Jedi-Minding on Tariffs

Posted: Mar 09, 2018 12:01 AM
Jedi-Minding on Tariffs

President Trump is the most masterful negotiating presence in the White House of not just the modern era, but in American history.

You free-trade establishment types need to pipe down, listen up, and learn a thing or two.

In the president’s brief statement Thursday in the signing of the tariff declaration, Trump let slip a few things that not only the media immediately began to ignore, but simultaneously demonstrated his mastery of the issues in far greater depth than many of the wall street wonks who spent the last two weeks denouncing his tariff policy (which until today had not been fully revealed).

Talk show hosts on the right, some of whom work for my parent broadcaster, libertarian pundits, economists, opinion editorialists, and plenty of millennials on Twitter and elsewhere sounded off with absolute certainty that Trump’s tariffs were a pox on the economic successes of his early days. They went on to predict the future doom of his legacy as a historic failure. And these were merely criticisms of the political right.

They should learn a little something about how our president operates.

One of the critical voices I interviewed said she believed the tariffs would be the beginning of the “Trump job loss” season.

Yet in the president’s own voice, flanked by his commerce, treasury, and trade secretaries to his left, and a sample of America’s finest production labor to his right, the president revealed a number of items that the press should have touted in response. Sadly they have yet to do so.

1. NOT A SINGLE COUNTRY WILL BE FORCED TO PAY THEM - IF THEY SO CHOOSE: Did you see this reported anywhere? It was buried pretty deeply on his own list of reasons for implementing the tariff policy, and with the press's tendency of having the attention span of a gnat understood, some of them may have flat out missed this. Yet he stated it. The implementation of the tariffs will also include the ability for countries to be added to or taken off the list (which doesn’t kick in for another 15 days) based on one simple criterion: improve whatever current standing you have with America by making it more fair. It’s simple, it’s straightforward, and massively doable. If your country charges a higher tax of any sort on our items coming into your country, eliminate that tax, or make it mirror the ones we charge you for your products headed into our markets. There is no reason why American cars should be required to pay a tax of 25% on our cars going into China, when they pay only 2.5% to get to bring theirs into the US. This is idiotic. Such concessions were negotiated by both Republican and Democrat administrations who seem to have negotiated from apparent weakness. And note that the president didn’t argue that you had to give us a favorable advantage—merely equal treatment—an old fashioned idea rooted in our nation’s founding. Theoretically no nation on earth will be required to pay the tariffs on steel and aluminum imports if they simply, quickly, and efficiently work to create a level playing field to the relationship we have with them. It is a brilliant move from this perspective as well—the decision to pay the tariffs is dependent solely on the decision of the other nation. By choosing to not create reciprocity in our relationship, they choose to take a posture that continues to cheat American workers, markets, and jobs. Tariffs are a more than fair response in return.

2. BEGIN TO WIN THE DEFICIT ON TRADE: Most of America probably did not realize that we lose close to $800 billion in the current annual trade deficits with the nations we trade with. These deficits are the very reasons why factories get shuttered. These deficits allow producers of mass goods to take advantage of us in ways no self respecting person ever should. By leveraging the power of American production (opening more steel mills, and aluminum smelts,) by forcing international partners to play fairly, by incentivizing good behavior, and by doing so in the aftermath of successful tax reform legislation and impact, America no longer has to allow ourselves to be kicked in the teeth and to say thank you to the likes of China and India who have been happy to do so for decades. And ponder this, if all things are equal, why couldn’t America compete on the international export steel and aluminum stage? We have begun exporting coal—quite successfully—and the benefits of doing so will reap long lasting power balancing on the international financial scales of justice.

3. SIGNIFICANT CAVEATS: In his prepared remarks the president should have assuaged the fears of the most potent free-trade apologists without caveats, but as a way of demonstrating his dexterity in the arena, President Trump added even more incentives to help accelerate this new reality. Carving out a promise to keep the imports from Canada and Mexico tariff free (as a new trade agreement/understanding is negotiated) should settle down the palpitating heartbeats of those concerned with the echo effect on markets that more expensive steel were being said to have caused. But before announcing those, the president included an even more significant carve out, “bring your production to America.” He offered what appeared to be tax free incentive for nations that would like to bring their production on to American shores. American companies are doing it by the droves since the election (and accelerated even more so after tax reform) but now President Trump is aggressively shopping America as an ideal place for other nations to bring their production to. This has nothing but upside as more of our materials, people, and resources are employed. 

Free traders for two weeks have been solemn, ill-tempered, irrational, and even hostile because a president signaled he was keeping his word on a fundamental campaign promise.

They didn’t need to be, the president had no intention of driving us into a recession, or like the last guy, allowing a stagnant recovery to putter along.

His intention all along doesn’t even appear to have been a simple tariff and tiff over our factories and getting those people working again.

Nope, his game plan was to (in one single move) force the rest of the world to sit up straight in their chairs, examine and search their hearts on how they feel about the privilege of being our trading partner, and saying as clearly to them as I do my 7 year old, “You can do better, and you will… or…”

And it’s way past time that somebody did!

America’s back, baby!