This is going to be worse. Back then it was all nations erecting tariffs against all other nations. It’s not 1945 anymore, the US is only about 24% of global GDP. And the US actually has a much lower share of trade as a fraction of its GDP than most other nations.
The rest of the world doesn’t have to tariff each other. We’re throwing up barriers left and right, but other countries are actually signing new trade agreements to fill the holes we leave behind. The US is going to pointlessly throw itself into a depression, while the rest of the world is going to keep trucking along just fine.
The US is going to pointlessly throw itself into a depression, while the rest of the world is going to keep trucking along just fine.
Sounds like this would be better for the US, not worse. When someone eventually assassinates Trump and rolls back his tarrifs, the US will be able to plug back into a world economy that has been happily humming along.
Yeah, except by that point we can’t just plug ourselves back in. The world economy is simply going to route itself around the US. And once that happens, climbing back up to our old position in the global economy will be neither quick nor easy. Because after 4 or more years, the other countries will have found alternative suppliers for everything they need. Foreign companies will have invested trillions in new production and supply chains that bypass the rot of the US economy entirely.
Just think about it. Imagine that you’re a Japanese automaker. Previously you found it beneficial to buy some of the components for your vehicles in the US. You’ve built supply chains and formed business relationships with American companies. Suddenly all those relationships are thrown into chaos by these tariffs. You have to scramble, take a massive hit in profits, and quickly find alternate suppliers outside the US. You even have to do a lot of re-engineering of your vehicles to be compatible with some of the alternate parts. And you form new relationships with business owners in alternate countries. You hire fewer people who speak English and hire more people that speak German, Mandarin, or Hindi. You start orienting your whole business around these replacement suppliers.
Then maybe 10 years from now the US gets sick of tariffs. (Note: this won’t end even if Trump leaves office in 2028. Biden didn’t repeal Trump’s first term tariffs. Both parties are currently anti-free trade.) But let’s say 10 years from now, the US’s current tariff fever breaks, as the electorate is reminded firsthand why we stopped using tariffs as a policy tool. The US drops all its tariffs and announces it is again open for business.
And you’re that Japanese automaker. What possible reason do you have for going back to those American suppliers? First, a lot of them will have gone out of business. And all the people you previously had relationships with have now left the industry. You have fewer people on staff who can even speak English. And all your vehicle lines have now been engineered to work with non-American parts. Oh, and it’s not like the American suppliers have a cost advantage; they’re still more expensive than parts you can get elsewhere.
So what exactly is your incentive to go back to those American suppliers? You want to go through that whole supply and production chain shift again, pay all that money again, for what purpose? You’re going to spend those billions of dollars, even though you are already completely adapted to not using American parts? Just to invest in a country that has proven itself to be extremely mercurial, politically unstable, and a fundamentally unreliable business partner?
No. That will not happen. That kind of rapid “plugging back in” will only happen for bulk commodities. The farmers selling soybeans will be able to go right back to selling internationally, as soybeans are soybeans regardless of where they’re grown. But any kind of complex good or service that requires careful integration in a global supply chain? Forget it. There is not going to be any rapid bounce back after this. Oh, and you can certainly forget the US ever being the global reserve currency again.
You said it would be worse than the depression, when the whole world economy collapsed. Regardless of issues of supply chains or broken trust, it is easier to sell your goods to a customer who has money.
Hoover had good reasons to look for a direction to shoot in, even though ultimately he chose his foot, but now the economy isn’t doing poorly. Or at least it wasn’t.
Well, yeah, it wasn’t.
And also, since the last week, the US economy will never do poorly again. So you just got a day where it did poorly for a few months.
Yeah but at least he made a dam to show them beavers what for
Empty pockets hanging out of pants were called Hoover Flags as a symbol of the resulting poverty of the man’s administration. What do you think, Trump Tags?
