Why I Don't Think Trump Has Blinked, Backed Down or Retreated on Tariffs

Earlier this week, when President Trump lifted reciprocal tariffs from most nations while increasing them against China only a week after so-called Liberation Day, some made the case that he had blinked, backed down and retreated.

I don't think Trump has done so at all. At most, call it what you will, the blinking, backing down and retreating is only temporary.

After all, the pause is but for a mere 90 days. Trump's stock and trade (for a lack of a better term) is alternating sticks and carrots even if the carrots taste like sticks. When it comes to Canada and Mexico in particular, Trump has gone back and forth between threatening tariffs, holding off on them, imposing them then scaling them back. As I put it, it is a case of I tariff you, I tariff you not.

French President Emmanuel Macron views the 90-day reprieve as "a fragile pause." After all, there remains a baseline tariff of 10% plus a 25% tariff on steel. aluminum and cars for the EU. 

What makes anyone think Trump is going to change his behavior? Tariffs are the central plank of Trump's economic policy. His hubris is such that he thinks he holds all the cards even if he is leveraged to the hilt to get even get to play at the blackjack table. No wonder he managed to bankrupt a casino. 

In the case of his tariff policy, Trump has undermined the predictability and stability of the marketplace. As I argued back in February, this is bound to lead to a global recession:

No one win with tariffs. Canada, Mexico and China will suffer. So too will the United States. With importers facing heavier costs those costs will be passed onto consumers in the form of higher prices and workers in the form of fewer jobs. The result will be a global recession. 

Trump has acknowledged that Americans will feel the pain of tariffs. It would be a self-inflicted wound but Trump will feel nothing so the policy will continue until he gets bored or leaves office.

Well, Trump isn't about to leave office and might very well decide to stay beyond 2028. In which case, one can only hope he will get bored. But tariffs are as appetizing to Trump as McDonald's Big Macs and Diet Coke. Unfortunately, this means he will never bore of a meal consisting of two Big Macs, a Diet Coke with a side of tariffs.