Month: April 2025

Trump’s Challenge to China — and Europe

I will post a more complete analysis of Trump’s “Liberation Day” tariffs and their implications for America’s (and the world’s) economic and political future. For the moment, I will focus on the implications of Trump’s challenge to China, which now faces a tariff of 34 percent on goods and services exported to the United States. China has announced that it would reciprocate. Trump announced, in turn, that if China reciprocates he will up the ante to a tariff of 104 percent on imports from China.

What Trump is saying, in effect, that the United States will no longer subsidize China’s industrial and military ambitions. Trump, rightly, sees China as the “main enemy” and wants to put it out of the business of draining America’s ability to prepare for and fight a massive, prolonged war, and thus to deter China from threatening just that. By putting China out of business, he will have de-fanged it and eliminated it as a threat to America — and Europe.

If the Europeans are smart, they will respond to Trump’s tariffs by reducing theirs on U.S. goods and services. And they will treat China a harshly as Trump seems willing to do.

If what’s left of Western Civilization has a future, it is in Trump’s hands. Will Europe go along or continue its slide into economic catastrophe and subservience to China (and its self-inflicted Muslim invasion)?

My guess is that some European nations will break from the EU and unilaterally reduce tariffs on U.S. imports.  Others (e.g., France and Germany) will not, just to spite Trump. One result will be the breakup of the EU. Another will be the effective breakup of NATO. A third will be Putin’s agreement to a settlement with Ukraine, given the removal of the NATO spectre from Russia’s vision. A fourth will be the de-fanging of China, as its sources of funding in America and (part of) Europe wither away — either through acquiescence to Trump or because they defy him.

How Not to Think about Tariffs

Tyler Cowen — The Free Press‘s new eminence grise — thinks about tariffs like the economist that he is; for example:

Like a game show host, Trump announced a series of tariff rates on many of America’s major trading partners.

How did he come up with the rates?

It seems by a crude formula: A given nation’s trade deficit with the U.S. divided by that nation’s exports to the U.S.

There is a base rate of 10 percent, to be applied to the UK, Costa Rica, and some other friendly nations. For India, it is 26 percent For Japan, it is 24 percent. For the European Union, it is 20 percent.

The most incomprehensible are those on Vietnam (the new tariff rate is 46 percent); Sri Lanka (44 percent); South Korea (25 percent); Cambodia (49 percent); and Taiwan (32 percent)….

Cowen goes on and on, citing seemingly authoritative statistics and ending up where a “good” economist should: tarrifs bad (like Orange Man). The upshot, according to Cowen, is that

we will be moving into a future with higher prices, less product choice, and much weaker foreign alliances. The tanking of the stock market, and other possible asset price repercussions, may tip America into recession and increase joblessness.

What really matters — and Cowen has no more insight into this than the Man in the Moon — is how foreign governments react to Trump’s announced tariffs, and what Trump does in response to those reactions.

Cowen’s doom-saying merely reveals his anti-Trump bias. In that respect, his eminence is just another pundit.