Trump plays games with Congress

 

Gordon L. Weil

President Trump’s State of the Union Address took on many characteristics of the schoolkid’s game of checkers.

In that game, if your piece reaches the other side of the board, the piece is “kinged.”   Trump wants himself or his policies to be kinged.  Each of his proposals or actions is a piece that could go all the way to become a king. 

While he extols the success of some of his policies, none has moved even halfway across the board, because they all lack majority approval.  His claims for historic success don’t match the record. 

“Our nation is back: bigger, better, richer and stronger than ever before,” he asserted.  But the Wall Street Journal reported: “Polls find that Americans are unhappy with Trump’s handling of the economy.”  It noted that “last month, voters gave the president low marks when asked if he cares about ‘people like you’….” 

The Address was the latest version of the Trump campaign speech.  According to him, everything positive was his doing; everything negative was the Democrats’ fault.  Many voters may want less partisanship, but compromise was not part of Trump’s message, any more than concern for average people.  Trump’s a salesman, who seeks to convince people of his product’s merits.

He made his case was by selling America First nationalism as patriotism.  The U.S. Men’s Ice Hockey Team, the Olympic champions, allowed themselves to be put on display.  Republican legislators chanted, “USA, USA!”

But an American victory on Olympic ice only momentarily overshadowed ICE killings of Americans.  Trump has controlled illegal immigration, but at the cost of his policy being severely degraded by the crude abuses of individual rights by hastily trained ICE agents.  He has had to retreat, hoping to calm public ire.

Still, he tried to embarrass the Democrats.   “If you agree with this statement, then stand up and show your support. The first duty of the American government is to protect American citizens. Not illegal aliens,” he said.  Many Democrats remained seated.  The Constitution assures equal treatment to all, not only citizens.  And Americans in Minneapolis weren’t protected.

While polls are not as accurate as often claimed, they can identify trends.  On average, polls show about 60 percent of people are dissatisfied with Trump.  Given the history of the president’s party usually losing House seats in mid-term elections, that could well mean that next year’s Address will find him introduced by a Democratic House Speaker.

Seated before him were four Supreme Court justices, just after the Court had rejected his use of tariffs.  In his ruling, the Chief Justice was thought to have signaled that the courts are set to be less compliant to Trump than Congress.  

But Trump loves tariffs.  Though they are not working, he suggests that they can produce enough income to replace the income tax.   This is pure fantasy.  What is real is that they are fueling some inflation.

On all other issues, voters rate Trump negatively.  His tax reform has increased the deficit but not helped average people.  He seems to believe that tariff revenues will solve spending problems, but he overpromises.  Meanwhile, people have a tough time making ends meet.  A soaring stock market may work for the wealthy, but not for most voters.

The Democratic policy is based on the hope that Trump will defeat himself.   The party lacks a coherent alternative and a single, charismatic spokesperson.  Presidential candidate posturing and the phony rivalry between progressives and moderates who can work together for a common goal are both blocking a positive policy.

The party’s response to Trump’s Address showed that a unifying and forceful alternative is possible.  It came from newly elected Virginia Governor Abigail Spanberger.  Coming after the lengthiest State of the Union Address ever, it may have only been viewed by Democratic loyalists.  Her theme was affordability.  It is worth watching.

As usual, Trump confidently asserted verifiable untruths, often misstating the country’s economic conditions as he found them and as they stand today.  “In his speech tonight, the president did what he always does: he lied,” Spanberger said.  Trump’s problem is that people are increasingly aware of the gap between his claims and the truth.

There’s a long way to go between the State of the Union Address and November’s congressional elections.  Now it’s clear he faces increasingly skeptical federal courts and risks the end of GOP control of Congress.

Trump cannot afford to lose GOP support, because the Democrats and non-aligned voters say they strongly oppose him.  Republicans cheered his words and appear to remain loyal, but defections by only a relative few could swing the elections.

He may become a lame duck after the elections.   It could begin even sooner if some congressional Republicans increasingly see their abject loyalty to him as a political disadvantage. 

 

Tariffs failing as Court cracks down

Gordon L. Weil

The big news was that the Supreme Court ruled that most of President Trump’s tariffs were levied illegally.   He so badly wants them to work, that he is trying again in a more limited way, but Congress could limit or stop him.

The real news is that the tariffs aren’t working to achieve his objectives.  In fact, they are hurting American consumers and the economy.  Nothing shows this more clearly that the desperate defense put up by Kevin Hassett, director of the government’s National Economic Council.

Trump had favored him to take over Fed leadership, but was forced to look elsewhere.  Hassett, an extreme Trump loyalist, embodied the notion that the president can control the independent Fed.  His obvious risk to Fed independence was more than Republicans and Democrats could accept. 

