With clear eyes, hard facts, critical thinking, new political strategy, empathy, and a soupçon of Schadenfreude
You can read all about it at https://nclalegal.org. I looked for a Donations page. Didn’t find it. Guess you don’t need donations from peons when you’re financed by Koch and Leo.
Wonder what they’ll say when they win in the Supreme Court and the Very Stable Genius tells the Court and their organization to go screw themselves.
Robin Hood, he ain’t.
Wall Street Journal, Consumer Angst Is Striking All Income Levels: Signs of weakness are showing up in spending on everything from basics to luxuries
The Journal identifies the “key points” as follows, after which it expatiates.
Ramesh Ponnuru (Washington Post), Where’s the economic sense behind Trump’s tariffs? Not even Treasure Secretary Scott Bessent can convincingly defend the president’s trade policy.
Ramesh Ponnuru is a senior fellow at the American Enterprise Institute and editor of the National Review. He writes,
If you think tariffs are painful, try watching President Donald Trump’s aides and supporters attempt to defend them. Whenever they come up with a rationale for his policies, however dubious, he immediately says or does something to contradict it. They say Trump’s trade strategy is all about containing China — then he slaps tariffs on the allies we would need to do so. They explain that the law lets him impose tariffs on Canada to protect our national security, only for him to let slip that he’s mad about Canadian dairy policies.
The truth is that Trump just likes tariffs and people who tell him they make sense. His trade adviser, Peter Navarro, thinks imports harm the economy because he doesn’t understandhow gross domestic product data is calculated. The administration has no grand trade strategy.
But the demand for sophistry in defense of Trump’s tariffs is apparently inexhaustible. Scott Bessent, the treasury secretary, tried out another argument at the Economic Club of New York last week.
The president, Bessent said with a straight face, “sees the world not as a zero-sum game but as interlinkages that can be reordered” to help Americans. (If this were a college paper, the professor would scrawl “citation needed.”)
Bessent argued that the tariffs are designed “to rebalance the international economic system” and “[level] the playing field.” He’s not just making the standard complaint that other countries place tariffs on U.S.-made products. Although true, that fact does not go very far toward justifying Trump’s policies. In fact, many countries place lower tariffs on our exports than we do on theirs — yet Trump wants to hike tariffs on them anyway.
The treasury secretary has a broader view of the imbalances that need to be fixed. “The United States,” he says, “provides reserve assets, serves as a consumer of first and last resort, and absorbs excess supply in the face of insufficient demand in other countries’ domestic models.” Most economists think the United States runs a trade deficit because investment outstrips savings. Bessent looks at it differently: Other countries force trade deficits on America by undervaluing their currencies and investing their excess savings with us.
Bessent sketched his case briefly in New York, but others have developed it in greater detail. Manufacturing employment has shriveled because of all this currency manipulation, these theorists say, but tariffs can undo these distortions by encouraging increased production at home.
Bessent alluded to this idea in the most quoted remark from the speech: that “access to cheap goods is not the essence of the American Dream.” He believes that the global economic order has pushed us to consume too much and produce too little. Perhaps a man with assets above $500 million should have found a better way to phrase this opinion.
But set aside the bad PR. The argument itself is a chain with several links — and not one is solid.
Trade balances don’t indicate which economies are succeeding and which are failing. The United States ran a trade deficit for most of the 19th century while rising as an industrial power. Nor is it true that trade surpluses can keep a country from losing manufacturing jobs. Every developed country — including Germany, which has a trade surplus — has seen the same downward trend.
Tariffs are not a reliable means of increasing domestic production, either. That’s partly because they tend to cause the currency to appreciate. Bessent himself has told us so: During his confirmation hearings, he tried to allay fears that tariffs would raise prices by saying that a rising dollar would soften the blow. But a stronger dollar also reduces demand for U.S. exports — which is the very reason Bessent complains about currency manipulation.
Tariffs also tend to raise the price of goods that U.S. manufacturers use, which makes it harder for them to make and sell their own products. Study after study has found that the tariffs Trump imposed during his first term caused manufacturing employment and output to shrink. Moreover, those tariffs didn’t even reduce the trade deficit.
What Bessent’s case for tariffs has in common with all the other rationalizations is that the president has given no indication he believes it. If Trump believed it, he would want a weaker dollar and an end to its status as a global reserve currency. He doesn’t; he has talked about punishing countries that try to displace the dollar.
The purpose of these theories is not to cohere. It’s to sound just plausible enough to distract from the unsettling truth: The president has an obsession with tariffs, and it is impervious to facts and logic.
Folks, grab a six pack and pop a big old bowl of popcorn.
The Guardian writes,
A Wall Street Journal editorial slamming Donald Trump’s tariff plans as terrible for the US economy and auto industry prompted a broadside from the president on Wednesday followed by threats to sue the media.
In an opinion piece titled Trump’s Tariffs Will Punish Michigan, the Journal argued Trump’s tariff plans would harm “US auto workers and Republican prospects in Michigan”.
Trump has threatened to impose 25% tariffs on goods from Mexico and Canada, a move the editorial argues would increase US vehicle prices, hurt auto workers and advantage Asian and European manufacturers.
“If the goal is to harm US auto workers and Republican prospects in Michigan, then by all means go ahead, Mr President,” wrote the Journal.
On his social media site, Truth Social, Trump wrote the Journal is “soooo wrong”. “The tariffs will drive massive amounts of auto manufacturing to MICHIGAN, a State which I just easily one [sic] in the Presidential Election,” he wrote.
