Economic Illiteracy from POTUS

The President provided a contender for most ignorant tweet this morning, as he makes a proposal that would disrupt the global economy.

Recently, I noted what I thought might be Trump’s most despicable tweet yet.   Today, I note what might be his most ignorant (recognizing that the contest is a tight one):

Well, it is anything but easy.  For example, the US Census Bureau notes that our top five trading partners are in order as follows:  China, Canada, Mexico, Japan, and Germany.  We have a trade deficit with each of these countries.  It would decidedly not be easy to cease trading with each of these countries until we had fully balances imports and exports so that there was no trade deficits.

The President of the United States is suggesting nothing less than the total disruption of the global economy, which would include the domestic US economy.

Further, he does not seem to understand that tariffs are taxes and that they cost is born not by the exporter, but is rather incurred by the consumer.  I was considering buying a new car this year, and if I do it will be a Toyota.  If his steel tariff plan goes into effect, what is that going to do to the price of that automobile?

This is an utterly foolish understanding of basic political economy.

The WSJ editorial board notes:

Mr. Trump seems not to understand that steel-using industries in the U.S. employ some 6.5 million Americans, while steel makers employ about 140,000. Transportation industries, including aircraft and autos, account for about 40% of domestic steel consumption, followed by packaging with 20% and building construction with 15%. All will have to pay higher prices, making them less competitive globally and in the U.S.

Also, can we say “trade war”?

FILED UNDER: Donald Trump, International Trade, Politicians, US Politics
Steven L. Taylor
About Steven L. Taylor
Steven L. Taylor is Professor of Political Science and Dean of the College of Arts and Sciences at Troy University. His main areas of expertise include parties, elections, and the institutional design of democracies. His most recent book is the co-authored A Different Democracy: American Government in a 31-Country Perspective. He earned his Ph.D. from the University of Texas and his BA from the University of California, Irvine. He has been blogging since 2003 (originally at the now defunct Poliblog). Follow Steven on Twitter

Comments

  1. James Pearce says:

    The President of the United States is suggesting nothing less than the total disruption of the global economy, which would include the domestic US economy.

    Whither the global economy or whither POTUS?




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  2. Mikey says:

    Things Trump has a lot to say about:

    – Imposing damaging tariffs
    – Starting trade wars
    – Alec Baldwin

    Things Trump is silent about:

    – Putin bragging about untouchable nukes with video simulations of said nukes raining down on Florida




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  3. CSK says:

    “Trade wars are good, and easy to win.” — Donald J. Trump, March 2, 2018

    He sounds like Dan Ackroyd peddling the Bass-o-matic.




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  4. al-Ameda says:

    The WSJ editorial board notes:

    Mr. Trump seems not to understand that steel-using industries in the U.S. employ some 6.5 million Americans, while steel makers employ about 140,000. Transportation industries, including aircraft and autos, account for about 40% of domestic steel consumption, followed by packaging with 20% and building construction with 15%. All will have to pay higher prices, making them less competitive globally and in the U.S.

    Not all that many years ago (maybe 25) among my progressive/liberal friends, I was one of the very few who adhered to and defended a free trade position.

    Normally (whatever that is and was) it was Republicans and corporate business interests who supported free trade, while Democrats and labor wanted less free trade in order to protect American jobs.

    Now, we have a so-called ‘successful businessman’ in the White House, who impulsively and unilaterally without notice to anyone, lays in tariffs that … well … the WSJ explained it succinctly. Presumably Trump hopes to strong arm our trading partner nations into accepting revised trading deals with us. In the meantime he’s thrown equity markets into a downward spiral, and further eroded relationships with heretofore trusted allies and partners.

    We’ve known that he’s impulsive and uninformed for over 30 years, yet we decided to elect a dumpster fire. So, yeah, many thanks to the 62,984,825 voters who thought this was/is a good idea. Mission ‘freaking accomplished.




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  5. Daryl's other brother Darryl says:

    The economy has been plugging away, solid but not rock solid. This has the potential to do real damage. The recession and the subsequent slow recovery was driven by lack of demand. This ipso-facto tax on every American is going to hurt demand, not make it better. Any benefit, enjoyed by the middle-class, from the tax cut is going to be wiped out by the insidious cuts to Obamacare and these mis-guided tariffs.
    While I appreciate the WSJ editorial (above)…the only thing that matters, policy-wise, is Fox and Friends. What are they saying about this?
    Here’s what Ben Sasse, R-Neb., said:

    “Trade wars are never won. Trade wars are lost by both sides. Kooky 18th century protectionism will jack up prices on American families — and will prompt retaliation from other countries…Make no mistake: If the President goes through with this, it will kill American jobs — that’s what every trade war ultimately does…So much losing.”




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  6. Slugger says:

    I have been checking my finances. I have a very serious trade imbalance with the UK due to my purchases of single malts; however, I beg you, Mr. Trump, to allow this problem to continue.




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  7. James Joyner says:

    @Slugger: I’m having similar issues with the state of Kentucky.




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  8. Mister Bluster says:

    Pud: Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!

    Tillerson was right. Donald Trump is a MORON!




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  9. Anonne says:

    @Mister Bluster:
    You mean a fucking moron, Mister Bluster.




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  10. Todd says:

    What’s really sad is that I can already imagine what my conservative friends will say (and believe) in response to the inevitable increase in inflation “it’s just Obama’s money printing finally catching up with us”.

