I woke up this morning to three piles of fecal matter on the floor. This is not metaphorical. The family dog apparently found something in the back yard yesterday and ate it, and has been dealing with digestive issues. I did what any responsible homeowner would do, and immediately set to cleaning them up. It wasn’t a pleasant task, but it’s something that had to be done at the earliest opportunity.
I woke up this morning to another pile of fecal matter on the national floor. This is metaphorical. It is Chinese tariff increases.
There’s little more to say about tariffs that hasn’t already been stated. Articles have been produced on the subject by every one of the regular writers here, ranging from detailed analysis of the flaws in tariff theory by Don and debunking their historical success by TheStig to stories of what’s befalling U.S. farmers by Beth to a regular drumbeat of the continued tariff moves by Tiff.
You’ve heard it. You can read them again by scrolling backward through the archives. Articles appear on tariffs and trade on more than a weekly basis. This is because tariffs are Trump’s primary weapon in trade negotiations, and he uses that weapon casually. He is using it against not only China, but against the European Union, Japan, Mexico, Canada and other allies. He used it to push through the deal with South Korea.
Unfortunately for him, when an adversary relies on one primary mode of attack, that attack can be anticipated and its effects minimized.
This is where we now find ourselves in the trade war with China. Having anticipated a swift capitulation, Trump’s team is instead watching as the Chinese pursue a strategy of delay. They recognize that Trump is likely a one-term President and are willing to wait until the next President to resume a reasonable trade policy.
(This is where the current Republican openness to foreign election interference may hurt them. They are still looking to the past, where Russia demonstrated skill at manipulating American viewpoints to Trump’s benefit. China also has expert hackers, and is likely to work against Trump’s interests.)
People will look to the Dow Jones to gauge how damaging the tariffs are; this is a false yardstick, as large businesses, also, have learned to anticipate and compensate for the tariffs. This is being done by relying on factors not directly linked to production, and therefore risks creating a market bubble – something many believe already exists.
Even with that, the Dow dove roughly six hundred points after the announcement yesterday, and is down another hundred or so this morning. A decade of weak fiscal policy has driven the Dow high enough that seven hundred points is not viewed as catastrophic.
The continued reliance on ever-increasing tariffs is a problem. Beyond all of the concrete economic problems it creates, having a putative Republican weaponizing taxation undermines the free-market principles that have been instrumental in growing America from a young republic to a global superpower.
It’s yet one more mess on the floor for President Trump. I can only hope we are allowed to clean house soon.