Bonus: How Trump's Tariffs Could Change Everything
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Well, my friends, the trade war has begun, and dear God, nothing has slowed down ever since. On February 1st, 2025, President Donald Trump would end weeks of speculation by announcing 25% tariffs on all imports from Mexico, 25% tariffs on all products from Canada, that being everything besides energy resources, which would be subject to a 10% tariff,

and 10% tariffs on all imports from China. As for why any of this was done here in the first place, it was not just a matter of economic issues. No, in addition to this, there are alleged U.S. national security risks associated with an influx of illegal aliens as well as illicit opioids along the border, and this is something that needs to be addressed.

Which from the get-go, for those of you who have not been paying attention in here, it's going to sound pretty wild, but I'm going to have to explain. After less than a month in the White House, Donald Trump has finally brought forth his America First agenda. He has brought this to life with quite a bit of force. He has issued threats, he has issued warnings, he has given offers, he has made deals to large swaths of the globe, and all of this has everyone kind of on the back foot wondering, what the hell is going to happen next?

The levying of tariffs on Canada and China, the threat of even more on the EU and the UK and the BRICS nations, the freeze of all USAID, and also pushing to buy or take over Greenland and the Panama Canal have reportedly impacted around 161 countries around the world, all within the first month of taking office, mind you, which is equivalent to 83% of the entire world being affected. The reality is, when America moves, the globe is affected.

And Donald Trump likes to move a lot. Even without those that have been immediately affected, a number of the remaining countries have expressed concern that the imposition of tariffs elsewhere could also have a knockback effect on them and their own trade as well. Even if Trump does not impose them directly, it is something that could affect the global market as the United States is the biggest economy in the world. As just one example, while the Caribbean nations have not been directly threatened by Mr. Trump...

Antigua and Barbuda's Prime Minister, Gaston Brown, would describe the U.S. leader's tariff plan as, quote, the largest threat to the region late last month. And he is not alone in saying that.

But among anything else that we could be talking about, Mr. Trump's freeze on all USAID has had by far the most significant impact on countries across the globe and has been most certainly the most polarizing. That is definitely something that we're going to have to address here in a later video because the amount of misinformation that is being presented about USAID is kind of overwhelming, both the good and the bad aspects.

Regardless of the matter, it is still huge. According to the latest available data from this last year, the freeze would cut aid from 141 nations, the worst of which that was affected was Ukraine, which received more than $6 billion from USAID in 2024, which...

That being said, it was still down from the much more significant $16 billion that had been received in 2023. But hey, that's not the only thing that has been done. Regarding the BRICS nations, which include Russia, Brazil, China, India, and South Africa, he has threatened to impose tariffs on them if they do not accept his demand of...

Committing to not create a new currency, something that they have touted that they would do for years. And that's just their overall organization. The individuals within it have also been addressed.

As just an example, he already labeled India a very big abuser of trade while on the campaign trail and vowed to use tariffs in order to correct trade imbalances. Many different raw base goods are imported and bought directly from India. Regarding Russia, Trump would say just two days after his inauguration that he would have, quote, no choice but to put high levels of taxes...

tariffs, and sanctions on anything being sold by Russia to the United States and other participating countries if Vladimir Putin did not end his war in Ukraine. At the end of just this last month, when asked about his comments regarding the U.S. takeover of Greenland, he said, I think we're going to have it. And when pressed on the Panama Canal, he would say that the U.S. would use, quote, something very powerful in order to take it.

Which on that note, that is not the focus of today's video, but that is easily going to have to be another video in and of itself that I'm going to be addressing here in the next like week or so. He is quoted as saying, describing the issue about Panama and the Panama Canal and China that quote, China is running the Panama Canal that was not given to China, that was given to Panama foolishly, but they violated the agreement and we're going to take it back or something very powerful is going to happen. This is what he told reporters.

