All things considered, I think the biggest problem with Donald Trump’s trade agenda is that he has no idea how little he understands about trade.
The president recently boasted, for example, in reference to trade policy, “I understand that issue better than anybody.” He added soon after, “I know every ingredient. I know every stat. I know it better than anybody knows it.”
And if that were true, it’d be quite reassuring, but it’s not. In fact, what the Republican sees as one of his signature issues is actually one of the areas in which he’s most confused.
Trump claimed yesterday afternoon that the United States would begin imposing an additional 10 percent tariff on $300 billion in Chinese imports starting next month. (I use the word “claimed,” because it’s often difficult to know whether the administration will actually do what the president says it will do.) Beijing, naturally, is threatening retaliatory measures.
But as part of the same announcement, Trump tweeted that the series of concessions he thought he’d received from China – developments the White House has bragged about for months – never actually materialized. It was intended as a criticism of Beijing, but it didn’t do the president’s credibility any favors.
Soon after, he presented reporters with familiar falsehoods regarding China and trade.
“They’re paying for these tariffs; we’re not. […]
“It’s been proven that our people are not paying for those tariffs.”
Even Trump should be able to understand that the opposite has been proven. Here’s a study someone can go over with the president on the effects of his agenda. Here’s another. And another. All of the evidence is consistent with common sense: Americans end up paying more as a result of Trump’s tariffs. They are, for all intents and purposes, a Trump tax hike on consumers in his own country.
Even Larry Kudlow, the top voice on economic policy in Trump’s White House, recently acknowledged during a nationally televised interview that the president’s claims about tariffs are wrong.
But that’s just the start of the problem. Trump added yesterday, referring to Chinese officials, “If they don’t want to trade with us anymore, that would be fine with me. We’d save a lot of money.”
There is no scenario in which the United States saves money by ending all trade with China. It’s the sort of assertion Trump makes because he’s convinced that trade deficits represent “lost” money, which will never make sense, no matter how many times the president peddles the claim.
And if this were just another example of the Republican saying things that aren’t true, we could all just nod our heads, shrug our shoulders, and wait for the next round of presidential rhetoric. But what’s so notable about these specific Trump falsehoods is that he’s basing part of the White House economic agenda on measures he doesn’t understand.
Trump seems completely convinced that he and his country have nothing to lose from a trade war, so he can wage the conflict with impunity, unconcerned with consequences. That’s ridiculous.
Complicating matters, the president’s confusion is broader than a policy failure. Trump’s convinced that China will yield and give him everything he wants as part of a trade war he believes is “easy” to “win.” The more he applies pressure, the better his odds of success.
In reality, the more Trump applies pressure, the more China returns economic fire, raising the risk of a domestic economic downturn. Indeed, when the Federal Reserve lowered interest rates this week, Fed Chairman Jerome Powell left little doubt that he sees the White House’s trade agenda as having an adverse effect on domestic growth.
As Jordan Weissmann explained yesterday in Slate, there’s plenty of speculation about why in the world Trump is doing this. Maybe, for example, the president thinks his erratic antics will force the Fed to push rates even lower.
But it’s hard to have confidence in Trump’s “plan,” to the extent that there is a plan, given how little he knows about the trade policy he’s playing with.