The Hall of the Tariff King, Part 1

This is one of those moments where we want to avoid stating overtly obvious things. So, before we begin, we assume that a) you already knew that President Felonious Punk was announcing new tariffs today, b) you weren’t expecting his message today to be a positive thing for the world economy, and c) the whole mess is bound to be convoluted and confusing. As long as we’re all on the same page with those assumptions, we can proceed in peace and knowledge.

It was a little after 4:00 PM EDT this afternoon when President Punk strolled out into the windy yard of the White House. Before him stood most of the members of his cabinet, minus Elon Musk, who many are saying is on his way out the door. There were also members of the autoworkers’ union, all wearing their hi-vis safety vests and hard hats as if they were expecting someone to bring out the heavy machinery for playtime. Other assorted guests were seated in the audience, and the White House Press Corps was behind them.

We kept hoping that perhaps the storms expected to hit DC tomorrow would show up early, increasing the possibility that Punk might get struck by a bolt of lightning, but that failed to happen. Nothing else good happened, either. Whoever applied the President’s foundation, that lovely shade of orange he wears to hide how much he’s aging, left a clear line indicating that, under all the pancake, he’s white, pasty, and most likely has age spots.

President Punk talked on endlessly, as he does, about how horrible the US has been treated by other countries and how poor we are, and how these tariffs are going to make everyone rich. The MAGA crowd was swallowing the snake oil by the cupful. Even when he brought out a chart that, for any economist, is absolutely terrifying, they still cheered and clapped.

At the crux of his message was not only the 25% tariffs on automobiles that had been promised, but a 10% baseline tariff on everyone with whom the US trades, and then additional tariffs on countries the President thinks have been taking advantage of the US.

While announcing the measures, Punk invoked national security powers under a continuing state of emergency to justify the action, circumventing Congressional approval. Congress shouldn’t let him get away with that and, if there was a fucking spine to be found among any of them, they wouldn’t. This is something on which he campaigned, though, so no one should be surprised.

Here’s the chart that was distributed to the press during the event:

The countries getting hit the hardest are Cambodia at a 49 percent tariff, followed by Madagascar (47 percent), Sri Lanka (44 percent), and Vietnam (46 percent). Major U.S. partners like Japan (24 percent), South Korea (25 percent), and India (26 percent) were also included, despite active trade negotiations in recent years.

The 10 percent universal tariff and country-specific reciprocal tariffs took effect immediately following President Trump’s Rose Garden speech on Wednesday, alongside an additional 25 percent tariff on auto imports. Presumably, the higher tariffs are subject to negotiation and no deadline for when those tariffs might take effect. As we’ve seen with the on-again/off-again tariffs with Canada and Mexico, Punk likes having plenty of room to work his racketeering scheme.

Markets reacted sharply to the announcement. Stocks plunged, and after-hours trading descended into turmoil as Punk pledged steep tariffs on some of the U.S.’s top trading partners. The SPDR S&P 500 ETF Trust (SPY), which tracks the S&P 500, fell 2.47 percent. The SPDR Dow Jones Industrial Average ETF Trust (DIA) dropped 1.37 percent, while the Invesco QQQ ETF, which tracks the Nasdaq Composite Index, sank 3.45 percent. International markets are not likely to do any better.

With today’s announcement, Punk is tariffing essentially all foreign goods. The administration says that the levies will bring in some $6 trillion, which would amount to the biggest tax hike in U.S. history. Some of the most perplexing updates are in countries where the United States has existing free-trade agreements, such as South Korea. The Punk administration claims that South Korea has a 50 percent tariff on the U.S., but it is basing its tariff estimations in part on currency manipulation and trade barriers. It hasn’t yet provided evidence confirming that such factors, insofar as they exist, are equivalent to a 50 percent tariff. The bottom line is that almost everything Americans buy is going to go up.

Such all-encompassing tariffs will cost each American family as much as $5,000 this year, economists predict. Americans will likely feel the effects of this while standing in a grocery store aisle, purchasing auto insurance, or undertaking home renovations. These levies have the potential to increase inflation and slow down the economy in the longer term, and the uncertainty of what happens next will also contribute to the confidence of shoppers and businesses. “The way that [Punk] does tariffs is he often makes these really big announcements and then rolls them back,” Annie Lowrey, who covers economic policy for The Atlantic, explained. “That’s really hard if you’re a business. Should we wait this out? Are they actually going to do it?”

While the news is just hitting newspapers around the world, already some countries are planning to fight the tariffs announced this afternoon. Australia is threatening to use ‘dispute resolution’ powers in Australia’s free trade agreement with the United States. Vietnam is hosting China and EU leaders in coming weeks where a unifed response to the tariffs is on the agenda. China, Japan, and South Korea have already agreed to work together in response to the tariffs.

Economists agree that there’s a limit on what can be raised by tariffs as well. “If you make something 50% more expensive, you don’t expect people to buy the same amount,” said Kimberly Clausing, a senior fellow at the Peterson Institute. When Punk insinuates that a tariff-based economy could replace the income tax, he is, without question, 100% wrong.

“The problem is it can’t raise anywhere near the amount of revenue you’d need to scuttle the income tax. And that’s the really, I think, ironclad point,” said Scott Lincicome, a vice president of general economics and trade at the Cato Institute, which is a libertarian think tank.

This is what we know tonight. We’ll see what kind of international response is generated while we sleep and report on that in Part 2 tomorrow.