When a boy cries wolf for the first time, you're caught by surprise.
When he does it every day, you stop paying attention.
The stock market reacted swiftly to President Trump's latest bluff -- that he plans to invoke a rarely used presidential power to impose hefty tariffs on steel and aluminum imports. The Dow dropped more than 400 points amid fears of a trade war. Shares of Boeing, GM, and Ford dipped too.
But company executives on Main Street? We're becoming accustomed to this kind of normalized chaos. I'm still waiting for Trump's mythical wolf to appear.
The downside to tariffs (and it's basically all downside)
Strategically, you could argue in favor of tariffs by saying you should never be too beholden to another -- another country or even another supplier -- for a specific product or item.
That's about the only positive thing I can say about tariffs. From my perspective, tariffs are a shortsighted form of crony capitalism.
Trump argues that his proposal is a tax levied on our foreign competitors. He gets to show his support for the blue-collar worker and wins attention (which he obviously likes) for trying to save steelworkers' jobs.
But a tariff on steel and aluminum only spreads the pain of employing those workers. Business owners must pay higher prices for supplies and then pass those costs on to every single one of us who uses products made from steel and aluminum. We will all pay for those jobs. It amounts to a tax on American consumers.
Some experts are saying the increase could amount to less than one half of 1 percent. But it's like cheating on a diet. Once you do it, it opens the door to more trips to the cookie jar. And why should the consumer have to bear that burden?
All alone on the playground
Tariffs keep smaller manufacturers and more adept manufacturers from entering the market. Most business people -- except steelmakers and aluminum smelters -- certainly won't benefit from Trump's proposal.
We've seen this dynamic play out in countries known for their high tariffs. Take India, for example, which imposes a high tariff on many imports. When I led Big Ass Fans, that kept us from doing significant business there. Same with Brazil.
Manufacturers in countries that levy high tariffs make inferior products, because there's no competition. Their domestic wares are, effectively, the only ones sold within their borders, preventing consumers from choosing anything else. These countries prefer to go off and play by themselves, rather than allow the competitive market as a driver for innovation.
Stacking the deck against the free market
Now, in the United States, Trump seeks to stack the deck against the market forces that should decide our economic fate. He's taking power from the "invisible hand" of the free market and giving it over to the government. Because the costs are spread across all of us, it amounts to a few bucks each. People may not notice, but it all adds up.
Governments, by nature, are heavy-handed. Any sort of regulation or tax is more onerous than it looks. It's an added cost, and in any sort of business, additional cost means you have less to spend on building more product, employing more people, and growing beyond your current size and scope.
To tell you the truth, I have no idea what Trump is actually trying to accomplish. Will we actually see tariffs on steel and aluminum? Will they spark an international trade war? Or is this part of the art of negotiating?
Who on earth knows. But I'll bet you dollars to donuts there's no wolf lurking around the corner.