Tariffs

Tariffs

 

His rambling 90-minute address came just hours before his latest tariffs went into effect. “I know what the hell I’m doing,” the president said. “I know what I’m doing. And you know what I’m doing too. That’s why you vote for me.”

 

The administration has given conflicting signals over whether the tariffs are open to negotiation. Trump claimed: “I’m telling you, these countries are calling us up, kissing my ass. They are. They are dying to make a deal.”

 

Mocking the pleas of foreign leaders, he parodied: “Please, please, sir, make a deal. I’ll do anything. I’ll do anything, sir!”

 

Less than a day later, Trump shelved plans to hike tariffs on most countries except China, unveiling a 90-day pause and pulling back from his global trade war after days of market turmoil and warnings of recession.

 

-             Trump says ‘I know what I’m doing’ before stepping back from global tariffs, Guardian

 

By Gregg Wall (4-12-25)

 

Now that’s entertainment.  

 

This last week may be long remembered as a key milestone in the fall of the American empire.  In a matter of hours POTUS Trump went from explaining to his adoring fans that world leaders were lining up, “kissing his ass,” and begging for trade deals to capitulating on the source of all that ass kissing, reciprocal tariffs (something this administration had previously vowed they would not back off on).  To be sure, Trump went forward with a ten percent tariff and an assortment of nation specific tariffs with special attention given to China, but the ninety-day pause on reciprocal tariffs was a huge blink, comedown, and turned liberation day into capitulation day.  The reciprocal tax was the cornerstone of a new tariff tax revenue stream, to possibly revamp the US tax code to exclude income tax, lay a greater regressive tax burden on the American public to pay for tax cuts for the rich, and hopefully drive offshored American businesses and foreign factories onto U.S. shores.  

 

So, what was the catalyst that caused such a volte-face from the President?  The stock market has been in free fall for several weeks, and Wall St bankers and operators, like Bill Ackman and Jamie Dimon, et al., were deeply worried and most unhappy about the turn of events.  This is after all, a group, Wall St, that has turned bailouts into an art form, a money-making venture, & a power consolidation model for the privileged few.  The U.S. stock markets, priced to perfection, when Trump came to power, have seen a bloodbath.  So, we have oligarchs bending the President's ear, we have Wall St… the POTUS’s favorite scorecard, the stock market…  adding to the pressure.  There was also the matter of bond markets which were also being crushed.  It appears that hedge funds were getting burned in another highly leveraged trade, involving derivatives, or what is called a basis trade.  So, as that trade began to burst and margins were called, Treasuries (aka collateral) were being dumped in the process.  And there was the matter of foreign governments dumping U.S. bonds and Treasuries in retaliation for Trump waging war with the world, a process that has been underway for some time.  Further factoring in, the Federal Reserve has sworn off QE and debt monetization, at least for the moment.  This, was all too much for the President.  Stock market tantrums, billionaire oligarchs whining, the golden calf… the Wall St bull going belly up… Trump, perhaps, could take.  But soaring interest rates were a problem, a huge problem for a nation in terminal decline.  America is in hock up to its eyeballs, and grossly mismanaged by the aforementioned oligarchs, Demo party, and our dear, dear friends, the violently repugnant & reprehensible GOP.  

 

Soaring interest rates could hasten America’s fall, threaten exorbitant privilege, make our exorbitant national debt spiral higher.  Is another bailout around the corner for Hedge Funds and their counterparties, Wall St banks?  JP Morgan’s Jamie Dimon seems to think so or is he simply advocating for his portfolio?   (Note, in Jamie’s world, another Wall St. bailout is merely a "kerfuffle."). Foreign governments turning the screws on the U.S. Treasury market, upset about kissing the Fuhrer’s hindquarters?  The White House has been extremely focused not just on tariffs but lobbying the FED for reduced interest rates… soaring bond rates got the President’s attention this week.  Hence, the administration bailed and turned tail on reciprocal tariffs. 

 

What was revealed to all this week is that America’s national debt is a huge hole in our nation’s armor, that and its morally bankrupt leadership are also a weakness & a liability.  Hence, Trump beat a hasty retreat on reciprocal tariffs.  

 

This wasn’t the first time, nor will it be the last time that markets…  dominated by Wall St mega banks & financial institutions…  are manipulated by corporate greed and CEOs, who get Washington to cower, panic, throw money at a crisis, or reverse course on economic and regulatory policies that the Street deems unsuitable (a threat to their profits).  Clearly, tariffs, the repudiation of free trade, and the onshoring businesses, with the promise of gainful employment for the American people, is deemed, in the eyes of Wall St., unsuitable (a detriment to myopic short-term gains).  Wall St loves the current free trade arrangement, all those profitable imports, an impoverished & destitute American workforce, the national debt soaring higher & higher, all those US dollars repatriated back to America & Wall St by foreign nations.  But I digress.  The next day, Wednesday, March 9, after Trump sent out a message to buy on social media, the stock market, lo and behold, roared to life.  The fix, seemingly, was in, the stock market, seemingly, rigged, and the insiders made out like bandits as the market climbed to record valuations within a single day, only to see it come crashing down the very next day, March 10.  And why not?  America is now, a banana republic, where we have two-tiered justice, two-tiered democracy, an economy for the rich and an economy for everyone else, even a two-tiered stock market.

 

Are we not entertained? 

