Tag Archives: tariffs

A Timely Reminder

There’s a tendency to lose focus on past Trumpian insanities while fixating on the most recent ones–and insanities come daily from our mad would-be king. But as we approach the next arbitrarily-set date for the institution of his further, higher tariffs, it’s probably a good time to revisit the impacts of one of his biggest and most damaging misconceptions. In a recent column, Michael Hicks patiently explains why we citizens will pay for that misconception, and why the costs Americans will have to absorb due to Trump’s tariffs are worse than additional costs attributable to inflation.

As Hicks writes, “the average American family will pay about $2,500 more this year because of tariffs. But unlike inflation, your wages won’t rise to compensate. That’s because tariffs work differently than inflation.”

Inflation is a decline in the value of currency over time. It happens because there is too much currency in circulation. That extra money can enter the economy through a growing deficit, as happened after the 2020 CARES Act, the 2021 American Rescue Plan and—the most inflationary of these—President Trump’s Big Beautiful Bill. 

When certain tax and spending policies meet monetary growth ( a result of miscalculations by the Federal Reserve), the result is inflation. Inflation affects all goods and services, including wages. (During the last inflationary bout, wages actually grew more than prices for the average private sector worker.) Not so with tariffs.

Tariffs work very differently. Tariffs are taxes on imports and range from 10% to 55%, depending on the country of origin, the product in question and the president’s hormone level.

Hicks reminds readers that American consumers pay tariffs–not the countries producing the goods, despite Trump’s insistence that tariffs are a fiscal punishment for the countries exporting the merchandise. 

Thus far, consumers haven’t really seen the higher prices that Trump’s tariffs will produce. That’s because, as Hicks explains, imports spiked in February, March and April as American businesses bought nearly five extra months’ worth of goods. That was in order to beat the tariff deadlines and avoid the extra tax. The surge meant that “many of the goods now on store shelves and being assembled into cars, computers and washing machines were bought before the tariffs, keeping price increases relatively low.”

The consumer price index—the main measure of inflation—rose 0.3% in the latest reading. That’s modest, but it came as the Federal Reserve was successfully reducing inflation. Prices have stopped falling and are rising again.

These higher prices are solely due to Trump tariffs. They are poised to worsen substantially as the stockpile of pre-tariff goods are sold by retailers or put onto cars, RVs and other American-made products. The cost of goods sold later this summer, and until tariffs are eliminated, will continue to rise.

This increase in prices and the consumer price index will look, feel and taste just like inflation. Journalists and even economists will call it inflation, but it’s not inflation. If it was inflation, we’d eventually see wages rising as well. But higher tariff costs don’t lead to higher wages; in fact, the opposite may occur.

The tariffs took the U.S. from 2.4% growth in the fourth quarter of 2024 to -0.5% in the first quarter this year. The economy continues contracting, which will reduce wage growth and maybe even reverse it. So, as prices go up, wages will decline for the average worker.

Trump keeps insisting that his tariffs will cause businesses to increase domestic production–to build factories in the U.S. There are a number of false assumptions underlying that prediction, and we are already seeing a drop, not an increase, in factory employment. Hicks notes that the two months of data that became available since Trump’s “Liberation Day” tariffs were announced show that the U.S. lost 14,000 factory jobs.

As he also points out, the slowdown in the economy this year follows a pattern that virtually all economists have identified as an outcome of tariffs–one reason for the global decline in their incidence. He also tells us that price increases due to the imposition of tariffs is not–at least technically–inflation. 

The technical name for rising prices during a weak economy is stagflation. And Hicks reminds us that stagflation is “what made the 1970s so miserable.”

Despite MAGA world’s constant dishonest attacks on Joe Biden, he presided over America’s robust economic recovery; he left Trump an economy that was globally envied. But then, Biden had assets Trump lacks–decency, a working brain, and a firm connection to reality. 

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About Those Tariffs

All Americans have been getting an education about economics, and specifically tariffs. Some Americans–those who voted for Trump or who didn’t bother to vote–are also getting a rude awakening. (It turns out that it really does matter who holds political office…)

I have not encountered a single reputable economist who doesn’t agree that tariffs are really taxes on the American public, or who believes that their imposition will revive American manufacturing and provide Americans with good jobs. The jobs promise is particularly obtuse; even if the tariffs did result in more factories being built in the U.S.–which is highly unlikely for a number of reasons–anyone who has been watching the manufacturing sector will confirm that its workers are being steadily replaced by automation.

