Donald Trump has reveled all his life in his ability to make deals. In the international sphere, some terms are translated. Lawyers specializing in negotiation use shock as a main tactic, veering between demand and accommodation in order to recalibrate the adversary’s expectations and break down emotional resistance.

It  seems likely that Brent Neiman’s  tariff formula was subject to Trump’s direct modification, for the purposes of:

• Negotiation shock.
• Brinkmanship.
• Political exigency, to establish a new normal before political or popular resistance develops.

Quoting from (Axios) Trump up, Dems down in new polls; Politics Part 7,

The deficit, that killer of nations, is mentioned less and less as the menace steadily grows. The choices offered so far: let the ill and elderly die in the street, or go broke as a nation….

Something has to be done.  But he difficulty of doing is illuminated by a napkin calc.

The 2023 World Bank  figure for  U.S. foreign trade, as a percentage of GDP, the latest published, is 25%.

Quoting from (IMF) Recession: When Bad Times Prevail,

They typically last about a year and often result in a significant output cost. In particular, a recession is usually associated with a decline of 2 percent in GDP. In the case of severe recessions, the typical output cost is close to 5 percent.

The imposition of tariffs at the levels of April 2nd  would have an effect that does not appear to have been anticipated, since it has not been studied with any significance. It would not result in a proportionate decline of imports. It would result in a supply chain collapse, as exporters cut their inventories, smashing the embedded chains of every country, including ours. You don’t buy what you may not be able to sell. A liquidity crisis would follow, a polite term for mass bankruptcy. The falling bond market, as large players seek liquidity, anticipates this. The supply chain  pile-up could result in a loss of GDP as high as 25%, five times that of a severe recession, a contraction not seen since  1929.

The napkin calc is just 25 divided by 5, a genuine black swan. You can get a little intuition from Largest Traffic Accident Pile-Ups In History.

Shock or brinkmanship may seem expedient tactics to circumvent the tedium of trade negotiations. But besides the Great Depression of 2025, another risk accrues, the loss of the goodwill of the United States, symbolized by Fort Knox, “the almighty dollar”, and the premium for the companies that trade on U.S. stock exchanges. For another context, see Dear President Trump, The Ghost of Henry Kissinger Redux.

Some on the  extreme right are promulgating the equivalent of an industrial Walden, with a broad return to smokestack industry. Let’s not overdo it.  Increased  representation of heavy industry is vital. But profit margins are lower, and the opportunities to multiply margins with productivity technology are limited. There is nothing inherently virtuous about it. Yet some people want the physicality of making things, and wouldn’t trade for white collar.

Peter Navarro  wants to make bicycles, an excellent starter industry for the world’s poorest countries. It leverages little more than basket weaving. Make reality of dreams instead. That’s what we’re good at. Let’s avoid ideology.  Make the jobs people want.

This is the time when the political opposition should devise practical, compatible alternatives or modifications of Trump’s program.

We must, indeed, all hang together or, most assuredly, we shall all hang separately.

Benjamin Franklin