 

Of course, lost in the circus of the tariff rollout, there’s a certain haste, a DOGE-like quality to the President’s tariffs delivery (if you can call it that).  A move fast and break things ethos, a smash and grab quality, a burn ‘em, cheat ‘em, and loot characteristic and heavy handedness.  Tariffs, of course, are a highly legitimate policy tool used by nation-states to protect industry, jobs, their economies from competing nations, engaged in their own trade machinations and mercantilism.  China has been highly protectionist and highly successful.  Tariffs and trade policy can be a starting point in negotiations, both an economic and foreign policy tool.  Of course, the American reader wouldn’t know any of this from reading the intelligentsia and America’s papers of record, loaded to the gills with free traders, globalization partisans, and neoliberals… that is to say, those elites vested in 45 years of abject failure and running the nation straight into the ground.  The fact that the President and fellow & future staff, seemingly, spent the last four years giving so little thought to the rollout of Trump’s tariff & trade policy is proving to be highly problematic presently.  Trump has long hammered on the nations that are, allegedly, ripping America off with trade imbalances.  

 

But not all imbalances are bad or inherently criminal or in Trump parlance, a “rip-off.”  Some nations enjoy a comparative advantage, like tiny Madagascar, which produces vanilla and runs a trade surplus with the United States.  For Trump to slam this impoverished nation with a 47% tariff is absurd, petulant, bullying.  Why should Americans pay a 47% tax on Madagascar’s product, vanilla, because they produce a product that America doesn’t or chooses not to produce?  Again, all this speaks to a tariffs rollout that was ill-conceived and poorly planned.

 

On the other hand, Trump has been highly reluctant to address the free trade zealots that inhabit America’s boardrooms, C-suites, and Wall St.  Those individuals in positions of economic & political power, who will, at the drop of a hat, move businesses offshore, if American labor and unions don’t bow & scrape to management’s and ownership’s every diktat.  These players have offshored the US economy, jobs, the tax base… like Apple… because they saw an arbitrage play, an opportunity to exploit foreign labor, govs, regulatory regimes, slave wages and/or slavery, subsidies, tax laws, judicial systems, and perhaps “bribe/incent” foreign govs for a competitive advantage (vis-à-vis the United States).  And in turn, manufacture goods overseas and dump them on US shores to make greater profits.  This arbitrage play, what economists refer to or call micro-trade policy, is what Trump’s team, ideally, should be addressing.  American businesses & capital, which have stripped and sold out the United States and driven labor, globally… indeed, nation-states, globally… directly into the dirt (in the by now all too familiar strategy, a race to the bottom). 

 

But this requires a great deal of study, analysis, and oversight of cost components, determining what the arbitrage play is by industry or in the case of monopoly or oligopoly by corporate entity and economic sector.  What are the appropriate costs and application of a tariff that eliminates any advantage that is to be derived from exploiting currency, foreign governments, labor, subsidies, tax laws, etc., so that said business, industry, or utility returns home?  And of course, there’s the monitoring of US companies, domestically, if any still exist w/in a given economic sector, to ensure they don’t take advantage of the situation and use tariffs to jack up prices and make obscene profits.  The overriding goal should be simple, if you sell in America… you produce, hire, and pay taxes in America. Full stop.  Such a scenario also expands global supply chains.  An easier and more direct path to conduct micro trade policy is windfall profits taxes, which, if properly applied, apply exclusively to the supply-side of the equation: capital and ownership.  But as we all know by now, the Trump administration wasn’t going  confront capital, U.S. multinationals, and ownership. 

 

(As for macro trade policy, games nation states play against each other…  in terms of trade barriers, tariffs, trade policy, currency manipulation, and financial leverage & economic sanctions, etc… we’ll leave that for another time.  Except to say, Trump’s overriding goal at the moment should be to create & return businesses to U.S. shores, so that it is far less reliant upon imports.  With that accomplished, the trade imbalance in goods goes a long way to sorting itself out… the financial imbalances, foreign nations sending US dollars, earned from the current trade imbalance, into Treasuries & Wall St is another matter entirely.  Here again, if the U.S. rebuilds its industrial, labor, tax base, and hopefully, evil rich Americans can stop looting the United States long enough, waging wars with the world long enough, then national debt & deficits should cool down.  We’ll be far less dependent upon foreign nations buying U.S. debt.  Can American billionaires & multinationals contain themselves?)

 

So, we are back to this week’s draconian, heavy handed trade policy, Trump waffling back and forth, and the world on the precipice of a global recession and American interest rates rising… a result that may crush the U.S. economy, introduce stagflation, cut American tax revenues – tariffs and otherwise – at a time that Trump and Musk are said to be deeply worried about interest rates and the national debt.   At a time that Trump is hoping to use tariffs to finance a really bad idea, the extension & addition of tax cuts for the rich.

 

Trump could have avoided many of his current problems if he had targeted key nations, instead of attacking and waging war with the world.  Trump could have avoided many of these headaches if he had targeted specific industries for a return to U.S. soil, instead of attacking and waging war with the world.  Over time he could have addressed less problematic nations and industries.  Instead, we have the typical Trumpian chaos: the bluster, the boasting & bravado, the tantrums, the malaise, the unnecessary harm to the United States.  Instead, we have each nation’s trade deficit divided by that nation’s exports to produce a tariff tax: poorly conceived, sloppy, and a policy that operates to the complete detriment of the American people and Trump’s overriding goal (which is legitimate, the return of business & industry to U.S. shores).  

 

But the bright spot, the silver lining, Trump and Musk are annihilating and putting to bed once and for all the idea that the billionaire class are masters of the universe, ordained by God with divine intelligence, and gifted with a preternatural ability to lead.  Those ideas, at the present, are dead and waiting to be buried.  American exceptionalism & exorbitant privilege, perhaps, also appear to be joining the myth of billionaire supremacy in a lonely, unmarked grave.  As nation-states dump U.S. bonds, send Treasury yields higher, and deliver a message to the United States: America’s empire & hubris are long overdue for a correction.

 

And for that, we should all be grateful. 

 

Copyright JM Hamilton Publishing 2025