贸易之争（Fintwit Book Club 2025年4月）

With me today, I'm happy to have on my co-host for the podcast, from one of my favorite newsletters, The Diff, Byrne Hobart. Byrne, how's it going?

Great.

The book we're going to talk about—we are recording on April 28. For those of you who are listening to the podcast 3 months or 3 years in the future, or have been under a rock, this month has been all about tariffs in the entire world. We had Liberation Day—was it April 6 or whatever? Markets down, markets up. It's all about tariffs.

You chose Clashing over Commerce: A History of U.S. Trade Policy. It is deep—1,200 pages. I budgeted a lot of time to read it, and I did not. I'm still kind of just at the end of the Cold War, but I had so many questions. Let me start here: This is a full-fledged history of tariffs. We can talk about everything here, but when you read the history of tariffs in this book, do they make you feel better, worse, or kind of neutral about the state of the world we're in as we talk on April 28?

Yeah. I actually ended up feeling a lot better. When I read it the first time, tariffs were just kind of a nonissue. It was sort of this history of, okay, we used to have them and now we don't, and here's how that came about. When I would read it, I was more attuned to, okay, that sounds like an inconvenient thing I'm glad I don't have to deal with, et cetera.

Reading it now from the perspective that there will almost certainly be higher—but who knows how much higher—tariffs on many different trade partners, I was coming into it expecting that I'd read all these really grim stories about how this is totally wealth-destructive and completely messed with U.S. industrial development. The book is actually just surprisingly neutral on tariffs. It does mention that they have this deadweight loss, but it also mentions that, just in terms of the scope of things, they were not that big a deal.

I think that has to be tempered with observations about how modern supply chains differ from historical ones. The other big contribution to free trade in the time period in which tariffs went to roughly zero was containerization, which was also effectively a cut in tariffs. It cut the implicit tariff of how expensive it is to load things onto and off of ships. If you can make that really cheap, then you can move more stuff around, and if you can move more stuff around in general, one of the things you can do is high-value-added manufacturing in one place and then ship things for final assembly somewhere else.

It does mean that the economy is just more interconnected, and there are fewer cases where you buy a product where everything is homegrown and that's the best place for it to be. I was thinking about this a couple of years ago, and I was thinking about a loaf of bread. If you buy a loaf of bread from a grocery store, you have this mix of different ingredients, and the one that is the most susceptible to free trade is probably either the plastic bag it's in or the twist tie.

The twist-tie supply chain is going to include the extraction of whatever the hydrocarbon feedstock is, then the manufacturing of the bulk plastic, and then the extrusion of the little twist-tie thing. Then you've got the metal, and there has to be a supply chain for mining and refining that and forging it into something specific.

What occurred to me is that the really expensive part of the bread is actually the part that we just get from the United States: We grow wheat and bake it into bread. It's American land and American labor. The incredibly cheap part is the set of inputs that can pretty much circumnavigate the globe. And yet, it's really, really cheap because all of those things are getting built wherever in the world they're the cheapest to make, because you can ship them pretty much anywhere.

Part of the way I reacted to the book was that I sort of felt like I did not get out of it what I was hoping to, because what I was hoping to get out of it was, okay, here's some context, and now I better understand Donald Trump. Then, literally from the opening chapter, it sets up this model of U.S. politics where you have these different constituencies.

You have people who were mostly agrarian, mostly Southern, who really wanted just more trade, so they wanted low tariff barriers. Then you have Northern, more manufacturing-oriented economies where they're competing directly with U.S. trade partners, so they want barriers to trade. But you also have, in the North, shipbuilding and general trading businesses, and they want free trade.

None of that actually applies to the current debate. It's really not the case that someone in Greater Boston really opposes this because it's going to hurt their job, or really likes this because they'll keep their job at the textile mill. We're a couple of generations removed from that kind of political economy.

I was walking with my wife last night, and I said the same thing you started out with to my wife. I said, "Look, I'm reading this book on tariffs. It's a behemoth, but I'm 700 pages in." When I read it, I alternate between feeling much better and feeling much worse.

You see so many parallels. This has happened so many times in history. If I had read this on April 9, when markets were really dropping, I would have been like, "Oh, we've been here before. I think I feel better."

But then I would feel much worse. I'd be like, look, after the Great Depression and the Smoot-Hawley tariffs, tariffs were kind of a settled issue. Yes, we've had big tariffs and big stuff before, but it's never great when you're saying, "Hey, we haven't really been fighting over tariffs in 100 years." The last time we had a really big fight over them, it was not only leading to the Great Depression; people argued, "Did this cause the Great Depression or not?"

I've kind of alternated between feeling better because it's happened and worse because, yes, it's happened, but it hasn't happened in 100 years. And, by the way, the economy—you know, they're talking about exports and imports. I think of the Revolutionary War, where they're like, "The imports went down from $3.6 million this year to $600,000 this year," right? That was sending stuff on ships over weeks and stuff; there wasn't a lot of it, versus today, where it's just-in-time shipping and really integrated.

Yeah. Part of what made me feel worse was that I remembered it as more of this economic history of tariffs, but a lot of it is actually a political history of how we choose which tariffs to get. Then, secondarily, we consider the economic impact: what people expected the economic impact to be and what actually happened.

One of the things that stands out is that once you have tariffs, and once they're a live political issue, everything slows down massively because every company and every interest group is embedded in some kind of supply chain. The book has a chart somewhere showing just how much time and how many pages of testimony were produced for different tariffs.