Last week, Hassett proved their judgment correct.  He wildly and incorrectly defended Trump’s tariffs in the face of evidence they weren’t producing promised results.

The Federal Reserve Bank of New York published a report showing that over the course of 2025, Trump’s tariff increases had mostly hit American consumers and businesses, amounting to a tax increase.  Hassett attacked the report, deriding it as not being worthy of an introductory economics class.

When import tariffs are increased, somebody pays them.  Trump believed that foreign producers would swallow the cost, enabling them to maintain their market share.  He saw their increased burden as punishment for underselling U.S. producers.  If they opted to pass their costs on to American purchasers, higher-cost U.S. production would become competitive.

The report showed that nearly 90 percent of the Trump tariff cost had been passed on to Americans, leaving only a small impact on foreign producers.   After attacking the study, Hassett then admitted the tariffs had caused “a slight increase” in U.S. prices.

But Hassett stuck with Trump’s optimistic view.  Even admitting that tariffs caused price increases, he argued that the benefits outweighed those costs.  After all, imports would be reduced, and American manufacturing would gain and add good-paying factory jobs.  Well-paid workers would be able to pay the higher prices of American products.

Hassett and, by implication, Trump were wrong on all counts.  Not only was the country spared his misguided Fed leadership, but Congress could come to understand that one of the key pillars of the president’s policies simply does not work.

Imports grew as companies stockpiled goods before the tariffs went into effect.  Then, they could be reduced while the resulting import goods were sold off and would stay down as U.S. production picked up.

Not so.  As reported by the New York Times, “U.S. imports grew last year, and the trade deficit in goods hit a record high …, as Mr. Trump’s policies scrambled trade but did not halt it.”   In fact, the deficit in goods, the object of trade battles, swamped the improved U.S. exports of services, not much affected by the tariffs.  Trump pays little attention to services.

Did the added tariff protection increase American manufacturing as Trump and his man Hassett predicted?  Not according to the manufacturers.  Their index showed that factory activity contracted during 2025.  Only in one month under Trump was there any growth.

What about manufacturing employment, which should produce more well-paid workers if the tariff policy works?  The manufacturers employment index fell by more than 10 percent, and the Times reported over 80,000 fewer workers.  The result was less employment in slimmed-down manufacturers.

The president is banking on Trumpenomics beginning to produce positive results before the November elections.  It’s likely that his biggest economic issue is affordability, a word he sometimes has difficulty saying.   That problem will only dissolve if consumer prices moderate.  Not all their levels are caused by tariffs, but tariffs give no sign of helping.

The truth has always been that most countries are not staging economic assaults on the U.S.  To the degree that the Chinese state economy has exploited American demand for cheap goods, Trump’s tariff policy has cut trade with China.   But it has simply moved to other low-cost countries like India, Mexico and Vietnam.

Trump likes to give the impression that the U.S. can be self-sufficient and is doing other countries a favor to trade with them.  Maybe it can do without French champagne, but it can’t do without Canadian electricity.

He continually claims the U.S. economy is booming, though the national economy slowed last year.  It is working well for the top 10 percent, relatively little affected by tariffs.  They also drive a climbing stock market, whose performance appears to be a prime Trump indicator of national prosperity.

He tries to jawbone average people into believing their economy is great and getting better.  He depends on the effect of tariffs to make his case, but Trumpenomics is not working.  The voters may provide a better economic index in November. 

Trumps policies falter; 'The economy, stupid' -- once again

 

Gordon L. Weil

“The economy, stupid.”

That phrase, posted by strategist James Carville in Bill Clinton’s 1992 campaign headquarters, has entered American political mythology as a revelation of dazzling brilliance and simplicity.

It isn’t.  It’s an eternal political truth; campaigns are always about the economy, though that’s not always recognized.

Inflation is the immediate problem.  Reacting to voter unhappiness with prices under the Biden presidency, Trump promised: “Starting on day one, we will end inflation and make America affordable again, to bring down the prices of all goods.”  Apparently, many voters, having lost faith in the Democrats, believed him.

Yet, inflation in September was higher than in the last full month of the Biden administration.  Trump runs the risk of facing the same kind of voter frustration with prices that brought him to office.

He asserts that the economy is sound, and people will soon see that he has kept his campaign promise.  Of course, that’s not quite the same as the “day one” promise.

Trump may claim that all is well and getting better for several reasons.  The stock market is soaring, and he may see it as a good representative of the national economy.  Yet its performance might reflect excess optimism about the rapid deployment of AI, which may not happen.  If that bubble bursts, it could harm both the market and the economy.

