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The realpolitik of Trump’s tariffs
The US President’s trade policy is about power and security, not economics.
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The writer says economists might fret about tariffs' inflationary effects, but US President Donald Trump isn’t motivated by classical economic theory.
PHOTO: AFP
Rana Foroohar
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T-day – or Tariff Day – is coming this week. Or not. We simply won’t know until it’s here, given that US President Donald Trump changes his mind about policy daily. But assuming reciprocal tariffs do go into effect, it’s worth thinking about them as Mr Trump himself probably does.
Economists might fret about their inflationary effects, but Mr Trump isn’t motivated by classical economic theory. To the extent that he thinks about tariffs in purely economic terms at all, he would look at the evidence of the increased tariffs against China during his first term, between 2018 and 2019, and note that, even though these represented a material adjustment in rates, they had minimal inflationary effect.
