Albert Mohler (0:04)

It's Thursday, March 13, 2025. I'm Albert Mohler and this is the Briefing, a daily analysis of news and events from a Christian worldview. As we try to think through all issues on the basis of Christian truth, biblical thinking, what we call rightly, the Christian worldview, we understand that there are some issues that are really, really clear, right and wrong, good and evil, very carefully, very cleanly made evident. And just to give an example, let's just again talk about, well, to make it easy, let's say murder. Murder is categorically wrong. It's just really easy. And then from that we have to reason to forms of murder. And that would include, by the way, abortion, which is why we see it as such an incredibly significant moral issue. So when you're talking about life, you're talking about murder, you're talking about abortion, you're talking about very clear right and wrong, good and evil, you know. However, when you think about much the government has to do, you think about much of what we do in everyday life. An awful lot of it comes down to decision making, choices, policies that aren't evidently or self evidently, right or wrong, good or bad, moral or immoral. Instead, we have to look at the fact that we're living in a complicated world. And in some disciplines, such as, say, economic policy, some arenas of human activity, like again, economic activity, it turns out that there are many issues in which there's not an absolute right or an absolute wrong. Certainly there is if you say stealing. But when it comes to the establishment of tax policy, when it comes to budgetary policies, when it comes to many issues, it's not so clearly right or wrong. One of the key issues right now, very much in the headlines, it's not really clear in moral terms whether they are right or wrong. I'm talking about tariffs. I'm talking about President Donald J. Trump, who says that the word tariff is, in his words, one of the most beautiful words in the English language. But something is really interesting, and we need to see underneath all the headlines is that there's very little basic discussion, at least here in the United States, about what a tariff is and why a tariff matters, how a tariff functions. Where did this idea come from? If President Trump says it's the most beautiful word in the English language, clearly he's exaggerating. But nonetheless, long before he was elected President of the United States, Donald Trump, citizen Trump, was a proponent of tariffs. Increased tariffs, higher tariffs. Well, let's go back in history. Where in the world did the idea of tariffs originate? And the answer is in the ancient world. But the word itself comes from the Ottoman Empire, the Islamic empire that controlled so much of the Mediterranean world for so many centuries. The Ottoman word was tarifa, and it had to do with a charge made on imported goods. The ticket the tarifa had to be paid for, it was paid for by the importing company. That is to say that when a company imported something to the Ottoman Empire, the Ottoman Empire charged an import fee, sometimes known as a duty, now more commonly known as a tariff. And that money went to the government coffers. That's the main reason, by the way, the Ottomans had the tariff system. It was because they wanted to gain economic income for the empire's treasury by charging persons for the exchange of goods, particularly coming into the Ottoman Empire. But to be clear, the word tarifa, which came down as tariff, that's dated to the Ottoman Empire. The idea of tariffs goes all the way back in ancient classical history. But when you're thinking about, say, the last 50 years, states of America, and in much of the industrialized developed world, there has been a strong bias against tariffs. Now, when you're looking at, say, one policy versus another policy, what's the opposite of a protectionist tariff policy? That would be free trade. The doctrine we might call free trade, the economic theory of free trade among nations is something that emerged with greatest force and evidently with compelling force at the end of the Second World War in the context of the Cold War between the free world and the communist world, but also in terms of asking questions about economic development for the whole world. And the theory of free markets holds that the elimination of tariffs over time serves everyone. Eliminating tariffs charged on goods eventually helps the importer and the exporter. It helps the company, it helps the consumer, it helps everyone. It leads to more prosperity. It's uncomplicated. It is an exercise of greater freedom because both corporations and consumers have more control over the economic process. The tariff is an intervention in an otherwise free market. Free market economics was, of course, a big part of the conservative renaissance that took place in the second half of the 20th century. So even as the Republican Party in the early part of the 20th century had been a largely corporate policy that goes back to the 19th century and thus big time pro tariff. By the time you get to the revolution in the Republican Party, represented by Ronald Reagan, you have free trade not only as a policy goal, but as a central tenet of economic policy. But it wasn't just Republicans at that point. The Democrats were pretty much fully on board or at least more on board with free trade as a central part of American economic policy. Now, when you look at efforts to put that into, say, treaties, NAFTA is one of them, the North American Free Trade Agreement. You also have free market agreements between the United States and Europe. You have most of the nations of the west involved in free trade arrangements of one kind or another. One little footnote here. The free trade has never been absolutely free trade, which is to say that in the negotiations, if it were easy, you could just say no tariffs, no duties, no interference by any government at any level. Well, you could sign that agreement pretty fast. The reason why nafta, for example, required so much negotiation is that nations demand certain kinds of carve outs. They have this particular industry they want to protect, they have this particular