The Tariff King

We're not even one month into His Orangeness' term and already the trade wars have begun. Trump has managed to alienate our closest neighbors and allies ten days into his administration.  This will not only increase inflation but lead to significantly higher prices at the pump as we get the majority of our imported oil from Canada and Mexico.  Thirty-plus years of a North American Free Trade Agreement, better known as NAFTA, goes down the drain to placate the petty grievances of a deeply addled man, driven by a group of advisors who seem to want to blow up the economy.  Is this what voters wanted when they pulled the lever for his Orangeness in November?

You really can't say you didn't see this coming as Trump promised tariffs.  He wanted to be the Tariff King.  He sees it as a way of hard bargaining but you have to have an inordinate amount of leverage to bargain like this.  Given the trade deficits we have with virtually all our major trading partners, I'm not sure what leverage we have anymore.  It seems like many of these countries can get along fine without us if push came to shove.  So, what next the "nuclear option?"

I suppose he will have the opportunity to back out, like he has already done with his spending freeze and annulling birthright citizenship.  He has turned the White House into a Royal Palace from which he issues decrees in direct defiance of the Constitution and subsequently finds them shot down in federal court.  He thinks he has has the Supreme Court to ultimately back him up, but we've already seen that conservative judges are only willing to go so far.  Three of them anyway.  

Roberts, Kavanaugh and Barrett seem to have minds of their own, not always willing to go along with the conservative hard line of the Heritage Foundation, which is driving this federalist agenda.  Trump will have to be more careful with his picks to replace Thomas and Alito as they are both growing long in the tooth.  Gorsuch has been the only recent appointment to hew to this autocratic agenda.  

Shades of the early Federalist days of government when Hamilton and others tried in vain to force the states to comply with their notion of a stronger federal government. In the end, landed gentry rebelled and voted for Jefferson in 1800, who would restore more power to the states. 

The irony is the Heritage Foundation and other conservative "think" tanks have long pushed the Jeffersonian version of decentralized government.  They have extolled "states' rights" for decades, but each time Republicans wrest the White House away from the Democrats they go out of their way to impose their own federalist agenda, which the Democrats have to undo when they are inevitably re-elected in the backlash to these anachronistic policies.

We now live in a global economy.  All major industries and technologies are international.  Many so-called American companies like Apple have their headquarters in Ireland to pay less taxes and more easily distribute their products in the EU.  Very few companies of any size trade exclusively in one country.  In short, when you impose tariffs, you are not only taxing your own industries but forcing consumers to pay higher prices, as the companies don't eat these tariffs.  They pass them along to consumers.

Yet, here is Trump extolling the virtues of William McKinley in restoring the late 19th-century president's name on Mt. Denali.  In the corrupted minds of Trump's advisors, as it is highly doubtful Trump had any real awareness of McKinley beforehand, the 25th president enriched the US through tariffs at a time the US was a minor player in the world's economy.  Given there were no income or corporate taxes at the time, this was one of the few means the federal government had to raise money.  The first "corporate" or excise tax wasn't introduced until 1909 under Taft.  

Team Trump also cited a largely insignificant war that McKinley initiated to seize three islands under Spanish control.  Probably the only thing any American would remember of this war from high school history class was Teddy Roosevelt's charge on San Juan Hill.  Truman would eventually relinquish the Philippines after nearly fifty years of autocratic leadership that led to much unrest on the island. Is this really the president you want to model yourself after? Especially given McKinley was assassinated in 1901 and the US flourished under Teddy Roosevelt, not McKinley.

I suppose some compromise will be reached that makes Trump feel like he "won" this first round.  His team probably wants to renegotiate NAFTA, which is due for review in 2026.  They want terms more favorable to the US, but this isn't the way to go about it.  We should look toward the EU as a model in expanding NAFTA throughout Central and South America and creating a trading bloc that will allow us to better compete with the EU and the emerging BRICS.  Trump's trade policies, dating back to his first administration, have already alienated Brazil and Argentina, which joined BRICS.  Chainsaw wielding Javier Milei pulled Argentina out of BRICS in 2023, supposedly modeling the Orange One, but no country can effectively compete on its own these days, not even the United States.

His actions may very well push Canada and Mexico toward the EU and BRICS.  Mexico joined OPEC in 2016 and has shown interest in BRICS, given its increasingly toxic relationship with the US.  If Trump carries through on his border policy by mobilizing troops to the border and fortifying the wall, you can guarantee Mexico will pull out of NAFTA and seek greener pastures.  Likewise, Canada is strengthening its ties with the EU as its relationship with the US becomes increasingly more strained.

It won't so much be American First as America Alone, with international trust irrevocably shattered. What good is it for a country to sign any kind of agreement with the US when it knows it can be broken at a moment's notice by a petulant president determined to show his authority.  Trump can wear his paper crown, but it only makes the US look stupid and weak.