If I can jump in, my favorite example of this is the Smoot-Hawley tariffs, where they're increasing the tariffs on literally everything. I think it takes 15 months for them to do it because literally every interest group comes in and says, “Hey, if we're increasing tariffs, you have to protect us from everyone outside of us, right?” And when they're reducing them, when the Roosevelt administration is doing the MFNs, nobody comes in because if you're reducing across the board, then nobody really cares.

So, as you're saying, once the tariffs get in, the special-interest groups do it. Time and time again, the tariffs get picked apart as people start saying, “The deep state”—this is just so ripe for special-interest groups, fraud, lobbying, all this sort of stuff. I didn't realize lobbying comes from something—I believe it was Grant hanging out in one of the hotel bars, smoking cigars, so you could walk by and—yeah, but it was related to tariffs or something.

So there was that. I think there were something like 15 pages of testimony about tomatoes and the importance of protecting American tomatoes from foreign competition. And I think this was also 3 days—15 pages over 3 days, if I remember correctly.

If you were a free-trade person, I think you were probably losing some fights to pure attrition. I don't want the fourth day of discussing how important tomatoes are, so fine, we can raise the tariff on them.

Many lawmakers over the 200 years that I've read so far in the book do 1 tariff reform and then end it. They'll say, “That was the worst 6 weeks of my life. I will never do this again. This is for the next generation to settle.” So you're right: you lose tons of fights through attrition.

One of the other interesting things in there was that I had this stereotype in my head of, “Okay, it's the Gilded Age, there's widespread political corruption in the late 19th century, and we also had high tariffs.” My assumption was that it was all these captains of industry who purchased a senator and then told that senator, “Here are the industries you're going to protect.”

There was a little of that, but the book actually calls out that a lot of the biggest companies by 1900 or so were pretty indifferent to tariffs and did not spend very much money on lobbying. They were the largest, most efficient producers at scale, so they had an interest in more trade because they could totally dominate the US market and wanted access to Europe. Europeans needed dollars to buy their stuff, so those companies were pretty neutral. It was actually the smaller companies that really cared about tariffs.

If you think about the economic impact of a tariff on the margin, it's the company that would not quite have been competitive enough without tariffs but is competitive enough with them. Those are often going to be less-efficient producers, and maybe they're in industries where it doesn't make as much sense to do it in a high-cost labor market.

The book does point out that, from the beginning—literally from the colonial era—what is now the US just had higher wages than the rest of the world. Originally, it was all down to land. There was more land per capita in the US than in Europe, so the market-clearing price for getting someone to work on that land was quite high.

I should also note that this book actually encouraged me to get a new Kindle. I'm holding mine up; it's blurred for those of you on YouTube, but this trusty Kindle has been with me for 7 years. I was highlighting so much because I found so much interesting material here.

But let me start with one thing again: this is a book on tariffs. If we had decided to read a book on alcohol regulation, I think we would be shocked by how much alcohol regulation flows through the course of American history. You know the Hamilton musical line: “When Britain tried to tax our tea, we got frisky. What do you think is going to happen when they try to tax our whiskey?” There would be lots of fights over alcohol.

This book makes it seem like tariffs, especially during the first 150 years or so of American history, were the dominating force of American history. There was a lot that I had forgotten. Obviously, you think of the Tea Party—that's a tariff—but I hadn't thought about that. Taxation without representation—that was tariffs. There's tons of other stuff, like the South Carolina Nullification Crisis in the 1830s. I had thought that was related to slavery, but it was actually related to tariffs.

My question for you here is: is it because we're reading a book on tariffs that tariffs are the throughline of the first 150 years, or do you think tariffs really were that important? Maybe, to our modern understanding, we don't quite appreciate how important they were in the 1700s and 1800s. There was no income tax; this was the government's only form of revenue.

The book does talk a little about this. Through the late 19th—or early—yeah, I think through the early 20th century, tariffs were the main way that the US government funded itself. The government was also a lot smaller, and they mention very early on that the cost of collecting an excise tax was about 20 cents on the dollar, while the cost of collecting a tariff was about 2 cents on the dollar. There are only so many ports that we can move things through.

At a high enough tariff, smuggling probably still does make sense, but at lower tariffs—and if you have a pretty interconnected economy—the smuggling thing gets tricky because now it's a bad idea to buy insurance and you probably can't borrow. It's sort of like when companies try not to use the dollar system, or when they're kicked out of the dollar system, and they find out that it's just really a pain to do any kind of business with anybody.

So, tariffs were a big revenue source, and unlocking the income tax as a potentially much larger revenue source did make them less important. I think you can look at the pre-income-tax tariff debates as partly a debate over how big the US government was supposed to be and what the expected scope of its activities was.

That did become a contentious regional issue because people in the South recognized that tariffs were going to hurt their ability to export cotton and tobacco. They also recognized that even though people in the North were talking about tariffs as this generally good thing—we need to protect American industry, and we also need the revenue—they obviously had a direct economic interest in that, too.

I was surprised by just how sophisticated some of the economic thinking was, given that they didn't have a lot of the economic models that we have today and these things weren't really in the water the way they are now. People in the southern US in the late 18th century still understood that if you want to sell more cotton overseas, you actually need people overseas to be selling stuff to you, because otherwise there's just this imbalance that can't be sustained.

I'd go back and forth between being impressed by how sophisticated the analysis was. Basically, they figured out pretty quickly that an export tax is an import tax, as you said.

I'd also go back and forth between that and how unsophisticated I thought some of it was. You'd see time and time again that we'd enter a recession or a depression—the Great Depression—and people would say, “Hey, now is not the time to bring down these tariff rates. The economy is suffering. What if we bring down the tariffs? Imagine the pain.”