interest or this particular area of the economy they don't even want in their country. And so you look at this and you can recognize free trade is never meant absolutely free trade. But in comparison with the economic involvement, the governmental involvement of decades and centuries past, it certainly looks like free trade compared to what came before it. The other argument for free trade is a freedom argument. Consumers in particular, like citizens, should be able to exercise the freedom of making economic choices in a free economy. And that's a basic exercise of freedom. And to take away that freedom is to reduce the freedom and liberty that is the due of every citizen. Again, that was a very conservative argument, gained a lot of traction. Why were there some Democrats, for example, who wouldn't go along with free trade even when free trade became the basic understanding and commitment of the United States? Why were they holdouts? Well, it's largely because of labor unions. Labor unions have never been keen on free trade. In some contexts, they're for freer trade, but not for free trade, not, not without some level of protectionism. They want their industries protected. They want their jobs protected. That is especially true in organized labor because it has been so heavily concentrated in industrial production. So let's just take, for example, a car. Domestic made cars were threatened by the importing of cheaper cars originally from Japan and from Asia and then from other places. And so you have had a very strong impetus coming from American labor, such as the uaw, United Auto Workers, to have a tariff system to protect the American automobile industry and thus the jobs here in the United States. That's been very compelling. It was more important for the Democratic Party for a long time. But with the realignment of workers and with unions and their interest, it's really significant that Donald Trump has become the great Prophet of protectionist terrorists in this sense. Now, just to use a term, we need to define protectionism. Tariffs really come about for two reasons. One of them is not protectionist. One of them is just dollars or currency revenue income. So just consider this. In 1789, when the Constitution was ratified and went into effect over the course of the 1790s, the constitution of the United States did not allow the federal government to tax the states. In basic terms, the only income the federal government of the United States had for a long time was income from tariffs. It was the charging of tariffs that went right into the national treasury. And there are nations today that also put a lot into their national treasuries by tariffs. Of course, this means that your people have to buy a lot from external providers who are paying the tariffs or the duties. You look at that and you recognize, well, okay, there's income. But, you know, in a battle of tariffs, that income can be significantly discounted. The income is at least one of the reasons why President Trump says he's in favor of tariffs, that big, beautiful word. And that is because there is revenue that will come. And by the way, back in his first term in 2018, this issue arose over American farm products, a battle of terrorists between the US and other nations. And in order to help farmers whose income had fallen because of the tariff war, he applied some of that money to farmers in terms of compensation for income loss because of the tariffs. He only had that money because the US Was charging tariffs. But that leads to the understanding that the main form of tariffs we're dealing with right here, they're protectionist tariffs. That means that a nation is acting to charge a tariff to make imported items more expensive, domestically produced items less expensive, giving the advantage to national interest, the advantage to domestic companies. That's for the protection of those companies and for the jobs. And so you'll hear President Trump and other defenders of protectionist tariffs say, you know, we need these tariffs in order to protect blank American industry and these American workers. Now, does that work or not? Well, in the 19th century, it worked in a huge way for the United Kingdom. The United Kingdom applied a very clear protectionist tariff on wool. And that helped to build the wool industry in the United Kingdom, particularly, of course, from Scotland. And that led to a lot of the wealth that developed in the United Kingdom, especially in the 18th and 19th centuries. But that did not prevent, eventually, economic competition from other sources of wool. So protectionist tariffs often are said to be applied to two things in particular. One of them is infant industries. Infant industries this is where companies say, and I'm going to use a tricycle just as an example. We want an American tricycle industry. If we allow all these cheap tricycles to come from all over the world, we're never going to have the establishment of tricycle companies in the United States and we're not going to have tricycle workers. And thus we're going to protect the infant industry of tricycle making in the United States. We're going to charge a tariff on imported tricycles to give an advantage to American tricycle manufacturers. And you also have the argument at the other end where there are people who are saying, in what are called elderly industries or aged industries, it doesn't mean old people, it means old companies. It means the only way we're going to keep this particular technology or this particular sector of the industry alive for a while, not indefinitely, but for a while, is to charge tariffs on imports. All right, so what's the bottom line on tariffs, good or bad? Well, it all depends on what tariff, at what time, for what industry, under what conditions. This isn't a yes or no question, fairly stated, it's not a right or wrong question in and of itself, but it does point to other worldview considerations. And one of them is that an economy is never as controllable as one thinks. And it also leads to the fact that when you understand how, say, tariffs work as opposed to free trade, what are the things you need to understand? Let me just use a clear example. The