Stanley Holditch
This is one of those points of inflection where one wonders if Trump is wrong about how America works or if we are.
Following the latest raise in table-stakes from China in the ever-escalating trade war, Trump went a little off-message after telling American consumers that trade wars were quick and easy to win.
There are three parts of this that are really funny:
- “hereby ordering” companies to act at the behest of the President is something that could only happen in a fully-socialist state-run economy
- “immediately” even if only in reference to starting to look, as if this will have an impact in Trump’s tenure
- “alternative” assumes that there are plenty of other countries with state-run economies, billions of government-subsidized workers, and huge cities and even regions exclusively dedicated to manufacturing
There are times when you call tell Trump’s account is being managed by a staffer, such as when “he” tweeted the four congresswomen to “go back to the … countries from which they came.” This rage and tendency towards authoritarianism in this one seems genuine.
So How Pissed Should You Be?
The truth is Trump is right about China – they have been rampantly stealing intellectual property from just about every firm that does business in their company (just ask Siemens), and their labor laws make it very hard for anyone to compete with them on price.
Where Trump has been consistently wrong is who bears the brunt of his tariffs: he has been quoted multiple times as saying that China pays for them and he is extracting billions from China. U.S. consumers bear the cost, and are going to be paying higher prices because of the tariffs. If the iPhone is any guide to U.S. goods, this is going to hit consumers hard. Higher prices cause downturns in spending, which in turn can cause lower profits leading to shakier earnings reports which can of course lead to a downturn in the overall market.
Many of those hardest hit (farmers) have remained Trump’s staunchest supporters in the trade war. But in light of the most recent $75bn in tariffs, they appear to be more war-weary than ever before. The National Farmer’s Union admitted last week that Trump is “making things worse.”
Trump’s negotiation style just isn’t suited for the global stage. It may work on beating up sheet rock suppliers or strong-arming local zoning officials but he is in way over his head when it comes to global economics. A more mature man would have recognized this and enlisted someone well-heeled in global trade to help him through this. But Trump is not a mature man, nor one self-confident enough to admit any area is a weak spot. So we can all expect this to get worse before it gets better, because there is no alternative to China, certainly not an immediate one, and Trump obviously doesn’t know the first thing about ending, much less winning, a trade war.
