Tariff Man is getting in over his head.
Tariffs were a prominent feature of Donald Trump’s first presidential term — and he’s running for a second term by promising a lot more where that came from. Trump says he’ll slap tariffs of 10% to 20% on most imports, with a 60% levy on imports from China. On some days, Trump slings even bigger numbers.
Trump says a lot of things that seem more like provocations than serious policy ideas. He likes to rattle establishmentarians with radical ideas. But Trump’s tariff plans are now boomeranging back on him and causing Trump himself to lose his footing.
When Trump does serious interviews, questioners always ask why the former president wants to hit ordinary Americans with a tax that could cost the typical household more than $2,000 per year, trigger retaliatory actions that harm American exporters, and generally roil the US economy.
Trump has a practiced answer — people in other countries pay the tariffs, so it’s not a problem — but that’s completely false and almost always unsatisfying to his interviewers.
During an Oct. 15 appearance before the Economic Club of Chicago, John Micklethwait of Bloomberg asked Trump if he was really willing to plunge the United States into the biggest trade war since the 1930s. Trump countered that his trade war would have a “massive positive effect” on the US economy. Micklethwait pressed on, pointing out Americans buy $3 trillion worth of imported goods each year and that new tariffs would immediately make all of those goods more expensive.
Trump explained that American factories would pop up to build all the imported products that are suddenly more expensive.
“That will take many, many years,” Micklethwait said.
“No, it’ll happen quickly,” Trump insisted. Then he argued that the higher the tariff, the faster US production will take root.
Trump digressed into ruminations on World War III, his friendships with foreign leaders, and multiple other things. Micklethwait steered Trump back toward Wall Street concerns that his tariffs would stoke inflation and pointed out that the pro-capitalist Wall Street Journal had bashed the idea.
Then it got personal. “What does the Wall Street Journal know?” Trump asked. “They’ve been wrong about everything. So have you, by the way. You’ve been wrong all your life on this stuff.”
Trump supposedly loves this sort of smackdown, where he can insult some elitist bothering him with boring policy questions. But when Trump gets pugilistic, it’s often a diversionary tactic. And in this case, Trump simply doesn’t have any happy talk to explain what will happen between the time he raises tariffs on thousands of imports and all those American factories sprout up in response.
Economists know exactly what will happen:
Prices will go up, Americans will pay more, inflation will go higher, interest rates will go up, and economic growth will slow. It takes years from the time companies and their investors choose to break ground on an American factory for assembly lines to start cranking out products. US production costs are often so high that even with tariff protections, building stuff in America can be cost-prohibitive. Trump could ratchet tariffs higher and higher on some goods and still there would be no American production.
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This is why Goldman Sachs, Moody’s Analytics, Oxford Economics, and many other forecasters predict Trump’s economic plan would be a net drag on the US economy. Business leaders often prefer the low-tax, deregulatory bent of Republicans, but aside from the mercurial Elon Musk, hardly any big company CEOs back Trump's economic plan.
Yahoo Finance recently ran an online survey and found Trump voters were broadly misinformed about tariffs. Of those who identified as Trump voters, 44% acknowledged that tariffs would raise prices, but felt other economic benefits would be worth it. Another 47% felt Trump’s tariffs would not raise prices at all. Among Harris voters, 97% agreed with economists who say tariffs would harm American consumers’ purchasing power.
Trump wants his backers to think he relishes such fights, yet he is increasingly shying away from them. On the same day as his standoff with Micklethwait, Trump canceled an interview with CNBC, which doubtless would have put Trump on the spot once again about his tariffs. Prior to that, he canceled an appearance on CBS’s 60 Minutes because he objected to being fact-checked.
Trump is opting for friendlier “town hall” venues, where supportive interviewers ask softball questions. That might comfort Trump, but candidates in the late innings of tight races normally court all the free media they can get. Trump’s Democratic rival, Kamala Harris, is doing that, with a Fox News interview scheduled for Oct. 16.
Trump’s tariffs, meanwhile, seem to know no bounds. On Oct. 13, Fox News’s Maria Bartiromo — a Trump ally and occasional mouthpiece — asked about his threat to impose a 200% tariff on any Chinese-branded car made in Mexico. “That’s only going to mean higher prices for consumers,” Bartiromo said. “It’s got to be passed on somehow.”
Trump seemed unconcerned. “Put 200 or 500,” Trump said. “I’ll put a number where they cannot sell one car.”
At some point, a tariff so high that nobody can sell a car means nobody can buy a car, either. But let’s not talk about that.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on X at @rickjnewman.
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