The Tariffs Are Coming For Us All— Except The Billionaires Who'll Just Get Richer And More Powerful

Mark Zandi Isn't Talking To Musk; He's Talking To You: “I’d Brace For Impact”

Professional Republicans— in Congress, in the Trump regime, in the states— are still rallying around Trump’s tariff regime. But that is going to bite them… hard: When Americans feel pain, presidents get the blame. This time, though, it’s not only going to be a president suffering; it’s going to be the groveling worms called the Republican Party.

And it isn’t going to be “a bit” of pain for the American people as Trump and his enablers have been predicting. It’s going to be the kind of pain you feel from a root canal— if not chemotherapy. Yesterday, Jeff Greenfield wrote that “The president who had promised in his Inaugural Address that ‘the Golden Age of America begins right now’ was all of a sudden suggesting that ‘there will be a little disturbance, but we’re OK with that.’ Trump’s economic team also chimed in; his Treasury secretary said the economy might need a ‘detox’ period, while his billionaire Commerce secretary said a recession would be ‘worth it’ (and also that his mother-in-law would not mind missing her Social Security check).” Lutnick’s mother-in-law is wealthy and Lutnick is already the designated fall guy when the tariff plans explode in their faces.

Greenfield noted that “Trump is moving to impose massive additional tariffs this week, and consumer confidence is plunging as vertiginously as the markets. Economic forecasters are issuing growing warnings of both recession and inflation. Will Americans heed Trump’s request for forbearance? When it comes to the economy, the emergence, depth and reach of hard times will become clear in the coming months. But as a political matter, history shows that it is highly dangerous for a president to offer the prospect of sacrifice in the cause of long-term benefits. Even when the case for suffering is due to a legitimate threat to national survival, Americans are a lot more willing to endure the theoretical impact than the reality. Trump, in fact, may be even more likely than his predecessors to bear the brunt of the public’s impatience.

Trump and his team have seemingly begun to prepare the public for some necessary sacrifice, though if the economic pain lingers in the coming months, he might change course rhetorically. It seems just as likely he’ll start arguing that any suffering should be blamed on previous presidents, or the media, or somehow another favorite target like immigrants.

But there is one aspect of potential hard times that is different from the challenges other presidents encountered. FDR faced a powerful enemy bent on conquest. Carter faced an energy crisis largely because of a foreign oil cartel. George W. Bush faced a stateless terrorist force.

Trump also likes to position himself as a wartime president facing national emergencies— but unlike his predecessors, his enemies are those of his own creation. (Canada? Really?)

The travails that may come in the days ahead— whether it’s tariff-triggered inflation and layoffs, or chaos at the Social Security office and the spread of disease as vaccination rates fade— all of this and more would be the direct consequence of actions taken by the Trump administration itself. Perhaps Trump could weather some backlash amid today’s sharp political polarization.

Still, if Americans tend to be impatient with sacrifice, how much less patient will they be if the cause is coming from inside the house?

And without any semblance of national purpose or unity. These are tariffs that may help Trump’s billionaire buddies like Musk and Lutnick but they’re viewed as being done on the backs of working families, many of whom elected Trump to the White House on promises of good economic times, not a recession, higher prices and inflation.

This morning, Paul Krugman wrote that he doesn’t “know exactly what will be announced later today. One safe prediction, however, is that over the next few days we’ll see many news analyses purporting to explain the thinking behind this radical change in U.S. policy. Such analyses will be a waste of time, because there’s nothing to explain. I’m not saying that the Trump team’s thinking is unsound. I don’t see any thinking at all.”

I don’t know how many people realize that the administration’s case for tariffs is completely incoherent, that it has not one but two major internal contradictions.

Here’s the story: Trumpers are claiming that tariffs

1. Won’t increase prices, because foreign producers will absorb the cost

2. Will cause a large shift in U.S. demand away from imports to domestic production

3. Will raise huge amounts of revenue

If you think about it for a minute, you realize that (1) is inconsistent with (2): If prices of imports don’t rise, why would consumers switch to domestically produced goods? At the same time, (2) is inconsistent with (3): If imports drop a lot, tariffs won’t raise a lot of money, because there won’t be much to tax.

So the public story about tariffs doesn’t make any sense. And Trump’s rants about tariffs go beyond nonsense.

