Tariffs and the National Debt

8/22/25 Congressional Budget Office estimates effect of tariff changes:

"We project that increases in tariffs implemented during the period from January 6, 2025, to August 19 will decrease primary deficits (which exclude net outlays for interest) by $3.3 trillion if the higher tariffs persist for the 2025‒2035 period. By reducing the need for federal borrowing, those tariff collections will also reduce federal outlays for interest by an additional $0.7 trillion. As a result, the changes in tariffs will reduce total deficits by $4.0 trillion altogether."

As deficits fall, so will interest rates 

USA Made Solar Panels

8/15/25 Yahoo Finance:

"T1 Energy (NYSE:TE) stock jumped on Friday after the company and Corning (NYSE:GLW) announced a strategic commercial agreement to strengthen the U.S. solar supply chain and scale advanced manufacturing of affordable, fast-to-deploy energy solutions.

"Under the deal, T1 will source hyper-pure polysilicon and solar wafers from Apple (NASDAQ:AAPL) supplier Corning's Michigan campus starting in the second half of 2026.

"Corning will deliver these wafers to T1's under-construction G2_Austin solar cell facility, which will be processed into cells for module production at T1's operational G1_Dallas site."

This is important for several reasons.  

1. Break PRC dominance of the photovoltaic panel industry. 

2. Create American jobs.

3. Provide competition.   I doubt they will provide a lower price, or even an equal price, but if Americans can decide whether to spend $2000 for American panels or $1000 for PRC panels, at least some will buy American.   This should pressure the PRC panels down on price and thus reduce profits for PRC companies.   

Less profit means less taxes to fiund the military of nation with whom I fear we will be at war in the next ten years.

This also reduces balance of trade deficit, putting less money in the hands of Chinese investors to buy American businesses and politicians. 

Reshoring

8/14/25 Fox channel 10:

"LOUISVILLE, Ky. (AP) — GE Appliances plans to shift production of refrigerators, gas ranges and water heaters out of China and Mexico as part of a more than $3 billion investment to expand its U.S. operations in Kentucky, Georgia, Alabama, Tennessee and South Carolina.

"The investment — the second-largest in the Louisville-based company’s history — is expected to add more than 1,000 jobs while ramping up domestic production and modernizing plants in the next five years."

Reshoring Drug Manufacture

8/7/25 UPI:

"Aug. 7 (UPI) -- The U.S. Food and Drug Administration announced Thursday it is launching the "FDA PreCheck" program in order to help construct drug manufacturing sites in the United States."

Both completed drugs and raw materials manufacturing will be encouraged back to the U.S.

Yes.  I voted for that.

Tariffs

8/6/25 Wall Street Journal:

"Six months into the experiment, with more tariff announcements likely in the coming days, the economy hasn’t crashed. Inflation has ticked up but not soared. Consumers aren’t finding empty shelves.

"As Trump promised, the tariffs have brought tens of billions in extra revenue to federal coffers. That is a significant sum of money, but not enough to replace income taxes in the way Trump has suggested."

I think the idea that tariffs could replace income tax was a pipe dream.  Still, the article discusses the dramatic increase in revenues from higher tariffs, and admits that so far, importers or retailers are eating most of the price increases caused by tariffs. This suggests to me that competition from domestic producers or lower-tariff countries are preventing them from raising retail prices.

I buy carbide endmills more often than I would like.  They are brittle and I sometimes push them through material faster than I should.  I try to buy Taiwanese or American.  The last PRC 1/8" carbide endmill I bought is now $21.99.  The US made Kodiak that I just bought was $11.99.

Another Trade Deal

7/22/25 CNBC:

"U.S. President Donald Trump on Tuesday stateside announced that he had made the “largest Deal ever” with Japan, that involves “reciprocal” tariffs of 15% on the country’s exports to the U.S."

If only Canada had a leader capable of making deals.

June Inflation Numbers

All the panic over tariffs causing inflation are having some data problems.   7/15/25 Bureau of Labor Statistics shows a .3% increase in prices for June for annualized rate of 2.7%.

