We have a madman in the White House. These tariffs are not rooted in sound economic knowledge.
Trump dropped a nuclear bomb on an effectively performing U.S. economy and didn’t even pause to ask if the coordinates were calculated properly. Somehow this protectionist bent administration must rollback these measures before the fallout deepens.
I know some of you have lives and don’t consume 12 hours of news and public policy everyday. But my intent is to keep you informed, so I want you to understand how this disaster was structured by a sloppy WH.
The tariffs were calculated using a formula that takes how much a given country sells to the U.S. (exports), subtracts how much that country buys from the U.S. (imports) to calculate the trade deficit, and then divides the trade deficit by that country’s total exports to the U.S., according to experts. That’s it.
The administration used a rudimentary formula that your youngest child would use to determine how to implement the most sweepingng tariffs in 100 years. No consideration for non-tariff barriers or the use of professional services.
Trump’s trade policy is based on targeting countries with large trade surpluses — but that approach is outright asinine for many reasons.
• The U.S. is a wealthy, consumption-driven country. We buy more. That’s not losing — it’s actually leverage in terms of foreign policy.
• Many countries sell us parts we need to build our own products. Tariffs hurt us too.
• We run massive surpluses in services — think software, finance, media, and consulting. That’s completely ignored.
• Some trade partners are just poorer. They can’t afford to buy as much from us. That’s not unfair — that’s reality.
• One of the absolutely biggest point is that our trading partners invest their trade surpluses in our capital market. We control 70% of the global market capitalization and we have a $50 trillion bond market supported by our trading partners.
Trade policy should be smart, not emotional. Deficits aren’t always a problem. Sometimes, they’re just the price of being the biggest economy in the world.
