WSJ editors on Trump's bullying tactics

Mr. Trump thinks he can bully everyone into submission, but he can’t bully Adam Smith, who deals in reality.  Markets know tariffs are taxes, and taxes are anti-growth.  The Trump tariffs are the biggest economic policy mistake in decades, and extending the 2017 tax reform and deregulation may not compensate for all the damage. 

There are also fears that if tariffs fail to reorder the global trading system, Mr. Trump might impose a fee on Treasury debt as chief White House economist Stephen Miran has proposed.  This would amount to a partial U.S. default since it would cut the rate of return.  Think Treasury yields are rising now?  Watch what happens if a Miran fee is imposed. 

All of this is tempting economic fate and contributing to a global “sell America” narrative in financial markets.  That’s why the dollar is under pressure.  Smart Presidents pay attention to market signals and adapt.  The adaptation now would be to negotiate a quick end to the tariff barrage.  Claim some trade-deal victories, and call it a day. 

But markets are spooked because they don’t know if Mr. Trump listens to anyone but his own impulses. 

~ The Editorial Board, "The Fire Jerome Powell Market Rout: Investors render a verdict on tariffs and politicizing the Fed.," The Wall Street Journal, April 21, 2025

President Trump meeting in the Oval Office with Japanese Minister of
State for Economic and Fiscal Policy Ryosei Akazawa on April 16, 2025

WSJ editorial board on tariffs: "Mr. Trump can’t say he wasn’t warned"

This isn’t cause for panic, but it is for tariff caution.  Mr. Trump is promising to impose his 25% levies on Mexico and Canada this week, which will send auto and other North American supply chains into chaos.  China gets hit with another 10% border tax, with European cars up next, followed by reciprocal tariffs on most of the world. 

A tariff is a tax, and taxes impose costs that reduce economic activity.  They also add uncertainty about where and how businesses should invest, as CEOs try to figure out where the tariffs will strike, on which goods, and for how long.  Will there be exceptions? 

If growth continues to slow, Mr. Trump can’t say he wasn’t warned.

~ The editorial board, "Tariffs and the Slowing Economy," The Wall Street Journal, March 2, 2025

WSJ editorial board on Trump's trade war with Canada

The U.S. sources about two-thirds of its primary aluminum and 60% of scrap aluminum imports from Canada. Both are used by secondary U.S. aluminum manufacturers and fabricators, which oppose Mr. Trump’s tariffs.  They have a hard enough time competing against lower-cost producers in China and Turkey. 

Canada makes up a smaller share of U.S. steel consumption (about 6%).  But Mr. Trump’s tariffs will still raise costs for steel users that depend on Canadian supplies.  Hot-rolled coil steel prices are up a third since Mr. Trump took office because U.S. manufacturers like Cleveland-Cliffs and Nucor have raised prices in anticipation of tariffs.

Commerce Secretary Howard Lutnick said over the weekend that the President’s tariffs would make some foreign products more expensive but “American products will get cheaper.”  Huh?  Companies that use foreign components will have to raise prices or swallow narrower profit margins.  Does Mr. Lutnick understand, well, commerce? 

Domestic manufacturers that compete with foreign goods will raise their prices to take advantage of the protectionism to increase their margins.  A study in the American Economic Review found that consumers paid $817,000 for each new manufacturing job created by Mr. Trump’s washing machine tariffs in his first term. 

And Mr. Trump is only getting started as he prepares to take his trade war global.  He promised Tuesday to “substantially increase” tariffs on cars on April 2, which he said would “essentially, permanently shut down the automobile manufacturing business in Canada.”  So first he whacks U.S. auto makers with tariffs that raise their production costs, then he tries to shield them from foreign competition by whacking American consumers.

~ The editorial board, "How Do You Like the Trade War Now? Trump is furious that Canada won’t take his tariffs lying down.," The Wall Street Journal, March 12, 2025

WSJ Editorial Board: calling Trump's tariffs the "dumbest" in history is an understatement

President Trump likes to cite the stock market when it’s rising as a sign of his policy success, so what does he think about Monday’s plunge?  The Dow Jones Industrial Average took a 650-point header after he announced that he’ll hit Mexico and Canada on Tuesday with 25% tariffs. 

Mr. Trump said at the White House there was “no room left” to negotiate with the two American trade treaty partners.  Some of his smarter advisers have been hoping he’d start renegotiating the USMCA and delay the tariffs.  But Mr. Trump wants tariffs for their own sake, which he says will usher in a new golden age.

We’ve courted Mr. Trump’s ire by calling the Mexico and Canada levies the “dumbest” in history, and we may have understated the point.  Mr. Trump is whacking friends, not adversaries.  His taxes will hit every cross-border transaction, and the North American vehicle market is so interconnected that some cars cross a border as many as eight times as they’re assembled.

Mr. Trump also objected when we reported an analysis by the Anderson Economic Group that the 25% tariff will raise the cost of a full-sized SUV assembled in North America by $9,000 and a pickup truck by $8,000.  Is this how the new Republican Party plans on helping working-class voters?

~ The Editorial Board, "Trump Takes the Dumbest Tariff Plunge," The Wall Street Journal, March 4, 2025