The Trade Derangement Syndrome – Econlib

The level of incoherence among politicians seems to be reaching new heights, particularly evident in the ongoing conflict over international trade policy in the United States.

President Donald Trump has asserted that the high tariffs he imposed on imported goods are simultaneously both temporary and permanent. According to his comments in a recent interview (Are Trump’s Tariffs Negotiable or Here to Stay? Amid Confusion, He Says It Can Be Both, ABC News, April 7, 2025):

When asked whether his sweeping tariffs are negotiable or here to stay, Trump replied, “They can both be true. There can be permanent tariffs and there can also be negotiations because there are things that we need beyond tariffs.”

In a separate statement (Calling Trump’s Bluff on ‘Reciprocal’ Tariffs, Wall Street Journal, April 6, 2025), he maintained:

To the many investors coming into the United States and investing massive amounts of money, my policies will never change.

He appeared to assert both that he was awaiting a conciliatory phone call from China and that his administration was already engaged in negotiations with them (Dow Jones Jumps 1,300 Points On Trump Tariff News; Apple, Nvidia, Tesla Rally, Investor’s Business Daily, April 8, 2025). On Monday morning at 9:08, he wrote:

China also wants to make a deal, badly, but they don’t know how to get it started. We are waiting for their call.

However, just a few hours later, he tweeted:

If China does not withdraw its 34% [retaliatory tariff] increase … all talks with China concerning their requested meetings with us will be terminated!

Are these mere slips of the tongue or a more profound disconnect? Such contradictions illustrate a troubling trend of incoherence.

In the political realm, we often encounter statements that defy basic logical principles: A is non-A, freedom equates to oppression, liberation translates to subjugation, and the idea of temporary becomes synonymous with permanence. While these assertions might find a home in the realms of poetry or abstract thought, they cannot serve as the foundation for coherent political discourse or sound public policy.

What we are witnessing in America is a protectionist stance that is not only incoherent but economically illiterate, bordering on farcical. As Trump once proclaimed, “Trade wars are good, and easy to win,” back in March 2018. Fast forward to January 31 of this year, and he declared that “the tariffs are going to make us very rich and very strong.”

On April 2, dubbed “Liberation Day,” Trump introduced his so-called “reciprocal” tariffs, based on a formula lacking any sound economic rationale, instead presuming that the tariffs imposed by foreign nations correlate directly with America’s trade deficit. The president theatrically presented a hefty report, the National Trade Estimate Report on Foreign Trade Barriers, as the underpinning of this “reciprocal tariffs” formula, though it merely lists qualitative aspects of trade barriers from around 50 countries. His announcement implicated nearly 180 nations, treating the European Union as a single entity.

The absurdity of the “reciprocal tariffs” was exemplified by the inclusion of St. Pierre and Miquelon, a minuscule French territory with a population of fewer than 6,000, subjected to the highest “reciprocal tariff” of 50%. Additionally, the Heard Island and McDonald Islands, an Australian territory inhabited solely by wildlife, were also implicated in this bizarre tariff scheme. As the Australian trade minister quipped, “Don’t know what they did to Mr. Trump,” referring to the penguins that occupy the territory (A Tariff Whodunit: How a Tiny French Archipelago Became Trump’s Top Target, Wall Street Journal, April 4, 2025).

It’s no surprise that many economists and financial journalists have labeled this entire endeavor as nonsensical.

Shortly after these developments, Trump escalated the trade conflict with China—essentially targeting American consumers who bear the brunt of the tariffs—while announcing a 90-day reprieve on tariffs for compliant countries. This move appears to be a strategic retreat, likely motivated by fears of a significant economic downturn, a depreciating dollar, and rising interest rates (America’s Financial System Came Close to the Brink, The Economist, April 10, 2025). Yet, this pause is merely a temporary reprieve that can be revoked at the whim of one individual. If tariffs and personal power are such beneficial instruments, why not consider a universal tariff of, say, 254%? One could easily concoct a flimsy rationale to justify such a figure and then suspend it for 90 days on products deemed politically sensitive.

A recent headline from The Economist of April 10 encapsulates the situation, stating:

Trump’s incoherent trade policy will do lasting damage

Even after his backtracking, the president has done profound harm to the world economy

A government that significantly curtails the trading liberties of its citizens while disseminating propaganda to justify such actions must be viewed as exhibiting a severe case of Trade Derangement Syndrome. This mirrors a potential dystopia where we witness a blend of Orwellian rulers and a complacent, cheerful populace reminiscent of Huxley’s vision. While it is indeed true that past governments have contributed to the construction of Leviathan’s palace, the pressing danger lies in the current trajectory of governance.

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