On April 2, Trump announced sweeping tariffs that go far beyond those he has already put in place.
Trump’s tariffs are going to be at least as harmful as those tariffs instituted through the Smoot-Hawley Act.
Any economist or historian will tell you that the Smoot-Hawley tariffs did more damage than good to the U.S. economy.
Trump says plants will suddenly be built in the US because he thinks companies would rather build a plant in American than pass the cost of import tariffs along.
Wait. Deciding to build a plant somewhere is a long-term decision, and no company makes such a decision in 2-3 months.
So, any company that has announced new plants in the U.S. since Trump started occupying the White House this year made that decision in 2024 or 2023.
The simple math is this: the cost of a 20-50% tariff is something that American importing companies can pay and add to the cost of what they sell.
That cost, easily recouped in part or entirely through a higher selling price, is hundreds or thousands of times lower than the cost of building a plant, staffing it and training those new employees in the US.
Also, building plants takes years — during which time Trump could remove the tariffs he applied today. He has a history (in the past three months) of saying when he will put a tariff in place and then changing his mind.
Few companies are going to choose to spend billions only to find that the reason for spending those billions has disappeared.
Another point: Trump’s tariffs will cause the prices of goods that the U.S. does not or cannot produce in large quantities to go up — this will go far beyond what you’ve heard about avocados, which come to the US from Mexico, because the US does not and cannot produce avocados in the numbers Mexico can. Of course other countries will retaliate against Trump tariffs, making it more difficult if not impossible for American companies and farmers to sell their products outside the US.
Another lie: this week, Treasury Secretary Scott Bessent said that the latest Trump tax cut — included in the current House budget proposal — would more than exceed any tariff-driven price increases.
Unfortunately, the Trump tax cut he referred to is an extension of the current tax rates (from 2017 and scheduled to end this year). That proposal provides no new tax cut. It would just maintain the status quo on American income tax rates.
I have said this before, and it bears repeating: everything Trump does is driven by what Putin wants. Putin wants to be able to say that a democratic form of government does not work. Don’t believe Trump, Lutnick, Vance and Bessent’s lies.
Trump is deliberately trying to destroy the American economy, which will make Russia and China more attractive places to do business. And that is what Putin wants.