Someone really oughta tell Trump about the history of tariffs
About 95 years ago, the Smoot-Hawley Tariff Act aimed to protect American industries by imposing record tariffs on imported goods. Despite warnings from economists, President Hoover plowed ahead, triggering swift retaliations from major trading partners. U.S. exports plummeted, global trade shrank and the Great Depression deepened, worsening global economic instability, contributing to turmoil that fueled World War II. Not great.
Recognizing its failure, the U.S. reversed course with the Reciprocal Trade Agreements Act of 1934, promoting international trade instead of protectionism, and the whole sordid episode serves as a textbook example of how trade wars backfire, choking commerce and harming economies rather than helping them.
But President Trump doesn’t seem to know it, and so he’s threatening a brutish tariff war with America’s democratic neighbors (as well as China – less indefensible) while also abandoning the world’s most vulnerable by shutting down USAID and halting nearly all foreign aid. It is a masterclass in how to be both stupid and immoral at the same time.
The decision to impose 25% tariffs on Canada and Mexico have now been suspended for one month after these countries threatened counter-tariffs and offered some concessions to Trump’s demands. Let’s hope that Trump pockets the fake win and does not return to an attitude that violates existing free trade agreements and would harm U.S. consumers.
The signs are not good. Other tariffs followed — 25% on steel and aluminum starting next month, which has already sparked the credible threat of counter-tariffs from the European Union. Trump’s acolytes will doubtless claim that this is brilliant brinksmanship and haggling. But even if it’s meant that way in part, there are costs to a global spasm of bad karma; export-oriented countries like Germany could plunge into recession, which does not always work out well, including for ambitious exporters like the U.S. (who need buyers). It’s idiocy whose real driver is not any patriotism or wisdom but a constant agitation to fuel the ego of a pathological disrupter (a.k.a. bully).
Trump’s justifications for the tariffs range from the absurd to the incoherent. Trump initially framed them as a way to combat fentanyl trafficking, a scourge that has devastated American communities. Yet Canada plays almost no role in the fentanyl crisis, and Mexico had already taken significant steps to curb trafficking.
The real impact of these tariffs will be higher consumer prices, disrupted supply chains, and job losses.
U.S. businesses that rely on materials and components from Mexico and Canada would face rising costs, which they’d passed on to consumers. Retaliatory tariffs would further squeeze U.S. exporters. And for what? The U.S. runs a relatively balanced trade relationship with Canada and Mexico. The trade relationship with Canada amounted in 2023 to $441 billion in exports versus imports of $482 billion, and with Mexico it totaled in 2022 exports of $362.0 billion versus imports at $493.1 billion.
For context, in Trump’s first term he placed tariffs on Canadian lumber, driving up costs for US consumers on everything from home construction to furniture. This, together with tariffs on aluminum and steel, was estimated to cost the average U.S. family at least $300 per year – and the current threatened tariffs could cost 10 times that much.
A smarter move would have been, say, to first pass tax cuts for U.S. firms before introducing tariffs. Instead, this ill-timed economic jolt risks fueling inflation just as markets were stabilizing – and even though concerns about inflation were a main reason many voters backed Trump.
(For more, see below video primer on trade wars.)
Meanwhile, if Trump’s tariffs are merely foolish, his move to halt nearly all foreign aid and emerging decision to shut down USAID and is both foolish and immoral.
Foreign aid – which is less than 1% of the budget – serves as a strategic instrument of soft power, fostering diplomatic goodwill, economic ties, and geopolitical stability. By investing in education, healthcare, and infrastructure in developing nations, donor countries create long-term alliances, enhance their global influence, and mitigate security risks that arise from instability and poverty – which can also drive migration. Aid strengthens economic partnerships, ensuring favorable trade relations and access to emerging markets, making it a tool of enlightened self-interest.
It is also a version of charity, toward countries that are less fortunate due to twists and turns of history. Moreover, former colonial powers have a moral duty to address historical injustices by supporting nations they once exploited.
While some of the foreign aid – to Israel and Egypt, for example – is military, the component that goes through he USAID organization is purely for societal development. Thus, for example, Armenia, which is trying to stabilize its educational and public institutions, receives various funds from USAID – including for the American University of Armenia, which is a major source of social development; keeping Armenia advancing toward democracy, in the combustible South Caucasus, is a U.S. geopolitical interest.
This is the outfit that Elon Musk has puzzlingly called “a criminal organization,” and its good works have now been suspended by executive decision, influenced by recommendations from Musk’s Department of Government Efficiency (DOGE). Musk has said it will be permanent, which would mean the trashing of programs like these:
- USAID supported country-led efforts to combat the HIV/AIDS epidemic in over 50 countries, providing treatment and prevention services to millions (USAID).
- The Malaria Vaccine Development Program, now halted, aimed to reduce child mortality by developing effective malaria vaccines, particularly in sub-Saharan Africa.
- The Feed the Future Initiative focused on reducing poverty and under-nutrition by promoting agricultural development and improved nutrition. USAID’s Office of Food for Peace also managed programs to address emergency food needs arising from natural disasters and emergencies. The Famine Early Warning Systems Network monitored and disseminated critical data on food availability.
- The Borlaug Higher Education Research and Development Program aimed to train individuals and strengthen institutions in developing countries to promote innovation in agriculture.
- The Africa-U.S. Higher Education Initiative sought to strengthen the capacity of African higher education through partnerships with U.S. institutions, focusing on key development areas such as science, technology, agriculture, and health.
- Through Health, Ecosystems and Agriculture for Resilient, Thriving Societies (HEARTH), USAID aimed to promote conservation of threatened landscapes and enhance community well-being by partnering with the private sector to align business goals with development objectives.
To such calamities we can add domestic ones: Trump muses about killing the Federal Emergency Management Agency about which he signed an executive order for a “full-scale review.” FEMA provides most of the aid to states like Florida, being pummeled by hurricanes like never before due to global warming that Trumpland continues to deny.
All of this madness will lead to increased famine, disease, suffering and economic instability, while handing geopolitical influence to China and Russia – who are not sitting still, and are investing huge efforts to establish influence in the developing world. Indeed it was Russia and China, through a bot program of indoctrination, which have for over a decade been trying to weaken America through propaganda aimed at discrediting the alternatives to Trump. Catastrophically, they succeeded.
The United States is not just an economic superpower — it is a global leader whose policies shape the fate of millions and once upon a time even aimed to inspire. It is stunningly reckless for the Trump administration to kneecap America’s economy and eviscerate soft power built over decades, handing a massive win to all the world’s autocracies.
At some point Americans must ask: Is this really the leadership we want? Sadly, the U.S. system vests huge powers in a presidency unconditionally backed by a craven Congressional majority, and does not provide a realistic way of deposing a president gone berserk. The reasonable path is to consider the coming 21 months to be the most teachable moment in the history of the republic – then deal the Republicans devastating punishment in the 2026 midterms, so that the madness can be curtailed for the final two years of Trump’s term.
