DarkRange55
We are now gods but for the wisdom
- Oct 15, 2023
- 2,054
Devil's advocate for a moment to spur some conversations.
There are a lot of narratives in markets. Wall Street and commentators love a story, and stories are powerful. But plenty of the stories people repeat are wrong or oversimplified.
First off legally, the importer of record writes the check to U.S. Customs when goods clear ports like Los Angeles or Houston. After that, the burden gets split: some combination of higher retail prices, squeezed importer margins, and exporters cutting their prices. Studies of the 2018 tariff shock found most of the cost showed up in higher U.S. import prices, but the overall effect on consumer inflation was modest—about 0.1 to 0.2 percentage point added to core PCE. In 2025, broader tariff changes are larger, with trackers estimating an effective average tariff rate around 17 to 18 percent and household costs in the $1,300 to $2,400 range depending on what's included. The bottom line is that tariffs tend to raise U.S. prices modestly, but the cost is shared between consumers, importers, and foreign exporters.
Before the income tax was created in 1913, Washington financed itself primarily with tariffs (something like 80-90%) and excise taxes, supplemented by borrowing. That's how the United States (largely) funded the War of 1812, the Mexican–American War, the Civil War, the Spanish–American War, and major infrastructure for westward expansion, including roads, canals, and later the transcontinental railroads. These revenues also helped nurture early industry during the age of the steam engine, the telegraph, electricity, and the automobile. Today tariffs are no longer the primary funding mechanism for government, but they are now generating significant revenue again. In June 2025, the Congressional Budget Office projected that the tariff increases through mid-May could reduce primary deficits by $2.5 trillion over ten years. By August, CBO updated its forecast—estimating that tariffs implemented through mid-August could reduce primary deficits by $3.3 trillion and lower interest costs by another $0.7 trillion, for a total deficit reduction of about $4 trillion over the next decade . Customs duties themselves are expected to bring in significant revenue this year—initial projections were roughly $80 billion, while actual collections through midyear are much higher, accounting for roughly 5–6 percent of federal receipts .
Comparative advantage can be built. The textbook theory says nations should specialize where they are relatively best, then trade. But advantages aren't fixed; they can be created. Taiwan in the 1970s had no edge in semiconductors—it was a country of tuna fishing and rice farming. With deliberate policy, research centers like ITRI, and the founding of TSMC, Taiwan built a semiconductor ecosystem from scratch. Today it is the global leader. Comparative advantage is not static; governments can shape it.
Following that model, companies like TSMC are putting billions into U.S. manufacturing. TSMC has pledged around $165 billion to three fabs and packaging plants in Arizona, alongside its smaller facility in Washington state. Intel is expanding plants in Arizona, New Mexico, Ohio, and Oregon. AMD, by contrast, is a fabless firm that outsources production. Volkswagen illustrates the opposite pattern: it built a major plant in Mexico to produce the Audi Q5 for the U.S. market.
Early leaders—Washington, Hamilton, John Quincy Adams, Lincoln, and McKinley—relied on tariffs both for revenue and protection. Tariffs remained central well into the twentieth century, with the Trade Expansion Act of 1962 giving presidents new authority to adjust them.
What matters is debt relative to income—debt-to-GDP. As of 2025, gross federal debt is about 119 percent of GDP, roughly $37 trillion. After World War II, the ratio was similarly high—106 to 119 percent—but it fell to about 25 to 30 percent by the mid-1970s even though nominal debt rose, because growth, inflation, and modest surpluses let GDP outpace debt. The last time the national debt was fully paid off was in 1835–1836 under Andrew Jackson. The lesson is that the ratio can come down again if annual deficits shrink and nominal growth rises.
The federal government owns about 28 percent of U.S. land overall—nearly half of all land in the western states, and 61 percent in Alaska. While iconic parks are off-limits, more leasing of federal land for minerals like lithium, uranium, gold, and rare earths could generate royalty income. There is also valuable intellectual property held by agencies like NASA and NIH that could potentially be licensed under appropriate frameworks. Treasury Secretary Scott Bessent has floated monetizing the "asset side" of the federal balance sheet as one option.
The United States has always charged tariffs. Average levels were low in the 2000s, but they have risen sharply since 2018. In 2025, policy toward Vietnam includes proposals for about 20 percent tariffs on many goods and up to 40 percent if those goods are deemed Chinese products rerouted through Vietnam. That reflects how tariffs today function not just as revenue but as tools of industrial and geopolitical strategy.
Tariffs usually raise prices somewhat, but the burden is shared, not entirely on the consumer. Historically they funded America's wars, westward expansion, and the building of canals and railroads. Today, they are generating significant revenue again—enough to reduce long-term deficits by potentially $4 trillion over the next decade. Comparative advantage can be created, and the United States is trying to do that now with semiconductors. Debt sustainability increasingly depends on growth outpacing deficits—a challenge, but not unprecedented in American history.
