Trump’s tariffs and the lies Democrats tell about them

As an economic conservative, I am opposed to tariffs.  In my perfect world, we would have none.  But we do not live in a perfect world. 

As he promised over and over during his campaign, President Trump intended to use tariffs as a negotiating tool.  He did not take a piecemeal approach.  He started hitting allies and adversaries across the board with tariffs.  In some cases, extraordinarily high tariffs.

Trump’s tariff policy was never about economic isolationism. It was about negotiating from strength. By imposing tariffs on allies and adversaries alike, Trump signaled that the United States would no longer tolerate lopsided trade relationships. His approach was comprehensive, targeting not just low-level infractions but systemic abuses—such as export subsidies, intellectual property theft, and market access restrictions.

Trump’s Objectives

As outlined in his strategy, Trump had three primary goals in terms of tariffs:

1. Reduce high foreign tariffs that unfairly penalize U.S. exports.
2. Eliminate unfair trade practices, including subsidized exports, bans on imports, eliminating counterfeit goods and address intellectual property theft.
3. Secure non-trade concessions — using tariffs to end wars, increase NATO contributions and gain greater geopolitical cooperation.

This multi-pronged approach can be chaotic, but it is starting to yield positive results – without all the downsides predicted by political adversaries.   Vietnam has agreed to a 20% tariff rate—far lower than the 46% Trump initially threatened. The European Union has signaled willingness to accept a 10 % universal tariff on many exports. These are not signs of economic breakdown—they’re signs of leverage working.

The Myth of One-to-One Price Hikes

Far from the simplistic narrative that tariffs automatically raise consumer prices or fuel inflation, the reality is more nuanced—and Trump’s predictions have been increasingly supported by recent data and economic behavior.  The assumption that tariffs automatically trigger massive price increases and inflation ignores how real-world supply chains and pricing strategies work. Tariffs do not automatically translate into one-for-one price increases. Instead, businesses, distributors, and even foreign exporters often absorb all or much of the cost to remain competitive.

Recent analysis from the Council of Economic Advisers found that the price of imported goods has actually declined since the latest round of tariffs took effect.  Ponder that.  Against all the draconian predictions, the retail cost of imported goods has dropped.

And there is more.  The imported component of the Personal Consumption Expenditures (PCE) index dropped by 0.1% from December through May, while overall goods prices rose only 0.4%—a modest 1% annualized rate.

This trend is echoed in the Consumer Price Index (CPI), where imported goods fell 0.8% while overall prices remained flat. These figures directly contradict the narrative that tariffs are driving inflation and driving up prices in general.  Trump’s political adversaries have been wrong about inflation and wrong about price increases – at least so far.

How and Why Businesses Absorb Tariff Costs

So how are prices staying stable despite higher import taxes? The answer lies in business ingenuity and market discipline:

• Front-loading inventory: Many companies pre-ordered goods before tariffs took effect, allowing them to sell at pre-tariff prices for months.
• Delaying purchases.  Conversely, some companies will defer purchases when imposed tariffs are at the highest – anticipating a future reduction.
• Bonded warehouses and trade zones: Importers delay tariff payments by storing goods in special zones until they enter the market.
• Foreign exporters absorbing costs: To maintain market share, some overseas producers lower their prices to offset tariffs in order to stay competitive.
• Retailers holding prices steady: In a competitive market, many businesses choose to absorb costs rather than risk losing customers.

These strategies have created a buffer against inflation, allowing consumers to continue purchasing goods without dramatic price hikes.

Why would exporters absorb the additional cost of the tariffs?  Simple.  Because they want to compete in the American market.  The size of the American market is what gives Trump considerable leverage in negotiations.  Currently, China exports $525.65 billion in goods to the United States.  The Chinese economy cannot afford to lose even a portion of the American market without suffering severe economic consequences.

Among the consequences could be the weakening of the Chinese yuan, lower industrial output, factory closings and high unemployment. There would be a massive drop in foreign exchange earnings – especially in such key sectors as electronics, machinery, furniture and apparel.  Industries with thin profit margins – such and toys and textiles – would be the hardest hit.

Gas and Energy: A Case Study in Price Stability

One of the most telling examples is gasoline off-price stability. According to ABC News, oil prices have dropped nearly 15% since Trump took office, helping to cool inflation across multiple sectors.  This decline in energy prices has a ripple effect. Lower transportation costs mean lower prices for groceries, consumer goods, and services. It’s a powerful counterbalance to any upward pressure from tariffs.

Inflation Trends Under Trump

Since Trump’s return to office, inflation has consistently declined, defying predictions of economic turmoil. The May CPI rose at an annual rate of just 2.4%, cooler than economists expected. The PCE index rose 2.3%, only slightly above the Federal Reserve’s 2% target. Even high-profile categories like eggs, which saw a 53% price surge in January, have cooled to 41% by May. These figures suggest that inflation is not only under control—it’s trending downward.

Tariffs: A Rebalancing Act

One of the benefits of tariffs can be the revitalization of the economy by expanding sale of domestic products, job creation and lower unemployment.  This possible outcome is influenced by what proportion of the tariffs reach the retail shelves. Since tariffs are being negotiated on almost a daily basis, we cannot yet determine their full impact.

To whatever measure the tariffs make goods more expensive, there is a benefit for domestic production.  While Trump’s tariff costs have not yet reached the consumers – and maybe never will – the threat of tariffs appears to have produced some positive investments in American industrial growth.  The monthly jobs numbers have been exceeding expectations – and the unemployment rate has dropped to 4.1%.

The tariffs have not had a negative impact on the stock market, as many Trump critics have predicted.  In fact, it has risen to record highs – fluctuating occasionally based on day-ti-day events.  But the trend is upward.

A Yale University analysis projects that Trump’s tariffs will boost U.S. manufacturing by 2%. While some sectors like agriculture may face short-term challenges, the long-term benefits of a more balanced trade environment are substantial.

President Trump’s tariff policy is not a reckless gamble—it’s a calculated strategy to restore fairness, protect American workers, and rebalance global trade. The evidence is mounting that tariffs have not caused runaway inflation, and in many cases, prices have remained flat or even declined.

By absorbing costs, adjusting supply chains, and negotiating better deals, businesses and foreign partners have adapted. Consumers have not been crushed under the weight of tariffs. Instead, they’ve benefited from a stronger domestic economy, more jobs and more equitable trade relationships.

Critics of Trump’s tariffs are engaging in political misinformation, disinformation and downright lies.  MSNBC’s Lawrence O’Donnell is among the worst of the worst.  In his inimitable pompous and arrogant style, he declares the consumer will pay all the tariff costs.  “That is how it works,” he declares.  Not so.  O’Donnell is an example of the merging of arrogance, ignorance and political deceit.  And he is not alone,

Many are calling tariff increases a “national sales tax” as if 100 percent of the tariffs will be passed on to the consumer.  It is a grossly false and misleading assumption.  Among those proffering that nonsense are Senate Minority Leader Chuck Schumer, Maryland Senator Chris Van Hollen, Maryland Congressman Jamie Raskin and most of the hosts on MSNBC.

Trump’s approach may be unconventional – and a bit chaotic in the short run — but it’s proving effective. Tariffs, when used wisely, are not a tax on the American people—they’re a tool for economic sovereignty.  We do not know what the various tariff deals will look like —   or what impact they will have on the economy – but so far, the Trump administration has been right and his political adversaries have been wrong – very wrong. So, there ‘tis.

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