I beg your pardon?

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So, Biden pardoned his son Hunter yesterday - and the reaction has been very mixed.

Some of the main criticisms I am seeing so far, and I’ll give my thoughts.

1. He previously said he would not pardon Hunter.
   • Sure, but the situation has drastically changed. The next president has explicitly talked about targeting people he considers “enemies.” Remember, this obsession with Hunter Biden has been purely political, driven by Trump and his allies. Hunter would not face the same scrutiny for his crimes if he were not a Biden.
2. It normalizes “breaking norms” - and will be used by the next administration as an excuse to break norms.
   • This criticism is ridiculous on its face, especially considering Trump’s first term and the rhetoric he has been using during his campaign.
   • Either way - I’m not convinced this move “breaks norms” to the extent many believe. It’s certainly not ideal, but it’s far from a wild or a severe situation, with all the context considered. As a reminder, Hunter’s convictions are unrelated to Joe Biden—they are tax and gun charges.
3. There are many people who deserve pardons just as much, if not more.
   • This is absolutely true. Biden should have announced this pardon alongside many pardons he ought to issue. There’s significant injustice he has the power to at least partially address.
   • My point here also addresses rule of law concerns: there should not be different rules for the President’s family. Again, Biden needs to correct other similar injustices as soon as possible before he leaves office.

Overall, I am not surprised Biden pardoned his son, despite him insisting he was not going to previously. It is also fine, and won’t encourage anything that wouldn’t already happen under the next administration. But, Biden has a lot more work to do to fix many injustices before he is gone.

Additionally, this outrage once again shows how high the bar is for Democrats but so abysmally low for MAGA. Democrats are expected to be perfect and the other side could literally do anything and it is shrugged off.

Tariffs Part 1: An Introduction

This is Part 1 of a multiple part series.

• Tariffs Part 1: An Introduction
• Tariffs Part 2: An Impossible Balance

There’s…. been a lot of talk around tariffs recently.

This is really a part one of a multi-part series. The goal of this part one post, today, is to give an overview of what a tariff is & what the pros and cons are.

For the most part, there is not much mentioned here about specific proposals or anything of the sort; but do check back soon because I will be going into the specifics in future posts.

This is meant to be a non-partisan and non-biased look at tariffs as a whole.

Additionally, since this is quite a dense post, I provided summaries in the sections that are longer. I recommend reading everything, especially the latter portions of the post - but the summaries are there if you want them.

The What

So, what exactly are tariffs?

A tariff is a tax imposed on imported or exported goods - for the purposes of this post, we will focus on import tariffs. As that is what is currently being talked about by politicians in the USA (although, unfortunately, the concrete policy proposals’ details have been lacking and inconsistent).

The Who

Who pays import tariffs?

Summary

The entity importing the foreign good pays the tariff; not the foreign country or entity in the foreign country.

This is one of the least understood aspects of tariffs in the current discourse.

The business or person importing the foreign good is the one who pays the tariff.

Let’s talk through an example:

Imagine a company (Company A) in the USA is currently importing shirts to sell in their stores from another country:

• The foreign country or the entity inside that country does not pay any tariff or tax.
• Company A (inside the USA) pays the tariff.
• Company A passes the cost of that tariff onto the consumer (you and me), raising the end price (inflation).

The Why

Summary 

The main reasons why governments implement import tariffs are to _try_ to: protect domestic industries, raise revenues, retaliate against other countries, and protect national security interests.

Countries typically intend one or more of the following effects, when imposing a tariff on imported goods:

• To try to protect an industry
  • For example, a country might impose a tariff on cars to attempt to make the domestic industry more competitive.
  • Similarly, a country might have a new industry that has not scaled up yet so they intend to protect it - so it can grow and compete.
• To raise revenue
  • Since the government collects the tariffs, they can be used to attempt to raise revenue for the government.
• To try to retaliate against another country
  • For example, Country A might impose a tariff that Country B believes is unfair or hurts one of their industries. In retaliation, Country B institutes a tariff that they believe hurts Country A.
• Improve or preserve national security
  • For example, a country might feel they need to produce things domestically in order to either prevent supply chain issues (e.g. computer chips) or that are used by the military (e.g. military arms)

The… What Next?

Are tariffs effective?

Summary

Tariffs are generally not effective as a long-term economic strategy. While they may provide temporary protection to specific domestic industries, the benefits are often outweighed by significant downsides, such as higher costs for consumers, inflation, and job losses in industries reliant on imported goods.

They are also an inefficient source of revenue, as reduced demand for imports over time diminishes their impact. Additionally, tariffs risk retaliation from other countries, which can escalate into trade wars and further harm domestic industries by restricting global market access.

