As President Trump declared “liberation day” with the announcement of global minimum 10% tariffs, the stock market did a credible impression of gold-medallist Olympic diver Greg Louganis. The DOW dropped 4%. The S&P 500 fell 5%. The NASDAQ got clocked with a 6% drop. And the day after was even worse. JP Morgan Chase now predicts a 60% chance of recession in the next couple months. Never before has the incompetence of a single man tanked the markets this hard. And it doesn’t seem like Trump is repealing them any time soon. So, based on that assumption, what are the implications? Let’s break it down.
The Chart
The single most egregious aspect of this nonsense is the chart Donald Trump brought out. It featured several things, but it included the Heard and McDonald Islands as countries being tariffed. Which is devastating news for the islands’ only permanent residents: elephant seals. But ignoring the idiocy of tariffing an uninhabited island, the chart gets worse.
In short, Trump literally made up the tariff rates that other countries charge us. He took the amount of product the US imports from a given country, subtracted how much we export to that nation, and then divided that by their exports to us. That has literally nothing to do with the tariff rate of other countries. South Korea is listed as having 50% tariffs under this formula. They, in fact, have a free-trade agreement that has kept most goods between our two countries flowing with a less than 5% tariff. 50 vs. less than 5. And then he based his not-actually-reciprocal reciprocal tariffs on those phony numbers. The president made up tariff rates, and now he’s gonna kill the economy with that as a pretense.
Economic Homicide
When you raise taxes, you hurt the economy. That’s been a basic tenet of Republican Party Policy since forever. Literally since the 1880s. So when White House Press Secretary Leavitt lies to our faces and tells us that “tariffs are tax breaks”, it’s indescribably frustrating. This is not a tax break. This is, in fact, one of the single largest tax hikes in peacetime American history.
This will cripple a wide array of sectors abroad and at home. Even the industries Trump claims to be “helping”. The American auto industry, for example, will get absolutely thumped by these tariffs. Because it turns out that you can’t just tariff everything and then expect cars to be made in America again. You need industrial machinery to make those cars. You need raw materials to make those cars. When all of that is heavily taxed, the cost of doing business skyrockets and outweighs any benefit tariffs brought for the company in reducing their competition. That’s why GM’s stock price is down 9% this month. Honda’s is down 8.5%, and Toyota dropped 8.5% just this week. The only American car company even treading water is Ford.
The National Association of Manufacturers, one the biggest trade associations in the country, just called for Trump to “minimize tariff costs for manufacturers”. I have it on good authority, using my extraordinarily advanced journalistic networking skills, that the Alcoa and Celanese Corporations, both massive industrial producers in the U.S., are up in arms over this.
These are just the industries Trump is claiming to be helpi
ng. These are all companies that employ Americans. Companies that continue America’s industrial legacy. Now imagine the reactions from those not being “helped”. I won’t go through the reactions of big names in other sectors for the sake of time, but they’re bad. Real bad.
The Crusade on the 401K
So now the question on everybody’s minds is “how does this affect me”. And as I’m sure you know by now, it’s not going to be pretty. Already ridiculous car prices are going to skyrocket by thousands of dollars. Food imported from Mexico? Forget about it. You didn’t need avocados anyways. Would you like a new iPhone in the next 4 years? Might take a rain check on that. Taiwan just got slapped with a 32% tariff.
The poor will, as always, suffer the most. They (and much of the rest of the country) have become reliant on cheap Asian goods to raise their standard of living. The very bottom percenters didn’t even use to have shoes in many cases. But over the past several decades, due to free trade and the Walmart Corporation, $10 shoes and other cheap clothing articles have become the norm. Who knows what happens to any of that with a 46% tax on Vietnamese goods?
And, of course, the elephant in the room: the subject of the 401K. 50% of America has money in the stock market, and a lot of that is via the 401K account, which usually follows the ebbs and flows of the NYSE. And boy are there going to be ebbs. This month the Dow Jones Industrial Average is down 10%. It shed thousands of points just this month. Which affects, as you likely already know, your retirement fund. Now, I, in my youth and sprightliness, am unshackled from such things as retirement accounts. But for anybody relying on stocks to retire before their mid 70s, this isn’t just an inconvenience: it’s a betrayal.
So the conclusion to this section of the article is as follows: globalist economics are good. The global economy is your friend. Without free trade, everybody’s lives become miserable. But, unfortunately, we are about to get pretty darn miserable.
Reflecting a Wider Issue
Ultimately, though, this fiasco is emblematic of a deeper issue in this country: gigantic executive power. Because Congress, and Congress alone can tax people. That’s what the Constitution plainly states. But like many things relating to executive power, Franklin Delano Roosevelt had to ruin it. In 1934, Congress delegated its authority by giving the chief executive the right to change tariff rates by up to 50%. The courts, in their incompetence, greenlit such a delegation of authority. Since then, as Congress has become more and more unworkable, they’ve just outsourced the whole “doing their job” thing to the president, which is how we end up with such a blatantly unconstitutional move as “Liberation Day”.Â
Because Congress refuses to actually pass legislation, Donald Trump now has the power to tax you, me, and everybody in this nation via tariffs. Unilaterally. Without anybody else’s say. Does it not unsettle you that any one man has that power? If you are a Trump fan, does it not terrify you that a future Democratic president could do the same? On this front, we’ve played stupid games since the New Deal. And now we’re winning stupid prizes.
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