Perhaps the most concise and convincing case against the stupidity–the insanity– of Trump’s tanking of an economy that was the envy of the globe was this brief talk by Fareed Zakaria. 

Rather than indulge in my usual prolonged rant, I am urging you to click on the link and listen to a calm and convincing explanation of why the world of hurt we are all experiencing isn’t temporary and won’t–can’t–lead to Trump’s imaginary rosy future.

If one of our occasional MAGA trolls happens to be reading this, and discounts Zakaria, who is, after all, not just a member of the hated media, but eminently sane and reasonable (qualities anathema to MAGA), how about listening to Ronald Reagan on the subject?

So much winning…

My own rants will resume tomorrow…..

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RIP Pax America

It isn’t just the insane tariffs. They are just the coup de grace. As Lawrence Summers posted: the tariffs are to economics what creationism is to biology, astrology is to astronomy, or RFK thought is to vaccine science. In fact, it is likely that their effects will hasten the fall of our mad would-be king, as plutocrats join the millions of ordinary Americans appalled by the wholesale destruction of American governance and the world order. 

But the larger damage has been done, and it is not remediable.

Perhaps the most accurate–and damning–analysis was from The Bulwark.

We cannot overstate what has just happened. It took just 71 days for Donald Trump to wreck the American economy, mortally wound NATO, and destroy the American-led world order.

He did this with the enthusiastic support of the entire Republican party and conservative movement.

He did it with the support of a plurality of American voters.

He did not hide his intentions. He campaigned on them. He made them the central thrust of his election. He told Americans that he would betray our allies and give up our leadership position in the world.

And that is exactly what he’s done. The article quoted Canada’s Prime Minister’s sorrowful eulogy.

The global economy is fundamentally different today than it was yesterday. The system of global trade anchored on the United States, that Canada has relied on since the end of the Second World War—a system that, while not perfect, has helped to deliver prosperity for our country for decades—is over.

Our old relationship of steadily deepening integration with the United States is over.

The eighty-year period when the United States embraced the mantle of global economic leadership—when it forged alliances rooted in trust and mutual respect, and championed the free and open exchange of good and services—is over.

While this is a tragedy, it is also the new reality.

So–how did we get here?

Historians will undoubtedly spend decades looking for answers, and there are certainly lots of contributing factors: lack of civic education, an information environment that facilitates confirmation bias, the ballooning gap between the rich and the rest, the arrogance of the tech “bros”. But while all those elements contributed, my own research tells me that the single most consequential support for Trumpism is America’s entrenched racism.

When I use the word racism, I’m not simply referring to anti-Black animus, although that is indeed its most prominent characteristic. I am using that term to include the other persistent, notable bigotries that continue to be prominent elements of American society : anti-Semitism, raging misogyny…the simmering resentment that all too many Americans harbour for anyone they consider “Other.” 

As Trump and Musk have taken their hatchets to the federal government, they have made no effort to hide their major target: those Others. They have moved to expunge DEI, diversity and “woke-ism” from America’s society– “epithets” that are thinly veiled terms for civic equality and equal rights. 

A plurality of our fellow citizens cast their votes for a President and a political party devoted to White Christian supremacy. It’s doubtful that they intended to destroy Pax Americana, but placing America under a regime of know-nothings, bigots and buffoons could hardly have done otherwise. And as the linked article says, “There is no going back.”

If, tomorrow, Donald Trump revoked his entire regime of tariffs, it would not matter. It might temporarily delay some economic pain, but the rest of the world now understands that it must move forward without America.

If, tomorrow, Donald Trump abandoned his quest to annex Greenland and committed himself to the defense of Ukraine and the perpetuation of NATO, it would not matter. The free world now understands that its long-term security plans must be made with the understanding that America is a potential adversary, not an ally.

This realization may be painful for Americans. But we should know that the rest of the world understands us more clearly than we understand ourselves….

The article’s conclusion is depressing–but realistic.

