When Donald Trump was running for president, the most common reason I heard that people were voting for him was for the economy. However, while the economy is currently steady, the tariff war started by Trump is set to lead to an economic downfall.
Goldman Sachs currently predicts that the probability of a U.S. recession is 35% within the next year, citing policy uncertainties and increased inflation due to the tariffs.
Arthur Laffer is an economist honored by Trump. Laffer warns that the proposed 25% tariffs on auto imports could add approximately $4,700 to the cost of a vehicle, potentially weakening the competitiveness of U.S. automakers.
Jan Hatzius, the Chief Economist for Goldman Sachs, said that economists believe upcoming tariffs to be announced on April 2 hold a greater risk “than many market participants have previously assumed.”
So, why is Trump doing this?
To appear to be “for the American people.”
Trump stated that these tariffs were due to the American people relying too much on foreign nations for goods. Thus, he decided to impose large taxes on foreign goods to promote American products.
For Trump and other American citizens in upper income groups, it does not matter how much of an increase in cost certain items may have.
“I couldn’t care less if they raise prices, because people are going to start buying American-made cars,” Trump said on a phone interview with NBC News. “If you build your car in the U.S., there’s no tariff.”
The tariffs will begin on April 3, and as of now the Trump administration states that they will be permanent. He shared his belief that the United States could collect upwards of $100 billion in revenues.
Since Trump’s announcement, shares of the top United States automakers have fallen sharply with General Motors down more than 7%, Ford off 4.6% and Stellantis lower by 4%.
Former Vice President Mike Pence shared his opinion on the tariffs in March on X.
“Tariffs are good as a means to bring nations like China to the table, but free trade lowers the costs of goods and improves the quality of life for every American,” Pence said.
I agree with Pence’s stance on this topic. While tariffs can be useful in influencing nations like China into negotiating better trade deals, or altering their unfair trading practices, free trade practices tend to be beneficial for overall economic conditions.
If Trump wanted to make an economic decision for the American people, he would recognize that the majority of the American people would benefit from lower average costs.
In addition, countries that trade more tend to grow faster due to increased production and efficiency. Thus, a free market would improve the economy without these additional tariffs. As economies grow through trade, wages tend to rise, and increased access to affordable goods improves the overall quality of life.
Trump’s policy on tariffs is not for the average American person. Rather, it is aimed to benefit the wealthy and American-owned companies. Like many of his policies and orders throughout his first term in office and over the past months, the American people are at the back of his mind, while he makes decisions that will continue to exclusively benefit him, the wealthy and his donors.
