Trump's losing bet on tariffs

Trump claims that he wants to defeat China... and yet he just handed them a gift.

Let’s do a thought experiment. I’m going to go out on a limb and do something I know I should never do: give Donald Trump the benefit of the doubt. Let’s assume that he was telling the truth when he said that the whole point of this trade war (and subsequent economic crash) was to take it to China and reshore American jobs and finally Make America Great Again. He claims that we have to contend with some pain because it’s just that important to box out an ascendant China and restore our standing on the global stage. He seems to really mean it, right? After all, why else would he crash the global economy if he wasn’t absolutely bought in?

Now, enjoy this excerpt from The New York Times:

After more than a week of ratcheting up tariffs on products imported from China, the Trump administration issued a rule late Friday that spared smartphones, computers, semiconductors and other electronics from some of the fees, in a significant break for tech companies like Apple and Dell and the prices of iPhones and other consumer electronics.

A message posted late Friday by U.S. Customs and Border Protection included a long list of products that would not face the reciprocal tariffs President Trump imposed in recent days on Chinese goods as part of a worsening trade war. The exclusions would also apply to modems, routers, flash drives and other technology goods, which are largely not made in the United States.

In other words, Trump launched a trade war and cratered our markets and gutted everyone’s 401Ks because it was apparently just that important to reshore those lost jobs. And yet now Trump is ceding advanced electronics manufacturing back to China. Perhaps I’m missing something, but wasn’t the whole point of the trade war to regain control of the exact items that Trump is now exempting from his tariff policies? Unless of course this trade war was launched to assert our dominance growing coffee beans or vanilla.

There are two reasons Trump caved.

First, the global economy was cratering; specifically, foreign countries were dumping our bonds, which are supposed to be the safest investment in the world. The development broadcast that the world was losing faith in the US and our dollar, which essentially undermines Trump’s whole stated goal of fostering investment in the United States.

Second, think about what company the China tariffs would hurt most: Apple. Now think about who has cozied up to Trump and donated a million bucks to his Inaugural fund and did the requisite ass-kissing at Mar-a-Lago: Tim Cook. In other words, Cook petitioned the king, and so as a result, he’s earned his carveout. And that’s how this works, because Trump only takes care of those who first pledge something to him. In a previous newsletter, I wrote about the concept of petitioning the king, wherein Trump imposes blanket tariffs, knowing that the only way they will be removed is if individuals or companies or countries offer him something financial or political in exchange for him lifting those tariffs. In this case, Apple got its carveout because Trump scored $1 million from its owner.

All of which reveals two facts. First, Trump is perfectly willing to destroy the economy as he awaits his gifts and political favors. After all, it’s not him suffering the financial consequences of a crashing market and cratering economy. It’s the rest of us. Second, while the Apples of the world can afford to pay him off, it’s the little guy who can’t. It’s the mom and pop shops that can’t petition the king for carveouts that will be sacrificed. And frankly, Trump doesn’t care because they can’t give him anything, and if he doesn’t get anything, then he’s not interested. While Trump coasts off this branding as some champion for American businesses, he is going to kill countless small businesses. In reality, he doesn’t care about bolstering business; he cares about protecting himself and his own interests. He’s hung America’s small businesses out to dry because he needed to set up a process by which the only way anyone could survive is if they had something of value to surrender to the king. That’s the danger of electing someone who’s sole priority is himself.