We have a deeply stupid government—from our economically illiterate president to our craven and foolish secretary of state, from the freelancing billionaire dilettante who is gutting American soft power to the vaccine-denying health secretary who is firing as much talent as he can. From the senior economics advisor who thinks comic books are good investments, to the senators who voted to confirm this cabinet of hacks, to the representatives who stumble over themselves justifying each new inane MAGA pronouncement.

But also, we have the government we deserve.

The American age is over. And it ended because the American people were no longer worthy of it.

RIP.

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Will Obvious Insanity Be A Turning Point?

By now, it should be obvious that Trump is not simply stupid and ignorant (two different conditions), although he is both. He is severely mentally ill. He has not simply pursued mistaken policies, he has pursued petty vengeance–when he isn’t pursuing personally profitable grifts.

The clown show Trump calls a “cabinet” has already inflicted major damage on critical aspects of governance: public health, civil liberties, Social Security and more. Now–with the advent of his insane tariffs–he has begun the tanking of an economy that economists agreed was the best in the world at the end of the Biden Administration.

Even before the announcement of the scale of these unbelievably stupid and damaging tariffs, Paul Krugman wrote what any halfway sentient observer already knew: their imposition is a declaration of an all-out trade war that America will lose.

As I said, I don’t know exactly what will be announced later today. One safe prediction, however, is that over the next few days we’ll see many news analyses purporting to explain the thinking behind this radical change in U.S. policy.

Such analyses will be a waste of time, because there’s nothing to explain. I’m not saying that the Trump team’s thinking is unsound. I don’t see any thinking at all.

Krugman focused on two major internal contradictions in Trump’s intended justification.

Here’s the story: Trumpers are claiming that tariffs

1. Won’t increase prices, because foreign producers will absorb the cost

2. Will cause a large shift in U.S. demand away from imports to domestic production

3. Will raise huge amounts of revenue

If you think about it for a minute, you realize that (1) is inconsistent with (2): If prices of imports don’t rise, why would consumers switch to domestically produced goods? At the same time, (2) is inconsistent with (3): If imports drop a lot, tariffs won’t raise a lot of money, because there won’t be much to tax.

So the public story about tariffs doesn’t make any sense. And Trump’s rants about tariffs go beyond nonsense..

Does he really believe that Canada is a major source of fentanyl? Worse, does he believe that fentanyl smugglers pay tariffs?

But is it all a cover for the real, probably sinister agenda of Trump’s tariff push?

No. There isn’t any secret agenda, devised by people who know that the public story is nonsense. How do I know that? Because who, exactly, do you think is devising this secret agenda?

As he goes on to note, today’s Democrats and Republicans get their policy advice from very different sources: Democrats engage people with credentials and expertise. They still may be wrong, but they’re drawn from pools of folks having recognized expertise. Republicans these days prefer “experts” who are pure hacks–people who can be counted on to support whatever the party says.

Krugman was writing before Trump’s unveiling of his insane tariffs. In the wake of that announcement, former Treasury Secretary Lawrence Summers posted that “The best estimate of the loss from tariff policy is now [close] to $30 trillion or $300,000 per family of four.”  Former Vice-President (and Trump toady) Mike Pence was quoted as saying that “The Trump Tariff Tax is the largest peacetime tax hike in U.S. history.” Dow futures lost 1200 points. A coalition of 12 countries officially moved to abandon the dollar in favor of local currencies for cross-border trade.

And that was just on day one.

MAGA cultists may not recognize the likely economic devastation, but a majority of American businesspeople do. So do the “profit over patriotism” lawyers who have bent the knee rather than stand up for the rule of law. And so do the economists and related scholars who work for the universities that have cowered and complied in order to retain federal grants.

In barely three months in office, an ignorant and petty madman has done incalculable damage to the rule of law, to the social safety net, to public health, to America’s alliances abroad– and now to a once-flourishing economy.

Increasing numbers of citizens are coming to understand the gravity of these actions. Call me Pollyanna, but I think the tariffs will provide a wake-up call to the cynical plutocrats who have been willing to go along with the mad king–ignoring the incredible damage being done to average Americans– in hopes of profiting from further tax cuts.

