Torturing Tariffs

Is there any world leader as thick as Trump?

Chart of some of Trump's 'reciprocal tariffs'

America's prosperity was built on tariffs, and in the early days the government was funded solely by tariffs. But the world has changed. Those billionaires who support Trump apparently want to go back to those times, so they do not have to pay any income tax at all (they already have ways to make sure that they can avoid paying anything like the rate of tax that the working and middle classes do). Some of them make their money in ways that do not attract tariffs, like social media. Some software firms expect to gain. Some of Musk's companies get some of their money from government contracts - directly from NASA or indirectly from companies doing business with the Department of Defense. They may not have given due consideration to the fact that components for Pentagon contracts are often imported. Some can make money from subsidiaries abroad, avoiding tariffs. But ultimately, they all rely on consumers - either directly as customers or through the tariffs and/or taxes that consumers pay. By laying off workers and through tariffs that raise prices, they are cutting off their noses to spite their faces.

I suspect Trump will be kept very busy carving out exemptions.

Trump's tortured thinking

Trump does not understand tariffs at the economics level. He can understand the micro level - that tariffs targeted at auto manufacturers would help his friend Musk's Tesla, for example, but he clearly does not understand how they work at the macro level, how he will piss off every country that is affected (though he may actually enjoy that) and cost most Americans dearly. For example, America has been trying to import eggs to keep the cost down, but what if egg-producing countries retaliate with a high tariff?

Don't take my word for it. According to the Economist, "President Trump’s mindless tariffs will cause economic havoc".

European Commission president Ursula von der Leyen's reponse calls this "a major blow to the world economy.... Millions of citizens will face higher grocery bills. Medication will cost more as well as transportation. Inflation will go up... We are already finalising a first package of countermeasures in response to tariffs on steel. And we are now preparing for further countermeasures, to protect our interests and our businesses if negotiations fail... Europe has everything it needs to make it through this storm."

Britain has got off relatively lightly with 10% tariffs, but that is an unjustified and harmful 10%. But Britain was trying to do it right, negotiating a trade deal, and this is a slap in the face. UK PM Keir Starmer gave his response to business leaders at 10 Downing Street (video). He said trade negotiations would continue, but nothing is off the table. He stressed that he would act in Britain's interest, which of course I applaud. No mention of cooperation with the EU or other countries. I found his first sentence interesting: "Last night, the President of the United States, acted for his country. That is his mandate." Trump is fond of claiming he has a mandate, which he does not. It is worrying to hear someone use Trump's language.

I'm not against tariffs, properly applied, as I explained in this article. To continue my analogy there, Trump is making it harder for nutrients to move around the system - rather like clogged arteries (do clogged arteries from too much ultra processed food lead to clogged thinking?). He does not understand how to use them at all, as Thom Hartmann explains.

"Reciprocal tariffs"

When Trump announced his April 2 round of tariffs, he produced a chart of "Reciprocal tariffs". According to the Economic Times, "a reciprocal tariff is a tax or trade restriction that one country places on another in response to similar actions taken by that country. The idea behind reciprocal tariffs is to create balance in trade between nations. If one country raises tariffs on goods from another, the affected country might respond by imposing its own tariffs on imports from the first country. This response is meant to protect local businesses, preserve jobs, and fix trade imbalances." It warns that "Reciprocal tariffs can lead to a back-and-forth increase in trade barriers, potentially resulting in a trade war that negatively impacts both economies. Such situations can disrupt supply chains, raise prices for consumers, and slow down economic growth," saying that "It is important for countries to communicate openly and work together to settle trade issues instead of turning to reciprocal tariffs."

However, Trump's reciprocal tariffs bear no relationship to the tariffs put on American goods by other countries. Instead, he divided the U.S. trade deficit with a country by the value of that country's exports to the U.S., then "kindly" cut that number in half.

Trump's list has some very strange or cruel entries:

• Myanmar - which just had a massive earthquake

• Heard & McDonald Islands - remote uninhabited islands, a nature reserve

• St. Pierre et Miquelon imported ZERO from the US last year but exported $3.5M worth of shellfish. I guess they were lucky to be rated at only 99% and not an infinite tariff (is half of infinity infinity?).

• The British Indian Ocean Territory has only one inhabited island - Diego Garcia - the inhabitants are US service personnel.

(Thanks to the many people on Bluesky, especially ‪News Eye, for pointing these out)

This seems typical of the ignorance and lack of knowledge that the current administration displays, but perhaps it is a way to apply different tariff rates to different countries so as to get them competing for his favour. Or maybe it is simply that their hearts and minds are not big enough to see beyond the ends of their noses.

How did he come up with these entries on the list? They do not all correspond to countries or economic zones. Apparently, he used internet domains (Heard & McDonald Islands is .hm not.au, for example).

Punish those responsible

American voters are going to be punished enough with higher prices and shortages. I ask that the response from the rest of the world targets those billionaires - American, Russian, Saudi or whatever nationality - who are enabling Trump. To get you started, here's a list of big tech donating to Trump's inauguration, and here's one of notable attendees and no-shows at the inauguration. The Tesla takedown is doing well, it needs to be expanded to all the oligarchs supporting Trump and to be augmented by targeted tariffs by countries. These people were able to carry out a coup because of their great wealth. We need to reduce it to the size where we can drag it into the bathroom and drown it in the bathtub, to misquote Grover Norquist.