Trump followed the rebuttal with a threat to those publishing “Fake books and stories with the so-called ‘anonymous’, or ‘off the record’, quotes” criticizing the opening month of his second presidency.
“At some point I am going to sue some of these dishonest authors and book publishers, or even media in general, to find out whether or not these ‘anonymous sources’ even exist, which they largely do not. They are made up, defamatory fiction, and a big price should be paid for this blatant dishonesty. I’ll do it as a service to our Country. Who knows, maybe we will create some NICE NEW LAW!!!,” he wrote.
The Journal’s conservative editorial board has been a persistent critic of Trump’s tariff plans, calling them “the dumbest trade war in history” earlier this month.
Wall Street Journal Editorial Board, The Dumbest Trade War Fallout Begins: Canada and Mexico vow retaliation in response to Trump’s tariffs, amid new economic uncertainty
The WSJ doesn’t say it, so I will. As far as I can tell, Orange Jesus knows full well that tariffs are going to increase inflation, cost jobs, and hurt his supporters. But he thinks they are a complicated, and therefore clever, way to generate a shit load of revenue and thus finance tax cuts for the billionaires.
As for the foreigners, Trump hates them all, but he particularly hates American allies. As the WSJ points out, Mexico and Canada will be hurt even more than his American supporters will be hurt. For Mango Mussolini, that’s a feature, not a bug.
Now back to the Wall Street Journal Editorial Board, which writes,
“WILL THERE BE SOME PAIN? YES, MAYBE (AND MAYBE NOT!). BUT WE WILL MAKE AMERICA GREAT AGAIN, AND IT WILL ALL BE WORTH THE PRICE THAT MUST BE PAID,” Mr. Trump posted on Truth Social on Sunday morning. He also included a blast at these columns for leading the “Tariff Lobby” after our Saturday editorial called his 25% across-the-board tariffs on our friends and neighbors “the dumbest trade war in history.”
We appreciate Mr. Trump’s attention, though we’re anti-tariff and not lobbyists. But bad policy has damaging consequences, whether or not Mr. Trump chooses to admit it. Mr. Trump can’t repeal the laws of economics any more than Joe Biden could on inflation.
***
Tariffs are taxes, and when you tax something you get less of it. Who pays the tariff depends on the elasticity of supply and demand for the specific goods. But Mr. Trump wants American workers and employers to take one for the team. Hope you don’t lose your job or business before the golden age arrives.
The economic fallout began Saturday evening as Canada said it will retaliate with a 25% tariff on $30 billion (Canadian dollars) of U.S. goods, with another C$125 billion to follow in three weeks. Mexican President Claudia Sheinbaum also promised to retaliate.
Canada’s new border taxes will hit orange juice, whiskey and peanut butter—all from states with GOP Senators. Prime Minister Justin Trudeau said Ottawa’s tariff list would also include beer, wine, vegetables, perfume, clothing, shoes, household appliances, furniture and much more. He said Canada could also withhold critical minerals.
Note that Canada’s Conservative opposition leader, Pierre Poilievre, also called for retaliation. Mr. Poilievre is the favorite to be the next Prime Minister and he rightly said the trade war will damage both countries. But he said Canada had to stand up for its “sovereignty” and protect its economic interests.
Mr. Trump’s tariffs are already roiling North America’s energy markets, which are highly integrated. The President implicitly recognized the risk by hitting Canada’s energy exports to the U.S. with a lower 10% tariff. But that will still hurt Midwestern refiners that rely on Canadian oil. Canada and Mexico could send more of their oil elsewhere for refining, perhaps even China.
Canada’s expanded Trans Mountain pipeline runs from Alberta to the West Coast and has spare capacity. It could be used to increase tariff-free oil shipments to Asia that would hurt California refineries that now import oil from Trans Mountain. California could have to import more oil from the Middle East.
Mr. Trump says the tariffs will revive U.S. manufacturing. But Jay Timmons, CEO of the National Association of Manufacturers, said in a statement that “a 25% tariff on Canada and Mexico threatens to upend the very supply chains that have made U.S. manufacturing more competitive globally.”
He added that, while his members understand the need to reduce fentanyl flows to the U.S., “the ripple effects will be severe, particularly for small and medium-sized manufacturers that lack the flexibility and capital to rapidly find alternative suppliers or absorb skyrocketing energy costs.”
Many more trade groups have criticized the tariffs, including even U.S. aluminum makers who benefited from tariffs in the first term. Canada accounts for more than half of U.S. aluminum imports (owing to its cheap hydropower) that secondary and downstream manufacturers use.
***
None of this means the Trump tariffs will tip the U.S. economy into recession. U.S. growth may be strong enough to absorb the blow from tariffs, as it was after Mr. Trump’s more modest levies in the first term. But the same can’t be said about Mexico and Canada, where growth is weak and which depend on U.S. markets for much of their GDP.
The tariffs may also not cause a surge in the general U.S. price level. Overall inflation depends far more on the Federal Reserve’s monetary policy. But prices will increase for most tariffed goods, which will be painful enough.
The tariff broadside also adds new policy risk and uncertainty that could dampen business animal spirits. Markets have been pricing in an assumption that Mr. Trump would step back from his most florid tariff threats, or limit tariffs to China.
The hammer blow to Mexico and Canada shows that no country or industry is safe. Mr. Trump believes tariffs aren’t merely useful as a diplomatic tool but are economically virtuous by themselves. This will cause friends and foes to recalibrate their dependence on America’s market, with consequences that are hard to predict. How this helps the U.S. isn’t apparent, so, yes, “dumbest trade war” sounds right, if it isn’t an understatement.
Facing MAGA 