Doug McMillon on the delayed impact of tariffs

We're keeping our prices as low as we can for as long as we can. As we replenish inventory at post-tariff price levels, we've continued to see our costs increase each week, which we expect will continue into the third and fourth quarters. 

~ Doug McMillon, Walmart CEO, August 21, 2025

 

Sabrina Escobar on why the impact of tariffs has been muted so far

There’s another reason for the persistence of consumer strength: Shoppers haven’t yet felt the sting of higher prices.  That is largely because many retailers imported products ahead of spring and summer tariff implementations, allowing them to keep most of their prices unchanged, and have been willing to eat some of the higher costs. 

The reaction to earnings, however, suggests that doubts are seeping in.  Walmart stock dropped 4.5% on the day of its release, while BJ’sWholesale Club lost 6%, and Target, 6.3%, though the last had more to do with its choice of a new CEO than its business.  And those doubts largely stem from new tariffs as retailers restock inventories for the holiday season and companies are forced to pass on higher import costs to consumers to protect margins. “I don’t think you really start to feel the pinch of tariffs until the third quarter, so I think that’s the make-or-break quarter,” says Steven Shemesh, an analyst at RBC Capital Markets. 

Look no further than Walmart, whose stock has earned a premium valuation for its ability to attract shoppers with its low prices.  On Thursday, CEO Doug McMillon said the impact of tariffs has been “gradual enough that any behavioral adjustments by the customer have been somewhat muted.” But he warned that the company has seen costs increase each week as it replenishes its inventories at post-tariff price levels—a trend that McMillon expects to continue into the third and fourth quarters. And while Walmart plans to keep prices as low as possible, some increases are inevitable, especially after the company missed earnings expectations despite its superior revenue growth. 

~ Sabrina Escobar, "Walmart and Other Retailers Have Eaten the Cost of Tariffs. Now It Is the Consumer’s Turn.," Barron's, August 22, 2025

 

Fred Hickey on the risk of tariffs to investors

Tariff hikes are a major risk [for investors].  The average effective U.S. tariff rate is currently around 15%.  The last time U.S. tariffs were this high was in the mid-1930s, during the Great Depression.  Many believe that the Smoot-Hawley tariffs (signed into law on June 17, 1930) were a major contributing factor for that extended depression.

~ Fred Hickey 

 

Patrick Barron on Trump's protectionist promises

 Within a week’s time, protectionists claim that tariffs will generate more tax revenue (including the absurd claim that the tax revenue will be paid by foreign exporters), protect and/or repatriate manufacturing jobs to American shores, punish trading partners who don’t “play by the rules”, make America more self-sufficient in key industries, and not cause prices to rise.  Whew!  That’s quite a lot of promises, and they conflict with one another.  For example, will tariffs generate tax revenue or cause production to be repatriated to America?  You can’t have it both ways. 

Probably the most galling claim is that the protectionists want to force the rest of the population to buy only American products in order to benefit stockholders and workers in key industries.  There is no recognition that this claim cannot be fulfilled unless whatever benefit accrues to key industries must come at the expense of everyone else.  In other words, protectionists tout the concentration of benefits and keep quiet about the diffusion of cost.  But the costs are there, even if widely diffused.  Protectionism really isn’t a theory of betterment for all but a claim that certain people in certain occupations are special.  They must be paid more handsomely than the market, meaning you and me, wishes to pay.

~ Patrick Barron, "The Protectionists Have No Theory," Going Postal, June 5, 2025

Mike Whitney on Trump's trade war with China

One of the oddities of the tariffs dust-up, was the fact that the Trump team never anticipated China’s retaliatory response.  It’s actually amazing.  The administration lives in such an information bubble that they thought China would cave in after their comical “Liberation Day” announcement.  What were they thinking? 

We know what Secretary of the Treasury Scott Bessent was thinking because he made a number of public statements that the US had an edge on China because ‘we were the deficit country.’  Here’s what he said in an interview on CNBC: 

“We are the deficit country.  They sell almost five times more goods to us than we sell to them.  So, the onus will be on them to take off these tariffs.  They’re unsustainable for them.”  He cited estimates that China could lose 5-10 million jobs if tariffs persist, highlighting China’s economic vulnerability. 

