Tariffs force the world to bargain

By Matthew G. Andersson

From all the partisan resistance to White House trade policy, and President Trump’s tariff strategy, the impression might be created that tariffs are just about the cost of goods and services.

The critics are dead wrong.

There’s something much more important about tariffs: they force people to the table.

Tariffs make people, and countries and companies, work together. Tariffs may indeed create some initial bad feelings; there can be some skirmishes or “trade wars.” But that’s only if politicians and business leaders sit back and complain.

Tariffs take action in order to work things out. Because they force a challenge, they invite a response, and those responses make respective parties think about what is in their best interests, and how they can negotiate. That’s called business. That is the genius of Trump’s tariff plan.

Hedge fund manager Bill Ackman recently wrote on X about how world leaders should give Trump a call and make a deal.

My advice to foreign leaders is that if you have not already reached out to President @realDonaldTrump, you need to do so immediately. Trump is, at his core, a dealmaker who sees the world as a series of transactions.

Based on his track record to date with foreign…
— Bill Ackman (@BillAckman) April 3, 2025

Exactly right.

But what he’s really saying is that world governments need to start talking; they need to reach out and communicate directly.

That’s also what makes good foreign policy, and it is the essence of peace and stability. Someone has to make an opening move and put some chips on the table in world affairs. Trump just did that. That’s what his predecessors were afraid to do, and why they created such disastrous industrial problems.

Global politics is a game, and good games involve some daring, some risk-taking, and accepting some wins along with a few losses.

Games teach a lot more than diplomacy alone, and business and games are much more effective than law and lawfare.

Renowned legal historian and author James Willard Hurst wrote an excellent book, “Law and Markets in United States History.” He argues that those two things -- law and markets -- represent different ways of bargaining. That’s true. But markets are better because they are direct and more efficient: no middle men of lawyers, judges, courts, tribunals, memoranda, and endless bureaucracy and waste, but direct, person-to-person interaction, and direct voluntary deal-making.

“Tariff” isn’t really the right word, either. I prefer “price.” In Chicago economics, price theory is everything: prices set expectations, communicate values, form supply and demand, invite offers, and reward risk and capital.

More than anything, however, prices, like tariffs, influence decisions. The best decision foreign representatives can make, which flows from U.S. tariff pricing, is to pick up the phone or get on a plane, and make a deal. Deals create a balance in supply and demand. They create equilibrium. A world economy that is moving toward equilibrium, is moving toward stability, order, and prosperity. That is the essence of Trump’s tariff plan.

Matthew G. Andersson is a venture founder and former CEO. He has been featured in the Wall Street Journal, the Financial Times, Fortune, and the Journal of Private Equity. He received the Silver Anvil award from the Public Relations Society of America and has testified before the U.S. Senate. He is a graduate of University of Chicago Booth School of Business, and the University of Texas at Austin where he worked with economist and White House national security advisor W.W. Rostow at the LBJ School of Public Affairs.

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