Some Links
Scott Lincicome compares Trump 2.0 on trade to Trump 1.0 on trade. Four slices:
On trade agreements, the Trump administration’s moves ranged from very bad to mundane to comically weird. The most notable agreements were the terribly named U.S.-Mexico-Canada Agreement (USMCA), which basically added some liberalizing (e.g., digital trade) and some protectionist (automotive “rules of origin,” labor/environmental policing, etc.) terms to a copy-and-pasted NAFTA; Trump’s Phase One deal with China, which has since (predictably) fallen apart; and a narrow deal with Japan that gave U.S. farmers essentially the same market access they would’ve had if Trump hadn’t foolishly abandoned the completed Trans-Pacific Partnership. The administration also initiated more traditional trade agreement talks with the U.K. and Kenya, but these never went far and were basically shelved by the Biden team.
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Overall, the Trump 1.0 approach was not only a big break from freer-market Republican trade policy, but also a significant departure from a decades-long, bipartisan White House approach to trade — one that avoided major trade wars and coupled relatively narrow protectionism with reciprocal trade agreements that generally opened markets here and abroad. Trump 1.0 also was messy, piecemeal, incoherent, and often reverse-engineered by frantic bureaucrats trying to make U.S. policy match whatever thing Trump happened to tweet out that day. And it was all intensely political: With deals and exceptions affecting billions of dollars in trade and numerous companies’ financial futures, lobbying on trade issues skyrocketed—as did the repeated appearance of impropriety.
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Thanks to several years of perspective, moreover, we also know—as numerous Capitolisms have documented—that Trump’s novel approach to trade policy wasn’t particularly effective: The tariffs and related chaos imposed relatively high costs with relatively little to show for it. On the other hand, the policy also wasn’t as devastating as some folks (not me, for the record) predicted. As bad as the policies and uncertainty were, goods trade is a small part of our giant, services-oriented U.S. economy, which was at that time being bolstered by a business cycle on the upswing and good Trump-era economic policy (tax reform, regulatory prudence, etc.). Companies and governments also diligently worked to avoid tariffs, retaliation, and spiraling trade wars, using every legal mechanism they had at their disposal.
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It thus seems more likely that, instead of the Full Trump, we get something less—but still much bigger than what we have now. Higher tariffs on most Chinese goods, for example, seem all but certain to arrive quickly. Given how much Trump campaigned on global and reciprocal tariffs, moreover, we should probably expect some form of a broader U.S. tariff regime, whether unilateral (more likely) or legislative (less), but with significant to-be-determined carveouts for FTA partners and essential goods. And both measures will likely be accompanied by another process for securing tariff exclusions, at least temporarily.
Even this watered-down system, however, would come with significant economic costs—and many more implementation problems than a blanket tariff would produce. Prices of certain goods would rise, as many companies are already warning; U.S. manufacturers would suffer from higher input costs and lower exports; import-reliant retailers and wholesalers would take a big hit to their bottom lines; and domestic investment would be stunted. Foreign governments will retaliate against not just American goods but maybe services, investment, or intellectual property too; and some that held off on retaliating last time might do so now because, given Biden’s failure (or refusal) to get U.S. tariff policy back on its pre-Trump course, they see no point in trying to wait the U.S. out this time around.
David Simon’s letter in today’s Wall Street Journal is excellent:
In her account of the destructiveness of inflationary policies (“How Inflation Ended Neoliberalism,” op-ed, Nov. 16), Jennifer Burns asserts that Milton Friedman “would likely have supported” some of the federal government’s massive Covid relief transfer payments. I find that unlikely.
The Covid relief transfer payments were massive new welfare-state programs that the federal government used to soften the ruinous consequences of one of this nation’s worst exercises in central economic planning: the federal and state governments’ shutdowns of the economy. Friedman vehemently opposed both central economic planning and expansion of the welfare state. Had governments adhered to Friedman’s admonitions, they wouldn’t have been able to justify—and he wouldn’t have supported—Covid relief transfer payments.
Prof. Burns also asserts that in the 1980s, 1990s and early 2000s, “We see the rich getting richer and the poor getting poorer.” Not so. The St. Louis Federal Reserve Bank’s income after taxes data set shows that inflation-adjusted after-tax income for the poorest quintile of Americans more than tripled from $3,137 in 1984 (the first year in its data set) to $10,608 in 2008.
David M. Simon
Chicago
Each president was successful to varying degrees at using his influence to postpone rate hikes even when inflation was knocking at the door. While the Fed is technically independent, its chairmen have long faced pressure similar to what Mr. Powell experienced during Mr. Trump’s first term. An independent Fed is a relative concept.
For the moment, the Fed is in the process of lowering interest rates, albeit gradually. I can think of no instance when the agency’s independence has been seriously challenged during such conditions, and I doubt that Mr. Trump will interfere, at least in an institutional sense, so long as the Fed stays on this path.
Picking [Lori] Chavez-DeRemer as secretary of labor would undermine Trump’s agenda. She supports the Public Service Freedom to Negotiate Act, which the vast majority of House Democrats support. Kamala Harris supports it, too. So does Randi Weingarten of the American Federation of Teachers and Lee Saunders of AFSCME.
On Nov. 13, the future president picked for his attorney general Florida Rep. Matt Gaetz. It is a catastrophically bad selection.
The nomination can’t be defended by referring to Mr. Gaetz’s record as an attorney. He has barely practiced law. He has no prosecutorial experience except as a prosecution’s target. And his law license was briefly suspended in 2021 because he stopped paying his bar-association dues.
But not all of Trump’s nominees are bad.
Arnold Kling ponders the predicament of today’s Democratic party. A slice:
But I think that [Yuval] Levin overlooks two major problems that Democrats face in the near term. One is the defection of substantial numbers of Blacks, Hispanics, Asians, and Jews. Now these minority groups have figured out that God will not strike you down if you vote Republican. The Democrats will have to figure out how to attract them as adults, as opposed to treating them like children.
The other problem that Democrats face is the nature of the social justice activist faction. The Woke make difficult coalition partners, alienating many people with their stridency on trans rights and DEI. I recently heard a story about a gay person told by a social justice activist that they could not be gay because they were not pro-Palestine.
All of the other factions in American politics—even libertarians—are willing to work with alliances of convenience and to accept partial victories in order to achieve some of their goals. But it is in the nature of the Woke to be intolerant of others.
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