Apart from the optics of a US President presiding over a shit show in the Rose Garden—using auto workers as props and holding up a board based on a lie that conflates tariffs with trade deficits (including those of penguin-inhabited islands)—there was another disturbing aspect to Trump’s speech.
In addition to distorting American history by presenting the age of tariffs (and murderous robber barons) as a golden era, Trump hinted that ‘income tax’—a fiscal instrument designed to redistribute wealth—was somehow linked to the reduction of tariffs.
“In 1913, for reasons unknown to mankind, they established the income tax so that citizens, rather than foreign countries, would start paying the money necessary to run our government,” Trump said.
The suggestion was that reintroducing tariffs could pave the way for income tax cuts, which by their very nature would favour the wealthiest Americans. In this way, tariffs that impoverish the poor—both in the US where consumers will take the brunt and in poor countries crippled by the tariffs—would end up funding tax breaks for the rich. It’s like turning back the clock to pre-Corn Law repeal Britain in the 19th century, when tariffs protected the landed gentry while workers paid more for their daily bread.
Of course, such an outrageous suggestion isn’t based on solid economic reasoning. For tariffs to achieve their stated purpose, they should not be revenue-generating tools. Their goal is to reduce imports in order to prop up domestic industries and safeguard jobs—even if it's hard to see how this works in a world where supply chains are so deeply interconnected. Tariffs may still serve a purpose in developing economies where the state actively drives industrialisation. But that is not the case in the US, where the state is being systematically dismantled.
Trump, however, is a demagogue who lives in a universe of his own truth. So it's no surprise that he defies economic logic, framing his policies as a populist insurrection against shadowy global forces. This is like Liz Truss harakiri budget multiplied by a hundred.
Some might ask: isn’t what Trump is doing a sign of the end of the neoliberal order, long dominated by the dogmas of unshackled markets? The problem is that instead of advancing toward a new form of international trade governance grounded in social and environmental regulation including labour protections, we are regressing into the age of hubris—where the poor (both in the US because of inflation and even in the poorest countries crippled by these tariffs) end up paying more to bankroll the ideological fantasies of Trump and company. The risk is that by defying economic rationality Trump may well end having no other option but to embark on on pillage and plunder to finance his delusions. Trade wars may well just be the prelude for conquest.