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On Liberation Day, President Trump held up what most economists correctly thought was a rather silly reciprocal tariff chart. Armed with that chart and under the cover of the International Emergency Economic Powers Act (IEEPA) of 1977, Trump then imposed reciprocal tariffs on most of the world\u2019s other countries.<\/p>\n
To pass the legal smell test, actions taken by the president under the IEEPA must be in response to an \u201cunusual and extraordinary\u201d foreign threat to our national security. Does the U.S. trade deficit pose a foreign threat? Hardly. The U.S. has incurred a trade deficit each and every year for the past 50 years, and those deficits have never posed a threat to America\u2019s national security. Indeed, trade deficits have become routine.<\/p>\n
But aren\u2019t the deficits \u201cbad,\u201d as claimed by President Trump? Hardly. As long as they can be financed with ease, trade deficits are \u201cgood.\u201d They allow Americans to live high off the hog by consuming more than they produce.<\/p>\n
So, when the Supreme Court struck down Trump\u2019s reciprocal tariffs, it didn\u2019t surprise me. The court was not \u201cunpatriotic and disloyal to the Constitution,\u201d as President Trump asserted in his response to the decision. Indeed, it\u2019s obvious to all that U.S. trade deficits do not pose a national security threat and do not rise to the level of a national emergency.<\/p>\n
Never mind. No sooner had the ink dried on the Supreme Court\u2019s February 20 ruling, than President Trump was at it again. By the end of the day, he announced the imposition of a new global, across-the-board tariff of 10%. That was followed the next day by Trump raised the tariff ante from 10% to 15%.<\/p>\n
But what about President Trump\u2019s claim that trade deficits are caused by foreigners ripping off Americans? This is yet another baseless claim.<\/p>\n
America\u2019s trade deficits are made in the good old U.S.A., because Americans spend more than they produce. This can be shown by a simple economic identity that all students learn in principles of economics: Consumption (C) + Investment (I) + Government Spending (G) + Net Exports (X) = Gross Domestic Product (GDP). Like all identities, it is true by definition. When total spending (C + I + G) exceeds GDP, there must be a trade deficit that\u2019s equal to the amount that spending exceeds GDP. Sure enough, in 2025 total spending in the U.S. was $31.7 trillion, while GDP was $30.779 trillion. Spending exceeded GDP by $0.921 trillion, and bingo, that was exactly what the U.S. trade deficit was equal to last year. It should be clear that trade deficits are generated by a simple fact: Americans spend more than they produce. Contrary to President Trump\u2019s assertions, trade deficits are not produced by foreigners ripping off Americans.<\/p>\n
But won\u2019t tariffs close the trade deficit, create jobs, and make the economy boom, as President Trump claims? In a word: no. The gap between America\u2019s spending and its gross domestic product determines the magnitude of America\u2019s trade deficit. As it turns out, the gap in 2025 was almost exactly what it was in 2024. So, the trade deficits in those years were almost identical. All tariffs do is reshuffle the countries that supply the American imports that fill the spending-GDP gap. They don\u2019t alter the overall trade deficit.<\/p>\n
Tariffs don\u2019t create jobs, either. Not only have none of the manufacturing jobs that President Trump touted materialized, but manufacturing jobs in the U.S. actually contracted last year by 108,000. If that\u2019s not bad enough, only 181,000 total jobs were created last year, down from 2.2 million in 2024. Contrary to the Spinmeister-in-Chief, tariffs are, when it comes to jobs, a flop.<\/p>\n
Not surprisingly, the tariffs also failed to create an economic boom. The GDP growth for 2025 came in at 2.2%, slightly less than the 2.3% rate in 2024.<\/p>\n
All Trump\u2019s tariffs have done is impose a sales tax on Americans, create uncertainty, if not chaos, in international markets, and turn friends into enemies. It\u2019s no surprise that the tariffs have become widely unpopular at home, too.<\/p>\n
There is only one thing worse than the blind leading the blind. That\u2019s when the deluded lead them.<\/p>\n
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of <\/em>Fortune.<\/em><\/p>\n<\/div>\n #Trumps #tariffs #lesson #economic #legal #ignorance<\/p>\n","protected":false},"excerpt":{"rendered":" On Liberation Day, President T… <\/p>\n","protected":false},"author":1,"featured_media":24506,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[2],"tags":[486,310,14197,4258,7486,489,490,491,496],"_links":{"self":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts\/24505"}],"collection":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=24505"}],"version-history":[{"count":0,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts\/24505\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/media\/24506"}],"wp:attachment":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=24505"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=24505"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=24505"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}