Liberation Day will leave U.S. captive to Trump’s incoherent economic plans | Editorial
Trump believes tariffs are a magic bullet. But history shows free trade led to unprecedented economic growth. By contrast, tariffs worsened the Great Depression.
Donald Trump is famous for catchphrases, from “You’re fired” to “Make America Great Again.”
His latest shibboleth is dubbed Liberation Day. But the only things Americans are likely to be “liberated” from are low prices and a bullish stock market.
Trump is expected to release details of his ballyhooed Liberation Day on Wednesday. While the plan could change, it essentially calls for reciprocal tariffs on goods from all countries that charge duties on U.S. exports.
For those confused by Trump’s previous on-again, off-again tariff pronouncements, he claims this is “the big one.” Wall Street reacted on Monday with another big sell-off, before clawing back the losses in the kind of stomach-turning roller-coaster day that may have investors packing a light lunch for the foreseeable future.
Trump believes tariffs are a magic bullet. But history shows free trade led to unprecedented economic growth. By contrast, tariffs worsened the Great Depression. The tariffs Trump implemented against China in his last term cost 300,000 jobs.
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Trump’s more aggressive trade policies this time around have already tanked the stock market. But many of Trump’s supporters have no clue their nest eggs have dropped in value since Fox News and other conservative outlets have largely ignored the market meltdown.
For the record, the S&P 500 had its worst first-quarter performance in five years, shedding more than $5 trillion in a matter of weeks.
It appears the worst is yet to come.
The U.S. economy — which in October was called the “envy of the world” — suddenly appears headed toward a Trump-induced recession. Goldman Sachs analysts warned the S&P 500 will drop another 5% over the next three months.
Trump is unmoved by the impact his tariffs are having on the slumping stock market. When asked how the impact of the 25% tariff on auto imports will increase car prices, Trump said, “I couldn’t care less.” (It was a rare moment of candor for the congenital liar.)
Of course, Trump could change his mind and back off his trade war, as he has already done. But the Wall Street Journal reported over the weekend that he is pushing for even more destructive tariffs.
In Trump’s warped world, he thinks tariffs will prompt consumers to buy American cars and lead to more manufacturing in the U.S.
But the problem is no American car is made just in America.
For example, just 15% of the Cadillac CT4 sedan parts are made in the U.S. Even the popular Ford F-150 truck has just 32% made here. Meanwhile, Honda, BMW, and other foreign automakers have plants in the U.S.
As a result, Trump’s 25% tariffs will increase the price of all foreign and domestic cars and trucks by $5,000 to $15,000.
Car prices are not the only thing going up. Food, fuel, steel, lumber, pharmaceuticals, computers, toys, TVs, and many other products American consumers and businesses buy from overseas are also getting more expensive.
Higher prices are also refueling inflation, which was tamed late last year before Trump took office. Now, Trump’s reckless policies have weakened retail sales and consumer confidence, which hit a 12-year low.
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Many consumers are struggling to make ends meet, while the booming job market has begun to slow down. The uncertainty from the tariffs is prompting consumers to spend less and companies to scale back on hiring.
The slashing of federal government agencies by Elon Musk’s DOGE unit has resulted in thousands of job losses, with more expected in the months to come.
Trump’s incoherent economic plans are scaring his own advisers, who are getting worried calls from business leaders, the Journal reported.
The Tax Foundation estimated Trump’s trade strategy could cost about 500,000 U.S. jobs and shrink the U.S. gross domestic product.
It all adds up to kamikaze economics.
Trump promised his return would herald a “golden age” for America. But it appears to be fool’s gold.