Trump's decisions about tariffs and spending fall short of logic

UPI

17-07-2025

President Donald Trump displays the One Big Beautiful Bill Act on the South Lawn of the White House in Washington on July 4. Trump signed his $3.4 trillion budget bill into law that day. Photo by Kent Nishimura/UPI | License Photo
July 17 (UPI) -- Whether you support or oppose President Donald Trump's ideas and policies, does anyone know on what basis his decisions are made and what level of analysis or evidence supports both? Consider his use of tariffs and, ironically, the recently passed One Big Beautiful Bill, or OBBB.
The OBBB is entirely dependent on tariffs to fill the debt and deficits created by tax cuts and excessive spending and not offset by cuts. Tariffs are also Trump's mechanism for altering the global trade and economic systems and providing leverage on friends and adversaries to do his bidding. What is the analysis and justifications for these assumptions on the value of tariffs?
For decades, Trump has believed that the large trade imbalances in which the United States always imports more than it exports are inherently damaging. But no evidence or proof of this assertion exists. The total balance of payments consists of the current and capital accounts.
The current account measures the goods and services balance. The capital account measures the flow of investments. The trade or current trade imbalance is a negative $800 or so billion. The capital account is more than a $1 trillion in surplus.
Much of the capital surplus is paying for our budget deficits. So why does the president not understand this fact and insist that tariffs must reverse the trade imbalance and probably make the capital account negative?
What data is used to show or demonstrate that a positive trade imbalance makes for a stronger economy and does not cause foreign trading partners to reciprocate by imposing tariffs of their own? The infamous 1930 Smoot Hawley Tariffs did not cause the depression, but they surely prolonged it.
Tariffs and sanctions are being utilized to force Russian President Vladimir Putin to negotiate an end to the war in Ukraine. Trump gave Putin 50 days to accept this demand. Interestingly, in any western movie, the villain or hero was never given 50 days to get out of town. Why would Putin capitulate and how did Trump arrive at this conclusion? We do not know.
In addition to imposing tariffs on friends, look at Russia, if Putin is not cooperative, Trump threatens secondary sanctions and tariffs on countries trading with Russia. About 20% of Europe's energy demands are filled by Russia. Can those nations forgo that? And how will tariffs on our erstwhile friends and allies be received if imposed?
As for debt and deficits, tariffs in the first half of 2025 raised about $100 billion. It is estimated that this figure could increase to $300 billion or more by year's end. That is substantial. But it is far from enough to meet this year's current projected deficit of $1.9 trillion.
Trump has pushed NATO to set a spending goal of 5% of gross domestic product on defense, with 3.5% for the military and 1.5% on improving infrastructure and resilience. At the same time, in sending more weapons to Ukraine, Trump has insisted that NATO members pay for it -- not an unreasonable request. However, will the current tariffs projected for Europe -- and possibly increased if Putin continues the war -- affect the ability of these states to meet the 5% goal? Very likely.
The OBBB has added another $158 billion for defense. However, aside from the argument that more must be spent on defense to match the Chinese and Russian threats, where is the analysis that this extra spending will actually close these perceived gaps in military forces? One trillion dollars or more is a huge amount to spend on a military that is dependent on technologically advanced and highly expensive weaponry.
A nuclear aircraft carrier and an air wing of F-35's at $130 million each will cost more than $15 billion. The B-21 bombers and sixth-generation fighters likewise are vastly expensive. Again, where is the analysis?
When asked about the temporary cutoff of weapons to Ukraine, the president's initial and incredulous response was that he was unaware of this decision. That reinforces the question of how decisions are made. And it is highly unlikely that Donald Trump will explain why he makes his decisions except on the basis to Make America Great Again or to make the United States the "hottest" country in the world.
Unchecked, this method of decision-making will come to a bad end. But who will tell the president -- and would he listen?
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Harlan Ullman is UPI's Arnaud de Borchgrave Distinguished Columnist; senior adviser at Washington's Atlantic Council, chairman of a private company, and principal author of the doctrine of shock and awe. His next book, co-written with Field Marshal The Lord David Richards, former UK chief of defense and due out next year, is Who Thinks Wins: Preventing Strategic Catastrophe. The writer can be reached on X @harlankullman.