This is idiocy.  This is like saying that the ragamuffin panhandler on the street-corner has the advantage over the flush businessman with millions in the bank.  The US is $36 trillion in debt while China has a $3 trillion surplus!  How does ‘being broke’ give us ‘the advantage’.  We’re lucky that China still accepts our currency at all, and yet, our Treasury Secretary thinks that being destitute gives us the “upper hand”.  A man like this should not be Treasury Secretary.

~ Mike Whitney, "Re-thinking U.S.-China Relations After the Tariffs Shipwreck," The Unz Review, May 20, 2025

Gene Seroka on import volume drying up at Port of Los Angeles

About a third of the import volume, which means give or take about 50,000 20 foot equivalents gone off the arrivals next week...  The other thing is that retailers are saying "We've got about 5 to 7 weeks of normal inventory in the country right now, then we start to see spot shortages if it goes on much beyond this.

~ Gene Seroka, Port of Los Angeles executive director, tweet of interview, May 3, 2025

Kenneth Pringle on President Biden's mercantilism

In slapping tariffs of 100% on Chinese electric vehicles, and 25% to 50% on products from semiconductors to surgical masks, Biden expands a trade war started by predecessor and self-proclaimed "Tariff Man" Donald Trump.  The U.S. wants Europe to join, and China is threatening retaliation.

Biden is actually following a much older trading strategy, one favored by George Washington, Abraham Lincoln, Herbert Hoover - and Queen Elizabeth.

From the 16th to 19th centuries, trade was a national competition to protect industry, improve world standing, and pursue politics by other means.  A zero-sum game, with winners and losers.

War, colonialism, great wealth, and poverty were the consequences.  Adam Smith dubbed it the mercantile system, or mercantilism.

Now Biden, who once championed China's entry into the World Trade Organization, is using punitive tariffs against China to "make sure American workers and American business and corporations can compete and win in the industries of the future."

Welcome to Mercantilism 2.0.

~ Kenneth G. Pringle, "Biden's Tariffs Are Nothing New for U.S.," Barron's, June 17, 2024

Eric Schliesser on the likely cronyism from Trump's tariffs

From my own, more (skeptical) liberal perspective tariffs are an expression of mistrust against individuals’ judgments; they limit and even deny us our ability to shape our lives with our meaningful associates as we see fit.  And tariffs do so, in part, by changing the pattern of costs on us, and, in part, by altering the political landscape in favor of the well-connected few.  

Of course, in practice, tariffs are always hugely regressive by raising costs on consumer products.  This is, in fact, a familiar effect of mercantilism and has been a rallying cry for liberals since Adam Smith and the Corn league.  That is, some of the most insidious and dangerous effects of tariffs are evidently political in character.  They create monopoly profits for the connected few, who can, thereby, entrench themselves against competitors, regulators, and consumers.  It is well known that once a tariff is entrenched it is incredibly difficult to remove.  They create permanent temptations to bribe the executive and those with access to him.  

Watch for stories about import-quotas, tariff holidays, and ad hoc tariff exemptions to appear in the press and subsequent policy.  Political and economic uncertainty is generally a self-reinforcing process.  To undo it more and more actions by the executive are demanded by a scared public manipulated by profit-seeking adventurers.  It’s entirely predictable we’ll see the rise of a system of selective subsidies and cartels as Trump Tariffs are entrenched. 

~ Eric Schliesser, professor of political science at the University of Amsterdam

(Quoted by Lew Rockwell in "Trump's Insane Tariff Policy," April 17, 2025

WSJ editors on Trump's bullying tactics

Mr. Trump thinks he can bully everyone into submission, but he can’t bully Adam Smith, who deals in reality.  Markets know tariffs are taxes, and taxes are anti-growth.  The Trump tariffs are the biggest economic policy mistake in decades, and extending the 2017 tax reform and deregulation may not compensate for all the damage. 

There are also fears that if tariffs fail to reorder the global trading system, Mr. Trump might impose a fee on Treasury debt as chief White House economist Stephen Miran has proposed.  This would amount to a partial U.S. default since it would cut the rate of return.  Think Treasury yields are rising now?  Watch what happens if a Miran fee is imposed. 

