I predicted, in my last post, that the next step would be Trump Destroying Everything (his proven instinct and honed skill) in the least time necessary.
Sadly, I was right. Here we are with Liberation Day.
I have never been a fan of Globalization, though I recognize the value of trade as such. But this is not the way to end Globalization, or trade deficits, or budget deficits, or de-industrialization.
Whatever bad you may say about it, and there's plenty, the US has been for a long time the wealthiest country in human history. A significant part of that today is reliant on global trade. We trade hundreds of billions of services for hundreds of billions of manufactured goods, which in many cases we don't even make anymore and haven't done so in a long time.
Whatever else you can say about this, it has worked so far, and showed no signs of not working.
Even if you wanted a total shift, you don't just throw that into the recycler all at once. Not while people still need stuff not made in the USA anymore!!!
Even on a firm footing such as good planning, such things take a lot of time because you have not just one industry but supply chains and networks.
Trump's Liberation Day is psychopathic madness.
The 25th Amendment should be applied immediately if Congress still can't do what it needed to do in 2021 after January 6th...Remove Trump From Office. He's insane, he's a madman, he's the very kind of power, pain, and fear manipulating lawless demagogue that the Founders of the US Constitution worried about (they were thinking about Oliver Cromwell and others) and tried to prevent by creating the Separation of Powers.
And Liberation Day is just one in a long line of lawless actions, including defying the courts over deporting a gay Venezuelan hairdresser with no convictions to one of the world's worst prisons in El Salvador, on highly specious grounds that would probably fall apart on any examination. Shutting down big science in health (a national Comparative Advantage we should be building and funding more) and other essential government operations--which were chronically understaffed rather than overstaffed, for a country of our size and complexity.
Further problem is all the President has appointed are fellow Yes-men if not outright morons like himself. And those Yes-men, now at the top of federal agencies are not only engaged in massively destructive layoffs, and killing the careers of the youngest generation of scientists and experts, but performing other actions, like recoding the Social Security programs, all being done by fellow Dunning-Kruger morons (whose whiz kid expertise in computer gaming or some such leads them to believe they are the masters of everything) virtually certain to create more catastrophes going forwards.
This has to be stopped.
No economists of any qualification (and who haven't become members of Trump's court) ascribe any description other than bullshit to either the simple version or the fanciest version of the formula used by the Trump Administration to calculate "reciprocal" tariffs.
But even if you took the fanciest version as beautiful and elegant, it's wrong again because the numbers used are way far out. The elasticity of prices to tariffs is given as 0.25%. IOW, the claim is being made that foreign producers (and domestic importers) will absorb 75% of the tariff costs, leaving the consumer to face only a 25% increase.
Most people intuit 1:1 but the answer from research is more that the wholesale prices will likely rise by over 90% of the tariff cost. Retail cost would generally rise a bit less than that. So generally the consumer, not the foreign producer, winds up paying most (but not all) of the tariff cost. But then retailers with quasi monopoly power may raise prices more, using the increased cost as an excuse.
EPI studied this angle, and concluded that even to meet Trump's stupid goals (which would basically reduce the world to a barter economy of the kind that never existed in human society) the tariffs should be about 1/4 as big, because this elasticity is, in reality, about 4 times bigger than the 0.25 estimate, which seems to come out of nowhere.
Some people are speculating this is just a negotiation tool. Well, I'm not sure anyone wants to negotiate with Trump anymore. Canada and Mexico allowed Trump to renegotiate NAFTA during his first term, and the reward they get for that now is threats of annexation. Pretty much all other countries are probably beginning to think (if not long before) they'd be better off dealing exclusively with BRICS countries.
There goes our trade, there goes the world reserve status of the dollar, there goes the wealthiest country on earth. All in one go.
But I've noticed, over on the social media now called X because of the curious twisted mind of the owner, bots and other people with hardly any previous posts (but often with exactly 125 followers) have popped up--and even in my "Following" stream--to tell me the wonderfulness of the virtually certain (economists give 80-90% estimates) stagflation (which I'd call the Trumpcession or Trumpocalypse, it will be Stagflation on Steroids) that Trump is brilliant and it's going to be wonderful.
So we can guess where Elon Musk stands. And it turns out, his enormously expensive cars, which few Americans can actually afford (even if they'd want to, which is unlikely anymore) have more American Content in them than most American Brands (and quite often, Foreign Brands have more American Content than American Brands).
So that's our future, working in the Dickensian factories of Elon Musk, making all the things that used to be made in China. And hardly being able to afford them.
*****
The obvious bullshit aspects of Trump's Tariffs include:
1) Attempting to balance trade with each and every country. We don't have things to sell to many countries, but they trade with other countries that trade with us, so it works out. Attempting to balance trade with every country is like imposing a barter system. Barter systems, when they even exist, are usually very limited. In human history, we went from Gift Economies to Credit Economies according to to David Graeber. And these are the most efficient.
2) Presuming all trade imbalances are due to protectionism. No, No, No. All goods are not fungible, nor are desires or needs.
3) Presuming the "elasticities" involved are fixed.
4) Not accounting for trade wars and alternative trading blocks.
5) Pulling the elasticities out of a hat when known values are quite different.
6) Finally, presuming a trade imbalance is something so bad you must employ a harsh measure that will make many people suffer and seek alternatives. The fact is, we run a trade imbalance because we can. Or at least we could, because the rest of the world valued US dollars as a means of trade and a store of value.
Trump's tariffs end this game abruptly. People have no reason to use dollars to trade with anyone but US. Taking these measures to their logical extreme...they can't. They're simply bartering their goods for ours, and no currency need be touched.
This is the sort of thing we should never do. It sets of a failure in trust and goodwill. That's been the source of our wealth, and this is smashing it.
7) The correct solution for de-industrialization is investment and education. We can't fix 45 years of dis-investment with tariffs. We have to begin the process or re-investing in US. And for quite some time, that's probably going to require more (not less) imported goods.
8) The correct solution for underemployment and bullshit jobs is more worker power and limits on corporate and finance power.
We had those sorts of things...in the New Deal Era.
Much of that was done away with by Presidents from Carter to Obama (Clinton actually made the biggest change by eliminating Glass-Steagall, and Carter kicked off deregulation in a big and bad way, but Reagan generally gets the credit now and put the most visible face on it for most people, so by many accounts we live in the Reagan Era, sometimes referred to as neoliberalism...the belief that "markets" are the solution for everything, so instead of new entitlements we've gotten new insurance subsidies so we can choose from a market of nothing but restrictive policies, trying to guess which slant of coverage--and which company--will work best for us, if we can afford it at all).
Or at least, we used to live in the Reagan Era. It seems, for many people now, that Trump is the solution for everything. And some of his backers will face less competition with Trump Tariffs.
Links:
https://www.washingtonpost.com/politics/2025/04/04/trump-tariffs-reason-advisers/
