Phil Magness describes the several different and competing factions of protectionists in the Trump administration. Three slices:
President Donald Trump’s tariff agenda exhibits no signs of a popular mandate. Recent polling found that 61 percent of the public believe raising tariffs will hurt average Americans, compared to just fourteen percent who see them as helpful. Seventy-six percent expect tariffs will produce increased prices at the store. Clear majorities also oppose Trump’s specific tariff measures against Canada and Mexico. Mainstream economists have panned the administration’s claims that their tariff program will “substantially reduce the US trade deficit.” Unlike past tariffs, which usually drew their support from special interest groups in the beneficiary industry, there does not even appear to be a concerted lobbying effort behind Trump’s current agenda.
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This formula mistakes the existence of a trade deficit for external trade barriers, and then calculates a meaningless “rate” by dividing the net difference between exports and imports by the value of imports and halving the result. It is an exercise in economic alchemy informed by stunning economic incompetence and no intelligible underlying principle. Navarro allegedly devised it himself and has since become its leading exponent in the media, revealing in the process that he does not understand grade-school arithmetic, let alone trade economics.
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The antics of the “tariff men” are beginning to imperil other policy priorities, such as deficit reduction. Future objectives such as renewing the income-tax cuts of Trump’s first term will likely face similar headwinds as long as the trade wars continue to dominate the president’s economic agenda. But there’s another lesson to be learned from the assortment of competing goals and competing tariff men in Trump’s orbit. When pursued together, their conflicting objectives become an incoherent mess of contradictory policies and chaotic vacillation. The result is tariff uncertainty and tariff chaos with a commensurate toll on the health of the US economy.
Wall Street Journal columnist Barton Swaim counsels GOP Senators to resist Trump’s lunatic protectionism. Three slices:
Some Republicans on Capitol Hill may argue that Mr. Trump promised such a tariff regime during the 2024 campaign. But that is wildly to misread his victory. Many, maybe most, voters neither know nor care what a tariff is. Mr. Trump’s narrow victory over an abysmal opponent—49.8% to 48.3% in the national popular vote—may reasonably be interpreted as permission to repair the left’s many fiascoes at home and abroad. What it didn’t signify was the public’s readiness to see the American economy reordered.
Congressional Republicans didn’t win their elections by calling for a new tariff regime. One GOP officeholder or another may favor a tax on a particular imported good (usually produced in his own state). Still another may argue that some country’s unfair trade practices, typically China’s, deserve punishment by countervailing tariffs. But until recently all Republicans everywhere understood that tariffs—a form of central planning like any other—are taxes that create webs of injurious consequences for everyone.
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Utah’s GOP Sen. Mike Lee is another onetime exponent of the benefits of free trade. He also voted for those trade agreements with Colombia, Panama and South Korea. Mr. Lee’s criticisms of the protectionist mentality are many and honorable.
And now? “If I were the leader of a foreign government with tariffs against the United States, I would be scrambling to sign a free trade agreement—as several are already,” Mr. Lee told me in a statement. “As the dominoes fall, I am optimistic that Americans will end up with even freer trade than before.” I salute Mr. Lee’s optimism, but you have to work hard to imagine that Mr. Trump’s goal is freer trade rather than a sealed off, self-sustaining America.
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In fact, the Senate Republican conference teems with people who, whatever they may say or not say in public, possess a measure of common sense on economic questions. They know that tariffs harm the country that imposes them by provoking retaliation, coddling domestic industries and alienating allies. What’s unclear is whether they will deem the ongoing implosion of markets and attendant economic chaos sufficiently ruinous to save the president from his worst idea.
Imagine an alternate reality where President Donald Trump’s top trade adviser was a bulging Hefty trash bag stuffed with discarded bricks.
No, really. Picture it. When Trump gathers his cabinet together for an important meeting, inexplicably, there is a large bag sitting in the corner of the room. Its black polyethylene sides stretch at awkward angles as it tries to contain the sharp edges of what appear to be dozens of bricks piled within. Some red clay dust that has escaped from the drawstring top lingers on the floor. A White House intern struggles to move it from place to place. The bag doesn’t speak or communicate in any way. It has no thoughts. It does not opine on the meaning of trade deficits or invent false data to tell misleading stories about the state of America’s economy.
