Cogito Ergo Non Serviam
Trump Retreats on Tariffs
Donald Trump announced 25% tariffs on goods from Mexico and Canada last week. They should have been in effect by now with the pennies they would generate trickling toward the Treasury. They are not. Monday, Mr. Trump backed off his demand, putting things on hold for 30 days. He claimed there was good progress in the responses of America's trading partners, and they agreed to do some things he wanted done. The proof that this is all theatre, Potemkin Negotiations, is the fact that he accepted their "concessions" which had been agreed previously. As fig leaves go, it is a rather small one.
Of course, this was entirely predictable for those who have watched how Mr. Trump operates. He likes to start a fire, focus everyone's attention on it, put the fire out and claim a victory. If it were not for the damage the fire does, this would be a decent way to self-promote. Unfortunately, the damage is severe and cannot be repaired readily.
The global trading system is a complex web of moving goods and providing services as well as payments. When one area of the web is hit by instability, it filters throughout the whole system. The relationships with the greatest trading volumes have the biggest effect when they are destabilized. Mr. Trump has attacked three of the most important, American trade with: Canada, Mexico and China.
What Mr. Trump has done with his tariff threat has caused actual damage.
Professor Roland Paris wrote a note for Chatham House that read in part, "Even if the current threat of trade war is lifted entirely, it will have lasting effects on the bilateral relationship. Canada and the US have always had trade quarrels, traditionally over relatively mundane issues such as the method for pricing wood. But Canadians have long assumed that the US would never deliberately seek to harm Canada. That assumption was shattered over the weekend."
Paul Wiseman wrote for the Associated Press, "For now, businesses, investors and U.S. trading partners are waiting to see what the unpredictable Trump will do next. Will he re-impose the tariffs on Canada and Mexico after 30 days? Will he really go after the EU? Or make good on his threat of a universal tariff?"
A great many businesses will be making arrangements for when, not if, the tariffs hit. They are going to reduce spending and staffing, which will reduce GDP. The problem is that they are going to do this whether the tariffs hit or not. They need to be prepared, and the actions they take to prepare are themselves a drain on economic activity.
It is unlikely that Mr. Trump will impose the full 25% across-the-board tariffs, but there is nothing stopping him from targeting certain industries and areas. The poison will be delivered in a smaller dose, but poison it is.
American prosperity stems directly from the open trading system established right after the Second World War in which tariffs were viewed as the enemy. The entire point of the trading system is to weave the national economies together in such a way that keeping trade as open as possible is in everyone's interest. Mr. Trump has torn that up with his threats
Pleasing his base is what Mr. Trump tries to do every day. Bashing foreigners, either as illegal immigrants or cheating trading partners, is part of what they want. But when it hits their pocketbooks, all bets are off.
Mr. Wiseman also wrote:
Outside a Harris Teeter supermarket near downtown Raleigh, North Carolina, Jacobs Ogadi had in his shopping bag an avocado, which almost certainly came from Mexico.
The 62-year-old mechanic said it "doesn't take a rocket scientist" to know that Trump's tariffs run counter to his promises to rein in inflation. "If it goes up 25%, it's not the government, it's not the Mexican people paying for it," he said. "Who pays for it? Us."
An informed public will place the blame where it belongs but the harm will be done.
© Copyright 2025 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Ubuntu Linux.
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