President Trump had campaigned on a promise to impose new global tariffs of sufficient scope and scale to replace the individual income tax, while also reshoring industry and employment. Treasury Secretary Bessent reportedly advocated for gradual and measured tariff increases. For policy observers skeptical of the merits of tariffs as an economic policy tool, the measured approach articulated by Bessent was welcome news. Trade policy developments since Mr. Bessent’s confirmation hearings have conformed to neither approach.
Filling the intellectual void has been Oren Cass, founder of American Compass, a nonprofit that rationalizes populist economic policies. Mr. Cass has a history of attempting to fit facts to narratives, no matter how disconnected, so the scattershot approach to tariff policy observed over the last week was a perfect opportunity for him to defend tariff policies, no matter their substance.
Last week, Mr. Cass highlighted a series of past writings on trade and tariff policy. These pieces indulged in the selective, bad-faith argumentation that he often deploys on matters of trade policy. To wit, the very sentence of the very first piece he cited was wrong. He observed that, “the standard economic model treats free trade as obviously positive, creating prosperity for all participants.”
Big if true.
Alas, it’s desperately wrong. It is on this flimsy intellectual foundation that Mr. Cass builds his economic rationale for tariffs. Unfortunately, the economic effects of tariffs are well understood and well documented. To be sure, there are relative winners and relative winners in global trade. But freer trade in general is net positive for trading partners. Raising trade barriers works somewhat in reverse – there are relative winners and relative losers – and in general are a net negative for trading partners. The upshot of the theory and evidence is that societies are better off with lower trade barriers than with higher.
Nevertheless, has been somewhat consistent in his elision of the theory and evidence on tariffs to articulate an economic rationale for tariffs.
As President Trump’s promise to raise tariffs on Mexico, Canada, and China – our largest three trading partners, respectively – evolved into threats, Mr. Cass articulated a somewhat different rationale: statecraft.
This abrupt change in perspective has not gone unnoticed. Phil Magness, a senior research fellow at the American Institute for Economic Research, highlighted this inconsistency, noting that Cass’s arguments for tariffs had evolved in seemingly real time. When all was said and done, of course, the tariff episode was deemed a perfect success. This outcome for Cass was never in doubt – but the mental gymnastics needed to rationalize tariffs, or the mere specter of tariffs, for any reason is a sight to behold.