Besides just the actual threats, Trump has simultaneously also taken his first military action of his presidency when he would order airstrikes on ISIS positions in Somalia. And now the latest news is that Trump is imposing 25% tariffs on steel and aluminum imports from all countries. Oh, dear God, I feel like not even a broken record. What am I trying to say here at this point? I just I can't I can't stop talking. The world just does not want to slow down.

This is going to be the end of me, I swear. All right then, but anyway, moving on. Tariffs, tariffs, tariffs, tariffs. Oh dear God, where do I even begin? This, my friends, is going to be a bit of a strange video because we are going to need to answer several questions. First, what are tariffs? Second, how they've been used historically. Third, why is Trump using tariffs? And fourth, what are the effects actually going to be? Buckle up, my friends. Let's dive into this.

First off, what is a tariff and how exactly does it differ from a tax? This is something that many people don't seem to really understand on the internet, but a tariff is quite simply a levy or duty that a government imposes on imported goods. When a product goes and crosses a country's border, the government charges this fee before the product can enter the domestic economy.

Essentially, to use an example, let's say that you have an imported car that costs $40,000. A 25% tariff on that would raise the price from $40,000 to $50,000 while not increasing the price of a domestically produced car, which may have been more expensive from the get-go. Let's say $47,000.

In the event that they don't pay for the now cheaper American car and they still get the import, that $10,000 difference from $40,000 to $50,000, that does not go to the car dealership. That instead goes directly to the government as a form of tax.

When I describe this, a tariff is different from other taxes like sales, income, or property taxes. Tariffs directly affect the price of imported goods, which can lead to higher consumer prices and can alter trade dynamics and international relations. They are also used for indirectly protecting domestic industries by making foreign products less competitive.

So, in addition to being a source of revenue for the government, they can protect domestic industries, counteract unfair trade practices, and act as a kind of leveraging tool in negotiations. This is something that, in case you didn't catch that last part, is something that is happening right now. You are seeing that happen right now with Trump, but we are going to address that later.

Because what it is that we have to do now is explain how tariffs have worked historically and why America has largely pursued free trade without tariffs until now. Of course, when I go and explain this, I'm not going to be explaining the entire history of tariffs because quite frankly, that would be

stupidly insane. Tariffs have been used in one form or another for thousands of years across countless different cultures, and explaining all of that would be pretty much pointless. So instead, we're going to explain it for the United States and try to keep this a little bit more focused so I don't go off on too much of a tangent.

Because that happens a lot. Yes, my friends, the use of tariffs goes back all the way to the founding of the United States, where it was something that was very hotly debated by the founding fathers. Many in the new nation saw free trade as an important principle, especially in contrast to Britain's control of colonial trading practices and mercantilism, which was a deep sore spot for many of them.

However, tariffs also provided an important source of revenue for the state, as at the time, there was no income tax, and it was something that would support early American industry. The framers of the U.S. Constitution would thus cement this in Article I, Section 8 of the Constitution, which gives Congress the, quote, power to lay and collect taxes, duties, imposts, and excises to pay the debts and provide for the general defense and general welfare of the United States, end quote.

This is such a big deal that the first major law that was ever passed by the first Congress in 1789 specifically dealt with tariffs, and it stated that, quote, it is necessary for the support of government for the discharge of the debts of the United States and the encouragement of the protection of manufacturers that duties be laid on goods, wares, and merchandise imported.

this is also something that just so happened to lead to a very big disagreement between alexander hamilton who saw tariffs as a good revenue source that would boost domestic industry and james madison who believed the tariffs would only lead to trade conflicts in kine with great britain and other nations

Which is a debate that we still have here today. Anyway, fast forward a little bit of time, and in the aftermath of the War of 1812, tariff legislation was used to further encourage the nation's domestic industrial growth. This is kind of the norm for the time and what was just done. In 1828, Congress passed a bill raising tariffs to as much as 50%, the steepest increase in the country's history.

