Month: April 2025

While we are in the midst of the Trump-induced market crisis, it would be easy to miss other developing stories, each of which would be worthy of plenty of handwringing in other circumstances:

1. Trump is proposing to deregulate by fiat, thereby bypassing the APA. The left should take notice; in the unlikely event the judicial system permits this, it will benefit them in the long run.
2. Trump ordered the DOJ to investigate, without any apparent cause, two members of his first administration he considers disloyal. That is an appalling, but completely predictable, misuse of executive powers.
3. After the Supreme Court upheld a lower court order in a deportation case, the DOJ is either dragging its feet or outright ignoring the order. Consequences will follow.
4. Trump is sending Steve (Dim) Witkoff, the man who parrots Kremlin talking points, to negotiate with the Iranians. God only knows how that will turn out.

Never a dull moment around here. . .

Life in the time of Trump.

The tariff scheme is here.

Markets crash; the nation gasps;

And greed succumbs to fear.

How much longer will it last?

That only Trump can say.

Tomorrow might just be much worse;

You’d best live for today.

On the one hand, a strong dollar makes American exports more expensive. On the other, it reduces the prices of foreign goods and vacations, keeps interest rates down, and cuts the cost of financing federal deficits.

Is it really self-evident that America would be better off with a weak dollar? It is to everyone, including Trump, who sees Americans solely as goods producers, but not to me.

It’s November. Trade between America and China has essentially halted as a result of Trump’s tariffs. American children consequently will have to go without toys for Christmas.

When Scott Bessent is asked about this, he tells the reporter that toys for Christmas aren’t part of the American dream. Americans should be focused on God, family, and community at Christmas, not cheap Chinese toys. In any event, the children in question will be grateful ten years from now when they have jobs in revived textile mills in South Carolina as a result of the tariffs. The long-term gain justifies the short-term pain.

That should go over really well.

Oren Cass, the prominent New Right commentator, thinks the concept behind Trump’s tariffs is right, but the execution is flawed. He believes the initiative can work if it is phased in, made more flexible, and explained better. Is he right?

Here are my reactions to his arguments:

1. Trump is never going to give up his right to go with his gut and change positions on a dime. Asking him to take a consistent position, explain it clearly, and ride with it regardless of the consequences is a waste of time. American business knows that and will refuse to rely on anything he says. As a result, the investments that Cass is counting on will never happen.
2. In the end, Cass is asking America as a whole to accept a lower standard of living in the form of significantly more expensive goods in exchange for more factory jobs in red states. He doesn’t like government programs that redistribute wealth, but that is exactly what his tariff scheme, if successful, will do.
3. Universal 10 percent tariffs will generate some revenue and provide some incentive to build factories in America, but the revenue will probably be sent to farmers to compensate for the loss of exports, and the incentives won’t be enough to make much of a difference. This will be a new form of right-wing recycling; American consumers will pay the tariffs, and farmers will get the proceeds.
4. As I’ve noted many times before, there is no vast pool of workers to take the new hypothetical factory jobs in the unlikely event they actually do appear. Of course, if the Cass plan creates a recession, that could change.
5. Cass sees the Reagan-Japan voluntary auto agreement as a model for deals that will be inspired by the reciprocal tariffs. That won’t work, because reaching enforceable managed trade agreements with scores of countries based on the entirety of their economic conditions–not just auto sales–will be too complex.
6. The Cass critique of the status quo is based on the premise that we need to bring back more manufacturing jobs, not because they are inherently superior to service jobs, but because they can be done by underemployed men in red states. Why not simply take some of the proceeds from globalization and give them to its victims in the form of tax credits and social programs? That would be a more efficient solution to the same problem.
7. There will be innumerable serious casualties in a trade war with China. We are proposing to fight it without any meaningful preparation and without allies, thanks to the blundering of the new administration. Cass would probably agree that this is a mistake, but the die is cast; it is already too late to turn back.

Scott Bessent says America will inevitably win a trade war against China because we have less to lose; we export far less to China than we import. Is he right?

Like many other foolish Republicans, Bessent sees Americans purely as producers–not as consumers. The large increase in prices that will follow the China tariffs will inflict plenty of pain in this country, to which the reactionary base will not be immune. Due to his public security apparatus, Xi can disregard public opinion to a great degree. Trump has no such luxury. At least for now.

Trump and his allies have made their utter contempt for the Europeans crystal clear. They have imposed large tariffs on the EU, demanded huge increases in military spending, withdrawn from the Paris Agreement, changed positions on Ukraine, and regularly insulted European nations both in public and in private. We are told, however, that the Euros will be enthusiastic allies in a trade war against China once the dust has cleared.

