How About (The Price On) Them Eggs?
Updating the Donald Trump F**K Up Watch and I'll bet you thought I couldn't do a musical interlude about eggs. Guess again ...
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I’ve been working on a longer piece taking a deep dive look at the election results — and what they mean, but in the meantime, it’s time to tap the sign.
Yesterday, President-elect Donald Trump announced that he will impose 25 percent tariffs on ALL products imported from Mexico and Canada.
It’s worth noting that Trump is tying this tariff to the “long-simmering problem” of drugs and “illegal aliens” coming across the border, which he claims “Both Mexico and Canada have the absolute right and power to easily solve.”
In a subsequent post, Trump pledged to slap an additional 10 percent tariff on all imported goods from China.
Why is this bad? I’ll let the New York Times answer that one.
Adding 25 percent to the price of imported products could make many too costly, potentially crippling trade around the continent. It could also invite retaliation from other governments, which could put their own levies on American exports.
That, in turn, could cause spiking prices and shortages for consumers in the United States and elsewhere, in addition to bankruptcies and job losses. Mr. Trump has insisted that foreign companies pay the tariffs, but they are actually paid by the company that imports the products, and in many cases passed on to American consumers.
Imposing tariffs on Canada and Mexico would also violate the terms of the North American trade agreement that Mr. Trump himself signed in 2020, called the United States-Mexico-Canada Agreement. That could open the United States to legal challenges, and potentially threaten the pact itself and the terms of trade it sets for North America.
The impact of Trump’s announcement is already being felt. The Canadian dollar and Mexican peso both fell sharply, as did stock market indexes in North America, Europe, and the Far East.
It’s only a matter of time — and it might happen even before the imposition of these tariffs — that Americans are hit with higher grocery prices. But it won’t just be food that is affected. So many US industries are reliant on Canadian and Mexican imports. The auto industry alone could be devastated by these tariffs.
Indeed, in the Fall, a survey by the University of Chicago asked a number of respected economists if they agreed or disagreed with this statement. “Imposing tariffs results in a substantial portion of the tariffs being borne by consumers of the country that enacts the tariffs, through price increases.”
Only 2 percent disagreed!
Those price increases will bring lower income and consumer spending, reduced productivity, and higher unemployment. In short, it’ll be bad.
However, the problem with tariffs is only partially related to higher prices (though that’s likely to have the largest political effect). A smart take from economist Brian Albrecht.
Lately, discussions around tariffs have focused on prices, sometimes called inflation. But that’s not what matters for economic efficiencies. Higher prices are primarily a transfer from consumers to producers and the government.
The deadweight loss comes because tariffs push companies (and consumers) to change their behavior in ways that use up more real resources for the same outcome—building plants in suboptimal locations, reorganizing supply chains, and developing elaborate workarounds like seat removal. These distortions represent pure economic losses that benefit no one. It’s like forcing someone to take a longer route to work—the extra gas purchases help the gas station (although it hurts whatever you don’t spend money on). But extra time is simply a wasted resource; no one benefits. So even when tariffs “succeed” in moving production to the US, they create waste that goes beyond just higher prices.
Now, there’s an argument that Trump is just bluffing to wring concessions out of Mexico and Canada on border security and the drug trade. That’s possible, and knowing Trump, I can see him on January 20 declaring phantom progress on these issues and standing down. But I’d hardly want to count on that — and I wouldn’t be surprised if US businesses start to delay new investments and even lay off workers to prepare for the economic hit that could be coming.
As I noted on Twitter, Trump announcing his intention to send the US economy into a tailspin upon taking office seems like an odd choice. When you throw in the almost certain economic dislocations that will accompany Trump’s plans for mass deportation of undocumented immigrants, the new president is planning to deliver a double whammy to the US economy.
But then again, I don’t call it the Donald Trump f**k up watch for nothing!
What’s Going On
I’m shocked to report that there is corruption in the MAGA world.
A year ago, Nancy Mace labeled herself pro-transgender. Now, she’s trying to stop a transgender woman from using the female bathroom on Capitol Hill. The cynicism of these people is truly a sight to behold.
Politico has put together an excellent interactive article that looks at Kamala Harris’s underperformance in big cities.
Musical Interlude
These guys also do a fantastic cover of “Come Together”
And one more thing - It's the typical tirade of a true strongman, dictator, tyrant - you choose, and now we will somehow, some way endure 4 years of this and worse. I recommend "Strongmen" by Ruth Ben-Ghiat.
Ah - the Great Grifter - He convinced a very misinformed delusional electorate that the price of eggs should be front and center on their narrow little voting minds, but hey, don't forget to buy his golden tennis shoes, Bibles, coins, guitars, watches and other junk before you go under for the third time.