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Tariffs And Trade Wars Are Clear Evidence That Trump Doesn’t Understand The Global Economy
And there’s nobody to keep him in check this time
Trump’s first few weeks as president have resulted in massive market volatility thanks to tariffs, DOGE, and general insanity.
Somehow Trump seems to think that tariffs are the solution to all of America’s perceived economic issues. Very wrong. Tariffs and the retaliation they invite only shrink the pie for all.
Let’s see why. When America charges a tariff on imported stuff like cars, that means the price of a foreign car gets marked up by some set amount say 25%. So the Toyota that would have sold for $20K now sells for $25K instead. American importers pay this higher price, which they pass onto the consumer — so the average citizen ends up paying higher prices.
Thus, tariffs reduce our options at the same time as they raise prices.
The normal objective of a tariff is to protect domestic suppliers from foreign competition. For example, if less cost efficient American auto manufacturers are unable to turn a profit at $20k per car but can make money at $24k per car, then the tariff insulates Americans against better run foreign competition (by making them more price competitive while still allowing them to…