I have not stated this is my formal position. I am simply trying to encourage discussion.
There are a lot of narratives in markets. Wall Street and commentators love a story, and stories are powerful. But plenty of the stories people repeat are wrong or oversimplified.
First off legally, the importer of record writes the check to U.S. Customs when goods clear ports like Los Angeles or Houston. After that, the burden gets split: some combination of higher retail prices, squeezed importer margins, and exporters cutting their prices. Studies of the 2018 tariff shock found most of the cost showed up in higher U.S. import prices, but the overall effect on consumer inflation was modest—about 0.1 to 0.2 percentage point added to core PCE. In 2025, broader tariff changes are larger, with trackers estimating an effective average tariff rate around 17 to 18 percent and household costs in the $1,300 to $2,400 range depending on what's included. The bottom line is that tariffs tend to raise U.S. prices modestly, but the cost is shared between consumers, importers, and foreign exporters.
Before the income tax was created in 1913, Washington financed itself primarily with tariffs (something like 80-90%) and excise taxes, supplemented by borrowing. That's how the United States (largely) funded the War of 1812, the Mexican–American War, the Civil War, the Spanish–American War, and major infrastructure for westward expansion, including roads, canals, and later the transcontinental railroads. These revenues also helped nurture early industry during the age of the steam engine, the telegraph, electricity, and the automobile. Today tariffs are no longer the primary funding mechanism for government, but they are now generating significant revenue again. In June 2025, the Congressional Budget Office projected that the tariff increases through mid-May could reduce primary deficits by $2.5 trillion over ten years. By August, CBO updated its forecast—estimating that tariffs implemented through mid-August could reduce primary deficits by $3.3 trillion and lower interest costs by another $0.7 trillion, for a total deficit reduction of about $4 trillion over the next decade . Customs duties themselves are expected to bring in significant revenue this year—initial projections were roughly $80 billion, while actual collections through midyear are much higher, accounting for roughly 5–6 percent of federal receipts .
Comparative advantage can be built. The textbook theory says nations should specialize where they are relatively best, then trade. But advantages aren't fixed; they can be created. Taiwan in the 1970s had no edge in semiconductors—it was a country of tuna fishing and rice farming. With deliberate policy, research centers like ITRI, and the founding of TSMC, Taiwan built a semiconductor ecosystem from scratch. Today it is the global leader. Comparative advantage is not static; governments can shape it.
Following that model, companies like TSMC are putting billions into U.S. manufacturing. TSMC has pledged around $165 billion to three fabs and packaging plants in Arizona, alongside its smaller facility in Washington state. Intel is expanding plants in Arizona, New Mexico, Ohio, and Oregon. AMD, by contrast, is a fabless firm that outsources production. Volkswagen illustrates the opposite pattern: it built a major plant in Mexico to produce the Audi Q5 for the U.S. market.
Early leaders—Washington, Hamilton, John Quincy Adams, Lincoln, and McKinley—relied on tariffs both for revenue and protection. Tariffs remained central well into the twentieth century, with the Trade Expansion Act of 1962 giving presidents new authority to adjust them.
What matters is debt relative to income—debt-to-GDP. As of 2025, gross federal debt is about 119 percent of GDP, roughly $37 trillion. After World War II, the ratio was similarly high—106 to 119 percent—but it fell to about 25 to 30 percent by the mid-1970s even though nominal debt rose, because growth, inflation, and modest surpluses let GDP outpace debt. The last time the national debt was fully paid off was in 1835–1836 under Andrew Jackson. The lesson is that the ratio can come down again if annual deficits shrink and nominal growth rises.
The federal government owns about 28 percent of U.S. land overall—nearly half of all land in the western states, and 61 percent in Alaska. While iconic parks are off-limits, more leasing of federal land for minerals like lithium, uranium, gold, and rare earths could generate royalty income. There is also valuable intellectual property held by agencies like NASA and NIH that could potentially be licensed under appropriate frameworks. Treasury Secretary Scott Bessent has floated monetizing the "asset side" of the federal balance sheet as one option.
The United States has always charged tariffs. Average levels were low in the 2000s, but they have risen sharply since 2018. In 2025, policy toward Vietnam includes proposals for about 20 percent tariffs on many goods and up to 40 percent if those goods are deemed Chinese products rerouted through Vietnam. That reflects how tariffs today function not just as revenue but as tools of industrial and geopolitical strategy.
Tariffs usually raise prices somewhat, but the burden is shared, not entirely on the consumer. Historically they funded America's wars, westward expansion, and the building of canals and railroads. Today, they are generating significant revenue again—enough to reduce long-term deficits by potentially $4 trillion over the next decade. Comparative advantage can be created, and the United States is trying to do that now with semiconductors. Debt sustainability increasingly depends on growth outpacing deficits—a challenge, but not unprecedented in American history.
I have not stated this is my formal position. I am simply trying to encourage discussion.
