The Price Americans Will Pay for Trump’s Tariffs

Many cultist and even some financial managers did not believe the Felon would impose tariffs on Mexico and Canada which are guaranteed to increase consumer prices in America and decreased American exports as those countries respond with their own retaliatory tariffs.  One has to wonder how long before those who bitched incessantly about gas, egg and grocery prices during the Biden administration (ignoring, of course the role played by the Covid-19 pandemic which was grossly mishandled by the Felon during his first regime).  Unfortunately, the Felon is oblivious to the true laws of economics and the damage tariffs do to consumers. Moreover, being totally self-absorbed, the Felon cares nothing about the lives and struggles of others. As for the Felon's yes man minions, they have the collective noses so far up the Felon's backside that it a wonder they don't suffocate. Expect no voices of reason or sanity from them.  A lengthy piece in The Atlantic by a conservative, former Republican looks at the damage Trump and his moronic supporters will wreak on the nation.  Here are column highlights:

To understand the harm Donald Trump has done with his tariffs on Canada and Mexico, here are four things you need to know:

First, every tax on imports is also a tax on exports.

The most popular beer in America is Modelo Especial, brewed in Mexico. Impose a 25 percent tariff on Modelo and sales will slide. So, too, will exports of the American barley that goes into Mexican beer. Mexico buys three-quarters of U.S. barley exports, almost all for brewing.

Trump surrogates may promise you that by driving Mexican beer off of grocery shelves, Trump’s tariffs will increase sales of U.S. barley to U.S. brewers. That promise may even be substantially true. But that offer has fine print that barley growers will notice.

Barley growers don’t care only about how much barley they sell. They care about the price at which they sell it.

A tariff raises the price of both every imported good and every good that competes with imports. If the price of Modelo is pushed up, the price of American-brewed beer will rise as well. American beermakers are not operating a charity. The tariff on Modelo allows them to both increase their market share at Modelo’s expense and raise their prices enough to increase their margins at the consumers’ expense.

But American consumers do not have infinite amounts of money. If they are paying more for beer, they have to make savings elsewhere. The result—and economists will prove this to you all day with facts and figures—is that prices in exporting sectors such as barley, and agriculture generally, will decline in proportion as prices in the importing sectors rise.

This is why developing countries that tried, after 1945, to bulldoze their way to industrialization using high tariffs—Argentina under Juan Perón; India under Jawaharlal Nehru—ended up instead isolating themselves from world markets. The tariffs did allow them to make their own radio sets and cars, but at the price of lowering national incomes and so shrinking the domestic market for those radios and cars. And, of course, the protected radios and cars could not compete on global markets against the superior products of the countries that accepted world prices, such as Germany and Japan.

Trump tariffs will be paid in the form of higher prices for imports and their substitutes, and lower profits and wages for everyone who works in export industries.

Second, every product is also an input.

When journalists write about tariffs, they look for everyday examples familiar to everyone, the way I just did with Modelo beer. Others will cite tomatoes or avocados, food items for which the cost of the tariff will be reflected in the price at the supermarket checkout. But the greatest harm done by tariffs is concealed in a way that prevents most of us from seeing the harm directly.

The largest glassmaker in North America is a Mexican company, Vitro. It operates plants in the U.S. and Canada, but the center of its operations is Monterrey, Mexico.

Very few of us buy big sheets of industrial glass. We do not see or care about the price. But we do care about the price of a new apartment. That apartment price depends on the cost of construction. Which depends on the price of the window systems that clad the apartment building. Which depends on the price of glass. Which Trump just raised by up to 25 percent.

You may buy a little aluminum in the form of cans and other household products. But the main way you pay for aluminum is in the price of airline tickets. Put a tariff on aluminum, and aircraft prices rise. Inflate aircraft prices, and airline-ticket prices also rise. . . . . Who will connect the surprise extra fee they have to pay to sit beside their child with a president’s decree against the cheaper Canadian aluminum that owes its price advantage to superabundant Quebec hydroelectric power?

Third, “illegal” is irrelevant; don’t expect relief from tariffs through lawsuits.

You might wonder how can Trump do this. After all, Trump himself renegotiated NAFTA and praised his new U.S.-Mexico-Canada trade deal as “based on the principle of fairness and reciprocity.”

Trump’s actions are almost certainly illegal under treaty rules. But the U.S. stopped obeying treaty rules some time back.

In 2018, the Trump administration imposed tariffs on steel and aluminum imports. The affected countries took their case to the World Trade Organization. More than four years later, in December 2022, the WTO issued its judgment. The United States lost on every point. Result? The Biden administration declared it would ignore the ruling.

On trade, the U.S. itself has led the way back to the law of the jungle. Remember that fact when the other big cats strike back.

Fourth, Americans may not remember their past actions, but others do.

You may have already forgotten all about last weekend’s Trump outburst against Colombia, backed by threats of high tariffs on Colombian products. You may not ever have known that Colombia opened up to U.S. wheat, soybean, beef, cotton, and peanut exports in order to secure a free-trade agreement with the United States. But Colombians remember.

Colombia’s politics are intensely polarized, the legacy of bitter years of insurgency and civil war. Through most of the 21st century, Colombia’s politics had been dominated by U.S.-friendly politicians of the right. In 2022, for the first time in its modern history, Colombia elected a president of the left, Gustavo Petro.

Trump is single-handedly reneging on 80 years of American work to persuade others to trust and rely on the United States. He is remodeling the international image of the U.S. after himself: impulsive, self-seeking, short-sighted, and untrustworthy.

Mexico and Canada must ultimately suffer whatever the U.S. imposes on them. They cannot relocate; they have few credible options. Mexico has learned from especially bitter experience that any attempt to strike its own international deals will be vetoed by the U.S., using force if necessary.

Over the past five centuries, the Euro-Atlantic world has seen the rise of one great power after another: Habsburg Spain, Bourbon and Napoleonic France, Victorian Britain, Imperial and then Nazi Germany, the Soviet Union. Each of those powers was ultimately brought down because it frightened other powers into uniting against it.

The United States since 1945 tried a different way. It reconciled the world to its dominance in great part by using that dominance for the benefit of willing partners. The United States provided security, it opened markets, it welcomed the improving prosperity of fellow democracies and like-minded allies.

In the 21st century, the United States faces a new kind of adversary. Past rivals might have matched the U.S. in wealth, technology, or military strength, but not in all three. China today is the nearest peer power the U.S. has faced since Americans battled the British Empire in the War of 1812. To balance China while keeping the peace, the U.S. will need more and better friends than ever before. Trump is doing his utmost instead to alienate and offend those friends.

“America First” means “America Alone.” This week’s trade wars are steps on the way to future difficulties—and, unless a great infusion of better judgment or better luck suddenly occurs, future disasters.

The geopolitical verdict on the first Trump presidency could be written with a breath of relief: “Bad as it was, it could have been worse.” On the present trajectory, the verdict on the second may not come with any relief at all.