Just two days ago, I wrote that I’d be watching President Trump’s decisions on tariffs following the elections on Tuesday. (Predictably, Republicans held their seats the FL special Congressional elections, albeit by margins half as wide as four months ago, but lost the judicial election in WI.)
“The first thing to note is Trump’s tariff announcement [Wednesday]. Let’s see if he introduces more muscular, triumphalist tariffs, or subdued and perhaps symbolic ones. We can then compare those to the election results. That will be an interesting data point.”
As you must have heard, he chose door number one, exceeding even the worrywarts’ worst fears:
“The tariffs Trump announced were higher than almost anyone expected. This is a much bigger shock to the economy than the infamous Smoot-Hawley tariff of 1930, especially when you bear in mind that international trade is about three times as important now as it was then.” (Paul Krugman, writing on his free Substack.)
We may get some reporting on why Trump went completely insane, but until then I don’t think there’s any point in speculating. (Was he so angered by the loss in WI that he upped the ante? Was the election completely unrelated? Was something else a factor? We just don’t know.)
It will take days or weeks for the picture to resolve—and by that time, he may have already begun canceling the tariffs. But in this moment of chaos and uncertainty, a few real-time notes:
Trump characterized the tariffs as “reciprocal,” but this was just one of many blatant lies he told while announcing the tariffs. The White House’s list of foreign “tariffs” actually had to do with a very crude calculation involving trade deficits—and may have been calculated by AI.
The tariffs, which Trump hadn’t finalized until the day of the announcement, were not about economic policy. They were a demonstration of force. In his simple, feral mind, levying tariffs are a way of bringing the world to heel under his authority.
They also offer the administration a massive opportunity for corruption. Trump is in a position to reduce or end tariffs on countries that help him out politically or financially. Trump cannot fathom non-transactional relationships, and I’m certain part of his power play here is designed to rake in money and power.
Trump hit nearly every country in the world with tariffs, but excluded Russia, Belarus, Cuba and North Korea. Are we the baddies? Yes.
From WWII to 2007, there were zero worldwide recessions. These tariffs, if they stay in place, along the reactions to them, may well spark the third global recession in 18 years.
By law, presidents can’t unilaterally levy tariffs—Congress has to be involved. Yet the Republicans in Congress have been largely supine in their reactions to both the tariffs themselves (which they cheered wanly) and their own constitutional powers. Yesterday, the Senate did pass a bill to overrule Trump on earlier tariffs, but it will not pass the House.
Treasury Secretary Scott Bessent begged the rest of the world not to retaliate, but in comments following Trump’s announcement, the EU, China, and others announced, angrily, to do just that.
As I write this, the U.S. stock markets are down 3.5%, 4%, and 5%. The rest of the world is still scrambling to respond. Meanwhile, Stellantis shut down two factories in Mexico and Canada as a result of earlier tariffs—and then laid off 900 workers at auto factories in the U.S. that support the Canadian and Mexican plants. A lot of stuff is going to unfold very quickly.
As I consider this news and try to figure out how to respond in my own life, two things come to mind. One is that Trump is actually predictable, at least generally. He raised tariffs in his first administration and told us he’d raise them even more this time around, and he’s doing it. An equally predictable pattern is that if Trump tells you he’ll do something, you can be sure that he’ll do it in the stupidest and most incompetent way possible.
Trump may cancel some or all of the tariffs or stubbornly stick with them or even raise them. He is famously averse to stout resistance. Whatever happens, make sure to factor the stupidity into your plans. We’re going to get so much more of it.
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