Now, reactions to the hikes would deepen growing tensions between the industrial north, where many people favored higher tariffs in order to be able to protect their homegrown manufacturers and developing industry, while the more agricultural south, which specifically relied on exports to Britain and other countries,

hated this. This is only one of the things that would lead to tensions developing all across the United States in the lead up to the Civil War. In addition to that, tariffs had quickly become the main source of the federal government's revenue until the war actually broke out. And mind you, when I talk about this, we are talking about

Tariffs making up anywhere from half to 90% of all revenue. That is, of course, until Treasury notes and a wartime income tax would go and supplement the federal government's income during that point. This would be very short-lasting, however, as the tariffs would resume their role as the chief revenue source

after the Civil War. Fast forward a little bit of time, and in 1894 then, Congress would go and pass the Wilson-Gorman Tariff Act, something which lowered tariff rates and actually established a permanent federal income tax. I know this may come as a shock to a number of you who may be like, oh wait, hold on, an income tax, that didn't come about until World War I, right?

Well, yeah, the Supreme Court ended up striking down the federal income tax imposed by Congress as being unconstitutional. After 1896, tariffs were raised from the Dingley Act to record levels of around 52% in its first year of operation. And over the course of the lifetime of that tariff, the rate would average around 47%. And again, that was one of the primary drivers of revenue for the federal government.

Of course, that era was going to end in 1913 with the ratification of the 16th Amendment to the Constitution, something which read, and I quote, Congress shall have power to lay and collect taxes on incomes from whatever source derived without apportionment among the several states and without regard to any census or enumeration. End quote.

With that, my friends, we had an actual proper income tax, and the establishment of a federal income tax would then start the process of diminishing the overall need for tariffs as the primary federal government revenue source. Income tax revenue would very easily surpass customs income after World War I and through the 1920s.

But tariffs also remained on the books at fairly high levels as a kind of tool in order to be able to protect American businesses, including farming. And that right there in turn brings us to the thing that really turned off most people away from tariffs back in the day and serves as a kind of reminder of what can happen if things are taken too far. The Smoot-Hawley Tariff Act of 1930.

I know it is that we've been going into quite a bit of government history at this point, but this is very important to understand specifically why tariffs have such a bad taste in so many people's mouths.

And this one was pretty bad. In the wake of the stock market crash of 1929, Congress would pass this act, which raised the country's already high average tariff rate by some 20%. In the signing of the bill into law in June of 1930, President Hoover would disregard the advice of more than a thousand economists who pleaded with him to please veto the bill, to not go and pass it.

But he did. In response, various foreign countries would soon enact their own retaliatory tariffs, and between 1929 and 1932, U.S. imports from and exports to Europe would fall by some two-thirds, with overall global trade declining in a similar fashion.

Trade during this time was absolutely killed. And although the global economic problems that the entire world were facing didn't start with the Smoot-Hawley Act, it would be completely unfair to just blame them, of course, many economic historians do agree that the tariff bill significantly worsened the Great Depression. At the time, people hadn't seen really anything like this before. People thought that, oh, this is something that would help the economy because if you keep out imports, then that means that people were going to buy domestic goods. But what

But what they really forgot to consider with such severe repercussions is that by keeping out imports, it keeps money away from the people who would actually go and buy the goods of your own country, which ends up actually hurting your exports as well. Then when you go and compound the fact that the countries start raising their own tariffs against the United States, too, well, it puts the entirety of trade on a kind of downward spiral.

So yeah, Congress couldn't really do anything, and in response, they started just delegating more flexibility to the president to implement tariff policies, which is something that is still in effect to this day, and why President Trump began to be able to do what it is that he's doing. In 1934, Congress would pass the Reciprocal Trade Agreements Act, which gave President Franklin Roosevelt the ability to change tariff rates by 50% and negotiate bilateral trade agreements without additional approval from Congress.

After World War II, essentially, the idea was, okay, well, we're going to try and get the world economy back on its feet, and one way that we're going to do that is by stimulating world trade as much as we can. So, the basic idea then is that, okay, we have America, the world's biggest economy, we are now willing to cut our tariffs if other countries are willing to sign up and reduce their tariffs as well, which was quite a strong negotiation tactic.

