One of the many pleasures of viewing the 1986 comedy Ferris Bueller's Day Off was watching Ben Stein lecture his somnolent high school class on the Hawley Smoot tariff bill of 1930 -- a raising of high tariff barriers that resulted in reciprocal barriers around the world and probably was a major factor in greatly prolonging and aggravating the Great Depression.
Tariffs have been a dirty word in economic and political circles ever since. But Donald Trump must have been one of those glassy-eyed, half-asleep students in the film. He didn't get the message.
"Hey gang, I've got a cool idea," he shouts to all his friends. Well, to his dog. Well, to Barron. "Why don't we raise tariffs? That will show all those clever foreigners that I'm making America great again, and Uncle Sam isn't their dupe no more." And so it happened. He announced over the weekend -- in a tweet, of course -- that he planned to impose a 25 percent tariff on imported steel and 10 percent on imported aluminum. Even Barron looked shocked. "But dad, NOBODY has tariffs anymore! They went out with spats! Didn't you ever watch Ferris Bueller on one of your many TVs? Oh, sorry, Dad, no offense."
The nation was shocked. Our allies were shocked. Even his own party was shocked. House Speaker Paul Ryan actually suggested that perhaps His Excellency had not considered all the implications? Perhaps he should talk to his economic adviser, Gary Cohn, for a little background on why tariffs in general are a bad idea, and why these particular tariffs at this particular point in the economic cycle are a very bad idea? Trump looked startled that the once talkative but recently subdued Mr. Ryan had actually spoken out, but refused to back off.
As for economic adviser Gary Cohn, well, he's out of there. Resigned. Giving up on trying to make a silk purse out of a sow's ear; or an educated president out of a block of obsidion. Goldman Sachs is looking mighty good, I suspect he's thinking.
Stock market wavered around a bit today, as rumors were floated that the President might be changing his mind. Probably not. He thought this out carefully at 3 a.m. a few nights ago, and, by gum, he knows what he's doing. Expect the Dow to fall. Expect retaliatory tariffs. Expect to pay more for everything.
Enjoy your (possibly) lower taxes next year. You'll need the additional money to keep up with rising prices.
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