Trump’s planned tariff increases are so stupid and wantonly destructive I find it difficult to write about it. Fortunately, plenty of others are sounding alarms about the scale of the pending devastation.
As you probably know, April 2 is when Trump plans to unwrap the details of what amounts to an economic teardown plan on a global scale. It is extremely difficult to fathom what he intends to accomplish save demonstrate the extent of his power. But even ancient archetype of destruction had reasons. The feared Kali, with her necklace of skulls, kept herself busy killing demons other gods had let loose. She apparently also has beautiful manners. The Furies are forces for justice, albeit often implemented brutally. From Wikipedia:
The Erinyes live in Erebus and are more ancient than any of the Olympian deities. Their task is to hear complaints brought by mortals against the insolence of the young to the aged, of children to parents, of hosts to guests, and of householders or city councils to suppliants—and to punish such crimes by hounding culprits relentlessly.
Of course, these two mythical examples are female, and it seems odd that commentators are loath to depict Trump’s extreme emotionality and fickleness at stereotypically feminine.
A much less grand/grandiose image is Dr. Jekyll and Mr. Hyde, particularly since Trump can be charming. However, in a recent talk on Dialogue Works, John Helmer mentioned that Russian officials have taken note of the parallel…and that in the Robert Louis Stevenson novel, Mr. Hyde becomes dominant.
Since we can avert our eyes from the main event only for so long, we’ll start with the Wall Street Journal. When the Wall Street Journal editorial board is a voice of sanity, you know it’s bad. Key bits:
Financial markets have the shakes as President Trump prepares to launch his next big tariff salvo on Wednesday. And nerves are appropriate since Mr. Trump’s chief trade adviser, Peter Navarro, is boasting about what he says will amount to a $6 trillion tax increase from the tariffs….
George Orwell, call your office. In the real economic world, a tariff is a tax. If you raise $600 billion more a year in revenue for the federal government, you are taking that amount away from individuals and businesses in the private economy.
By any definition that is a tax increase, and the $600 billion figure would be one of the largest in U.S. history. It amounts to about 2% of gross domestic product, and it would take the federal tax share of GDP above 19%. The average since 1975 is about 17.3%….
It’s possible Mr. Trump will walk back from this tax ledge…
But what is clear is that the President is going to impose significant tariffs, and do so when the economy is slowing. The Atlanta Federal Reserve’s GDP Now estimate for the first quarter, which ended Monday, has the economy shrinking 0.5%. That volatile number will change as March data arrive, but both consumers and businesses have grown more cautious as they worry about the effect of tariffs.
This is especially worrying because the signs are that Mr. Trump thinks tariffs are worth the economic damage. The latest evidence is his weekend claim that he doesn’t give a hoot if prices rise on foreign cars….
Somehow we doubt American consumers will feel the same at a dealer showroom. Mr. Trump’s 25% tariff on foreign cars, which goes into effect this week, will raise car prices by some amount. Foreign car makers might absorb some of the tariff cost, but some part of the 25% levy is sure to be passed on to American consumers.
Mr. Trump also ignores that U.S. car makers are also likely to raise their prices…over time the U.S firms would be foolish not to raise their prices to increase profits, perhaps by some margin less than the increase on imported cars.
That’s what happened after Mr. Trump raised tariffs on washing machines in his first term. Washer prices rose nearly 12%, according to a 2019 study, and it didn’t matter where the machine was made.
Admittedly, the Journal harps on their favorite dirty word, “tax”. The article also assumes that vehicle components shipped from Canada and Mexico as part of “American cars” will remain exempt, per relief the Administration settled on in early March. The US automaking business is integrated across the three countries, with many border crossings required. It would be an operational as well as financial nightmare to implement tariffs on Canadian and Mexican elements. But the volatile Trump could flip flop again, or threaten to, which would wreak havoc with planning.
From another point in the ideological spectrum, here, the Guardian:
A full-blown trade war between the US and its trading partners could cost $1.4tn, a new report shows.
Economists at Aston Business School have modelled a range of potential scenarios, including the possibility that America it hit by full global retaliation after it announces new tariffs against other countries.
That full-scale trade conflict could result in a $1.4 trillion global welfare loss, Aston has calculated.
