Donald Trump billed his “reciprocal tariffs” as a tit-for-tat measure: You tariff our products at 20 percent, we’ll tariff your products at 20 percent back.
He said it again in his Rose Garden announcement: “Reciprocal — that means they do it us and we do it to them. Very simple. Can’t get any simpler than that.”
It’s not good policy, but it made a certain amount of sense.
But instead, what we got on Wednesday were “reciprocal” tariffs that are at best a reciprocal of something else entirely: trade imbalances. They make no sense at all. They are wildly destabilizing and frankly insane.
Take Cambodia, for instance, one of the poorest countries on the planet. Its effective tariff rate for imports is about 12 percent. But being so poor, and a massive manufacturer of such things as clothing and shoes, it maintains a huge trade imbalance with the U.S.
Cambodian exports to the U.S. are approximately $10 billion a year, compared to imports of less than $300 million in U.S. products. It’s like the trade imbalance between the BMW dealership and the coffee shop around the corner.
But that, according to the Trump’s thinking, makes it a “bad actor.” The White House explanation is that the imbalance between U.S. imports and U.S. exports — literally, our trade deficit with that country divided by its exports to us, which works out to 98 percent for Cambodia — represents that country’s “tariff charged to the U.S., including currency manipulation and trade barriers.”
To be “kind,” Trump said, he divided that number by 2 – and came up with a 49 percent import tax on Cambodian goods going forward.
He did the same calculation with a total of 185 other places, according to charts the White House posted on Twitter, ranging from the European Union and China to two islands inhabited only by penguins.
As Washington Post opinion columnist Catherine Rampel noted on social media, “Nothing in this formula tells you anything about either tariffs or non-tariff trade barriers.”
My favorite analogy so far came from British journalist Ian Dunt, who wrote:
It’s hard to state just how nonsensical that actually is. You might as well divide the numbers of apples in your kitchen by the number of bagels and use it to calculate your mortgage rate. To criticise it on political or economic grounds is too generous. It operates below the level of rational thought.
Similarly, The Economist – admittedly, a champion of globalization – described Trump’s move as “bonkers” and wrote that his apparent formula “is almost as random as taxing you on the number of vowels in your name.”
Massive Journalistic Failure
Why am I writing about this in Press Watch? Because you would have no idea just how insane these so-called “reciprocal” tariffs are from the main stories in your favorite national newspapers and mainstream-media organizations.
I wrote several weeks ago about how the mainstream media was overlooking the insanity of Trump’s tariff plans.
But no one anticipated anything this disconnected from reality.
And yet our top journalists still tried to explain what Trump is doing in respectful terms. As a result, they badly misled their readers and viewers.
In the New York Times lead story Thursday morning, Ana Swanson and Tony Romm blithely adopted Trump’s terminology. They reported on the across-the-board tariffs then noted that he had also imposed “double-digit tariffs on dozens of other countries that administration officials said had treated the United States unfairly.”
Later, they wrote that “the European Union, China, Britain and India… would also face higher reciprocal tariffs based on trading practices that Mr. Trump has deemed unfair.”
Finally, they gave Trump credit for restraint:
Mr. Trump described his approach as “kind,” saying he was charging other countries only half of the reciprocal rate that his administration had calculated should be applied, based on their trade practices. He said tariffs were needed to boost domestic production and turn the United States into an “industrial powerhouse.”
Please note that they didn’t even put “reciprocal” in quote marks. They just swallowed it all whole.
In the Washington Post’s lead story, David J. Lynch and Jeff Stein described “higher import taxes tailored for each of about 60 countries that his advisers say maintain the largest barriers against U.S. products.”
Then the reporters actively covered up the insane basis of the calculations, writing a load of absolute hooey:
Administration officials calculated individual tariff rates for each of those countries based upon an analysis of the trade practices that the White House found objectionable. The president described these tariffs as “reciprocal; that means they do it to us and we do it to them.”
