There is no method to Trump’s tariff madness

[LONDON] Is there any method to the trade tariff madness US President Donald Trump unleashed on Apr 2? No one can answer this question with confidence, because Trump is a politician who has made unpredictability part of his brand. But answer it we must, so here is a list of possible reasons why Trump launched the trade equivalent of World War III.

Start with the obvious: Trump actually thinks the tariffs will bring manufacturing jobs back to the US and make the American economy great again. This was always a half-baked notion, at best. But if Trump believed that his latest tariffs would amount to America’s “Liberation Day”, subsequent events should have disabused him. The US stock market has tanked, analysts are close to predicting a recession, and pressure is building on the Federal Reserve to cut interest rates and fix the mess.

Moreover, economics textbooks suggest tariffs should cause the US dollar to gain in value, as Americans import less and therefore supply fewer dollars to the currency market. Instead, the shock from the scope and scale of Trump’s reciprocal tariffs was so nasty that the greenback depreciated against the world’s major currencies, which can only mean traders are expecting US economic activity to decline.