I can already predict a presidential debate between Elizabeth Warren and Donald Trump. She: I have a plan for that (fill in the blank). He: I have a tariff for that (fill in the blank). What’s on my mind today is the wisdom of tariffs, especially as exercised by President Trump, and whether his supporters will reject a tariff for this and a tariff for that.
A tariff is just another federal “user tax” (paid by importers of record) that decreases importer profits and increases end-user costs. President Trump loves tariffs because importers have no way around them – and the federal government collects the tax. Plus, he expects Americans to stop buying the “taxed” imports. If it were only that simple.
Why does President Trump have such as affinity for tariffs? The objective answer is that the Clinton, Bush and Obama presidencies allowed China’s trade practices to grow into an existential threat and illegal immigration to balloon into a wage-killing crisis in red-state America. Further, their globalist “patronage” undermined US leverage, leaving Trump with tariffs as his only option (and last resort).
The subjective answer is Trump’s is the barbaric mind of the American entrepreneur. This means he is hard-wired to ruthlessly work toward his entrepreneurial vision (i.e. his campaign promises) and his “inner entrepreneur” believes his every idea will succeed where others (Obama) failed. His detractors hate what makes Trump effective, mocking his proclamations of “genius” and frequent MAGA rallies. Another view holds that Trump has the clear vision of a successful entrepreneur, never wavers from his mission, and uses “mental pep rallies” to replenish his energy.
His liberal detractors aside, Trump supporters find his entrepreneurial spirit refreshing and just what America needs to become great again. Republicans might be divided on whether threats of tariffs will deliver on the “greatness” promise, but they all agree the President had to do something about Chinese trade and illegal immigration.
As a political matter, Republicans dislike the red-state pain caused by tariffs on (and retaliation by) China, and they don’t really know if the tariffs will force China to embrace fair and reciprocal trade. As a practical matter, they know China is an existential threat to the USA, because Red China is now our primary economic and military threat. They also know prolonged trade negotiations and tariffs are preferable to saber-rattling militarism or all-out boycotts.
Sadly, House Democrats and Senate Republicans sit on the sidelines and Monday-morning quarterback. Meanwhile, Trump’s inner entrepreneur is 100% sold on his tariff idea, convinced this as another business deal in a buyer’s market. Unless Xi sees this as the seminal battle in his war to supplant the US, Trump is correctly reading the situation.
Promising escalating tariffs on Mexico to exact help with the border crisis was unconventional but proved to be pragmatic. While Senator James Lankford (R-OK) whined that Trump was “trying to use tariffs to solve every problem but HIV and climate change,” the smart money bet on Trump to get a great deal – and he did. Trump and his Mexican counterparts knew the Mexican economy would crater long before import tariffs reached 25%.
Trump promised 2016 voters Europe would pay full NATO dues, an end to the immigration crisis on the southern border, and fair-and-reciprocal trade with China. Fair enough, but can he use tariff threats to solve every bilateral problem with another sovereign state? Hard to say, but Mount Rushmore has no room for one-hit wonders.
Friday’s jobs report included a paltry 75,000 jobs added in May and downward revisions for March and April. The short-term threat is Trump’s foreign counterparts read that as a reason to procrastinate. The long-term threat is to Trump’s 2020 re-election hopes. The Trump campaign staff knows this “un-presidential” man needs growing jobs numbers and stock indices to win re-election – and those numbers need tariffs to work in Trumps favor.