In fact, the administration cut each country’s estimated figure in half and will levy what the president called a “discounted” rate.
“The president is lenient, and he wants to be kind to the world,” said one senior administration official who briefed reporters on the condition of anonymity.
On ABC’s World News Tonight, David Muir stenographically reported: “The president saying these are reciprocal tariffs, arguing ‘you do it to us we’ll do it to you.’” Correspondent Rachel Scott echoed him, reporting without any caveats: “President Trump says the higher penalties come in response to tariffs those countries impose on American products they import.”
Even in articles on Thursday about the predictable resulting stock-market plunge — in which reporters quoted analysts saying things like “These tariffs are worse than even our worst-case scenario” — they didn’t explain how bogusly constructed those tariffs are.
CNN’s main story, written by Bryan Mena, adopted Trump’s framing: “For example, instead of matching the European Union’s 39% tariff on US goods, the new duty on the EU will be 20% instead.”
But to their credit, CNN eventually published a sidebar on “the dubious way Trump calculated his ‘reciprocal’ tariffs,” by David Goldman. And an update Thursday afternoon from CNN’s Matt Egan quoted Michael Block, a market strategist at Third Seven Capital, saying “The market is saying this isn’t just bad economics, it’s bad mathematics” and “They’re ignoring every rule of classic micro and macroeconomics. This is the policymaking equivalent of a suicide bomber.”
MSNBC host Chris Hayes reacted appropriately on Wednesday night. “They made up all the numbers and completely fabricated this retaliation,” he said. “I’m struggling to communicate just how nuts this all is.” The equation Trump apparently used results in “a number too stupid to even characterize as wrong,” he said.
Missing: The Why
So why did Trump do it this way? It’s a question I don’t see journalists actually wrestling with. (Stenography is easier.)
Connecticut Democratic Sen. Chris Murphy, posting on social media, had a plausible explanation that I think deserves media exploration, namely that “The tariffs are a tool to collapse our democracy. A means to compel loyalty from every business that will need to petition Trump for relief.” It’s very long, but bear with him:
This week you will read many confused economists and political pundits who won’t understand how the tariffs make economic sense. That’s because they don’t. They aren’t designed as economic policy. The tariffs are simply a new, super dangerous political tool.
You see, our founders created a President with limited and checked powers. They specifically put the power of spending and taxation in the hands of the legislature. Why? Because they watched how kings and despots used spending and taxes to control their subjects.
British kings used taxation to reward loyalty and punish dissent. Our own revolution was spurred by the King’s use of heavy taxation of the colonies to punish our push for self governance. The King’s message was simple: stop protesting and I’ll stop taxing.
Trump knows that he can weaken (and maybe destroy) democracy by using spending and taxation in the same way. He is using access to government funds to bully universities, law firms and state and local governments into loyalty pledges.
Healthy democracies rely on an independent legal profession to maintain the rule of law, independent universities to guard objective truth and provide forums for dissent to authority, and independent state/local government to counterbalance a powerful federal government.
But the private sector also plays a [role] to protect democracy. Independent industry has power. The tariffs are Trump’s tool to erode that independence. Now, one by one, every industry or company will need to pledge loyalty to Trump in order to get sanctions relief.
What could Trump demand as part of a quiet loyalty pledge? Public shows of support from executives for all his economic policy. Contributions to his political efforts. Promises to police employees’ support for his political opposition.
The tariffs are DESIGNED to create economic hardship. Why? So that Trump has a straight face rationale for releasing them, business by business or industry by industry. As he adjusts or grants relief, it’s a win-win: the economy improves and dissent disappears.
And once Trump has the lawyers, colleges and industry under his thumb, it becomes very hard for the opposition to have any viable space to maneuver. Trump didn’t invent this strategy. It’s the playbook for democratically elected leaders who want to stay in power forever.
That’s as good an explanation as you’ll hear anywhere, I suspect. And you won’t hear it from the mainstream media.