Paul Krugman published this earlier before the tariff announcement and he is 100% right:
From Apocalypse Now:
Willard: They told me that you had gone totally insane, and that your methods were unsound.
Kurtz: Are my methods unsound?
Willard: I don’t see any method at all, sir.
[…]
I’m not saying that the Trump team’s thinking is unsound. I don’t see any thinking at all.
I don’t know how many people realize that the administration’s case for tariffs is completely incoherent, that it has not one but two major internal contradictions.
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. Here’s one of the latest:
Does he really believe that Canada is a major source of fentanyl? Worse, does he believe that fentanyl smugglers pay tariffs?
But is it all a cover for the real, probably sinister agenda of Trump’s tariff push?
No. There isn’t any secret agenda, devised by people who know that the public story is nonsense. How do I know that? Because who, exactly, do you think is devising this secret agenda?
As he goes on to point out, Trump’s advisers are all hacks and yes-men. There are no grown-ups.
This is all Trump’s whim, ungoverned by any expertise or any sense of responsibility. He believes his hype and all the rest of his sycophants and henchmen are just going along for the ride — and that’s assuming they know this is lunacy in the first place.
As Krugman puts it:
This is all about Trump’s gut feelings. A White House official told Politico that he likes the “shock and awe,” and that
Each country needs to panic and call. … Trump wants to hear you grovel and say you’ll cut a deal.
Since most of our trading partners aren’t in a groveling mood, trade war seems inevitable.
I’ll update this once the “big announcement” happens.