Although they can sometimes be justified for national security purposes, tariffs often lead to broader inefficiencies, such as misallocation of labor, stifled innovation, and reduced competitiveness, creating far more economic problems than they solve.

It depends on the goal, so we will address each of the goals one by one.

• Protecting an industry via tariffs
  • While a specific industry might receive some temporary protection (that is, if the tariff even makes the domestic industry actually competitive on price) there are significant issues that almost always outweigh this (usually relatively small anyway) benefit (see the general downsides section a little bit further down).
  • In exceedingly rare circumstances—especially if employment is a major concern—imposing a tariff might be the least harmful option. However, many governments opt for subsidies instead, as they generally have fewer downsides. It is critically important to use tariffs as sparingly as possible and on the smallest range of goods necessary.
• As an attempt to raise revenue:
  • First, the revenue generated by tariffs is relatively small compared to income taxes and cannot replace any significant percentage of income tax revenue.
  • Over time, the amount raised from a given tariff tends to go down for a few main reasons:
    • For most goods, the increase in price will reduce the demand. This means less of that good is imported and therefore fewer tariffs are collected over time.
    • Even if the tariff does successfully shift demand to domestic goods (which, again, is certainly not a guarantee), there’s less demand for the import, and less of the tariff can be collected.
• Retaliation
  • If a country imposes tariffs to pressure another, the affected country might retaliate with its own tariffs.
    • This can escalate into a cycle of retaliation, leading to a full-blown trade war.
  • Imposing a tariff on goods that another country exports often invokes retaliatory tariffs that hurt the original country’s industries.
    • This is yet another way that tariffs can make the problem you are trying to solve, worse, instead of better.
  • This is a massive risk for a country, especially the more goods a country places tariffs on.
• National Security
  • When it comes to national security, it is widely recognized as both necessary and prudent for countries to prioritize domestic production of critical goods. Ensuring local manufacturing capacity can help prevent supply chain vulnerabilities and enhance readiness during times of conflict or crisis.

General downsides

• Regardless of the intent of any given tariff; tariffs cause higher costs on the imported good (inflation).
  • This cost does not only exist for the good itself, if it is an intermediate good (a good that is used in the production of something else). For example, steel. When the price of steel goes up, the price of products that use steel go up. This increases the risk of job losses and inflation of the goods in these downstream industries (and in the economy generally). This is a large example of tariffs causing more problems than they solve.
  • By the way, about half of everything that we import are intermediary goods - which makes any proposal that adds tariffs to many goods even more risky.

Misallocation of Labor

Stepping back, it is important to understand why any given good is imported; another country can produce it at a lower cost.

Domestically, we generally produce what we are most efficient at or where the free market has efficiently allocated resources.

Given this, tariffs can shift workers into less efficient industries. This is crucial because it leads to several issues, including:

• Lower overall productivity.
• The goods we produce can become marginally less competitive on the global markets, as their prices increase.
• Reallocation of capital (money, machinery, etc.) into less efficient industries and away from more productive ones. This stifles innovation, as resources are directed toward maintaining outdated or inefficient production. (For example, would you really want to redirect any resources at all from semiconductor manufacturing and toward the manufacturing of soap?)

Who benefits and who is hurt by tariffs?

The country imposing tariffs disproportionately harms its own working class by raising the cost of goods and increasing the risk of job losses in industries dependent on imports. It also negatively impacts companies and their workers reliant on imported materials by driving up production costs and reducing competitiveness.

Meanwhile, foreign producers might redirect goods to other markets, potentially benefiting consumers abroad through increased supply and lower prices. However, this effect is indirect and heavily influenced by global market dynamics.

Historic examples:

I will not go into all the details on each of these in this post; however, these are a few examples of tariffs causing significant economic downturns in history, each disproportionately harming the working class:

• Smoot-Hawley Tariff Act (1930, USA)
• English Corn Laws (19th Century, UK)
• British Navigation Acts (1651-1849)
• Argentine Protectionism (20th Century)

Conclusion

Tariffs, while often proposed to protect domestic industries or raise revenue, overwhelmingly cause more harm than good. They disproportionately hurt consumers in the imposing country by increasing costs and fueling inflation, particularly for goods that are critical to supply chains.

Businesses relying on imports face higher production costs, making them less competitive, which can lead to job losses and reduced innovation. Retaliation from other countries can escalate into trade wars, compounding the damage and leaving industries worse off than before.

While there are rare cases, such as national security concerns, where tariffs can be justified, the general downsides — misallocation of labor, inefficiency, higher costs, retaliation, etc — almost always outweigh the benefits. Tariffs often solve one problem while creating many more.

More resources on Tariffs:

Separating Tariff Facts from Tariff Fictions (Cato)

The Basics of Tariffs and Trade Barriers (Investopedia)

Next up in the Tariffs series:

Tariffs Part 2: More Consequences