President Donald Trump did what he had to do.
Last week, Trump dropped an economic neutron bomb by declaring tariffs on virtually every country on the planet — tariffs based not on reciprocal tariff rates, but on trade deficits. After an initial stock dump of approximately 10% and then days of the markets bouncing up and down like a hyperactive corgi, Trump finally announced that he would be undoing his threatened tariff regime with regard to our allies.
In a statement posted to TruthSocial, he said, “Based on the lack of respect that China has shown to the World’s Markets, I am hereby raising the Tariff charged to China by the United States of America to 125%, effective immediately. At some point, hopefully in the near future, China will realize that the days of ripping off the U.S.A., and other Countries, is no longer sustainable or acceptable. Conversely, and based on the fact that more than 75 Countries have called Representatives of the United States, including the Departments of Commerce, Treasury, and the USTR, to negotiate a solution to the subjects being discussed relative to Trade, Trade Barriers, Tariffs, Currency Manipulation, and Non Monetary Tariffs, and that these Countries have not, at my strong suggestion, retaliated in any way, shape, or form against the United States, I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately. Thank you for your attention to this matter!”
This was reality setting in and Trump respecting it. As I wrote last week, “Now, Trump is unlikely to carry his policies to their full fruition if markets respond as expected. He is too canny a politician for that.” Trump lives in the world of reality; he is a pragmatist, not an idealist. And that means that when the stock market tanks, when the effects of his tariff regime are about to wipe out small businesses across America, when the economic pain is imminent, Trump will change course.
And he did.
Some Trump acolytes make the case that this was all a planned rollout. If so, the evidence is sorely lacking; from poorly calibrated posterboards to the bizarrely ignorant comments of presidential adviser Peter Navarro, all this would have to have been a peculiar plan. If the plan was to tariff China and negotiate better trade terms with our allies, the easiest thing to do would have been to tariff China and negotiate better trade terms with our allies. Occam’s razor suggests that Trump unleashed a policy he preferred and then reversed course thanks to blowback. Trump himself acknowledged that he changed policy because people were getting “yippy” and “queasy.” But in effect, it makes no difference whether this was planned chaos or merely reactionary course-changing — the utilitarian nature of the result is the same.
I’ve said before that Trump lives in the world of reality — that he responds to headlines, to incentives and to situations. That’s just as true today as it has always been. And for that, Trump deserves credit.
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Yes, tariffs are a tax on foreign and goods and yes those taxes make foreign goods more expensive. But the truth is that we can’t sell any American goods overseas because of all their tariffs on American goods that are not reciprocated and how we have allowed foreign tariffs on American goods to destroy our manufacturing base and move businesses overseas for the last fifty years. That’s where we are now and that’s how we end up with 90% of all our pharmaceuticals made in China and 90% of all computer chips made in Taiwan. Not only bad for American workers, but a national security threat. As another example, anyone that’s ever been abroad can easily see how many American automobiles are in Europe or South America or Japan or anywhere else in the world; less than 1%. Then look around anywhere in the U.S., where the majority of autos are foreign made. That trade imbalance is what Trump is talking about.
Trump is only trying to level the playing field and force foreign countries to remove their usurious taxes on American products. And, of course, Trump is pragmatic. He also already stopped reciprocal tariffs and will negotiate with each country individually because his main target (correctly) is China. Yeah, some foreign may temporarily cost some more but Americans will ultimately be way better off with Trump’s actual tax cuts, lower inflation, and especially reduced fuel costs from restoring America’s energy independence. Lower gas prices mean lower costs for EVERYTHING because everything gets to market by gas or diesel trucks and trains. And bringing American and foreign companies to manufacture in the U.S. means higher paying jobs for Americans. Everyone needs to take a breath and look at the big picture and what’s best in the long term, not what’s best for next month and that’s exactly what Trump is doing. Look at it this way: Would you rather have your Toyota cost a thousand dollars less or have a job that pays thousands more per year and also save thousands a year on gas and food prices. I’ll take the second choice every time. Long term smart business, not short term politics as usual.