Darrell Castle endeavors to give his opinion on the subject of tariffs and what they mean for the United States.

Transcription / Notes

RESETTING THE ORDER

Hello, this is Darrell Castle with today’s Castle Report. This is Friday the 11th day of April in the year of our Lord 2025. It’s difficult to leave the subject of war and talk about tariffs but I have been waiting for the wars to pause long enough for me to do it. The wars haven’t cooperated, but I have to pause them for this week since the subject of tariffs can no longer be ignored.

I don’t claim to be an economist but I do know something about economic history so, I will, therefore, endeavor to give an opinion on the subject of tariffs and what they mean for us. I used to study the marketing theory of one of the great marketers in the world today, Dan Kennedy. People would pay handsomely for Dan’s advice and they would often ask him, so what should I do, this or that, and his answer was, yes. In other words, he would advise them to implement all those ideas at the same time. President Trump seems to have adopted that shotgun approach to how he deals with the US economy and its relationship with the world.

The tariff seems to be the base of Trump’s economic program and he has announced the implementation of 10% baseline tariffs on all imports but he has now temporarily paused them for 90 days. My understanding is that all reciprocal tariffs are paused except China which stands at 125%. He said that “yippy” globalists and “queasy” skeptics fueled his decision. I guess that means people were getting nervous and that made him nervous.

Tariffs are a tax on the importers of goods and the people who buy the finished products from the imported goods ultimately pay the tax. True, the buyer is free to not buy but in any event the tax money goes to the government and that explains the idea that tariffs will help reduce the deficit and therefore debt. The problem is that if we think about it the flaw in that reasoning is that increased revenue comes at the cost of decreased production thus offsetting any gains. Tariffs tend to slow down production wherever they are imposed. That is a concept proven time and again by history. The Chinese are a little uppity right now so their 125% tariff stays in place. The UN tells us that China now has 31% of world manufacturing and that is expected to increase to 45% by 2030. The idea then is to spur US manufacturing and that is a good thing but only if people have enough income to afford the products.

 Trump asserts that this tariff will correct decades of unfair trade practices that have disadvantaged American workers and industries. Quote from the president; “For too long, other nations have taken advantage of our open markets while imposing barriers to our products. Those days are over.” Think about it like this; a banana republic sells bananas to us and we sell them cars. We import twice as many bananas as that country does cars so there is a trade deficit and we put a 100% tariff on bananas so problem solved. The difficulty is that the banana republic now can’t afford nearly as many cars so it’s self-defeating.

 What he is attacking and threatening, then, is the order of the world that has existed since the end of WWll. It’s a globalist order in which the United States controls the world’s access to money with its reserve currency status while foreigners make stuff and exchange it for US debt and a promise to make interest payments on it.

The economic world order alters or changes from time to time as it did with the end of the gold standard in 1971. Things seemed to work well until the first really expensive war collided with the civil rights movement in which millions of additional Americans had to be included in the social fabric of America, its welfare, and its politics. President Johnson talked from time to time about how difficult it was to pay for both at the same time.