Better off reading Faisal Islam’s analysis on the bbc

In depth article up today, which is very good.

What Trump maybe trying to achieve is to reverse what Faisal calls the China Shock on trade, to bring jobs back to the US.

Thing is, while these tariffs might be somewhat successful at achieving that goal in the long run, the cost elsewhere will be mighty. There will be no more cheap goods anywhere in US shops. Apparel, electronics, basic goods, basic commodities are all going to increase in price, in some cases steeply. The ordinary person in the US is going to feel SO much poorer as soon as these tariffs flow though. Inflation, declining purchasing power, falling demand, companies holding off investment and hiring.

And because US workers won’t work for a dollar a day, it’s likely that the US factories that spring up eventually to replace imports will invest heavily in capital and automation. So there won’t be that many jobs created anyway. You can’t make the 1950s happen again, because the world has changed in so many ways.

The economic truth of comparative advantage is so powerful, there’s just no way this policy of protectionism can make up for the loss. What’s most mad, is that this process of globalisation has fuelled unbelievable growth in the wealth of ….the United States. Of all nations, the US may have done the very best from the whole process. The issue is rampant inequality, it’s a failure to share the benefit of globalisation fairly. So a few win massively, most win a good amount from incredibly cheap goods and services, but if you lost your job to offshoring you will have lost big time. The answer is in simple social policy, to scoop up those people and take care of them, to retrain them and give them decent jobs to move to. It’s not blowing up the system that has made the US essentially the most powerful economic entity on earth.

People who have studied business, economics, finance all know this. And Trump saying it’s going to be fine won’t change the reality. It’s why stock markets fell so much. It’s just going to make everyone in the US in particular poorer.

Posted By: Under soil heating on April 6th 2025 at 11:56:54

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