Investors (not to mention every country in the world) obviously let Trump have an earful of loud yips over his tariff plan. It was a US bond market upheaval in addition to huge losses in stocks that caused Trump to backtrack on his worldwide tariffs. He had to acknowledge the yipping and queasy response to what he had done.
His backtracking of the “beautiful” tariffs on all of the world’s countries created short term relief. It was a particularly fruitful relief for his billionaire buddies that responded to his call to buy when the stocks were down-just before he paused the tariffs. (This has been accused of being market manipulation.) Let’s keep in mind that when stocks and bonds go down, it is not just rich investors who suffer losses but also retirement accounts of millions of Americans.
However, after the money making pause for his rich buddies, markets have still soured over the excessively huge tariffs on goods from China that were increased to the point that China has retaliated resulting in a full on trade war.
The damage from this ongoing tariff escapade is very likely to be deep and long lasting. Thousands or small businesses, not just Walmart and other major retailers, have deep dependance on China for products or, in the case of large manufacturers, raw materials and components they need. This will all translate into higher living costs for everyday Americans-plus citizens around the world despite any currency manipulations that occur.
To expect any business to respond to a 145% tariff on products from China with no notice will turn into a death sentence for many. That is unless you can “pay to play.”
By exempting computers, and related tech components from the tariffs on China, don’t expect those firms (which were mostly heavy donors to Trumpsuch as Musk), to be moving their Chinese production to the US.
Now the mixed messaging from the White House-or perhaps better said mixed-up messagingis that these exemptions are temporary. It is a safe bet that the pay to play response from the tech world will be on the table to extend the “temporary” pause. Nonetheless, by adding such uncertainty into whether the exemption will stay slows the tech world from making any major decision to invest in the US-or abroad for that matter.
In starting this trade war between the US and China (already adversaries on many fronts), Trump is also destroying the main ties between the two countries. Without anything binding them together, the risk of armed conflict becomes more prescient.
To go along with this China debacle, Trump has destroyed any credibility with practically all trading partners including with what very well now may be our former allies. Recall that the pause on the huge worldwide tariffs is for 90 days. It is hard, not just for businesses, but for consumers to plan around that.
There are possibly some tariff measures that need to be in place-not just with China but with other countries as well. But these need to be done in a strategic way that accommodates extensive negotiations and long time horizons so businesses can prepare to adapt.
The Trump tariff strategy according to his supporters was to go to the brink so every country in the world will want to kiss his derriere and do a deal. But if you want a deal, expect that any country is going to watch out for its own self-interest. This kind of “deal” takes time-especially if you are trying to deal with countries of the entire world (except Russia of course).
But how thought out is this tariff strategy when even the formula used to determine Trump’s beloved tariffs can be graciously considered a sick joke? The formula to determine tariff amounts has been reverse engineered as a simplistic artificial intelligence concoction and simple math model. It has “brilliantly” resulted in putting a tariff on uninhabited islands (unless you count penguins and seals) plus outlandish tariffs on poor counties with no capacity to buy meaningfully from the US.
This kind of sloppiness may even exceed the use of a commercial messaging app to discuss war plans (with a journalist blindly included) in our new realm of arrogant carelessness.
Yip! Yip! Yip!
W Laurence Doxsey, Retired, Former Director of Office of Sustainability for City of San Antonio, former Environmental Officer for US Department of Housing and Urban Development, former Sustainability Officer for City of Austin, resides outside Medina.
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