Trump Has a Screw Loose About Tariffs

President Donald Trump’s trade war has crashed stock markets. It is pushing the United States and the world toward recession. Why is he doing this? His commerce secretary explained on television this past Sunday: “The army of millions and millions of human beings screwing in little screws to make iPhones—that kind of thing is going to come to America.”

Let’s consider this promise seriously for a minute. The professed plan is to relocate iPhone assembly from China to the United States. Americans will shift from their former jobs to new jobs in the iPhone factories. Chinese workers will no longer screw in screws. American workers—or, more likely, American robots—will do the job instead.

One question: Where will the screws come from?

iPhones are held together by a special kind of five-headed screw, called a pentalobe. Pentalobes are almost all made in China. Under the Trump tariffs, Apple faces some tough choices about its tiny screws. For example:

Apple could continue to source the screws from China, and pay the heavy Trump tariffs on each one. Individually, the screws are very cheap. But there are two in every iPhone, and Apple sells almost 250 million iPhones a year. Even if the tariff on screws adds only a dime or two to every U.S.-made iPhone compared with its Chinese-made equivalent, that will nevertheless add up to a noticeable cost differential between American and Chinese manufacturing. Continuing to buy tariffed tiny screws from China will also empower China to impose additional export taxes on its screws, or limit or even ban their export entirely.

Alternatively, Apple could source its tiny screws from here in the United States. Significant tiny-screw-making capacity does not yet exist in this country. But if convinced that the Trump tariffs are here to stay, perhaps somebody in America will raise the capital, build new factories, invent screw-making robots, recruit and train supervising human workers, and meet Apple’s requirements at a “Made in the USA” price. That may take time, perhaps a lot of time.

Either way, Apple will face permanently higher costs.

[Read: Trump’s most inexplicable decision yet]

Let’s play another round of this game. Suppose we did get serious about creating a “Made in the USA” tiny-screw industry. What then?

Screws are made from many kinds of metal, which Trump has almost certainly tariffed. So that’s one higher cost for our hypothetical U.S. tiny-screw industry. The metal is cut and coated in nickel or some other corrosion-resistant metal. The coatings will likewise probably be imported; that means more tariffs, more costs. The screws are then shaped by advanced machines operated by highly skilled workers. Many of those screw-making machines are built in the United States, so that’s good news for the “Made in the USA” project. But the screw-making machines are themselves built of steel and other metals, which, as noted, are now tariffed. They use primary and secondary components that may be imported and therefore tariffed.

In short, instead of protecting American screw-manufacturing-equipment companies, Trump’s trade policy will hammer them with higher costs. In the end, this once-solid American industry will go out of business and be replaced by foreign competitors that can build their machines without paying a 10, 20, 35, or more percent tax on every item they require.

Tariffs are advertised by their supporters as taxes on things Americans consume. When he was a candidate for vice president, J. D. Vance mocked those who worried about the price of toasters. But a tariff is also a tax on things Americans produce. At every stage of the industrial process, American companies will pay more for the components they need. And so it will be for the makers of those components, and the makers of the components’ components, and so on, in an infinite regression of self-defeat.

“You don’t have to pay the tariff if you make your car in the United States,” insist the Trumpists. No? What about the steel that goes into the car? The glass for the windscreen? The fabric for the car’s upholstery? The speakers for the car’s sound system? Tariffed, tariffed, tariffed—to the point where the car itself costs far more for a worse product than what is available in all of the world’s other markets.

Even when you reach a seemingly final product, the chain of self-defeat does not end. Imagine that the United States somehow survives the immediate crisis and arrives at a place where Americans use American-made mobile devices sealed by tiny “Made in the USA” screws. In that scenario, all you’ve done is inflict permanently higher costs on every U.S. business that uses mobile devices, while pricing them out of world markets in turn. The whole U.S. economy will run slower than its competitors, like a sprinter who volunteers to wear a weighted vest that none of the other runners has to carry.

[Read: Trump’s tariffs are designed to backfire]

Amid this Trump-made economic shock, some pro-Trump advocates are trying to escape embarrassment by prevaricating with disingenuous platitudes: “Maybe the markets are panicking. We just have to wait and see how it plays out. It’s too early to predict.”

It’s not too early to predict. Trump is choosing a strategy based on a willful refusal to understand how products are made and how markets work. This administration has a screw loose.