Once upon a time in a land – where everything accompanies a side orders of fries, where bald eagles soar and where balding reality TV stars become presidents – a courageous, orange-tinged warrior rose to the highest office in the land. His mission? Should he choose to accept, and he did! To protect the American middle class from the tyrannical threat of… reasonably priced foreign goods. In other words, an epic onslaught on globalisation revolving around a tale of tariffs, tweets, and tremendous misunderstandings of international economics.
Before Trump’s announcement of his “beautiful tariffs” – his words not mine – the average chump thought a “tariff” was either a new McDonald’s smoothie or a type of French baguette. But Trump changed all that. Like a wizard rummaging around his dusty spell book, he stumbled upon tariffs in one of his old copies of “Economics for Making America Great Again” and thus began the trade war. Now, a regular Joe may ask, “Pray tell, what a trade war is?” It’s just like a regular war, but with less ammunition and more cocoa beans. Simply put, a trade war is when countries try to outdo each other by slapping – literally – taxes on imports. It is akin to a couple of pre-schoolers fighting in a sandbox throwing dirt back and forth till the time one of them brings a bulldozer. No prize in guessing who that is!
Now, many economists warned that tariffs could backfire. But Trump had a simple rebuttal:
“I know more about trade than anybody.”
As if to make the whole calculation more convoluted, the well-choreographed tariff board displayed in the Rose Garden was neither alphabetical nor numerical. To make it doubly difficult to follow, the tariffs shown adopted by other countries on the US were not tariffs at all but a vain attempt to showcase their trade surplus against the United States. So much to navigate, and for a nation whose most ponderous moment comes when they are asked at checkout, “paper or plastic”!
Then, like an ill-equipped boxer not expecting a counter punch, the Trump administration got counter-punched. Retaliation came through from far and wide. So much so that the US government had to redefine “winning” a bit more loosely. In all his bravado, Trump continued his tirade against China accusing the Chinese of stealing American jobs, intellectual property, and possibly the last Easter egg in the White House dining room. This was Trump’s four-dimensional chess move or as economists called it: Jenga, but drunk.
There seemingly may not be much logic behind the current endeavour and I too – like the Trump White House – define logic very narrowly. But alas there was some. That logic, as Trump explained through carefully crafted policy sessions (read: late-night Twitter rants) was simple: make foreign goods more expensive and Americans would buy American. It was as sturdy a plan as the Titanic. And not unlike the Titanic, one small detail would tank it – Americans like cheap stuff. Like, really a lot. All of a sudden, prices – including those of household goods – started to rise and in response Trump generously offered government subsidies. Because nothing screams “free-market capitalism” like a president taxing one part of the economy to bail out another part he just torched. It was like pushing someone into a fire and then handing them a fire extinguisher.
Now, many economists – yes all those “beautiful economists” – warned that tariffs could backfire. But Trump had a simple rebuttal: “I know more about trade than anybody”. And how could anyone argue with that line of critical wisdom? After all, Trump wrote “The Art of the Deal,” which definitely qualifies one to rewrite centuries of trade policy. To explain the benefits of tariffs, Trump once said, “Trade wars are good, and easy to win.” but in reality no one really wins a trade war. It’s like two people gutting it out in fight-club – about which we don’t talk, the first rule of fight-club – and hoping that one will rise unscathed. Now even MAGA hats are getting pricier! Maybe that is why Elon Musk has had his made from recyclable coal.
Eventually, as the stock market tanked and Trump’s approval ratings wobbled like jelly in a trifle, he started walking back some of the tariffs. Like a kid trying to slide a broken lamp back onto the table before mom gets home. Now deals are being renegotiated, some tariffs are paused, quite a handful are phased and other are re-evaluated. All face saving exercises embellished with constant refrain to ground-realities, global outlook and help-thy-neighbour. Canada and Mexico may have something to say about that!
In the end, tariffs under Trump are like his shinning golden hair – defiant, confusing, and defying all known laws of nature. He may not have made trade great again, but he did something much harder: he made it entertaining.g
The writer is Director Programmes for an international ICT organization based in the UK and writes on corporate strategy, socio-economic and geopolitical issues.