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The Economist weighs in on Trump's economic insanity [1]
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Date: 2025-04-03
As millions of Americans brace themselves to be “liberated” from their retirement accounts, future employment prospects and tight family budgets due to the obsessive fixations of a single unbalanced individual they foolishly permitted to wield power yet again from the highest office in the land, one should rightly expect more from the financial press than complacency. Fortunately, we are now hearing from some in that genre for whom the reality of the looming economic catastrophe Trump is poised to inflict upon this country is so mind-bogglingly obvious that it cannot be wished or imagined away by any stretch of magical thinking.
One day after Trump’s delusional press conference before an audience of similarly deluded sycophants, in which he proudly touted his justifications for imposing a battery of farcically-calculated tariffs upon the goods and services of most developed nations on the planet (Russia being curiously exempted), the editors of the Economist have weighed in on the all-but-certain ramifications of those tariffs:
If you failed to spot America being “looted, pillaged, raped and plundered by nations near and far” or it being cruelly denied a “turn to prosper”, then congratulations: you have a firmer grip on reality than the president of the United States. It’s hard to know which is more unsettling: that the leader of the free world could spout complete drivel about its most successful and admired economy. Or the fact that on April 2nd, spurred on by his delusions, Donald Trump announced the biggest break in America’s trade policy in over a century—and committed the most profound, harmful and unnecessary economic error in the modern era.
The “most profound, harmful and unnecessary economic error” indeed. And it’s not clear why anyone possessing even a rudimentary understanding of America’s place in the world economy would sign on to a program that virtually assures its utter and complete annihilation. One plausible explanation for such weird credulity is that many in the financial press expect Trump’s fixations to be temporary and that somehow, some way, everything will return to normal before too long. That once Trump perceives the stock market crashing— as investors flee to whatever safe havens they can scrounge -- cooler heads will at last prevail upon him to move on to another distraction. This ignores the fact that there are no longer any members of his economic “team” willing to tell Trump that his ideas are catastrophic. And it ignores the fact that they were specifically selected for just that reason.
The other, darker (but seemingly more likely) explanation, is that they themselves are so petrified that they cannot bring themselves to acknowledge what is happening right before their eyes, or worse, that they will, by their fealty to Trump, somehow be insulated from its consequences.
The authors of the Economist’s editorial duly reiterate what should be self-evident to anyone with a functioning brain, or at least one capable of recalling and processing even the tiniest fragment of our country’s history:
Almost everything Mr Trump said this week—on history, economics and the technicalities of trade—was utterly deluded. His reading of history is upside down. He has long glorified the high-tariff, low-income-tax era of the late-19th century. In fact, the best scholarship shows that tariffs impeded the economy back then. He has now added the bizarre claim that lifting tariffs caused the Depression of the 1930s and that the Smoot-Hawley tariffs were too late to rescue the situation. The reality is that tariffs made the Depression much worse, just as they will harm all economies today. It was the painstaking rounds of trade talks in the subsequent 80 years that lowered tariffs and helped increase prosperity.
What apparently has yet to sink in is that if these tariffs are permitted to continue, virtually everything Americans typically crave will become more expensive. Every piece of clothing, every car they buy, every electronic gadget or appliance from smartphones to refrigerators, every piece of equipment and machinery that powers American businesses, all the way down to the groceries they purchase or the meals they covet from their favorite restaurants, will see price increases. And that doesn’t even begin to encompass the consequences of the inevitable retaliatory tariffs imposed on American goods. Those will, in turn, devastate the future of innumerable American businesses that depend on exporting their products. As the editors laconically put it, “This catalogue of foolishness will bring needless harm to America. Consumers will pay more and have less choice.”
But even that understates the ultimate destructive economic effect of these tariffs. Consumer spending will inevitably tank as Americans see their disposable income drying up before their eyes. Investment in the stock market will collapse as market gains become more and more elusive and unpredictable. We’ve already lost the confidence of our former trading partners, now the prospect of a full-fledged global trade will simply cement their antipathy towards dealing with the United States. What we’re potentially risking is not simply a recession, but a permanent devolution in most Americans’ standard of living.
As the editors observe, Trump’s tariff bludgeon will simply prompt our former friends to seek out sane trading partners rather than risk further trade losses in dealing with an unstable regime led by a mercurial incompetent:
Instead, governments should focus on increasing trade flows among themselves, especially in the services that power the 21st-century economy. With a share of final demand for imports of only 15%, America does not dominate global trade the way it does global finance or military spending. Even if it halted imports entirely, on current trends 100 of its trading partners would have recovered all their lost exports within just five years, calculates Global Trade Alert, a think-tank.
The Economist counsels other nations to be cautious on retaliation, predicting (accurately) that it would only cause Trump to double down. But that is like asking someone not to stand up to a bully because he might hit you again if you do. Other countries are still answerable to their own citizens, and those citizens are going to become increasingly anti-American on just about everything that matters (On top of all this, Trump’s draconian immigration practices are rapidly transforming us into a pariah state no one wants to visit).
Finally, the idea — actually espoused by Trump at his press conference — that other countries will simply cave to Trump’s demands and rush to open factories in the U.S. is preposterous. Does anyone think Vietnam or Indonesia have any possible interest in moving their manufacturing base here? What sort of hallucinatory world do these people live in?
There is no favorable outcome for Americans with these tariffs. None. It’s all bad, a wholly pointless, self-inflicted wound, apparently all premised on the irrational whims of someone whose own horrendous business record should have prohibited him from ever leading this country in the first place, let alone implementing its economic policies.
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