As are many others, I’m quite interested in what economic policies the incoming Trump Administration will enact once the reality of Jan. 20 demands something actually be put in writing.

I certainly support a more frugal approach to government spending (both foreign and domestic) than what has stoked the inflation fires over the past 4 years — but the oft-repeated praises of “tariffs” as a broad-stroke solution to what ails the nation’s economy might just accomplish the opposite of its not-so-well-thought-out path to prosperity.

Tariffs can be a very useful temporary tool for the U.S. when a foreign entity “dumps” its products into U.S. ports at far less than its own cost of production with the intent of driving U.S. competition out of business for later market gains. Such was the case when China was flooding the U.S. market with electronic goods, computer chips and solar panels before the first Trump Administration leveraged “temporary” tariffs into at least a partial political solution to the situation.

The tactic bought time for the U.S. to find new sources of computer chips (Taiwan) and electronic goods (Maylasia), but from what seems to be the predominant outcome, “free trade” with China remains a trip to the casino — and the “house” rarely loses. 

When tariffs are used indiscriminately, however, retaliation is natural resulting in even more market inefficiency and disruption. And, if no other sources of tariffed products are available, the cost is born by the consuming nation’s shoppers. Many times, our nation’s history has shown those “tariff dollars” (essentially a semantic term for artificially-inflated prices) go directly into the U.S. Treasury — which has never profitably grown a crop, run an assembly line or created one bit of new wealth.

Still, talk of funding the U.S. government with tariffs (and other seemingly well-intentioned government intervention in the economy) reminds me of the Nixon Administration’s ill-fated seduction by the temptation of Presidential meddling to control the economy. In 1971, the nation was experiencing moderate inflation from nearly a decade of “Guns and Butter” deficit spending on the Great Society and the Vietnam War, unemployment (under the old and more accurate accounting methods) stood at 6%, and American consumers/voters were weary and restless.

Just as tariffs disturb supply and demand-driven markets, the price controls enacted by President Nixon did the same thing. By executive action Nixon ordered a 90-day freeze on prices and wages, after which increases would have to be approved by a federal pay board and a newly-created price commission. Overall, his actions were initially popular with the public, and especially the media. The economic fallout which followed, however, was horrendous (but the president won the 1972 election in a landslide). At the same time, he also had “floated the dollar” — taking it from a hard currency (silver certificates) to a fiat currency (federal reserve notes) a move which unleashed the true inflation of the previous decade’s exorbitant social and military spending.

By 1973 when the president again turned to another “temporary” freeze to combat the effects of his 1971 actions, store shelves were devoid of many products, ranchers had quit shipping cattle, poultry producers were slaughtering their flocks, and steel prices were set so artificially low domestic suppliers either shuttered their mills or went out of business entirely — leaving Japan, Korea, Turkey and China to make the world’s steel (eerily similar to our modern supply chain.)

I personally remember supplies of T-posts, barbed wire and baling wire were non-existent — a situation which actually helped launch the move to big round balers and baler twine as ubiquitous farm staples — probably one of the only silver linings of that era.

When one reads the country of origin of many products used in U.S. agriculture today, it’s evident the nation isn’t producing a significant portion of the every-day consumables and many of the hard goods used in domestic food and fiber production — a reminder to reflect on what politically-popular “price controls” did 50 years ago.