The chaos of the Trump Administration’s tariff war is already causing importers and exporters to halt shipments worldwide. The COVID-19 pandemic caused factories and most supply chains to freeze for extended periods. Have we forgotten the empty shelves of toilet paper? Do we remember the hoarding behavior? We can expect a similar experience by this coming summer, as existing goods now sitting in local warehouses are depleted.
In addition to EMPTY shelves, we will see HIGHER prices.
Except for committed conspiracy mavens, the recent pandemic was not preventable. However, Trump’s clumsy, devil-may-care tariff war was.
Trump’s tariffs on Canada, Mexico, and China are examples of his amateurish impulsivity. He said the tariffs would be high, and then, to prove his manhood, Trump raised them even higher. He boldly said he was not joking and said the tariffs would be immediate. After the public and a few oligarchs reacted, a few days later, he meekly transmitted a press release stating that he had paused the tariffs.
Hidden behind the mixed messages and conflicting actions, the Trump Administration has a 27 percent tariff on Canadian “soft” lumber. This includes all sorts of wood pulp products, including our friend in the bathroom. Although America produces much of its finished toilet paper, many sawmills near the Canadian border acquire wood chips from Canada.
Throughout American history, tariffs have been used more as a political than an economic tool. Tariffs were used to punish foreign adversaries, raise revenue (as a regressive tax on everyone), and protect particular industries. Coincidentally, the protected American industries were also leading political party funders, who dictated the tariff amounts and rules. The old saying that the devil is in the details is very appropriate with tariffs. In greedy, detail-oriented hands, a tariff can be designed to be so boringly opaque that only a few members of the human race have the time and motivation to understand it. A few companies get rich while the rest of us lose.
Ironically, most corporations and wealthy investors who supported the devil-may-care dictator thought their lot would improve. How’s that going? Trillions in wealth have vanished in the stock markets.
Marc Zuckerberg went to Mar-a-Lago to kiss the ring and make donations before the election. His company is currently being carved up by Trump’s FTC Chairman.
Elon Musk went full-tilt MAGA in support of Trump. Look at him now. His Tesla lost 50% of its value in months, and he is the world’s laughing stock. Unsurprisingly, Musk is openly yelling at most of Trump’s tariff minions. The world’s richest and smartest man is watching his mighty empire being destroyed. Most of his wounds have been self-inflicted.
In typical Trump fashion, when asked if he is personally negotiating with Chinese leaders, he flippantly responds, “Negotiations are actively ongoing.” When China’s leaders are asked the same thing, they say, “There are no negotiations.” We do not need to trust China; any objective person can recognize a Trump lie.
The American economy needs predictability, not chaos. Chaos leads to a decline in investment. Investors do not invest when their return on investment becomes dangerously uncertain. The lack of investment leads to economic decline, leading to unemployment. Chaos during a tariff war leads to some version of the Great Depression of the 1930s.
The only people benefiting from Trump’s tariff war are those with inside information. They sell or buy based on their knowledge of what chaotic thing Trump will say the next day. Trump signals that he will “lower the boom” on English imports, and his insiders sell or buy the stocks affected by his pronouncements.
Chaos is a disaster for the 99% but an opportunity for Trump’s 1%.