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      • Homicides
      • Attempted Homicides
    • Congress Hapless Corrupt
    • Mass Casualty Events
  • Project MindBreaker
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  • Liberty 250 Year Checkup
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    • Attempted Homicides
  • Congress Hapless Corrupt
  • Mass Casualty Events

Tariffs, Free Trade, And Taxes Were Revolutionary Issues

Tariffs And The 1930s Great DepressionReagan's 1984 Speech - Tariffs And Free Trade

  

AMERICA’S FOUNDERS SPOKE OUT STRONGLY AGAINST THE EFFECTS OF TARIFFS ON AMERICA'S PROSPERITY


At The 1773 Boston Tea Party, they destroyed tariffed products 

     On December 16, 1773, American colonists boarded English ships in Boston Harbor to throw tea into Boston Harbor to protest the tariff imposed on tea.


On July 4, 1776, they spoke out again in the Declaration of Independence, decrying imposed tariffs:

          For cutting off our Trade with all parts of the world:

          For imposing Taxes on us without our Consent:


     Taxes on specific imported products are known as tariffs. These tariffs are passed on to the purchasers of those products in the colony or country where they are consumed through price increases on those specific products. The cost of the tariff is directly paid by the importer and built into the prices they charge, so these price increases are inflationary exactly as any other price increase is, reducing consumer purchasing power for all other goods and services – just like a pay cut would also reduce a family’s purchasing power. Imposing tariffs typically results in retaliatory tariffs which raise prices dramatically, and result in trade wars which can cut off trade between nations, depressing both countries’ own economies. 


     The Founders protested these tariffs, added costs imposed on them by the unitary executive, English King George III, with the Boston Tea Party and with other protests against tariffs and transaction taxes beginning in 1773.

In the early years after independence, America’s founders used tariffs on a limited range of products to finance a small federal government which started with a few dozen employees in 1789. After a time, they steadily reduced tariffs to encourage international trade so they could sell more American products to other countries in return for agreeing to reduce tariffs on imported products. By steadily reducing tariffs on imported products, they increased the buying power of all Americans, which stimulated economic growth and prosperity as Americans bought still more products and services in America.

 
FAST FORWARD - AMERICA MAKES THE SAME MISTAKE AS KING GEORGE III


  Congress doubled many tariffs on imported goods in June 1930, some going as high as 59%, most raised to the 20-30% range. By then, the Smoot-Hawley Act, which had passed the House of Representatives in May 1929, had already caused the October 1929 Wall Street stock market crash (see the video at the black action bar above). As the massive unregulated stock market speculative price boom of the Roaring 20s ended, tariffs and retaliatory tariffs expanded among nations. Global trade collapsed by 67% as American industry and farm exports lost sales, pricing power, and profitability to the export collapse. Unemployment soared from 8% to 25% over just two years.

 

     Widespread bank failures occurred all over the US in the 1930s as economic conditions deteriorated with mass bankruptcies of businesses and farms. As America's uninsured banks collapsed, depositors withdrew their money en masse - unlike today, there was no FDIC deposit insurance, so bank depositor panic withdrawals spread like wildfire. Critical local sources of business and agricultural financing completely disappeared in many places, causing still more business and agriculture industry failures. Tight money policies and the deflation of asset values of land and equipment used as collateral for the few loans available made both credit and currency ever more scarce.


     With little bank financing available to meet payrolls and finance sales, the Great Depression resulted. Businesses collapsed and industrial production ground to a near halt. Agricultural prices collapsed as desperate farmers overproduced, seeking income to pay farm mortgages and to live on. With export markets blocked by tariffs to protect local farmers in other countries, and no government agriculture price supports, farm income subsidies, or subsidized crop insurance before 1933, farmers were pushed off their land by the millions, and farming communties collapsed along with them. The US economy entered a deep economic depression which continued until the US entered World War II in late 1941.

 

FAST FORWARD - AMERICA MAKES THE SAME MISTAKE AGAIN


     When national governments impose tariffs on products imported from other countries, this typically results in retaliatory tariffs by that country on imports from the other nation. This depresses trade and economic growth in both countries, since tariffs increase consumer prices, which reduces the amount of money consumers have available to spend on other goods and services. 

  

     US international trade - imports and exports - totals over $5 trillion each year, nearly 20% of our entire economy and millions of related jobs in America. America is the headquarters of far more multinational companies which do business around the world than any other nation. Americans working here and internationally often manage and support those American-owned foreign operations. Foreign direct investment in US plants, inventory, and other assets totals well over $5 trillion, including $200 billion invested in 2023.


