How Trump’s Tarrifs will damage America more, by Robb Smith

Time to spit some truth. Tariffs can’t possibly make this $5 injection-molded spatula made in Vietnam or China a level-playing field. Why? Because the $2/hr Vietnam worker or $4/hr Chinese worker literally can’t be made equal to the $35/hr US worker through a tariff; the math simply doesn’t work. And China already uses the world’s best automation, so the US can’t make up the difference via higher productivity.

The only thing tariffs will do—and this isn’t speculative, this will happen—is that if someone needs a spatula they’ll now pay $7 for it (based on 50% tariffs and 20% Amazon margin). So a consumer will pay 40% more for that item, starting basically now.

Now, the reason no one is going to setup a spatula factory in the US is the same reason we shouldn’t be tariffing spatulas: the US should not be producing them, and no one in their right mind will try.

There is a value curve in international economics, and poorer countries make cheap stuff and rich countries make expensive, complicated stuff. Just imagine trying to make spatulas in the US, even with state-of-the-art automation (the same the Chinese use): now your cheap plastic spatula will be $30.

This entire program is an act of strongman theater by people who have no intention of keeping these tariffs in place. Trump’s team knows the US will be impoverished by moving down the value curve to compete with developing nations for stuff we shouldn’t be producing in the first place.

So why do it? They’re hoping that every nation blinks and eliminates their own tariffs, and that this magically creates American jobs. The problem with that, though, is twofold.

First, the economic carnage that is wrought while doing so could be catastrophic, as markets, asset values, investment, consumer spending and varied nation’s policy replies generate a chaotic complex system that could very easily throw off all sorts of nonlinear black swans; they’re playing with fire. If this doesn’t get resolved soon, it’s a guaranteed recession and wealth effect down-spiral.

Which brings me to the second reason tariffs are a problem: they play with fire here, but tariffs won’t even work. The US’s core economic problem isn’t unfair trade, it is that it is rich, has fallen behind in the global economic value curve, and its prosperity is massively unequally distributed. These effects arise not because of unfair trade, but because as the global reserve currency our currency is overvalued relative to everyone else (esp China). Not to mention we’ve done a terrible job of investing in the education, innovation and productivity enhancement needed to remain competitive in the face of that GRC headwind. Yes, China needs to boost its domestic demand so as to soak up its excess savings that currently is being absorbed by US trade deficits, but the US has not done a single thing in 80 years to actually free itself from the yolk of being the GRC. Indeed, Trump and his team keep talking it up as if it’s a source of power! It’s not, it’s the very disease that will inevitably choke us out, and not a single foreign nation has to fire a shot to do it.

Beyond the GRC, decades ago we gave up on our future: the U.S. historically led in innovation—DARPA, semiconductors, the Internet, biotech—but starting in the 1980s, there was a strong political shift away from public R&D and industrial policy in favor of neoliberal market ideology. Unsurprisingly, public R&D as a % of GDP has declined since the 1970s. The sad part is DOGE is doing it all over again as we speak, hollowing out our public R&D investments and talent and eliminating what little lead we still have, and MAGA is cheering them on. The lack of knowledge and self-awareness is almost inconceivable.

More, American education has been terrible. We have stagnant K–12 outcomes, especially in STEM, and underfunded schools. We’ve had skyrocketing college costs and student debt, and little investment in vocational training, apprenticeships, or mid-career up-skilling—areas where Germany, South Korea, and now China excel. Meanwhile, China massively invested in education, with rapid university expansion, heavy investment in STEM (over 4.7 million STEM grads/year vs ~0.6M in the U.S.), and deeply subsidized AI, robotics, advanced manufacturing and materials PhDs.

We want to even be in this conversation? Then we need to stop acting like petulant children, learn some basic facts about how the world actually works, and then get ready to compete for the future by laying down long-term, strategic investment in the core of the nation’s capacities and which will take decades to come to fruition. If you think we’re going to overcome 50 years of short-sighted policy and lack of truth-telling to the American people, lies that continue right up to this afternoon, than you should absolutely expect, with totally fair warning, that this only gets worse from here, and we’ll have no one to blame but ourselves.”

–Smith, a metatheorist writes on X