This principle is something that would continue to drive U.S. trade policy in the decades to come, leading to agreements such as the General Agreement on Tariffs and Trade, the World Trade Organization, the North American Free Trade Agreement, which were all negotiated by U.S. presidents and not Congress. So for those of you who are out there who are saying, oh, how is Trump able to do this? Isn't that Congress that's supposed to do it? No, that's, it's Trump. It's the president. That is the person that is supposed to be handling this.

Tariffs have thus been a tool for negotiations for almost a century at this point, which in turn brings us to Trump and his own art of the deal, if you will. So, my friends, here we are, the third point. Why is Trump bringing back tariffs?

Well, Trump has always been kind of a fan of tariffs, and his current view on them is something that arose back in the 1980s, when he would say that Japan and other nations were taking advantage of the United States. This has actually been one of the most consistent points put forth by Trump over the years. He has always been saying this, that America has largely footed the bill for global defense and free trade, while in turn being taken advantage of through other countries' either unfair trade practices or allies neglecting their defense spending.

Yeah.

Though that last part is something that we're definitely going to need to do a video on here later because NATO is going to be a whole thing that we're going to have to deal with. During the 2016 presidential campaign that he would win to become the 45th president, Trump would repeatedly favor policy proposals that renegotiated trade agreements for the United States. He frequently would go and criticize the North American Free Trade Agreement, calling it, quote, the worst trade deal the U.S. has ever signed, end quote. Which my wife is not demanding that I do the accent.

This has been the worst trade deal in the history of trade deals.

She's very pleased with herself now at this point. He also called the Trans-Pacific Partnership the death blow for American manufacturing and said that it would, quote, put the interests of foreign countries above our own. And to that end, I'm going to need to briefly have to mention what happened with Canada and Mexico because that is pretty much all that anyone has been able to talk about for the last week or so. See, in his first presidency, Trump would set his sights on NAFTA, from which he would threaten to remove the United States if the agreement was not renegotiated to his liking.

At the center of his approach was a promise that he was going to bring back manufacturing jobs to the United States. And so representatives of Canada, Mexico, and the United States began to renegotiate the agreement in August of 2017. However, months of negotiations didn't really do anything. They didn't really go anywhere. And tensions would mount between Canada and the United States after Trump, in April of 2018, would announce the imposition of import tariffs on Canadian steel and aluminum.

which is an action that threatened to start a whole new trade war and would prompt the Canadian Prime Minister, Justin Trudeau, to condemn it.

However, this didn't really last very long, necessarily. At the end of August of 2018, Mexico and the United States would announce they had come to terms on a new trade agreement that preserved the majority of NAFTA, but did introduce a number of significant changes. Under the pressure of being the odd country out, Canada, in the last hours of September 30th, would also end up agreeing to join the new accord. There wasn't really much else that they could do, which was branded the United States-Mexico-Canada Agreement, the USMCA.

The pact was signed by Trump, Trudeau, and the Mexican president, Enrique Peña Nieto, on November 30th, 2018. Most of the agreement, which required approval from the country's legislatures, would then go into effect on July 1st, 2020. This was a pretty big deal for the time, and some of the most prominent terms of the new agreement related to the automobile manufacturing industry. Under the USMCA, in order for a car or truck to be exempt from tariffs,

75% of its components would have to be manufactured in North America. Under the previous agreement, NAFTA, the corresponding requirement had only been 62.5%.

Also, the agreement would require that at least 30% of work on tariff-exempt vehicles must have been done by workers that were earning at least $16 per hour, which, mind you, when I go and say that, that is significantly more than what most Mexican laborers would receive, which is one of the problems that was undercutting American workers. You had cheaper Mexican labor, and this is something that was negatively impacting workers within the United States.

Canada would also reluctantly agree to make concessions to open access to its markets for dairy products from the United States, though it would manage to keep some exceptions. All in all, it wasn't necessarily something that was massive, but it was a better deal for the United States that allowed it to flex its muscle.

