As a child in 4-H, I learned the fable of the Wise Man, The Young Boy, and The Little Bird. In the story, a young boy plans to trick a wise man by hiding a small bird in his hands and asking the wise man if the bird was alive or dead. If the wise man said the bird was alive, the boy would squeeze his hands and kill the bird. If the wise man said it was dead, the boy would open his hands and let the bird fly free. Either way the boy would prove he was smarter than the wise man.
The lessons of this fable seem especially relevant to our current moment, as President Trump holds the fate of our country in his hands. Love him or hate him, there’s no denying that President Trump makes big decisions, thinks outside the box, and swings for the fences in his policy agenda. The President has made more big pivots in the last few months than most presidents in a four-year term.
While I have mixed feelings about the range of policy shifts, one major policy move has me stymied: slapping punitive tariffs on every U.S. trading partner, even our friends and allies.
As CEO of the Consumer Technology Association, which represents some 1300 U.S. tech companies, I hear daily from business leaders about the disruption and angst they’re feeling. In our industry alone, tariffs added over the past month affect some 1100 tech products and $816 billion in U.S. imports. Even factoring in the “exclusions” allowed by the President’s April 11 memorandum—likely only temporary relief given the promise of additional tariffs—these tariffs increase costs to import some 1000 tech products representing $433 billion annually.
The uncertainty is just as damaging. Business leaders can’t plan or make long-term investments when they don’t know what tariff rates will look like tomorrow, never mind six months from now. More, 145% tariffs make China imports costly and improbable.
Are the Crackerjacks worth the prize? President Trump says these tariffs are needed for national security, revenue, and as the proverbial stick to reshore manufacturing and create jobs. But the revenue is illusory as it assumes a healthy economy and continued buying despite soaring prices. That’s not to mention the jobs fiction. Even those companies inclined to move manufacturing here know that factories can’t be built and supply chains can’t be moved overnight. We lack the equipment, knowledge, workforce, and access to raw materials and other inputs. And as one business leader asked, “where am I supposed to get the resources to build factories when I’m just trying to survive?”
In the long run, I see two opposing paths for President Trump’s approach to trade. If he chooses to stick with isolation and high tariffs, it will be a catastrophic economic miscalculation. Doubling down on the highest tariff rates in a century will make nearly every product bought by Americans cost more, hurt our economic growth and ability to export goods, isolate us from the world, and cause more stock market declines. It will weaken the dollar and speed the world’s move away from our currency as a safe-haven reserve. Without a pivot, expect a recession or worse.
Even once these factories are built, they are likely to be highly automated and employ more engineers than blue collar workers. In the meantime, American consumers will pay multiples more for the products than they do today. While President Trump’s vision is laudable, the facts declare it an impossible dream.
There’s another interpretation: Trump’s tariff bluster may be 3D chess. In the wake of the so-called “Liberation Day” tariff announcement, he says global leaders have sought negotiations and deals to avoid economic pain. If the result of tariff threats is lower or even zero tariffs and a reduction in non-tariff trade barriers, history will laud President Trump’s spectacular strategy.
Going to “tariff zero” with America’s trade partners – especially like-minded democratic allies – will usher in a golden age for our economy. It would expand American exports as we tapped into new markets and lower the prices Americans pay for imports, growing our tax base. It would keep inflation in check and allow interest rates to drop. A two percentage point drop in the federal interest rate would save over $700 billion in annual payments on our national debt.
More, stronger trade ties to our Treaty allies and fellow democracies enhance our national security. We don’t want to go from MAGA to MAGAA (Make All Go Against America). The closer we get to zero tariffs, with other nations committed to buying our products and friendly nations integrated into our supply chains, the stronger and greater we become.
And so, I say to President Trump the same thing said by the wise man: “It is up to you whether the bird lives or dies.” For the sake of our economy and our future, I hope the President unshackles our economy from these destructive tariffs and allows it to soar.
