Trump Declares War on…Accounting
He’s at it again.
Donald Trump, who proudly calls himself “a tariff man,” slapped $30 billion in new taxes on products from Communist China. In theory, this is in reaction to the Chinese Communist Party’s refusal to accept a trade deal on Trump’s terms. In practice, the president just loves tariffs.
Most readers of BD probably take issue with that, but I hold to it. Last month, in this very part of cyberspace, I noted how Trump is trying to have his cake and eat it, too: i.e., get a “deal” he can tout – and remove Chinese tariffs on American agriculture – while keeping the earlier tariffs he imposed on Chinese imports. How? This was their great idea: get the CCP to tariff other US exports instead.
There are some people who are convinced that this is all about “getting tough with China.” I take second place to no one in my loathing of the CCP, but as I noted back in April:
The Administration that touted itself as being able and willing to “stand up” to Beijing has been reduced to begging the CCP to switch its tariffs to less visible products.
Meanwhile, the regime gets a free pass on threatening Taiwan, strong-arming its neighbors in the South China Sea, using Kim Jong-un as a foil, and persecuting hundreds of thousands of Uighur Muslims in occupied East Turkestan.
The president who as a candidate railed against the rest of the world “laughing at us” is only spared hearing side-splitting gales from Zhongnanhai due to the distance of the Pacific Ocean.
The rest of the world is taking notice and will act accordingly.
This morning, none of the cited topics were part of the president’s defense of his new tariff hike. Instead, he went on a full protectionist bender, as noted by Andrew Egger of the Bulwark (emphasis in original):
The real problem is Trump’s argument about the relative benefits of trade wars versus trade deals: The remarkable assertion that “Tariffs will bring in FAR MORE wealth to our Country than even a phenomenal deal of the traditional kind. Also, much easier & quicker to do.”
The president’s position on tariffs is utterly transparent: The reason to impose tariffs on other countries is because tariffs are great for the economy, full stop, and the reason we didn’t have widespread tariffs before Trump is because our previous leaders were an unbroken succession of silly fools.
If and when the White House follows through on Trump’s $100 billion threats, his staffers will prepare an official announcement justifying the step in Kudlowian terms: That the tariffs are needed to punish China for intellectual property theft, or forced technology transfer, or a raft of other unfair trade practices. Is it true that these can be problems for the U.S.? Of course. But are they actually the reason Trump keeps escalating his trade war? Transparently not. He has told us so himself.
The worst part about all of this – besides Congress apparently unwilling to do anything to reclaim the tariff-setting powers it handed to the executive branch last century – is Trump’s rationale, endlessly repeated on his Twitter feed. He sees trade balances as profit and loss statement, and treats trade deficits as losses. They aren’t. They never have been. They never will be.
Meanwhile, the problems Egger cites are still there (to say nothing of the list I whipped up from last month). The Chinese Communist Party truly is a threat to the democratic world. It has been ever since it moved away from political reform in the aftermath of the Tiananmen Square massacre. An Administration that truly wished to marshall the forces of freedom against the CCP would do something more along the lines of what Shay Khatiri has in mind (Bulwark):
The administration needs to cultivate the tacit Democratic support to make sure China cannot win the trade war by waiting out Trump’s tenure in office. He has to make it at least a credible possibility that the policy will extend beyond his administration. He also needs the United States’ allies, which would provide a two-sided advantage. First of all, by joining the United States they will increase the pressure on China’s economy (which already is facing difficulties). And second, the United States and its partners should relax trade barriers among themselves in order to minimize the negative economic impacts of the conflict.
Which brings us to the president’s self-sabotage. Early into his administration, Trump pulled the plug on the Trans-Pacific Partnership (TPP) and Trans-Atlantic Trade and Investment Partnership (TTIP). Since then he has also put tariffs on European and Canadian goods and is now considering the addition of new tariffs. Canada and the E.U. are not America’s adversaries. They, along with Australia, are its most reliable allies—and we need their help if we are to win Trump’s trade war.
A smart strategy would be to lift these newly imposed tariffs on our allies, re-join both agreements, and then encourage India to either join the TPP or form a bilateral free trade agreement.
There is no winning in this trade war if the burden is too heavy on the American people and too light on the Chinese.
There is no chance Trump will do any of those things. He doesn’t disapprove of Chinese exports; he disapproves of all exports. He doesn’t want to restrict trade with Communist China; he wants to restrict trade with everyone. He’s not fighting other regimes, or even other nations; he’s fighting numbers.
This is a war on accounting.