by Chris Braunlich
Asked nearly 40 years ago what he needed most, less regulation or lower taxes, a small manufacturer of machine tools replied: “We need both,” he said, “but the thing we need most is certainty.”
“Businesses have to plan out months and years,” he said. “We have to plan for employee salaries, tax rates, benefit costs, energy prices, selling cost, and the value of the dollar if we export or import. There’s a huge risk of failure trying to know what all that will be two years or even two months down the road, and if we’re wrong our businesses and our employees get hurt. The worst thing for a business is uncertainty.”
Nothing about that has changed.
Economists are free to argue about the viability of tariffs, although most conservative and even liberal economists tend to line up with the legendary Thomas Sowell over Paul Navarro.
But one thing about which there should be no argument: imposing massive tariffs with a heretofore unknown formula that is defective, even on countries with which the U.S. has a trade surplus, on products we cannot make (think: coffee, chocolate, and bananas), and on islands populated only by penguins does not inspire confidence in the process.
Nor does watching the bottom drop out of the stock and bond markets, and its effect on the 61 percent of American adults holding stocks in personal or retirement accounts.
It might be comforting if these actions were explained coherently. But they aren’t: those advising the president seem to have tested a variety of themes to justify them, almost as if the evidence was gathered after the decision had been made. Only after a week had passed did the White House even unite on the message that it was all just a masterclass in trade negotiation.
So, putting a “pause” on most tariffs (but keeping them on neighbors Mexico and Canada) while making clear the goal is not abandoned and we have to do it again in 90 days creates chaos for American businesses who hire Americans to make or supply products to Americans.
Which is why your retirement account remains volatile.
It is no different for Virginia business owners.
