Sunday, September 9, 2018

What did Donald Trump do today?

He lied about the effects of his trade war.

On August 31, the Ford Motor Company announced that it was scrapping plans to import its Focus Active model from a Chinese factory. It said that Trump's tariffs, which would force consumers to pay an extra 25%, made it impossible to sell in the United States.

In a tweet today, Trump insisted that this was a victory, because "This car can now be BUILT IN THE U.S.A.!"

In reality, Ford has no plans to make the car in the United States, and immediately said so. 

Re-creating the entire supply chain in the U.S. would be a money-losing proposition for Ford, so the Focus Active will simply not be sold in the United States. The demand (and the profit) for small crossover models will instead be absorbed by other automakers. Since Ford has all but abandoned the U.S. market for passenger cars, the most likely winners will be Japanese and Korean automakers.

Trump told a similar lie last week about Apple when he declared that the company could simply relocate its production chain in the United States.

Trump has spent much of his presidency taking credit for business and economic expansions he had nothing to do with. These tweets seem to point to a new tactic: taking credit for things that haven't happened and never will. But given the damage done by his trade war at the worst possible time on the electoral calendar, he may feel he has no option but to run on hypothetical good news.

Why is this a bad thing?

  • It's wrong to lie for political gain.
  • A president who thinks he can simply order good economic news to happen is incompetent.