Quick Take: What hasn't yet been said about the tariffs - it's really important

I think we're overlooking the really, really big picture here

Source: BBC

As you all know, I’m never the first to expound on matters of the day. There are thousands of columns and blogs who can give you a First Take or what turns out to be a Fake Take - or politically-motivated screed. I read all that and digest it and try to figure out the really important take. One we may have been missing.

On President Trump’s April 2nd “Liberation Day” or the day of signing tariff reciprocity into US policy formally, I think we’ve missed the really, really big picture.

The Big Picture is as obvious as what Trump deemed to call it: “Liberation Day”.

The question we should have been asking all along is: globally, what do these tariffs and various impediments to free trade actually do to the whole world? Because it’s not just tariffs, but a whole raft of laws, regulations, import specifications, graft, pay-for-play and just plain barriers to trade. Even if we achieve so-called tariff parity with players like Korea, Japan and the EU, they’ll still have protectionist regulations in place. Think environmental rules, agricultural rules, labor rules, second- and third-sourcing rules, transport and packaging rules - and taxes.

It’s that last one, taxes, that gives the whole game away. All these other countries, and the United States as well, use trade to make money - for government. Every time a good is produced or moves, it is taxed, tariffed, regulated, fees collected - and its cost goes up. To pay for government at all levels everywhere.

Surely you don’t believe these various collections (trillions of dollars globally) end up in the hands of actual citizens? Hardly.

They pay for government.

This is the real friction, or sand in the gears. This is what affects all of us, regardless of nationality. Everything anyone buys is levied with unproductive burden to be fed into the maw of government. Everywhere, all the time. And US consumers have been subsidizing that scheme for decades. Everybody else has too, to lesser extent, but mainly us here.

Because of the vastness of the global economic enterprise, we can’t fathom a number to quantify the impact to everybody on the planet - but we can surely get the Big Picture, if only looking at the impacts within our own nation. Everything costs more and is a little bit crappier - and the barrier to entry of innovative approaches a little higher - as a result. Yes, there actually is something out there better and cheaper than an iPhone, it just can’t make it to market because of the byzantine regulations and barriers to entry all over the planet.

You don’t know what you’re missing.

So if Trump is imposing a new regime - a new deal for every economy on the planet - that is the beast he’s fighting: government tax collections and regulation. For sclerotic, inefficient, dead-hand, mindlessly corrupt, intrusive governments everywhere. This puts the EUs squealing in a whole new light, doesn’t it?

On another point, assuming Trump is successful in knocking down global impediments to trade - we have our own house to get in order. Because let me assure you, we can’t compete in a fair trade fight. The rest of the world looks at the United States the same way we here look at California. Hopelessly bloated government with everything regulated to death. It takes years to get permits to build a factory here - and the price to build is an order of magnitude more than other places. And we have an energy problem - we can’t build more capacity or generation because of insane regulations. What’s going to power all these factories we can’t build? So even if Trump is successful in leveling the playing field, who’d want to play here?

I think Trump is just the man for that fight. As someone who’s spent his life constructing buildings out of concrete and steel and copper wiring and pipes, he would know how absurdly regulated we are here in the US. I am hopeful that he takes more than a chainsaw to our regulatory burden here in America, and there are positive signs already. De-regulating energy production is a great first step.

So yes, I fully applaud what Trump is doing globally, but if we’re going to be a player in a truly free global economy, we’d better be ready to receive all that business if it is to come here. But look not on how this liberates the American economy, rather how it unleashes the potential of the entire global population, and the benefits we’ll all enjoy in the future.

Global Liberation Day!