Trump, in what can now be dubbed “classic” Trump style, has thrown the realm of international trade into chaos. He’s both threatened and enacted tariffs against our biggest trading partners, he’s ramped up already over-blown rhetoric, and he’s thrown down a gauntlet regarding truly free trade.

That last bit has chummed the waters for his supporters, who presume that all this tariff stuff is tactical, not ideological, but a fair judgment of the evidence at hand can only produce one conclusion: None of us know what’s actually in his head or what his true beliefs are. Given Trump’s propensity to say whatever, no matter if it’s contradictory, and given that we cannot read his mind, we are left with no rational means of determining the basis and intent of his actions.

Is his tariff stuff protectionism born of a belief that trade deficits matter and that the path to MAGA is in “balance,” or is it tactical, intended to achieve a free trade goal? We can cherry pick evidence for both positions, which means we can’t conclude either. Time may answer that question for us… or it may not. If Trump’s tariffs are actually a negotiating tactic, they’re a risky one. If, on the other hand they’re a signal that he actually believes trade deficits matter (they don’t), then we’re screwed no matter what – but that’s not today’s topic.

If we go with what his mind-reading acolytes tell us, that they are a “I don’t want this but I’m going to use it to get what I really want” gambit, the goal is an admirable one: opening up protected foreign markets. It’s true that many of our trading partners engage in their own forms of protectionism, and getting them to liberalize access to their economies is worthy of effort. If Trump succeeds in leveraging other nations into reducing their tariffs, trade barriers, and protectionism, he’s doing us, them, and the world overall some good. But, the perils of them not working are multifold:

  • In the short term, tariffs do real economic harm, domestically. Lost jobs, reduced wages, economic stagnation, increased costs to consumers, and so forth and so on. The longer the trade war carries on, the more damage is done. Any look at history makes this obvious.

  • The markets get roiled, and increased uncertainty as to what Trump will do in the future is established as the new norm. Businesses and markets don’t respond well to future uncertainty, and behave more defensively in their future planning. This harms the economic growth that Trump is both promising and banking on to keep him in voters’ good graces.

  • China and other countries may do the calculus and conclude that they’d be better off in the long run by toughing out the trade war instead of conceding. The economic harm done domestically may be sufficient in and of itself to tip the scales against Trump come 2020, and our trading partners may choose to gamble that the next president would be more pliant.

  • It lays a failure trap for Trump. If he doesn’t get a quick victory, he’s left with two choices: Keep the tariffs in place, even though they’ll harm the economy, reduce his party’s chances for keeping Congress at the mid-term, and reduce his re-election odds, or rescind them, swallow the defeat, and be saddled with the same sort of “he will blink” reputation that dogged Obama after his Syrian “red line.”

Some admire Trump’s negotiating style and skills. Others disparage them. But, like so much else about Trump, it’s better to judge each action in and of itself, to simplify matters and avoid the pitfalls of opinion-upon-opinion. Thus, any presumed brilliance or incompetence should be set aside in favor of a simple, fact based analysis:

There’s an old thumb-rule in baseball: Never steal third base with none out or with two out. If you’re going to try anyway, you’d better be damn well sure you make it.

If (and I repeat if. We can’t know the truth about the Untethered Orange Id’s intent until well after the game is over, and perhaps not even then) tariffs are a negotiating tactic rather than genuine protectionism, they’d better work. They’re a high-risk maneuver, where failure comes at a very steep price. This isn’t a mysterious or difficult conclusion, and it’s one we can assume our trading partners can reach as well. They face their own complications, domestically, from how they manage their side of this business, since tariffs don’t just hurt us, so the calculus remains complicated, so it’s not a slam-dunk that a trade war would work in their favor. But, that’s their problem and something they have to figure out as well.

Trump’s tariff gambit (if that’s what it actually is) is a risky one, and a gopher-field of ankle-breaking traps. If it fails, it’s gonna hurt. Him, and us.

Peter Venetoklis

About Peter Venetoklis

I am twice-retired, a former rocket engineer and a former small business owner. At the very least, it makes for interesting party conversation. I'm also a life-long libertarian, I engage in an expanse of entertainments, and I squabble for sport.

Nowadays, I spend a good bit of my time arguing politics and editing this website.

0

Like this post?