Trump’s El Dorado tariffs moving beyond rational plan

Tariffs are a tax on the citizens of the country that imposes them. The cost of the goods coming into the US for consumption by Americans will go up by the amount of the tariff plus the profit margin to cover the costs of the US businesses that distribute them.

The benefit of the tariff is that it encourages US businesses to start or expand their manufacturing capability and replace those imported goods. But this doesn’t happen overnight. To build new factories and establish manufacturing output and supply line logistics takes many years. It also assumes that the tariffs will last for many years.

The new capital investment required to create new production capacity is expensive and if, as is likely, those tariffs will not continue after the term of President Donald Trump, those factories may never be built. Some expansion of existing operations will most certainly occur. But the huge financial and time investment required to replace all those imported goods will just not happen.

Walmart imports a great deal of what it sells, mostly from China. If the price of all those goods rose by 50 per cent or more, the cost of living would escalate and the ability of Americans to function financially would be difficult.

This would lead to a drop in demand for the goods followed by a drop in demand for labour and a downward spiral towards economic recession.

A recession in the US will spill over to Australia, which is why the prediction of most Australian economic commentators is that interest rates will drop. As good as that may seem, it reflects a much greater potential problem with the economy.

Bruce Williams, Merewether, NSW

Robert Gottliebsen (“Economic reason in Trump’s trade madness”) is to be congratulated for clarifying the reasoning behind Trump’s tariff war.

The US clearly has been taken advantage of in its international trade balance, but it’s a pity that its administration has not calmly explained the rationale for its seemingly aggressive tariffs.

Ralph Hilmer, Randwick, NSW

Where does Donald Trump think he’s going to get all the workers when he turns the US into a manufacturing powerhouse again via his tariffs on imported goods? Bring them back from Venezuela or wherever he has deported them to, or simply release them from detention centres? Good plan, keep them out of the US or locked up until you need them. Unfortunately, many of them will probably be too old to work by then.

W. Chapman, Upper Lansdowne, NSW

I am confused. Why would Donald Trump resort to a recipe straight from the alchemist cookbook to attempt to stop the course of globalisation? Weird, when back in the 1980s the US actively sought all nations to scrap tariffs and asked China to westernise with a view to dominate China economically. That went horribly wrong. And so will Trump’s foray into the mythical land of tariff El Dorado.

Jim Millett, Kippa Ring, Qld

Kerry Packer famously gloated: “You only get one Alan Bond in your lifetime, and I’ve had mine.” Similarly, with the US President’s tariff policy driving friend and foe alike into the arms of China, Xi Jinping must be thinking that you only get one Donald Trump in your lifetime, and I’m having mine.

Shaun Miller, Prahran, Vic

Many “experts” have already given their grim opinion of Trump’s tariff moves. However, as with the Melbourne Cup, the early jostling is dour and difficult but we’re not quite at Chicquita Lodge yet and the long Flemington straight stretches before us, with the ultimate winner unknown.

Rosemary O’Brien, Ashfield, NSW

Will Glasgow is on the right track on Trump economics (“Ducking Donald’s punches may have been a wiser move”, 9/4). Yes, “leadership cults around Trump” and “obscene ego” are key factors.

As we watch the US President’s White House gatherings with international leaders, we see Trump surrounded by his cabinet. Trump is trying to say: “See how important I am.” He’s wasting the time of his cabinet, which has better things to do than fawn over him. Trump has created a bubble of like-minded followers. He is left without sensible counterbalancing advice. His ego is his downfall and that of international trade.

Lee Smith, Kenmore, Qld