Trump’s Economic Genius

You might have heard that stocks were in free fall for a time this morning and that the markets closed much lower than last week on news of escalation of the trade war with China. But even earlier, the Creature demonstrated he doesn’t understand how any of this works …

Yeah, China is cowering in terror of the Mighty Trump and wants nothing more than to make a deal

Beijing will fight “to the end” in the trade war, the country’s state broadcaster said on Monday, just before China announced that it would raise duties on US$60 billion of American goods on June 1.

Disregarding warnings issued by US President Donald Trump, the Chinese Ministry of Finance said tariffs on thousands of US products will rise to as high as 25 per cent, from the original 10 per cent, in the latest escalation of the battle between the world’s two biggest economies.

Oh, wait …

In his public statements, Trump persists in describing the tarriffs imposed on China as a transfer of wealth from China to the U.S. A few days ago he tweeted “For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results.” And, of course, he persists in not grasping that his tariffs actually function as a massive tax to be paid by consumers.

Greg Sargent:

President Trump has spent the past 24 hours tweeting manically about trade, repeating the absurd falsehood that China is paying us billions in tariffs. We keep hearing that this shows Trump “doesn’t understand” how tariffs work.

But this is better seen as a straight-up, deliberate lie — a lie upon which Trump is staking his reelection.

A long-term trade war with China now looks plausible. Trump hiked tariffs to 25 percent on $200 billion of Chinese goods on Friday. Monday morning, China announced it will retaliate with new tariffs on $60 billion of U.S. goods.

If this does continue, Trump’s lie about China paying us billions in tariffs will become ever more imperative for him.

Sargent writes that negotiating better trade agreements with China was one of his central campaign promises. How much do most people care about trade agreements with China, though? As long as they are happy to buy Chinese-made consumer goods? As with other lies, at some point many people do notice that nothing is better. They didn’t really get a tax break. The factories didn’t really open. And so on.