Yes, Tariffs Increase Food Prices

At least in Canada:

"Top food price increases in Canada since Jan 2025 (ranked by % change):

→ Strawberries +53%
→ Oranges +37%
→ Squash +31%
→ Beef +30%
→ Carrots +30%
→ Cabbage +29%
→ Roasted or ground coffee +19%
→ White rice +17%
→ Potatoes (4.54 kg) +16%
→ Frozen broccoli +14%
→ Frozen corn +14%
→ Infant formula +12%
→ Frozen peas +12%
→ Almonds +11%
→ Salmon +11%
→ Apple juice +10%
→ Tea +9%
→ Meatless burgers +8%
→ Orange juice +6%"

I really do not want to see our cousins starve to death.  If only they had a way to stop idiots in charge of their government. 

One of those Economists Who Sounded the Alarm About Trump's Tariffs...

is changing his claims.  6/21/25 Yahoo Finance:

"

• Torsten Sløk, chief economist at Apollo Global Management, laid out a potential scenario where President Donald Trump’s tariffs are extended long enough to ease economic uncertainty while also providing a significant bump to federal revenue. That comes as the 90-day pause on Trump’s “reciprocal tariffs” is nearing an end.

"Businesses and consumers remain in limbo over what will happen next with President Donald Trump’s tariffs, but a top economist sees a way to leave them in place and still deliver a “victory for the world.”"

He is admitting that Trump has a path forward that increases federal revenue without trade destruction. 

It Is Not Bad Yet. Trust Us, It Will.

6/11/25 New York Times:

"U.S. Inflation Remains Muted, With Limited Effects From Tariffs

The Consumer Price Index rose 2.4 percent in May, from a year earlier, a reading that reflects only the initial impact of President Trump’s tariffs."

Of course,  if it turns out that competition from low-tariff nations and U.S. manufacturing keeps prices down, what will they report?

Unexpected Price Competition

One of the traditional arguments against protective tariffs is that driving up the price of imported goods will reduce price competition from domestic manufacturers.   The logic is flawless and it us certainly true, but other factors come into play as well.  This 5/17/25 Business Insider article describes a business in the wholesale secondhand clothing market.  They report rising demand for their goods because higher tariffs make used but originally well made clothes in higher demand  

My wife considers most Chinese-made clothes of poor quality.  I can see how quality used clothes would represent a competitive price point keeping domestic manufactured clothing lower priced.

Expanding Pharmaceutical Manufacturing in America

4/29/25  Legal Insurrection has an article about companies investing in U.S. production of pharmaceuticals.   They remind us how dependent we are on China for many of the medicines we use.  Quoting the Washington Times:

"

"China, the newsletter reported Tuesday, “accounted for 95% of U.S. imports of ibuprofen, 91% of U.S. imports of hydrocortisone, 70% of U.S. imports of acetaminophen, 40% to 45% of U.S. imports of penicillin and 40% of U.S. imports of heparin, according to Commerce Department data. In all, 80% of the US supply of antibiotics are made” in China."

There are so many websites about which I knew nothing and whose focus is unsurprising albeit unknown to me.

Links in the article include a page from Health Economics about Johnson & Johnson investing $55 billion in U.S. production plants because of the tariffs.

Another surprise was FiercePharma.  Also PharmaceuticalCommerce.

Will all these companies be producing in time to replace China before tariffs or retaliatory shutoff?  I am not sure.  Weaning yourself off a drug can be difficult.   I suspect there are less adversarial nations that can produce these in the meantime. 

Speaking of which, I have been going through China tooling withdrawal for some months.  In some cases, there seem to be no U.S. equivalents or at prices that are so high that I suspect they need some U.S. competition.  But even in an area where I would expect Chinese dominance -- end mills -- there are some excellent other sources such as Taiwan's SpeedTiger.  Depending on the size, I am buying German and U.S. made carbide end mills at prices that were already competitive before the tariff war started.  MSC Direct has lots of U.S. made end mills.