I heard about this first from Jonah Goldberg’s podcast, but it fits so well into the current madness with the administration’s tariff policy.

Particularly when you examine how each of the rates were determined.

But if you unpick the formula above it boils down to simple maths: take the trade deficit for the US in goods with a particular country, divide that by the total goods imports from that country and then divide that number by two.

There is no “reciprocity” here. There is no examination of what is imported compared to what is exported.

The administration even put tariff rates on uninhabited islands.

This is just naked mercantilism wrapped up in populist fervor.

But it will bring back jobs! Maybe. A few. Sometime in the future. But at what cost?

Access to cheap goods is not the essence of the American dream.

Treasury Secretary Scott Bessent

Access to cheap goods makes life easier on people. Particularly on those who don’t have have a lot of money – or a lot of money to spare. Does that sound like anyone you know?

Finally is the destruction of trust among our closest allies and trading partners. Nations cannot get rich trading only within their borders. And the administration has just proven that the American government cannot be a reliable trading partner. They must find other alternatives. If they do, they will not be coming back for a long time.

We end up poorer. All because of Critical Trade Theory.