All of this is tempting economic fate and contributing to a global “sell America” narrative in financial markets.  That’s why the dollar is under pressure.  Smart Presidents pay attention to market signals and adapt.  The adaptation now would be to negotiate a quick end to the tariff barrage.  Claim some trade-deal victories, and call it a day. 

But markets are spooked because they don’t know if Mr. Trump listens to anyone but his own impulses. 

~ The Editorial Board, "The Fire Jerome Powell Market Rout: Investors render a verdict on tariffs and politicizing the Fed.," The Wall Street Journal, April 21, 2025

President Trump meeting in the Oval Office with Japanese Minister of
State for Economic and Fiscal Policy Ryosei Akazawa on April 16, 2025

Patrick Barron on U.S. competitiveness and need to return to the gold standard

As long as America can print fiat money to pay for imports it will print fiat money.  But under the discipline of the gold standard, Americans will have to produce good quality products at world market prices in order to earn the foreign exchange (gold) needed to settle international trade.  It’s the only way. Erecting tariffs, as desired by President Trump, solves nothing and merely exacerbates the situation.  America must learn to compete in the world on equal terms; i.e., it cannot simply print fiat dollars.  It must produce goods that foreigners wish to buy at prices that foreigners are willing to pay.  Becoming an autarkic nation, a la North Korea, will condemn Americans to poverty.  America needs to become an honest, commercially oriented nation.  If not, the world will pass it by just as has happened to other great nations in the past. 

~ Patrick Barron, "David Hume’s Insight Explains America’s Economic Decline," Going Postal, April 16, 2025

Kevin Hassett on Trump's tariffs (2025)

I don't believe that the tariffs are going to be very inflationary at all.

~ Kevin Hassett, FOX Business interview, 6:10 mark, April 18, 2025

Phil Gramm and Larry Summers on the "hollowing out of American manufacturing"

The primary argument for the implementation of broad-based tariffs is that they will reverse the hollowing out of American manufacturing and reduce the trade deficit, which is causing a "hemorrhaging of America's lifeblood."  Contrary to the repeated claim, there has been no hollowing out of American manufacturing.  Industrial production in the U.S. is at an all-time high.  The U.S. is producing 2.5 times as much real industrial output as it did when we last ran a trade surplus in 1975.  We are producing that record output with the smallest percentage of the labor force since America became fully industrialized.  The percentage of the civilian nonfarm labor force employed in manufacturing peaked in World War II and has been in secular decline ever since.  This has been a great success for productivity and not a failure of trade, as today's full employment attests.

It is telling that the Trump tariffs implemented in mid-2018 and the Biden expansion of those tariffs didn't stop the secular decline in manufacturing employment as a percentage of total employment.  The decline in manufacturing employment is being driven by the same secular forces that caused employment in agriculture during the 20th century to fall from 40% to 2% of the labor force: a vast increase in labor productivity and a decline in manufactured products relative to services.  This is a worldwide phenomenon occurring in both developed and developing economies.

~ Phil Gramm and Larry Summers, "Gramm and Summers: A Letter on Tariffs From Economists to Trump," January 30, 2025

Janet Yellen on President Trump's tariffs

I’m afraid I could not give it a passing grade, I’m sorry.  This is the worst self-inflicted wound that I have ever seen an administration impose on a well-functioning economy.  So we had a very well-functioning economy, and President Trump has taken a wrecking ball to it.

~ Janet Yellen, CNN interview, April 11, 2025

Mark Skousen on President's 2018 steel tariff

Q: President Trump did say all of this will really lead back to the American dream being attainable again...  Do you see that happening?

A: No, absolutely not and in fact I think the president is delusional and I think he's making a major mistake.  Look, I'm a professional economist and one of the things I teach at Chapman University - and I've taught at Columbia and other big schools - is cost-benefit analysis.  Don't just look at the benefits that we're achieving through these tariffs, you have to look at the costs.  The rise in the cost to consumers: you're not going to see cheap clothing and toys and sports, and even automobiles are going to increase dramatically in price.  So what is the cost?

Well in 2018, President Trump imposed a 25% tariff on steel.  It created a thousand jobs in the United States, but it also lost 75,000 jobs.  Why?  Because steel is an import and that raises the cost and causes trouble.  You have to remember, the automobile industry has 30,000 different parts and do you know how much comes from outside the United States in imports?  40%!  So even U.S. cars are going to see a dramatic increase in price.

