It Is Hard To Find a Non-Trump-Aligned Economist Who Finds It Sensible
Much as Donald Trump seems to think that economic policy focuses on how much money he can bring in to campaign funds from selling his criminal mugshot, it does seem necessary to consider what he would do about economics should his presidential hopes keep sustaining themselves.
Every poll, every political interview, every candidate knocks the state of the economy, and Trump’s voice is among the loudest to suggest that the “great” economy he thinks he led during his four years in the White House will magically return without hint of changes resulting from pandemics, international competition, and climate issues beyond his personal control.
But strip away the boasts, and Trump’s economic plan comes down to a very small number of priorities – cutting spending along the lines of House Freedom Caucus demands, cutting taxes to starve a federal government, and help wealthier businesspeople like himself, and imposing massive new tariffs on other countries trading with the United States.
He wants more drilling right now for oil and gas later and more deregulation of business regulations and environmental rules.
Moreover, there are few other ideas coming from the Republican rivals’ bench, though Florida Gov. Ron DeSantis has promised to “start slitting throats” of federal employees on Day One. Sen. Tim Scott talks about encouraging local enterprise zones, an idea that has shown mixed results, and business leaders really don’t like being pushed around politically by DeSantis. The others echo talk about reduced spending and lower taxes without a lot of specifics.
There is nothing in that program that addresses the price of eggs and milk or the price of gas anytime in the next several years – the exact complaints that people express about the Joe Biden government.
Biden has lagged in persuading voters that the economy is in good stead. We all recognize that while the nation’s economic numbers are improving, with job growth high and unemployment low, and inflation once again heading under control, it has been everyday supermarket and fuel prices that prompt criticism.
The sad truth is that any American president has only limited control over a market-driven economy and its everyday prices – an idea that candidates naturally ignore.
The Washington Post has outlined how Trump has been meeting with advisers to float a plan for a 10 percent tariff on all imports as a “ring around the collar” of the U.S. economy.
It is an approach from Trump’s White House that will raise prices for U.S. consumers rather than reduce them, and that will make both imported supply lines and marketable exports for U.S. producers more difficult.
It is hard to find a non-Trump-aligned economist who finds it sensible.
During his administration, Trump imposed substantial tariffs on Chinese imports – all while claiming repeatedly that China was paying these tariffs to the United States treasury. Trump claimed that it would prompt the return of American businesses from China back to the United States, though what we saw in real life was a turn to increased production in Vietnam, Thailand, and Mexico. Trump also imposed tariffs on Mexico and Canada, before signing a new trade agreement with the country’s North American allies in 2019.
That was a lie, of course. China never paid anything to the United States government to export goods here, and the price of clothing, electronics and small appliances produced more inexpensively in China went up across the board for U.S. consumers. U.S. businesses found that their parts and supply line costs went up as well, with those increases passed along to consumers.
In addition, U.S. farmers lost agricultural exports markets in China, which imposed tariffs of its own.
Biden has never rescinded those Chinese tariffs, but it is unclear whose business or prices are helped by these extra payments. While some U.S. businesses have returned to this country, most have turned elsewhere for foreign suppliers. On China, Biden and Trump are relatively aligned, though neither says so.
Recently, Trump summoned his top economic advisers to his private golf club in New Jersey night to map out a trade-focused economic plan for his presidential bid that included a “universal baseline tariff” on virtually all imports to the United States, participants said. The main issue seemed the size of a universal tariff, not its existence.
The Post said the tariffs could represent a massive escalation of global economic chaos, surpassing the international trade discord that marked much of his first administration, upsetting existing bilateral and international accords re-negotiated by Biden.
The advisers included former senior White House officials Larry Kudlow and Brooke Rollins, outside advisers Stephen Moore and former House speaker Newt Gingrich.
On Fox Business, Trump publicly called for setting this tariff at 10 percent “automatically” for all countries — a move that experts warn could lead to higher prices for consumers throughout the economy, and likely lead to a global trade war.
Tariffs and Trumpism
Among the most noteworthy aspects to these plans is that they build on the image of a Trump-led United States as a bully in the world and that they fit within a set of increasingly authoritarian measures that an isolationist Trump is outlining for his return to the White House.
Any nation’s exemption might be dependent on a kingly nod from Trump. Think Saudi Arabia suddenly finding favor with a Trump golf course plan in return for a break in tariffs.
It also reminds us that quite apart from the hypocrisies arising from Trump’s legal issues and the prospect of a president under indictment or convicted of crimes that include tossing side election results, the idea of a Trump presidency alone promises dangers.
The Post talked with economists of different political affiliation who called the tariff idea.
“lunacy” and “horrifying” and said it would lead the world’s other major economies to conclude that the United States cannot be trusted as a trading partner. Although aimed at bolstering domestic production, a 10 percent tariff would hurt the thousands of U.S. firms that depend on imports, while also crippling the thousands of U.S. firms that depend on foreign export markets, one economist explained.
“A tariff of that scope and size would impose a massive tax on the folks who it intends to help,” Paul Winfree, an economist who served as Trump’s deputy director of the Domestic Policy Council, told The Post. “It would get passed along through higher prices at a time when the Federal Reserve has had difficulty limiting inflation.”
Here’s Paul Krugman: “Trump’s proposal for a unilateral, across-the-board tariff would in effect be seceding from the international order it did so much to create. The result would be a global wave not so much of retaliation — although that too — as of emulation, a free-for-all of tariffs imposed to cater to various interest groups. This would be bad for the world economy, but even more important, it would foster suspicion and hostility among nations that should be allies.”
We’ve just been through all this with our own European allies, for example, who want to sell European wine and cheese at competitive prices, or South Korea and Japan who want to sell cars competitively.
At heart, of course, the trade discussion is about American jobs, not about prices – the very thing that seems to be drawing voter anger.