“We don’t even have tariffs,” President Trump told the Wall Street Journal this week, attempting to deflect the blame that Wall Street is putting upon his administration for a tumbling stock market. “I mean, other than some tariffs on steel — which is actually small.”
He later added, “Where do we have tariffs? We don’t have tariffs anywhere.”
He spoke as if the tariffs had yet to go into effect.
He must have missed the memo. His own administration told the Washington Examiner earlier this month that as of Oct. 2, U.S. importers already owed $4.4 billion in tariffs for goods imported prior to that date. By now, that number is surely much larger.
Perhaps that’s just a drop in the bucket of the U.S. economy, but people notice when that kind of money goes missing. Which is to say, markets notice.
And the Dow Jones industrial average is down 1,500 points so far in October as a consequence.
It isn’t just the $4.4 billion in direct costs that tariffs heap upon American importers and manufacturers. It’s also the higher prices that they and everyone else must now pay for competing domestic goods and materials that no longer face international competition — again, thanks to the tariffs. And then, add to that the retaliatory tariffs that deprive these American companies of sales overseas. It’s a triple whammy.
The result is exactly what we predicted last spring when Trump began talking about metal tariffs: Economy-stunting high taxes fall on consumers; higher expenses fall on just the sort of businesses that Trump claims he wants to help — manufacturers that build things with steel and aluminum.
The expenses that Trump has heaped upon manufacturers are now showing up on Wall Street, just as we warned. Stocks are giving back all the gains of this calendar year, and manufacturers like Ford Motor Company and 3M are reporting lost earnings, blaming the higher prices they must now pay for the steel and aluminum that goes into their products.
Trump doesn’t seem to appreciate that he is gradually undermining his own economic recovery. Things had been off to quite a good start after he signed his tax reform bill. But when you offset tax cuts for workers with tax increases that target the nation’s manufacturing capacity, they tend to be less effective.
Trump argued in his WSJ interview that the steel and aluminum tariffs are “actually small.” And compared to the entire economy, they are. But these tariffs directly target and stunt the growth of a very important base of manufacturing that uses steel and aluminum for inputs. Not only are companies like Ford and 3M suffering but the construction of future oil and gas pipelines will also be far more expensive and less feasible because of the tariffs. The tariffs threaten jobs and growth in industries that are much larger and far more promising than what’s left of the U.S. metalworking industry.
Trump also claimed that companies are losing money because they are incompetent and are merely using the tariffs as an excuse. If so, then people need to ask why Trump’s presidency coincides so perfectly with such companies’ inability to make money.
For all this, there is still some good news. Trump can give Americans a second round of tax relief right now, without Congress having to lift a finger.
He can make the markets boom again.
All he has to do is rescind the tariffs that he imposed unilaterally.
