Beyond Penguins: Trump's Erratic & Costly Tariff Policy

Is everyone tired from winning yet? Maybe you should ask your 401K? On second thought, maybe you shouldn’t right now. Big K—make that Little K—is in a panicked retreat at the moment. What little confidence Little K had in these uncertain times was crushed by Trump’s decision to impose blanket tariffs on most of the world’s trade imports (excluding Russia of course). Trump’s tariffs are likely to set off a global trade war. That will cause inflation, which will increase the price of goods and services of all kinds, and consequently lower the living standards of millions of Americans.

China has already retaliated with equally punishing tariffs on American imports. Europe is still pondering a response. But the tipping point for markets had to be when Wall Street traders realized Trump had imposed stiff tariffs on an uninhabited island in Antartica, which set off angry protests by the Island’s penguins.

Norfolk Island, Antartica

Yeah, that did it. Wall Street Traders realized that if the quality of thought behind these tariffs included imposing tariffs on a snow barren frozen island in Antartica, where no humans live, that was a good sign it was time to get the f**k out of the market—”biggley.”

From Trump’s announcement of his tariffs on late Wednesday, until Friday’s closing bell on Wall Street, the markets reacted accordingly. Upwards of $5 trillion in stock value was lost. Looking at the S&P 500’s performance during the past 11 presidents terms up to this point (see chart below), we see Trump (II) has the worst performance by far. An obvious note from the data is where Sleepy Joe finished—can you say “Numero uno”…by a lot. Trump should really take notice. Maybe Trump could help us out and start taking really long naps. The markets and the world might be a lot richer and safer.

Historically speaking broad based tariffs have never produced the growth and prosperity their advocates claim. Broad based tariffs tend to do the exact opposite. As we all know, or you should by now, one of the aggravating factors in the Great Depression was the Smoot-Hawley Tariff Act of 1930, which put tariffs on tens of thousands of imported goods. And of course we know just how that worked out for the American economy. We went from already bad to much worse.

I guess the biggest lesson of history might be that we learn nothing from history. To be fair to the Donald, he’s probably never read a history book in his life. No one honestly expected him to know (or care really) what history might teach us. But how about you? How many of you knew what the Smoot-Hawley Tariff Act was? “Anyone? Anyone?”

It was another Republican President, Herbert Hoover, that signed Smoot-Hawley Tariff Act into law, sending millions of Americans deeper into poverty and financial ruin. It took over a decade and World War II (a massive tax-payer funded stimulus) for the United States to recover economically from the collective mistakes of “businessmen” like Hoover. It took President Franklin Roosevelt, a Democrat and career public servant, and his New Deal legislation, to finally restore America’s greatest and set the foundation for the growth of the largest, most prosperous middle class in the world.

I don’t claim to know the future. Markets will eventually bounce back. We just don’t know when or how stable any market recovery will be with this level of uncertainty and instability. Trump is an agent of chaos, and markets like stability. With Trump as President, investors will always fear a market crash is just one press conference away.

Lastly, I would like to point out a suspicion that should be obvious. Trump has never divested himself of his business interests. He is actively running them while he is President of the U.S.—obviously this presents massive conflicts of interest. And not that any of you knew this, but Trump has an extensive—War and Peace reading length—legal record of shady dealings. He is, for the record, also a convicted felon on 34 counts of falsifying business records. And maybe you also didn’t notice, but Trump is an award winning bullshit artist. Nothing Trump says can be believed. Nothing.

But think about this. How do we know that Trump’s tariffs and other moves that push the markets up or down aren’t partially, or largely given his character, big insider trading style moves? This is a fair question. Trump and his cabinet of billionaires have the insider heads up to what Trump is going to say. Can anyone honestly say—with a straight face—that they’re sure Trump and his administration of super rich businessmen wouldn’t move stocks and assets in or out of the market based on their insider knowledge of what Trump is about to publicly say? I mean certainly Trump and his family, and his circle of rich “businessmen,” wouldn’t be involved in such criminality, right? And certainly if any of this was happening, I’m sure Trump’s Justice Department would launch an extensive criminal investigation into this level of criminality and breach of public trust at the highest levels?

Yeah, the check is in the mail…