clearest example I can give is Walmart. You walk into Walmart, you have an amazing array of goods you can buy at an availability and a price unprecedented in human history. I'm not picking on Walmart, but Walmart is right there for everyone to see. Amazon would be very similar. Whether online or in the store, you have a vast array of items, and many of them are, in true economic terms, they're costing now only a fraction of what they would have cost some time ago. And you walk in the store and you take that for granted, you can buy a bicycle in Walmart and it's a fraction of what a similar bicycle would have cost in real dollars from, say, 1960. Why is that so? Well, it is because those jobs have been offshored to another country, Those factories have been offshored to another country. They pay less per hour to workers in that other country. They have other economic policies and that can be more cheaply produced in country. I'll just say I'll make one up. Geographica, that somewhere in Geographica you have These industries, and they go, they don't have income as high. They have an economy in which the wages are low, the costs are low. The bicycles thus cost a lot less. And by the way, with containerized freight, the amazing thing is that the freight is now a small part of the cost of the bicycle. You would think that shipping a bicycle all the way from Geographica, coming to the United States, you'd be paying a lot for transport. But modern containerized transport is so efficient that that's really not so. Now, I'm not saying you should try to mail a bicycle to Geographica. That's going to be pretty expensive, not to mention geographically frustrating. But let's go back for a moment to how this works. Americans are very accustomed to being able to choose a car from a vast array of makers, and that includes domestic cars. It also includes all kinds of imports. And when you drive down the street in any American city, you see something I never would have seen as a boy in this country, and that is all of these foreign manufactured cars are foreign industry cars showing up in the United States. But things get even more complicated after that. Because even if you have one with an American label on it, an American brand, a Ford, a General Motors car, the fact is that a lot of that car was almost assuredly made somewhere else. It just ended up on your car with an American mark for final assembly. So I'll just use two auto brands here. I think we can understand. You have a Cadillac here, you have a Volvo here. The Volvo is a foreign brand. It used to be Swedish, by the way, but then it was bought by another international company and the ownership is now in Asia. But nonetheless, it's still a Volvo, still has the Swedish engineering behind it. But nonetheless, you say a Volvo here, a Cadillac there. The Cadillac's American made. Well, at least most of the Cadillac is American made, or it's at least assembled in the United States. That's why it's made in America. But the fact is that American consumers are quite accustomed now to saying, I want a Volvo, I want a Cadillac. They haven't been factoring in tariffs on the Volvo with free trade agreements. They haven't had to. But you could say, well, right now, President Trump is rather anecdotal in terms of his tariffs. He is rather scattershot in terms of his tariffs. Aluminum and steel now, Canada and Mexico now, by the way, also China and some other countries. And then the President is saying that what he's calling for is reciprocal tariffs, which is to say you tariff our products. Okay, we're going to tariff your products the same way. Now, does that help the United States or not? Well, immediately, you could argue it would help the United States long term. It's a different question. I think the president's absolutely right that foreign interests and foreign countries have taken advantage of the United States, of our industries and of our workers. And they've often done so with unfair trade practices and also with unfair labor practices at times. But you look at this, and we just have to understand we don't know how this war of tariffs will turn out, but we do know this. A war of tariffs will turn out. President Trump announces new tariffs. Well, pretty soon, Canada is going to announce new tariffs. Mexico's going to announce new terrorists. Okay, so who's going to win that kind of war? A tariff war has broken out before, many of them in ages past, many of them even in the 20th century, especially the early 20th century. Who's gonna win this? Well, the answer is who can stand the pain longest? This is where President Trump, even speaking of some temporary pain, he clearly intends for the US to wait out other governments in a tariff war. But there could be something else at stake here. Maybe the president really doesn't intend to leave all of these tariffs in place. Maybe he sees the threat of a tariff and maybe even the temporary application of a rather drastic tariff. Maybe he sees that as a tool for negotiation. Maybe he thinks it will bring threat and pain to other countries in order that they will change policies to be more in alignment with what he thinks they should be. But there's something else going on here. And as I close this section of the briefing, I want to mention this as well as I say it's not a clear right or wrong. It's not a clear good or bad in an economic system, especially one that's so overwhelmingly complicated as the world economic system, not to mention just the economic system and relationships of the United States. The fact is that the law of unintended consequences often shows itself hard to know exactly how any of these policy decisions will turn out. But I mentioned that President Trump has been a critic of free market economics, especially when it comes to the issue of tariffs, for a long time, long before he became president of the United States. So what's going on there? Well, for one thing, the president saw the offshoring of so many American jobs in American industries as antithetical to our national interest. The problem with immediately reversing that is that those jobs leave fast and come back slowly. So it will take time for that strategy to work