After scolding Ukraine’s Zelensky in the Oval Office and then punishing Ukraine by cutting off U.S. intelligence data, threatening to remove thousands of Ukrainians from the U.S., and stalling military assistance, Trump is now, just an hour ago, threatening Russia with sanctions for waging an aggressive bombing campaign.
Yesterday, he posted this on TruthSocial:
“Based on the fact that Russia is absolutely ‘pounding’ Ukraine on the battlefield right now, I am strongly considering large scale Banking Sanctions, Sanctions, and Tariffs on Russia until a Cease Fire and FINAL SETTLEMENT AGREEMENT ON PEACE IS REACHED. To Russia and Ukraine, get to the table right now, before it is too late. Thank you!!!”
This stepped up aggression by Russia is a case of cause-effect based upon Trump’s own recent treatment of Ukraine, the literal cutting off of most aid to Ukraine following the February 28th Oval Office fiasco. Basically, Trump’s post-meeting abandonment of Ukraine made it possible for Russia to do the Ukrainian battlefield “pounding” by removing, for example, Ukraine’s access to U.S. military surveillance thereby allowing Russia to immediately lambaste Ukraine at will. Cause-Effect. When will his madcap foreign policies do the same, and how dangerous will be the result?
Yesterday, Trump levied a worldwide 25% tariff on steel and aluminum imports to the U.S.! Yes, the entire world. Most notably Canada, Mexico, both of them our longstanding allies and fellow NAFTA partners. It happens; it happened. It affects 21 Million tons of steel products; our 2023 supply of steel sourced in the U.S. was approximately 90 Million tons, including flat-rolled, mini milled, and tubular. Imported steel goods were, therefore, 19%, a significant amount. Below, I’ll have a look at the Canadian impact, but first:
The chart below shows the world share of steel imports for 2023:
As far as aluminum is concerned, Canadian imports (2024) provided the lion’s share, outpacing all other countries.
The total amount of all imports vs. steel and aluminum imports is illustrated to the left (2024 data). The wedge shows the amount we import worldwide, Canada’s portion of the wedge is smaller than the total, of course.
Thus, Trump’s targeted steel tariffs should have but a moderate effect on overall prices, but a significant impact on steel prices, but a larger impact on aluminum. And these products are not in general, final products, they are intermediate, used in the production of final products. The price increases that will occur during Trump’s tariffs will be passed along to the American public, as higher prices, and will contribute to overall inflation, particularly in auto production costs and consumer sales of the final products. And recall how maniacally worked up Trump was about “Biden’s inflation,” which was brief and directly related to COVID’s effects. Inflation now is running between 2.5 and 3%, within the Federal Reserve’s target rate. So, what does our daft president do to bring prices down as he promised his MAGAs he would do on “day one”? Well. he slaps on tariffs – worldwide – which will accelerate inflation. Of course. Indeed.
Tariff Man!
In truth, tariffs are a mixed bag, and often they do not meet the economic objectives of the country imposing tariffs, for example, aiding the development of home grown industries. Trump, however, has since his early middle age, not gotten the message. On the record, he famously said, “Tariff is the most beautiful word in the dictionary,” and dubbed himself “Tariff Man.” He thinks its an economic nuclear weapon.
Why? He is so dull he does not accept the axiom that tariffs almost always cause price inflation! He insists that tariffs are paid by the tariffed counties; they are not, they’re paid by the importer, and then passed along through the production pipeline as a price increase at the point of sale to consumers. Where is the crater sized hole in his brain? Certainly, he’s heard from many that he is dead wrong, but who in his present administration dares tell him? Could son Barron convince him, he’s probably had some high school level economics? No, Trump is so self-destructively certain and goofily confident that he’s ultimately wholly irrational, across the board. Reasoning with him is, in any practical sense, impossible. There’s no clear definition of how addled he is. But it’s a lot.
So, I expect his tariffs will backfire as the public and business interests (such as the automobile industry) speak loud and clear. Trump will likely try to periodically soften the blow to price inflation by suddenly reducing them, and by striking deals that exempt certain industries from the tariffs, such as agriculture and automobiles. This, of course will defeat the reason for tariffs. He’ll play at tariffs like a boy with a yoyo – up and down, in and out. In doing so he’ll cause massive economic uncertainty that may paralyze whole industries trying to plan their business choices. And this level of uncertainty is anathema to producing a stable economy, and stability is the holy grail of commerce. Trump’s yoyo grift is the tool of a boy, not a man. Certainly not a tariff man . . .
Two days before Trump placed a 25% tariff on nearly all goods from Canada (he placed a 10% tariff on energy and energy resources), Senators Coons (DE) and Kaine (VA) introduced legislation sure to raise Trump’s blood pressure. It’s a bill to restrict a president’s authority to impose tariffs on allies and free trade agreement partners by requiring the consent of Congress. Presently, presidents’ tariff authority is so strong as to be arguably plenary.
Here’s the joint statement by Coons and Kaine. Note that it was introduced two days before the tariffs were imposed. Chances for passage in a MAGA dominated House? Very iffy. . .
The Liquor Control Board of Ontario quickly addressed Trump’s 25% tariff on Canadian products, one of our staunchest allies. It is also a major trading partner from whom we imported $462 Billion in 2023, the year with the most complete data. Here’s what we imported, second only to Mexico. So, we’re talking 25% tax on American importers, that’s a very high tariff rate, which due to NAFTA, was approximately 2%. Now, we’re in a new world where an inept businessman is permitted to impose tariffs willy-nilly.
In any event, here’s an example of how quickly the Canadian Province of Ontario replied to Trump today. (The Liquor Control Board of Ontario (LCBO) is a government agency. It is a Crown agency that is owned by the Ontario provincial government. The LCBO is responsible for the sale and distribution of alcohol in Ontario.). The Premier of Ontario, the wonderfully cantankerous Doug Ford posted this on Twitter/X:
Assuredly, more will follow, and recall that the automobile business is a tripartite arrangement among us, Canada and Mexico. We may see price increases on cars very soon (like tomorrow), So, if you can, buy a new car today. . .