Of course, even with the issues being fixed, if you will, trade would once again come up for the 2024 presidential election. In November of 2024, posting on Truth Social, President-elect Trump would pledge to impose a 25% tariff on all products that were imported to the United States from Canada and Mexico, which is something that would remain in effect until the countries would take steps to prevent illegal immigrants and drugs,

especially fentanyl, from entering the country. In response to this, Canada would vow swift retaliation to the, quote, unjustified tariffs and would order retaliatory tariffs on goods from the United States. Trump would, of course, defend his tariffs, accusing Canada of being, quote, very abusive of the United States.

The trade war would spark retaliation from both Canada and Mexico, with both countries announcing that they would take countermeasures to hit back at the American economy. However, within days, Trump would manage to agree to delay tariffs for 30 days after Mexico and Canada would agree to drastically step up border security. In a message that was posted to Truth Social that evening, Trump would lay out the terms of the deal with Trudeau, saying, and I quote,

Canada has agreed to ensure that we have a secure northern border and to finally end the deadly scourge of drugs like fentanyl that have been pouring into our country, killing hundreds of thousands of Americans while destroying their families and communities all across the country. End quote. The statement from Canada would in turn say that they would be implementing their $1.3 billion border plan and as per Prime Minister Trudeau will be, quote, reinforcing the border with

new choppers, technology, and personnel, enhanced coordination with our American partners, and increased resources to stop the flow of fentanyl. Nearly 10,000 frontline personnel are and will be working on protecting the border. In addition, Canada is making new commitments to appoint a fentanyl czar. We will list cartels as terrorists, ensure 24-7 eyes on the border, launch a Canada-US strike force to combat organized crime,

When talking about this, Trump had cited what he described as the Canadian government's failure to effectively stem the tide of illicit drugs across its border with the U.S. in his executive order implementing trade restrictions.

but that it was specifically Trudeau's border plan that prompted him to issue a new order, pausing the tariff for at least a month while it is that things get determined. Now, when I talk about this, my friends, I know that a number of you are going to be raging here in the comments section right now because you're going to be saying, hey, hold on, Stack, wait a minute. Canada was already going to be doing this.

Well, yes, you right now in the comments section and many others online were very quick to point out that Canada had already announced the implementation of a $1.3 billion border enforcement plan before Trump enacted the tariffs or even returned to office. As Independent Institute senior fellow and historian Phil Magnus would tweet, quote, So Trump's big negotiating win is to get Canada to do what it already announced it was going to do back in December, end quote.

And yeah, for people that are talking about this online, that is something that definitely appears to be true. However, there's a couple things that need to be stated. These claims are mostly true. The Canadian government in December did announce the implementation of a new $1.3 billion plan aiming at detecting and disrupting the fentanyl trade. And that was before any kind of discussion with Trump would take place after his implementation of tariffs. But two things.

One, the tariffs had been announced in November, whereas the border deal was not something that was actually announced until December. In the meantime, the actual deal was something that was not the exact same as it was announced in December. The details that were discussed at that time were not entirely recycled from the previously announced agenda.

The plan, though it did previously exist, was expanded upon with new measures, such as the appointment of a fentanyl czar who would engage with U.S. counterparts and enhance operational collaboration and efficiency in combating fentanyl in order to enhance law enforcement tools

to combat organized crime in Canada. In addition to that, there would be the listing of organized crime cartels having an impact in Canada as terrorist entities under the criminal code. Also, Canada would launch the Canada-U.S. Joint Strike Force to combat organized crime, fentanyl, and money laundering.

The Prime Minister would also sign a new intelligence directive on organized crime in Fentanyl that would be supported by Canada's investment of $200 million in new capacity to allow Public Safety Canada and the communication security establishment to gather intelligence on transnational organized crime and share with American partners and law enforcement across the continent.

And finally, ensuring 24/7 eyes on the border through round-the-clock surveillance and by mobilizing law enforcement and civilian forces with new and modernized equipment.