out if that's what the President's working on here. But the other issue might be even more interesting. The free trade regime was a part of a worldview and an economic theory tied to what was called neoliberalism. Neoliberalism was the idea that liberty needs to be translated into the evaporation of tariffs, the evaporation of protectionist policies, the creation of a free market. But here's the thing. President Trump understands the importance of a nation, and this was at the expense, the neoliberalism was at the expense of nations in favor of some kind of global market. Well, behind a global market comes some kind of global political reality that's at least part of what the President is resisting. The Davos crowd wants one giant global market, erase basically all those national distinctions and national borders. That leads over into issues such as immigration, refugees, economics, and all the rest. And President Trump isn't going with that. So when you wonder what's going on here, the answer is, well, time will tell. Because it's not entirely clear what exactly the President intends, an argument can be made that the tariffs he's imposed thus far appear to be quite arbitrary and separated from a big time strategy. But the reality is, I think the strategy is more apparent than some people want to see. This is a president who believes that disrupting the system that exists is necessary, even if we're not sure exactly what system would take its place. The chronological reality we have to keep very much in mind is that President Trump, in a second term in office, can start this process, but almost by definition, he can't finish it, which points to what's at stake in the 2028 elections as well. Well, okay, now we're gonna shift gears, but it's related, as you're gonna hear. And so we're gonna go to Croatia. And in Croatia, there's a big question about price controls. The government of Croatia is facing the fact that prices have been escalating, and there's a lot of political pressure because prices are getting too high. So the Croatian government is putting in place price controls that say it is going to be a criminal act if you charge more than this amount for that. Price controls are something that has been tried in the United States, it's been tried elsewhere. And in Croatia, it's something that the government is now trying to put in place because runaway inflation has become a real threat to the nation's economy. And so there's political pressure, there is economic pressure. The need is to get a control on prices. So they're putting in Price controls. Does it work or not? Why is this really interesting in historical terms? It is because Croatia is where Emperor Diocletian went to retire. So this is coming up because Emperor Diocletian, who went to retire in what is now Croatia, very few Roman emperors, by the way, successfully retired. That's a dangerous proposition back in the Roman Empire, especially when you. Diocletian, who, by the way, was one of the main persecutors of Christians in the early Church, but nonetheless an economic. He retired to what we now know as Croatia, and it was Diocletian who put in place price controls. And if you're a Roman emperor and you're putting price controls in place, you're not threatening people with fines, you're not threatening people with jail time, you're threatening them with execution. If they charge too much, that's likely to get your attention, okay? But Diocletian, back in the 4th century, as Emperor of Rome, putting on price controls, found out that if you do put on price controls, even if you are the Emperor of Rome, and even if you can and execute people who charge too much, there are two things that happen. Number one, a lot of the economy just shuts down because everyone's afraid to be engaged in business. Because, after all, you don't want to be engaged in a transactional business where you can lose your life simply for charging the wrong price. Other things that take place is that you have shortages of products because if you're not paying people enough that it's worth producing this product, if you say the price has to be this, and that's not enough to cover the price of, say, all the parts of the tricycle you're going to put together. You stop making tricycles. And so there's a shortage of these things. And thus that leads to greater inflation, which is what you tried to shut down with your price controls in the first place. But the other thing is, in a fallen world, what you end up with, if you put in this kind of tight control, even with the death penalty, you create what is known as the black market, you lead to the creation of an alternative economy, a black market that operates outside the rules, outside the law. This is how you get so much organized crime. Think of the United States, for example, just under Prohibition in the early 20th century, and how organized crime saw the opportunity and began running in alcohol. The rum runners and others you had right here in Louisville, Kentucky, there's a restaurant right now in what used to be a speakeasy during Prohibition. The police knew it was there. It was the illegal sale of alcoholic beverages. But, you know, everybody seemed to be in on it, so long as he got a take. Organized crime and groups such as the Mafia moved in. The black market became a dominated market. All kinds of perverse incentives were put in place along with a completely reordered morality. So when you think about price controls, you think about all the terrorists and all the rest, you realize nothing really is new under the sun, especially when it comes to economic behaviors like this. It goes back sometimes to Emperor Diocletian, who retired in Croatia after having put together a price control policy that didn't last. But with Diocletian in what is now Croatia, we're going to have to end today's edition. Thanks for listening to the briefing. For more information, go to my website@albertmuller.com youm can follow me on Twitter or X by going to twitter.com AlbertMuller for information on the Southern Baptist Theological seminary, go to sbts.edu for information on Boyce College, just go to boycecollege.com I'll meet you again tomorrow for the briefing.