And then ask yourself: Would the country be better off if Trump was seeking counsel from that literal sack of bricks rather than from Peter Navarro?
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Navarro might be part of the MAGA tribe now, but he’s still a socialist at heart. During the COVID-19 pandemic, he waxed poetic about how “beautiful” it was to see “the power of the federal government merging with the power of private enterprise.” His vision for America’s trade policy is the sort of autarky that would make Vladimir Lenin proud.
The Editorial Board of the Wall Street Journal explains why Musk vs. Navarro matters. A slice:
Broadly speaking, Mr. Musk represents a segment of Mr. Trump’s 2024 coalition—call it Silicon Valley MAGA—that is libertarianish and believes in freeing the U.S. economy to grow and dominate the future, benefiting all Americans. It favors pro-growth tax and regulatory policy and robust legal immigration to attract the world’s brightest minds.
Mr. Navarro is part of the Steve Bannon wing of MAGA, which wants to put U.S. industries behind the high tariff walls that Mr. Trump is now imposing. This faction distrusts corporations, especially Big Tech and pharma, and it doesn’t mind higher taxes and using government power to punish political enemies.
Michael Chapman reminds us of Frédéric Bastiat’s brilliance at exposing the lunacy protectionism.
Joe Bishop-Henchman reviews the history of very high tariffs in the United States. A slice:
Thus, claims that high protective tariffs were a mainstay of past American policy are wrong, as they only existed for four brief periods (1828–32, 1842–46, 1890–94, and 1930–34). The harmful economic effects resulted in landslide wins for the opposition party after each of those enactments (which, as it turns out, was the Democratic Party in all four instances). Notably, peaks in US revenue from tariffs were not in those years but in 1826 (2.7 percent of GDP) and 1871 (again 2.7 percent of GDP), during years of comparatively lower tariff rates. Tariff revenue rose after 1842’s enactment but fell after 1828 (from $23 million to $22 million in 1830), after 1890 (from $229 million to $177 million in 1892), and after 1930 (from $587 million to $327 million in 1932).
Also, surveys show that young people’s preferences for employment are in the service industry, healthcare, and tech in particular. After all, that’s why so many high school graduates choose to go to college. [Jack] Salmon points to various surveys, including this: “According to one survey of Gen Z respondents by Soter Analytics, only 14 percent of respondents said they might consider a job in manufacturing.”
GMU Econ alum Dominic Pino imagines the conversation between the U.S. Trade Representative and a foreign ambassador. Two slices:
White House Trade Negotiator: Hello, Mr. Ambassador, welcome to the White House. We’re so glad you could make it. We want to start the process of negotiating a free trade deal with your country.
Foreign Ambassador: Thank you so much for having me. We’ve wanted a free trade deal with the U.S. for years. But we were under the very strong impression that you weren’t interested, so we didn’t bother.
WHTN: Why is that?
FA: Well, I mean, you guys haven’t signed a new bilateral free trade agreement since 2007, the one with South Korea, and efforts with other countries since then have been scuttled. If you couldn’t even get one with the United Kingdom, given that you’re both rich countries and share so much history and speak the same language, then we didn’t think there was a chance for us. Or the Trans Pacific Partnership, which made perfect sense given your geopolitical interests in constraining China — which is in our interest as well, by the way — but still didn’t get done.
WHTN: Don’t tell us what our interests are! We know what they are, and they don’t concern you.
FA: I was trying to find common ground in our shared interests—
WHTN: Well, Mr. Trump won’t take kindly to that. This is about America First! The Trump White House wants free trade, and we’re willing to tariff anyone to get there!
FA: I’m glad you brought that up, because I have to admit I have been a little confused about—
WHTN: Are you questioning Mr. Trump’s judgment? Because I’ll tell you right now, he takes great offense to that, and we won’t be able to talk any further if you do.
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WHTN: Those deals were negotiated by globalists, and they sold out American workers. In our America First administration, we need real free trade, like I said before, and that means new deals with everyone.
FA: But, with all due respect, Mr. Trump negotiated the trade deal with Canada and Mexico, and those were among the first countries he went after with his trade war. Why should we believe you?
WHTN: Because we’re the United States of America, and we’re more powerful than you, and we’ll do what we want.
FA: So this isn’t a negotiation, then?