~ Mark Skousen, "Trump Unveils Sweeping Tariffs Plan," 2:15 mark, Newsmax, April 3, 2025

Stephen Miran: "In the long run, the tariff rate will make the United States more competitive"

The wrongs of excessive trade imbalances and the wrongs of excessive globalization didn't happen overnight and they also won't be fixed overnight...  In the long run, the tariff rate will make the United States more competitive, vis a vis our trading partners.

~ Stephen Miran, Fox News interview, April 4, 2025

Donald Trump on the impact of tariffs on foreign car prices

I couldn’t care less, because if the prices on foreign cars go up, they’re going to buy American cars.  I hope they raise their prices, because if they do, people are gonna buy American-made cars.  We have plenty.

~ President Donald Trump, interview, NBC News, March 30, 2025

(The new 25% tariffs on foreign-made cars and auto parts are set to take effect on April 3, a day after Trump is scheduled to announce reciprocal tariffs on imports from more of America’s trading partners.  While there were reports last week that the reciprocal tariffs would be targeted and less ornery, the Wall Street Journal reported Sunday that the Trump administration is considering stiff tariffs of up to 20% against almost all U.S. trading partners.)

WSJ on the 1963 chicken tax

Nothing is more American than the pickup truck. One big reason why: the “chicken tax.”

The U.S. has imposed a 25% tariff on imported trucks ever since President Lyndon Johnson hit back at European levies on American poultry in 1963, less than two weeks after the assassination of President John F. Kennedy.

As the Trump administration pursues a barrage of new tariffs, the longstanding tax on pickup trucks bears witness to the power of high duties to reshape global trade, competition and industry over decades, with effects far exceeding their original purpose.

Like today’s tensions, the dispute that became known as the “chicken war” was punctuated by worries about the trade deficit, accusations of protectionism and threats to cut Europe loose from America’s defense umbrella. 

~ Stephen Wilmot, "The 1960s ‘Chicken Tax’ Shows the Lasting Impact of Tariffs: Imported pickups have long incurred a 25% tariff, keeping production within North America but raising little revenue for Washington," The Wall Street Journal, March 19, 2025

In the 1980s, Subaru imported a small pickup that circumvented a 25% tariff on trucks because it had two backward-facing seats bolted to the open bed.

Stephen Miran: "I think that a lot of folks have got the effects of tariffs wrong"

I think that a lot of folks have got the effects of tariffs wrong...  The number one point is a general point about economics, which is that when you think about any economic policy, a tariff, a tax, anything else, the economists believe that the party that bears the burden or the benefit of that policy is the party that's more inflexible, because if you're flexible, you can change your behavior to avoid the costs...  

U.S. consumers are flexible.  We have options.  We can produce stuff at home, we have a variety of countries we can import stuff, we can substitute into home production, whereas countries that sell to the United States are inflexible.  They've only got the United States to sell to.  There's no alternative.  So they're the ones who will bear the burden of these tariffs, which means that there's going to be very limited pass through into downside economic risk or into higher prices.

~ Stephen Miran, "Trump's Economic Adviser Rejects Short-Term Pain From Tariffs," Bloomberg Podcasts, 0:30 mark, March 24, 2025

WSJ editorial board on tariffs: "Mr. Trump can’t say he wasn’t warned"

This isn’t cause for panic, but it is for tariff caution.  Mr. Trump is promising to impose his 25% levies on Mexico and Canada this week, which will send auto and other North American supply chains into chaos.  China gets hit with another 10% border tax, with European cars up next, followed by reciprocal tariffs on most of the world. 

A tariff is a tax, and taxes impose costs that reduce economic activity.  They also add uncertainty about where and how businesses should invest, as CEOs try to figure out where the tariffs will strike, on which goods, and for how long.  Will there be exceptions? 

If growth continues to slow, Mr. Trump can’t say he wasn’t warned.

~ The editorial board, "Tariffs and the Slowing Economy," The Wall Street Journal, March 2, 2025

Herbert Hoover on tariffs

The sole purpose of protective tariffs is to protect the wages of the American worker and the farmer’s income from being dragged down to the level of cheap foreign wages and standards.

~ President Herbert Hoover, October 1929