President Donald Trump has announced sweeping new tariffs on most goods imported into the U.S. from abroad. His flat 10 percent levy on all imported products and services came into effect on Saturday. Starting Wednesday, American tariffs will rise higher, in some cases quite dramatically so, on the European Union, China, India, Vietnam, and some of our Asian allies such as Japan, South Korea, and Taiwan—which have for decades unabashedly run large trade surpluses.
The resulting 10 percent drop in the stock market over two days last week, to early 2023 levels, has prompted hysteria of the sort not seen since 2008. The more the American Left—not long ago, passionate advocates of Trump-style trade fairness—seeks political advantage through roars of outrage, the more recalcitrant Europe and Asia delude themselves into thinking the blinkered American people surely must prefer the good old days of insidious trade deficits to the current chaos.
So, what is the logic behind the Trump tariffs? Why are they incurring such invective? And why is he willing to take such political risks in a fashion that no prior Republican administration had dared?
Let me explain.