It's not news that Donald Trump's ignorance about economics is practically limitless. Even so, the sheer idiocy of his claims on Twitter this morning about the impact of his tariffs on imports from China is quite staggering. The tweets in question are included in this piece from the BBC website.
According to Trump, China has been paying tariffs ranging from 10 to 25 percent on a variety of goods it ships to the US. Nobody seems to be able to cure Trump of this misunderstanding. The tariffs are paid by US consumers, and analysts are increasingly able to quantify the results. It appears that the average cost of a washing machine in the US has gone up by about $100 as a result of tariffs, including the levies on steel that Trump applied as part of the NAFTA renegotiations. Those tariffs remain in place even though the new deal has supposedly been agreed.
There's nothing new there, but the next statement from Trump is outright jaw-dropping: "These payments are partially responsible for our great economic results". Wait, what? Forcing American consumers to pay more for imported goods directly reduces their purchasing power. That can only serve to crimp consumer spending, which is the main driver of the US economy. If Trump follows through on his threat to boost the tariffs at the end of this week, the impact on the consumer -- and on businesses such as Walmart that source a lot of their product from China -- will be severe.
Trump may not get this, but Wall Street does. US stocks had been on a tear since the start of the year, with the S&P up by 17 percent on hopes that a trade deal with China was imminent. Today's Trump tweets promptly put the markets into reverse. Trump has been quick to take credit for the stock market's performance during his term in office. It's unlikely that he'll step up to take the blame if his idiotic trade policies put an end to the bull run.
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