Why anyone is surprised that President Trump is pushing hard for tariffs is beyond me. For nearly 30 years, Trump has pounded the same drum: America is being ripped off by foreign competitors who are undercharging for their raw materials.
Trump based his presidential campaign around a handful of things: establishing a wall along the Mexican border, our country no longer getting taken advantage of in foreign alliances, and boosting America’s manufacturing base through a series of tariffs.
Nearly two weeks ago, it was reported the Commerce Department was going to recommend tariffs on steel and aluminium. Now, Trump has made good on the recommendations, and has made it known that he wants a 25% tariff on steel, and a 10% tariff on aluminium. In a statement to reporters, White House Press Secretary Sarah Huckabee Sanders said, “The president is concerned about the men and women of this country who have been forgotten about, the industries that our country was founded and built on.”
On Twitter this morning, Trump went further, escalating his rhetoric and officially confirming that, yes, he wants a trade war.
When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!
— Donald J. Trump (@realDonaldTrump) March 2, 2018
We must protect our country and our workers. Our steel industry is in bad shape. IF YOU DON’T HAVE STEEL, YOU DON’T HAVE A COUNTRY!
— Donald J. Trump (@realDonaldTrump) March 2, 2018
Trump explained his affinity for a trade war in a subsequent tweet:
When a country Taxes our products coming in at, say, 50%, and we Tax the same product coming into our country at ZERO, not fair or smart. We will soon be starting RECIPROCAL TAXES so that we will charge the same thing as they charge us. $800 Billion Trade Deficit-have no choice!
— Donald J. Trump (@realDonaldTrump) March 2, 2018
To the everyday American, Trump’s logic makes sense. Why should American workers lose to those in countries who don’t want to play by fair rules?
Wall Street, however, operates by its own logic, which is the profit principle, all the way down to the lowest common denominator. The market didn’t react well to Trump’s announcement:
Following Trump’s trade war tweet, the peso is today’s biggest loser https://t.co/dnqvncFtwx pic.twitter.com/qc73JAdvrn
— TicToc by Bloomberg (@tictoc) March 2, 2018
U.S. equity futures extended declines after Trump declared trade wars are “easy to win” in a tweet. Follow our coverage LIVE with @FerroTV ▶ https://t.co/Hb3j9GMw47 pic.twitter.com/m6X5Sj7YRu
— Bloomberg TV (@BloombergTV) March 2, 2018
That’s far from surprising. The traders on Wall Street can’t turn obscene profits without our importing of cheap, foreign-made goods. So the stock market is tanking, despite President Trump’s non-stop touting of its gain.
And that’s not all. Trump’s tariff decision could push White House Chief Economic Advisor Gary Cohn out the door.
A good look inside the pained White House tenure of Gary Cohn https://t.co/3rAfAqTuQM via @politico #trade
— Natasha Turak (@NatashaTurak) March 2, 2018
From the Politico report:
One person close to Cohn, a former Goldman Sachs executive, said he wouldn’t be surprised if he eventually left the chaotic and deeply exhausting administration as a result of the decision. A second person close to Cohn described it as a brutal blow that violated one of the NEC director’s core beliefs—that protectionism is economically backward and won’t lead to increased prosperity.
Anyone who has taken a macro-economics course knows the wisdom passed down from plenty of 19th century economists: free trade is the most efficient means of acquiring cheap goods and services. But there’s more to life than just cheap goods. President Trump doesn’t just want us to have a high standard of living, he wants us to have access to good, well-paying jobs.
Will tariffs bring back the languid steel industry in the U.S.?
It looks like we’re about to find out. Better buckle up: the trade war has begun.
What do you think about President Trump’s proposed tariffs? Tell us your thoughts below!
