Farm subsidies, car interest deduction show tariffs’ triple harms

Tariffs are a three-in-one tool for economic self-harm. The first harm comes from the tariffs themselves, which raise producer costs and consumer prices in the tariffing country. The second harm comes from retaliatory tariffs, which pile on additional price increases. The third harm comes from covering up the first two tariff harms with still more government interventions, such as taxpayer-funded subsidies and bailouts.

President Trump’s tariff war took just weeks to reach this third stage with possible farm subsidies, plus a possible tax deduction for interest on auto loan payments. More such measures are likely on the way. Wisconsin-based ginseng exporters are one of the earliest casualties. More are on the way.

This is a repeat of Trump’s first-term tariff strategy. Trump’s original China tariffs caused China to retaliate, targeting American farmers. Many American farmers rely heavily on China as an export market, so this cost them a great deal of their livelihoods.

Trump tried to make up for this by giving affected farmers $28 billion in subsidies, above and beyond what they were already getting. While that helped to relieve some of tariff pain Trump caused for the farmers, it’s unfair to the taxpayers who footed the bill.

Those same taxpayers were already shouldering the burdens of Trump’s tariffs plus China’s retaliatory tariffs. That $28 billion also represents an opportunity cost that could have gone towards any number of other things Americans would have chosen to spend their money on instead.

History is already repeating itself. Trump’s second-term tariff barrage has already destroyed $6 trillion of value in financial markets, shrunk GDP, and caused warning signs in inflation indicators.

Retaliatory tariffs from around the world are already causing additional damage. And now Trump is already proposing using additional taxpayer dollars to sweep under the rug some of the damage he caused in the first place.

While trade protectionism is an efficient form of economic self-destruction, it is surely not the kind of efficiency Trump had in mind when he commissioned DOGE and other efficiency initiatives. It is time for Congress and the courts to step up.