And you're kind of like, well, again, we can agree to disagree on tariffs, but if you think that tariffs are taxes, bringing down taxes is generally one of the good ways to help. Or the economy would go into recession and tariff rates would drop, and they wouldn't want to bring down tariffs because the government would say, “Oh, man, we're really in it now. That's all of our revenue. Now we're running a deficit. We need to raise tariffs to get our budget balanced.” You'd be like, “No, that's not Keynesian. You need demand.”

Doug makes a really interesting point in the book: if you actually look at tariff levels and US economic growth, what you see is that when there is a low tariff, there's often a financial crisis, and when there's a high tariff, there's often rapid economic growth. But the reason for that is that tariffs were the main source of revenue.

You would tend to see tariffs get cut when the US government was running a surplus, and then tariffs get raised when it ran a deficit. There's this funny bit, I think for the 1880s or 1890s, where the big looming crisis was that the surplus was too big. We just couldn't spend money fast enough, and we were worried that all the circulating currency was going to be hoarded by the Treasury by accident because they had these high tariffs and the economy was growing very strongly.

They did end up trying to solve that by offering much more generous Civil War pensions. For just that generation after the Civil War, that is actually one of the big throughlines of American politics. Civil War pensions were very easy to argue for, very tied to the Republican Party, of course, and a very good vehicle for graft. After the pensions were expanded from, “If you served, you get money,” to, “If you were injured,” then your kids get money, your widow gets money, and your spouse gets money.

So, yeah, it became a very gameable system. And then that kind of puts other later political issues into a different context. I feel like if I grew up in the Deep South and it was the early 20th century, I would be very skeptical of all the things that Yankees say about all of the good things they’re going to do for the world, because I would remember that this hugely salient issue was, “Let’s tax everybody, but disproportionately the South, in order to give benefits to our side.” I would recognize that this was originally a very public-spirited and good thing to do, but also that they kept doing it well past that point.

I have this every time I read a history book, but really with this book, history doesn’t repeat; it rhymes. Every time you read a history book, you’ll see a little bit of, “Oh, I see echoes of these leaders here—what I’m hearing from this world leader right now.” My God, I had to get a new Kindle because I was highlighting so much. You could take a thousand quotes from here and maybe blur out the party, but a lot of times, actually, not blur out the party, because the Republicans were the party of high tariffs.

I could clip it today and we could start a Twitter firestorm with people being like, “That’s the stupidest thing.” I’d be like, “Hey, man, this was 100 years ago.” It was just crazy how much it rhymed. To go back to sophisticated analysis early on, one of the things I was kind of surprised by was how much the Founding Fathers thought about tariffs. Again, this was the main way they were going to fund the government.

A lot of the Revolution was over taxation without representation, which back then was tariffs. There’s a quote from Madison that says, “Madison correctly anticipates the fundamental issue in trade policy is the degree to which domestic producers should be protected from foreign competition.” One of the reasons they had to do away with the original Articles of Confederation was that Britain could take advantage of the Confederation, saying, “Hey, New York, why don’t you give us a lower tax than Pennsylvania?” So they would play all the states off one another. I was just really surprised that history didn’t repeat; it rhymed from literally the beginning of American history.

To go back to the Civil War pensions, they very much rhyme with DOGE and Social Security right now. Obviously, there were lots of parallels between those. Another thing I was surprised by was how much the Founding Fathers thought about tariffs.

Yeah. It did seem like some of the other factors were that the US is less dependent on trade. It has a lot of internal resources, and when the book begins, the US has a lot of these internal resources that we can exploit on our own without importing stuff. At this point, partly because of that and partly because of the institutions that were built off of that, we do have this large, very competitive service-sector economy where it really does not need any kind of protection from foreign competition, except to the extent that it’s mitigating something unfair that other countries are doing.

I don’t think the US needs some kind of law that says that if you’re a French search engine or a French social network, you have to pay some extra fee to do business with Americans. On the other hand, there seem to be all these weird contours of European antitrust law and privacy law that mysteriously American companies are really good at tripping, and they have to pay big fines, while European companies are often somehow very safe from that.

There are these other forms of protectionism, which I think were just harder to get away with when you didn’t really have something like a multinational corporation in the modern sense. Or, if you did, it was multinational but mostly doing business with countries in Asia or Africa, where Europeans did not really consider them geopolitical peers at all. So the companies were just kind of running things, more so than doing business and having to comply with local laws.

Let me give you one point. One of the things the book makes clear is that one reason tariff policy is so interesting is because it’s a place where people frequently put constituents over party. If you are elected by your constituents and you’re a representative in the 1700s or 1800s, and your constituents are all agricultural, you’re probably going to be for pretty low tariffs because your constituents want to sell, right? They’ve recognized all the issues, despite the fact that the Republicans’ traditionally Northern base favored high-tariff policy.

One more thing: this tends to persist over time. If you were in the South, you tended to be in favor of low tariffs because you sold a lot of agricultural products. And the book notes—I love the note—that the correlation between voting on tariffs in 1828 and voting for the North American Free Trade Agreement in 1993 was 60%, which is pretty high over 100 years, right?

I also like that the book will sometimes interject with, “The bill was passed,” or, “The bill failed,” and every Democrat voted for it except the representatives of Louisiana because they have a sugar industry and they want to keep the sugar out. It’s always the one where they are not in favor of free trade, because free trade means more competitive sugar from elsewhere.

Time and time again, whether it was a congressional vote or a presidential election, it would come down to the swing state of Pennsylvania. I don’t know how Pennsylvania’s demographics have enabled it to be a swing state since the founding of our country. It’s just crazy that it is. Louisiana has sugarcane, New York has New York City, and I’m sure lots of other things for both of them, but Pennsylvania has been a swing state. I just don’t know how it’s been that way for 250 years.

