I recently read some interesting comments by a basketball player for the Milwaukee Bucks:
Regardless, Antetokounmpo felt weird about facing [former coach] Budenholzer at the other side of the court considering that they were strong and close allies in Milwaukee for five seasons.
“It’s definitely weird,” Giannis said. “Seeing him complain about plays that I do, charges, push-offs, and all that, and it’s the stuff that he loved when I did it when we were on the same team, winning a championship together.
“He loved when I did that, but now I’m playing against him.
On one level this is sort of amusing, as we all understand that coaches are not seeking the truth, they are like lawyers advocating for their clients. They are more interested in winning than in determining whether a given action was or was not a foul. But I do understand how this change of tone would feel “weird”, as in the heat of battle we tend to feel that we are in the right, and often interpret reality through that lens.
David Hume once said, “Reason is the slave to the passions”. Many people decide what they want, and then look for reasons to justify their actions. Consider the case of tariffs. Proponents of high tariffs often suggest that the US is being taken advantage of by other countries, which they claim have much higher tariff rates than we do. In fact, our major trading partners mostly have similar of even slightly lower tariff rates than the US. If we were to adopt “reciprocal tariffs” it would mean cutting out tariff rates with our major trading partners.
Nationalists will often cite a few individual tariffs in foreign countries that are much higher than the equivalent tariff rate in the US, overlooking the fact that we also have some individual trade barriers that are much higher than those of our trading partners. David Henderson is also skeptical of claims that these are reciprocal tariffs.
In a recent post, I suggested that the roughly $100 billion in tariffs on Canadian and Mexican autos would represent one of the largest tax hikes in history. Today’s announcement is far larger, perhaps $400 billion—although I cannot be certain as the tariffs will also impact the quantity of imports. In any case, it would certainly be the largest tax increase in American history, even in real terms, although as a share of GDP the WWII increases were probably larger.
It’s too soon to predict the economic impact, as President Trump’s tariff announcements are frequently adjusted after negotiation. In addition, the effect also depends on the monetary policy reaction. If inflation is targeted at 2%, a recession might occur. If monetary policy is adjusted in order to prevent a recession, we would probably get higher inflation.
