‘Tariff Man’ Trump does not understand basics of trade

your say December 07, 2018 01:00

President Trump and President Xi have finally met and agreed to a 90-day truce to avoid, for the time being, the 25-per-cent tariff threatened by the US on all Chinese goods.



Uncertainty emanating from the tariff crisis after Trump’s on-and-off threats is turning the global economy upside down.

When President Trump tweeted on Tuesday that “I am a Tariff Man....It will always be the best way to max out our economic power. We are right now taking in $billions in Tariffs. MAKE AMERICA RICH AGAIN”, people began getting more worried and puzzled. Trump doesn’t seem to understand that tariffs collected by the government are generated from the US businesses importing those goods, and eventually from the pockets of US consumers, not from China. 

The Dow Jones stock market index dropped by nearly 800 points on the same day, but not only because of the tariff uncertainty. For the first time, the US treasury yield curve is “inverted”, which means the long-term interest rate is falling below the short-term rate. In this case interest for the two-year bond is higher than for the 5-year bond – a sign of a possible recession.

When will the credulous followers of the US president start to realise that this is not a reality show for Donald Trump. All his unpredictable acts and conceit will sooner or later threaten the global economy with catastrophe.

Yingwai Suchaovanich