Trump's tariff policy has nothing to do with trade

By: Chris Murphy / The Daily Telegraph
Translation: Telegrafi.com

Economists and analysts have spent the past two weeks desperately trying to decipher President Donald Trump’s ultimate intent with the tariffs. Last week’s surprise move, in which he suspended most tariffs for 90 days, came after the White House had spent days insisting that the tariffs were not for negotiation but a long-term strategy to revive the U.S. industrial base and bring back jobs. However, there’s a simple reason why Trump’s short-lived tariffs don’t make much economic sense: They were designed not as an economic policy but as a means to compel loyalty to the president.

When combined with smart domestic industrial policy, tariffs can help protect American jobs and products. But these chaotically designed, blanket global tariffs are accomplishing nothing more than threatening to raise prices and destabilize the global economy. This makes sense, because Trump’s goal seems to be to impose economic chaos, forcing industry leaders to turn to him for relief.

Trump has reportedly admitted that he doesn’t care if his policies cause a recession, as long as they don’t lead to a depression. He apparently doesn’t remember that during the Great Recession of 2008, nearly nine million jobs were lost and 10 million Americans lost their homes to foreclosure. But these tariffs were never really intended to help the working class, bring jobs back to the U.S., or fix the broken global trading system. The 90-day suspension is proof of that.

How many new factories or jobs are being created to justify putting Americans' retirement plans at risk? What are the 75 countries Trump is negotiating with? Have they offered terms that would serve American workers and not just special interests? Or are these tariffs simply a tool to pressure American companies until they give in?

Take as an example Apple -in. Commerce Secretary Howard Lutnick fantasized about an “army of millions and millions of people putting in little screws to make iPhone"in" that "he would return to America". Just a few days later, Apple received an exemption from Trump's 145 percent reciprocal tariff — on smartphones, laptops, hard drives, processors, servers and memory chips from China. Tim Cook, who personally donated $XNUMX million to Trump's inaugural committee, has a good relationship with the president. Lutnick later clarified that Apple was exempt from the “reciprocal” tariffs, but not from the tariffs that would soon be announced for semiconductors, which guarantees that Apple will continue to exert influence over the administration.

If you understand Trump's action as a use of executive power to coerce institutions that would otherwise halt the slide toward autocracy into cooperation, then it's easy to see how tariffs fit into this plan. Some may not want to believe it, but it appears that Trump is undertaking a systematic campaign to destroy any institution that might stand in his way.

He has already attacked three main pillars of American democracy. He has threatened to cut off federal funding for universities – as centers of academic research and youth protest; he is attacking the largest law firms by excluding them from government contracts and stripping their lawyers of their security clearances; and he is trying to silence journalists by denying them access to government facilities unless they use language pre-approved by the White House.

Now he is using tariffs to force companies and industries to come to the White House to beg for relief. Each company or industry will likely be forced to make concessions in exchange for these exemptions. During the suspension, CEOs are expected to come forward, one after another, to demand that their companies be exempted from the tariffs. These concessions may be financial in nature, but they are mostly expected to be political. Most of these agreements will remain secret from the public.

Once Trump has control of most law firms, universities, media organizations, and private companies, it will become almost impossible for any form of opposition to gain any ground. The Justice Department, used as a weapon, can arrest protesters, and there will be fewer and fewer lawyers to defend them. University research and academic discussion that opposes Trump’s ideology will be jeopardized. As the rule of law crumbles, private companies will not object. This is not a new or innovative strategy – it is a playbook widely used by democratically elected leaders who intend to stay in power forever.

Rolling tariffs and granting exemptions to political allies is not about trade policy. It is about subjugating American industry. Public outrage is much more likely to stop Trump’s attempt to destroy democracy if everyone can clearly see the plan he is trying to hide. /Telegraph/