Australian economist Justin Wolfers ridiculed President Donald Trump’s so-called "largest (trade) deal ever made" with Japan on Wednesday, dismissing the president’s knowledge on basic economics.
“This is how you fool a president who doesn't understand economics into thinking he's done something,” Wolfers said, speaking on MSNBC’s Katy Tur Reports.
Trump announced Tuesday a new trade deal had been reached with Japan, in which the United States would impose a 15% tariff on Japanese imports, 10 percentage points lower than what Trump had previously threatened. The deal would also see Japan, at Trump’s direction, invest $550 billion into the United States, creating “hundreds of thousands of jobs.”
The only issue, Wolfers said, was that those promises demonstrated a total lack of understanding of economics.
“The biggest thing Trump has done is he's raised taxes on Americans who import goods from Japan, from 2% to 15%,” Wolfers said, referencing the previous U.S. tariff rate on Japan. “What did he get in return? Well, a little bit of market access opening in Japan.”
Trump has previously seethed over the low number of American-made vehicles exported to Japan, blaming regulatory barriers and market manipulation. While Trump is hoping that will change with the new trade agreement, which he said will see Japan “open their country to trade including cars and trucks,” Wolfers quickly poured cold water on the president’s hopes.
“The reason we don't sell a lot of cars in Japan is the Japanese like small cars; Americans make big cars,” Wolfers said. “I'm not remotely optimistic that this is going to open up the Japanese car industry to American automakers unless we start changing what we make.”
Another major sticking point for Trump has been Japan’s refusal to import American-grown rice, calling the country “spoiled” over its refusal. Like his grievance with Japan’s low imports of American vehicles, Trump said that the new trade deal would also see American rice exports to Japan increase.
And again, Wolfers tore apart Trump’s assessment.
“The thing about rice is it's a commodity, it's the same whether you're importing your rice from Australia, the U.S., from Canada or wherever,” he said. “It's not really going to have any major impact at all on the demand for American rice.”
