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Fifty-Eight: Trade And Tariffs Explained
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Today I’m going to talk about trade and tariffs in a way that even a 5 year old can understand if.
Now I know, that probably sounds dry. But if you stick around, I promise you’ll end this episode knowing more about trade and the global economy than most politicians—and certainly more than the President of the United States. And I’m not even trying to be edgy with that. It’s just… true.
Here’s the reality: A trade surplus or trade deficit is just the difference between what a country exports and what it imports. That’s it. It’s not a win-or-lose scoreboard. It’s not a sign of national strength or weakness. It’s an accounting detail. A symptom—not a diagnosis.
And cutting off trade with another country? That doesn’t “save” us money. It doesn’t “bring back jobs.” What it actually does is shrink the economy. It limits product availability. It raises prices for everything from cars to cornflakes. It triggers inflation. It makes everyone poorer. Period.
This isn’t new information. We’ve known it for a long time. And if you need proof, let’s roll the tape back to one of the dumbest trade blunders in U.S. history: the Smoot-Hawley Tariff Act of the 1930s.
Congress—bless their hearts—thought slapping tariffs on imported goods would protect American farmers and manufacturers during the Great Depression. Instead, what happened? Other countries retaliated. Exports plummeted by over 60%. Trade collapsed. Jobs vanished. The global economy cratered even further.
Now here’s the fun part: if that name—Smoot-Hawley—rings a bell, maybe you remember it from Ferris Bueller’s Day Off. Yeah. A teen comedy from 1986 explained it better than most modern politicians.
Ben Stein, in his iconic deadpan role as the economics teacher, delivers this legendary scene:
“In 1930, the Republican-controlled House of Representatives, in an effort to alleviate the effects of the… uh… anyone? Anyone?… the Great Depression, passed the… anyone?… Smoot-Hawley Tariff Act, which… anyone?… raised or lowered?… raised tariffs, in an effort to collect more revenue. Did it work?… Anyone?… It did not work, and the United States sank deeper into the Great Depression.”
It’s played for laughs—but it’s also spot-on. It didn’t work. And yet, nearly a century later, we’ve got people pushing the exact same crap with new branding.
Fast forward to the U.S.-China trade war under Trump. We jacked up tariffs on Chinese goods. China retaliated—hard—by targeting U.S. agriculture. Soybeans. Pork. Wheat. Farmers across the Midwest got wrecked. Prices dropped. Exports dried up.
So what did we do? We bailed them out with tens of billions of taxpayer dollars. Let that sink in.
The government caused the problem, then used your money to patch over the hole they blew in the boat. That’s not economic strategy—that’s political arson followed by very expensive fire trucks.
And this isn’t just a U.S. issue. Let’s look globally.
In 2010, Japan got into a diplomatic spat with China. As leverage, they restricted exports of rare earth minerals—critical materials used in smartphones, electric vehicles, wind turbines, even missiles.
The result? Panic. Supply chains trembled. Prices exploded. The entire tech and manufacturing sector around the world felt the aftershocks. It was a reminder: global trade isn’t just about profit—it’s about stability.
Or take Russia in 2022, cutting off natural gas supplies to Europe in response to sanctions over Ukraine. What happened? Prices for electricity and heating fuel in countries like Germany and Italy soared—by over 500% in some cases. Factories shut down. Steel, fertilizer, aluminum production—all scaled back or halted. Inflation soared. Food prices, rent, basic goods—everything went up.
Because when trade breaks, everything breaks.
There are a million more examples.
And every time, it’s the same story. Politicians sell you a fairy tale about protecting the economy, about bringing jobs home, about “America First” or whatever slogan they’re workshopping this week.
But in reality? You get screwed.
You pay more at the grocery store. You pay more for fuel. You lose job opportunities. You live in an economy that’s slower, more expensive, and less competitive. That’s the price of economic ignorance.
Trade isn’t some abstract Wall Street concept. It’s what keeps your shelves stocked, your bills manageable, and your paycheck worth something.
Trade supports competition. That’s what keeps prices low. It drives innovation. That’s what keeps companies from getting lazy. It creates connections. That’s what builds resilience in times of crisis.
Cutting it off doesn’t “protect” us—it isolates us. It weakens us. It leaves us more vulnerable.
And who pays? You do. Every time.
Not the president. Not the billionaire donor class. Not the lobbyists.
You.
Because you’re the one paying $5 for eggs. You’re the one whose factory job didn’t come back. You’re the one stuck choosing between overpriced groceries or a busted car you can’t afford to fix.
Trade is not a zero-sum game. It’s not about dominance. It’s about growth—mutual growth. And if the people in charge can’t understand that, if they’d rather posture than learn economics 101, then maybe we need to start electing people who can.