Yeah. It’s pretty wild.

Anyway, bringing it to the current climate, the thing I’ve been kind of surprised by is that, again, Republicans for 200 years were the party of high tariffs. Obviously, Republicans today are not Republicans of the 1860s, but I’ve been surprised that Republicans today still seem to be Republicans. For the past 20 years, Republicans have been low-tax, and that’s because a lot of their constituents would benefit from low taxes. They’ve shifted South, and as we said, the South favored lower tariffs.

Today, you’re seeing Republicans be the high-tariff party, and that switched in 3 years, 2 years, 6 months—I don’t know. Are you surprised by how the current cycle seems to be breaking the constituent-over-party message that you’d get through the past 250 years of this book, if that question makes sense?

I think a lot of it just comes down to Trump and his somewhat idiosyncratic preference for tariffs. You can try to reason into why that would be, but I think some of it is just that tariffs are something Trump actually likes. I guess you could argue that the rise of China is more of a threat to US manufacturing and US economic self-sufficiency, and that there’s going to be one party that’s more of a China-hawkish party than the other. Trump did talk a lot about China even going back to the 2016 campaign.

I think the Republican Party would seem to be more likely than the Democrats to remain—or re-become—the high-tariff party. But it also seems like a weird, idiosyncratic result of just the current personalities at play.

I have no disagreement with you. Again, we’re not pointing out anything unique. You read this book and you would have almost 300 years of history of, hey, the one place where you’ll really see representatives break from party—and obviously the parties have been much weaker over time and much stronger over time—the one place you’ll consistently see them break is on tariff policy.

And yes, there are idiosyncrasies of Donald Trump, but it’s always interesting when you see something where you’ve got 300 years of history and, in the current day, for now, you’re seeing a divergence from that history. That’s the only reason I mentioned it. Anything else on that?

Yeah. No, I think the other point on it is that tariffs are in part a sort of dignified way for someone who does not have a college education and is in the workforce to basically accept a handout from the government while still having a job that they can actually take pride in. And I think there’s a reasonable kind of utilitarian argument that that is actually a reason to have some nonzero level of tariffs.

If you have someone who could work in a factory job and would prefer that—would just prefer the vibe of that over the vibe of working in a restaurant, at a retailer, in the healthcare space, or whatever—if trade barriers make it harder for other countries with cheaper labor to compete with the US, then you are creating these jobs where it’s not that the job is fake. They are doing real work, but the job at that pay scale is an artifact of tariffs keeping the US from importing something from a place where people make $2 an hour or $1 an hour or whatever.

That is just a way to do a wealth transfer. There is deadweight loss, but it is a transfer to a constituency that Trump has actually done reasonably well with. So I think that is another piece of it: if you are in that constituency, you can look at tariffs as the reason that your job has not moved overseas, or the reason your job won't move overseas, and you know who to thank for that.

I certainly hear you, though. I think the book and economists would argue—there's a line from, I think it's Roosevelt—when they're talking about lowering tariffs and you're starting to see real momentum gain from people who are like, “Hey, let's lower all these tariffs.” They say, “Yes, we understand that there are 1.2 million jobs that are kind of supported by these tariffs, but that ignores the tax on the other 13.2 million people.”

As you're saying, you'd have to measure the deadweight, but I would imagine it's a pretty high deadweight loss to support these 1.2 million people who want to be in a factory rather than be a server and tax the rest of us. But that's kind of an argument from history, though. Let me go into a different one.

Bringing it back to the present, one of the things I think is interesting is how the current arguments that we're having are almost a funhouse-mirror version of the arguments you've had over the past 200 years. For the past 200 years, it was, “The tariffs are high. Man, it's really scary to try to lower the tariffs. What are we going to do?” And today it's, “Hey, there are low tariffs. Let's raise the tariffs.”

For the past 200 years, until the Great Depression, Congress was just the actor in setting the rates, right? They had to go line by line and set the rates, and that's one of the reasons you had a lot of corruption and lobbying in there. Whereas today, it's, “Hey, the president has all the authority,” and Congress is kind of looking at itself like, “Oh, man, should we take this authority back?”

It's funny: in the 1930s, when they're arguing about it, Congress is really worried about delegating this power to the president. So I'll turn it over to you. What was your favorite kind of funhouse-mirror aspect of the past versus what we're seeing today?

Yeah, I thought that piece was really interesting. There was also this shift around that time from tariffs on mostly particular products to tariffs mostly on specific countries, or bilateral deals with specific countries. And it does make sense that Congress would be really good—any given congressman is really good at getting benefits for their constituents in the form of protection for whatever the local jobs are. My boy, Pig Iron Kelley.

Iron Kelley. Yeah.

And that was part of the argument for giving FDR more power to actually sign these bilateral deals: the president cares more about overall national party popularity than about popularity in any one district. And so he's actually more of a disinterested party than any legislator for either party.

And I think this is the kind of argument where, if you're a Democrat at that time and you make that argument, it is perfectly sensible. If you're a Republican, you're listening to that argument and you say, “Wait a minute. You're saying we can trust whoever has this job to do the right thing for the country and put collective interests over narrow interests—but he is on your side. He's your guy.”

So, of course, there may be less of a degree of that kind of influence, but it still exists. It's still directionally true that the president is probably going to do things that are specifically beneficial—as both Bush and Obama did—including temporary tariffs that were specifically beneficial to, I think, one was Pennsylvania and then Michigan.