    In other words, Donald Trump is not unique in his economic illiteracy, he’s simply in a position where his faulty beliefs can have more effect.




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  11. JohnMcC says:

    Just to illustrate that it’s an ill wind that blows no good, The Guardian reports (and it seems ThinkProgress got there first) that “Carl Icahn dumped $31.3 Million worth of stock in a company strongly dependent on steel last week…. In a little-noticed SEC filing submitted on Feb 22d Icahn disclosed that he systematically sold off nearly one million shares of Manitowoc Company, Inc.”

    Everyone shocked at this, raise your hands!




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  12. Daryl's other brother Darryl says:

    Carl Icahn, longtime buddy of Donald Trump’s, sold more than $30 million of stock in a steel-dependent company, Manitowoc Company Inc., days before new tariffs on steel imports were announced. That companies stock dropped 6% on the news of the tariff’s. Icahn had not traded Manitowoc stock in the previous 3 years.
    Rule 39: There is no such thing as coincidence.




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  13. MBunge says:

    While people like Steven L. Taylor have been running U.S. economic policy the last several decades, we have seen…

    Decades of stagnant wage growth.

    An explosion in economic inequality.

    And the virtual destruction of entire U.S. industries.

    And the essential response to those and other dangerous economic trends has been…what?

    I think one of the single most instructive moments in economic policy the last several years was the debate, or lack thereof, surrounding TPP. The first, second, third, and fourth arguments in favor of TPP should have been “NAFTA has been great and this is more of it.” Yet even though that is the single most compelling argument to be made in favor of TPP, the phrase “NAFTA” was barely mentioned by any TPP advocate.

    And that happened EVEN THROUGH THERE IS A GOOD ARGUMENT TO BE MADE THAT NAFTA HAS BEEN A POSITIVE THING FOR THE U.S. ECONOMY. Why? Because if you actually look at the numbers, there is also a decent argument that NAFTA has been a negative thing for the U.S. economy or least a lot of negative things have happened to the U.S. economy during the NAFTA era. Which argument is stronger? We can’t say because free traders refuse to have the discussion. They would rather ignore the beneficial aspects of NAFTA than acknowledge any harmful effects, even if there is more benefit than harm.

    That’s because “free trade” isn’t an economic policy where you evaluate the results and make changes according to economic developments. “Free trade” is religious dogma. It’s one of the tenants of faith of the post-Cold War consensus, which is coming apart at the seams.

    Mike




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  14. CSK says:

    @Daryl’s other brother Darryl:

    I noticed that. Glad you mentioned it. It will be interesting to see how the Trumpkins rationalize this. Fake news, I suppose.




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  15. Senyordave says:

    @Daryl’s other brother Darryl: I think Icahn has been investigated for other things when he was an “unpaid” economic advisor on regulatory issues, specifically regarding ethanol rules. He had a major stake in a oil-refinery business called CVR Energy. I suspect Icahn found being an unpaid advisor a very lucrative proposition.

    Trump is doing a great job draining the swamp. And kudos to the GOP for exercising oversight, I’m sure this activity can help launch another inquiry into Benghazi.




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  16. Daryl's other brother Darryl says:

    @Daryl’s other brother Darryl:
    BTW…6% of $30,000,000 is $1.8M that Denture Donnie saved his friend by giving him insider information.




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  17. CSK says:

    @JohnMcC:

    It’s Fake News, I tell you, it’s Fake News!!!!! Everyone knows that The Guardian is a Commie rag that hates real Murkans like Donald Trump!!!!!




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  18. James Pearce says:

    @MBunge:

    It’s one of the tenants of faith of the post-Cold War consensus, which is coming apart at the seams.

    Post Cold War? You sure about that, Mike?




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  19. Scott O says:

    @MBunge: + @DTrump:
    People with small minds (and small hands) excessively capitalize.




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  20. wr says:

    @MBunge: In which the always perspicacious Mr. Bungles takes both sides of an argument and then declares himself a winner over all others.




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  21. OzarkHillbilly says:

    @Slugger: @James Joyner: Scotland here.




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  22. OzarkHillbilly says:

    And for the record, I read that these tariffs were coming down the pike yesterday at Balloon Juice. Not sure how they knew** but it certainly didn’t happen “without warning.”

    ** and no, I don’t think they have an inside line to all things trump




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  23. Jim Brown 32 says:

    Am I the only one that sees a correlation between this country’s transition from a production to a service economy and the rise in income inequalities that liberals claim to care so much about. No wonder rust belt blue collar workers voted Trump–Starbucks Democrats are basically pro-status quo economically.

    This is essentially the same as how I viewed ObamaCare–for complex problems where no one can say for sure what the right answer is–lets see what this does. If it increases demand for homegrown steel which has the effect of more direct or indirect jobs in the steel industry–that’s good no matter who does it. No democrat should be bemoaning policies that could cause disruption to the current global trade system. Its a 20th century institution that needs disruptive forces to update itself to modern realities.




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  24. @Jim Brown 32: The tariff proposal in question will not help increase US industrial output, but it will raise prices on consumer goods. Regardless of one’s partisan affiliation or one’s view of globalization, this is not going to be helpful to most Americans.

    One can critique the neoliberal order, but the global economy is a genie that is not being put back in its bottle, and certainly not via some crude implement like tariffs.




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  25. @OzarkHillbilly: Thew news was out at least by noon central time yesterday.




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  26. Tyrell says:

    Holy smokes ! “Democrats and trade unions support Trump’s tariff plan” (CNBC)




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