bombs in bottles
I'm thinking about the administration's tariff announcement. Specifically, I'm thinking about the conversations I'm likely to have with my students, many of whom are currently taking Economics as part of their graduation requirement. And everything I expect to hear takes me back to a single response: "This won't end the way you think it will."
Here's the chain of thought through several overly simplistic Econ 101 principles, using an example I happen to know slightly more than usual about: blueberries.
Currently, the world's largest blueberry-producing nation is Chile. Chile's rise to blueberry dominance is a relatively new phenomenon, however. For my entire childhood, the world's largest blueberry-producing governmental unit was Van Buren County, Michigan. Van Buren County, Michigan is still the world's #2 blueberry-producing governmental unit.
For the purposes of this conversation, we're going to assume Michigan actually can retail fresh blueberries year-round. It can't, but accounting for seasonal differences in the hemispheres is more work than I want to do. So here we go.
A quick Intertubes search tells me fresh blueberries are currently selling on US commodities markets at about $2.00 per pound. (If this feels low, it's because you pay a significant markup when you buy them per pint at the grocery store.)
Chile got the minimum 10 percent tariff. So Chilean blueberries will now cost US importers $2.20 per pound. Michigan blueberry sellers, meanwhile, can keep selling their blueberries for $2.00 per pound.
What happens?
My students will almost certainly answer "people will buy Michigan blueberries instead, and this will be good for Michigan blueberry growers and for people who want blueberries. It's a win-win!"
But this means there will be more demand for Michigan blueberries. And when demand rises....
...prices rise.
Michigan blueberries aren't going to stay $2.00 per pound for long. They're going to rise to $2.20. At this point, there are no benefits for consumers. Blueberry growers see a slight benefit.
Rising prices might incentivize Michigan's blueberry growers to grow more blueberries. After all, there's more money to be made, right? The costs of growing more blueberries may be offset by the increase in prices. To do this, though, our blueberry farmers will need to overcome a small problem and a large problem.
Small problem: Blueberry bushes take approximately three years to become established, and 5-7 years to fully mature. During this time, they require the same intensity of care as established bushes, but they don't produce anything. Our blueberry farms will need to account for this 5-7 year cycle and hedge their bets as to where blueberry prices will be in that time.
So maybe blueberry farmers plant more bushes. Maybe they don't. Either way, they have a larger problem:
Who picks the vast majority of Michigan's blueberries?
If you guessed "migrant workers," have a muffin.
These tariffs come at a time when the administration is also "cracking down" on "dangerous immigrants" (aka human trafficking people with known protected status to foreign prisons):
We're about to run a significant shortage of workers to pick these blueberries (and every other crop we'll need to rely on when the cost of imported foods goes up).
"Okay," my students will probably say. "But other people will step in and take those jobs, right?"
...Will they?
Michigan agricultural workers aren't guaranteed an hourly wage or salary. Instead, they're paid "piece rates."
Piece rates vary depend on what you're picking. For small produce like blueberries, they're often set by the pound. Michigan farms are required to pay at least minimum wage, even if workers accept a piece rate deal - but in practice, many do not. Especially when their workers are undocumented and unable to complain.
Harvest workers typically work as long as there's sufficient light in the fields by which to see. This means 6:30 a.m. to 10:30 p.m. in Van Buren County, Michigan. It also means working in weather that can range from 45F and raining to 100F and blazing sun - sometimes within a matter of hours.
One of two things is going to happen here:
1. US workers will refuse to work in these conditions without a significant increase in pay. This is going to drive up blueberry prices. Chilean imports will get more attractive again, driving up their demand and thus their prices. Except Chile doesn't have the problem of having alienated its blueberry-picking labor force, so Chile isn't going to face this part of the cycle.
2. US workers will take these jobs, but production will drop. With less supply, prices for domestic blueberries will climb again. Chilean imports will get more attractive, driving up demand, driving up those prices.
"But wait," you're probably asking. "Why are you assuming production will drop?"
Here's an unpleasant truth about your produce: It's probably picked by children. Yes, even in the US.
See, "piece rates" don't keep track of who picked the produce - just how much got turned in. Also, childcare is expensive, and in Van Buren County, it's also somewhat scarce.
For many, many migrant worker families, the combination of these two facts means the entire family heads out to the field, including the kids. A "single" migrant worker's piece rate might actually include work done by two, three, or four kids in addition to that worker.
US workers aren't going to bring their kids into the fields. For one thing, documented US citizens who are children are expected to be in school much of the year. For another, we are not a nation that tolerates child labor when it's our children - only when it's "someone else's children."
To get those kids into the fields, we'd need something else. Something like...the total de-funding of the US school system.
To get US workers into those fields, we'd need to crash large sectors of the economy. With, say, blanket tariffs on everything, not just blueberries.
If I wanted to turn the US into a country of 300 million desperate, starving people ruled over by 20 or so billionaires with total power, I'd institute exactly the kind of tariff system the administration just announced.
The fight isn't over yet. The first tariff-related lawsuit was filed yesterday, for example. But I have a bad feeling about this particular fight.
Trump is relying on mob boss tactics here. He assumes that the US is a big enough bully that we can make other nations capitulate to us.
Here's the thing: We can't.
These aren't schoolyard nerds. They aren't quiet family-owned businesses on a city street. These are full-size sovereign nations, with their own economies, relationships, and strategies. The world functioned without the United States of America for millennia, and it can do so again.
But "mob boss tactics" are kinda Trump's thing. His trump card, if you will. He doesn't have an alternate strategy when they fail.
He also doesn't have two things far more important than an alternate strategy. He doesn't have (1) smart, skilled people around him who will develop a workable alternative. He also doesn't have (2) sufficient self-confidence and humility to admit when he's made a mistake. Especially when that mistake was playing his trump card.
I doubt a lawsuit or hundreds will make him back down. The judiciary can only do so much when its enforcement arm is the thing that is misbehaving. I appreciate the lawsuits, but I have no faith in them to create meaningful change.
I was willing to believe the administration would back down on a lot of things. This is different. The intersection of "Trump's baby, the tariffs" and "Trump's baby, being a gruesome dick to immigrants" is too strong here. If Trump walks away from this, he walks away from the only thing propping up his dainty ego: his image of himself as a big mob boss.
The shock and awe of the last 74 days (or years, I don't know anymore) has been A Lot. It's affected everyone's judgment. But the tariffs feel different to me. This is bad.
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