The President sees trade imbalances as something that is “not fair”. The problem is that the USA is the richest country so it obviously can afford to import more than anyone else. And what is especially weird is that he has also placed tariffs on countries where the US has a trade surplus. This is effectively a 10% tax on every product imported into the USA and that requires a massive administration to keep track of every waybill and that will slow down commerce to a crawl.
As DOGE has gutted the infrastructure of the Government, there may be nobody to make sure the tariffs are collected. The infrastructure for the Dept of Customs would be gargantuan. Trade could be held up (not good for eggs) or let through without applying the tariff, and that will create backdoors and potentially retroactive fines where tariffs could not be processed.
People then will need to misrepresent or falsify the statistics up the chain to the president, who now thinks that great things are happening. In fact trade both falls through the floor and tariff collections from importers fail, local importers fail but multinationals build their factories in the US, to escape tariffs. Somehow the trade deficit continues and although there is some relief for manufacturing sectors, raw materials still attract tariffs so the prices of (for example) new cars increase, anyway, no matter where they are constructed.
The existing external production facilities are now supplying the rest of the world far more efficiently creating a comparative deflationary pressure on world trade, the USA has isolated itself from this benefit with its protectionist approach to trade.
This could result in a great reset of American dominance of the world economy. Trade with the USA becomes more expensive across the board so either it does not occur (except for the huge multinationals who can build factories to make cars and semiconductors).
As the imports into the USA of goods and services that can not be created by factories that can be built, an entire sector of the US economy will decline affecting millions of smaller operators and businesses, except the black/grey market – which will flourish.
The Joy of Tariffs therefore will be felt by smugglers and between emerging trading relationships between the EU, China and Canada and these large blocs and the rest of the world.
Tariffs seem to the short sighted as a correction, but every action has an equal and opposite reaction in a bipolar world. Trade is not like politics. It is not a binary opposition. It is complex and multifaceted and the rush to apply tariffs by the White House simply does not have a way of succeeding, being implemented and the side effects are worse than the disease.
Bring it on.