What if I Told You the Tariffs Aren’t a Big Deal (Yet)?

What if I Told You the Tariffs Aren’t a Big Deal (Yet)?

If you hadn’t heard, President Donald Trump recently established tariffs (taxes) on imports of steel and aluminum. 25% and 10% respectively. Media outlets are proclaiming economic peril. I’ve even heard it referred to as “evil” on social media.

Is it weird if I think we’re going to be OK?

I’ve said it before and I’ll say it again: I’m a free trade shill. I think we take our low prices for granted and then gripe about jobs leaving, not realizing the two go hand in hand. It’s easy to point to thousands of jobs lost, it’s hard to point to millions of avocados that are cheaper because Mexico produces them cheaper, or gas that’s cheaper because we can import Canadian oil freely. I think NAFTA is underrated for thousands of little reasons like that. I even suspect the deceased Trans-Pacific Partnership was underrated too. I think protectionism tells consumers they’re too stupid to make their own choices, and the government needs to help them, and then fails to address the actual underlying issues. I’ve outlined my vision of the least-bad approach to protectionism, and I think I stand by what I said on that matter.

I’ve been critical of Donald Trump on several issues. I disagree with his zero-sum view of the US trade situation. But I don’t think I have Trump Derangement Syndrome. I keep things in perspective.

And I wish to offer my perspective about why markets will survive the new “trade war.”

1. It’s Not a Trade War til They Shoot Back

China, in particular, will probably respond with their own trade barriers. We’d see a bit more inflation from it, depending on the magnitude of what they choose to do.

But, I daresay, there is a grain of truth in this tweet:

Not a ton, but a grain or two. Having the import market gives us negotiating leverage. China’s response will be measured, because they have more to lose than we do, especially given that Trump doesn’t seem to care about losing the benefits of trade I mentioned above. We both would lose, but they would lose more from escalating, so we can expect them to be careful.

But none of this has even happened yet, and it could remain restricted to the steel and aluminum sectors.

2. The Immediate Impact is a Tiny Portion of the Economy

I looked up the annual value of US steel and aluminum imports last year, and I was shocked at how low they were. $29 billion for steel, $1.26 billion for aluminum. Yes, billion with a b is small here. Because the US economy is measured in trillions. In the $18 trillion range (GDP). Let’s just take that fairly round number. I did the math for you: steel imports are .0016% of the economy, aluminum imports are .00007% of the economy.

It is true that higher prices for steel and aluminum will translate into higher costs for industries that use those materials (automotive, aerospace, construction, etc.). There could be layoffs, or just slowed hiring. It is also true that these industries account for much more employment than steel or aluminum processing. But when forming a picture in your mind of what percent of workers are going to be affected by this, keep the above percentages in mind.

We’re talking about a fraction increase of the price of a fraction of steel and aluminum which is a direct input for a fraction of the economy.

Don’t sell your investments over this.


I’m Sure It’s Fun to Throw Around the Word “Impeach,” but Where Does it Lead Us?

I’m Sure It’s Fun to Throw Around the Word “Impeach,” but Where Does it Lead Us?

by Jonathan McGeachen

I hear the word “impeach” getting thrown around by my liberal friends, but I don’t see it happening. I would be a little surprised if Donald Trump were impeached by this Congress, and very surprised if that impeachment led to a conviction.

The Meaning of the Word

First, let’s be clear about the term “impeach.” Impeachment does not mean removal from office. It refers, specifically, to the initiation of the process in the House of Representatives, requiring only a simple majority. A conviction by 2/3 of the Senate is necessary to remove a President from office.


Andrew Johnson was impeached by the House in 1868, but not convicted by the Senate, so he remained President. Same way with Bill Clinton. They were preparing to impeach Nixon before he resigned. And that’s about it. No president has ever been impeached and then convicted.

Current Makeup of The House

There are 435 voting members of the House. A simple majority therefore requires 218 votes. 241 representatives are Republican and 194 are Democrat. Assuming every Democrat voted to impeach, they would still need to flip 24 Republicans in order to achieve their majority.

Current Makeup of the Senate

There are 100 Senators. 67 would make a 2/3 majority, required to convict. 52 Senators are Republican and 48 are Democrat or Democrat-leaning independent. Assuming every Democrat votes to convict, they would need to flip 19 Republicans.

The Risks for Republicans

There’s always a new headline about Trump’s overall poll numbers, but consider: Gallup polls show Donald Trump having a whopping 86% approval rating among Republicans.


These are the voters that Republican Representatives and Senators have to answer to in primaries, and no one else. These voters live in a media environment where any charge against Trump is Fake News, or answerable with a tu quoque, or both. The risk of being branded a traitor, a RINO, and losing one’s seat is tremendous.

The Risks for Democrats

President Mike Pence.

What Would the Substantive, Provable Charges Be?

Not just circumstantial evidence or poor “optics.” I put this last because it matters least; we live in an era when perception is everything. But it’s something to chew on.