I think we are probably overestimating how many tariffs will be launched. Some very wealthy people will whisper in Trump’s ear, and he will do a half dozen very targeted ones, brag about them endlessly, and then when they don’t really affect the overall economy, his voters will use it as proof that all the libs were “sky is falling” once again and that Trump made and kept his promise.
It’s important to realize that the guarantee of a Trump presidency is two-fold;
1) Whatever happens will be even more stupid than you could possibly imagine
2) Trump will convince people it’s good and reap political benefit from said stupidity
The GOP continues to skate by on doing just a small enough level of harm (it’s not actually small, that is just the perception) to prevent widespread electoral backlash, and it’s quite incredible.
Not only that, but announcing them all now is a good way to try to bully countries with limited leverage into signing trade deals with the US that exploit themselves but aren’t as painful as a tariff war.
The American public saw a president overseeing one ethnic cleansing and said make that two and let’s amp up the economic imperialism even more baby.
That is a good analysis.
To me the question is what is the purpose in raising tariffs?
Speaking generally tariffs may be intended to:
(1) Raise taxes for the government.
(2) Provide protection for domestic businesses from particular foreign competition.
(3) Promote self sufficiency to lessen if not eliminate dependencies on other countries.
(4) Impose political power upon other countries.
(5) Provide leverage on other countries to reduce their tariffs.
(6) Meeting other particular objectives such as reducing drug imports or immigrants or getting allies to spend more on NATO.
(7) Diverting business and consumer expenditure away from particular goods and services.
(8) Reducing if not eliminating trade deficits.
Regarding motivation and practicalities, I find the incoming Trump administrations reasoning muddled.
And that is why I think the policy will work badly at first.
For a start selecting Canada and Mexico is more likely to annoy local allies than achieve much.
As to how other countries respond, that is another question.
www.crisesnotes.com
