What did Donald Trump do today?
He imposed massive, baffling tariffs on products from most of the world.As expected, Trump announced today a new round of massive consumer-paid taxes on imported goods. Details were scarce, and even his own senior administration officials were apparently out of the loop until late this afternoon, when Trump unveiled a list of what he falsely called "reciprocal" tariffs on almost every country on the planet—and then some.
The immediate consensus of financial experts was that this was "worse than the worst case scenario." The rating agency Moody's had calculated that a 20% blanket tariff would result in 5.5 million lost jobs, 7% unemployment, and a 1.7% contraction in the U.S. economy—and what Trump announced today is bigger than that. Even the extremely conservative Wall Street Journal editorial page had reacted with horror, noting that tariffs are regressive taxes ($6 trillion worth in this case) that will hurt Americans with the least income the most.
Trump had waited until after the markets had closed to make the announcements, to avoid the embarrassment of a direct reaction, but futures markets promptly fell off a cliff.
The actual rates, which start at 10% and go much higher for some countries, are supposedly "reciprocal"—which would mean matching tariffs that other countries had already placed on the United States. But Trump's list gives astronomical rates for those—completely false numbers generated by a formula that, to put it gently, has nothing whatsoever to do with tariffs.
The weirdness extended to the list of markets that the tariffs applied to. The Australian territory of Heard and McDonald Islands were hit with the minimum 10% tariff, but as they are inhabited only by penguins, this shouldn't effect the economy much. Trump also imposed a 10% tariff on the British Indian Ocean Territory, better known as the home of the joint US-UK military base Diego Garcia—and only that base, which does not export anything.
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| Penguins on Heard and McDonald Islands. Any goods they attempt to export to the United States will be subject to a 10% tariff. |
Trump claimed that the Council of Economic Advisors had generated the list and the numbers on it—which, again, are completely nonsensical. The odd inclusion of uninhabited territories suggested to some observers that staffers had simply used ChatGPT to auto-generate a policy based around Trump's deeply held (but completely false) belief that foreign countries "owe" the United States whatever the trade deficit between them is.
In addition to penguins, American naval bases, and various other uninhabited rocks, every military ally of the United States is on the list, including Ukraine. Russia, however, is not.
Why does this matter?
- The United States literally cannot afford this level of incompetence.
