What is there more to be said about the US tariff increases that President Trump introduced just now? Commentators and economists have extensively explained the stupidity of the measures. But maybe a few points are less obvious.
- The primitive “analysis” that led to the tariff specifications seems to be based entirely on goods trade statistics, even though services trade makes up a large part of total trade
- The idea that the only way to get rid of a deficit is to achieve balance with every trade partner is absurd.
- The plan seems to be premised on the US revenue increase that will result from the tariffs. This will then allow for compensatory measures in the tax system. But if the objective is to encourage more production in the US, this would eliminate the revenue from the tariffs. And the tariffs will not yield revenue when the US consumer decides not to buy, or the foreign exporter decides to sell elsewhere.
- The measures have further undermined any idea of “the rules based international order”. They have pushed the WTO into further irrelevance, and the OECD along with it.
- The idea that this is the end of globalisation is absurd. More globalisation is inevitable. But it will just be harsher.