Mad King Trump's Tariff Disaster

[Celerity]

https://prospect.org/economy/2025-03-12-mad-king-trumps-tariff-disaster/



One of the factors that worsened the Great Depression was the international retreat from foreign trade. As the global economy collapsed, countries attempted to protect their home markets with tariffs, led by the United States, whose Smoot-Hawley Tariff, signed into law by President Hoover in 1930, touched off a massive trade war. Though this was not the principal cause of the crisis, economists generally agree it made things worse. Instead of protecting home markets, the trade war merely choked off a source of foreign demand for American-made goods and services, shrinking output and causing even more unemployment.

Donald Trump is doing his Hooverian predecessor one better. His on-again, off-again trade war on Mexico and Canada got real last week with the imposition of 25 percent tariffs on most goods crossing the border. Canada retaliated in kind, and the province of Ontario, whose government owns many large hydroelectric dams, imposed a 25 percent tariff on electricity going to the American Northeast.

Things heated up further on Tuesday when Trump announced, as usual by way of

Okay it's back
truthsocial.com/@realDonaldT...

— George Pearkes (@peark.es) 2025-03-11T14:06:54.180Z" target="_blank">an incoherent wall of text posted on Truth Social, that the tariff on Canadian steel and aluminum would increase to 50 percent in retaliation. Ontario Premier Doug Ford had previously threatened to cut off power to the U.S. entirely if Trump kept escalating.

Then, as I was writing this article, Trump

*TRUMP: LOOKING AT BACKING DOWN ON THE 50% DUTIES ON CANADA
*TRUMP: MAY BACK OFF DOUBLING STEEL, ALUMINUM CANADA TARIFFS
*TRUMP ON CANADA: WILL PROBABLY MAKE DIFFERENT TARIFF DECISION

— George Pearkes (@peark.es) 2025-03-11T19:09:52.889Z" target="_blank">reportedly reconsidered his escalation. So far, however, the Canadian national government, for entirely understandable reasons, has said it will keep its tariffs up until Trump stops with the syphilitic emperor routine. Unlike Smoot-Hawley, the Trump tariffs, even if they don’t escalate continually, might single-handedly cause a severe recession in America or even the world.

snip

[Bernardo de La Paz]

1. Instead of a coordinated targetted & timed tariff campaign, tRump has a chaotic all-fronts ill-timed tariff war

In theory, the largest economy can win a tariff campaign that is specific to a particular objective in one sector and one country, such as electric vehicles from China as happened in 2024, because the effects on the target will be much greater than in the largest economy. The Chinese EV tariff was coordinated with Canada and Europe. And you would want to time it for when economic conditions are generally good so that ripple effects would be harder to notice and not contributing to negative news cycles. Thus you wouldn't mount other major economic measures at the same time that might require a little tolerance for small downward pressures.

tRump doesn't have a particular objective for his tariffs beyond making money and hurting other countries. He is achieving some limited success on the latter and the former hasn't taken hold yet. But in both objectives he will fail because trade will constrict and other countries like Canada have resolve and grit and elbows.

Instead of a focused competent campaign tRump has landed himself and the US in the middle of a global trade war while pressing down on the domestic economy with reduced government spending, reduced government employment, and reduced labour supply on the low wage end. He has declared economic war on North America, Europe, and Asia.

The business community is beginning to dimly catch on that tRump tariffs are not a negotiating tactic.

The economic damage will be a prominent feature of his legacy. He has a fair chance of living to see it, but it is an open question whether he will be more than marginally aware of it by then.

[John Farmer]

2. Trump admin. officials are still insisting

that tariffs on Canadian products are a tax on Canada. (Our ally.)

Something like 80% of the agricultural Potassium that US farmers use comes from Canada. The farmers are going to be pissed!