President Trump continues to pursue his misguided tariff crusade believing that he is somehow protecting American industries and employment. His latest move, reciprocal tariffs (which he intends to begin April 2), is even worse. Trump has stated that he plans to impose tariffs based on “what they charge us, we charge them,” which is an economically stupid idea. Advocates of this policy like to argue that it’s based on fairness, but it certainly is anything but that.
From a practical standpoint, the United States trades with around 200 countries covering about 13,000 items. Is Trump really going to go head-to-head on this many goods? Just the onerous price adjustment and management of it all on a continuous basis will add to the bureaucratic nightmare that Trump says he wishes to avoid.
Furthermore, if Trump cares about America first, he should forget the concept of reciprocal tax policy. Otherwise, by imposing tariffs based on what other countries charge us, he’s letting other nations set our rates. This would not be looking out for America’s best interest; it’s a game of tit-for-tat — with other nations leading it!
Likewise, Trump is completely tone-deaf on how reciprocal tariffs would impact the average consumer. With tariffs already raising the cost of imported goods, reciprocal tariffs can escalate markets into a trade war. Not only will this continue to drive up prices, but it can also disrupt international trade and global supply chains. With the price of goods artificially raised in such a retaliatory relationship, Americans and American businesses will be less able to get the goods they need at the lowest cost.
While Trump sees reciprocal tariffs as a means to leverage negotiations with other countries, he’s not interested in encouraging fair-trade practices or diversifying trade relationships. He engaged in a type of political signaling that looks more like economic strong-arming, except that Trump doesn’t understand the long-term economic harm reciprocal tariffs create. Whatever short-term political gain Trump thinks he is creating for this country (or himself) will only burden American consumers with higher prices and economic instability in the long run.