     Foreign direct investment in the US directly employs 6% of Americans. These foreign-owned plants and service industry companies also create other jobs at industry suppliers, trucking companies, and distributors such as car dealers around the US.  Plant workers pay in these plants drives local community job creation, including in retail stores, restaurants, schools, and hospitals, just as it does with American owned employers.


     These international trading relationships and specialized cross-border supply chains are key to American prosperity and provide direct employment for many of us. For example, Apple phones designed in the US, and Boeing airplanes made in the US, have sold well in China. American fruits, nuts, and other commodities like wheat, soybeans, and corn, grown by American farmers, are exported to Asia and elsewhere. 


     International cross-border investments facilitate highly efficient high volume automated plants and supply chains. Cross-border high volume production to serve all markets from a single plant or specialized company reduces duplication of investments, costs, and workforces. Lower volume production lots would otherwise have to be produced locally in many places. This would require multiple investments in duplicated lower volume plants, result in higher procurement costs for parts and materials at the lower volumes, use less automation and less productive workforces, and less efficient supply chains and logistics. All these duplicative plant investments and other added costs would have to be passed on to customers, priced into finished products like airplanes, cars, and appliances. 


      Anti-American sentiment related to tariffs and the resulting local job losses in other countries will also cost American jobs as our exports decline. That, and proposed punitive US tax law changes on foreign investment, will almost certainly substantially reduce foreign direct investment, costing jobs here. Other country retaliations against American goods, such as agricultural products, computers, and airplanes, will reduce our exports, costing US jobs. Sharp declines in corporate earnings as US consumer demand shrinks from price increases imposed by tariffs, and as other nations boycott products produced by American companies, will force layoffs among America's largest companies. 


    US policy choices to impose tariffs and punitive foreign company taxes will ultimately strengthen international competitors, who still have access to the other 96% of all global consumers who have 84% of global purchasing power (PPP). It will reduce American influence and access to markets which provide millions of American jobs driven by exports, such as aircraft, advanced medical equipment, pharmaceuticals, and biotechnology products. 


     The uncertainty which comes with abrupt tariff and tax policy flip-flops has already frozen some investment decisions in America among businesses and consumers. If these freezes lead to project cancellations, the policy changes will cost still more American jobs, including in construction, construction materials, trucking, skilled trades, engineering, and other occupations. A 67% collapse in US trade, as when US tariffs were doubled in 1930, would cost millions of American jobs. Even after the recent compromises with three of our largest trading partners, current overall US tariff levels are similar to the tariff levels which led to the 1930s economic collapse. 


RECENT REMINDERS OF REALITY

 

    The aggressive China tariff program which began in 2018 led to farm bankruptcies then. Together with tight labor markets, see https://banbrainhacks.org/right-sized-workforce this combination has led to slower private sector economic growth since. Today's ever more aggressive tariffs have already led to lower US consumer confidence, dropping sharply from November 2024 to April 2025, when it registered its lowest level since the Covid pandemic, recovering slightly in May 2025 https://www.conference-board.org/topics/consumer-confidence


    Just how realistic is the promised tradeoff of tariffs returning manufacturing jobs to America? Will $36.06 hourly US labor replace $6.88 hourly Chinese labor? It can, but prices will rise on those goods, meaning fewer purchases of everything else. The same thing happens when tariffs are imposed on imports and those jobs migrate elsewhere seeking a slightly lower tariff rate in another country. Prices rise so there is less to spend on everything else. This costs American jobs, whether you do it one way or the other. That's the lesson which has come with each and every time when tariffs have been  tried broadly. 


     Scroll down past Fentanyl Factors below for a realistic illustration of the current cost differential for work performed in America compared to China. Keep in mind, China is a relatively high cost source of imported products among the Asian countries where we source many everyday household products - phones, shoes, clothes, refrigerators, kitchen appliances, televisions, furniture, and so on.


     Continuing to permit tariff expansions, and the direct economic damage to American families, businesses, and jobs which will result, demonstrates the lack of political courage in Congress to do what is right for their constituents when their party power structure has adopted dogma to replace good economic sense based upon practical experience and sound advice. For example, the Senate recently engineered a 50-50 tie when it voted on tariffs. So the Vice President broke the tie, leaving the Senate with an imagined excuse for its failure to act against policies which are known to cause damage to the American economy. That’s how we got here. They are the reason we are here. 

