The amount of chaos and confusion is unnecessary and overwhelming. For those of you readers who are avid consumers of the news, you need to find a different hobby. Following everything that the White House is doing minute by minute is probably unhealthy for anyone. The blizzard of dizzying information that is coming out of the White House is mind boggling. Unfortunately, confusion is the point.
Tariffs
Please tell me if you understand what Donald Trump is doing with tariffs. And, by the way, please explain it to Wall Street, because Wall Street doesn’t understand his steps either. For some reason, Donald Trump believes that a trade deficit is bad. Therefore, every trade deficit must be reversed. The idea is ludicrous.
Let’s take a simple example like a small, poor African nation that exports diamonds to the United States. The United States buys diamonds because we are a rich, wealthy country. We like diamonds. On the other hand, this poor African nation cannot afford either the cars or computers that we make here in the United States. They cannot import much of anything from us. They cannot afford it. Therefore, when you look at the balance sheet, the United States will have a trade deficit with this African nation. Is this bad? Probably not. Yet, somehow, Donald Trump wants to force this country to buy American products. This is probably not in the best interests of that African country.
By now, everybody except Donald Trump should understand how basic tariffs work. Let’s say that you own a company that makes T-shirts. You sell your T-shirts for $10 a T-shirt. You live in Malaysia. You want to sell your T-shirts in the United States. Donald Trump slaps a 20% tariff on your T-shirts because they’re imported from Malaysia. Now, your T-shirts will cost $12.
Who pays that extra two dollars? Does Malaysia pay it? No, you, the consumer, will pay the extra two dollars. This is basically a tax that we pay out of our pockets to the American government.
The purpose of tariffs, when used correctly, is to protect American industry. Using the same example, American T-shirt manufacturers can continue to sell their T-shirts for $10 apiece and, therefore, undercut the T-shirts being sold by my Malaysian company. In theory, consumers will buy the cheaper T-shirts if everything else is equal. But it is disingenuous, at best, to say that Malaysia will pay the tariff.
But to make T-shirts in the US that sell for $10 apiece, the manufacturer will be able to pay employees no more than $3 an hour (minimum wage in the US is $7.15). So who’s the employer going to find to take those jobs? Malaysians?
Targeted tariffs may be necessary to protect specific American industries. Across-the-board tariffs make no economic sense. This is why Wall Street has been tumbling. This is why everyone has said that Donald Trump’s across-the-board tariffs make no sense. I still have no idea why we’re alienating Canada. Donald Trump, himself, negotiated our trade policy with Mexico and Canada during his last stint in office, yet now he’s slapping them with some ridiculously high tariff? The whole thing is nuts.
IncompetenceGate
In what can only be described as a slapstick comedy that rivals any episode of The Three Stooges, several of Donald Trump’s cabinet members were on a messaging app called Signal. They were discussing plans to bomb Houthis rebels in Yemen. The CIA director was on this chat and revealed the name of an undercover CIA officer. The Secretary of Defense shared specific details of the airstrikes, including the type of aircraft and missiles used, the targets, and the time of attacks.
What’s the big deal? National Security. Certain things are supposed to be secret. Using a “secure” public messaging app is not government policy. Our government has specific steps that government officials need to take to keep certain discussions completely secure. Using WhatsApp or Signal is not in the government playbook. In fact, it’s illegal! Remember what a scandal it was when Secretary of State Hillary Clinton used a private server for some innocuous emails? This is EmailGate on steroids.