…
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Now I know, that probably sounds dry. But if you stick around, I promise you’ll end this episode knowing more about trade and the global economy than most politicians—and certainly more than the President of the United States. And I’m not even trying to be edgy with that. It’s just… true.
Here’s the reality: A trade surplus or trade deficit is just the difference between what a country exports and what it imports. That’s it. It’s not a win-or-lose scoreboard. It’s not a sign of national strength or weakness. It’s an accounting detail. A symptom—not a diagnosis.
And cutting off trade with another country? That doesn’t “save” us money. It doesn’t “bring back jobs.” What it actually does is shrink the economy. It limits product availability. It raises prices for everything from cars to cornflakes. It triggers inflation. It makes everyone poorer. Period.
This isn’t new information. We’ve known it for a long time. And if you need proof, let’s roll the tape back to one of the dumbest trade blunders in U.S. history: the Smoot-Hawley Tariff Act of the 1930s.
Congress—bless their hearts—thought slapping tariffs on imported goods would protect American farmers and manufacturers during the Great Depression. Instead, what happened? Other countries retaliated. Exports plummeted by over 60%. Trade collapsed. Jobs vanished. The global economy cratered even further.
Now here’s the fun part: if that name—Smoot-Hawley—rings a bell, maybe you remember it from Ferris Bueller’s Day Off. Yeah. A teen comedy from 1986 explained it better than most modern politicians.
Ben Stein, in his iconic deadpan role as the economics teacher, delivers this legendary scene:
“In 1930, the Republican-controlled House of Representatives, in an effort to alleviate the effects of the… uh… anyone? Anyone?… the Great Depression, passed the… anyone?… Smoot-Hawley Tariff Act, which… anyone?… raised or lowered?… raised tariffs, in an effort to collect more revenue. Did it work?… Anyone?… It did not work, and the United States sank deeper into the Great Depression.”
It’s played for laughs—but it’s also spot-on. It didn’t work. And yet, nearly a century later, we’ve got people pushing the exact same crap with new branding.
Fast forward to the U.S.-China trade war under Trump. We jacked up tariffs on Chinese goods. China retaliated—hard—by targeting U.S. agriculture. Soybeans. Pork. Wheat. Farmers across the Midwest got wrecked. Prices dropped. Exports dried up.
So what did we do? We bailed them out with tens of billions of taxpayer dollars. Let that sink in.
The government caused the problem, then used your money to patch over the hole they blew in the boat. That’s not economic strategy—that’s political arson followed by very expensive fire trucks.
And this isn’t just a U.S. issue. Let’s look globally.
In 2010, Japan got into a diplomatic spat with China. As leverage, they restricted exports of rare earth minerals—critical materials used in smartphones, electric vehicles, wind turbines, even missiles.
The result? Panic. Supply chains trembled. Prices exploded. The entire tech and manufacturing sector around the world felt the aftershocks. It was a reminder: global trade isn’t just about profit—it’s about stability.
Or take Russia in 2022, cutting off natural gas supplies to Europe in response to sanctions over Ukraine. What happened? Prices for electricity and heating fuel in countries like Germany and Italy soared—by over 500% in some cases. Factories shut down. Steel, fertilizer, aluminum production—all scaled back or halted. Inflation soared. Food prices, rent, basic goods—everything went up.
Because when trade breaks, everything breaks.
There are a million more examples.
And every time, it’s the same story. Politicians sell you a fairy tale about protecting the economy, about bringing jobs home, about “America First” or whatever slogan they’re workshopping this week.
But in reality? You get screwed.
You pay more at the grocery store. You pay more for fuel. You lose job opportunities. You live in an economy that’s slower, more expensive, and less competitive. That’s the price of economic ignorance.
Trade isn’t some abstract Wall Street concept. It’s what keeps your shelves stocked, your bills manageable, and your paycheck worth something.
Trade supports competition. That’s what keeps prices low. It drives innovation. That’s what keeps companies from getting lazy. It creates connections. That’s what builds resilience in times of crisis.
Cutting it off doesn’t “protect” us—it isolates us. It weakens us. It leaves us more vulnerable.
And who pays? You do. Every time.
Not the president. Not the billionaire donor class. Not the lobbyists.
You.
Because you’re the one paying $5 for eggs. You’re the one whose factory job didn’t come back. You’re the one stuck choosing between overpriced groceries or a busted car you can’t afford to fix.
Trade is not a zero-sum game. It’s not about dominance. It’s about growth—mutual growth. And if the people in charge can’t understand that, if they’d rather posture than learn economics 101, then maybe we need to start electing people who can.
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