19 May 2019

Massive

CNBC published an excellent piece last week (link here) about how Donald Trump's reckless tariffs are equivalent to a massive tax increase. That's because retailers and wholesalers will simply add the tariff cost to their prices.

Trump has repeatedly said that China will pay the tariffs, not the American consumer. That presumes -- stupidly -- that retailers and wholesalers will not raise prices to cover tariffs of 25 percent and just take it out of profits. Trouble is, retail profit margins are considerably lower than 25 percent.

Trump's clumsy and ignorant tariff rollout seems like something that was designed by someone who never took an entry-level class in economics. Considering the Trump has an undergraduate degree from Wharton, one has to imagine he paid other students to do his papers and take his exams, because he clearly doesn't have the capacity to understand basic econometric principles.

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