US President Donald Trump could make Americans sick.
In his trade war with China, the Twitterer-in-Chief announced plans to slap tariffs on about 1300 products imported into the US from the US’ economic nemesis on the other side of the Pacific.
Among those products which Trump plans to make more expensive is a suite of anti-depressants, drugs used to induce labour and even some that are used to treat cancer.
Malaria diagnostic kits, vaccines for human use, vaccines for animal use, drugs to help heart performance, insulin treatments — it’s a long list of China-made medicines that with a Twitter blast Trump plans to deploy in the front line of his “trade war”.
While economists and investors have fretted over what the presidential decree to impose $US50 billion worth of tariffs on Chinese goods will mean to the global economy, sick Americans are unlikely to get a second thought.
But they will be the real victims of “war” not based on fact but on Trump’s ignorance about his own economy, international trade and economic history.
He displayed some of that ignorance immediately after China revealed it would engage in its own economic form of Mutually Assured Destruction by imposing $US50 billion worth of tariffs on American imports.
Trump took to Twitter to say that “When you’re already $500 Billion DOWN, you can’t lose!”.
His $500 billion reference was to the value of Chinese goods shipped to the US last year.
He didn’t mention the $US130 billion worth of American goods shipped from the US to China in the same year.
That included $US12.4 billion worth of American soya beans, $US16.3 billion worth of American civilian aircraft (largely Boeing planes), $US10.5 billion worth of American passenger cars and $US4.4 billion in American oil.
So it was unsurprising China decided to be a little more specific in the economic pain it would take with its tariffs on American goods.
It decided to hit the biggest (like planes) and the most politically sensitive (soya beans).
Tobacco, cigarettes, whiskies, dried cranberries and corn were also on China’s list.
But not one drug or other life-saving product will attract an extra tariff, despite US medicines being among one of China’s largest imports from America.
That we are in this situation, where the US economy is travelling well with unemployment close to 4 per cent and interest rates edging up to more normal levels, says everything about Trump and his understanding of trade.
In his tweet, he suggested there can only be economic upside for the US if it hits China imports with $50 billion in extra costs.
That’s if you discount the sick or poor who face spending more of their income on important drugs.
You have to discount the dairy producers who will have to pay more for milking machines (on the US tariff list) and the wheat farmers who face paying more for a harvester (also on the US tariff list).
Poultry incubators and bread baking ovens are on the US list.
So up goes the cost of your American breakfast.
And perhaps the golf-loving President missed that electric golf buggies will also attract higher tariffs.
Trump needs to spend some time looking at what his policies will do to ordinary Americans.
All is based on Trump’s view that when it comes to two-way trade, there are winners (those running a surplus) and losers (those running a deficit).
In Australia’s case, we are obviously a loser. Last year Australia ran a $US14.6 billion deficit with the US, dominated by our imports of American planes, medicines and cars.
Despite our free trade agreement with the US, Australian exports to America have effectively flatlined for the past decade.
American exports to Australia have similarly barely changed in total.
Yet even with such a large surplus, the Trumpster has made clear he’d like to “fine-tune” elements of the Australia-American FTA so it’s even “fairer” for the US.
That’s a demand for change on a trade surplus..
What he wants from China, with which the US is running a $US375 billion deficit, is anyone’s guess.
Is it a deficit of $US200 billion? $US100 billion? A surplus?
What is clear is that by focusing on the size of the deficit, Trump is ignoring the whole point of international trade.
If an American poultry farmer can buy a cheap Chinese-made incubator, that should flow through to cheaper eggs.
And the winners from the cheaper eggs are hungry Americans.
If an American parent wants to vaccinate their child they have the ability to buy a cheap, Chinese version.
That frees up cash for that parent to spend money on something else — like some American eggs.
In the Trump world the consumer is ignored.
It’s all about the identifiable lobby group (think US steel producers) rather than silent majority who have to shell out more to buy imported goods because of his economic failings.
We have seen Trump’s world view before. It was called mercantilism, a belief that the key to a country’s success was to run trade surpluses with every other nation.
It dominated economic thinking through a period between the 1500s and 1800s.
It also contributed to a series of wars as nations fought over natural resources.
That mercantilism collapsed under the weight of its inherent contradictions, replaced by our system of free trade, has been a key part in creating a world that has never been richer — with far fewer people in abject poverty.
But knowing about mercantilism and its failings would require actual knowledge. Facts.
It’s unlikely to be the focus of an in-depth analysis on Fox News or on a Twitter feed..
Rather than viewing the world through the prism of 140 characters, Trump needs to spend some time looking at what his policies will do to ordinary Americans.
Alas, that seems unlikely.
Trump last week asked his chief trade adviser to consider an extra $US100 billion in tariffs on Chinese goods.
It was as if he didn’t even think that China would retaliate against his own initial rash tariff move.
Given what the initial $US50 billion worth of tariffs will hit, an extra $US100 billion means even more pain for ordinary Americans.
More expensive crutches or Band-Aids perhaps?
As an Englishman who lived through the mercantilist period may have reflected when considering Trump’s tweets and verbal utterances: “It is a tale told by an idiot, full of sound and fury, signifying nothing.”