Nov.26

electoral-vote.com

Dem 47

   

GOP 53

Trump Is All-in on Tariffs

For decades—at least as far back as the 1980s—Donald Trump has viewed tariffs as a magic pill that solves all economic problems. He campaigned on this notion and yesterday, he made clear that he plans to act on it. Here is the announcement he made on his grifty social media platform:

As everyone is aware, thousands of people are pouring through Mexico and Canada, bringing Crime and Drugs at levels never seen before. Right now a Caravan coming from Mexico, composed of thousands of people, seems to be unstoppable in its quest to come through our currently Open Border. On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States, and its ridiculous Open Borders. This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country! Both Mexico and Canada have the absolute right and power to easily solve this long simmering problem. We hereby demand that they use this power, and until such time that they do, it is time for them to pay a very big price!

We are, of course, aware of the dangers posed by Canada, and have done yeoman-like work in trying to raise awareness of the issue. That said, if there is fentanyl coming into the U.S. in large (or even small) amounts from Canada, U.S. authorities don't know about it. Meanwhile, Canada is not among the 10 largest sources of undocumented immigrants to the United States. In fact, it might not be in the Top 20, because the Department of Homeland Security lumps every country outside the Top 10 into a catch-all "other countries." All we can be sure of is that Canada sends fewer than the 180,000 undocumented immigrants who come each year from the #10 Dominican Republic.

In short, the ostensible "terms" that the 'Nades need to fulfill in order to have the tariffs lifted are effectively unfulfillable. And that's before we consider the fact that they have their own fentanyl epidemic; if they can't solve that, why would they be able to solve a trans-national fentanyl epidemic? As to Mexico, there actually are both fentanyl and undocumented immigrants coming to the U.S. in large numbers from there. But they're not going to be able to do anything, either. In other words, assuming Trump sticks with his threat, then he's talking about 25% tariffs in perpetuity.

In addition to the North American tariffs, Trump also added this later in the day:

I have had many talks with China about the massive amounts of drugs, in particular Fentanyl, being sent into the United States—But to no avail. Representatives of China told me that they would institute their maximum penalty, that of death, for any drug dealers caught doing this but, unfortunately, they never followed through, and drugs are pouring into our Country, mostly through Mexico, at levels never seen before. Until such time as they stop, we will be charging China an additional 10% Tariff, above any additional Tariffs, on all of their many products coming into the United States of America. Thank you for your attention to this matter.

China is not in a much better position to satisfy Trump's demands than Canada or Mexico. We suppose Xi Jinping theoretically could execute a few fentanyl dealers for show. However, that's not going to affect the flow of drugs. Plus, Xi is a strongman, and it is not good for a strongman to appear to be taking marching orders from another strongman.

We admit to being somewhat mystified by Trump's thinking. But before we start speculating, let's run through some facts. The first fact is that, in addition to being (apparently) a True Believer in tariffs himself, Trump appears to have converted his devoted followers to the Gospel of Protectionism. That much is clear from the latest poll from CBS News/YouGov. To start, 83% of Trump supporters and 52% of all respondents want tariffs. At the same time, 79% of all respondents think the #1 priority of the Trump administration should be lowering prices, while 59% of all respondents think tariffs will make prices higher. That means there is a not insignificant portion of the voting public that: (1) supports Trump, (2) wants tariffs, (3) wants lower prices, and yet (4) believes tariffs will lead to higher prices. What on Earth is a non-crazypants politician supposed to do with that kind of dissonance?

Meanwhile, there's every reason to believe that the conventional wisdom about tariffs—that, in short, they do more harm than good—is correct. The last round of tariffs, from 2017-20, which were much less aggressive than what Trump proposed yesterday, were borne almost entirely by American consumers. Projections for a new round of tariffs, made before we got specifics yesterday, suggest a decrease in purchasing power of 2% (richest people) to 4% (poorest people), working out to a loss of $1,700 for the average household. Meanwhile, the first round of Trump tariffs, from his previous term, didn't save jobs, despite promises to the contrary. The fundamental problem is that the loss of jobs in agriculture and manufacturing is largely not caused by competition, but instead by automation. A protectionist policy cannot reverse that.

Ok, those are the facts. Now, let's move on to speculation. Why would Trump commit to a policy that is likely to hurt working-class people, including tens of millions of people who voted for him? And, in particular, why is he pursuing a policy much more aggressively than he did the first time around? Here are the seven theories we came up with:

1. Trump really is a True Believer, and has convinced himself that he knows tariffs and macroeconomics better than, you know, every economist ever. Inasmuch as he has surrounded himself with kooky people, it's possible that some "alternative thinker" has his ear, and is egging him on. These seem like exactly the kinds of things Elon Musk might do, for example.
   
   
2. Trump knows that his proposal is probably illegal, by virtue of the fact that the U.S. has a free trade treaty with both Mexico and Canada. So, he may expect to get sued, and for his tariff plans to be frozen in place. He hates to lose, but this would pretty easily be converted into a win, because he could whine and moan about how unfair it all is, and then he could blame everything that goes wrong, economically, on the lawsuit ("If only I'd been able to impose the tariffs, this inflation/recession/unemployment/whatever would not be happening").
   
   
3. Trump knows that he's not likely to get much legislation through Congress early on, by virtue of the Republicans' razor-thin majority in the House, and this is a way he can do something splashy on Day 1.
   
   
4. This is something of an "opening bid," and he plans to back off, either by reducing the numbers, or creating carve-outs, or something like that.
   
   
5. Trump plans to impose the tariffs, let them wreak havoc for a year or so (during which there are no elections). Then, as the 2026 midterms approach, he could claim victory on the immigration/fentanyl front, and lift the tariffs. This would boost the economy, and he could claim victory again. Of course, this is like claiming you saved someone's life because you stopped choking them. But, the MAGA folks are not known for critical thinking (see the stats above).
   
   
6. There's some sort of grift going on, and Trump is using the tariffs to enrich his friends or himself. After all, the base will love him no matter what, and he doesn't have to worry about getting elected again. That said, even when he DID have to get worried about getting elected again, he was finding ways to excuse fat-cat donors from his tariffs.
   
   
7. Trump got marching orders from Vladimir Putin.

It could be more than one of these and, of course, some of these explanations are more likely than others. In any case, prep yourself for $10/dozen eggs, $6/gallon gas, and an extra $5,000 tacked on to the cost of that new car you were considering. (Z)