There is one news today: Trump’s tariffs. The stock markets have dived and world leaders are anxious about the financial future. We don’t know for sure how it will all play out. The endgame is unknown but it might end up a financial bloodbath for those countries determined to retaliate resolutely. China comes to mind.
President Trump is taking a massive gamble. He is sure that tariffs will help to make America Great Again. The money collected by America via tariffs will allow him to reduce taxes. And foreign businesses will set up in America to avoid the tariffs thereby increase jobs for Americans. This second aim is unworkable as the tariffs may be short-lived. It takes years to set up manufacturing in a foreign country.
Most of his administration apparently disagree with tariffs! The news is that U.S. Treasury Secretary Scott Bessent is looking for a way out of his job and he’s been in it for a few months.
The MO of tariffs can be tested using the reductio absurdum argument. This tests a proposition by reducing it to an absurd extreme.
This is how I’d do it: pretend that Trump increased tariffs to 1000%. The result? World trade would cease to exist. Quod erat demonstrandum (QED): tarrifs put a brake on trade and ultimately stop it.
Less trade means a smaller world economy and ultimately poorer people. For yonks the world has turned on the basis of economic growth. All countries strive for it. Tariffs puts the economic growth aim into reverse.
How do tariffs work? My understanding: The foreign goods coming into America from say the EU are 20% more expensive. The importer pays 20% more for the goods. The importer recovers this surcharge by selling the goods to the wholesaler for 20% more. The wholesaler sells the goods to the retailer for 20% more and the retailer sells the goods to the consumer for 20% more. The American taxpayer, John Doe, picks up the tab.
The importer pays the 20% surcharge to the US government. They keep it as ‘tax revenue’, which should, according to Trump, amount to trillions of US dollars over the forthcoming years.
As I have, Trump has simplified things. The world economy is 3-D chess; highly nuanced and complex. Trump is playing conkers when he should be playing 3-D chess. He has it wrong.
Perhaps he is playing 2-D chess? And wants to force all these countries to eliminate their tariffs on the importation of US goods into their countries and thereby create a level playing field and world free-trade in due course. Perhaps he is playing the long game.
The trouble here is that China and other countries have upped the ante and increased their tariffs not reduced them. A trade war has erupted which is currently the opposite of his intended aims.
More: Michael Broad – non-cat stuff by me.
P.S. Trump is neither good for curbing global warming (he does not believe in it at all) nor animal welfare (not a priority whatsoever). He is concerned with making money and being dominant. This objective will always work against protecting nature and wildlife.
