Trump takes the dumbest tariff plunge

President Trump likes to cite the stock market when it’s rising as a sign of his policy success, so what does he think about Monday’s plunge? The Dow Jones Industrial Average took a 650-point header after he announced that he’ll hit Mexico and Canada on Tuesday with 25 per cent tariffs.

Mr Trump said at the White House there was “no room left” to negotiate with the two American trade treaty partners. Some of his smarter advisers have been hoping he’d start renegotiating the USMCA and delay the tariffs. But Mr Trump wants tariffs for their own sake, which he says will usher in a new golden age.

We’ve courted Mr Trump’s ire by calling the Mexico and Canada levies the “dumbest” in history, and we may have understated the point. Mr Trump is whacking friends, not adversaries. His taxes will hit every cross-border transaction, and the North American vehicle market is so interconnected that some cars cross a border as many as eight times as they’re assembled.

Mr Trump also objected when we reported an analysis by the Anderson Economic Group that the 25 per cent tariff will raise the cost of a full-sized SUV assembled in North America by $9,000 and a pick-up truck by $8,000. Is this how the new Republican Party plans on helping working-class voters?

Mr Trump is volatile, and who knows how long he’ll keep the tariffs in place. Retaliation that hits certain states and businesses may also cause him to reconsider sooner than he imagines. Investors are trying to read this uncertainty as they also watch growing evidence of a slowing US economy. Unbridled Tariff Man was always going to be a big economic risk in a second term, and here we are.

The Wall St Journal