Liberation Day? Understanding Trump and Tariffs

This is something I take seriously. If you're going to interfere with two people voluntarily exchanging goods, you better have a damn good reason. So let’s talk about tariffs and trade, probably the most overlooked policy area in Washington that President Donald Trump has somehow made the hottest topic in the world.

Trade has been in the headlines for weeks, thanks to the United States’ back and forth on tariffs and heightening tensions with Canada, Mexico, and China. President Trump’s approach—simultaneously aggressive and erratic—reflects his consistent worldview:

America is getting ripped off, and it's time we stop letting it happen.

Economic Injustice?

Knowing that tariffs are niche and not that popular once Americans hear prices may increase on their commonly purchased goods, the Trump Administration took to calling April 2nd “Liberation Day.” Liberation from… bad deals? Exploitation? It’s not entirely clear.

What we do know is that a majority of U.S. adults (55%) believe the administration is focusing too much on tariffs, and 64% think it’s not doing enough to lower prices, according to a CBS News/YouGov poll. This is a big political risk for Trump. The fact that he can only serve this one final term as president is the only explanation for why he’d spend political capital this way.

In numerous public statements, Trump has emphasized massive trade deficits as evidence of this economic injustice. For instance, he claimed a $200 billion deficit with Canada and a $250 billion deficit with Mexico, often tying these numbers to issues like drug trafficking and illegal immigration. It's a jumble of arguments, but the trade deficit is the centerpiece.

So, What Is a Trade Deficit?

Simply put, it means that American consumers buy more from a particular country than that country buys from us. I run a trade deficit with my grocery store—I pay them money and get food. They’ve never bought a video from me. (Well, except for that one time I made a documentary with Whole Foods.)

Trade deficits aren’t inherently harmful. The money we send overseas doesn’t disappear; it returns via capital investment, lending, or other financial flows. But Trump views trade through a zero-sum lens: if another country gains, America must be losing.

This “America as a corporation” mindset—where deficits are akin to bankruptcy—is misguided.

The U.S. isn’t a business. We are a nation of individuals who buy, sell, and trade based on personal value, not government edicts.

Trump’s views echo an old strain of economic nationalism, one that Republican icon Ronald Reagan, somewhat ironically, spoke out against. In a now-famous speech, Reagan warned against viewing trade as war: "Commerce is not warfare. Trade is an economic alliance that benefits both countries."

Yet even Reagan, the free trader, caved to political pressure at times, imposing tariffs on Japanese electronics in the '80s to protect American semiconductor manufacturers.

Can We Have It All?

Trade protectionism is always politically seductive. It's easy to see the steelworker whose job was saved by tariffs. It's much harder to see the eight other workers at downstream businesses hurt by higher costs. As Senator Rand Paul put it, tariffs create “concentrated benefits and dispersed costs.”

The person who keeps their $80,000 job is visible; the thousands who pay more for cars, washing machines, and appliances are invisible.

My wife and I experienced this firsthand. About 15 years ago, we tried to launch a U.S.-made cloth diaper business. The market—largely “crunchy granola” moms—demanded American-made products but balked at the price required to make them domestically. Despite being in dozens of stores, we couldn’t make it work. U.S. manufacturers were offering $25-$30 an hour and couldn’t find workers. We folded. It sucked.

This personal story reflects a broader truth: we (Americans) want low prices and domestic jobs. But we often can’t have both.

The textile industry is a clear casualty of globalization. Once those jobs and skills move overseas, they’re not just hard to get back—it may well be impractical. Free trade leads to specialization and efficiency, which lowers costs. But it also creates fragility. COVID-19 showed how dependent America had become on foreign supply chains for everything from baby formula to semiconductors. Taiwan's TSMC makes the lion’s share of our advanced computer chips, so imagine the chaos if China were to blockade the island.

Free trade is good economics, but too much reliance on foreign production can be a national security risk. Economists praise efficiency, but as Nassim Taleb noted, if they had their way, we’d all share one kidney. Sometimes redundancy matters.

What Is Really Reshaping the World?

The truth is, while trade causes disruption, it’s not the biggest economic force reshaping our lives. That honor goes, of course, to technology. Since the 1950s, manufacturing jobs in America have declined, and that’s not because of China. Blame automation.

Machines do more with less. That’s why food is cheap (don’t talk to me about eggs right now). That’s why cars are built with fewer workers. AI and robotics are accelerating this trend and changing everything from farm labor to car washes.

This raises existential questions about the future of work. What happens when nobody needs to do the basic, character-building jobs anymore? How will young people learn what it means to work?

There are only so many AI-safe jobs like being a pool lifeguard for the summer.

Trade is a disruptor, sure, but so is innovation. Both are necessary for any notion of this thing we call progress, and each carries costs.

What we need is resilience.

A private sector that remembers the cold lessons of COVID.

A workforce trained for the unavoidable future.

And a society that respects the benefits of free markets, while preparing for their dislocations.

Adam Smith’s argument for free trade, made in The Wealth of Nations, still holds. The logic of voluntary exchange lifts living standards, increases choices, and fosters peace.

The government, despite endless attempts, has rarely been successful in protecting industries or retraining displaced workers. Too often, protectionist policies become corporate welfare cloaked in nationalism.

I supported Trump, and I want him to succeed. But no president, no matter how populist or powerful, can wave away the realities of living in a global economy.