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The Gobbledygook That Is Trump’s Trade “Policy”

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My intrepid Mercatus Center colleague Veronique de Rugy just sent me this e-mail. I share it here with her kind permission.

Don,

I assume you heard that President Trump explained yesterday that he would delay the new wave of tariffs on China to December 15th as to not derail Christmas shopping in America. That implies that he understands that the tariffs—import taxes—he has been imposing on imports from all over the world are paid in large part by American consumers not exclusively, or even mainly, by the Chinese and other foreigners, as he has been claiming for some time.

It also means that Trump understands that the extra $69 billion Uncle Sam has collected as a result of the tariffs are very much a tax on the American people. Yet, when pointing this out on Twitter, Trump supporters respond that the president has to be pragmatic to win the trade war.

I am not sure what pragmatism has to do with this. Either tariffs are paid, at least in part, by consumers or they aren’t. They can’t be both.

All this verbal volleying could mean three things: 1. For months the president understood that he was taxing American consumers but didn’t care because he thought that their pain was worth incurring to achieve his trade goals; 2. Trump is now making excuses to appease the stock market but doesn’t really believe that the Chinese are paying these taxes; or 3. He believes both that the Chinese are now paying all the tariffs but that consumers will pay the tariffs during Christmas shopping. I am thinking 3 is a real possibility because the president has shown an incredible ability to say one thing and its opposite without flinching.

As for Trump supporters, I have to stop being surprised by how gullible they are. After all, they are not holding against the president the fact that we were promised many beautiful deals pronto because no one would dare retaliate against the U.S. Instead, many governments have retaliated against us and no deal (with the exception of a small one with South Korea) has seen the light of day. Trump supporters aren’t holding against him either the rocky stock market, the talks of trade induced recession, or the bailouts to farmers, all of which goes against the presidential claim that “trade wars are good and easy to win.”

Vero

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