Trump's tariff blunder will generate retaliation, retribution against an isolated U.S.
First, he has more than decimated U.S. stock markets so far. About 60% of Americans invest in these markets largely through pension and retirement funds. Second, on the current course, Trump has significantly increased the likelihood of an economic recession. But the third trick may be the most ominous.
By his isolating the United States from the international system through tariffs, profound questions have been raised about American commitments to allies and partners.
And even if the United States were to put these tariffs on a temporary hold, how long that would last is not an idle question. The United States simply is no longer trusted under Trump. And even if Trump were to relent on tariffs or they dropped after he left office, the damage could be irreparable.
Meanwhile, Presidents Vladimir Putin and Xi Jingping must be overjoyed with what Trump is doing. During the Cold War, the United States manipulated the Sino-Soviet relationship, eventually turning China against the Soviet Union. Today, U.S. administrations have tried to repeat this ploy.
Sadly, by imposing tariffs, Trump is achieving two geopolitical goals for Beijing and Moscow.
First, Russia and China are being driven closer by the need to counter the United States. Second, Beijing and Moscow will exploit this condition by drawing much of the international trading system closer because of tariffs that make doing business with the United States too expensive. The United States will become increasingly isolated by these geopolitical and economic shifts.
This means that trade with the rest of the world will become more expensive for the United States. Since 30% to 50% of all U.S.-manufactured products consist of foreign content, costs will be passed on to consumers as tariffs drive them up. One example shows why tariffs will not work.
The United States imports about$140 billion a year of products made in Vietnam. U.S. exports are about $14 billion. If tariffs are reduced to zero, the United States should buy more from Vietnam and Vietnam from the United States. Assume that is an increase of 10% by both. That will favor the imbalance. U.S. imports would rise to $154 billion and exports only to $15.4 billion, thereby increasing the imbalance.
What would China and Russia do? First, the BRIC states -- Brazil, Russia, India and China -- will draw closer. China will continue to expand its Belt and Road Initiatives, offering better trade deals in attempts to cut off U.S. influence. Russia, too, will use its energy and defense capabilities for external sales. Diplomatically, tariffs will generate retaliation and retribution against the United States. China and Russia will use this to their ends.
Meanwhile, the United States will be whiplashed by a triple whammy. The Department of Government Efficiency has so far created more disruption and damage to the agencies where it has landed than any savings or efficiencies that may have been achieved. If the extension of the 2017 tax cuts are made permanent, that will add about $6 trillion to the debt. And tariffs have already shed over $10 trillion from the markets, possibly inducing an economic recession or crisis.
The debt is $36 trillion now. It could rise to well over $40 trillion before Trump's term ends. So how is this not a geo-economic-strategic crisis and blunder of the first order? One casualty will be NATO, since Trump will demand greater defense spending at a time when governments will be increasingly hard-pressed to deal with this looming economic crisis. And the war in Ukraine persists as the Trump administration is favoring Russia. Otherwise, why is Russia excluded from tariffs?
As Trump has turned the Grand Old Party into Trump's Own Party, he has cowed Congress into fawning submission. Members of Congress must reread Article I, Section 8 of the Constitution that delineates its authority. These are the first three responsibilities:
• The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defense and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
• To borrow Money on the credit of the United States;
• To regulate Commerce with foreign Nations, and among the several states, and with the Indian Tribes
Then, Congress, do your duty!
Harlan Ullman is UPI's Arnaud de Borchgrave Distinguished Columnist, senior adviser at Washington's Atlantic Council, chairman of a private company and principal author of the doctrine of shock and awe. His next book, co-written with General The Lord David Richards, former U.K. chief of defense and due out late next year, is The Arc of Failure: Can Decisive Strategic Thinking Transform a Dangerous World? The writer can be reached on X @harlankullman.
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