To hear the legacy media tell it, President Donald Trump’s tariffs have led to an economic meltdown with the power to drown the global economy in a sea of red ink. The president’s “mindless tariffs will cause economic havoc,” warned The Economist. Time magazine insisted the new tariff schedule “could lead to a global recession,” and the left-wing website Vox said his tariffs are “destroying the economy … because American democracy is no longer strong enough to stop him.”

I am a firm believer in the free market. As I have written at The Washington Stand, tariffs pose real costs and potential benefits. But the overwrought analysis of Trump’s “Liberation Day” tariff policy is as off-base as the uniformly negative reaction to every policy he proposes. There are sound reasons why any American, especially a Christian, should not become a “Panican” over President Trump’s tariffs.

Reasons to Believe

President Trump deftly offset hammer-blows to the economy with policies that keep growth humming at historic levels during his first administration and will again.

The greatest reason for optimism is that the point of Trump’s Liberation Day tariffs is to open, rather than to close, markets. Already, the Trump administration has turned reciprocal tariffs into a modest tool for negotiations — and a one-front trade war against China. Trump imposed a 10% across-the-board tariff while announcing a 90-day pause on additional increases. Already, 75 nations have sought bilateral free trade agreements, with 15 to 20 underway. However, Trump hiked tariffs on Chinese goods from 84% to an the effective tariff rate of 145%. The Chinese Communist Party retaliated by raising their tariffs on the U.S. to 84%, then 125%.

Targeted tariffs can open markets. As a short-term tool, they may yield long-term boosts to free trade.

Since the U.S. imports far more goods than it exports, a trade war incentivizes our trade partners to open their markets. The U.S. imported nearly $439 billion from China in 2024, while exporting only $144 billion — a $295 billion trade deficit. For 10 years 2012 to 2022, the U.S. trade deficit with China exceeded $300 billion annually. Similarly, the European Union, a customs union,imposes high tariffs on some U.S. goods, so the U.S. imports approximately 40% more goods than they do. The U.S. runs trade deficits with more than 100 nations.

There is successful precedent for such action. President Ronald Reagan placed export quotas (dubbed “voluntary export restraints”) on Japanese automobiles until 1985, slapped 45% tariffs (on top of the existing 5% tariff) on Japanese motorcycles competing with Harley Davidson in 1983, depreciated the dollar against the yen to boost exports, and imposed 100% tariffs on Japanese electronics in 1987. The result: Between 1986 and 1997, U.S. exports to Japan more than doubled, soaring from $27 billion to $66 billion.

Tariffs can also transform the U.S. revenue away from job-destroying income taxes. President Trump asked his Treasury secretary to consider replacing the IRS with an “External Revenue Service” on his first day in office. Cutting or eliminating domestic taxes would supercharge economic growth and return America to the constitutional vision of its Founding Fathers. Tariffs and customs duties provided 85% to 90% of U.S. government revenue until 1863. For the 50 years from 1863 until the enactment of the income tax in 1913, 40% of all U.S. government revenue came from excise taxes on alcohol and tobacco and 49% from customs duties.

But back then, the federal government claimed only 1% to 3% of total GDP. Some economists estimate the Trump tariffs could still raise that much revenue today. Capital Economics analyzed the full Liberation Day tariff schedule could raise between $700 billion and $835 billion annually, or about 2.3% of GDP. (Other estimates run about half that high.) But out-of-control spending is the problem. Since World War II, federal revenue has skyrocketed to between 13% and 20% of GDP, claiming a robust 17% of the entire U.S. economy in 2024. The greater undertaking would be to return government spending to comparable levels.

Has Trump Already Compensated for Tariff Increases?

There are indications President Trump’s deregulation agenda alone has compensated for his proposed tariffs. The Tax Foundation estimates the Liberation Day tariffs will cost “more than $2,100 per U.S. household in 2025.” Yet the White House announced last month, “Since returning to office, President Trump has saved Americans over $180 billion, or $2,100 per family of four, by halting” $1.8 trillion in “proposed Biden-era regulations.” He has also proposed a bonanza of additional tax cuts and incentives. Moderate, targeted tariffs offset by massive, broad-based tax cuts could be a winning trade for most Americans.

The Trump team’s careful planning of this tariff adjustment extends to its timing. President Trump made the politically savvy choice to front-load the pain of economic transition into the early part of his term. By getting the worst impacts on the table immediately, he created an artificial basement which he can offset or mitigate with economic growth, tax relief, and deregulation, making the trough of the transition a distant memory by 2028, if not 2026. President Ronald Reagan watched Federal Reserve Chairman Paul Volcker’s high interest rates trigger the worst economic downturn since the Great Depression in 1982. But the U.S. economy came roaring back with seven straight years of economic growth in 1983, leading Reagan to a 49-state landslide reelection.

Clearly, Trump has China in his sights, and there is lingering bipartisan consensus over hitting back at Beijing. Clips resurfaced this week of Chuck Schumer and Nancy Pelosi spouting Trumpian rhetoric about the PRC, and Joe Biden kept or increased Trump’s tariffs on some Chinese goods.

Further, isolating the Chinese Communist Party would be a good thing. Although Milton Friedman and some libertarians believed in unilateral free trade, such a system is not possible with a malicious government that insists on intellectual property theft, industrial espionage, and perpetual threats of nuclear annihilation. This author has advocated isolating China in print and radio commentaries since Tiananmen Square.

The Real Mainspring of Human Progress

Ultimately, Christians must remember the economy amounts to more than tariff rates or all U.S. economic policies combined. In the final analysis, economic growth springs from human action — from the wellspring of creativity embedded in every human person by the Creator at the foundation of the world. Although God alone creates ex nihilo (out of nothing), each individual created in the image of God seeks to share in this work by refining, multiplying, and improving the natural resources the Almighty placed in his hands. No human policy can change the law God has written into the human heart.