As Trump Hits China With A Broad Economic Salvo, China Strikes Back With A More Surgical Strike That’s More About Politics Than Economics
Putting U.S. corporations (and farmers) in a position of helping to pressure the U.S. President. Because, as the New York Times points out, a tariff on Chinese goods really ends up being a tax on American consumers. The Times’ story details some interesting things China is doing that we’ve been wondering about, while leaving us perplexed about some of the things the White House has been doing, which we’ve also been wondering about:
- Trump has been trying to portray China’s apparently measured response to his tariffs (only $3-billion in retaliation, compared to $60-billion in tariffs), as acknowledgement their leadership knows they’ve been putting one over on the U.S. for a long time. But the Times suggests China is simply responding in a less messy, more politically savvy way. By targeting fewer goods, they’re not really hurting their own consumers much, and they’re targeting products that aim geographically at pockets of Trump support.
- China is also officially retaliating against Trump’s earlier steel and aluminum tariffs, and not his more recent round of broad tariffs explicitly targeted at China. According to the Washington Post, they’re doing this so they can try to debunk Trump’s assertion those steel and aluminum tariffs are necessary for “reasons of national security” (which explains why Trump keeps saying that over and over again). Unless Trump is two steps ahead and is trying to create a showdown at the World Trade Organization to show how corrupt and useless and anti-U.S. it is.
- Finally, the one we don’t have an answer to: why didn’t Trump start with intellectual property? That’s the one issue where the U.S. has China dead to rights. Those abuses are the biggest challenge for American companies in China right now. But we have a guess: Trump’s a heavy industry kind of guy. The jobs he wants to bring back involve dirt and grime and heavily muscled guys. He doesn’t much care for the folks that sit behind desks and write code. (And might go and buy the Washington Post in their spare time).
We also think Trump’s “America First” mantra, which leads to zealousness for trade wars, ignores something really important: pride. Do you think executives at U.S. corporations like it that Trump keeps telling the world they need remedial help? The mark of success of an American company is that it can compete globally on its own. On a bullet train ride in Japan recently, we noticed a huge new Amazon distribution center. That’s a sign of American success, even in a market that is protected.
So you’ll continue to hear a lot of anti-tariff talk from big business on the basis that they’re trying to support consumers. Or at least protect them from higher prices.
At the same time, do you think corporate America is going to come rushing to the aid of consumers when it comes to Trump’s continued and largely successful effort to dismantle what was the government’s most powerful consumer advocacy arm from the inside?
Mick Mulvaney who’s pretty much literally in charge of running the Consumer Financial Protection Bureau into the ground (and is also Trump’s budget director), asked Congress for significant and almost certainly irreparably damaging changes to the Bureau, saying it’s “too powerful, and with precious little oversight of its activities”. (Which was the whole point.) Among his proposals:
- Fund it through Congressional appropriations (which we all know is incredibly unreliable), vs. by the Federal Reserve, as it is now.
- Allow the President to remove the Bureau’s director for any reason. Right now it’s an untouchable position, except if there’s “specific and justifiable cause” for removal. Mulvaney got in there because the previous chief quit to run for Governor of Ohio. (We do wonder why he couldn’t have just stuck around even if it would’ve been extremely frustrating and unfulfilling. We are all frustrated sometimes.)
Which goes to show the people who thought up the CFPB (most notably Elizabeth Warren), were both very smart and perhaps very naive.