Donald Trump loves tariffs. He’s been talking about them for 10 years and still does not understand how they work. He also doesn’t understand trade deficits and believes that any country that sells more goods to the USA than buys from them is somehow ripping off America. If services are included the trade balance often reverses but he isn’t interested in that.
It’s one thing for the
President to be ignorant about economic statistics. But it’s quite another when
he refuses to consult economists or ignores their advice. He thinks he’s such a
genius that he knows better than anyone else about everything. Some people just
can’t be taught and Donald Trump is the poster boy for such people.
The tariffs Trump
announced today covers every country and all products, excepting only Russia, North Korea, and one or two other countries, and their products. This includes many products that America cannot make or
grow- like diamonds and coffee - which makes no economic sense.
The stock market which
used to be the only economic marker that Trump cared about has tanked even more
today. Indexes like the Dow Jones dropped between 4-5% today, losing more than $2t
in investors’ wealth (in addition to the $5t lost since inauguration day).
So what is Trump’s
motive? Is it simply wilful ignorance and complete indifference to the
consequences? Does he really believe that they will promote more manufacturing
jobs in America despite evidence to the contrary? Or is something else going
on.
Heather Cox Richardson
in her substack post this morning quoted Senator Chris Murphy who explained
that the reason Trump’s tariffs make no economic sense is because they are not
an economic tool. Instead Murphy argues the tariffs “are simply a new, super dangerous political tool” designed to
control private industry the way he is controlling law firms, universities and
media corporations. Corporations “will
need to pledge loyalty to Trump in order to get sanctions relief. The tariffs
are designed to create economic hardship so that Trump has a straight face
rationale for releasing them, business by business or industry by industry. As
he adjusts or grants relief it’s a win-win: the economy improves and dissent
disappears.”
Similarly Robert Reich
in his morning substack post argues that the real reason for Trump’s tariffs is
not to reciprocation for other countries’ unfair trade practices, but
intimidation. His goal in this as in everything is to get other countries to
capitulate to his demands. “Surrender is
the whole point. Domination is his goal”. Each capitulation feeds his power
and “encourages him and his goons to engage
in even more bullying…”
Whether aimed at other countries or American industries and corporations, what Trump is doing is extortion. He's like the mob boss taking over a town who first sends his thugs to rough up the local businessmen, then offers them protection - for a price.
These theories make at
least some sense. But I don’t know which is worse –a wilfully ignorant leader ruining
his country's (and the world’s) economy in a misguided attempt to make it great
again, or a tyrant seeking world domination.
Sources
https://heathercoxrichardson.substack.com/p/april-2-2025-wednesday
https://robertreich.substack.com/p/how-to-deal-with-trumps-demands-for
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