For awhile, it looked like Donald Trump was going to declare war on North Korea. Now it's beginning to look like he's declaring war on . . . the world. Paul Krugman writes:
We’ve known all along that Donald Trump is belligerently ignorant about economics (and many other things). But up to this point that hasn’t mattered much. He took office amid a sustained recovery that began under his predecessor, and that recovery had already lifted the U.S. economy to the point where “normal” policy rules apply: interest rates are above zero, monetary policy is effective again, so short-term economic management is in the fairly reliable hands of the Federal Reserve, not the chaotic Trump White House. What the president didn’t know couldn’t hurt us.
It's now abundantly clear that his ignorance could hurt all of us. He simply doesn't understand trade:
Trump has always had a thing about trade, which he sees the way he sees everything: as a test of power and masculinity. It’s all about who sells more: if we run a trade surplus we win, if we run a trade deficit, we lose.
This is, of course, nonsense. Trade isn’t a zero-sum game: it raises the productivity and wealth of the world economy. To take a not at all random example, it makes a lot of sense to produce aluminum, a process that uses vast amounts of electricity, in countries like Canada, which have abundant hydropower. So the U.S. gains from importing Canadian aluminum, whether or not we run a trade deficit with Canada. (As it happens, we don’t, but that’s pretty much beside the point.)
He has no idea how closely integrated the world economy has become:
We live in an era of global supply chains: just about everything produced in America (and everywhere else) uses inputs produced in other countries. Your new car may well have a chassis assembled in the U.S., an engine and wiring system made in Mexico, electronics from Korea and China, and, of course, steel and aluminum from Canada.
So, when he raises tariffs on products from other countries, he sets off a tit for tat cycle:
So we can’t “win” a trade war. What we can do is start a cycle of tit-for-tat, and when it comes to trade, America — which accounts for 9 percent of world exports and 14 percent of world imports — is by no means a dominant superpower.
A cycle of retaliation would shrink overall world trade, making the world as a whole, America very much included, poorer. Perhaps even more important in the near term, it would be highly disruptive.
Put simply, Krugman writes, Trump's actions are "surpassingly stupid." With each passing day, it becomes clearer that the president of the United States is an Orange Idiot.