Raw Story: 'Not seen more wrongheaded policy': Expert says Trump move was discredited 200 years ago

[Dennis Donovan]

Raw Story - 'Not seen more wrongheaded policy': Expert says Trump move was discredited 200 years ago

Brad Reed
April 1, 2025 9:12AM ET

The Washington Post is reporting that President Donald Trump's aides "have drafted a proposal to impose tariffs of around 20 percent on most imports to the United States," which many prominent economists have argued would almost certainly push the United States into a recession.

Greg Mankiw, an economics professor at Harvard University and a former Chair of the Council of Economic Advisers under President George W. Bush, said that the tariff proposal being floated by the president indicated a deep-seated ignorance of how economies actually operate.

"“Trump doesn’t seem to understand basic international economics," he told the Post. "A lot of the arguments he makes, Adam Smith was refuting two and a half centuries ago in ‘Wealth of Nations'... I have not seen a more wrongheaded policy come out of a White House in decades.”

And Mankiw wasn't the only economist who made dire projections about the impact of the Trump tariffs.

The Post writes that Mark Zandi, chief economist for Moody’s, projects that "the economy would almost immediately tumble into a recession that would last for more than a year, sending the jobless rate above 7 percent" should Trump go through with his tariffs plans.

/snip

[bucolic_frolic]

1. Recession and taxation are part of the plan

The more pain, the more control, the more control, the more power. When tax revenues plunge from the recession and drop in consumption, they'll raise income taxes. Make people poor so they suffer and turn to churches. Print more Bibles. Salvation through suffering, and send us a check.

[maxsolomon]

4. They'll RAISE Income Taxes?

I believe their plan is to extend their foolish 2017 Income Tax CUTS.

[dutch777]

2. Whatever evil he will do, the sooner the better. All ammo for us for 2026. More empty chair town halls!

What folks may have missed with tariffs, Trump certainly has, follows. He made a statement that he doesn't care that foreign car prices will go up because that will make US made cars cheaper by comparison and therefore people will buy more US cars. He ignores the fact that a not insignificant percentage of components in US cars are foreign made and said parts will cost US manufacturers more and therefore they will have to raise prices. While technically maybe not as much as the tariffs on foreign cars, by some amount.

An object lesson from the last Trump administration and those tariffs that I experienced first hand in lumber pricing. Trump put 25% or some such tariff on Canadian lumber. In the middle of a house remodel and I go to my local lumber yard for some more wood trim. All of a sudden wood trim prices are way up. Now this was in WA state. They have a major lumber industry all their own. I ask the clerk at the lumber yard if I can't source local wood products. He said most of what I am seeing is LOCAL product. So I ask why is local up so much too.? He said as soon as Canada tariffs went into place, local producers raised their prices to be just a few percent below new Canadian rate. So if you think its just tariffs, its not, its markets doing what markets do and the profit motive has an energy all its own that the Chief Dimwit either doesn't know or chooses to ignore.

A more current story. I have worked with a product vendor that makes modular walls for construction. The base structure is aluminum framing. They are Canadian owned with a main plant in Calgary and US plants in GA and AZ. They mostly source raw aluminum from the US, which has to go to Canada to get molded for their product. So coming into Canada it will suffer a 25% reciprocal tariff from Canada. When made into their system for shipping to the US plants where it gets finish details it will suffer a 25% US tariff. To get around this double hit, they will need to either stop using US aluminum or significantly regear factories and where they make things to minimize the tariff risk or risk going out of business as their product no longer is cost effective compared to alternative products. From discussions it clearly sounds like they may shutter the US plants and use Canadian or other non US aluminum. So likely anyway this gets cut, US workers will be out of jobs. Trump plays checkers, the world understands chess.

[central scrutinizer]

3. Economists: "this is disastrous and stupid"

Trump: “ hold my beer”

[BattleRow]

5. And watch this putt..

[Old Crank]

6. A little comment from PAul Krugman

From his substack a couple of days ago..

Here’s the story: Trumpers are claiming that tariffs

1. Won’t increase prices, because foreign producers will absorb the cost

2. Will cause a large shift in U.S. demand away from imports to domestic production

3. Will raise huge amounts of revenue

If you think about it for a minute, you realize that (1) is inconsistent with (2): If prices of imports don’t rise, why would consumers switch to domestically produced goods? At the same time, (2) is inconsistent with (3): If imports drop a lot, tariffs won’t raise a lot of money, because there won’t be much to tax.

So the public story about tariffs doesn’t make any sense. And Trump’s rants about tariffs go beyond nonsense.