There’s an old political adage to the effect that matters have to “hit bottom” before spineless officials will take action. There’s an excellent case to be made that–thanks to our obviously insane Chief Executive–we’re there.

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It’s Even Worse Than We Expected

I expected the incompetence and the racism, and the first few days of the Trump Administration fulfilled those expectations. The wholesale assault on diversity–not just the elimination of DEI, but the scrubbing of any mention of minorities from websites (including those used by medical researchers)–accompanied the nominations of pathetically unqualified Whites, unintended confirmation of the charge that MAGA defines “merit” as “White guys.”

Those nominees are being confirmed by spineless GOP Senators to “manage” a workforce that is under attack. Those of us who read and understood Project 2025 anticipated these deeply concerning efforts to destroy civil service rules that  protect  professionalism and guard against politicization of the federal workforce.

But as Robert Hubbell has recently explained, what we are seeing is monumentally worse. It’s a coup. And–as he also says-the longer we fail to recognize that we are seeing a slow-rolling coup attempt, the longer it will take for us to recover. The coordinated attacks on the DOJ, FBI, Office of Personnel Management, Treasury Department, and dozens of other agencies leave little room for doubt.

Taken together, those actions amount to a hostile takeover of the US government by those who are loyal to Trump rather than to the US Constitution. The only word that accurately describes that situation is “coup.” Any other description is a sign of fear, submission, or surrender.

Hubbell proceeds to enumerate the activities that justify identifying what is occurring as a “coup.” (The linked essay has references confirming the allegations.)

Elon Musk and his DOGE infiltrators have taken over the Office of Personnel Management (OPM.) They’ve connected non-government computer servers to the US personnel mainframe computers, seized private information about millions of federal employees, and locked senior managers out of their agency’s computers. They’ve moved “sofa beds” into the OPM offices and put the offices into a “lockdown mode.”

That takeover is what allowed Musk to send his unauthorized memo inviting millions of federal employees to resign in exchange for eight months of “non-working paid employment.”

Musk and DOGE have also attempted to seize control of the US Treasury payments system. That system is the gateway through which all federal funds flow.

When a senior manager at the Treasury asked why Musk needed access to the highly sensitive system, the manager was immediately placed on leave. He chose to quit, instead. ..The Acting US Attorney for Washington, D.C., fired about 30 US Attorneys who prosecuted January 6 insurrectionists…. Think about that for a moment: The convicted felons who attacked the Capitol have been pardoned and the loyal servants of the Constitution who prosecuted them have been fired. That fact should outrage every American.

At the same time, the FBI fired eight of its most senior leaders. They headed divisions responsible for cybersecurity, national security, and criminal investigations.

The FBI has also fired dozens of agents who worked on investigations of January 6 insurrectionists and asked for a list of every agent across the US who worked on the largest criminal investigation in the history of the FBI. That list will include hundreds—possibly thousands of FBI agents. The implication of the memo ordering the compilation of the list is that those agents may be fired.

Dozens of government websites have been taken offline to be scrubbed of references to diversity, gender, or human attributes that are not white, male, and Christian. (The Census Bureau website was offline, presumably to remove evidence that America includes people who are not white male Christians.) Websites relating to LGBTQ equality, women’s health, transgender issues, and scientific knowledge in general were taken down.

The Pentagon has advised NBC, NYT, NPR, and other mainstream media outlets that they would be “rotated out of the building (i.e., the Pentagon)” to make room for NYPost, Brietbart, and OANN.

All of this is happening as the Economic-Idiot-in Chief has slapped 25% tariffs on Canada and Mexico. As Hubbell quite accurately notes,

the Canadian auto industry—which is a major parts supplier to the US auto industry—cannot survive for a week with 25% tariffs. The Canadian supply chain will shut down, the American car industry will be severely damaged, and tens of thousands of US autoworkers will be laid off. We aren’t talking about inflation increasing or the cost of eggs. We are talking about tens of thousands of job losses and an economic shock likely to lead to a recession….

Soon, very soon, Americans will be called upon to leave the comfort of their homes and the anonymity of their computer screens to engage in massive, coordinated action to remind Trump and Musk that they are servants of the people, not vice-versa.

There is no longer any way to ignore what is happening, or to “sane-wash” MAGA…..

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