The report explains that tariff escalation leads to higher prices, reduced competitiveness, and fragmented supply chains, as we saw in 2018 in the US-China trade war.
It says:
Donald Trump’s 2025 return to power has unleashed a gale of protectionism, reshaping global trade within weeks.
They outline six scenarios, from the first wave of tariffs already announced against Canada, Mexico and China to a full-blown trade war.
Here are the key findings:
US initial tariffs: US prices rise 2.7% and real GPD per capita declines 0.9%. Welfare declines in Canada by 3.2% and Mexico by 5%.
Retaliation by Canada, Mexico and China: US loss deepens to 1.1%, welfare declines in Canada by 5.1% and Mexico by 7.1%.
US imposes 25% tariffs on EU goods: Sharp transatlantic trade contraction, EU production disruptions, US welfare declines 1.5%.
EU retaliates with 25% tariff on US goods: Prices rise across US and EU, mutual welfare losses and intensified negative outcomes for the US. UK experiences modest trade diversion benefits.
US global tariff: Severe global trade contraction and substantial price hikes substantially affect North American welfare and UK trade volumes.
Full global retaliation with reciprocal tariffs: Extensive global disruption and reduced trade flows, severe US welfare losses, $1.4 trillion global welfare loss projected.
The full-blown trade war (scenario 6) would have “profound implications” for interconnected economies like the UK.
The report says:
As a trade-dependent nation navigating post-Brexit realities, the UK stands at a crossroads. Trump’s tariffs disrupt supply chains and exports, yet might open doors for rerouting, with high potential for exporting much more to the U.S.
The dual-edged impacts are stark: fleeting export gains collide with vulnerabilities in critical sectors like automotive and tech, while EU divergence risks, amplified by regulatory misalignment and political distrust, threaten its efforts in resetting the UK-EU relationship.
So while the UK can use its post-Brexit flexibility to mitigate risks and leverage new trade routes, sustained gains depend on rebuilding EU ties and supporting a rules-based international trade order, they add.
The Financial Times presented some granular predictions from the same analysis:
And from the mainstream USA Today:
President Donald Trump’s widening global trade war has clobbered the stock market, raised the odds of a U.S. recession and started to push up inflation for American households with the prospect of much steeper price increases ahead.
Trump says the ultimate prize – spurring more production in the U.S. and reclaiming the nation’s status as a manufacturing stronghold – will be worth the turmoil…
Amid Trump’s tariff threats, a handful of large manufacturers have said they’ll locate factories or new production in the U.S., including Hyundai, Honda and Apple.
But trade experts and economists say it’s unlikely a significant share of makers with overseas factories will move established supply chains halfway around the world under the threat of on-again, off-again tariffs whose duration is uncertain in a tumultuous economic climate. Those that do would have to grapple with severe shortages of skilled workers.
Even if a sizeable share relocated to the U.S., the number of jobs created would be relatively small and more than offset by those wiped out in a recession, economists say.
Further comments from the peanut gallery, um, Twitter:
Holy shit. Trump just lost Fox News:
The S&P 500 just dropped more than 1%, sliding to its lowest level since September due to Trump’s dangerous tariffs. Nasdaq dropped 1.7%. The Dow Jones Industrial Average fell 0.3% — and Big Tech is down across the board. pic.twitter.com/0wsdtlPESn
— CALL TO ACTIVISM (@CalltoActivism) March 31, 2025
NEW: China, Japan, and South Korea agree to “closely cooperate” in response to U.S. tariffs
Anyone with half a brain & a basic understanding of the world could see that Trump’s relentless attacks on our allies will only isolate America & strengthen China
pic.twitter.com/BS3ppL6BTz— Republicans against Trump (@RpsAgainstTrump) March 31, 2025
Note economists generally do not see the US Great Depression as caused by Smoot Hawley, although many will agree that the trade restrictions made matters worse. Nevertheless:
The economic damage from the 2025 tariffs could be so much more devastating than Smoot-Hawley.
Back in 1930, imports were 3% of GDP.
Today imports are 15% of GDP.
The economy is 5x more exposed to tariffs today than it was 100 years ago when we learned our lesson against… pic.twitter.com/duwuEKtFAH
— Spencer Hakimian (@SpencerHakimian) April 1, 2025
As Lambert was wont to say, this is an overly dynamic situation. Stay tuned.
