Tariffs

It was Jeopardy!, or The Price Is Right, come to Washington.On an unseasonably chilly day in the White House Rose Garden, Donald Trump stood with a giant chart listing which reciprocal tariffs he would impose on China, the European Union, the United Kingdom and other hapless contestants.The winner?Trump, of course, the maestro of fake populism, watched by a crowd that included men in hard hats and fluorescent construction worker vests.The losers?Everybody else.Sensing a bad headline, Trump hadn’t wanted his “liberation day” to coincide with April Fools’ Day, so he waited until 2 April to enter his fool’s paradise. It turned out to be liberation for his decades-old grievances about the US getting ripped off as Trump stuck two fingers up at the world.“For decades, our country has been looted, pillaged, raped and plundered by nations near and far – both friend and foe alike,” the president said against a backdrop of nine giant US flags on the White House colonnade. “Foreign cheaters have ransacked our factories, and foreign scavengers have torn apart our once beautiful American dream.”He nodded to American steelworkers, car-workers, farmers and craftspeople in the audience. These blue-collar workers have been central to Trump’s political rise. Their industrial towns in the midwest and elsewhere were hollowed out by the trade policies of Ronald Reagan and Bill Clinton, which sent thousands of jobs abroad where labour was cheaper.Trump couldn’t quite bring himself to say that “liberation day” represents a final repudiation of Reagan, still a god in Republican circles. But he did drive a stake through the heart of the 1994 North American Free Trade Agreement, or Nafta, describing it as “the worst trade deal ever made”.In 2016’s great revolt against globalization, the forgotten workers could have voted for the leftwing populism of Bernie Sanders, but he lost the Democratic party nomination to Hillary Clinton.Instead, enough went for Trump to make him president, believing his promises that he alone could fix it, end American carnage and get the factories throbbing again. As it turned out, he delivered a $1.5tn bill that slashed taxes for corporations and the wealthy.Many workers duly switched back to the Democrats, with Joe Biden in 2020. He did pour money into manufacturing – for example, with the Chips and Science Act, a bipartisan bill investing $52bn to revitalize the semiconductor industry.Yet in 2024 the pendulum swung again.Somehow a Manhattan billionaire with a criminal record again persuaded blue-collar workers that he was on their side. He claimed he could wave tariffs (taxes on foreign imports), which he has described as the most beautiful word in the English language, like a magic wand.In reality, experts say, it will result in higher prices and slower growth. The Ontario premier Doug Ford called this not liberation day but termination day because of all the jobs that will be lost. Trump playing with tariffs is like a child playing with matches.As he prepared to sign an executive order imposing reciprocal tariffs on about 60 countries, he mused that it was payback time: “Reciprocal: that means they do it to us and we do it to them. Very simple. Can’t get any simpler than that. This is one of the most important days, in my opinion, in American history. It’s our declaration of economic independence.”It was a strange message to hear from the leader of the wealthiest, most powerful country in the world as he slapped tariffs on the likes of Ethiopia, Haiti and Lesotho.“For years, hardworking American citizens were forced to sit on the sidelines as other nations got rich and powerful, much of it at our expense. But now it’s our turn to prosper … Today we’re standing up for the American worker and we are finally putting America first,” he said.View image in fullscreenEven then, Trump claimed he was being kind by not going “full reciprocal”. He summoned his commerce secretary, Howard Lutnick, to bring the chart to the podium and, as if it were a gameshow, began running through the scores on the doors:“China, first row. China, 67%. That’s tariffs charged to the USA, including currency manipulation and trade barriers. So 67%, so we’re going to be charging a discounted reciprocal tariff of 34%. I think in other words, they charge us, we charge them, we charge them less. So how can anybody be upset?“European Union, they’re very tough – very, very tough traders. You know, you think of the European Union, very friendly. They rip us off. It’s so sad to say, it’s so pathetic. Thirty-nine percent. We’re going to charge them 20%, so we’re charging them essentially half.“Vietnam: great negotiators, great people, they like me. I like them. The problem is they charge us 90%. We’re going to charge them 46% tariff.”And so on to Taiwan, Japan (“very, very tough, great people”), Switzerland, Indonesia, Malaysia and Cambodia: “United Kingdom, 10%, and we’ll go 10%, so we’ll do the same thing.”Once he’d gone through the figures, Trump rambled, as he tends to do, as if at a campaign rally: “The price of eggs dropped now 59%, and they’re going down more, and the availability is fantastic. They were saying that for Easter, please don’t use eggs. Could you use plastic eggs? I said, we don’t want to do that.”And: “It’s such an old-fashioned term but a beautiful term: groceries. It sort of says a bag with different things in it. Groceries went through the roof and I campaigned on that. I talked about the word ‘groceries’ for a lot, and energy costs now are down. Groceries are down.”In other words, everything is going great despite Signalgate, despite disappointing election results on Tuesday, despite a falling stock market and sapping consumer confidence. Now, a global trade war, too. The US is about to discover the one thing more dangerous than a politician who believes in nothing is a politician who believes in something stupid. More