Regarding the new reciprocal tariffs, I have a genuine concern that many people are blindsided by political hype. I am afraid that soon after the April 2 "Liberation Day," we are going to discover that financial emancipation has been oversold, leaving us paying a very expensive tab for an ill-conceived idea.
The billions and trillions of pending tariff dollars, soon to fill our federal coffers, will not be paid by corporations. They will not be paid by governments. Instead, every single penny will be sacrificed by consumers, both foreign and domestic. Be not deceived! "Tariff" is simply another way to spell "tax." So, open your purse or wallet and prepare to ante up... to the tune of billions and trillions of dollars!
But tariffs will bring industry back to America, right?
If that's true, how will an infusion of American industry affect your cost of living?
As of March 25, 2025, the average hourly wage for American auto workers was $23.60, compared to $1.93 to $4.27 for Chinese auto workers. Mexican auto workers made $2.70 to $3.25 per hour. Thus, cars built exclusively in America will be very expensive compared to automobiles made elsewhere.
What about steel?
As of March 2025, the average hourly wage for steel workers in the United States was around $24, compared to China's manufacturing sector (including steel), estimated at $5.51. The average hourly wage for production operators in Mexico was around $4.90. Skilled Mexican workers (machinists and welders) earned $7 to $8 per hour. Thus, metal products made exclusively in America will be very expensive compared to the same items built elsewhere.
All other American manufactured or milled products will also follow suit. Roughly, American salaries are at least four times higher than Mexico or China. Thus, a more costly investment at the beginning means a more expensive result at the end. There is simply no other way around this hard, cold fact. So, do you see your salary quadrupling in the near future, just to keep up with the more expensive American industry?
Should industry come back to America?
Yes, absolutely, but curse the Republicans like George Bush, Sr., who first promoted the North American Free Trade Agreement and General Agreement on Tariffs and Trade for the sake of their "New World Order." Please note: I make that criticism as a lifelong Republican. However, my political affiliation doesn't mean that I accept the legitimacy of every party policy!
If you're old enough to remember, Ross Perot warned us, "The loud sucking sound you hear will be American industry going to Mexico and China!" Huh, looks like he was right after all (even though George Bush's globalist Republican Party reviled the man for his honest, accurate appraisal)!
But know this: When industry does come back to America, you will pay the delinquent bill for all the years it was gone, plus paying the current reciprocal tariffs... all added to your retail cost!
Although you might not realize, we were in this same financial dilemma 200 years ago!
In 1828, the Northern politicians wanted to punish the Southern farmers for trading with England. Consequently, the "Yankees" levied huge tariffs on foreign goods — a 38% tax on imported manufactured goods and a 45% tax on certain imported raw materials. Infuriated, South Carolina refused to honor the new law. Vowing the tariffs were unconstitutional, Southern states threatened to secede.
Trying to placate the enraged South, the federal government replaced the harsh tariffs of 1828 with kinder ones in 1832. However, a tariff is a tariff, and the damage was already done!
The Southern economy went into free fall when they could no longer afford to trade with Europe. Across the Atlantic, England's economy immediately collapsed. Trying to control the damage, British banks tightened their lending policies. Meanwhile, back home, America could no longer borrow money from their foreign brokers. As a result, the Northern states spiraled into an abysmal depression when Americans made a "run on the bank" during the Panic of 1837.
The crisis came to a head on May 10, 1837, when New York City banks ran out of gold or silver coins and paper money was virtually worthless. The financial institutions immediately stopped exchanging specie (gold and silver coins) for commercial paper (paper money) at full face value, "paying only pennies on the dollar." A significant economic collapse followed. Despite a brief recovery in 1838, the recession persisted for nearly seven years. Over 40% of all American banks failed, businesses closed, prices declined, along with mass unemployment. From 1837 to 1844, deflation in wages and prices was widespread.
Interestingly, the Panic of 1837 was so incredibly horrific that the economic crisis actually influenced the American vocabulary that we still use today! When land sales could no longer be transacted with worthless paper money, property had to be purchased with "hard cash," (i.e., specie — gold and silver coins... but there was none to be had). Unlike the Panic of 1837, America is now $36.22 trillion dollars in debt... not a good time to play stupid games on razor thin ice.
Nearly sparking a civil war, the Tariffs of Abomination and the subsequent Panic of 1837 did not actually end until gold was discovered in California by James W. Marshall at Sutter's Mill in 1848.
As we enter a brand-new era of punitive tariffs that are promised to be a great American panacea, I certainly pray that there is still a mother lode of gold to be found in "them thar hills." God knows we'll probably need it!
Edwin Woolsey served as an educator for 31 years in Missouri public schools, teaching history for much of that time. His love for history continued as he authored/published 13 books, available locally at Book Nook and on Amazon.
