Global Trade War?


Donald Trump is quickly learning that it’s harder to make significant changes in the US government or economic policy than he thinks. All the years sniping and tweeting from the sidelines and then the barrage of disdain for government officials during the campaign are being exposed as the belligerent rhetoric of an uninformed amateur.

Trump has promised to build a wall on the US-Mexico border that the Mexican government will pay for. In a press briefing yesterday Sean Spicer suggested levying a 20% tax on goods imported from Mexico. Even Econ 101 students understand who will end up paying the proposed tax: the American people will be charged more for cars made in Mexico, lettuce, tomatoes, and avocados.

A web of agreements and deals between countries has been developed over decades of negotiation. As Politico reports, there is a high likelihood that unilaterally taxing goods imported from Mexico could result in other countries rethinking their trade agreements with the US resulting in less favorable arrangements. The result could be a global trade war that could hurt US jobs and put entire companies out of business.

Trump’s premise throughout the campaign was that the trade deals that previous administrations negotiated were crafted by bureaucrats who lack his intelligence. He might be smarter than some economists. He might not be.

If a factory in Indiana or Pennsylvania shuts down because of his reckless rhetoric or policies, will do everything possible to hold him accountable.

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