Trump’s Tariffs Threaten Widespread Shortages

Trump finally built his wall. It isn’t made of bricks or barbed wire. It is made of taxes. Taxes on imports.

Without authorization from Congress, Trump has built an economic wall around our country. What Trump called “liberation day,” is the launch of a new global economic order, one that penalizes trade, punished American consumers, upends international relationships, and will ultimately slow economic growth everywhere.

Don’t take my word for it. Devin Winchester is Co-Editor of the Journal of Global Economic Analysis. He is now a Senior Fellow at Motu Economic & Public Policy Research in Australia. Earlier in his career he did his research at MIT and worked as Senior Knowledge Expert at McKinsey & Company. He modelled the impacts of tariffs on the economies of dozens of countries. The biggest loser? The United States.

While Switzerland will see the biggest percentage hit to its GDP, The United States will suffer the biggest financial loss. The model predicts a more than $100 billion hit to our economy. Moreover, each of us will have to absorb the biggest dollar hits in the world- $861 per household.

The economic wall won’t just bring high costs, lower profits, and a slower economy. It will also create shortages. Like it or not, the supply chains are global and interconnected. At least they were yesterday. Today, companies are scrambling to replace the items they can no longer afford before the run out of the inventory they piled up in anticipation of this day. These shortages will slow down manufacturing and impact the availability of consumer goods. Already there are warning of shortages of toys at Christmas, supply chain shortages in the auto industry, shortages of foods like coffee, and a return to COVID-like shortages everywhere.

Trump’s wall will weaken US businesses, not strengthen them. The intended effect of tariffs (besides creating a huge new source of regressive tax revenue for the government) is to replace foreign parts and ingredients in American products or to replace imported finished products with American made ones. Think about how that can happen in an economy like ours, with nearly full employment. Companies will have to invest capital and repurpose labor to replace what had been imported. That means less work and investment in profitable economic activity, and fewer products and services available for export. It’s a recipe for economic disaster.

To be clear, this didn’t have to happen. No one asked for it. This policy has one author only- Donald Trump. He imposed this disaster on everyone just to fill the budget hole created by tax giveaways to billionaires.

And, it may all be illegal. The Constitution says Congress has the power to impose tariffs, not the President. But Mr. Trump wanted it, and the GOP would rather give it to him what he wants than raise pesky questions about the separation of powers. Meanwhile, the rest of us have to prepare to have our pockets picked.

Edwin Eisendrath hosts "The Big Picture" on WCPT820 AM/ Heartland Signal. He's the former CEO of the Chicago Sun-Times, a long-time management consultant, a former Chicago Alderman, HUD Regional Administrator and teacher in Chicago's public schools. You can follow him on BlueSky at eisendrath.net and Substack at “It’s the Democracy, Stupid.” Read the original column here.

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