…There can’t be any secret agenda behind the Trump tariffs, because there’s nobody around Trump with the knowledge or independence to devise such an agenda. This is all about Trump’s gut feelings. A White House official told Politico that he likes the “shock and awe,” and that

Each country needs to panic and call… Trump wants to hear you grovel and say you’ll cut a deal.

Since most of our trading partners aren’t in a groveling mood, trade war seems inevitable.

You might imagine that Trump will back off if his tariff gambit goes as badly as seems likely. But I don’t think he will, because his team of sycophants will tell him things are going great.

The Economist reported that there will be nothing liberating about what Trump is trying to market today as Liberation Day. “Over the two months since returning to the White House, Trump will have brought America’s overall tariff level to its highest since the second world war, setting the country up for slower economic growth, higher inflation, more inequality and, quite possibly, fiscal trouble… Trump seems to be giving scant regard to any blowback. A sputtering stockmarket, for example, does not worry him as it did in his first term. He believes he is doing what he must to rebuild American manufacturing. And Liberation Day is almost certainly not the end. Trump has talked of more sectoral tariffs, covering everything from semiconductors to pharmaceuticals. If other countries retaliate, as they will, Trump has vowed he will strike back. Some believe he ultimately wants to bring countries to the table, to reset economic relations... Goldman Sachs at first thought the hit to America’s year-on-year growth rate from Mr Trump’s tariffs would peak at 0.3 percentage points. Yet with the president’s increasing aggression, the bank’s analysts now think it will peak at 0.8 percentage points, and could reach 1.3 percentage points if he continues to escalate. Inflation will rise, too, especially in the short run. Deutsche Bank reckons that, if Trump goes for maximal levies, he could add 1.2 percentage points to the inflation rate, pushing it above 3% in year-on-year terms. Surveys show that consumers think inflation may run as high as 5% in the next year.”

After his thorough rejection by Wisconsin voters yesterday, Trump is deathly afraid of losing in the Senate in his crackpot new trade war with Canada. Last night he attacked Susan Collins, Lisa Murkowski, Mitch McConnell and Rand Paul as "disloyal."

For someone who supposedly graduated from Wharton Business School “Trump talks of tariffs as a rich vein of revenue for the government. Yet there is a paradox here: if tariffs do encourage firms to move factories to America, that will reduce the revenue the levies bring in… Tariffs cause big economic distortions. Their benefits are captured by inefficient producers, who gain from higher prices at the expense of consumers. There is also a political concern. Firm in his belief that tariffs are a fount of revenue, Trump wants to use them to help cover the cost of aggressive tax cuts later this year. These cuts will come at a time when America’s budget deficit is already worryingly high and rising. If America becomes fiscally dependent on tariff revenue, they will be harder to remove, despite their economic costs. Liberation Day may go down in the history books— not as the celebration that Trump intends but as economic malpractice of the highest order.”

Yesterday, Jeff Stein and David Lynch reported that with 20% of American imports falling under Trump’s tariff plans, “the plan is likely to send shock waves through the stock market and global economy. Assuming that permanent tariffs took effect in the current quarter and triggered robust retaliation by U.S. trading partners, the economy would almost immediately tumble into a recession that would last for more than a year, sending the jobless rate above 7 percent, according to Mark Zandi, chief economist for Moody’s, who described the results as a worst-case scenario... In an AP-NORC poll released on Monday, 38 percent of respondents approved of the president’s handling of trade with other countries and 60 percent disapproved.”

Most forecasters expect comprehensive tariffs to slow the economy while raising the unemployment and inflation rates. Like Moody’s, EY Parthenon says 20 percent universal tariffs would produce a recession.

Zandi of Moody’s sees unemployment peaking at 7.3 percent in early 2027 and remaining near 6 percent through 2028. Stocks would lose one-quarter of their value, and more than 5 million jobs would be lost by early 2027, said Zandi, who described the results as a worst-case scenario.

By raising prices, tariffs would disproportionately hit lower-income consumers and businesses that rely on imported components. Profits and productivity would slide.

“I’d brace for impact,” Zandi said.

The GOP should brace for impact as well. A recession is going to lose them at least two dozen seats in the House. If not for gerrymandering, it would be closer to 50 or 60 seats.