Paul Hennessy/Getty Images. The president’s decision last year to slap tariffs on goods from countries around the world and drag the U.S. into a trade war with China hasn’t gone super well for America. The farmers whose profits have been destroyed as a result know this. The manufacturers who have had to lay off employees and move production overseas know this. The consumers who paid $3 billion a month last year to finance the tariffs know it, too. One person who doesn’t? Donald Trump,who lives in his own alternative reality and still thinks this whole thing is going great. On Tuesday, after China responded to the latest round of tariffs with fresh punitive measures of its own, the president claimed that “Tariffs have rebuilt our Steel Industry” (fact-check: false); that “Our great Patriot Farmers will be one of the biggest beneficiaries of what is happening now” (fact-check: false, and weirdly Soviet); and that we will be “moving jobs back to the USA” (fact-check: false again!). Alarmingly, while Trump previously appeared to view tariffs as a negotiating tactic, he now seems to believe they should be permanent economic policy, despite his own advisers admitting they’re hurting not just China but the U.S.: In tweets and other public utterances in recent days, Trump has hailed his tariffs, claiming they have helped power U.S. economic growth, and repeated over and over again that other countries such as China foot the bill, a view even his own economic advisers are uncomfortable defending. Trump is also displaying a preference for his tariffs over his own deals. Among the major hurdles to a congressional vote to ratify his renegotiated version of the North American Free Trade Agreement are the steel and aluminum tariffs that Trump imposed on products coming from Canada and Mexico.
Those tariffs have invited retaliation against U.S. agricultural exports, such as corn and pork, that [is] hurting U.S. farmers. They also have caused senior Republicans like Chuck Grassley, the powerful head of the Senate Finance Committee, to say they will block any vote for Trump’s rebranded NAFTA, the U.S.-Mexico-Canada Agreement. But Trump has refused to bend unless Canada and Mexico agree to other trade restraints with new investment in domestic steel mills and aluminum smelters, one of the benefits of Trump’s trade wars the president is most eager to tout.
While an obsession with tariffs certainly hurts the U.S. economy—Moody‘s analysts predict Trump’s threat to hit virtually all Chinese goods with a 25 percent levy “would slash U.S. real G.D.P. by 2.6 percentage points”—experts say the never-ending counterattacks would likely be detrimental to the global economy, too, causing a painful economic slowdown that could tip the country into a recession. “I’m with most economists and I think tariffs and a reduction in free trade are going to be a bad outcome for all involved,’’ Stephen Gallagher, chief U.S. economist at Societe Generale SA, told Bloomberg. Gary Hufbauer, of the Peterson Institute for International Economics, noted that while it might be easy—if not entirely misguided—to slap tariffs on imports from other countries, it’s a lot harder to take them off, pointing to a tariff that was introduced in the 1960s to protect U.S. light trucks from foreign competition and has never been removed.
Meanwhile, China appears to be in this thing for the long haul. On Tuesday, its state media released a clip effectively saying the country’s been through a lot worse than some bloated real-estate developer with a Twitter addiction. In a clip from state broadcaster CCTV that went viral, an anchor asks, “After 5,000 years of trials and tribulations, what kind of battle have the Chinese not been through?”
The video, which has been viewed more than 3.3 billion times, underscores how China wants to portray itself as playing the long game in the trade battle in contrast with President Trump, whose re-election next year could be at risk if voters perceive the trade war negatively. Meanwhile, the People’s Daily, the official newspaper for China’s Communist Party, posted a photo captioned, “This, is China’s attitude!” CNBC’s translation of the Chinese phrases in the image reads: “Negotiate—we can! Fight—bring it on! Bully us—YOU WISH!”
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