Since resuming office, President Donald Trump has not for one minute parted from his promise to leverage tariffs to ignite a new “golden age.” At times, he seems to be working continually to stimulate major trading partners into arrangements that make America great again.

However, anyone attempting to follow the bouncing tariff proposals may get dizzy. What is the president trying to do, and why does it seem so hard to make final decisions?

To whatever degree the tariffs are about controlling access to America’s economy and securing something in return, a fluid situation will result. Trump’s expensive bargaining chip may also require him to navigate a strange political alliance — one that frequently forms when the government puts its thumb on the scale of business matters.

In February, Trump announced 25 percent tariffs on all goods from Mexico and Canada and a 10% added tariff on China. Days later, after outcries, the tariffs were delayed and coverage modified. More recently, we were told that tariffs would be expanded to more nations — perhaps all nations — with each border tax charged equal to what they charge America.

A “sauce for goose is good for the gander” approach might spur agreements to bring down tariffs, which could be positive. However, there are more questions to consider before drawing that happy conclusion.

Is this primarily an effort to leverage trade partners to reduce the entry of fentanyl and other illegal drugs? To protect U.S. industries from low-cost foreign competition? To re-industrialize America? To garner revenues that help balance the budget? All this and more?

These things matter, but let’s consider another possibility: The tariff movement is mainly about Trump, a modern colossus who stands empowered and athwart U.S. entry points. One who, rattling the keys to the world’s largest legally safe consumer market, uses tariffs as a lever to change how the world works. Perhaps tariffs are, in a sense, tribute.

Economic theory can reveal a lot about political behavior, including how a president enjoys enough support to wield a policy that, all things equal, costs Americans quite a bit of money.

In the case of federal regulations like these, my 1983 Bootlegger-Baptist theory of regulation has been called on by regulatory scholars to explain features of the NAFTA trade deal and the Clean Air Act; OSHA safety standards, interstate trucking regulation, and the Pure Food and Drug Act; regulation of genetically modified organisms; gambling legislation; blood donation; the 1990s tobacco settlement; and pending AI regulation.

The theory gets its name from regulating the Sunday sale of alcohol in American states and cities. This tends to occur when two distinct groups join the cause: Bootleggers (who enjoy a day without legal competition) and traditional Baptists (who have argued that consuming alcohol is immoral). Both favor Sunday closing laws but for decidedly different reasons.

Time and again, when a regulation is proposed, one group takes some moral high ground. The other — maybe bootleggers, legal businesses better positioned to navigate a new regulation than their competitors, or industries protected by tariffs — laughs all the way to the bank.

Meanwhile, politicians can appeal to moral sympathies with a sincere smile while caring for well-heeled bootleggers.

In today’s tariff conversation, “Baptists” may make strong and sympathetic moral arguments about reducing drug deaths, improving federal revenues, and generating a more level international playing field. Each point is richly supported by public interest groups.

The obvious candidates for the “bootlegger” camp are the industries tariffs protect. Tariffs reduce their competition and enhance their profits. Others might include wealthy taxpayers who see their future bills lightened by an alternative form of government revenue. Some bootleggers might even put on Baptist clothing, perhaps sincerely, as they call for higher tariffs — but the profit motive remains.

Finally, there’s Trump, the politician-broker who, as gatekeeper, gains tribute — call it political currency — from both groups. The president may believe tariffs are a moral imperative and see himself playing a major Baptist role. Like countless politicians before him, he is also the chief enabler of the bootlegger.

To secure a position that is not in the immediate best interests of U.S. consumers, Trump can lean on an invisible network of bootleggers and Baptists.

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ABOUT THE WRITER

Bruce Yandle is a distinguished adjunct fellow with the Mercatus Center at George Mason University and dean emeritus of Clemson University’s College of Business & Behavioral Science. He wrote this for InsideSources.com.

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