A strange feature of American policy is that business people, especially small business owners seem to believe that they will do better under Republicans, even if history shows that business is better under democrats. The owners of small businesses supported Trump in the last elections, despite numerous evidence that it would be very bad for business.
And now I get a rude awakening.
Let’s talk for a second about price controls.
A few weeks ago, Viktor Orban, the de facto dictator of Hungary and a love set, announced that he imposes a profit-practical margin caps for pricing-by food. I intended to write something about it as a warning that something similar could happen in the United States, that businessmen were stupid if I suppose Donald Trump was on their side.
Unfortunately, I never got to write that post. So I was missing the chance to be prophetic, because it was already: Trump said that car executors in March did not increase prices in response to rates. He denies that he said, but the reporting seems solid. His statement to make the title that «he could not care less» about increasing the prices of the car seems to have been about imported vehicles, not domestic production.
The reason why I expected Trump to follow in Orban’s footsteps is that Trump, like Orban, does not clearly have fixed principles, other than power and self-assessment. According to Trump, politics will not reflect any consistent ideology. Instead, he will change with his perception of his personal advantage, his temperament, his whims and his malignant narcissim. If he does not like the increase in prices, he will try to stop inflation by intimidation.
In short, the store will be very bad for business.
Most immediately, it seems that Trump does not care that his tariffs will increase business costs, in addition to increasing prices for consumers. We will better understand how many costs will increase after the «Day of Liberation», the big announcement of the new proclaimed rates for Wednesdays. (War is peace, freedom is slavery, tariffs are tax reductions.) But growth has already begun.
Indeed, due to the tariffs already in force, the US economy is already unsuccessful, the producers had difficult to keep their things together.
You see, steep steel and aluminum rates were the opening savory in Trump’s commercial war and are applied not only to the metals itself, but to anything done from metals, including screws, nuts and screws. And foreign producers are not the absorption of tariffs; I suddenly rise the prices.
Of course, it was predictable and foreseen. Rates do not only make foreign goods more expensive for consumers. In a world where many of the goods we import are productive entries, such as screws – or car parts – the rates directly increase the manufacturing costs in the United States. However, Trump’s threats against car producers suggest that he thinks he can control inflation by intimidation.
The direct effect of growing costs based on rates is, however, just the beginning of the ways in which trumpism will be bad for business.
In the past I was skeptical about the statements that uncertainty is an important factor in the economy. In the years Obama, vague, the waters of «uncertainty» often seemed, in practice, to be invoked as a fantasy way to say «policies that I do not like» and was used as an excuse for that fiscal austerity forced by the Republicans of the Congress they detained the economy. But in the 10 weeks since Trump was inaugurated, the perceived uncertainty has increased. Here is an index quoted on a large scale:
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