Yesterday, April 2, Trump had his little Rose Garden party where he announced the “Day of Liberation”, whatever the hell that means. He believes and has many others believing that tariffs are the end-all be-all. To me, it sort of feels like let’s fill the boat half full of water just to prove it won’t sink. It’s a great boat and by proving it won’t sink we’ll make it even greater. His genius idea, so far, has turned the stock market on its head. Ourselves as well as millions of others that are retired have seen our accounts shrink. Pretty big losses. For us, we have seen a decline of 10%. Fortunately, our broker has pulled us out of the market, so the bleeding has stopped. Once the storm has passed we will watch it grow back to where it was. Hopefully.
Ever since he took office he has been talking about and touting his tariff plans. ‘Beautiful’ he calls them. So far all I have observed is that they have stirred up muddy water in a clear lake and pissed off many countries of the world that we trade with. Are they going to solve all the problems he says they will? Pardon me if I don’t pat him on the back. Too much of his plans seem counterintuitive to sound economic principles. His explanations are ‘this is how I say it’s all going to transpire’, and it doesn’t line up with what a lot of economists who have studied economics a lot more than he has have to say. To be honest, I think I have studied economics a lot more than he has. Prices are going to rise in America but not because of inflation this time. They’re going to rise because of supply chain disruptions causing imbalances in supply and demand. Other countries who are being impacted by the nonsense are equally, if not more dependent on foreign trade as we are. Many are countering with their own tariffs. Which means, of course they will be taxing their own citizens making many goods no longer affordable for them. So we will be exporting less just as we will be importing less. The global marketplace is going to shrink, for everybody.
Presumably, this will stimulate more foreign investment in America. For some countries with large scale economies, maybe so. For many smaller countries. No. Will this stimulate economic growth in America? It will, but not to the scale that Trump thinks it will. The reason is Americans will be selling more to Americans but they’ll be selling a lot less to foreign markets. And many US businesses are powerhouses because they sell to foreign markets. The global marketplace is a lot bigger than the US market. By paring down their global market, you pare those companies down. Which will translate to fewer jobs in America.
This tariff mania was not well planned and thought out. Trump did not listen to some of the very smart people (much smarter than he is...) before he pulled the trigger on this. History has taught some very tough lessons regarding tariffs. Obviously, Trump isn’t a history buff. All we can really do at this point is fasten our seatbelts and prepare for some turbulence.
#tariffs #foreigntrade #globalmarkets #trumptariffs
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