RUTH SUNDERLAND: Tariffs won't come up Trumps for Donald
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One theory about Donald Trump is that the more outrageous the statements he makes, the less effect they have – a verbal equivalent of what economists call diminishing returns. Yet his pronouncements on tariffs still have shock value. We should be wary, too, of imagining his threats are too preposterous to be taken seriously.
In his presidential campaign he talked about 10-20 per cent tariffs on imported goods, going as high as 60 per cent on China, and 25 per cent from Mexico and Canada unless they fall in line with his desire to clamp down on illegal immigration and drugs.
The president-elect denied reports in the US media that he might be toning down his plans and has ramped up his rhetoric. His chest-thumping included a threat to slap tariffs on Denmark 'at a very high level' if the nation resists his attempts to take over Greenland, an objective he has not ruled out using military force to achieve.
If Trump is as good as his word, it could have unintended consequences. Danish pharma giant Novo Nordisk makes weight loss jabs and up to 30 per cent of hearing aid imports to the US come from Denmark, so Americans may end up deafer and fatter if these products are caught in the net.
Diminishing returns: One theory about Donald Trump is that the more outrageous the statements he makes, the less effect they have. The aim of tariffs is straightforward: to penalise firms which import goods or components by forcing them to hand over a percentage of the price to the government.
