America’s trading partners have largely failed to retaliate against Donald Trump’s sweeping tariffs, allowing a president taunted for “always chickening out” to raise nearly $50bn in extra customs revenues at little cost.
Four months since Trump fired the opening salvo of his trade war, only China and Canada have dared to hit back at Washington imposing a minimum 10 per cent global tariff, 50 per cent levies on steel and aluminium, and 25 per cent on autos.
At the same time US revenues from customs duties hit a record high of $64bn in the second quarter — $47bn more than over the same period last year, according to data published by the US Treasury on Friday.
China’s retaliatory tariffs on American imports, the most sustained and significant of any country, have not had the same effect, with overall income from custom duties only 1.9 per cent higher in May 2025 than the year before.
Here is more from the FT. To be clear, I do not think this is good. Nonetheless it amazes me how many economists a) reject the “Leviathan” approach to analyzing public choice and U.S. government, b) think “normative nationalism” is fine, c) have expressed partial “trade skepticism” for some while, and d) think our government should raise a lot more revenue, including through consumption taxes…and yet they find this to be about the worst policy they ever have seen.
Some also will tell you that higher inflation is not such a terrible thing, though whether they extend this view to inflation from real shocks is disputable.
With some debatable number of national security exceptions, zero tariffs is the way to go. But you can only get there through broadly libertarian frameworks, not through conventional “mid-establishment” policy analyses.
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