Trump’s tariffs will end in tears all round

If US President Donald Trump is skilled at anything, it is demagoguery.

- Koichi Hamada

By stoking voters’ fears and prejudices, he manages to win support for, or distract from, extreme policies that benefit himself, his family, and his (mostly ultra-rich) cronies, and cause serious harm to virtually everyone else. The key to his success is knowing which buttons to push.

Mr Trump’s embrace of tariffs exemplifies this approach. The factor-price equalisation theorem states that, over time, free trade tends to cause the prices of identical factors of production, such as labour, to be equalised across countries. Never mind the countless real-world variables that would prevent wages in China or Vietnam from matching US levels any time soon. Many American workers are frustrated with stagnant incomes, and fear being displaced by AI. So, when someone says that open trade is driving down their wages or causing their jobs to move elsewhere, they listen.