UPDATE (April 9, 2025, 2:21 p.m. ET): President Donald Trump on Wednesday said his administration will pause most “reciprocal” tariffs for 90 days but raise tariffs on China to 125%.
As Donald Trump’s trade tariffs rock global markets, there’s no shortage of questions about the president’s agenda, but at the top of the list is the most straightforward question possible: Why? Why is he doing this?
As the administration’s tariffs took effect, Fox Business’ Maria Bartiromo told Treasury Secretary Scott Bessent, “Business leaders are saying to me, ‘Why are we doing this?’ Everyone was very excited about President Trump’s agenda — deregulation, tapping into energy, tax cuts — and now, boom, with these tariffs everything has changed. Why are we doing this?”
The fact that a conservative media host — hardly a critic of this White House — didn’t know the answer seemed like a bad sign. That said, the president has taken some steps toward offering an explanation for his radical and damaging plans: On Sunday night, en route to the nation’s capital after his latest golfing weekend, Trump told reporters that one of his principal goals is eliminating trade deficits. He added that, as far as he’s concerned, a trade deficit is “a loss” that he can’t tolerate.
For those who’ve followed Trump’s career, the rhetoric was not surprising. He’s spent much of his tenure in public life condemning trade deficits.
Whether he understands trade deficits, however, is a separate matter entirely.
At a basic level, if the United States buys more products from a country than it sells, that gap represents a trade deficit. To hear the Republican president tell it, such deficits must necessarily be seen as a problem in need of a fix — because any such gap is proof that Americans are getting “ripped off.”
As a New York Times report explained, this isn’t just wrong; it’s absurd.
[E]conomists argue this is a flawed way to approach the issue, given that bilateral trade deficits crop up for many reasons beyond unfair practices. “It’s totally silly,” Dani Rodrik, an economist who studies globalization at Harvard University, said of Mr. Trump’s focus on bilateral deficits. “There’s no other way to say it, it makes no sense.”
I’ve long wondered how I’d explain this to the president in a way he’d understand if I ever had an audience with him. The most common metaphor focuses on supermarkets: Typical American consumers run trade deficits with their local grocery stores since people buy products from the stores, and the stores tend not to buy products from consumers.
That’s not a bad thing: People give supermarkets money, and in exchange, supermarkets provide people with groceries they want and need. The fact that there’s a trade gap is unimportant.
But since Trump tends to find groceries to be odd and mysterious, this explanation probably wouldn’t resonate, so I’d try a different pitch.
In the president’s first term, he was determined to lower the nation’s overall trade deficit. He failed: In 2019, the year before the pandemic, the Commerce Department said that the United States posted a $891.2 billion merchandise trade deficit, the largest in the nation’s history.
And yet, in 2019, the U.S. economy was nevertheless fine. In fact, according to the White House, it was the strongest economy in the history of human civilization. The fact that Trump failed to shrink the trade deficit was entirely inconsequential.
If the economy can thrive, even as the trade deficit grows, why bother wreaking global havoc to address a problem that isn’t a problem?
Not to put too fine a point on this, but the answer is that Trump doesn’t appear to have any idea what he’s talking about. As the Times’ Jamelle Bouie explained in his latest column, “He did not reason himself into his preoccupation with tariffs and can neither reason nor speak coherently about them. There is no grand plan or strategic vision, no matter what his advisers claim — only the impulsive actions of a mad king.”
Trump’s confusion and ignorance are a problem, but making matters far worse is the fact that he’s wholly unaware of his confusion and ignorance. The president boasted during his first term, in reference to trade policy, “I understand that issue better than anybody.” He added soon after, “I know every ingredient. I know every stat. I know it better than anybody knows it.”
If that were true, it’d be quite reassuring, but it’s not. In fact, what the Republican sees as one of his signature issues is actually one of the areas in which he’s most confused.
It’s the worst of both worlds: Trump doesn’t know the issue, and he doesn’t know that he doesn’t know the issue.
What’s more, a growing number of people — investors, foreign officials, business leaders here and abroad, et al. — are increasingly aware of the fact that the emperor has no clothes, which only makes the larger crisis more severe: Few have confidence that the man responsible for this mess knows what he’s doing, or even understands the issues at a rudimentary level.
