Morning Joe’s Steve Rattner Warns ‘Economically Incoherent’ Trump Tariffs Are ‘Highest’ Since ‘WWII’
Morning Joe economic analyst Steve Rattner warned that President Donald Trump’s tariffs were “economically incoherent” and would cause costs to spike for Americans, showing the policy in stunning historical context as the “highest” rates “since World War II.”
Trump’s long promised 25 percent tariffs against nearly all imports from Mexico and Canada came into effect at 12:01 a.m. on Tuesday in a move that immediately sent the Dow Jones, S&P 500, and Nasdaq into sharp decline. Trump justified the tariffs as a measure to pressure both countries into curbing undocumented immigration and the flow of fentanyl across their borders.
An additional 10 percent tariff on Chinese imports pending in a move that will impact the top three U.S. trade partners.
The move immediately sparked a call for retaliatory measures from Canada, with Prime Minister Justin Trudeau promising counter-tariffs on $155 billion of American goods.
Speaking to Morning Joe host Joe Scarborough on Wednesday, Rattner laid out the scale of Trump’s policy and predicted which sectors are set to be hit hardest by the escalating trade war. Beginning he described the tariffs implemented in Trump’s first term but also the USMCA free trade agreement, which he said was no “im effect ripped up.”
These new tariffs on China, on Mexico and on Canada have brought our average tariff rate to over 10 percent. And just to put that in perspective, this is the highest tariff rate we have had since World War Two. The whole history of post-World War Two was bringing tariffs down, bring countries together, making them economically more integrated as a means also of having more peace and less likelihood that one of them would attack another. And now Trump has gone the other way.
He’s doing this against the backdrop that is not ideal: inflation. We can debate who’s fault inflation is, he certainly took a shot at Biden last night, but inflation has come down. But it’s kind of stuck around 3%. And the Fed’s target is 4% and this has implications for interest rates. It will be very hard for the Fed to cut interest rates further with inflation stuck around 3% and even going up a little bit.
Rattner continued to discuss where U.S. consumers would feel the impact of tariffs the most:
I’ll say just one more time, at the risk of being too ad nauseam, that tariffs are like a national sales tax. They increase the price of what Americans pay for goods that come from overseas.
Consumer computers and electronics, we know, are not really made here very much. And so those imports are going to potentially drive the prices of those up, 10.6% leather products. You could almost look at this list as a proxy for what we don’t make anywhere and else. And therefore we have to import it: Leather products, electrical equipment, wearing apparel, especially motor vehicles, are very complicated in terms of what’s made here, what’s made in China, what’s made in Japan and what’s imported from elsewhere, and textiles we don’t make much of here and so on and so forth.
As I’ve said repeatedly, repeatedly, repeatedly, and you’ve said it, it is a form of national sales tax. According to the Budget Lab, a nonpartisan group. They think that the average cost to an American will be about $1,800 a year from these tariffs. And of course, if you impose more tariffs, the costs will go up. And not surprisingly, again, these tariffs hit poor people.
And I would just add, maybe I should have had a bar on it here for you, all you guacamole lovers out there, virtually every avocado is imported from Mexico and the price of avocados are likely to go up 25%. So I would suggest buying very, very quickly.
Commenting on the consumer response to the tariffs, Rattner concluded: “It is a worrisome time. The stock market has jitters. There are other worrying signs in the economy. Trump is taking office at a rather precarious time in the economy. And so when you combine that with a lot of his policies that are, frankly, economically incoherent, it’s going to be interesting to see how it plays out.”
Watch above via MSNBC.
