Tariff Deals Secured by Bullying Will Lead to US Isolation, Decline
By Tom Kagy | 23 Jul, 2025

The sole beneficiary of high tariffs may be the Trump family's crypto business.

The modern world runs on interconnection.  No nation can prosper in isolation.  The tight network of relationships, both business and geopolitical, developed over the past century by the US is what affords Americans unmatched physical security and high living standards.  

By abruptly quitting the World Trade Organization and going rogue with threats to impose absurd levels of tariffs on imports, Trump does three things: 

1. Alienate our friends, allies and partners, and reduce the value to them of US ties, greatly motivating them to strengthen ties with alternate partners as a way to avoid being so victimized in the future.  This greatly diminishes America's future influence, security and prosperity, something that looms large in the minds of statesmen but not a vain demagogue like Donald Trump.

2.  Destroy valuable business supply chains built by American businesses over decades at the expense of countless billions of dollars in investments.  For example, in 2023 US businesses made $127 billion in direct investments in China.  Since 2000 the value of US FDI in China is about $1.4 trillion.  Much of that was spent building manufacturing capacity to serve US consumers.  The tariffs have obsoleted much of those investments by making exports unprofitable.  

The destructive impact goes far beyond costs directly attributable to tariffs like the $1 bil. reported by GM for Q2.  More important is the destruction of hundreds of billions of dollars of business value in the network of supply chains involving numerous trading partners.  

Thousands of companies have simply ceased or delayed US-based business operations involving imported goods.  They include US sales of Land Rover and Jaguar cars and Raser latops, as well as some models from Framework, and some medical devices from the US firm Belluscura which imports components from China.  All of these stoppages represent losses to American employees, customers, distributors and investors.  

The list of adversely impacted American small businesses run into the tens of thousands, representing many billions of dollars in lost profits for American entrepreneurs.

3.  Lowers US and global growth for the forseeable future.  Adding a high new tax reduces sales volume.  Less sales means slower growth or even recession.  Driving up the cost of goods with 10 to 55% tariffs inevitably reduces consumer activity to the detriment of retailers, distributors, importers, suppliers, manufacturers and others along the supply chain.  

So far the impact of tariffs have been muted by drawing down stores of inventory acquired pre-tariffs and eating tariff costs to avoid losing sales.  But businesses can only do that for so long, and not after they're forced to restock after the higher tariffs kick in.

What do these high tariffs buy?  Two things: 

1. Trump being able to brag to his MAGA base that he's making other countries pay for the privilege of doing business with the United States.  In reality it's the working-class MAGA base that will pay a disproportionate share of the tariffs nominally collected from foreign exporters but is actually being charged to American consumers.  

2.  The tollgate Trump has created with high tariffs has let Trump personally reap hundreds of millions of dollars in private (and thus far, secret) purchases of $TRUMP coins and tokens of the Trump family's World Liberty Finance, the discreet modern way to bribe Trump into granting favorable terms on tariffs and other non-tariff barriers.  

As of last month the Trump family had collected over $500 million as their profit on crypto asset sales.  Trump's sly disclaimer that he has no direct management control over those businesses is meaningless.  He knows who bought how many millions of Trump crypto assets and is apparently using that knowledge to grant audiences to big-money buyers.  There is a growing suspicion that many, if not nearly all, the policy changes Trump has engineered since taking office is tied directly to business interests that have pumped money into his family's assets.

The nominal justification for high tariffs is to reinvigorate the US manufacturing sector.  The 449,000 US manufacturing jobs that remain unfilled today suggests that any new manufacturing jobs that are created will be difficult to fill, if not downright impossible, especially given the loss of workers due to Trump's senseless deportation push which, in itself, has become a major source of woe for American businesses and farms.

In essence, Trump has sold a very high new national sales tax — the most regressive and job-destroying of all forms of taxation — as trade tariffs.  You might call this Trump's big beautiful scam.