𝗧𝗿𝘂𝗺𝗽’𝘀 𝗕𝗹𝘂𝗻𝘁 𝗙𝗼𝗿𝗰𝗲 𝗦𝘁𝘂𝗽𝗶𝗱𝗶𝘁𝘆

A468-wordunder2.5-minuteread

Liberation day has arrived and the only thing that President Trump is liberating is us from our money.

Today’s post isn’t focused on cleantech. Suffice to say that the tariffs on China, Vietnam, and Thailand will be painful for clean energy. That pain will be additive to that inflicted on the macro economy.

The President admits there will be short term pain. Like a blind squirrel he’s found an obvious nut. To counter that pain, he promises long-term gain. In that regard he’s simply nuts.

In general, Americans are unwilling to accept short-term pain to fix our ever-increasing structural problems. Yet no major problem can be fixed without pain. In that regard I applaud President Trump. However, that’s where my admiration ends.

The tariff strategy is a mirror image of DOGE. Both have worthy objectives, and both deploy a amateurish approach that mindlessly break things, then fixes what shouldn’t have been broken.

Who does that?

People who lack skill and knowledge.

The worst part isn’t attempting to fix trade imbalances by breaking everything. The worst part is that the strategy’s foundational elements are not just flawed, they’re completely wrong.

Former U.S. Trade Representation Michael Froman noted on CBNC this morning that the way the tariffs were calculated is nonsensical. According to Mr. Froman, the Trump team took the trade deficit with each country and divided it by total trade to arrive at the tariff rate.

This makes sense only to President Trump, who must have missed that economics class at Wharton.

We run trade deficit with almost every country not because of unfair trade practices, but because of two characteristics of our economy:

We are the world’s largest economy.
About two-thirds of our economy is consumer-driven, meaning Americans buy lots of stuff. Way more per capita than most other nations.

Trade deficits are inherent. The clear exception is China. With an economy that rivals ours, and a population four times larger, China could easily consume as much as we do.

The second flaw is that the U.S. manufacturing base has been eroding for years. President Trump promises to reenergize it, which is a recurring refrain from Republicans.

I’ve written about this before because it’s a damaging bit of misinformation that I suspect most American’s think is true.

The chart attached to this post clearly shows that manufacturing output in the U.S. has steadily increased in the last 20 years. In fact, you could go back 100 years and you’d see the same upward trend. What has declined – and dramatically so – is manufacturing employment.