Tariffs as 'costly punishment'

Why? Because you foreigners are sooo unfair to me, because reasons

Like the rest of the world, I’ve been trying to understand why Donald Trump has imposed crazy tariffs on imports to the US - effectively imposing economic sanctions on his own population. The financial markets - famously politically correct and right on - think the tariffs are nuts.

Photo by Dimitris Chapsoulas on Unsplash

What’s going on?

There’s been lots of attempts to understand their utter arbitrariness. Trump has had a thing for tariffs for decades - a thing utterly unconnected to their effectiveness (they don’t work).

There’s more commentary than I can recount attempting to understand Trump’s economic rationale, or what Trump and his team are thinking. For fun, read some economic takes: The Other Hand; Drezner’s World; Noahpinion; Paul Krugman; and ‘Here's why experts think Trump's tariffs could hurt the U.S. economy.’

“Trump’s tariffs encompass such a broad swath of products and trading partners that they will inevitably have adverse effects on the U.S. economy—with the costs of disruption borne by American consumers and businesses in practically every sector.”

Trump Trashes the Economy

I think there is another way of looking at what he’s doing - and this is through the lens of ‘costly punishment’.

what is costly punishment?

Costly punishment—harming others at a personal expense to enforce social norms—is an intriguing paradox, and costly punishment offers a powerful way to understand why Trump is willing to impose such extreme, punishing, costs on the US in order to have a pop at other nations.

Why would individuals sacrifice their own resources to penalize others, especially when they gain no immediate benefit? Why would Trump impose what are economic sanctions on his own nation? Because he wants to punish other nations, and is doing so from what he perceives is a position of great strength.

(there’s a reading list at the bottom; other topics: evolutionary foundations of cooperation; animal analogues; psychological mechanisms: the human drive for fairness; neural underpinnings; third-party punishment; punishment can backfire - vendettas; unintended consequences; Trump is imposing costly punishment through tariffs)

evolutionary foundations of cooperation