Everything that I have described here, all these measures, and this is something that is coming directly from the Canadian government, these measures contribute to and expand upon Canada's border plan that they had announced in December, which through its $1.3 billion investment would increase resources dedicated to border security. That includes the procurement of Black Hawk helicopters, drones, mobile surveillance towers, as well as the addition of personnel and new canine teams.

When you go and combine this with the agreement with Mexico to send its National Guard north to guard the border, and you do, unlike what many people are saying online, actually have a win for Trump. Now, it's not as big as what has been implied, necessarily, to be sure, but the framing by media sources to say that this whole thing was inconsequential because, oh, Canada was going to do it anyway, that's false. That is not true. That is a misrepresentation of what happened.

If anything, it was arguably one of the biggest wins you could imagine as both sides got to look smug and claim victory. But that all being said, the biggest target by far for Trump has been China, which has been one of the biggest killers of American manufacturing. Now, naturally, the numbers are going to vary depending upon where it is that you get your information from, but some studies will go and show that trade with China cost Americans around 1 million manufacturing workers between 1991 and 2007.

Competition from Chinese imports using cheap labor would lead to massive manufacturing job losses and declining wages, as higher-paid American factories simply could not compete. Now, one argument for this type of thing is that the loss of one type of work allows for a country or entity to specialize in a more lucrative field that makes more money, which, yes, this is true. After all, why make t-shirts when you can make advanced pharmaceuticals, which, by

make a ton more money. But some studies have found that offsetting job gains in other industries never really materialized after the loss of manufacturing jobs to China. Closed companies no longer order goods and services from local non-manufacturing firms, and former industrial workers may be unemployed for years or even permanently as they struggle to transition to some kind of other job.

Increased imports are something that reduce wages in the non-manufacturing sector due to lower demand for non-manufacturing goods and increased labor supply from workers who have already lost their manufacturing jobs and are now looking for their own work. Some studies would go and estimate that the competition from Chinese imports would cost the U.S. as much as 2.4 million jobs in total between 1999 and 2011. That is a massive cut.

When you go and combine this job loss with a flood of immigration to the United States over the decades, and you have a perfect recipe for driving down wages of workers everywhere. Which, on that note, is something that has been a very hot topic for many years when tied to things like immigration. The largest beneficiary in the scenario was the multinational corporations that could move their manufacturing to cheap locations and then sell at a premium to the United States, drastically increasing their profits.

When I go and talk about this, my friends, this is something that becomes all the more frustrating for Trump because of the massive trade imbalance with China and its unfair practices. The sheer amount of which, when talking about their business practices, would likely need their own video by itself because, oh dear God, is there so many. I feel like I've said that here so many times over the course of this video. The gist of it is that U.S. trade with China has grown enormously in recent decades, and it's crucial for both countries.

Both countries need each other. Today, China is one of the largest export markets for the United States for goods and services, and the United States is the top export market for China. This trade has brought lower prices to U.S. consumers and higher profits to American corporations, which is great, but at the same time, it has also come with massive costs. When China went and joined the World Trade Organization over 20 years ago, it is something that was greeted by the entire world with a sense of

That is now something that has kind of vanished as Beijing continues to embrace state-led development, not letting the free market do its thing, but instead pouring subsidies into targeted industries to the detriment of U.S. and foreign companies. Companies that cannot compete because they are simply being out-subsidized.

Although U.S. consumers would benefit from the flood of cheap goods flooding in from China, millions of Americans would in turn lose their jobs due to the import competition. Meanwhile, investment by Chinese companies would raise national security concerns. The United States has long accused China of pressuring American companies to hand over their technology in order to be able to do business within the country, or of just outright stealing it, as we have covered previously in episodes when talking about, like, the Boeing hacks.

Because that, my friends, is the harsh reality. In order to achieve its economic goals, the Chinese government has poured subsidies into a range of different industries, including renewable energy, with the aim of creating a national champion company, so to speak.

