Are we liberated yet?
People of a certain age will
remember Yosemite Sam chasing Bugs Bunny around with a shotgun, blasting holes
in walls, ceilings, and windows while completely missing his target. It’s the
perfect metaphor for Trump’s tariff policy announced yesterday.
Trump is acting as if tariffs
were a form of warfare, and he’s “fighting back” against the countries that
have “taken advantage of us.” This is how he’s behaving like Yosemite Sam with
his blunderbuss, shooting everywhere and just making a mess while missing the
target altogether.
He’s not only throwing wild
tariffs on every country that trades with America (except Russia), but he also put a flat 10% tariff on every
product imported into the United States (except from Russia).
Additionally, this sort of
rhetoric — and making tariffs country-specific instead of product-specific — is
what drives trade wars that also run the risk of increasing the danger of
actual wars.
“Shooting” at countries instead
of at products is not only hostile; it’s also generally counterproductive
except, literally, during time of war.
Further demonstrating Trump‘s
ignorance about the difference between business-based tariffs on products and
war-based tariffs on countries, his commerce secretary, billionaire Howard
Lutnick, is warning countries not to engage in reciprocal tariffs
or trade restrictions.
The second solid criticism of
Trump’s tariff plan is that only Congress has the legal power to impose them,
and that’s a good thing.
No manufacturer is going to
invest billions of dollars and years of construction to build a factory here in
response to a tariff thrown up on the whim of a mercurial president; they want
to know that that tariff will be there for decades so they can earn back their
investment.
Which is why, outside of
wartime, tariffs should be specific to products, not countries.
Our Department of Commerce
specifies over 17,000 separate categories of products that
tariffs can be attached to, and they’re often startlingly specific. Steel, for
example, has 740 sub-categories ranging from rolled steel to ingots to hundreds
of items as specific as “Semi-finished iron/nonalloy steel, ≥ 0.25% carbon,
rectangular/square cross-section, width ≥ 4x thickness.”
Products that we make in
America, or want to make here again, should be the targets of tariffs, not the
countries that make them. And while there are thousands of product categories
that are amenable to tariffs, there are also things it would be stupid to put
tariffs on because we don’t make them here — and don’t plan to.
For example, we don’t grow coffee
in the US, but they do in Mexico; that’s why we imported 65.5 million kilograms of unroasted beans from that
country in 2022. Slapping a tariff on all Mexican goods will
sweep up coffee, which will only succeed in driving up inflation here, as the
cost of the tariff is added to every cup in every kitchen and restaurant across
America.
Bringing back manufacturing also
a really good thing to do, because it’s historically been one of the most
important ways that workers can find entrée into the middle class without a
college education.
Sadly, though, Trump may be doing
more damage than good to the cause of the middle class with his bizarre
country-based tariff policy.
Trump is able to do his
uninformed tariff song-and-dance because there’s a loophole in our tariff laws
that allows the president — during a time of national emergency — to impose
emergency tariffs. It makes sense that the president should have that flexibility
in the event of another Republican Great Depression or World War III, but that
isn’t what’s happening today.
Trump declared a state of
emergency at the beginning of his administration specifically so he could put
his tariffs into place — which means the next president can simply reverse
them. Again, no CEO in her right mind is going to invest billions based on that
level of uncertainty.
At least four Republican senators
get this; Tuesday night, Trump did one of his signature weird 1 am screeds on his Nazi-infested social media platform,
calling out Mitch McConnell, Rand Paul, Susan Collins, and Lisa Murkowski by
name because they’re supporting a Democratic effort to end the state of
emergency so Congress can reclaim its trade authority. They voted with
Democrats last night and the resolution passed; it goes to the House
now, where Mike Johnson will probably kill it.
If Trump had any understanding
of tariffs outside of his simplistic “you hurt us, we hurt you” worldview, he’d
realize the best way to accomplish his stated goal of bringing manufacturing
back to this country can be tariffs, but only when they are done carefully and
selectively.
But, no; understanding
anything other than how to cheat on golf and your taxes, screw vendors, stiff
workers, and sexually assault women is beyond his limited abilities. And, of
course, running companies into bankruptcy and being bailed out by Russians. Repeatedly.
When Congress imposes tariffs
there’s a far better chance, they’ll stay in place long enough to assure
American companies it’s worth building new factories. Instead of imposing his
tariffs by fiat, Trump should have put them into the form of a proposed bill
that he’d then submit to Congress.
