CNN
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President Donald Trump is set to wager this week on his second term, the economy and personal financial success for millions of Americans, in his long-standing belief that tariffs can replicate the golden age of America’s wealth and independence.
Or is it him? This is Trump’s whimsical leadership where nothing is certain until it happens. And, in particular, trade assertion orders will be reversed as soon as they are given.
However, Trump promises that Wednesday, April 2nd will be “Liberation Day.” It’s time he imposes reverse dollar tariffs on countries that impose duties on US goods.
His most robust move to transform the global trading system could impact all Americans and raise prices at a time when family budgets are already extended. But the president implicitly asks everyone to buy into strategies that pique the appetite for future profits but require sacrifices for years to come.
Trump’s trade war policy has already wiped out trillions of dollars of stock markets – the Dow Jones Industrial Average plummeted 700 points on Friday alone, exacerbating the fears of the recession as consumer confidence waned. He also alienated US allies as his foreign policy began to unravel the Western system of alliance.
As Wednesday’s deadline approaches, the president is further damaging the confidence that economic stability depends on by raising contradictory expectations. For example, it suggests that some countries and industries may obtain opt-out from new tariffs. His whiplash leadership puts as much damage as the policy itself.
By imposing tariffs on imports, Trump forces businesses to move manufacturing and supply chains to the US, creating jobs and reviving areas that have been deprived of poverty through globalization.
The downside, however, is that tariffs will skyrocket prices for consumers who exhaust the fatigue of living expenses. And there’s no guarantee that businesses will support the state, as such direction takes years and will likely take longer than Trump’s power.
If the president continues, he will take a great political risk. However, he does not seem to notice any potential effects. In his spectacular comments on NBC News’ Kristen Welker on Saturday, the billionaire and billionaire cabinet leader was indifferent to hiking the cost of cars caused by his new industry tariffs.
“I couldn’t care much if I raised prices because people were about to start buying American-made cars,” Trump said in a phone interview. “Because when prices of foreign cars go up, they’ll buy American cars.”
His attitude has put political backlash at stake when Republicans are already wary of the slowing economy and the impact of Trump’s policies on elections, and this week’s special election in Florida threatens to embarrass the party.
Trump’s view also ignores the complexity of the 25% car rates that come into effect this week. The manufacturing process is deeply integrated with plants in Mexico and Canada. This means that most cars built in the US will become more expensive. And, in theory, future US-made cars may be surviving tariffs, but the increased production costs and investment required for manufacturing only within the US will be passed on to consumers. Meanwhile, new cars will be thousands of dollars higher, putting industry employment cuts at risk.
Winners and losers
Trump’s belief in the near-mystical power of tariffs is rooted in his worldview of winners and losers and his belief that the United States has long been torn apart by the European and Asian powers protecting industry.
“We’re going to charge the country to do business in our country, take on jobs, take away wealth and take away a lot of things they’ve taken over over the years,” Trump told reporters last week. “They have taken so many from our nation, from our friends and from our enemies.”
Customs policy is as old as the US. However, many economists condemned restrictive trade policies for causing immense difficulties in the Great Depression of the 1930s, and the post-World War II period gradually fell in trade barriers before the fundamental reshaping of global commercial transactions, as the 21st century emerged.
Trump refuses to accept the economic consensus that tariffs will cause higher prices as importers will pass the additional obligation costs to consumers. This is a particular concern as voters are not much mitigated from hiking the cost of important goods during the pandemic era. Despite the signs being ticked again, inflation may have eased, but the cost of living from five years ago has not returned.
The president’s goal to revive economic outlook in areas that have been hampered by the loss of factories is commendable. The economic transformation brought about by globalization has stripped the community of prospects and contributed to the opioid epidemic. Executives claim that Trump’s policies will restore Main Street, which has been damaged by closed store lines.
The sense of loss in the Rusby Belt region encouraged Trump’s political upheaval as he turned into the rage of ordinary Americans more effectively than other politicians of his generation.
There is no doubt that the results did not support past officials’ promises about the power of globalization to enrich all Americans. And Trump’s trade transformation is underpinned by a broken pledge.
For example, one of the arguments to expand free trade and lead China to the World Trade Organization was to liberalize the Communist giants and not pose a threat to the United States. But there was also economic debate that it would make our work safer.
“For the first time, we will be able to sell and distribute products in China, which American workers have created without being forced to move manufacturing to China, sell the Chinese government, or transfer valuable technology,” President Bill Clinton said in March 2000.
That argument has looked hollow to many Americans over a quarter century. And while it seemed logical to try to promote China’s political reform through economic policy, Beijing instead used trade concessions to bankroll its rise into the superpower position and solidified its oppressive nation-state.
But is the ideal view of the president’s future U.S. economy realistic?
Recreating the 1950s-style American manufacturing idyllicism is a broader era in which the competitiveness and economy of the United States is concentrated on the rise of employment and commerce based on service industries, technology and artificial intelligence.
For example, other economies (Canada) will lose in a trade war with the stronger US, but they can still cause great pain to American consumers.
And Trump’s own unpredictability — extending deadlines, providing tariff exceptions, reversed his policies and then doubling them, not because he hampered the market-based retirement savings of millions of Americans.
The ghost of an unstable politician who follows his hourly whims and tries to personally manipulate the world economy, puts disasters at risk. And it promotes the uncertainty that discourages manufacturers from returning home.
There are also doubts as to whether the president will be in this for the long term.
Some signals suggest that he is.
“Access to cheap products is not the essence of the American dream,” Treasury Secretary Scott Bescent told the New York Economic Club this month. “The American Dream is rooted in the notion that any citizen can achieve prosperity, upward mobility and economic security. For a long time, designers of multilateral trade transactions have lost sight of this.
But many Republicans hope that Trump simply uses tariffs as leverage to boost his legendary pursuit of “trading.”
“It’s all about negotiating with President Trump to see what we’re going to do in the long run,” Sen. James Lankford told CNN’s Dana Bash on Sunday about the “coalition status.” “In a way, I feel this is like a kitchen remodel or a bath remodel,” the Oklahoma Republican added. “It’s going to be noisy for a while, but we all know where we’re heading, we’re trying to lower American prices and raise jobs.”
However, the White House is less optimistic than Lankford, as it refuses to accept that tariffs will raise prices and instead refusing to trigger a utopian scenario in which import tariffs will generate huge rewards through tax cuts, lowering and enormous immediate job creation.
“We already have a great race to fill those factories, and we will see domestic production being rapidly replaced by this foreign content,” Peter Navarro, senior adviser of trade and manufacturing at the White House, told CNN’s Casey Hunt on Thursday.
“We’re going to see wages go up. … Tariffs will be just over $100 billion on cars alone, and one thing that tax cuts do is offer tax credits to those who buy cars made in the US.
Navarro expanded this vision with “Fox News Sunday” when he forced the president’s own approval that tariffs would cause “confusion.”
“Trust in Trump,” Navarro said.
But for many investors and consumers, that trust has already been crushed due to the president’s volatility. The days ahead could be turbulent as he deepens his one-man experiment in the world economy.
