When Trump threatened Brazil with punishing tariffs on Wednesday, there was no fancy mathematical equation trotted out this time as justification.
The 50% levy on goods was retribution for a perceived “witch hunt” against his political ally, Jair Bolsanaro, whose supporters attempted a coup two years ago.
This administration is bringing back the law of the jungle to international trade, according to trade expert Kristen Hopewell, and time is running out to salvage the remains of a post-war system of commerce that promoted stability and prosperity across the world.
“Trump is a totally unreliable negotiating partner,” she tells Fortune. “Any deal you strike with the administration is not worth the paper it’s written on.”
When this country was founded, tariff revenue was enough to fund the entire federal government. Those days are long gone, and they’re not coming back.
Nowadays, there are basically two reasons to play the tariff game. 1. Extract tariff concessions from your trading partners, and 2. Encourage domestic production. The problem is, if you’re going for #1, you have to be willing to drop your tariffs at the drop off a hat to make a deal. If you’re playing #2, the people that build factories and whatnot want assurances that the tariff supports will be in place for years and years.
So you can see that there’s an inherent trade-off between #1 and #2. To some extent, you cannot serve both masters. But Trump has been playing both strategies at the same time without a care in the world. There are… consequences… to doing that, which I am sure we will all get to experience.
Edit: okay, okay. This Bolsonaro thing is a brand new strategy #3 which I’m calling… Oh geez… I gotta go buy some more beer.
There’s a third: manipulate the market so that you can keep making more and more money at the expense of normal Americans.