Now, some experts would go and argue that these subsidies are wasteful, as many different businesses that are poorly led or with bad products are kept alive by virtue of just simply government waste. But at the same time, even if those products are not actually good, they can be disruptive to other countries whose companies simply can't compete against such levels of state support. If something is made cheap enough, even if it is bad, people are still going to go and buy it.

The United States argues that many Chinese state-owned enterprises are effectively just arms of the government, and unlike their private competitors, they do not make decisions based on market forces, but rather for national policy purposes as a type of offensive weapon to take out enemy nations. Along with this, many economists say that China has kept the value of its currency, the yuan, artificially low in the decade after it joined the WTO by accumulating U.S. dollar reserves.

You may wonder then, okay, well, why would you want to keep your currency weak? After all, that means that your people are not able to buy nearly as much of foreign goods. And yes, that's the point. A weaker yuan makes the Chinese product significantly more affordable abroad, while at the same time encouraging its own population to only buy local and not buy foreign goods.

U.S. goods are significantly more expensive in China, thereby contributing to a massive trade deficit between the United States and China. When I go and explain that, my friends, that in turn is something that is made only worse by the fact that China does not engage as a free trade partner, but rather it has propped up its own industries through tariffs and subsidies for quite literally decades.

Something that, even as people may be mad about the United States for what it is doing now, China has already been doing it, and worse, for again, quite literally decades. Of course, that all being said, Trump would not pause his tariffs on China like it is that he did with Canada and Mexico, and China would ultimately respond in kind.

Last week, Trump would impose a 10% tariff on all Chinese goods imported to the United States, on top of all existing tariffs that already are in place on China. This all being part of a bid to try and pressure Beijing to do more to stop the flow of the deadly synthetic opioid, fentanyl, into America.

which is something that I need to address here right now. That is going to have to be another video. Again, I know I'm saying it again. I get it. But China is a major source of the chemicals that are used by cartels in Mexico to make the drug. And there have actually been a massive number of illegal Chinese immigrants that have made their way into the United States in order to be able to produce drugs.

That is something that we're going to have to cover later. After those tariffs went into effect, China would quickly retaliate by placing tariffs on some chips and metals and began investigating Google and placed the maker of Calvin Klein and Tommy Hilfiger brands, like yes, the clothing brands, on its unreliable entities list.

Which sounds bad, but in actuality, it wasn't nearly as bad as it could have been. According to Harry Murphy Cruz, who is the head of China economics at Moody's Analytics, he said that the response was just a warning shot. Quote, It is China saying we don't want to make the situation worse, and so our response is going to be quite restrained relative to what we could do. But in putting some of those export controls on critical minerals and rare earths, it is saying to the United States...

We can make it really tricky for you if this gets worse, end quote. Because that's just it. The actual amount of tariffs is much smaller in comparison to what the United States has done. During Trump's first term, Beijing would respond proportionally to tariffs, ensuring that the effective tariff rate on U.S. goods entering China, the average across all imports, matched the imposed on Chinese imports that were going into the United States.

So if the U.S. was going to tariff $100 billion worth of goods coming to the United States, China was going to tariff $100 billion of goods vice versa. In this case, though, according to Murphy Cruz, China for now is allowing the effective tariff rate on American imports to be much lower while sending a signal. The U.S. tariffs cover around $450 billion worth of Chinese goods, while the Chinese tariffs only hit around $15 to $20 billion in American goods.

which is very small. However, there's a crucial factor that needs to be considered here when talking about geopolitics. China absolutely dominates the rare earth industry, something I've made a video on here before, accounting for the bulk of global mining and refining that are used for advanced technologies and products. Massive discoveries in the United States and Europe have occurred on this front in the last couple of years, which is amazing for getting financial and national independence. But

But those would likely not be usable for at least a decade, meaning that for the foreseeable future, like it or not, one cannot simply cut China out entirely and

And they know this, which is why China has been able to abuse trade relations with different states for decades. Of course, in that same vein, though, the world needs the United States. It is the world's biggest economy and consumer. Canadian, Mexican, and European politicians may make grandiose statements against Trump, America, and

And this may be great for their political base in order to get re-elected, but their actual power to risk American ire is much smaller than you would actually believe. As for what is going to happen now then, well, that remains to be seen. The direct effect of tariffs is to make it more expensive for domestic firms to be able to import by raising the price of imports.