It still happens even when it's the president, and it especially happens if, as you mentioned, Pennsylvania is in the mix and it's a swing state. But, yeah, I thought that general evolution made a lot of sense in terms of the funhouse-mirror stuff.

One of the things that was kind of a worrisome part of the funhouse-mirror effect was that, when the US would try to negotiate with Great Britain, part of the British Empire's backup plan was that it had this low-tariff, sort of free-trade zone with Great Britain and the various colonies, and a lot of that was preserved even after the colonial period. They still had pretty close trade relationships, and so they didn't need the US all that much. At least they didn't feel the need to do what the US told them to do.

It was another area where you see the parallels to today. Before the big tariffs were rolled out, the administration—there's the quote of Lutnick going, “Look, we're not going to tariff mangoes because we're not exactly growing a lot of mangoes in the United States.” And when you're reading about the 1870s and they're raising all these tariffs, they're like, “Well, of course we're going to exempt coffee.” You're like, man, the more things change, the more they stay the same.

You mentioned the British, and there was one particular piece of prerevolutionary-war trade policy that I wanted to mention. The British—one of the arguments for the British tariffs, I can't remember if they explicitly make it or if the book just calculates it—is, “Hey, America, because you're one of our colonies, you get into the free-trade zone, and the British Navy patrols the globe and makes it safe for your ships to deliver your cotton, sugar cane, whatever it is. We make it safe for your ships to go.”

And the book even calculates the value of that protection. Again, more things—history rhymes. I'm just struck by a lot of the arguments today, and this comes back to the dollar and everything, but you'll see the US government, the Trump administration, saying, “Hey, the world is kind of piggybacking off America protecting the oceans, trade routes, whatever it is, and we don't get any payment for that.”

So I just wanted to throw that out to you. I think it's a really interesting thing 250 years ago, and I think it's interesting today. I just wanted to throw that out at you.

Yeah, I think one model for that is that this is actually a big US export: this combination of having a pretty coherent system of laws, a really good financial system, a widely used currency, and a military to back all of that up and ensure that we could actually protect our economic interests and those of America's allies pretty much anywhere.

And if you do that, you actually get reserve-currency status as the implicit payment that the rest of the world makes to you in exchange for that, and it's not done in a really bilateral way except through this accidental historical evolution. Iran and North Korea do not really benefit from that. I guess Iran gets the slight positive externality that there are fewer professional pirates out there attacking oil tankers, because if they attack one that's protected by the US, that's a very dumb decision.

And so they get some slight benefit from that, but they're not really supposed to be part of the dollar system, and nor is North Korea. But, yeah, everyone else, just because of the general way that things work out, ends up wanting to buy dollar-denominated assets and wanting to fund a trade deficit that the US runs.

And that trade deficit, in part, pays for things—and the trade deficit and the government's fiscal deficit create the very safe dollar-denominated assets that these countries want to buy. That does actually fund the system that makes the US such a trustworthy counterparty and that makes it a little bit easier—or a lot easier, actually—to trade overseas.

So if you model that as an export, then what we get is more consumption than we otherwise would be able to afford for a given level of local output, because some of the output is the unmeasured global consumer and producer surplus that is created by the US Navy and by the dollar system.

Nope, that's great. Let's see, just some other thing—look, we've—you probably, more than me, read a lot of history. Obviously, there are historical parallels. Presidential figures that are compared to Trump—I think Andrew Jackson gets thrown around a lot.

But if I was limiting you to just rhetoric on tariffs and everything that's in this book, who's the historical figure that most reminds you of Trump? I had a surprising one, but I'd love to hear yours.

I think it talks a little bit about Mark Hanna and McKinley, and McKinley seemed kind of similar, at a different level, and kind of a polar opposite in terms of how he campaigned. Trump sort of campaigned like William Jennings Bryan, and then he governed like McKinley.

So that was the one who seemed the most similar. There is some element of Hamilton in Trump’s thinking, which is fun, because they obviously have a very different process and maybe slightly similar personal lives. Maybe history would be very different if dueling were still semi-tolerated. Hamilton did have this vision that the U.S. was going to build a lot of stuff and have a system that actively encouraged that. But he also just had a different kind of system in mind, and when the gap is that long, we’re talking about such different things, even if we do see some of the same policies show up. What was yours?

I am surprised you said Hamilton, because my surprise figure was Jefferson, actually. I just saw so much of Jefferson. Jefferson was a protectionist in the late 1700s and early 1800s. When he’s president, he’s talking about tariffs. I’ve got all these quotes. Again, this book broke my Kindle. I was trying to quote Jefferson when he was trying to get some tariffs going, and some Republicans who were against them—he calls them “pseudo-Republicans,” which reminds me so much of RINOs.

There’s just page after page of Jefferson. Hamilton—the musical—has Hamilton as the man with the top mic. Jefferson could spin a pretty hot mic, too. There’s just page after page of him dunking on people and trying to raise the tariffs for the American people and for his beloved Virginia.

I’m surprised by Hamilton. McKinley, obviously—Trump talks about loving McKinley and the tariffs. I hadn’t realized that McKinley comes to power because he’s a congressman who supports the McKinley Tariffs in the 1890s, and then becomes president. I was kind of surprised that he’s known for tariffs and is a president of tariffs, but his mentions in the book are actually pretty small. Maybe it’s just the period and everything, but I thought I was going to be looking at a 200-page McKinley thing. It’s like, nope: McKinley, as a congressman, gets the tariffs implemented; he’s president; and then it’s on to the next one.

