“Trump doesn’t know a tariff from a hole in the ground. Everybody knows that.”
“Trump thinks that a tariff against Chinese imports means that China will have to pay more to send goods to the US. Trump thinks that a 25% tariff will teach Canada and Mexico a lesson, and force them to stop immigrants coming in with gunny sacks of fentanyl. Trump is a fool.”
Is he really?
I agree that Donald Trump is uninformed in many areas. And doesn’t care that he is. He’s happy to think with his gut. He distrusts experts, with their facts and charts and trends and big words, who are probably trying to put something over on him. Don’t confuse him with facts.
But when it comes to tariffs, I’m not so sure that Trump is ignorant. Financial manipulation has been his modus operandi. It’s probably what he knows best.
Let’s apply Miller’s Law: “in order to understand what someone is telling you, assume the person is being truthful, then imagine what could be true about it“.
Let’s assume Trump knows what tariffs do. What is he trying to accomplish?
Tariffs will mean that imported goods will cost more. Obviously, Chinese goods, Canadian raw materials, Mexican strawberries with cost more. So buy American! Or do without.
But wait. General Motors makes parts in Mexico. Apple’s i-Phones are made in China. Did China force the US (and Canada) to outsource manufacturing to China?
North American business were falling all over themselves in the 1990s to take advantage of the really low wages available through globalization. Telecom and high-tech companies in particular embraced the concept of the “virtual corporation”, meaning that they would own the “intellectual property”, but didn’t actually make anything. Instead, they partnered with Chinese corporations to do the actual manufacturing. In this way, they exported their processes and expertise to China, in exchange for short-term profitability.
In 2000, the dot.com bubble burst, followed by the collapse of a vastly over-capitalized telecom sector. China was left with the high-tech manufacturing, the expertise, and lower production costs. So American companies increasingly slapped their labels on products with components from China. Not really China’s fault.
A particularly telling example. China makes electric cars that are technologically world-class, and considerably cheaper than Teslas, made in the USA. What is to keep Americans from buying the Chinese autos? Tariffs. No wonder Elon supports Trump.
What will force General Motors to stop importing components and parts? Tariffs.
Of course, the American public will be paying a lot more. They will be upset, because they are used to the lower-priced imports: clothes from Pakistan, fruit from Chile, guitars from Korea, televisions from China.
So what can Trump do? He can whip up anger against the Chinese in particular, and foreign countries in general, for “forcing” Americans to buy their products. Tell Americans that immigrants are responsible for the drug epidemic in the USA.
And dismantle the political system, corrupt the courts, and send the police after anyone who protests.
Not really so dumb.
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