Thursday, March 22, 2018

What did Donald Trump do today?

He successfully provoked the trade war he wanted.

This morning, Trump signed an official memo that cleared the way for up to $60 billion worth of tariffs on China. This means that the total price of Chinese goods sold in the United States would rise by that much.

Within hours, China responded with a list of 128 American products sold in China on which it was prepared to issue retaliatory tariffs. The price that Chinese consumers paid for these goods would rise, and American producers would sell fewer of them.

By definition, this is a trade war. Trump apparently truly believes that it is possible to "win" a trade war, perhaps because he also believes that a trade deficit means a country is somehow "losing" money. Not every economic advisor opposes tariffs on China, but nobody who understands what a trade war is thinks it is possible to "win" one.

Another thing Trump believes is that the stock markets are an indicator of his job performance. US stock markets crashed today on news of the tariffs, with the Dow Jones down 724 points (-2.9%). 

Why should I care about this?

  • A president who cannot or will not learn the most basic possible facts about the economy is incapable of doing his job.