Unlock the White House Watch watch newsletter for free
Your guide on what the US elections of 2024 mean for Washington and Le Monde
The writer is director of economic policy studies at the American Enterprise Institute
The “Liberation Day” has arrived. Unfortunately, he threatens to release the Americans from real robust growth, low unemployment and a good part of their retirement savings.
Trump’s prices are an economic emergency. If it was implemented, the average rate rate of the United States would be higher that under Smoot-Hawley. They would do it constitute The highest increase in tax since the 1968 samples to finance the Vietnam War. Our trading partners would retaliate. By increasing taxes and prices, they would erode household income and expenses. Business investment spending and US exports would be hardly affected. If it is supported, this trade war would be likely to cause a recession.
And for what? Around half Among American imports, intermediate goods are used at the national level to produce those finished. High rates increase production costs for American companies, harming competitiveness. Take steel. For each job in the production of American steel, there is 80 who use steel in production. Trump’s prices could indeed help this steel producer, but they will injure the other 80s by reducing the competitiveness of their employers.
Economists Aaron Flaaen and Justin Pierce estimate That during Trump’s Trump’s trade war, manufacturing losses against higher input prices were five times greater than import protection gains. In addition, reprisal losses were almost three times greater than import protection gains.
Already, eminent companies react to economic reality. Steelmaker of Ohio Cleveland-Cliffs announcement Last week, she released 600 workers in Michigan and 630 in Minnesota to reduce the drop in demand due to Trump prices. During the week ending on April 1, the course of the company’s action abandoned 11%.
Vice-president JD Vance arguments that Trump “believes in economic self -sufficiency”. Well, to see the advantages of economic self -sufficiency, consult North Korea. However, Vance is right. Trump is a real mercantilist who considers trade deficits with hostility. But its prices should not reduce the deficit, which is motivated by the fact that the United States invests more than it saves it. For evidence, watch his first mandate again, which saw the United States Current account deficit 18% increase in the first quarter of 2017 in the first quarter of 2020.
Moreover, We must not Pay particular attention to manufacturing or be excessively concerned about the trade deficit. The average salary of a worker in the service sector has exceeded the average manufacturing salary at the end of 2018. Nostalgia poorly placed for an imaginary past and the row policy of swing states are not good reasons to try to move workers more paid to less remunerated jobs.
Likewise, the trade deficit means that the United States can consume more than it produces it. It’s a good thing. The deficits offer consumers a greater variety of products and give us companies a competitive advantage by allowing workers to focus on productive activities with greater added value. Again, we should not wish American workers to return to the era of sewing tennis shoes together in factories.
What about Trump’s other objectives? These prices will generate income to finance tax reductions – but if its objective is to help the working class, increase taxes on the consumption of working class households to finance lower income taxes for wealthy households is weird. The intentionally click of the brakes on global economic growth will weaken national security. The reversal of the bird to companies in allied countries will not strengthen supply chains or will make economic resilience progress.
Trump should be very concerned about the fact that his increase in working class taxes weakens him politically as well as other Republicans, which makes it more difficult to adopt his tax bill in 2025 and keeps control of the mid-term congress of 2026.
A CBS News / Yougov survey last week shows That only 23% of Americans think that its policies improve them financially – down 19 percentage points compared to January. On Tuesday, the Democrats succeeded much better than expected in two races in the room in the Deputy Red Florida districts. The next day, a handful of republican senators broken With Trump on commercial policy and voted to cancel his Canada prices. GOP senator, Rand Paul, argued that Trump did not have the constitutional authority to increase taxes.
The political reality that Americans will rebel aggressively against a president who intentionally increases consumer prices and the increase in unemployment could be the instrument of economic salvation. If Trump cares about republican success in 2026 and 2028, then he will reverse the course before too much economic damage is caused. When dust sets in, the “liberation day” can end up freeing the Americans from the commercial fantasies of a deceived president.
