UK Edition
In the great tradition of reality television, the winners and losers from Donald Trump’s “liberation day” tariff announcement were kept secret until the last moment. Except that there weren’t any winners, just losers and bigger losers. There wasn’t even a pretence of this being a necessary but regrettable policy.
The countries that would be punished deserved everything they were getting. They had pillaged and robbed, looted and raped (metaphorically) innocent Americans for decades and now America would take its revenge. Trump recited all the industries — old and new — which had been undermined by these assaults on the population which had been pauperised by foreigners.
In spite of the references to new technologies, this was clearly a promise to resurrect the Rust Belt, and most specifically the automobile industry whose failure was, in the Trump account, entirely caused by the gross unfairness of foreign competition and nothing to do with the fact that a lot of Americans prefer foreign cars to American ones. The answer must be simply to coerce those foreign manufacturers to move their production to the United States — a process which will take years, involve the building of new plants and the establishing of new supply chains, all of which will certainly result in higher costs and therefore higher prices.
The UK got off relatively lightly with a 10 per cent base rate tariff — except presumably for the universal 25 per cent charge on all foreign cars, which will be disastrous for the British automotive industry.
So what is really behind this potentially calamitous disruption to world trade relations? Democratic Senator Chris Murphy has suggested that it is deliberately designed to create chaos and recession in order to set the stage for a shift from democracy to autocracy. Trump is creating instability so that he can justify enacting emergency powers.
I have to say I find this theory rather far fetched, not because I trust Trump’s democratic convictions but because I don’t believe that he thinks about the consequences of his actions more than 48 hours ahead, which seems to rule out a long-term political project.
There was nothing — absolutely nothing — said about what effect this would have on the cost of living of those American citizens in whose name this was all being done and who would now find the prices of foreign goods dramatically increased. Not to mention the cataclysmic economic effects on countries which have been historically far less prosperous than the United States.
But their fate does not come into this computation at all. This is all about America — or, in truth, all about Trump and his mission to save the industrial heartland for which he hopes to go down in history. But if this phenomenally risky gambit fails — if the car workers of Detroit and the tech start ups of the West Coast do not find that they have arrived in a brave new world of opportunity and affluence, and the world at large demands retribution — what then?
Trump’s trade war will only have losers. And the biggest loser may be Trump
The president’s gambit to revive the Rust Belt is phenomenally risky. What happens if his tariffs don’t work?