Boy, the Wharton School of Business must suck!
I mean, President Trump is an alleged graduate of that joint (Can we see the official transcripts, please?), and they apparently spent no time on tariffs, trade wars, Smoot-Hawley, or anything that would prevent this hay-haired, meandering dolt from doing something as drastic as starting a trade war, just as the nation is on the verge of getting back on its feet.
Nor does that Wharton education prevent him from doubling down on the stupid in a tweet.
When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!
— Donald J. Trump (@realDonaldTrump) March 2, 2018
Yeah. That’s just not right. Or bright.
The Wall Street Journal’s editorial board penned an amazing rebuttal to the news. This part, especially, stood out:
Apparently Mr. Trump can’t stand all this winning. His tariffs will benefit a handful of companies, at least for a while, but they will harm many more. “We have with us the biggest steel companies in the United States. They used to be a lot bigger, but they’re going to be a lot bigger again,” Mr. Trump declared in a meeting Thursday at the White House with steel and aluminum executives.
No, they won’t. The immediate impact will be to make the U.S. an island of high-priced steel and aluminum. The U.S. companies will raise their prices to nearly match the tariffs while snatching some market share. The additional profits will flow to executives in higher bonuses and shareholders, at least until the higher prices hurt their steel- and aluminum-using customers. Then U.S. steel and aluminum makers will be hurt as well.
Mr. Trump seems not to understand that steel-using industries in the U.S. employ some 6.5 million Americans, while steel makers employ about 140,000. Transportation industries, including aircraft and autos, account for about 40% of domestic steel consumption, followed by packaging with 20% and building construction with 15%. All will have to pay higher prices, making them less competitive globally and in the U.S.
Instead of importing steel to make goods in America, many companies will simply import the finished product made from cheaper steel or aluminum abroad. Mr. Trump fancies himself the savior of the U.S. auto industry, but he might note that Ford Motor shares fell 3% Thursday and GM’s fell 4%. U.S. Steel gained 5.8%. Mr. Trump has handed a giant gift to foreign car makers, which will now have a cost advantage over Detroit. How do you think that will play in Michigan in 2020?
So he’s willing to dunk on 6.5 million American workers to benefit 140,000?
What about supply and demand? How do those 140,000 workers keep up with the demand of American companies that use steel and aluminum?
Nebraska Senator Ben Sasse weighed in on Trump’s ignorant tweet earlier today:
“Trade wars are never won. Trade wars are lost by both sides. Kooky 18th century protectionism will jack up prices on American families — and will prompt retaliation from other countries. Make no mistake: If the President goes through with this, it will kill American jobs — that’s what every trade war ultimately does. So much losing.”
That’s exactly what happened with Smoot-Hawley, and the average tariff increase was only about 20 percent. Trump is talking 25.
And no, Smoot-Hawley did not lead to the Great Depression, but many economists feel it took a bad situation and actually made it worse. Others say it intensified nationalism around the world.
Just what we need, right?
“Worse” is not what we should be working for, right now.
Trade is great for America. It's great for American families. Trade creates jobs & lowers prices for American families.
Trade wars do the opposite. No trade war has ever worked. We don't want to make America 1930 again. pic.twitter.com/fK7oy7GcVz
— Senator Ben Sasse (@SenSasse) March 2, 2018