A Guide to the Madness of King Donald

The Sultan of Shrill has a useful guide to Trump’s latest round of arbitrary, unilateral, ad hoc tariffs:

These tariffs are really, really high

One way to look at the newly announced tariffs is in the light of history. The infamous Smoot-Hawley tariff of 1930 pushed the average tariff rate to about 20 percent. So far every country that has received a letter will be facing rates higher than that.

Another way to look at it to ask how much we would expect these tariffs to reduce trade. The key number is the elasticity of substitution in world trade — the percent fall in imports caused by a one percent rise in import prices. The median estimate from many studies is 3.8, which implies that in the long run 25 percent tariffs will reduce trans-Pacific trade by almost 60 percent. That’s a lot.

Side note: If I were a government employee, this post would probably be flagged for DEI because I just used the word “trans.”

There were never going to be genuine trade deals

These tariffs are going to hurt South Korea and Japan, although they’ll hurt U.S. consumers even more. So why didn’t Korean and Japanese negotiators make big enough concessions to satisfy Trump?

Because there was nothing for them to concede. South Korea has had a free trade agreement with the United States since 2012, so most U.S. exports to Korea face zero tariffs. Japan, like other wealthy nations, has very low tariffs on most goods. Neither country, then, was in a position to offer big tariff reductions, because their tariffs were already minimal.

Here’s part of Trump’s letter to South Korea, alleging that the country’s “Tariff, and Non Tariff, Policies and Trade Barriers” are responsible for the bilateral trade imbalance

[…]

Notice that Trump offered no specifics — because there aren’t any. How were the South Koreans supposed to end unfair trade practices that exist only in Trump’s imagination?

Here’s an analogy that occurred to me: Imagine that you have a belligerent neighbor who threatens to take revenge unless you stop dumping trash on his lawn. You reply, truthfully, that you aren’t dumping trash on his lawn. His response is to accuse you of being intransigent and slash your car’s tires.

The only possible out here would be a series of fake deals, in which countries pretend to have offered significant concessions and Trump claims to have won big victories. Some people still think that will happen — the new tariffs aren’t supposed to take effect until Aug. 1. But the tone of those letters and Trump’s clear obsession with tariffs make me doubt that he’ll call the tariffs off, in part because of my last observation: Attempts to mollify Trump always end up emboldening him to demand more.

Why make a deal with a man who will surely break it?

As I already mentioned, South Korea and the United States have had a free trade agreement (KORUS) since 2012. This agreement wasn’t some vague memorandum of understanding. It was the result of years of tough negotiation, followed by intense political debate in both countries before our respective legislatures passed the enabling legislation.

Yet Trump is simply ignoring that hard-won agreement. His letter to the South Koreans doesn’t even mention KORUS, let alone explain why the United States is reneging on its solemn promises.

Other countries recognize the obvious truth that you can’t make appeasement deals with Trump because 1)he won’t honor them and 2)they sometimes require you do stop doing things you already aren’t doing. So the sanewashing explanation that Trump is just threatening tariffs to sign big, beautiful trade deals does not make sense on any level.

It seems like having a Nobel Prize-winning expert who is able to communicate complex ideas about Trump’s domestic policies in prose comprehensible to the layman would be useful for a prominent newspaper, but we’ll return to that later.