Does that sound plausible to you? Does bullying sound like a successful form of diplomacy? Do you really think the Euros will agree to act as Trump’s vassals instead of setting their own course?

Trump’s trade representative was testifying in favor of the reciprocal tariff scheme when Trump announced that he had paused it for 90 days. His people then spun the announcement as the logical conclusion of a grand scheme, not a U-turn. Trump subsequently undercut them by admitting that he had suddenly changed his mind under pressure from the bond market. His intuition told him that the pause was necessary to avoid an economic meltdown.

There are two lessons here. First, working for Trump is very difficult; you have to be willing to change your position on a dime, while pretending that the narrative hasn’t changed. Second, Trump is incapable of setting out clear and convincing positions and then sticking to them. We are going to be living with this kind of chaos for the next four years.

American businessmen voted enthusiastically for Trump because they believed he told the truth about tax cuts and deregulation and lied about tariffs. As of today, the opposite is true. Learn to live with the uncertainty you voted for, guys.

You may have noticed that most of the discussion about resolving American trade deficits has revolved around the purchase of gas and weapons. Is there any other national economy that relies heavily on exports of these two products?

Spoiler alert: it invaded Ukraine.

Will the Supreme Court be confrontational or passive-aggressive with regard to Trump’s power grabs? That is the question I have raised many times over the past few months; so far, the answer is the latter. The Court has mixed statements regarding judicial power and independence with actual decisions that favor Trump, at least in the short run.

Will this pattern continue? As time goes on, it will become more difficult for the Court to avoid direct confrontations. If public support for Trump collapses as a result of the tariffs, that would make the Court’s job easier. But for now, the safest assumption is that Trump will continue to get what he wants, with a side of rhetoric that he doesn’t like.

Trump has apparently told the EU that a trade deal can be made if the EU will agree to buy $350 billion in American energy a year. That is the kind of managed trade agreement I discussed in my previous post, and it would eliminate the deficit. But would it make sense in practice?

Questions abound. Is there an additional $350 billion in American energy that is available to be sold? What form would it take? If the Europeans needed it, why aren’t they buying it now? What would happen to the energy sources that they are using today? Would such an agreement, for example, mean an end to North Sea oil and nuclear power plants? Would the energy be purchased by governments, or the private sector? How would it be distributed? Which American companies would get the concessions? Do huge multi-national oil companies really deal in “American” energy? What would happen to energy prices at home with these massive exports? If domestic prices skyrocketed, how would that result in a manufacturing renaissance? And so on.

I just don’t see how this could work. Mercantilism and liberal democracy don’t mix.

Trump is assuring us that scores of nations–not China, of course–are beating a path to our door to make a deal on tariffs. For once, I believe him. Will that solve the problem and put an end to the trade war?

No, because the supplicants are offering to reduce or eliminate tariffs on American goods, but tariffs aren’t the source of the imbalances. Trump imagines that legal barriers are the problem; in reality, the imbalances are caused by cultural and economic factors that are beyond the control of liberal democratic governments. Can the German government, for example, realistically demand that the German people instantly change their attitudes towards spending and debt?

As a result, don’t expect Trump to accept these offers, and the war will go on. The only real “solution,” from Trump’s perspective, would be a series of enforceable agreements in which foreign governments agree to increase purchases of American products and to limit their exports. Authoritarian governments that view the nation, not individual producers and consumers, as the focus of economic activity have some ability to make good on a promise of that nature, but political systems based on the protection of individual rights do not.

In an NYT column published about a week ago, Rep. Don Bacon, a relatively moderate Republican from Nebraska, called on his party to provide continued support to Ukraine. He also argued that the GOP needed to stand up for its principles–democracy, free markets, and the rule of law. Does this accurately reflect opinion within the GOP?

No. The handful of Republicans who still believe this voted for Nikki Haley. Today’s GOP exists solely to give unconditional support to Donald Trump–period. Democracy, free markets, and the rule of law only appear as foils in his agenda.

Life in the time of Trump.

His tariffs are now here.

Investors paralyzed by doubt;

Consumers filled with fear.

He says they will be permanent

But can he be believed?

The world has heard his lies before.

We will not be deceived.

By most objective standards, Biden’s economic record was a success. Due largely to his personal infirmities, however, he was unable to make much of an effort to sell it to the American people. The voters decided that he was a failure even before the campaign began in earnest, and that was that.

Trump, on the other hand, is a born salesman. That is his problem. We know only too well that Trump will try to sell us the Brooklyn Bridge, as he did in the early days of the virus. His happy talk, even when it has some basis in fact, will persuade no one except the base, which doesn’t have the economic clout to keep the economy afloat.