Trump returns to wrecking the US economy with nonsensical tariffs
(Originally published July 9 in “What in the World“) With war in Iran seemingly behind him and the U.S. back in the fight against Russia in Ukraine, Trump has resumed his attacks on the U.S. economy.
In his latest offensive, Trump announced plans to impose a 50% tariff on imports of copper, a raw material crucial to the U.S. manufacturing he purports to promote—carmakers, defense contractors, and everything, well, with electrical wiring. His move sent stocks down slightly (his extension only reinforces the “TACO trade”), but copper futures up 12% to a record. Trump also renewed his threat to impose tariffs on imported pharmaceuticals and semiconductors.
This follows Trump’s letters Monday to U.S. trading partners, granting an extension to his original July 9 deadline to reach new trade deals with the U.S., but threatening them with new tariff levels if they fail to reach a new deal by Aug. 1. The new tariffs are in most cases equal or higher than the “reciprical” tariffs he announced in April based on plugging miscalculated data into a bogus formula to achieve a dubious outcome. On Sunday, Trump vowed to impose a 10% tariff on any country that is a member of BRICS, which now includes the original sources of the acronym—Brazil, Russia, India, China, South Africa—as well as Egypt, Ethiopia, Indonesia, Iran and the U.A.E.
Trump’s policies continue to drive investors out of the U.S. for the perceived safety of foreign markets. The dollar The ICE U.S. Dollar Index has fallen by almost 11% in the first six months of this year, its biggest first-half drop since 1973.
The Supreme Court, meanwhile, allowed Trump to proceed with his sweeping layoffs of government employees. The court lifted a lower court’s order to pause the layoffs until a case could be heard determining whether the president can legally downsize federal agencies without Congressional approval. The Supreme Court said Trump is likely to win that case and, therefore, the layoffs may proceed.
A fresh sign of trouble for the U.S. housing market: delistings. Delistings have climbed 35% so far this year compared with last year, according to Realtor.com, as sellers pull their homes rather than accept lower bids from potential buyers.
U.S. businesses, meanwhile, are starting to face shortages of workers as Trump’s deportation of immigrants grow. Fear of deportation is leading some foreign employees to stop showing up for work, and some big companies are laying off foreign-born hires.