There are situations in which tariffs are a useful tool to address a trade deficit, or to protect key sectors of a country’s economy. Then there are situations where you accuse a bunch of penguins on an uninhabited island of currency manipulation. Guess which one we’re living in?
This is the takeaway of the manifold tariffs announced by President Donald Trump on Wednesday afternoon. In addition to the penguin-occupied Heard and McDonald Islands, the tariffs target the British Indian Ocean Territory, whose sole occupants live on a joint US-UK military base on Diego Garcia island. Yes, the United States is levying reciprocal tariffs against its own troops.
And then there are the tariffs against countries that have actual goods and services on which US consumers depend. China: 54 percent. Vietnam: 46 percent. Cambodia: 49 percent. South Korea: 25 percent. No corner of the US consumer economy will go untouched. Prices will rise. The stock market is spiraling. A recession looms. The tech industry will be turned upside down. Mark Cuban, noted billionaire, is encouraging people to stockpile consumables before it’s too late.
It’s reckless, it’s absurd, and it’s also everything Donald Trump said plainly he would do on the campaign trail. True, he didn’t telegraph how misguided the methodology would be—you can read about it more here, suffice to say it’s thoroughly detached from the realities of international trade—but he loudly, repeatedly promised to tariff his way to glory.
The stated goal is to return manufacturing jobs to the United States, which is a bit like resurrecting the dodo. The US still manufactures plenty of goods; it’s second only to China in annual output, according to the World Bank. But many of the industry’s jobs have been replaced by automation, a bottle you can’t re-cork. And higher domestic labor costs mean US-made products will inherently be more expensive, a trade American consumers have consistently rejected. All of this was already true in Trump’s first term. It’s even more so now.
And let’s say a plurality of companies did decide to reshore or set up factories in the United States. The timeline for those decisions and implementation is measured years if not decades, and follow-through can be spotty. (Just ask Foxconn.) So what happens in the meantime?
The rationale has all the weight of a soap bubble. There isn’t a world where the US suddenly manufactures all the items the country has decided to target. There’s a 47 percent tariff on Madagascar now. Do you know why the US has a trade deficit with Madagascar? They produce vanilla; we don’t. Unless we’re suddenly setting up vanilla assembly lines in Ohio, that’s not changing.
But maybe Trump’s so-called Liberation Day is all just a master negotiating ploy. “Everybody sit back, take a deep breath. Don’t immediately retaliate. Let’s see where this goes,” said Treasury secretary Scott Bessent on CNN Wednesday. “Because if you retaliate, that’s how we get escalation.”