Tariffs And Incoming President AOC

Yes it could happen

It’s time to talk about tariffs, and what we are all really risking here. I’ll start by saying the United States certainly has some legitimate trade complaints with various countries China being high on that list. You can also genuinely complain about European autos or Japanese rice or any number of other individual trade issues.

But it isn’t as if there are not similar complaints about US trade policy. For example tariffs, and protectionist trade policy have Americans paying more than twice what other countries pay for sugar because sugar beet farmers in Minnesota and sugar cane farmers in FL are really good at lobbying. Overall it’s fair to say that the United States is somewhat more lenient in aggregate than our trading partners when it comes to imports, but somewhere between that reality and 24% tariffs on Japan we cross into the land of dipshittery.

That said I’m not going to spill massive ink going line by line on whether large tariffs are a good idea. Suffice it to say you will find many such pieces floating around very few of which are supportive of these tariffs. For the record I am in the “this policy is dipshittery” camp. Also for the record my position is the overwhelming one.

That doesn’t make me right of course, but when pretty much everyone who actually knows anything thinks this is a bad idea it’s a good time to pause and reflect. Is it possible that maybe just maybe on this one issue Trump and his tariff policies derived on a third grade take home math worksheet are wrong and everyone else is right?

And if he is wrong I’d suggest it’s a good idea to contemplate what that might mean in practice.

First let’s take the fact that even tariff proponents seem to acknowledge the likelihood of short term economic pain.

Now look at some of the economic headwinds we already have.

Flattening federal spending

Deportation of illegal immigrants

Federal employee layoffs

The significant drops in the stock market

Cutting spending, firing government employees, and deporting illegal immigrants in varying degrees are all things I believe need to be done, but all of them do reduce economic activity. It’s money not being spent. It’s people getting fired, and getting fired doesn’t poll well. In fact 100% of voters who are not young female members of Andrew Cuomo’s staff oppose losing their jobs.

Now consider the Atalanta Fed provides a real time model of GDP as economic data is released. Their current estimate before the effects of these tariffs is for GDP to fall 1.4% in the first quarter.

The point here is that we are already facing what can be fairly called some dark economic clouds. We’re also sailing straight into that stormy environment on the good ship “let’s try something economically random”.

Implementing random heterodox policies is not Donald Trump’s strong suit. Keep in mind that prior to 2020, lockdowns were not considered an appropriate response to a respiratory virus. That means the last time the Trump administration ran with wacky unorthodox ideas was when it backed lockdowns as a remedy for Covid. Let’s just say the resume here when going off script leaves something to be desired. There is reason to be skeptical.

The problem with going outside conventional wisdom is you are held completely responsible for the consequences. Group think exists for a reason. If everyone is wrong the same way you can simply argue you didn’t know better, and everyone else got it wrong too. Go against the grain, and you earn 100% of the blame. That’s why virtually no governor had the courage to oppose covid lockdowns. It’s why every analyst will recommend NVidia stock at any price as long as other analysts are doing the same.

If Donald Trump is wrong here the consequences are a nasty recession. The political consequences for presiding over a recession tend to be voting for something completely opposite of what you currently have. I’d argue those consequences are even worse if they are the result of something everyone told you was idiotic from moment one.

Take a look at this chart below from a study on the expected impact of tariffs.

What it predicts is that the economic hits from tariffs start to really bite 3 to 4 years after implementation with a hit of approximately 0.4% for each 3.6% increase in tariffs. Our increases are about 6 times that.

And when would the worst hit? Right around the 2028 election.

The last time you had a deep recession you replaced GW Bush the Simian Scion of the CIA with a hard core progressive in Barack Obama. Democrats ran one of the more ideologically extreme members of the party, and won because when the existing party fails voters are happy to vote for something as different as possible.

What might that look like in 2028?

I present President OnlyFans

In some ways President AOC is completely logical. The Republican’s elect a reality star prone to saying really stupid things. The Democrats elect someone who was born to be a low brow influencer, and also says stupid things. He’s old she’s young, Trump was largely the biggest middle finger to the crazy left that voters could conjure up. If we are mired in a recession because it turns out everyone else was right, and Trump was wrong, it’s hard to imagine a bigger middle finger than AOC, and much like Trump she is adored in her party.

Imagine the media swooning:

First female president

First Latina president

Youngest president ever

It’s brat summer times 50.

And the talking points are obvious.

For the second time Republicans have driven the economic car into the ditch, and it’s up to democrats to bail them out once again.

I think that line of argument works. Politically speaking the president gets credit or blame for the economy. This is doubly so when you implement policies everyone told you were a bad idea from moment one.

If you are one who is mindlessly cheering for these policies I would at least consider the possibility that Trump isn’t your savior. He’s more like John The Baptist heralding the coming of our Lord And Savior President Only Fans.

At the very least implementation matters.

Oh look other countries are negotiating now. Trump is playing 4d chess. It’s working!

I’m no expert, but I think it might be smarter to negotiate first, and launch the economic nukes when that fails not the other way around. If other countries were willing to negotiate the day after “liberation day” they were probably willing to do so the day before as well. There is a real order of operations problem here where we’ve already done economic damage when it may not have been necessary.

I’m sure it’s all been very satisfying to those who want to own the libs or Davos or whoever, but it was not smart, and when you are making massive changes, against a backdrop of inpatient voters largely unwilling to tolerate economic pain it’s pretty damn important to be smart about it. Driving policy by popping off on Truth Social for likes and dopamine hits is the opposite of that. His supporters should expect better even if he is 100% right on trade.

And the smart money says he isn’t.

You’d better hope he’s right because I’m genuinely not sure we can survive a dumpster fire economy run by a reality show host followed by an economy run by a socialist bartender.

And that is a genuinely plausible outcome.