I have always been convinced that Donald Trump is a moron, albeit a dangerous one imbued as he is with a colossal ego and limitless self confidence. His first Secretary of State Rex Tillerson said he was a moron (with added profanity) and it’s hard to believe his IQ is much above 70 if at all. This makes him a moron in my book and probably in yours too. If there was any doubt, that was dispelled on Wednesday when he spent the best part of an hour addressing an audience in the White House rose garden and millions watching on TV across America and beyond. The numskulls sitting in front of him all applauded as he took a wrecking ball to the global economy, stock markets in the US and across the world, and the finances of his fellow Americans.
Scott Lucas, professor of US and International Politics at the Clinton Institute at University College Dublin, said his speech was "filled with lies and distortions and it was the dumbest and most economically illiterate speech I have ever heard."
It was indeed totally insane. He somehow believes the revenue from these massive tariffs can replace income tax and boost growth!! He tweeted this yesterday:
The Dow Jones industrial average, the Nasdaq tech index, and the S&P500 all fell dramatically, wiping a total of $2.5 trillion (with a 'T') off US stocks in the course of an hour. This wasn't an unforeseen catastrophe like an earthquake but a deliberate act by a sitting president.
The whole idea of racking up massive tariffs on imports is crazy in any case since they are paid, not by foreign companies or governments, but by US taxpayers. He is like a cornered James Bond villain threatening his hostages; "give me what I want or the kid gets it!"
His former Vice President Mike Pence called it the "biggest tax hike in US history." And this is being done by presidential decree, not Congress where all decisions about tax rates and revenues are, or should be, made according to the Constitution. Some in his administration even claim it’s a tax CUT as if the tariffs will actually come from foreigners in return for the pleasure of selling their goods to American consumers. Really. Words fail.
He has been banging away about the soaring US trade deficit for decades and is convinced the way to get it back into balance is by tariffs.
All that said, it’s the way it has all been worked out which is off-the-wall crazy. Experts are just laughing at the sheer insanity of the list of figures shown on live TV by Trump. Despite being described as the ‘tariffs’ other countries apply to imports from the USA. They have virtually nothing to do with tariffs. All they do is divide the trade deficit by the total amount of goods a country exports to America x 100= the percentage ‘tariff’ Trump thinks that country is applying.
The US Trade Representative has the calculation but they stick some Greek letters in to make it look more authentic and considered. They use multiplying factors for changes in import demand and import prices - called “elasticity” to show how a reduction in demand reduces prices (or vice versa).
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Hence adding these multipliers adds nothing to the result. They could have been omitted. You're left with total imports minus total exports on the top line (the trade deficit) divided by the total imports and expresses as a ratio which you convert to a percentage by multiplying by 100.
It is childishly simplistic.
The Washington Post also points out that the calculation leaves out services — which make up the bulk of the US economy and an important proportion of its exports, making the trade relationships look more one-sided in any case.
“They’ve got an indefensible foundation to an indefensible policy," said Douglas Holtz-Eakin, president of the conservative American Action Forum.
Having 'calculated' the ratio, you then divide it in half to produce what the administration called a “discounted reciprocal tariff” they intend to apply to 185 countries on his list, which excludes Russia, Iran and North Korea, but includes the Heard and McDonald Islands inhabited only by penguins, and the Falklands. And that's it. Totally surreal.
I suspected it was made this simple because it’s about as complicated as Trump can cope with. You can easily imagine all kinds of complex options being proposed but the experts simply not being able to get Trump to understand. And him waving it all away as too complex and unnecessary because he knows best at all times and under all circumstances. The formula and Greek letters are just a fig leaf.
Another possible explanation is that they used AI. Don't laugh. This article from Computing appears to show what you would get if you asked ChatGPT to work it out and the results are uncannily similar to Trump's ludicrous figures. But ChatGPT, when pressed, also admits the whole things is nonsense!!!
The New York Times has worked out that the tariffs will cost US workers $714 billion a year by the way:
Nobody, at least nobody with the slightest know how, thinks this will solve the deficit issue, boost growth or replace income tax. What it will do is give Trump immense power to offer exemptions in return for things he wants. Other countries should avoid giving him anything.
The policy is so awful that nobody thinks it can possibly last. The first batch of tariffs came in last night with others to follow in the next few days up to April 9th so US consumers are going to feel the effects very soon and he will become the most unpopular president in history. He has sown the seeds of his own destruction.
