‘What the hell is going on?’ That anxious wail of economic incomprehension has been heard ever since President Trump decided last January to impose tens of billions of dollars of tariffs on China and other countries, including Canada, Mexico and the member states of the EU.
The wail went up another octave last week as the White House announced a further $200 billion in tariffs. Among the politicians and think tanks of Washington DC, where I have spent the past few days, there is talk of little else; talk rendered more feverish by the prospect of midterm elections in November.
A hundred billion here, a hundred billion there — pretty soon we could be talking real money. Include retaliations from the other side, fold in a goodly measure of escalation, and the world’s first trillion-dollar trade war is not an impossibility. That’s quite a thought.
So then: what is actually going on here? Having learned to take the President seriously, orthodox academic and policy opinion is now learning to take him literally, in his stated desire not merely to address what he sees as unfair trade practices, but to bring back supply chains and reindustrialise America.
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