In some cases, tariffs are a useful tool to address trade deficits or protect key sectors of the country’s economy. Then in some cases, you accuse a bunch of penguins on an island of uninhabited currency manipulation. Guess which one we live in?
This is the harvest of multiple tariffs announced by President Donald Trump on Wednesday afternoon. In addition to the Heard and McDonald’s Islands occupied by Penguin, tariffs target British Indian Ocean territory, and its only crew resided on a United U.S. military base on Diego Garcia Island. Yes, the United States is imposing mutual tariffs on its own forces.
Then there are tariffs on countries that have actual goods and services that American consumers rely on. China: 54%. Vietnam: 46%. Cambodia: 49%. South Korea: 25%. No corner of the U.S. consumer economy will be affected. Prices will rise. The stock market is growing spiral. The recession is approaching. The technology industry will be reversed. Billionaire noted that Mark Cuban encourages people to store consumables before it’s too late.
It’s reckless, it’s ridiculous, and Donald Trump has performed well on the campaign. Indeed, he has no way of how the Telegram misleads this approach—you can read more here, but enough to say it is completely disconnected from the reality of international trade—but he loudly, repeatedly promising the way it collects glory.
The stated goal is to return manufacturing jobs to the United States, which is a bit like a resurrected dodo. The United States still produces a large amount of goods; according to the World Bank, it is second only to China. However, much of the job in the industry is replaced by automation, a bottle you can’t reseal. Higher domestic labor costs mean that American-made products will be more expensive by nature, and the trade-offs of the United States have been rejecting. All of this has been like this during Trump’s first term. Now even more.
Suppose multiple companies do decide to re-move or build factories in the United States. The timelines for these decisions and implementation are measured over the years, if not decades, and may be spots afterwards. (Just ask Foxconn.) So what happens during this period?
Reason to have all the weight of the soap bubble. There is no world where the United States suddenly made all the items the country decided to target. There is now a 47% tariff on Madagascar. Do you know why the United States has a trade deficit with Madagascar? They produce vanilla. We don’t. Unless we suddenly set up a vanilla assembly line in Ohio, that doesn’t change.
But perhaps Trump’s so-called Liberation Day is just a master negotiation strategy. “Everyone sits down and take a deep breath. Don’t take revenge right away. Let’s see where this is going,” Finance Secretary Scott Bessent said Wednesday. “Because if you take revenge, that’s how we upgrade.”
