Yes, our king was asked recently when he was going to end his Epic Fury (the greatest and the angriest) war ever against Iran. He responded that it could be soon or it could be later. He didn’t know, but would decide when he felt it in his bones. Well, maybe he meant to say in his gut, but anyway he did say in his bones.
The next day Jimmy Kimmel panned that it was wonderful that we had a president who would end a war he started when he felt it in his bones and not in his brain. When it comes to war and peace, wouldn’t you think there would be some calculation based on national interests, grand strategy, and facts on the ground?
Having spent more than three decades working on international trade issues, I’ve been struck by how similar his tariff war has been pursued to how his Iran war is being run. The King’s Liberation Day announcement last April was also motivated more by gut feeling than brains and empirical evidence. In retrospect, it should have been dubbed the Epic Fury Trade Day when he announced sweeping tariffs with a minimum rate of 10% and higher rates on countries that run a large surplus in goods trade with the United States.
So what are some of our king’s gut feelings on international trade? The overriding one is that trade is a zero sum game and a game in which we have been losing. That is to say that he doesn’t believe, despite what his Wharton profs probably taught, that there are mutual benefits derived from specialization in production and trade.
Donald Trump has consistently claimed that we have been losing to foreign countries in international trade, citing longstanding U.S. trade deficits as proof we have been “ripped off” because we are paying more to foreign countries than they pay to us. So he feels that higher tariffs will protect U.S. manufacturers by making foreign goods more expensive. He ignores, or doesn’t know, that while a higher tariff will protect some industries, the costs are paid mostly by U.S. companies and consumers and will assuredly be inflationary.
The United States has been running trade deficits for over four decades. A deficit doesn’t mean we are being taken advantage of or that foreigners are fair or unfair. It is a reflection of our spending patterns. Due to our deficit spending, we have to borrow from the rest of the world to make ends meet. To reduce our trade deficits we would have to either save more by spending less, or else increase taxes. And last year, despite increased revenue derived from tariff hikes, the trade deficit in goods grew to a record $1.24 trillion thanks to Trump’s increased deficit spending and tax cuts for his billionaire buddies.
Last February, writing for the majority, Supreme Court Chief Justice Roberts ruled that Trump lacked the authority under the International Emergency Economic Powers Act to impose a hodgepodge of tariffs on countries all across the globe. Roberts also opined that he did it in a capricious and reckless manner that caused chaos in America and the world.
Despite the Supreme Court decision, Trump persists in letting his vibes guide U.S. trade policy by using other statutory provisions beyond the one struck down by the Supreme Court. He also continues to assert extraordinary power to unilaterally impose tariffs of unlimited amount for whatever grievance or reason that provokes him.
For example, last year he imposed a 40 percent tariff on multiple Brazilian exports in an effort to pressure (unsuccessfully) the government to pardon a friend and ex-president. More recently, when Spain blocked him from launching strikes against Iran from U.S. bases there, Trump threatened to cut off all trade with Spain. Sadly, his supine GOP supplicants in Congress continue to shirk their constitutional responsibility to regulate foreign commerce and rein in a reckless president.
Hopefully, there is some sign of pushback against Trump’s tariff war coming from public opinion. According to a recent Reuter/Ipsos poll, only 35 percent of Americans approve of Trump’s handling of the economy. Let’s hope this translates into an epic voter rejection of Trump and his MAGA allies in November.
Ray Ahearn lives in Holyoke.