A few columns ago, I strongly asserted that the increasingly growing economy that former POTUS Barack Obama bequeathed to current POTUS Donald Trump, would soon be smashed and scuttled by quixotic decisions and actions of Trump and his advisers. That prediction seems more and more to be accurate.
Amid the most recent economic news made public, the USA economy is seemingly doing great. GDP growth has been surprisingly strong, unemployment is the lowest it’s been in decades, and the stock market has been humming along in top spirits.
Suddenly, within the last few days, however, the stock market has been in a deep nose dive and shows no sign of easing immediately. The primary reason given by most market experts is that Trump is again threatening to increase tariffs primarily on Chinese imports into this country. That means China will once again increase tariffs on goods from the USA, particularly agricultural products.
Already midwestern farmers are griping that the current tariffs are costing them millions of dollars, and the subsidies being doled out from the government are not keeping pace with those losses. But Mr. Trump still thinks he’s winning using this tactic.
As reported by the NYT’s economist, Paul Krugman, a few days ago, there was a major economic conference recently, out of which Princeton University, Columbia and the New York Federal Reserve combined results into a research paper titled, “The Impact of the 2018 Trade War on U.S. Prices and Welfare.”
The basic conclusions of that paper, which analyzed all available new data on the 2018 tariffs was that, unlike what the Trump administration promised, China and other, “ foreigners paid none of the (tariff) bill, U.S. companies and consumers paid all of it. And the losses to U.S. consumers exceeded the revenue from the new tariffs, so the tariffs made America poorer overall.”
In other words, the USA was not winning this trade war, it (and we) was losing it. Now Mr. Trump is talking about doubling down on that strategy—more tariffs, not less.
The new news also showed how Mr. Trump had lost upwards of 100 billion dollars in his own businesses over a 10-year period. His father, Fred Trump, while he was alive consistently made large amounts of money, and his son, Donald, consistently lost large amounts of it.
As mentioned previously, Donald Trump bankrupted at least six previously successful businesses in New York and New Jersey. And yet, we accepted the myth that Donald Trump was a highly successful, even genius businessman.
There was then no effective outcry over his madcap idea that the USA could pummel China and other sovereign nations into some kind of economic subserviency to the United States through tough trade tariffs.
This was a bad idea from the beginning. As stated previously, it will not end well for this country. Although certainly the stock market will rebound—it always does—there are already players in the monetary part of the U.S. operations who are alarmed enough to start uttering again that scary word, recession. Some claim we are already on the cusp of another one brought on by this tariff trade war tactic.
Mr. Trump is the captain of a solid-looking, well-maintained and beautiful ship, who, for some reason, is convinced that the ship can be even better—and he can claim credit for it—by driving the ship straight into the rocks just over the horizon. No alarm bells or other cautions seem capable of stopping him. Trump the economic superhero.
Welcome to the economic ride to hell—with our eyes wide open.
Professor David L. Horne is founder and executive director of PAPPEI, the Pan African Public Policy and Ethical Institute, which is a new 501(c)(3) pending community-based organization or non-governmental organization (NGO). It is the stepparent organization for the California Black Think Tank which still operates and which meets every fourth Friday.
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