Yeah. There was less material. I was kind of implicitly thinking that the page count per year was going to be roughly a function of the level of tariffs. When you’ve got a 60% average tariff on dutiable imports, then you have a lot of stuff to say. But it turns out all you really have to say is, “They passed a bill that raised the average rate from what it was to this higher rate,” and then they did it again, and then they undid it, and so on.

Whereas there’s actually a lot of material toward the end, which I actually like. The book, in some ways, runs out of steam because we do just get to this arrangement where the tariff is a less important political issue and just becomes a more technocratic one. It becomes one where people still have opinions, but a lot of the debate is about these narrow details. It’s about managing this gradual process of reducing everyone’s tariffs and everyone’s trade barriers.

I think this is one of the reasons that trade deals take so long to negotiate. The deal is done between the governments of 2 countries, and it’s some kind of more executive-branch-flavored negotiation, but the impact is going to have a lot of regional variation. That’s going to tie into intraparty and party-level politics.

So you’ll probably automatically have some kind of game of telephone where someone wants to cut a trade deal between 2 countries, and then they realize that this particular constituency—this swing state—is going to swing the other way, potentially, if this goes through.

No, look, and to your thoughts on intraparty deals and regional voting, one of the things that’s interesting here is that you think of the United States basically brokering the TPP and then rejecting the TPP with the Asian countries in the 2010s. You’re like, “Oh, that’s weird,” but then you go through the history here. It’s very easy to forget that the United States, post–World War I, sponsored the League of Nations and then didn’t join the League of Nations despite sponsoring it. The United States struck a trade deal with Canada—I can’t remember exactly when in the 1800s. So what you’re saying, again, so much of the stuff you think, “Oh, this is unique.” A lot of the stuff is so similar here.

You know who my favorite person in the book is? He’s the head of FDR’s Export-Import Bank. He’s a rising figure in the administration, and he’s kind of pro-tariff. His first deal is to strike a deal with Nazi Germany to sell 800,000 tons—I don’t know what the unit is—of cotton, mainly for German marks, and then he’s immediately escorted out of power. I was just like, man, this guy was a rising figure. He was kind of on the other side of tariffs because FDR was lowering tariffs, and he burns all his capital striking a deal to sell cotton to Nazi Germany. Like, oh, man, that’s a rough beat.

Yeah. And it’s like, to make a mistake like that, because that’s always the thing that defines you: What was your most important job, and how badly did you do it? I’m sure he felt pretty bad the day after he realized this was kind of the end of his career. And then, looking at just how political outcomes evolved after that, it just looks worse and worse. He’s always going to be the Nazi trade-deal guy.

He would have been great in finance, though, because of the whole Matt Levine thing: If you lose $1 million, it’s bad; if you lose $1 billion, you’ve got another job because people are like, “Oh, he risked, he learned.” He would have been great in finance. Because if that’s how you flame out in government, imagine how you would have flamed out in finance with that deal.

I think we’ve covered a lot of it. Again, I could just list quote after quote. I’ve got one on my screen: “The United States has a Gordian knot in the matter of interference with world trade by tariffs, quotas, embargoes, and similar trade restrictions.” Is that from today? Nope. Again, that’s from around the 1930s era. And I could find similar quotes for the 1870s, the 1820s, everything. Anything else kind of interesting that you wanted to call out from the book or anything?

One of the things that was just funny to me was that there’s this bit where it’s quoting a Texas legislator, and he’s just throwing out some numbers. He says, “People talk about the tariff being for revenue, but actually, I bet that for every dollar of tax revenue it generates, $5 of private gain.”

Then 6 pages later, it’s Irwin talking about macroeconomic and econometric analyses of the impact of tariffs. He says, “Well, it looks like the main part of the impact was about 0.5% of GDP as tax revenue and about 2.5% of GDP as gains for the producers.” Somehow this random legislator just gets the number exactly right off the cuff, which is great.

I wonder how much of that is just that you would have this more tangible sense if way more people were actually doing physical work and seeing things get made. They’re growing things or making things, and then some fraction of them are in the service sector, but still a lot more adjacent to that. Even if you’re in the service sector, but your job is as a clerk at a warehouse or you work for the railroad, you still just see the tangible evidence: This is what trade looks like. Ships come in with this stuff on them, and they go out with this other stuff on them.

Maybe people just had these more accurate intuitions about those kinds of things because it was closer to the lived experience. Whereas, if you look at trade today and you’re looking at something like an iPhone, it’s this black rectangle, and there’s a whole lot of complicated stuff in here that was designed in a lot of different places and built in a lot of places and all put together in China.

You just don’t have that sense of this object containing things that have collectively circumnavigated the globe many times before they got into that iPhone that then got to you. I think the efficiency of the modern economy makes it easy for us to sometimes underappreciate trade and just to have really weak intuitions about how big a deal it is and how complicated it is.

Yeah. And look, I think that’s a through line of the book, too, right? They mention it time and again. It’s protecting the things that get made—the factory jobs. Like, “Hey, I don’t know.” But it’s definitely a through line.

With the iPhone, as you said, an iPhone costs, what, $1,500? So I think people kind of think, “Oh, because it’s so small...” You don’t think about it. If you had $1,500 of—name your commodity, name your commodity—it would take up so much room on a ship. So you’re kind of like, “Oh, clearly that’s way more important than the iPhone.” It’s like, no, the iPhone is actually probably more important. They’ve driven down costs and increased efficiency so much because it’s so small. It’s actually probably carrying more than its weight in terms of value, even though I used weight, even though it’s way smaller.

They go to some congressmen, and all the Republicans are saying, “Hey, giving FDR—the president—the power to renegotiate.”

