It’s a sad day when Adam Smith is misrepresented to justify Trump’s insane trade policies.

Smith did say that national defence was one case in which free trade may not be the best policy. But Trump’s claim that trade deficits rendered the US “dependent on foreign adversaries”, is economically incoherent – the existence of a trade deficit bears no relation to military capabilities. Smith did not argue that defence justifies tariffs – which makes no sense – but that they may justify other measures that impede free trade, such as not allowing the military to rely on imported equipment.

Smith’s argument for matching taxes is not one used by Trump and in fact is rarely relevant because imported goods are mostly subject to the same taxes as home-produced ones.

Smith also said that temporary high tariffs may be appropriate in retaliation for other countries’ high tariffs, but only as a temporary bargaining chip to try to persuade those countries to reduce their own trade barriers. Arguably, this may be what Trump is doing. The least damning interpretation of his actions is that he knows his tariffs are dumb and has no intention of sustaining them, but he hopes to shock his trading partners into reducing their own tariff and non-tariff barriers. This may even have been partly effective. But in the process, he has caused massive uncertainty and damaged trading relations with countries including Australia that do not have high tariffs or other trade barriers. Most importantly, the USA cannot be trusted to abide by its commitments under various free trade agreements.

http://quod.lib.umich.edu/cgi/t/text/text-idx?cc=ecco;c=ecco;idno=004861571.0001.002;node=004861571.0001.002:5;seq=291;view=text;rgn=div1

Those of us old enough to remember the oil price shocks of the 1970s will be sceptical of an argument that higher import prices don’t affect inflation. Tighter monetary policy might prevent a one-off shock from higher prices from morphing into a persistent outbreak of inflation. But it could well cause a recession.

insane trade policies
Rhian,
Why is forward thinking & planning always portrayed as negative by those who don't contribute & only look for instant gratification ?
It's the non-contributing intellectual experts whose policies are driving inflation & social regress & economic imbalance !

Trumps tariffs aren't working and are instead sinking the US faster.
Yay!
http://www.youtube.com/@SeanFooGold/videos

Armchair Critic,
Do you seriously expect that years of mismanagement culture can be reversed in just a few months ?
Stop looking at now, act for tomorrow ! Why do you think all these "economic experts" aren't in business themselves ?