An indirect effect of tariffs is making it more expensive for households to consume goods that are either imports upon which tariffs are imposed themselves or by making them buy more domestic goods that are more expensive. The impact on domestic producers is less clear. On one hand, economic theory would tell us that, oh, domestic producers should have a greater share of the domestic consumer market since domestic goods are now relatively more competitive.

However, at the same time, many domestic producers in the United States manufacture goods for final consumption, meaning that even if they didn't manufacture the first 75% of a product, they do the final 25% to make it truly worthwhile, but now everything in the previous 75% is now going to be more expensive. So, on that note, if the price of imported steel from China increases or other states increases,

It would make it more expensive for U.S. domestic car manufacturers to produce cars, regardless of whether or not those manufacturers decide to continue to import Chinese or Canadian or Mexican steel, and then pass that expense on to the consumers, or switch to sourcing more expensive domestic steel. Either way, when tariffs are applied across the board, everything is going to get more expensive.

So, there might only be a marginal benefit for domestic steel producers. In fact, domestic steel producers may struggle to add jobs at all, as many U.S. producers are more capital-intensive, using greater machinery, and rely on automation to ramp up production, rather than China, which is more labor-intensive and relies less on automation. The actual benefit may not be as much as one thinks. The actual number of jobs may be smaller.

In the long term, that all being said, it could help the United States, and additional revenues from tariffs would be greatly appreciated to try and balance the budget or pay off America's enormous debt. Which again, I know that I am saying this again, I know, that right there deserves its own video, as a debt crisis is something that appears to be brewing.

Yes, but on the other hand, it could wreck international and trade relations, shrink America's GDP, and hurt consumers and producers as well, at least in the short term. We don't necessarily know what the long term would entail. We just really don't know yet.

This, as it stands, is a brand new world in global economics that really hasn't been seen before. However, in the end, I don't want people to think that this is all doom and gloom. It is important for people to understand, in the end, why there is an increased desire for tariffs within U.S. domestic policy.

The neoliberal consensus that would drive globalization since the 1970s and 80s would lead to economic stagnation for many working class families in the United States, especially in areas that had been prime industrial hubs of the upper Midwest and more, places that largely depended on manufacturing jobs that would expire.

Addressing the economic displacement that was caused by globalization and free trade is something that advanced economies all around the world have struggled with as they either have poor citizens or rich citizens while more middle class manufacturing jobs were largely exported out of the country. This struggle can in part explain why it is that different economies around the world are now moving back towards tariffs.

Until these loss of jobs, until this loss of lifestyle, of economic success can be addressed,

we can expect that an appetite for things like tariffs are going to remain significantly higher now than they were decades ago. As for what that actually means in the future, who really knows? But my friends, this has been Stakuyi with the History of Everything Podcast YouTube channel. Thank you all very much for watching. I know this was a longer episode here addressing everything for tariffs, and I appreciate you all for joining me. This was a big thing to go and tackle, and I know from the course of researching this that there is like 10 more videos that this now has possibly spawned, so...

So yeah, I'm sorry for that. Let me know in the comment section below what it is that you'd like for us to address next. And if there's any one of these topics that you thought was great that I listed off as being another good video idea, let me know. And I will probably take the most liked one in that where I will take all of that and put that into a poll to determine what we're going to be tackling next. Because again, the world does not want to slow down. And now I need to go sleep. I've been working on this all day. Goodbye, my friends. See you next time. Best of luck to you.

I hate most business podcasts. It's all blah, blah, blah. Tell me your background. No, nobody has time for that. I'm Jason Pfeiffer, editor-in-chief of Entrepreneur Magazine and host of the podcast Problem Solvers. So I know you are busy running a business and you just need answers and I find them.

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