Trump's Tariffs: How to Lose Friends and Impoverish Americans
Matt Bernardini surveys the damage of the Donald's global trade tariff debacle, and asks who actually benefits?
Amidst all of the Trump campaign propaganda about how bad Joe Biden’s economy was and how the Donald would be the only person to ‘make it great again,’ one comment from Elon Musk that went almost unnoticed, might end up being the only true thing this administration ever says.
A week before the election, Musk told voters to brace for temporary hardship if Trump’s policies were implemented.
“We have to reduce spending to live within our means,” Musk said during a town hall on X. “And, you know, that necessarily involves some temporary hardship, but it will ensure long-term prosperity.”
The wealthiest man in the world, telling ordinary Americans that they may have to endure some hard times, so that Musk can shape the country the way he wants.
That’s rich.
Yet so far it appears to be the most accurate thing that Musk has ever said, particularly after the week America just had. On Wednesday, now known as “Liberation Day,” Trump levied heavy tariffs on most imports from US trading partners. The tariffs were so high that they eclipsed what many experts believed would be the worst case results.
Republican politicians are already hearing from their constituents, many of whom voted for the President, because of the negative effect these tariffs will have on them.
“I don’t support across-the-board tariffs as a general matter, and so I don’t support those, and I will be urging changes there because I don’t think they will end up raising a bunch of revenue that’s been asserted,” the Arkansas Republican Representative French HIll said.
So far the damage to the economy is already underway. Just over the last two days, the stock markets had their worst days since the pandemic, and our allies continue to distance themselves from us.
The European Union, which is already at odds with Trump on NATO spending and support for Ukraine, has vowed to retaliate by levying reciprocal tariffs on US goods.
“And we're now preparing for further countermeasures to protect our interests and our businesses if negotiations fail," European Commission President Ursula von der Leyen said.
Our northern partner Canada is preparing to take an even harder line, already announcing a breakup with the US.
“The old relationship we had with the United States, based on deepening integration of our economies and tight security and military cooperation, is over,” new Canadian Prime Minister Mark Carney said. “We must fundamentally reimagine our economy. We will need to ensure that Canada can succeed in a drastically different world.”
In response many vehicles coming from the US into Canada will now be hit with 25 percent tariffs, along with a renewed focus on manufacturing automobiles in Canada.
“We must respond with purpose and force and take every step to protect Canadian workers and businesses against the unjust tariffs imposed by the United States, including on automobiles,” Carney said.
Not only is Trump’s policy nonsensical and alienating to our allies, it also suffers from a fundamental contradiction. He has insisted that these tariffs will raise much needed revenue for the country and also create a domestic manufacturing boom. Yet these two things are virtually incompatible. If a domestic manufacturing boom does indeed occur, then it’s unlikely that the tariffs will bring in much revenue, because there are fewer imports. And if these tariffs do bring in significant revenue, then the domestic manufacturing boom doesn’t occur. It would be like someone expecting a cigarette tax to bring in additional revenue, when the real goal of it is to get people to stop smoking.
Also the ensuing trade war makes it unlikely that this will have any effect on the US economy, except for making consumers pay higher prices.
However, the bluster around tariffs and revenue does create a good smokescreen to divert attention from the key Republican policy, redistributing wealth from the average citizen to the wealthy.
For all their talk about the revenue that these tariffs are going to bring in, Republicans are once again proposing massive tax cuts for the rich. Somehow, they forget about the importance of new revenue when it comes to taxes. And because these tax cuts are going blow an even bigger hole in the deficit, Republicans are going to play some more budgetary tricks to make the damage appear smaller than it will be.
On Wednesday, the same day the tariffs were announced, Senate Republicans released a budget resolution that proposed $5.3 trillion in new tax cuts. To pay for some of these, they are calling for big cuts to important social programs like Medicaid and food stamps, as well as ignoring Senate rules. To pass the budget by a simple majority, instead of needing 60 votes, Republicans have to pretend that the tax cuts will only cost $1.3 trillion. By abusing these rules, Republicans not only get to cut taxes for the wealthy by harming average Americans, they are also setting up a system that will allow them to do whatever they want for next year because they can pass whatever they want with a simple majority.
“In this instance, the policy Senate Republicans are pushing for is something that would cut taxes disproportionately for the wealthiest Americans while taking away Medicaid and food assistance and adding $3.8 trillion in deficits over 10 years—and much more in the years beyond that,” an analysis by independent policy institute the Center for American Progress found.
After the tariffs and tax cuts take effect, it looks like Musk will have been right about American consumers facing hardship. Only the difficulty may not be temporary, it could very likely be permanent.