The #TrumpRecession Begins This Week. It is Entirely Avoidable.

Presidents actually have very little sway over the economy. But tariffs are one way to affect the economy.

Donald Trump is set to announce tariffs on aluminum and other products as early as today. If he goes through with it, he will trigger a recession that undoes all the economic gains so far made during his presidency. It is not rocket science. It is Economics 101 -- basic economics that the left and right tend to agree on actually. Only the fringe on each side disagrees and the President has been captured by fringe economists and his own outmoded thinking.

Imposing tariffs on metals will raise the costs of guns, ammunition, beer, cars, and many other products Trump voters tend to love. This will completely undo the income gains made by the tax cuts.

Then, other countries will reciprocate thereby starting a trade war. Here is the thing the President does not seem to understand. These countries will only raise the cost of importing American goods. So the prices of Chinese goods in Europe will stay the same and the cost of European goods in China will stay the same. Only American goods being sold abroad will go up in price as goods coming into the United States will go up in price. So the United States alone will bear the cost of tariffs. Also, and this is a key issue, even with the tariffs in place some imported goods will still be competitively priced. Consequently, American goods will be more expensive elsewhere in the world while, in some cases, imported goods into the United States will still be priced competitively enough that Americans do not then start buying the American version of the good.

The only losers here are Americans. Donald Trump promised winning and he is losing at this. His trade team thinks a trade war will be, in the President's words, "easy to win," but when every other country on the planet is against us (as they are on this), we will not win. We will just price ourselves out of the market.

This will trigger a recession that will deservedly be blamed on President Trump. There will be an economic slowdown as American manufacturers slow their production rates due to decreased purchases abroad. American consumers will decrease their spending as the costs of basic goods increase.

President Trump wants to protect certain American industries, but his tariffs will actually wipe them out even faster. The very areas of the country President Trump must win again in 2020 will be hurt the most. This is all completely avoidable and the blame for what is coming will be on President Trump.

Regardless of who is in the White House, there is actually very little any President can do to stimulate or hurt the economy. Our free market tends to work mostly on autopilot. Imposing tariffs is one of the few ways the President can affect the economy and it will not be for good.

Continue previous post: Bottom line, maybe tariffs are one way to level the playing field. If leads to higher costs in the short term, but has long term benefits over a 10 year period, then so be it. There has to be some way to bring manufacturing back to the USA.

If those were the same, the U.S. manufacturing sector would be booming. You wouldn't have to worry about a third world despot knocking you in the head and taking your successful company for his cronies. A U.S. company is going to manufacture in the U.S. if everything else is equal. Generally, it takes a significant price gap to drive a relocation operation, and then it is done piece-meal.

How are you going to equal U.S. wages to those of Mexico? Or China? Do you want to live on that wage? Not to mention having to overturn all of the minimum wage laws just to make it happen. Then you have the environmental regs, workplace regs, complicated tax code, high corporate tax (yes, it is still high), etc. I would love to get those in better shape, but pretending that we can equal the costs of production with a developing country is pie in the sky. It simply isn't going to happen. Maybe if you could get all of those countries to our economic level, but otherwise you have to bring the U.S. down to theirs. We need to accept the reality that advanced countries are not going to build top line economies on labor intensive manufacturing. What we need to be considering automated and high-tech manufacturing where we can complete and don't try to artificially hang on to low tech manufacturing, where labor costs are high. The wagon wheel maker can curse the automobile all he likes, but he better learn how to repair it or join the soup line.

@curtmiler - China is transshipping many products thru Canada & Mexico to come in free of tariffs via NAFTA. You get it - while the rest of these commenters and even EE don't seem to be able to read between the lines. President Trump looks at the long game as few in DC ever have because of his real-world [and not Harvard MBA] business background. These tariffs aren't as much about Chinese metals headed into the USA directly, they ARE about the renegotiation of NAFTA. We import more steel from Canada than ANYONE ELSE. Trump announced the tariffs last week when the NAFTA revision negotiations were getting underway, to much outcry by even the RINOs in congress. This week he stated that "even Canada and Mexico" would be subject to the tariffs; THEN he indicated that the tariffs could be included in the revised NAFTA. Checkmate on the Canadian and Mexican negotiators. Play ball at the NEW NAFTA table, of suffer the consequences. I do wish to see our metals industries be revived in a huge way, because we need that internal capacity to support out infrastructure construction and other manufacturing. Raising the net price of imports will provide more incentive for US investment in the plant construction and expansion needed.

Are you really saying that nothing the President does matters to you at all? I'm not trying to say that your signature issue is not important, but there is much more that goes into governing our great nation, and our process does not work properly without active and engaged citizens.

There is no reason to bring manufacturing back to the US, unless we have developed robots that can do it all without human intervention.

There is NEVER going to be a 1950s-style manual--labor-based economy in the US ever again.

That's for 3rd-world countries with uneducated populations that will work for $1/day...

I spent 40 years in manufacturing in the U.S. Labor is actually not that big of a piece of the pie. Labor is cheaper in China. Many other things in China are a pain in the butt. Trying to accomplish a quality job there is why some manufacturing came back here long ago. The biggest piece of the pie is tax, not labor, and corporate tax has dropped significantly. How much a tariff hurts depends on how big it is. China has a quiver full of critical products that it supports as loss-leaders to undermine our economy. The government reimburses the makers of these products for selling them to us for less than the cost of production. A tariff to offset that is the only logical thing to do. Trump correctly recognizes that if manufacturing does not remain a significant part of our economy, we are sitting ducks waiting for the world to pull the rug out from under us.

The time when we could sit here and think that we are the world's bank and business hub while all we have left is a service-based economy has passed. It's do or die. Sadly, the Chi-Coms understand capitalism better than we. They know that you can only pretend you're the big dog on the block for so long while other dogs eat your lunch. They are building a manufacturing base so that they can be what we were. The idea that we can never again have a healthy manufacturing sector is the bullcrap that they want to feed you. Dish up!