We have written twice that no matter what happens this November one of the biggest certainties is the return of a "Tariff Man" to the Oval Office.

That fact is rapidly becoming consensus which is pretty wild. The only thing more shocking might be how accepted it is. We are all seemingly on board with this.

When you think about the equally shocking fact that both major parties have embraced fiscal irresponsibility it is concerning. It is then even harder to turn around and also realize that both have also decided to adopt a political philosophy that we know, to an absolute fact, leaves us and the world worse off.

The problem with falling in love with tariffs and other protectionist measures is they are very easy to impose and devilishly hard to remove. The reason is, of course, that you have created a constituency overnight that benefits from the tariffs.

Competing in global markets is extremely challenging. By comparison, competing for political favors is miles easier. It is also considerably cheaper. You don't need to convince tens of millions of consumers or clients or what have you. You need to hire some good lobbyists and pay for some decent cocktail parties.

We most recently wrote all this just last week where we argued that among other downsides, these tariffs and other measures had the potential to be inflationary. We also said you should expect more protectionist rhetoric policies as the election season heats up.

Right on cue the Biden administration announced a whole raft of new tariffs on Tuesday. They were not small either. The White House is increasing tariffs on Chinese goods, including electric vehicles (100%), steel and aluminum (25%), lithium-ion batteries (25%), critical minerals (25%), solar cells (50%), semiconductors (50%), port cranes (25%) and medical syringes and needles (50%).

You might even say "bigly" tariffs.

The political calculus is easy to grasp. President Biden is trying to take the wind from the sails of his opponent by proposing (and enacting) policies that quite literally steal Trump's thunder.

We are not sure that this will work politically - Donald Trump is nothing if not good at raising the stakes bombastically. For instance he has already easily come over the top with a 200% tariff on EVs made in Mexico and a 10% tariff on anything made in China. After all, this costs him nothing. He can say anything he wants.

But regardless of who says what, we are are far more confident about the overall policy direction and what this cynical and counterproductive turn will do economically and financially.

How should you think about this? What are the financial implications here?

There are two that we can easily see. That is besides the very basic "inflation is bad."

The first is that stuff with tariffs will get more expensive for you the consumer. Not just the stuff with announced tariffs because the thing about tariffs is that they lead to more tariffs.

Retaliation is hard coded in this game. It also leads to industries lobbying for their own protections. Today it is Chinese washing machine, tomorrow it will be French wine or Japanese rice cookers or who knows what. In turn, those countries in turn raise tariffs on Kentucky bourbon or Iowa corn or California almonds or software. This very quickly becomes a race to the bottom.

You have to feel for the poor Europeans who have been doing everything they can to hold the line on NOT yet engaging.

In the irony of all ironies it is the statist and industrial policy loving Europeans and EU that is holding the line against protectionism.

There are legitimate reasons to be concerned about very high value semiconductor chips or various other strategic products but we are talking about solar panels. It is very, very, very unlikely that the richest, largest, most powerful economy the world has should be making solar panels or washing machines. We have zero advantage there. We don't even have interested labor.

The second point is less understood and discussed though we have made it once before: we are raising the cost of our efforts to combat climate change.

The White House and its supporters will argue that by bringing production of green renewable products home, we will be improving our own economy while also making the necessary investments to combat climate change.

The only problem is that a century of economic outcomes argues otherwise.

Money isn't finite. The carbon transition is going to be incredibly expensive and doing so efficiently is paramount both because it will enable us to do it quickly and also

So, as we have argued before, we are now raising the costs and throwing sand in to the gears of the global economy to make it MORE difficult to

We also know that this happens in economic policy. Historically, once countries start making bad economic decisions the likelihood of making others start going up and then these independent policies start compounding.

That is what is happening where the (costly and likely inefficient) US industrial policy is combining with our (for already costly and inefficient) green subsidy regime to create the mother of all high cost regimes.

Away from the higher cost angle - which is as close to a lock as possible - we are also creating a huge set of interest groups that will benefit massively from these protections and tariffs and "America First" nonsense.

Regardless of who wins in November these coalitions will be both very determined and very greedy that the gravy train continues.

This is sad!

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