Trump Tariffs: WWFS (What Would Friedman Say)
The eyes of the world are focused on the White House where President Donald Trump’s return is a harbinger of very significant and consequential changes in America’s international trade policies.
The President of the United States demanded major economic and political concessions from China, Mexico, Canada, and the European Union which, if not satisfied promptly, will lead to the imposition of punitive tariffs.
When the previous administration took a radical left turn, Biden quipped that “Milton Friedman is not running the show anymore.” If Trump’s re-election is to be a restoration of America’s strength through capitalism, the new administration should wake up every morning with the question: What Would Friedman Say?
Some think President Trump’s “Trade 2.0” proposals (including no less than 60% tariffs on all Chinese goods and 10 to 20% tax on all other imports) can boost America’s economy and strengthen the middle class by creating many blue-collar jobs. If that’s the sole purpose of the new trade barriers, the plan is likely to backfire spectacularly.
As 1976 Nobel Prize economist Milton Friedman pointed out: “We call a tariff a protective measure. It does protect; it protects the consumer very well against one thing. It protects the consumer against low prices. And yet we call it protection.”
Tariffs are not paid by foreign producers and governments. They are calculated as an additional cost and raise the prices of imported goods for American middle-class families whose wallets and bank accounts are already plundered by inflation unleashed upon them by Biden’s administration. Tariffs also increase costs for American producers, making them less competitive globally. This destroys many more jobs in the exporting sectors than we can protect in parts of the economy that we try to shield against foreign competition.
To “protect” the job of one steelmaker in Gary, Indiana from cheaper Canadian, Mexican, Brazilian, Korean, or Japanese steel, we will destroy several jobs of Michigan autoworkers in Detroit, Flint, and Lansing. With more expensive steel, construction businesses all over the country will have to downsize. We may artificially and visibly boost one sector for a time, making it look like the tariffs work to our advantage. The costs of protectionism will be greater and harder to estimate as much of the damage is widely diffused and suffered over very long periods. This always works to the advantage of populist politicians and special interest groups such as certain declining corporations and labor unions.
For over two centuries, economists have known that tariffs cause inefficiencies, increasing prices, lowering living standards, and leading to a net loss of jobs. However, there are at least three important considerations that even Milton Friedman would take seriously today: the Chinese Communist Party threatening Pax Americana, the collapse of law and order in our cities after the unprecedented invasion of our southern border during the past four years, and the increasing popularity of the Fair Tax proposal to eliminate the income tax and shut down the IRS.
National Security
Not even Milton Friedman would support free trade with Germany and Japan during World War II. The current government of China poses the biggest threat to our way of life. Xi is more dangerous than Hitler or Stalin since the PRC has a much bigger economic potential and control over Third World resources than the Third Reich or the USSR.
The threat of tariffs on Chinese products whose biggest market is here, sends a clear message: “Don’t mess with the US!” If the Chinese Communist Party backs down before the tariffs are implemented, this may turn out to be the cheapest tool for advancing Trump’s “peace through strength” doctrine.
Negotiating Power
The open border policies of the previous administration admitted into our country millions of unvetted illegal immigrants. Among those who entered America were members of the worst Salvadoran and Venezuelan gangs. With the government’s abdication from its primary responsibility to keep us safe by protecting our borders, Mexican drug cartels flooded our cities with fentanyl, destroying the lives of millions of our neighbors.
In respect to Mexico, if Trump’s threats to impose tariffs against our southern neighbors force their politicians and law officials to cooperate with us in stopping the invasion, this would be a great success. The fact that within a day, President Claudia Sheinbaum agreed to send 10,000 National Guard troops to secure our border, shows the world that Trump has already won Round One of his Mexican standoff.
Tax Reform
Finally, tariffs on finished goods and other taxes on consumption can generate enough revenue for the federal government to allow Trump to accomplish the greatest pro-growth reform in our 250-year history: the abolition of the income tax and the elimination of the IRS. A tax is a penalty on the activity. Income taxes disincentivize wealth generation through work and investment, stifling economic growth and reducing prosperity. Removing this burden from America’s workers and entrepreneurs is the most effective way to Make America Great Again.
About the Authors
Lilliana Bernier and Alexander “Noel” Tokarev authored the above piece for the March 2025 edition of When Free to Choose, Northwood’s signature publication dedicated to promoting free enterprise. A junior from Rochester, Michigan, Lilliana is majoring in Accounting and Financing, with a minor in Data Analytics. In addition to her studies, she is involved in Alpha Chi Omega and the NU Finance Association. Noel is studying Sport Management at Northwood University. A student-athlete from Midland, Michigan, Noel has authored many thought-provoking pieces for Students in Defense of Freedom, an annual collection of student essays, and When Free to Choose. Click here to subscribe to When Free to Choose at no cost.