 
                                             _______________________________________________

 
 

Fentanyl Factors Into A Decades Long Drugs Strategy Failure - As The Excuse For Tariffs It Will Propel Economic Failure

 

     The executive branch declared a fentanyl emergency early in 2025 as its reason for adding billions of dollars of tariffs to imported products. But it is America’s own decades old failed drug strategy which has led to a 750% increase in the death rate since Nixon declared the “War on Drugs” in 1971. The fentanyl epidemic itself.is decades old, as this class of drugs date from the 1960s, when synthetic opiods were broadly introduced to replace morphine and codeine, which come from opium poppies, which also give us heroin, itself a centuries old drug problem. The fentanyl problem first arose in America, not in Canada, Mexico, or across any ocean. Purdue Pharma, an American company formed in 1892, and responsible for much fentanyl abuse and many of the overdose deaths, was placed in bankruptcy in 2019.  https://www.dea.gov/sites/default/files/2020-06/Fentanyl-2020_0.pdf  


So, the fentanyl problem is not a new emergency, it’s an old failure which has never been fixed. Just like our health care system, see https://banbrainhacks.org/a-healthy-america%3F Current freezes and planned government cuts in health care funds will lead to reduced distribution of the Narcam antidote used to reverse fentanyl overdoses, so deaths will actually rise as these  “emergency” tactics are applied. That’s sort of like suspending ambulance services and closing hospital emergency rooms to combat accidents. 

  

     Tariffs have a similar economic impact on American farms, businesses, and American jobs to cutting emergency services to combat emergencies. Economists urged Hoover not to sign the Smoot-Hawley Act which raised tariffs to about the same level as is in force as of May 2025. The economic impacts will be similar today - reduced growth, higher government deficits, and lower employment. 


     The only good news - there will be far fewer bank failures and bankruptcies due to Federal Reserve Bank interventions and FDIC deposit insurance safeguards put in place in 1913 and 1933 respectively, after similar economic calamities led to the 1907 Panic and  the 1929 Wall Street Crash and Great Depression - so the damage will be more contained than in the 1930s.

Manufacturing Jobs Will Return From Asia To America?

Who Will Fill All These New $6.88 Hourly American Manufacturing Wage Jobs?

  Neither promises nor economics will realistically return these manufacturing jobs to America at any reasonable price point. The same products produced at our $35 hourly American manufacturing wage rates will not be priced remotely close to their current prices. But American consumers will spend 25% to 30% more than before, to purchase the identical products produced in the same place they already are or close by elsewhere in Asia. 


Tariffs are a federal government sales tax around four to five times higher than typical state sales tax rates. Sales taxes are listed on the bottom of your store receipt, not buried in the price. As for retailers eating the higher costs from tariffs - it's impossible to absorb 25% higher costs when your typical net profit margin is currently 2.5% to 5%. So much for the economics. 

  

And those promises of returning jobs....it would be best if we avoided retaliatory tariffs on US made products so we can start by keeping the jobs we already have. Then figure out how to make more innovative products the rest of the world wants to buy. Being globally competitive begins with the better, faster, and/or cheaper of capitalism driven by new ideas, products, and process innovations. After the intellectual property was stolen from Great Britain so they could be built in America, water-wheel driven industrial power looms replaced the export of cotton from America and powered America’s early industrial expansion. Then new railroads shipped kerosene from those new-fangled oil refineries to replace ever scarcer and more expensive whale oil in lamps. Morse code and telegraph operators were eventually replaced by phone operators, then by cell phone texts. Sears replaced many local general stores, then was itself replaced by Walmart and Amazon. Wooden airplanes are decidedly out of fashion these days, but we do still manage to sell the aluminum ones we make in America around the world. And carbon fiber airplanes are replacing some of those aluminum airframes with still lighter, more efficient aircraft. That’s what has driven the expansion of American jobs and our economy for centuries – a focus on innovation for tomorrow, not on trying to recapture disappearing opportunities from yesterday.


Shifting national policy away from protectionist tariffs in the direction of innovation actually does create more private sector jobs and investment in the US. Tariffs and protectionism have never accomplished that. 


The Patriots who attended to the tea chests at the December 1773 Boston Tea Party didn't like the King's tariffs and His restraint of their trade with other nations either.

______________________________________


Data sources:

Foreign direct investment:

https://www.bea.gov/data/intl-trade-investment/direct-investment-country-and-industry

 Hourly wages table : US 40 hour work week:   

https://www.bls.gov/charts/employment-situation/employment-and-average-hourly-earnings-by-industry-bubble.htm

 Hourly wages table : China, 44 hour work week:    

https://teamedupchina.com/average-salaries-by-industry-in-china/


Trade Facts

Source: 2023 US Bureau of Economic Analysis press release

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