Trump tariffs: Looking for rationality, even if probably there is none

(Note: I wrote this on April 8th and did not expect that Trump would steal my thunder and pause the tariffs for 90 days)

We are all desperate to find any rationality in Trump’s tariffs, probably in vain. Still, I propose my attempt in the following table.

The first 3 rows are the possible purposes of tariffs, the fourth row describes Trump’s tariffs:
1. Increasing public revenue
2. Bringing manufacturing back to the US
3. Create negotiating chips to extract economic or non-economic concessions
4. Trump’s tariffs

The columns are the possible characteristics of tariffs:
1. The level of the tariffs
2. For how long will they be imposed
3. Whether they are sector/country-specific or general in scope.
There is no question that Trump’s tariffs are high, while, of course, we don’t know for how long they will last. They are also specific per sector (steel, aluminium, autos, various exemptions) and per country (Russia= 0, China =124%, Penguins in the Antarctic uninhabited islands = 10%, … ), and you can make a story that this depends on the concession you want to extort: more negotiating chips with those from whom you want to extract more. This could apply internationally, but also domestically as there will probably be Americans, not only foreigners, queueing in front of the White House begging for tariff exemptions or reductions.
There are two messages in the table. The first message is that tariffs cannot achieve all three objectives: certain characteristics deliver one objective, other characteristics deliver another objective, and there is no configuration of tariffs that can deliver all objectives.

The second message is that the rationale underlying the table is the following:

• If the purpose is revenue, the tariffs should be medium-sized (not to hit the downward sloping part of the Laffer curve), last for long and apply in equal way to all sectors and countries.
• If the purpose is reshoring manufacturing to America, tariffs should be medium-sized, last for long, and be specific, since the ease of reshoring depends on sectors/countries.
• If the purpose is to create negotiating chips, tariffs should be high, temporary, until the negotiation objective is reached, and specific, since the sought-after concessions will be sector or country-specific.

Trump’s tariffs are high and specific. According to the rationale in the table, they should also turn out to be temporary.

But, unlike in the table, there is probably no rationality in Trump’s behaviour, including in tariffs. So, maybe, I should have not written this post, or you shouldn’t have read it.