Oh, yeah, I love that echo.

Yeah, I think I underlined some speech there. Oh, yeah. Here we go: Republicans went so far as to say that this bill giving the president power to negotiate tariffs would create a fascist dictatorship in respect to tariffs, and there would be no shackles upon the use of this extraordinary tyrannical dictatorial power over the life and death of the American economy.

No, you’re right. I’m on the exact same page because I love the whole point. It has echoes in today, but then I love it because they’ll go to individual senators who voted for these new tariffs and then are going to vote for this, and they’re like, “Hey, what’s going on?” Or they’ll go to some of the senators and be like, “Hey, you’re saying it’s unconstitutional to vote for this because they’re going to lower tariffs. You voted for this when it raised tariffs. What are you going to do?”

And there’s one congressman from Minnesota, Harold Knutson. He says, “Look, I’ll be honest with you. If I thought the president was going to raise tariffs, I’d vote for this bill in a second, and I wouldn’t be making a peep. But he’s going to lower it, so by God, it’s unconstitutional.” I just love the honesty there. And again, you see parallels to today, where 10 years ago, you can find any politician you want saying one thing, and they’re probably acting it out differently. But I just love the honesty of being like, “It’s not in my constituents’ interest. It’s not in what I believe. So, voted for it then, voted against it.”

There are tons of other funhouse-mirror things, but anything else jump out to you?

Not really. I thought it just added a lot of texture to, like you mentioned before, a lot of other historical debates, where it makes more sense and fills in some more gaps about how the tariff issue became this national issue and really dominated politics for a while. So I guess it probably did end up just creating different political coalitions.

You would end up with a low-tariff coalition that is also part of the pro-slavery coalition before the Civil War. And then you end up with this connection between high tariffs and being opposed to slavery. It probably ties into a bunch of other stuff. I could imagine that if you were the high-tariff party, and you know that this means U.S. industry is protected, maybe this affects your view on immigration, where it does mean more people working in these jobs and mitigates some of the wage pressure.

Meanwhile, that increase in population in the earlier parts of the 19th century does mean more people who are going to eventually spread out into states that haven’t determined whether they’re free states or slave states. So maybe you end up with people in those states voting your party’s way because your party is the one that let them in in the first place.

We probably end up with all this weird path dependency in economics, politics, and history generally. Even though tariffs were a non-issue until a couple weeks ago in U.S. politics—or mostly a non-issue in U.S. politics—we still sometimes inherit institutions that were very much defined by tariffs when they mattered a lot more.

You know, one thing I liked in the book: you’ll see, again, the correlation between voting for NAFTA and voting for the tariffs in 1830 was 60%. So it was actually quite high.

But I do love seeing how, at first, if I remember correctly, the Midwest was kind of partnered with the North on higher tariffs. Then, when roads get built so the Midwest can start shipping its grains out, they go, “Hey, we’re no longer high tariffs; we’re low tariffs now.” So I love seeing the evolution.

One thing I did want to ask you before we wrap this up, and then I have a comment and then we can wrap it up. You will see, especially around slavery, but even later, too, when a party is worried the votes are starting to break against it, they add a bunch of states, right? And you see time and time again in history—and, look, this is unrelated to tariffs—but as I was reading this and just reading the history, I was surprised.

Obviously, there’s the talk of Canada or Greenland or whatever, but I was surprised we haven’t seen parties trying to add more states, especially in the recent past, where the temperature has gotten really hot between the 2 parties, versus the 1970s or 1980s, when, yes, people would like to be in power, but I don’t think they were saying every election was the fate of our democracy. Have you been surprised we haven’t started seeing the parties talk about adding states to kind of pack their votes a little bit?

Yeah, I think you probably want things like that to happen when the temperature is really hot, but you can’t actually make things like that happen unless it simmers down a bit. I think it makes a lot of practical sense that NorCal and SoCal could be independent—could be separate states—and maybe we keep the state count constant by having just Dakota. On the other hand, there are going to be some South Dakotans and North Dakotans—not many of them, but there are going to be some—who are mad at you.

I mean, just as an administrative matter and in terms of having the Senate be roughly representative of the overall population, if you do something like that, what you’re basically saying is, “I think there should probably be 1 or 2 more Democratic senators and probably 1 or 2 fewer Republican senators.” And so, of course, you kind of know how the votes will break down.

Then you could say, “Okay, the actual compromise is, let’s split California, but we’ll also split Texas.” And then the problem is that Texas is full of Texas nationalists who actually do like Texas as its identity, as part of their identity.

So I think it is true that you could hypothetically have some kind of pressure-release valve like that. It’s just a lot easier when your country is expanding its territory and is able to buy adjacent territory, and also when land is a big factor of production.

If you have new territory, people can just go there and actually improve their income just because they’re going somewhere that’s empty, and so they can have their own farm. It’ll be a larger farm than it otherwise would be. Whereas, if we did annex Greenland, it’s not like we’re all going to be going up there and working the rare-earth mines, and the trading floors will be empty because the hedge funds just can’t afford to keep all of their employees when they could be out there mining or whaling or something.

So, in that sense, it changes what that feedback—what that pressure-release valve—looks like.

No, you say—and look, I said this off the cuff—I hear that. In what you said, you talked about the temperature dialing down a little bit, and I’m just, as I was reading this and getting the memory jogged, surprised that the temperature was really high when they were adding states.