Sadly, he’s not that smart or
well-informed about history, and apparently neither are his advisors.
So, here we are with actions
taken that may throw the entire world into recession, or possibly even a second
Republican Great Depression.
That said, there’s also a huge
risk to any Democrats who might want to play Yosemite Sam themselves, blasting
away at Trump’s tariffs and missing the nuance — and the multiple truths — that
make up today’s trade situation.
The simple reality is that
tariffs do work to protect domestic manufacturing; they have
since the founding of our republic, and are used today by every
country in the world (including the US) for that purpose. (There’s a great explainer of all this, including the American
history with tariffs going back to George Washington and Alexander
Hamilton, here.)
And, when Reagan embraced
neoliberal cuts in tariffs, negotiating the Uruguay Round of the General
Agreement on Tariffs and Trade (GATT) in 1986 — which led to the WTO and NAFTA
(also negotiated by Reagan and Bush respectively) — those two Republican presidents
began the long slide of American manufacturing.
As the union guy who spoke at
Trump’s event yesterday noted, anybody over 50 can remember when
everything in Walmart — and pretty much everywhere else, including the cars on
the dealership lots — was made in America.
Hell, Sam Walton started Walmart
with the slogan “100% Made in the USA” which is also the title of his autobiography; it was only when those tariffs
collapsed as a result of Clinton signing off on Reagan’s/Bush’s NAFTA and the
WTO that Walton’s stores began to import from cheap-labor countries and stopped
stocking American-made products.
Because of this simple
reality, Democrats who simply fall back on the old neoliberal talking points
that tariffs are sales taxes and that countries that trade with each other are
less likely to go to war with each other (the original explicit neoliberal rationale for tariff-free
trade) are risking political suicide.
It’s hard to make political
arguments that use nuance, but in this case, Democrats really don’t have a
choice. Having grown up in the Midwest (Michigan) I can tell you that most
anybody who hails from a former manufacturing region is cheering Trump on right
now.
Regardless of party.
And today’s Democrats
haven’t been all that hostile to tariffs: Not only did President Biden keep
Trump’s tariffs from his first term in place, he added additional tariffs of his own (although almost
nobody knows it).
Biden increased tariffs on steel
and aluminum products from 7.5% to 25% in 2024; his tariffs on semiconductors
will rise to 50% by the end of this year; Democratic tariffs on some electric
vehicles (EVs) hit 100% last year; Biden’s tariffs on lithium-ion EV batteries
and magnets for EV motors will go up by 25% by 2026. After the Covid crisis,
the Biden administration even put a 50% tariff on syringes and needles to
jump-start domestic production, and personal protective equipment (PPE) tariffs
went up 25%.
(Notice that none of those are
tariffs on countries, just on products. The only country-specific tariffs Biden
approved were against Russia, in response to their invading Ukraine, as a form
of economic warfare.)
Opposing tariffs just because
Trump loves them, in other words, isn’t just ineffective politics; it doesn’t
even conform to Biden’s new Democratic trade policy.
So, here’s how modern Democrats
need to talk about this situation. It’s not only good political messaging; it’s
also good trade policy, as I lay out in my book The Hidden History of Neoliberalism: How Reaganism Gutted
America.
First, Democrats need to
answer the question, “Why tariffs, particularly if they act as taxes on
imported goods?”
That answer is easy; it’s an
accurate explanation of what Trump is totally garbling: Tariffs encourage
manufacturers to produce their products here in the USA instead of in cheap
labor or high pollution countries.
But the “how to do it” is the
critical part.
Democrats, in other words, need
to differentiate between “smart tariffs” and “stupid” or “wartime tariffs,”
advocating the former while ridiculing the latter.
“Put tariffs on products, not
on countries” would be a great start, for example.
Our dim-witted president is being
called out on his shoot-from-the-hip tariff policy from both left and right.
The country is confused and needs to understand what is going on and how it
will impact their future.
Democrats must therefore take a
clear position in favor of smart, targeted tariffs — on individual products
rather than countries — like Biden did.
And then they must point out that
Trump’s obsession with slapping punitive tariffs on countries (except on
Russian products) stupidly risks utterly crashing our economy — and possibly
even the world’s economy — while starting a trade war that nobody will win.
And, tragically, it’s all being
done not for any good reason, but just because Trump is not that bright.
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