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In MAGA parlance, Wednesday was known as “Liberation Day,” i.e., the day on which Donald Trump would unleash punitive tariffs on much of the world. Economists probably have a different name for it, but we can’t print it since this is a family publication.
Essentially, what happened is that a guy who does not know that the word “groceries” is a term people still use every day kicked off a global trade war for no sensible reason that will not only lead to higher prices for Americans but also isolate the United States by forcing its allies (and some adversaries) to work more closely together.
In addition, the “policy” will wreak havoc with the world economy and create unfathomable hardships across the globe.
Trump believes that the US will ultimately come out ahead from the chaos he is creating through the imposition of “reciprocal” tariffs. The term is a misnomer because the tariffs are not based on the actual tariffs of other countries but rather the trade deficit the United States has with them.
That is also extremely short-sighted.
For example, let’s assume that there is a small African nation that exports a rare mineral the US needs for manufacturing semiconductors. However, because the country is extremely poor, it does not buy a lot of American goods.
The result is a massive trade deficit, which would now be used to calculate a high tariff rate. That in turn, would make the import, i.e., the mineral that the US needs, more expensive. Ultimately, that cost will be passed on to consumers and, in the end, everybody loses.
Apart from the calculation using the trade deficit and the level of a country’s exports, there seems to be no rhyme or reason to the policy.
Trump announced that all countries would be subject to a 10 percent tariff while some of them, including the US’s largest trading partners, would be punished with a higher rate.
Predictably, those large trading partners, including China, which is now subject to a tariff of 54 percent, and the EU (20 percent) have already vowed to retaliate.
In order to soften the blow from the Trump tariffs, some of the countries affected by them have already announced that they would band together. For example, the EU will work more closely with Canada, and China plans to do the same with Japan and South Korea.
This, along with the fact that it is the culprit for the upcoming global economic upheaval, will leave the US more isolated.
In other words, this “policy” is short-sighted in every single way.
Of course, there are some who are assigning method to Trump’s madness in light of the president’s well-established mobster mentality.
“This week you will read many confused economists and political pundits who won’t understand how the tariffs make economic sense. That’s because they don’t,” said Sen. Chris Murphy (D-CT). “They aren’t designed as economic policy. The tariffs are simply a new, super dangerous political tool.”
The lawmaker says that Trump can use the tariffs as a way to pick winners and losers — both in terms of industries and countries.
It is important to note that Congress could put a stop to this before Trump’s wrecks both the US and the global economy.
For example, four Republican senators voted with all Democrats on Wednesday night to pass a resolution that would end the 25 percent tariff imposed on Canada.
“As I have always warned, tariffs are bad policy, and trade wars with our partners hurt working people most. Tariffs drive up the cost of goods and services,” said Sen. Mitch McConnell (R-KY), one of those four. “They are a tax on everyday working Americans.”
The former Senate majority leader added that “at a time when Americans are tightening their belts, we would do well to avoid policies that heap on the pain.”
Unfortunately for all of those Americans, and billions of people across the globe, House Republicans are not going to summon the same kind of courage to stand up to Trump… even when he does something so extraordinarily foolish and harmful.
As a result, pain it is.
In his Navigating the Insanity columns, Klaus Marre provides the kind of hard-hitting, thought-provoking, and often humorous analysis you won’t find anywhere else.
