Donald Trump stumbled into another meme last week when, during a cabinet meeting, he played down the domestic economic implications of astronomical tariffs on China by suggesting American children may have to make do with fewer toys, at least for a while.
“Maybe the children will have two dolls instead of 30 dolls, you know?” he mused. “And maybe the two dolls will cost a couple of bucks more than they would normally.”
The jokes write themselves, and there are so many of them (jokes) that it’s impossible to decide where to start — which one to tell first. So I won’t bother.
Cringeworthy as Trump’s doll example was, he’s not entirely wrong. Critics (a group that obviously includes me) are certainly correct to assess that 125% eye-for-an-eye, across-the-board tariffs between the world’s two largest economies is a ruinous proposition, but to posit that is to construct a straw man.
Both sides (i.e., Washington and Beijing) have carved out any number of exemptions and exceptions already, some of which are formal others not. And the very fact that a triple-digit tariff war between the US and China would be economically catastrophic for both nations is itself insurance against a scenario where duties are sustained at such levels for more than a month or two.
Will the effects of this tiff be felt in the US come Christmas? Maybe. Are the Walmart shelves going to be bare and will the little girls have to make do with dolls their mothers made from old rags stitched together around pillow stuffing? No. That’s ridiculous, and shame on people like me for suggesting as much.
But (and I should probably capitalize that), good on people like me for sounding the alarm. Because logical fallacy or not, sometimes you need to hear the straw man argument to understand the stakes. That’s especially true when you’re dealing with someone like Trump who won’t shoot you straight (unless it’s in the middle of Fifth Avenue).
It’s one thing to say, as a minority of observers have, that tariff hand-wringing’s overdone. It’s another thing to discount entirely, as some of those same observers tend to do, the psychological toll this senseless charade’s taking on American households, regardless of political persuasion. Have a look at the figure below, from the latest installment of Morgan Stanley’s consumer survey.
That’s the net domestic macro view (i.e., share expecting the economy to get better less the share expecting it to get worse) broken down by political affiliation. Focus on the blue and green lines.
Independents (“middle of the road” voters) were more or less split on the outlook just after the election. Today, a mere six months later, a net 28% of those voters harbor a pessimistic view. More concerning is the precipitous drop in the net share of Republicans who expect the economy to improve. It was near 60% post-election. Now it’s just 28%, and the trajectory’s an almost uniform, steady decline.
Whatever the reality of the tariff impact turns out to be six months hence — i.e., eating boiled shoe leather or merely making do with fewer Barbies — the reality right now is that Trump’s scaring the sh-t out of people, if readers will forgive the lapse into a colloquial cadence.
The charts below are from the same Morgan Stanley survey. On the left is a net measure of near-term spending plans. 27% of consumers surveyed expected to spend more versus 22% expecting to spend less over the next month, for a net 5%, tied for the lowest reading in four years.
The figure on the right shows the breakdown by income cohort. The spending outlook among those making less than six figures hasn’t been this bad since late 2020 — i.e., before two more rounds of stimulus checks went out to most American families.
I suppose you could argue that’s a good thing to the extent it suggests the pull-forward effect which can create a self-fulfilling inflation prophecy isn’t on the cards, but that’s a torturous way to go about finding a silver lining.
To reiterate, the problem with attempts to downplay the threat from Trump’s economic policy proposals is the same as similar efforts to soft-pedal the threat to democracy from his domestic political agenda.
I can sum it up with a hypothetical exchange between a Trump apologist and someone like me. “It’s not actually going to turn out that bad,” the apologist would say. To which I’d reply: “Well Jesus Christ, I certainly hope not!”
125% on China can’t last indefinitely, but if it lurches its way to 50%, that’s pretty “bad”. Just 10% tariffs on ROW might be optimistic. Deals coming fast and hot starting imminently might be optimistic. Trump can’t stop coming up with new tariffs – movies, re-nego’ing USMCA, Iran oil customers – and whatever adults are in the room can’t shut him up.
While we are mesmerized by our one-sided tariff negotiations, here comes another win for all Americans!
https://www.marketwatch.com/articles/moderna-pharma-stocks-fda-vaccine-regulator-64d9137d?mod=watchlist_latest_news
I am looking into how to get my fall Covid shot in Canada . . .
It is bad. I might not kill us, but it is bad. All of it.
People have downplayed the tariff threats in numerous ways that time has proven wrong. ie they’re a negotiating tactic, smart guys like Bessant will talk some sense into him and he’’ll quietly backoff and negotiate realistic deals behind closed doors. If you’re paying attention, it’s clear those are all false hopes. The king wanna be is hellbent on driving the car off the cliff because he’s been sure since he was 6 that cars can fly if you just give them the chance. Now that dementia has arrived, no one is going to change his mind. There is one hope; they make him pope and he decides it’s a better gig than playing president.
It all feels a lot like ignoring/rolling back the efforts to halt climate change, i.e. the outcome isn’t determined, however it’s a really, really risky bet. Playing with matches in a hay-filled barn risky. Just plain stupid. Especially because the ‘bet’ isn’t even warranted, needed, nor will it get us something better even if it doesn’t blow up in our faces.
The transcript of today’s reception in the Oval Office clearly documents Trump’s progressing dementia – incomplete thoughts and sentences, meandering, loss of focus, memory loss, etc. Then Bessent’s sheepish inability/refusal to explain who pays for tariffs. Hegseth cancelling Ukraine’s munitions on a whim. Think on it: This has to be the scariest time ever in US history, as Americans mostly stand by and watch.
Not true! Chuck Schumer just wrote the Administration another “very strong” letter with multiple “very strong” questions I think he’ll have us back on the right track in no time.
All Americans should be forced to watch Trump answering the question “Do you think you need to follow the Constitution?” with his answer of “I don’t know”, and his answer of what the Declaration of Independence means to him and he answer’s “a letter of love, and unity”. The man is an idiot, and his loyal base doesn’t know it because clips like that never make it on to Fox or Newsmax.
Yeah, he literally doesn’t know why this country exists, which is to say he doesn’t understand what it was the Founders were revolting against. I doubt very seriously that he could recount basic facts about the Revolutionary War which, incidentally, makes him less informed than his base. Having lived in and around rural areas of the South, I can tell you that even if they don’t know anything else about the founding (and they generally don’t), a fair share of the lifted F150 crowd does have some vague conception of the extent to which the whole point here is that we don’t have a king. Unfortunately, they can’t connect the final dot between that and Trump posting pictures of himself wearing a crown on social media.