This article examines Trump's tariffs, comparing them to historical precedents and warning of potential economic ramifications. Explore the political analysis and societal implications involved.
Trump may see his tariffs as a negotiating tactic; he risks starting a global trade war and a return to the Great Depression of the 1930s. Our America’s editor, William Dowell, explores the historical parallels and poses the challenge today.
This article is also published in Bill Dowell’s personal Substack column: A Different Place.
Canada, Mexico, and China account for a third of U.S. imports. Donald Trump’s obsession with imposing tariffs will amount to a 25% sales tax on just about everything anyone in the US wants to buy. Trump could then take the sudden influx of cash to finance his obsession with deporting millions of undocumented workers. The effects on the American public and the US economy are likely to make any previous complaints about inflation seem like a tempest in a teapot. Trump’s plan will lead to a surge in personal and small business bankruptcies and could plunge the U.S. into a recession, if not a depression.
We have been there before. A compliant US Congress issued The Smoot-Hawley Tariff Act of 1930 in hopes of boosting the US economy after the Stock market crash of 1929. More than 1,000 US economists warned President Herbert Hoover not to do it. Hoover refused to listen. The tariffs ignited a global trade war, and US exports were cut by 67%. America entered the Great Depression, and the country, along with the public, was nearly destroyed. The depression spread across the planet and arguably accelerated Hitler’s rise to power in Germany and the eventual outbreak of World War II. Why anyone would want to repeat that experience is hard to understand, but the fact is that Trump has not made much sense since the inauguration.
Backed by a slight Republican majority, he has picked an astonishing assortment of inappropriate people to fill his cabinet, and he has strong-armed a rubber-stamp Congress to go against its better judgment. His initial attempt to stop all federal funding and grants to public programs had to be reversed at least for the time being. After the crash between a US military helicopter and an airliner in Washington, DC, Trump’s comments, that the tragedy had been caused by diversity hiring was proof, if anyone needed it, that Trump simply says whatever comes into his head without bothering to consider the facts or the consequences.
Trump‘s new tariffs may cause a good deal more damage than his first week of blunders. Canada has said that it will respond by setting its own tariffs targeted against $105 billion of US exports. The tariffs would start with a 25% surcharge on $20 billion worth of American goods and then increase to cover another $80 billion. Mexico also has plans for a pain-inducing retaliation. China wants to talk things over but is clearly ready to join everyone else if Trump refuses to listen to reason.
At least initially, the Canadian tariffs would target oranges and agricultural goods coming from Florida, bourbon and whisky from Kentucky, and an assortment of other agricultural goods primarily from states that vocally supported Trump and the MAGA crowd. American-made beer, shoes, furniture, and appliances are also likely to be hit. The list will grow astronomically as Trump’s trade war accelerates and tarnishes America’s global reputation. Trump has also proposed a tariff war against Europe, which he says has treated the US awfully.
Trump claims that the tariffs are justified because neither Mexico or Canada have managed to stop drug cartels from selling fentanyl to American addicts. A more likely explanation is that Trump’s dream of mass deportations of mostly Hispanic immigrants is likely to cost the US a fortune but will also help fund Trump’s obsession with immigrants. Republican Senator Lindsey Graham noted on NBC’s Meet The Press, that while Trump may want to deport millions of people, he can’t do it unless Congress gives him the funds. Trump may hope that a 25% sales tax levied against each and every one of us will help finance the detention camps and other infrastructure needed to realize his deportation dreams. He’s not the first manic leader to target an ethnic group for systematic exclusion.
Trump also claims that the tariffs will bring America back to doing its own manufacturing, That ignores the fact that the US no longer has the infrastructure, the equipment, or the technology to produce the kind of manufactured goods that are now being imported—at least not in any practical time frame. The US can rebuild its manufacturing capacity and train American workers to run it, but in realistic terms, it will take years to do that, and even then, there is no guarantee that any of it would be economically viable. In the meantime, the impact on the US economy is likely to be catastrophic. During Trump’s first term as president, experienced advisors managed to keep him from going off the rails. What we have now is Trump unrestrained by advisors, the law or human reason. The incompetence of the people he has selected to run US government agencies is not an accident. Trump wants a weak cabinet that is forced to depend on him personally—in other words, to serve as Yes men. The effectiveness of most presidents is largely determined by the quality of the men and women they choose as advisers. The administration’s first two weeks of chaos is proof, if any were needed, that Trump is simply not bright enough and not knowledgeable enough to do it alone. By accident or design, we have a president who is simply not up to the job. The question now is what to do about it.