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Dear Jack,


A month ago, President Trump signed Executive Order 14257, establishing a baseline 10 percent tariff on nearly all imports. Additionally, the White House announced plans for reciprocal tariffs on 57 countries.

A week later, on April 9, the administration then paused these reciprocal tariffs for 90 days.

We don’t know if the reciprocal tariffs will take effect after July 9. What is certain, however, is the current tariff landscape: a 10% baseline tariff applies to nearly all imports, a 25% tariff targets car imports and most goods from Canada and Mexico, and a staggering 125% tariff is in place on most Chinese imports.

Some of my conservative friends like to imply that tariffs are part of a cunning plan to eliminate the federal income tax. They point out that until 1913 America did not have a federal income tax and the federal government was largely funded by tariffs.

Now I’m all in favor of eliminating income taxes, and I spent much of the last legislative session in Mississippi advocating for the repeal of our state income tax. But the numbers don’t add up for replacing the federal income tax with tariffs.

To generate the $2.6 trillion annually that the income tax provides, tariffs would need to average 127% on all imports (even accounting for an estimated 20% drop in import volume). Do that and only rich folk will be able to shop at Walmart.

Others have told me that we need these tariffs to protect American industry against offshoring and the loss of American jobs overseas. Really?

Here’s a graph showing US industrial production over the past few decades. US output today is close to three times higher than it was when LBJ was President. US factories make almost twice as much stuff as they did when Ronald Reagan left the White House.
Industrial output went up as tariffs came down ….
The growth in US industrial output happened while tariffs declined from 6-8 percent in 1969 to about 2 percent by 2010 (with a slight increase by 2020 due to higher tariffs on China).

It is true that the number of manufacturing jobs in America has fallen, as manufacturing output has risen. But that is because fewer workers in industry are able to make more. The same thing happened in farming a century before.

The loss of farming or manufacturing jobs has not made Americans poorer. It means Americans went and found work in better paying jobs.

That’s why the total number of jobs in America has risen despite the fact that the proportion of Americans working in manufacturing has fallen. There were 70 million jobs in 1969 and there are 160 million jobs today. So much for free trade taking away our jobs.
There are more jobs in America than ever ...
“But what about China?” some of my conservative friends then say. “See what happened when China was allowed to join the World Trade Organization, reducing the tariffs on imports to America?”
Has China impacted US industrial output?
Tariffs on Chinese imports to the U.S. actually rose between 2010 and 2020. If anything, historical data suggests that periods with lower tariffs coincided with the strongest growth in U.S. industrial output.

If China is your primary concern, why impose tariffs on China’s emerging rivals? China faces significant challenges with debt and demographics. If the goal is to counter its industrial dominance, why burden countries like Vietnam, South Korea, and India—potential competitors to China—with crippling tariffs?

Americans are rightly worried about China’s industrial might. It’s alarming that China’s Jiangnan Shipyard builds more ships in a single year than all U.S. shipyards combined. It’s concerning that China produces more drones in a day than the U.S. does in a year.

However, tariffs aren’t the solution. Instead, adopting Senator Roger Wicker’s “Peace Through Strength” proposal would better address these challenges by strengthening America’s defense industrial base.

Tariffs won’t eliminate the federal income tax, reverse a supposed industrial decline, or solve the question of how to deal with an aggressive China. What they will do is make you poorer and America less competitive.

Consider your cell phone. Apple has already stated that tariffs will increase its costs by nearly $1 billion this quarter alone. That extra cost? It’s coming out of your pocket when you buy your next iPhone.

To dodge new tariffs on Chinese goods, Apple is shifting much of its manufacturing from China to India. Don’t expect new iPhone factories in Mississippi or Michigan—think Madras instead.

The result? Tariffs will make iPhones pricier without bringing Apple’s assembly lines to America. Ironically, the high-value work—design, software, and chips—is already done in the U.S. Tariffs will simply move low-value assembly from one Asian nation to another, leaving you to foot the bill.

I fear that tariffs won’t just be seen as having triggered an economic downturn. By doing so they will overshadow all those other conservative wins. If GDP is falling, who’s going to be focused on DEI?

During my recent trip to Washington, several administration insiders suggested that the current tariff strategy is part of a broader plan. They claim tariffs are being used as leverage to dismantle restrictions on U.S. exports to other countries.

Whether or not this was the original intent, I hope it becomes the retrospective rationale. For instance, if a close ally like the UK, which runs a trade deficit with the U.S., agreed to eliminate all its tariffs and allow any product sold in America to be sold in the UK, the U.S. could respond in kind.

Such a trade agreement with the UK could set a precedent, encouraging other allies—Japan, India, Australia—to follow suit. The result might be the complete removal of trade barriers between the U.S. and its allies. That’s the optimistic scenario. The alternative is higher costs for everyone, leaving us all poorer.

Let me close with my favorite graph of all time. It shows how Mississippi’s economic output rose more in the past five years that it did over the previous fifteen. What’s the single biggest risk to this growth story? Tariffs.
Mississippi is on the up. Don’t let tariffs ruin it …..
Have an awesome weekend!
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Warm regards,

Douglas Carswell
President & CEO

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