The Great Epidemiologist and the Servile Dwarves are now economists. Putting tariffs on America’s three largest trading partners would get you thrown out of day one economics. These tariffs go into force tomorrow.
It’s also godawful diplomacy. Canada, Mexico, and China can obtain pretty much anything anywhere else. They don’t have to put up with it and there’s every chance they won’t.
25% is a lot. It hits margins. It hits the net value of trade. It’s not worth it for the sellers if demand shrinks due to increased costs to customers. 25% shrinkage in demand can destroy trade.
The BRICS initiative is perhaps worse. The US dollar is the default international currency. It’s easy to convert any currency into any other currency.
Sending the message that America doesn’t understand basic trade anymore is at best a dubious situation. Tariffs will force American importers to pay more for their imports.
The theory of producing in the US doesn’t survive a second’s scrutiny. Your big TV is going to be made by some guy in a tree in Idaho? No, it isn’t.
“Made in the USA” would take years to happen, if ever, and more likely never. Most American manufacturers shifted offshore 30 years ago. That might be a bit recent for Republican policymakers to have noticed. Anything after 1940 seems beyond them.
Worse is the naivete. It’s bizarre.
Tariffs are regulations. Trump’s donors and supporters are experts at dodging regulations. They don’t even pay taxes if they can help it. Also experts are smugglers, and opportunists who can get those US goods elsewhere or simply copy them. The only beneficiaries will be the black market and organized crime.
Blocking computer chips is arguably dumber. Obstructing sales of one generation of chips means nothing. They’ll be obsolete by the time they get on the market and duly swiped long before that.
What is the point?
The Republicans were anti-global from day one, despite the huge amounts of money the US made dealing with China. Like the UK, they’re heavily weighted to the financial markets, not the real economy.
The UK destroyed itself with the Brexit idiocy and an unholy does of hyper-conservatism at its most pig-ignorant. A lot of very dodgy numbers were the excuse, while Brexiteers simply went and got European passports for themselves and their families. A huge black market has meanwhile sprung up in the UK since.
Check out this rather patient article on fxstreet.com for lousy logic. The other lucky winner in this lottery of lunacy is the EU. They’ll pay tariffs, too.
It simply won’t be worth doing business with the US. As America’s wealth in property melts down like the LA fires, real capital is likely to evaporate. Domestic prices are totally out of control. American private debt is well over 200% of GDP.
You’re looking at a CCC credit rating for the US. Interest rates will go through the roof in any bad, let alone worst-case, scenario. That will make borrowing much more expensive. The US will be a bad risk, a global deadbeat. Worse than Russia, because the US holds so much capital.
It’s like 1929 all over again, but much, much dumber.
