« on: April 04, 2025, 08:54:18 am »
https://www.nationalreview.com/2025/04/americans-will-pay-the-price-for-reckless-tariffs/Believing that a country is in bad shape if it imports more goods than it exports — i.e., if it has a trade deficit — is, in most cases, a harmless error in reasoning. It’s the sort of thing that seems to make sense at first glance, but any halfway decent economics professor can train it out of students in one or two lectures.
That error in reasoning becomes harmful when the person who believes it is the president of the United States, and he is willing to claim emergency powers to act on it unilaterally. That’s what Donald Trump has done with his executive order to raise tariffs on virtually every country on earth.
As a share of the economy, the executive order is likely the largest peacetime tax increase in U.S. history. In nominal terms, it’s the largest tax increase, period. And it comes without any input from Congress. In fact, it effectively overturns USMCA, CAFTA-DR, and the twelve bilateral free trade agreements that Congress has approved. On Tuesday morning, the Dow Jones Industrial Average opened down over 1,100 points, or about 2.6 percent, in reaction to the news, while the tech-heavy Nasdaq collapsed around 800 points, or 4.6 percent.
Trump claims extraordinary powers to impose these tariffs on the basis that the trade deficit is a national emergency. He claims to be helping U.S. manufacturing firms, but groups such as the National Association of Manufacturers oppose the tariffs, probably because about half of U.S. imports are inputs for domestic production.
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The last thing that worked to substantially reduce the U.S. trade deficit was the Great Recession, because a bunch of people lost their jobs and couldn’t afford to buy as much stuff as normal. You probably remember that as a bad time, but if trade deficits are truly national-emergency-level terrible, then the 2009 reduction in the trade deficit should have been great news.
Trump likes to frame his trade policy as “commonsense.” To treat allies worse than enemies and raise taxes on consumers and businesses at a time when the cost of living is a major concern is anything but commonsense. Trump’s mistaken beliefs about trade have been a constant since the 1980s, but now they have been combined with an enormous grant of power, and Americans will pay the price.
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