Whacko in the White House

Convicted felon Donald Trump's expansive new tariffs reverse a decades-long global trend of lower trade barriers and are likely, economists say, to raise prices for Americans by thousands of dollars each year while sharply slowing the U.S. economy.  The Yale Budget Lab estimates the Trump administration’s tariffs would cost the average household $3,800 in higher prices this year.

Like the proverbial senile old man sitting on the couch, Trump social media posts were strangely ignorant of reality.  The seemed upbeat when asked about the stock market drop. “I think it’s going very well,” he said. “We have an operation, like when a patient gets operated on and it’s a big thing. I said this would exactly be the way it is.”

Meanwhile, back in reality, the economy is turning into a dumpster fire.  Investors turned thumbs-down on the new duties Thursday, with the S&P 500 index dropping 4.8% at the close of trading, its worst day since the pandemic. The Dow Jones Industrial Average plunged more than 1,600 points. 

The average U.S. tariff could rise to nearly 25% when the tariffs are fully implemented April 9, economists estimate, higher than in more than a century, and higher than the 1930 Smoot-Hawley tariffs that are widely blamed for worsening the Great Depression.

72% of Americans (and 64% of Republicans) believe tariffs will raise prices in the short term, according to the CBS News/YouGov poll.

Trump claimed that sky-high new taxes on imported goods would be “reciprocal,” meaning they were payback for tariffs other countries have slapped on U.S. exports. But the reciprocal tariffs turned out not to be based on actual levies imposed by other countries. Instead, they’re based on a formula made up by the White House ― and widely mocked by experts. 

Douglas Holtz-Eakin, a conservative economist American Action Forum and former director of the Congressional Budget Office, called it “malpractice” in response to another conservative economist who called it “embarrassing.” 

Journalist James Surowiecki was one of the first to notice that the administration was lying about the so-called calculations touted by Trump.  “They didn’t actually calculate tariff rates + non-tariff barriers, as they say they did,” Surowiecki wrote. “Instead, for every country, they just took our trade deficit with that country and divided it by the country’s exports to us.”

The Nobel-Prize-winning liberal economist Paul Krugman called the crudity of the “reciprocal” tariffs formula shocking. “When the fate of the world economy is on the line, the malignant stupidity of the policy process is arguably as important as the policies themselves,” Krugman wrote. “How can anyone, whether they’re businesspeople or foreign governments, trust anything coming out of an administration that behaves like this?”