So I definitely hear that it would be easier if the temperature was coming down and people weren’t worried about 1 senator flipping literally everything—the fate of American health care or whatever you want it to be. But I’m surprised. You’ve got a Republican-controlled trifecta right now. And if history is any indication, like in the 1880s, I think the Republicans have been like, “Hey, maybe we add in a couple states. You’ve got North Dakota and South Dakota. Why don’t we have a West and East Dakota that are going to be reliably Republican as well?” and just kind of pad our majorities there, because I’ve just been surprised by that.

Last thing I wanted to say, going back to the book: I really, really enjoyed this book. Again, highlighting 2 areas that I thought it could improve, and we’ll wrap up after this. A, the conclusion: he doesn’t even give any thoughts. As you said, he just kind of lays it out there: here’s the history of the tariffs. And I thought he would have a conclusion. He just says, “That’s the history of tariffs. They’ve been important. Donald Trump’s coming. We’ll see what he does.”

I did think he was interesting. He wraps it up by saying, “Hey, the history of tariffs says that they’re tax policy, and tariffs are really slow to change,” and the past 60 days kind of show otherwise there. But I’ll let you comment on that, and I have 1 last comment.

Yeah. No, I thought it was a really good outline, and in some ways I think if I’d gotten to the end of the book and he’d said, “Well, here is proof—I think this book just proves that tariffs are always a terrible idea,” or if he’d said, “This book proves that tariffs have costs and it’s always worth it in the end to preserve these jobs,” or whatever, I think either of those would have made me want to double-check some of the quotes and references.

But if he’s just reciting a bunch of facts, and they’re interesting, and he’s also able to say tariffs did have an impact—it’s just not as big as you would think, and a lot of that was that trade was not as big in the past as it is now—maybe his point is that you want to really belabor a point like that because it’s not one of those ideas where you can come up with a really snappy explanation for why that would be so and then everyone just instantly gets it.

Yeah, I was pretty much fine with that. I'm sure he has views, but I also think generally economists who write a lot about trade are almost always going to have a view that free trade is a good idea and that tariffs are rarely or never worth it. The fact that he was able to say things like, “Here’s who benefited, here’s who didn’t,” or, “Here’s where I think the deadweight loss was just not that big,” really adds to the credibility of the overall work.

No, now that you say that, I think I agree with you. I did think, “Hey, this is an economist and historian writing this. He’s going to come out at the end and dunk and be like, ‘Tariffs are terrible. Forget tariffs. Let’s lower income taxes, corporate taxes—all taxes are deadly.’” But he does not say that. He’s very balanced.

The other thing, which I think you will agree with me on, man, is that I wish he had gotten this book edited a little bit better, because he will tell the same story 4 times in a row. Again, the book runs probably 1100 pages of actual reading and then 100 pages of footnotes. I could have gotten this down to 500 pages in 3 days. I mean, he really tells the same stories and stuff, and I just wish he had edited it a little bit better.

I know you get a couple of cool anecdotes when you can run long, but several times I would read a page and then read it again and flip back and forth, like, “Did I just read the same page 3 times in a row?” And it’s because he would repeat the same story over and over. So, I really am enjoying it, but, man, I wish he had edited it just a little bit.

Yeah, yeah. I think there, you could definitely tell a story that is like this, but it is, “Okay, here are 5 big tariff debates. We’re going to detail what the situation was leading up to them and then how they went.”

Part of it maybe is that the tariff debate was pretty continuous. In fact, there are a lot of bits in the book where he says, “Okay, here’s who’s president.” And then the next thing that happens is the big swing during the midterms because of something tariff-related.

So, you do have this blow-by-blow thing where, especially when tariffs are being written mostly by the legislature, every 2 years there is some turnover in who did what. The more extreme a thing someone did, the more likely it is that they’re out and the policy changes again.

You have this weird homeostatic mechanism where the tariff has to bounce around, in part because it responds to the economic cycle with a lag and in part because politicians’ careers were partly tied to whether or not the voters perceived them as having done a good job on tariffs.

One last thing, and then we’re done: I do love that there are a couple of recurring characters, especially on the high-tariff side. Henry Clay pops to mind, Pig Iron Kelley pops to mind, and a few others, but I love when they’re just popping up over and over again across a 30-year period.

I understand politicians are powerful. They tend to get sticky. I almost felt like a sports fan. In 2006, I was rooting for LeBron James, and now in 2025, I’m rooting for LeBron James.

When I’d see Henry Clay in the 1830s dealing with Andrew Jackson, and then I’d see him 10 or 15 years later, I’d be like, “Oh, yeah, my guy’s still out there kicking it.” It’s really fun to see that. But that’s how politics goes, especially with tariffs and these figures popping up. I thought that was interesting.

Any last thoughts? I think I’ve said that 4 times, but again, I really liked it. We read 700 or 800 pages, so we might as well have a lot of thoughts.

Yeah, no, I think it was fun. I think it was this look at just a very different political structure than the one we have today, in terms of how laws get made and in terms of what the pressures are on them.

It’s also just a lot more literal and personal when it’s a slightly smaller country, and lobbying is literally: you hang out in the lobby of the hotel where President Grant is going to be sipping bourbon and smoking cigars, and you hope that you get a chance to have a fake chance meeting where you get to tell him all about the importance of copper mining or protecting sugar farmers, or whatever it is.

So, yeah, I think we’re always operating in systems that descend from a system that worked in a much more personal and literal way. Just seeing what that system was like and tracing its ancestry to today was really fun.

But the more things changed, the more they stay the same. I mean, that chance meeting with Grant—you had that happen at Mar-a-Lago now. And the deep state now, every 20 years with the tariffs, they’d be like, “Hey, we think this is really impacted by the deep state. We need to drop all our tariff reform and look into the impact of lobbying.” It was just a really interesting thing.