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The angry old man we call president may have just launched an unwinnable trade war.
It used to be much easier to ignore the cousin who posted anti-immigration screeds on Facebook, or the guy in your neighborhood diner ranting about how foreigners have taken all the jobs. It's bad enough having to ignore these people, but as Paul Krugman asks in his Tuesday column, "what if the ranting, ill-informed old guy who strongly believes things that just aren’t true happens to be the president of the United States?"
Unfortunately, that's exactly who Donald Trump is. And that crazy old racist just started a trade war with his decision to impose tariffs on steel. The decision itself is "not that big a deal," Krugman writes. "The really disturbing thing is the way he seems to have arrived at that decision, which apparently came as a surprise to his own economic team."
Trump justified the tariffs as necessary to protect national security; that might make a shred of sense if we were importing steel from a country that was a genuine threat to the United States instead of, say, Canada.
That's only the beginning of our problems. Trump's move, "gives other countries full legal license to retaliate, and retaliate they will. The European Union—which is, by the way, a bigger player in world trade than we are—has already threatened to impose tariffs on Harley-Davidsons, bourbon and blue jeans."
Since making his announcement, Trump has used Twitter to amplify his lies. Krugman is adamant that these aren't simply policy matters he disagrees with, but outright falsehoods:
He has, for example, declared that we have large trade deficits with Canada; actually, according to U.S. numbers, we run a small surplus. The Europeans, he says, impose “massive tariffs” on U.S. products; the U.S. government guide to exporters tells us that “U.S. exports to the European Union enjoy an average tariff of just three percent.”
This means that Trump "has a picture of world trade in his head that bears as little resemblance to reality as his vision of an America overrun by violent immigrants." He actually believes trade wars are easy to win, and that we can erase trade deficits with tariffs. Needless to say, he is sorely mistaken. Krugman predicts the following:
Sharply higher interest rates wreaking havoc on real estate and those with large debts (hello, Jared), and a sharply higher dollar inflicting severe harm on exporters, like many of America’s farmers. And a full-scale trade war would disrupt international supply chains, displacing huge numbers of workers: The U.S. government’s own estimates say that exports to the European Union, Canada and Mexico support 2.6 million, 1.6 million and 1.2 million American jobs respectively.
We don't know whether this angry old man will follow through on his threats, but Krugman is less than hopeful, ending this week with a warning: "Listening to a garrulous old guy spout nonsense is annoying in the best of circumstances. But when this particular old guy controls the world’s largest military, nukes included, it’s downright scary."
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