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Tariffs can end globalism (but they come with a cost)

By newseditors // 2025-03-16

Ever since the days of Herbert Hoover and the official start of the Great Depression, the concept of trade tariffs has been demonized by academia and the majority of modern economists. (Article by Brandon Smith republished from BirchGold.com)

It’s actually one area where left-leaning and conservative economists tend to align – though each group opposes tariffs for very different reasons.

Proponents of Adam Smith's free market philosophy or Ludwig von Mises and his Austrian school are likely to be just as opposed to Donald Trump's tariff plans as any globalist from the halls of Davos.

First and foremost, we have to make it clear that tariffs are taxes on international companies that export goods to other nations. These taxes force companies to import from countries outside of the tariff list or produce goods domestically. The primary targets of tariffs are corporations, not citizens.

One problem that I think many conservative economists miss in their opposition to tariffs is the problem of changing dynamics. Adam Smith might have witnessed the corruption of mercantilism, but he had no inkling of the monstrosity of modern globalism and how it would ultimately pervert the free market ideal.

The same goes for the influential economist Mises. His support for global trade was contingent on the idea that government interference in trade is always the root problem. The very principle of “free markets” mostly means free from government interference. Their thinking was that markets can only operate efficiently when buyers and sellers exchange freely and prices are set based on competition and efficiency.

While that was true then, is it still true today?

How globalism interferes with free markets

They did not take into account the blurring of lines between corporations, governments and non-governmental organizations (NGOs).

They did not consider the corporate shadow government of Davos and the manipulation of markets in the name of “free trade”.

They couldn't even fathom the creation of world-spanning bureaucracies like the International Monetary Fund, World Bank, the Bank of International Settlements etc. when they developed their economic theories.

After the Bretton Woods conference, Mises would go on to question the motives of the new “global order” and the trade agreements being put in place. He would also oppose at least some aspects of globalism before his death, leaving Austrians to debate the merits of “good globalism” vs “bad globalism.”

The reality is that today there is no “good globalism.” It doesn't exist because the entities dictating global trade collude rather than compete. They are not actually interested in free markets, they are interested in global monopoly. Corporations are the key to this monopoly.

Adam Smith criticized the very idea of “joint stock companies” (corporations), because he believed they were inherently flawed and could lead to both economic and social harm. But there are a lot of Austrian economists and libertarian anarcho-capitalists who defend international companies as if they are an inherent evolution of the free market process.

This is simply not so.

Global corporations (and central banks) are purely socialist constructs chartered by governments and given special protection from both regulation and the law more generally.

Their immunity to constitutional restrictions serves government interests and government legal chicanery serves corporate interests.

This is the opposite of free markets.

How tariffs break up globalist monopolies

Tariffs, if used properly, are a tool to force such corporations to serve the interests of the national populations they feed on. When a tariff is applied to China, or Canada or Mexico, the target is not necessarily those countries, but the global corporations that exploit the cheap labor or resources of those countries and then sell the goods to Americans at a massive markup while providing few if any jobs in return.

These corporations also act as wealth siphons; sucking up consumer cash in one country only to deposit it in other countries instead of cycling that wealth (after their cut) back into the economy they rely on for sales.

In other words, global corporations act as a kind of wealth redistribution machine that takes money and jobs from Americans and spreads them around the world to the detriment of the American public.

As the middlemen of this wealth redistribution scheme, these companies generate vast profits while people on both sides of the exchange get very little in return.

Mexico might seem like it benefits from NAFTA trade imbalances, but this is a mistake – The Mexican people and their standard of living enjoy minimal benefits; the companies that use them for labor get the advantage, along with some government officials.

In turn, U.S. GDP and our national wealth continues to rise due to global corporations. But the majority of that wealth increase is not going to everyday American families, it's going to the 0.1% of the wealthiest elites.

The longer globalism carries on the wider the wealth gap becomes. This is an undeniable fact and I think people on the left and the right mostly agree on this issue.

