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Doubling Down on a Dumb Trade War

Way back when we were proud to be Republicans, it was largely because of the Grand Old Party’s principled stand for red-in-tooth-and-claw capitalism. When Republican nominee Mitt Romney accused President Barack Obama during a campaign debate of picking the economic winners and losers, and mostly picking the losers, we stood up and cheered. Now the Republicans are obliged to defend President Donald Trump’s protectionist trade war against the rest of the world, and to ignore the fact that he’s picking the economic winners and losers and mostly picking the losers.
On Monday Trump escalated the trade war with China by threatening $200 billion of tariffs on that country’s exports to the United States, his earlier threat of a mere $50 billion of tariffs having failed to force China’s capitulation to his trade demands, and of course China immediately responded with threats of retaliatory tariffs. Of course the stock markets hated the news, and so did everyone else with a basic understanding of the global economy. It’s bad economic policy, has warped America’s foreign policy to the point that North Korea’s nutcase dictator Kim Jong-Un is a an honorable leader much beloved by his starving people and Canada’s democratically elected Prime Minister Justin Trudeau is a weak and dishonest leader who awaits a special place in hell and all of our longtime allies are suspect, and in the long run it will prove bad politics.
Trump’s tariffs on steel and coal imports will surely be popular with people employed in those industries, but it will just as surely be unpopular with people who work in steel- and coal-buying industries, and anyone who buys anything made of steel or powered by coal, and the latter categories are by far a bigger voting bloc. There are also a lot of wheat farmers and airplane-makers who do a brisk trade with China and will surely be chagrined if China decides to buy from Argentina or Airbus, and a large chunk of Trump’s die-hard defenders will eventually notice that their shopping trips to Wal-Mart are suddenly far more expensive. The worst case scenario for a global trade war is the same as the last time a cocky and unprincipled Republican president tried it, which resulted in the Great Depression and eventually World War II, and even Trump will be hard-pressed to spin that outcome to even his most die-hard defenders.
The best-case scenario is harder to imagine. Red-in-tooth-and-claw capitalism has always resulted in the creative destruction of longstanding industries, such as buggy-making and Blockbuster video stores, but it has reliably replaced them with something the public has always found better. China isn’t the reason that coal-mining now employs a mere 50,000 workers in America, which is mainly because of mechanization and nuclear plants and fracking of natural gas and all those windmills along I-35 and other more healthy ways to generate the nation’s energy. We sympathize with those last remaining coal miners, but red-in-tooth-and-claw capitalism might well replace their jobs with something that doesn’t cause black-lung disease and an early death, and in any case they’re a small voting bloc.
Trump seems to believe the best-case scenario is back to the good old days when America mined coal and made all the world’s steel, and that his die hard defenders will prefer that to this high-tech age and what might come next. What might come next might well be far better, though, and we’ll bet on that rather Trump’s global trade war.

— Bud Norman

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The Pros and Cohns of Protectionism

Even on a Tuesday day when a pornographic video performer called Stormy Daniels filed a lawsuit against President Donald Trump, the departure of National Economic Council director Gary Cohn was the biggest news out of the White House. The frequent comings and goings of Trump administration officials are usually newsworthy only because of the colorful characters involved and the chaotic situation they represent, but in Cohn’s case it could have serious consequences.
Cohn was one of economic advisers who tried to talk Trump out of imposing the steep steel and aluminum tariffs that were announced last week, as well as the rest of the protectionist agenda Trump has proposed, and his resignation suggests that talking Trump out of such cockamamie ideas is beyond his ability. The congressional Republican leadership also tried persuade Trump to reconsider, and although Trump is invoking national security reasons for imposing the tariffs so did his Defense Secretary and Secretary of State, as well as some of most stalwart defenders in the conservative media, so it appears that no one’s up to the task.
Cohn’s continued role in the White House gave faint hope to the free-traders, though, and his exit suggests the fight is over. His resignation wasn’t announced until the stock markets had closed for the day, but we expect the news will be met glumly when they open again today. Except for the aluminum and steel makers and a few other unionized industries hoping for similar protection from foreign competition, pretty much everyone is planning to pay more for aluminum and steel and try to pass the hit along the supply chain and down to the end consumer, steeling themselves for the inevitable retaliatory tariffs on American exports by friends and foes alike, and worrying what comes after that.
Cohn and the other sensible administration officials and the congressional Republican leadership and the conservative media defenders should have seen it coming all along, though, as well as all those steel-and-aluminum buying companies and export industries and other critics. Trump made quite clear during his seemingly quixotic campaign that he intended on waging a global trade war, and although he spouted off a lot of crazy talk that no one took seriously he was quite clearly sincere in about this particular threat. He’d been publicly critical of America’s trade with the rest of the world since President Ronald Reagan’s administration, claimed that America had been taken advantage of in every foreign relation since the Marshall Plan of President Harry Truman, and offered himself as the artful dealmaker who alone could set things right. Over the years Trump has been all over the place on abortion and immigration and “transgender rights” and almost anything else in the news — we like to joke that he’s taken more positions than Stormy Daniels — but he has never once wavered from a core conviction that he alone could renegotiate the entire world economy to America’s rightful advantage.
Although an estimable fellow, Cohn was never going to talk Trump out of this delusion. Cohn was always a controversial pick, with critics to both the left and right, and ill-suited to any role in Trump’s reality show. His only previous employer was at the too-big-to-fail Goldman-Sachs investment bank, where he rose through the ranks to a top spot, and the conspiracy theorizing sorts of liberals and conservatives have long noticed that Goldman Sachs has landed a noticeable number of former executives in both Democratic and Republican administrations for an noticeably long time, so that left him vulnerable. The stock markets and other centrist types were slightly reassured that at least Trump honored some of the time-honored presidential traditions, and held out hope Con would restrain Trump’s populist impulses, but a buttoned-down riser-through-the-corporate ranks has never prevailed in any reality show ever aired.
Cohn lasted on the reality show island longer than most of us expected, given all the anti-globalist conspiracy theorists who got a vote in each week’s cliff-hanging exile. He outlasted the defiantly nationalist chief strategist Steve Bannon, oh-so loyal and kinda cute communications director Hope Hicks, onetime establishment whipping boy and later chief of staff Reince Priebus, currently under-indictment former National Security Advisor Mike Flynn, that Omarosa woman who held some job or another before returning to a lesser-rated reality, along with countless others can’t quite recall. We think he did some good along the way, too.
As an observant Jew with universal human values, Cohn reportedly considered resigning after Trump insisted there were some “very fine people” marching alongside the neo-Nazis at a deadly rally in Virginia, and although he stayed on he helped fuel the public’s indignation. By sticking around he helped he shape and shepherd trough the Congress a tax bill that so far seems one the best things the Trump administration has done, and he’s also played a role in all the deregulation that has so far worked out well enough. He couldn’t talk Trump out of his crazy trade war, but at least his resignation might spook the stock markets and fuel the public’s indignation and give those congressional Republican leaders and other critics some chance of restraining the president’s populist impulses.
We’ll hope for the best for Cohn and all the rest of us, including that unfortunate visiting Swedish Prime Minister who wound up standing next to Trump during a joint news conference where both the American and Swedish press were asking all sorts of pointed questions about potential trade wars and the ongoing “Russia thing.” The video would have fed all the snarky late comics’ monologues if not for the lawsuit by the porn star, but even those easy and smutty jokes were among the first casualties of the trade war.

— Bud Norman