The graph above illustrates the values of the S&P 500 stocks over the last year. Pretty clearly the market does not love President Trump’s tariffs. Here’s a sampling of opinion from across the spectrum.
New York Times
Tom Friedman, David Brooks, and Steve Rattner all have pieces against the tariffs.
Washington Post
Most critically, Trump might learn from the fallout of previous attacks on the global trading system. Trade today amounts to a much larger share of economic output than it did in the 1930s, when the Smoot-Hawley Tariff Act exacerbated the economic losses of the Great Depression. Yet Trump’s new levies bring the average U.S. tariff back to where it was in 1933.
Misconceived as Trump’s tariff barrage might appear to an economist’s eye, it hews to an underlying logic about the exercise of power. Regardless of their effects on production or employment, Trump’s tariffs will compel companies across the economy and countries across the world to seek a deal with America’s leader. This seems to be Trump’s only realistic goal.
The reality of America as the dominant nation in the fastest-growing and most critical spheres of the global economy today — technology and services — seems to mean nothing to him. His tariffs have been calculated using a method closer to voodoo than economics. Among many mistakes, they are based solely on U.S. trade deficits with countries in goods. That the United States runs huge surpluses in services — exporting software, software services, movies, music, law and banking to the world — somehow doesn’t count. More than 75 percent of the U.S. economy is apparently intangible fluff; steel is the real deal.
None of these theories work, and that’s because Trump doesn’t really have a theory of tariffs. What he has is a series of intuitions: that exports make you strong and imports make you weak and dependent; that America was a better place when manufacturing formed the core of our economy; and that manufacturing tended to be strong when tariffs were high. Combine those intuitions with a penchant for showmanship and a chaotic approach to administration, and what you get is, well, just ask the penguins.
Donald Trump’s economic agenda, from taxes to tariffs (which are themselves taxes), is variable because he believes in the immediate translation of whims into policy proposals, without an intervening pause for study. (His conversation with a Las Vegas waitress quickly became his proposal to end taxation on tips.) Commerce Secretary Howard Lutnick says Trump suddenly favors eliminating “taxes” on people making less than $150,000 a year — in 2022, about 93 percent of Americans 15 and over.
Wall Street Journal
Mr. Trump’s tariffs are the biggest policy shock to the world trading system since Richard Nixon blew up Bretton Woods in 1971. As with that decision, Mr. Trump is acting with little understanding about the damage his tariffs will cause. The “disturbance” might not be as little as he imagines.
Europe needs a new strategy, and the best plan by far is to live well—i.e., economic growth. If the American export market no longer is as available as it once was, there are enormous opportunities to expand Europe’s domestic market. Europeans have become aware in recent years of the shocking gap that has opened between European and U.S. productivity and per-capita incomes—with Europeans some 34% poorer on average than their American peers. This implies there are enormous opportunities for the European economy to jolt itself into greater prosperity.
Ideas for how to do so aren’t hard to come by.
We are not bringing our friends close and our enemies closer. Too bad, when the world looks more and more like a mob war every day. We won’t come away from this new time looking stronger and more commanding but dumber and weaker—less like the Don, more like Fredo.
One of the things that impressed me about the responses, other than their collective neoliberal opposition to tariffs, was how mealy-mouthed so many of them were. Yes, our enormous trade deficit has made the United States richer. By far the greatest proportion of that wealth has been realized by the ultra-wealthy while middle income people, those between one standard deviation above the median income and one standard deviation below the median income find themselves struggling. You cannot reasonably complain about “the rich” while ignoring the reasons “the rich” are so much richer than the rest of us.
Furthermore, I think it is incumbent upon those who disagree with a policy to identify alternatives and not a single opinion piece did so.
So, in effect, Trump is helping BRICS+ to de-dollarize world trade. Alexander Mercouris notes that the new US tariffs are higher than the Smoot-Hawley tariffs that helped to touch off the Great Depression. The EU leadership is already pushing for open war with Russia. Looks like The Fourth Turning’s war is upon us.
Of course they were mealy-mouthed. If they say something too harsh Trump will use the power of the govt to go after tham like he has done with law firms. Anyway, I cant begin to communicate how bizarre it is after people, mostly on the left, have complained about income inequality to now hear that it is a concern of the tariff people, many of whom supported globalization and the need to make profits as the motive for moving business out of the US.
Alternatives? There are lots of them which have been offered before. Negotiate a trade deal, then honor it. Do stuff to lower production costs in the US like appropriate deregulation. Higher tax rates and more aggressive policing of payment on the wealthy. Dont give tax breaks to companies that move offshore. How about just starting with the US will get rid of its tariff if the other country will get rid of theirs? Maybe most importantly put someone in office who values competence.
Steve
Congratulations, steve. That was incoherent.