Trump is following the authoritarian playbook as his tariffs damage the U.S. economy: Find scapegoats, restrict the flow of accurate information, and place puppets in key roles to generate fantasy data.
As noted in a previous column, the tariffs imposed by U.S. President Donald Trump are being paid for almost entirely by Americans. American businesses and consumers are eating 86% of the cost of tariffs, with just 14% being absorbed by foreign countries.
And even some of Trump’s Republican colleagues are warning of how tariffs are damaging key industries:
Tariffs are also increasingly impacting the U.S. economy, with weak job numbers and rising core inflation:
“Though the inflation rate stayed stable between June and July, core inflation, which excludes the volatile energy and food industries, went up 3.1% over the last month – a higher pace than what was seen in June.
Prices for takeout and restaurants jumped up 3.9% over the last year, pushing up overall food prices by 2.9%. Prices for used cars, housing and medical care also jumped up higher than the overall rate.”
“Economists say that it takes time for tariffs to show up in consumer prices. Some retailers have been stocking up their inventory to delay the impact of tariffs and keep prices stable. But the jump in prices suggests that companies have started to pass down costs to customers, as leaders of companies like Walmart, Nike and Macy’s have said would happen.”
And remember, the full brunt of Trump’s tariffs has not been felt, as higher rates only went into effect in early August following a spate of ‘deals.’
It’s always someone else’s fault…
As the economic stats continue to show the toll of tariffs, Trump’s response is to lash out and blame others. For example, he is demanding the U.S. Federal Reserve cut interest rates even amid rising core inflation. And rather than making his views felt and then respecting central bank independence, Trump is escalating his campaign of pressure and threats. Here’s what he said on Truth Social:
“Jerome “Too Late” Powell must NOW lower the rate. Steve “Manouychin” really gave me a “beauty”when he pushed this loser. The damage he has done by always being Too Late is incalculable. Fortunately, the economy is sooo good that we’ve blown through Powell and the complacent Board. I am, though, considering allowing a major lawsuit against Powell to proceed because of the horrible, and grossly incompetent, job he has done in managing the construction of the Fed Buildings. Three Billion Dollars for a job that should have been a $50 Million Dollar fix up. Not good!”
Trump wants debt to be cheap so he can overheat the economy, with little regard for the long-term consequences of expanding the already immense U.S. debt pile. Lower rates would help temporarily mitigate some of the impact of tariffs, effectively hiding some of the cost of Trump’s misguided economic policy in the short term at the expense of making the U.S. more vulnerable to a debt crisis in the medium to long term.
While Trump cannot easily remove the Chair of the Federal Reserve, he has already removed the head of the Bureau of Labour and Statistics (the agency that puts together the monthly U.S. jobs report) following recent poor job numbers, and replaced her with a far-less qualified individual who just so happens to have previously mused about suspending the monthly jobs report:
And Trump is now calling for economists at private banks to be replaced because he doesn’t like what they say:
Let’s call this what it is: Authoritarianism.
Trump will simply not accept responsibility for the consequences of his economic policies. He has embraced an economic worldview that is fundamentally at odds with reality, meaning the more he imposes that worldview, the worse the results will be. But since he demands total power without any responsibility, he will need to continue finding scapegoats.
And since even scapegoating stops working at a certain point, he is already trending towards where most authoritarian leaders end up: Stifling the flow of information and demanding the creation of fake data to generate an illusory world where his policies somehow work.
We expect to see this in places like Russia, China, Iran, and other authoritarian countries. To see it happening in the United States is deeply unsettling.
Spencer Fernando
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