Only the international conglomerates and their political allies get anything out of globalization. Conservative and leftist political factions just can't agree on what to do about it. Leftists think bigger government and more regulation is the answer. Conservatives think smaller government and less regulation is the answer. Conservative are closer to the mark, but neither solution confronts the core problem of collusion between government and conglomerates.

So, I stand with my Austrian school economist friends on most things, but when they cry foul on Trump's tariffs I have to remind them that the situation is not as simple as “government interference bad.”

The current system is long overdue for a course correction and libertarianism is not going to provide it.

Globalism leads to dependence; truly free markets lead to freedom

Another key problem of globalism is forced interdependency. If each nation is producing an ample supply of their own necessary resources and they decide to trade the excess with each other then global markets make sense. But, when each nation is pressured though trade agreements to rely on every other nation for the basic needs of their populace then we must reexamine the value of globalism in general.

Global economic interdependency is serfdom, especially when corporations and NGO middlemen are involved. Only resource redundancy and localism creates true free markets and individual liberty. Tariffs can help to energize local production and trade and make communities more self-reliant. That said, there's going to be a cost.

The comparisons made between Donald Trump and Herbert Hoover are rampant and have been since 2016. I warned during Trump's first term that accelerating fiscal decline and growing stagflation could be dropped in his lap and blamed on his policies.

In other words, anti-globalism would be blamed from the financial upset caused by globalists themselves. I continue to believe that this agenda is still in play.

Hoover was blamed for making the Great Depression worse with his Smoot-Hawley tariffs. In truth, the Great Depression spread because of a series of policy decisions by major banks and the Federal Reserve (Former Fed Chairman Ben Bernanke admitted to this openly). At the time it didn't matter who caused it – Hoover was president and so he was the scapegoat.

The same situation could happen for Trump if he's not careful. It's important to remember that U.S. production has been hollowed out by decades of government incentives supporting globalization, along with unchallenged corporate power. Reining in corporations with tariffs is not going to be enough, there must also be incentives to reverse the damage done by previous administrations.

I can't think of any other way to rebuild America's industrial base fast enough to counter the price inflation that will inevitably come with tariffs. Defeating inflation would require a massive national effort to manufacture large quantities of necessities domestically.

Tariffs alone aren’t enough.

If we're going to violate the tenets of free markets with tariffs and government intervention on corporations, then we might as well go all the way and incentivize local manufacturing at the same time. We need mass goods, energy and housing now, not years from now. Otherwise, in the long runs tariffs will only make our situation worse.

Government controlled resource management in favor of domestic production will, most likely, inspire accusations of “fascism.” There's a lot more to it than that. Any government policy in favor of nationalizing production is going to produce endless comparisons and breathless op-eds to the weird mustache man of Post-Weimar Germany.

I would contend that fascism requires permanent government intervention (in other words, socialism) well beyond basic trade protectionism or incentives for domestic producers. Our civilization has simply moved so far to the left that any policy contrary to globalism is considered extreme populism.

Finally, there's the issue of the dollar and its world reserve status. After Bretton Woods the great unspoken arrangement was that America would act as the military pillar of the western world (and apparently the consumer cash cow of the world). In exchange, the U.S. would enjoy the advantages of having the world reserve currency.

What advantages? Namely, the dollar could be printed well beyond any other currency for decades without suffering the immediate effects of expanding the money supply because most of these dollars would be held overseas. America’s major export for the last 50 years has been inflation. Not goods or services – but IOUs.

A trade conflict could help end this arrangement. Meaning, all those dollars held in foreign banks would come flooding back into the U.S. and cause a spike in the cost of living.

Reserve status has long been the Achilles’ heel of the U.S. and it must end eventually. Just take note that globalists have been preparing for this shift since at least 2008 with the SDR basket currency. A trade war will not only require the Trump Administration to increase domestic production, but also to launch a new commodity-backed currency to protect against the dollar's demise. Gold and silver are the obvious commodities for such a purpose. There’s a reason that, throughout human history, monetary systems move from gold and silver to paper – back to gold and silver.

Maybe that’s why the White House is suddenly so keen to audit Fort Knox?

I hope so – and they better hurry. There's a lot to do, and not much time to do it.

Read more at: BirchGold.com

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