Let Trump get away with it.

Why we shouldn't retaliate against Trump's tariffs.

• We could easily punish the US for Trump's tariffs.
• But it will hurt us too.
• Let his own people tear him apart.
• Because he will never admit to being beaten by another country.

I recently wrote about Trump’s aluminium and steel tariffs, and the potential for the rest of us to retaliate with our own tariffs, launching an all-out trade war which everyone will lose.

If we retaliate against Trump with our own tariffs, it probably will damage the US. But it will also hurt our countries too, by increasing the price of whichever US export on which we've just imposed a tariff (e.g. consumer goods for households, production inputs for businesses, etc.). Whatever we place tariffs on will become more expensive for us in the hope that it will damage the US and cause Trump to rethink his position - like a normal president would.

But Trump is no normal president. In this kind of contest, Trump will never admit to being wrong. After all his bluster about how the rest of us are taking advantage of the US, he will never admit that we beat him. He would scorch the entire Earth if it meant he could be king of the graveyard.

So retaliating will hurt everyone, us included, and will only make Trump dig his heals in more.

Which is why we should - and this is the part that requires some serious pride swallowing - let him get away with it.

These tariffs alone are bad, but not a disaster. But if we retaliate, the potential subsequent trade war could easily escalate beyond anyone’s expectations, causing serious pain and hardship the world over - even global recession. And that can happen even when there are reasonable people in charge.

Also, fortunately for us, Trump’s tariffs will hurt the US too. Industries such as automotive and other manufacturing (the typical “real” American blue collar industries Trump fantasises about) rely on foreign steel as an input. And tariffs on inputs can have multiplied adverse impacts on the final goods for which these inputs are used, far greater than the initial tariff. So this tariff will make the US suffer, without the need for the rest of us to retaliate.

It’s very likely Trump has no idea about this, especially given the fact his trade adviser Peter Navarro, recently said this:

“My function, really, as an economist is to try to provide the underlying analytics that confirm his intuition.”

So Trump doesn’t have people around him providing independent economic advice. He has propagandists and 'yes men'. But the manufacturers that suffer from this misstep will surely be loud about it. And these are the sorts of people (if any) to whom Trump will listen. Traditional business and industry Trump can remember from his childhood in the 1950s. And removing the tariff because these industries asked him won’t feel like losing or backing down for Trump. He likes them. But backing down in the face of international retaliation will feel like losing.

Trump’s tariffs won’t bring the US steel industry back in any big way so manufacturers will still have to import steel, now more expensively. We should let his own people tear him apart because of these tariffs. We shouldn’t force our people to suffer from our retaliation in the hopes it will make Trump see reason.

He’s not that kind of president.