Everyone’s screaming again.
“Trump’s going to kill the economy!”
“It’s the Great Depression 2.0!”
“Your avocados will cost $39!”
Ignore them.
I’ve read the actual plan. I’ve looked at the data.
Are these fears grounded in reality—or is there a smarter way to understand what’s really going on?
Let’s break it down.
Price Talks. Behavior Follows.
First, the new tariffs.
There are two flavors:
- Reciprocal Tariffs
- Blanket Tariffs
And yes, Trump is doing both.
Before you freak out, let me give you a rule.
It’s a rule that governs everything from taxes to trade to raising your teenager: Incentivize what you want. Disincentivize what you don’t.
If you want fewer people to smoke, don’t write them letters from the Surgeon General. Just raise the price of cigarettes.
Boom—smoking goes down. Nobody listens to advice. Everyone listens to prices.
Same principle applies here.
And here’s what you need to keep in mind.
The Customer Is Always Right
America’s the world’s biggest customer.
We spend $3.17 trillion a year buying stuff from other countries. That’s more than the GDP of most of them.
Now imagine you’re the biggest spender in the world—and your suppliers start taxing you just to buy their stuff.
What did we do before? Smile. Nod. Take it.
Trump? He’s doing something different: he’s saying “no.”
That’s the reciprocal tariff.
If a country slaps a tariff on us, we slap one back—but only half as much. That’s it. No vengeance. Just math.
So the media’s outrage machine? It’s pretending this is a war. It’s not. It’s leverage.
Business 101: don’t piss off your biggest customer.
These tariffs are a message: “Play fair or lose access.”
Guess what happened last time we did this?
Remember the last trade war? No? That’s because it didn’t destroy the economy.
In fact:
- GDP went up
- Inflation stayed low (1.5%–1.9%)
- The stock market soared (up over 40% between 2018–2020)
Oh, and...
- China caved: Agreed to buy $200 billion of U.S. goods. Promised to crack down on IP theft.
- Mexico folded: Dropped tariffs, raised wages, moved part of their auto supply chain away from China.
Result? 30,000 new jobs in the U.S. auto industry. Win-win.
That’s not economic suicide. That’s called negotiating with leverage.
What About the Blanket Tariff?
This is the controversial one.
Trump wants a 10% blanket tariff on all imports. The media says it’ll “destroy the world economy.”
They love to bring up Smoot-Hawley—the 1930s tariff that supposedly caused the Great Depression.
Except...
Smoot-Hawley was a 50% tariff. Trump’s is 10%. And more importantly, Smoot-Hawley was about shutting out the world. Trump’s version is about:
- Raising money
- Gaining leverage
- Shifting the supply chain home
$3.3 trillion in imports × 10% = $300 billion in new revenue. That’s just math.
Now imagine this: take that $300 billion, and cut personal income taxes with it.
Boom—stimulus without printing money. Imagine that.
Will it cause inflation?
Short answer: no.
Look at the data.
- In 2018–2020, tariffs went up. Inflation? 1.5%–1.9%.
- In 2021, the U.S. printed 40% of all dollars in existence.
- In 2022, inflation hit 9%.
Tariffs didn’t cause inflation. Money printing did.
The Real Takeaway
Let’s zoom out.
This isn’t about isolationism. It’s not about xenophobia. It’s about leverage.
We’re the biggest customer in the world. We get to say, “These are our terms.”
The tariffs will:
- Increase US govt revenues + GDP
- Be used to lower taxes
- Encourage fair trade
- Not cause inflation
- Force countries to negotiate (e.g. lower tariffs, help border, etc)
- Onshore American industry
Everyone’s talking about whether Trump’s tariffs will “crash the economy.” But here’s a better question:
Why should American workers be the only ones playing by the rules?
The media’s addicted to drama.
But sometimes the most controversial move... is just common sense.
So don’t listen to the panic.
Look at the incentives.
Look at the money.
Then ask: who really has the leverage?
Spoiler: America.
James Altucher
