The Trump administration’s April 2 “Liberation Day” tariffs put Wall Street into a tailspin in early April, as the president threatened to impose 10 percent rates on most countries and increase rates for the “worst offenders,” including China. The market reaction was swift and severe, with shares on the S&P 500 tumbling more than 11 percent from “Liberation Day” to April 9, when Trump announced that he would postpone the tariff increases for 90 days—except on China, whose tariffs he raised to 145 percent as the countries slapped each other with back-and-forth retaliatory increases.

The president and his advisors were unfazed by the decline in the stock market, with Treasury Secretary Scott Bessent telling reporters the decline was “a ‘Mag 7’ problem”—referring to the nickname of the top seven U.S. technology stocks—“not a MAGA problem.” Aboard Air Force One, Trump told reporters, “I don’t want anything to go down, but sometimes you have to take medicine to fix something.” 

It was the sell-off in the bond market that made them blink, as the rates for the 10-year and 30-year U.S. Treasury bonds surged nearly half a percentage point each over the week that Trump threatened to raise tariffs. Treasury bond rates directly affect the U.S. government’s cost to borrow money to fund its operations.  “They were getting a little bit yippy, a little bit afraid,” Trump told reporters.

Panicked and hostile reactions followed from pundits and editorialists, including from establishment conservative outlets like The Wall Street Journal and National Review. “Not since Herbert Hoover signed the Smoot-Hawley Tariff has a president chosen to disregard a larger body of informed opinion than President Trump did when he instituted his protectionist trade policy,” Republican Phil Gramm, former chair of the Senate Banking Committee, wrote in the Journal. (See the following editorial by Chronicles Editor Paul Gottfried debunking the Smoot-Hawley canard.) The editors of National Review published an editorial urging Congress to overrule the president’s tariffs, especially those on China, Mexico, and Canada, which have provided one-third of U.S. imports and are “incredibly damaging to the U.S. economy.” 

Since China entered the World Trade Organization in 2001, America’s economic health has fallen off a cliff and China’s has soared, such that it has become the world’s manufacturing powerhouse and has advanced its technological and military sophistication to rival the U.S.

Ironically, it was these very same media outlets that championed the free-trade policy that has put the United States in its current predicament, one of massive indebtedness and economic dependence on nations like China that are hostile to U.S. interests. Since China entered the World Trade Organization in 2001, America’s economic health has fallen off a cliff and China’s has soared, such that it has become the world’s manufacturing powerhouse and has advanced its technological and military sophistication to rival the U.S. China’s massive population now inhabits bustling cities characterized by modern infrastructure and mass transportation, while U.S. cities have fallen into disrepair and are plagued with high crime and drug abuse, particularly of fentanyl, which is manufactured and imported into the U.S. from China. The decline in America’s fortunes can be seen particularly in the decrepitude of the so-called Rust Belt of former manufacturing regions in the U.S. heartland, which during the postwar period had provided their inhabitants with the country’s highest per capita incomes.

The U.S. government is now in debt by $36.7 trillion, an amount equivalent to $323,000 per American taxpayer, and it pays nearly $1 trillion in annual interest on that debt. America’s trade deficit—the gap between what it sells and buys from other countries—reached a record $918 billion last year. The U.S. national debt as a percentage of its gross domestic product was 55 percent when China entered the WTO in 2001; it hit 122 percent in 2024. Most crucially, the U.S. no longer produces the critical resources it needs, like steel, rare earths, semiconductors, and silicon computer chips. The fact that we are dependent on these imports in part from China, or from countries that China threatens to remove from U.S. economic influence, like Taiwan, is a matter of strategic vulnerability.

Nor has the Communist Party-ruled China played by the rules of international trade when it joined the WTO. In addition to its drastically lower labor costs, Chinese industry is heavily subsidized by the state, which does not allow American firms to compete freely within China. Nor have Chinese courts done anything to prevent Chinese firms from blatantly stealing American intellectual property. Here’s how Canadian businessman and Shark Tank host Kevin O’Leary put the situation in a panel discussion on CBNC:

One-hundred-and-four-percent tariffs on China are not enough. I’m advocating 400 percent. I do business in China. They don’t play by the rules. They have been in the WTO for decades. They have never abided by any of the rules they agreed to when they came in, for decades. They cheat, they steal, they steal IP [intellectual property]. I can’t litigate in their courts. They take product, technology, they steal it, they manufacture it and sell it back here. Nobody has taken on China yet, not the Europeans, no administration for decades. As someone who actually does business there, I’ve had enough. I speak for millions of Americans who have IP that have been stolen by the Chinese.

In light of the stark reality of America’s economic situation, all the complaints that are coming from Wall Street and the conservative establishment are akin to the voice of an alcoholic complaining that cutting him off from his supply of booze is going to kill him. The globalized economic system Americans have been sold by our economic elites over the past three decades has made the country weak, passive, obese, and dependent. Weening ourselves from this system is not going to be pretty, and the Trump administration is going to have to balance its policy on a knife’s edge, at the risk of crashing the Treasury bond markets if the “medicine” it applies is too strong. But shrinking from this challenge and accepting our current situation of decline and dependence is no choice at all.