Make no mistake: President Donald Trump’s unilateral decision to impose tariffs on imports from China and our closest allies, including the EU and Canada, is a very big deal. We should all be concerned.
This action is another example of the politics of aggrievement: anger and outrage looking for someone to blame and make pay for the transgressions, real or imagined, suffered by the aggrieved. You can see the politics of aggrievement play out through anti-immigration policies, steps to shrink government and actions to cut taxes and eliminate regulations without a serious inquiry into whether there really is a transgression and, if there is, whether the action is in fact a remedy.
As practiced in this country, aggrievement politics depends on obscuring the data and facts that undermine its arguments and outrage. For example, in the immigration debate, we don’t hear much about the country’s need for young workers, who will pay into the Social Security and Medicare trust funds, and how immigration is a prime source of these young workers. We don’t hear much about how the recent tax cuts favored passive investment and aren’t creating the promised jobs or increased wages. Facts and data that don’t support aggrievement are shouted down or ignored because they’re “too complicated” to be understood. The politics of aggrievement has succeeded because informed debate doesn’t occur and because the consequences of its policies haven’t been widely felt yet.
Tariffs are a different matter entirely. They are the place where aggrievement as a ruling philosophy will run smack into the fundamental reality that international trade benefits the U.S. and the rest of the world. And while we may decide to turn our back on the world trade, others will not. While those profiting from the politics of aggrievement have successfully controlled the domestic discussion, they won’t be able to control the global discussion.
The international community knows that tariffs imposed without due consideration of their effect on other countries or the domestic workforce are a losing strategy. They see the historical experience of the tit-for-tat tariff wars that led to the Great Depression as one stark frightening example, among many others, of what happens when countries try to capture prosperity by beggaring their neighbors.
The international community knows that the countries that have cooperated economically have collectively created more wealth and eliminated poverty on a level never before seen in human history. There is little danger that China, Canada, the EU and the rest will unilaterally increase tariffs on one another, just because we place tariffs on them. They will avoid a replay of the 1930s world economy.
What they will do, however, is put targeted tariffs on U.S. products and find ways to inhibit our exports to them. Meanwhile, the president’s tariffs on foreign imports are already adversely affecting our companies. Many businesses they are supposed to help, like General Motors, have already said on record that they are opposed to them. Others are reconfiguring their businesses by laying off American workers or shifting production overseas, for example, Harley Davidson and Mid-Continental Nail. The Federal Reserve Board has raised concern that these businesses are the thin edge of a broader trend.
Perhaps the president’s view is that because the U.S. market is so big, our trading partners will eventually give in and the U.S. will win. That is a grave miscalculation, because we have as much to lose, if not more. U.S. businesses — many of which are located in our region — will lose access to international markets and pay higher costs for inputs, while our government will lose access to international capital.
Shaking a fist at China or Canada may provide a nice dopamine hit for some, but at some point, the world will just go on without us and other nations will derive the primary benefit from international trade while we see our economy shrink and our country become less relevant.
Ignoring that reality may be momentarily effective politics, but I’m not hearing anything that gives comfort that there is a plan once the aggrieved are done being angry.