The meme had me in stitches. There was our President appearing in a drawing on X, dressed as a Bishop in stained glass, his hand raised in blessing, bearing the caption: “St. Upid: the Patron Saint of Economic Collapse.”
The meme appeared in X March 4. Already the Dow had begun its descent. By April 4 as I write this just a month later, the Dow has fallen altogether 13.8% from a January all-time high. Back then our President had inherited from Joe Biden a thriving stock market.
The losses to the broader averages by April 4 were worse: the S&P 500 had fallen by 16.7%; the Nasdaq a whopping 22.4% in just six weeks, and the Russell 2000 had crashed 27%. It is the worst stock market start of any presidency in America’s history.
The stumble of course is the St. Upid tariffs. As the President went into the Rose Garden April 3 to make his “Liberation Day” announcement, markets were strongly up on the day. There was a relief rally anticipating, as the President had hinted, his tariffs would be limited in scope—just tit-for-tat reciprocal tariffs at the same percentage each nation had charged the US. China tariffs had been 7.3% and EU tariffs 5.2% (WTO). So, the thought was the US would impose corresponding 7.3% tariffs on China and 5.2% on the EU. As CNBC’s Jim Cramer, a “fair trader, not a free trader”, was to grouse afterward: “That’s not what we got”.
The shock in the Rose Garden started as soon as the President held up a white board showing not reciprocal tariffs, but something far, far worse than any worst-case scenario. Instead of a 7.3% reciprocal tariff China got walloped 34%, and China would retaliate the next day by 34% tariffs on the US. Instead of a 5.2% tariff, the EU got hit with 20% and the EU planned retaliation. The trade war was on.
None of it made any sense. Israel, which removed all tariffs on the US, still got hit with 17%. An island off Newfoundland with 500 people that only sold fish to the US got hit with 10% tariffs. Islands off Antarctica with no people at all, just penguins: tariffed 10%. Even South Korea, which had a free trade agreement with the US—posing no tariffs at America at all—slapped at 26%. All for no reason at all except St. Upid’s ugly animus against the entire world. How had it happened?
It happened because our President’s tariffs were not reciprocal, but based on raw trade imbalances that were not even deliberate. Brazil and Columbia, for example, have only small tariffs on the US, but provide lots of coffee beans because Hawaii alone can’t come close to producing all the beans we use daily. Why should Brazil and Columbia get hit with 10% tariffs simply for providing us the cheap beans America can’t provide itself? Or why slap Canada that provides us the uniquely thick oils Mississippi Gulf Coast refineries specialize in refining? It is unjust. And it is St. Upid at his stubborn, ideologically extremist worst.
As Stephen Colbert says, now our 401s “are no longer K.” Who signed us up for this?
What is truly, magnificently and massively St. Upid about all of this is that trade balances alone, in the words of the Tax Foundation, “should not be misunderstood to be indicators of economic health”. Rather: “Production and exchange-regardless of the balance on the current account—generate wealth.”
Peter Navarro, the trade guru to the White House, forgets that what we consume from the rest of the world is an asset that is part of our GDP we then use to generate more jobs and wealth as services we in turn provide the rest of the world.
Indeed, the Tax Foundation tells us: “Since the end of World War II, the world has largely moved away from protectionist trade policies toward a rules-based, open trading system. Post-war trade liberalization has led to widespread benefits, including higher income levels, lower prices, and greater consumer choice.”
Wise man Fareed Zakaria wrote it best back in 2020 in the first term of this President’s trade wars: “Most other countries understand that the best way to raise incomes at home is to expand markets abroad, buying and selling from the rest of the world. The United States has 4 percent of the world’s population. It needs to trade with the other 96 percent if it wants to improve its citizens’ lives.”
Manufacturing is clearly not our answer. Zakaria writes recently in the new world (not the steel mill world of the 1960s): “the United States runs huge surpluses in services—exporting software, software services, movies, music, law and banking to the world.” Indeed, he says: “The most advanced economies in the world today are almost all dominated by services” accounting for “…80 percent of all nonfarm jobs. Manufacturing is less than 10 percent.”
It was banking, not manufacturing, that made the Medici in Florence fabulously rich and gave us the most lavish art and architectural city in the entire world—remember? We should remember history to reverse the terrible ruination brought on by our stubborn Patron Saint of Economic Collapse.
Robert P. Wise is a Northsider.
