Subject to multiple unknowns you are probably correct Dopey.
An article by Karl Smith in todays AFR (reposted from Bloomberg) tries to "make sense of the madness" and doesn't do a bad job. Key points:
1. The Bilateralist School" The goal of trade talks, according to this school, is for each side to agree to give up its particular special interests in exchange for its partners giving up theirs. Multilateral trade negotiations, such as the Trans Pacific Partnership, often do the exact opposite: Each country's special interests invariably have veto power over the entire agreement.
Consequently, multilateral trade agreements tend to be shot through with exceptions that undercut free trade. Nye points to the European Union as an example of such an arrangement."
AND2. Neo-mercantilists, such as Trump advisor Peter Navarro, see the US's trade deficit with China as inherently bad. Since imports subtract from GDP while exports add to it, Navarro argues, the US economy would be stronger if it imported less and exported more.
But the strength of the US economy, mainstream economists point out, is ultimately determined by the productive capacity of its workers and businesses. Limiting imports simply raises prices for US consumers and business. Those higher prices lead to less consumer spending and less investment, neutralising any GDP gains and leaving US consumers worse off. "
ANOTHER goal of the tariffs maybe to increase tax revenues following so-called tax cuts. Tariffs may well reduce consumer spending but they will also facilitate greater government spending. Both the far right and the far left of "popular" politics are into big spending and the isolationism of heavily controlled markets.
And so Trump's advisors are seeking short term pain for what they perceive to be long term gain. If not for some mega sized global debt bombs we could live with the re-evolution of bilateral agreements "IF" those agreements actually deliver flatter playing fields. It's a big IF though because humans will always squabble over the minor issues and corrupt major goals in the process.
Those debt bombs? They have been sitting there for an eternity without anything much to light the wick. A key question now is whether or not trade war antics and argy bargy will shift perceptions enough to blow a few of those bombs sky high. When that happens the rest will follow IMHO.
cheers