He may also be only looking at a slice of the American public.  Surveys suggest that Republicans, the wealthiest people and investors are positive about the economic outlook.  But they are out of step with everybody else.  While they wield great economic power, they are not the mass of voters.

Trump’s tariff policy contributes to inflation, though not as quickly as foreseen in some dire forecasts. His team takes credit for the limited early impact, ignoring the lags inherent in economic change, and that inflation will thus increase as the months roll by.  Importers will absorb less of higher tariffs than at the outset, with more costs being passed on to consumers.

By applying across-the-board tariffs, Trump failed to take account of American dependence on certain products that cannot be replaced by U.S. production.  Big price increases have occurred in coffee, women’s clothing and electronics.  Seeing the trend, he has begun lowering some agricultural tariffs.  There may be more reductions to come.

When President Reagan took office facing high inflation, he left it to the Federal Reserve to take the unpleasant measures needed to lower it.  The policy amounted to saying it will hurt more before it gets better.  Reagan remained blameless, while the Fed raised interest rates.  The Fed tamed inflation, but caused much pain in doing it.

By contrast, Trump has plunged in and tried to get the Fed to cut interest rates, which he argues will promote growth.  His pressure may have influenced the Fed, slowing a reduction in inflation.  To the extent that his policy fails, Trump, unlike Reagan, may get the blame.

Housing is a special problem, with demand exceeding supply.  Inevitably, that scarcity drives up prices.  One underlying factor is that by eliminating immigration, the government has cut labor force growth needed for housing construction.

The tariff policy has also had an unanticipated rebound effect.  The U.S. may cut imports and bring production home, but it may lose exports due to retaliation.   After U.S. auto tariffs forced two American carmakers to close some Canadian production, Canada removed a tariff-free exemption on some of their exports to its market, costing the carmakers solid sales. 

One key to Trump’s approach is his heavy reliance on cheerleading to overcome people’s worries about the economy.  An old song included this line: “Wishing are the dreams we dream when we're awake.”  

Unlike the song’s lyrics, wishing won’t make it so.  Trump offers dreams more than paycheck reality.  People pay the price at the check-out counter, an experience that Trump may have missed.  No amount of telling them that it will soon be better, without evidence for the claim, can change the higher costs that people pay.  Dreams can become nightmares.

Trump’s problem, one he shares with many others who have occupied the White House, is in taking responsibility for the state of the economy.  This overstates presidential influence; the economy is usually influenced by a myriad of factors outside of their control.  

In this case, however, Trump’s trade, immigration and Fed games have put him squarely in the game.  He exudes confidence in these initiatives, while they produce uncertainty and come up short on promised results.

Even if he abruptly alters policies, the inevitable economic lag will mean the effects of his past moves will be felt next year.  In short, he has handed Democrats a major issue to boost their 2026 congressional campaigns.  The economy, stupid.

MAGA melts; promises can't be kept

 

Gordon L. Weil

MAGA may be failing when it comes to some of President Trump’s key policies.

Like many candidates for executive office, he made promises with broad political appeal, but which ignored and encountered harsh reality – from political to economic to legal – that made keeping them impossible.

After making bold and popular promises, Trump last week backtracked on commitments relating to tariffs, immigration and military action. 

With global free trade becoming increasingly unworkable, Trump imposed a new system depending on a multitude of bilateral arrangements.  He levied across-the-board tariffs on almost all countries.  He acted swiftly in the belief that other countries would flock to make trade concessions so that he would lower tariffs aimed at them.

Economists warned that the tariff burden would fall mainly on American consumers as their cost was passed on by importers.  He denied that tariffs caused inflation and even denied that prices were rising.   Unhappy consumers saw prices on groceries increase, whatever he might claim.

No obvious effort was made to equate the dollar value of trade concessions made by others with the cost imposed by new tariffs.  Instead, Trump lowered tariffs in return for promises of massive new investment in the U.S., though it is doubtful that tracking foreign investment commitments is possible.  In the short-term, domestic manufacturing benefitted little from tariff protection.

Finally, Trump came to realize that his tariffs were driving up prices for individual consumers.  Last week, he ordered tariffs lifted on foods for which U.S. production was insufficient to meet demand, pushing prices up.  More tariff cuts on non-food items are said to be coming.

“Wait. If lowering tariffs lowers prices, what does raising tariffs do to prices?” Erica York, a vice president at the Tax Foundation, asked.  It may be called a matter of “affordability,” but that’s really inflation.

In the end, some relatively low tariffs may survive, but the policy itself is in trouble.  Even more troublesome is the possibility that the Supreme Court, usually supportive of his expanded use of power, could overturn many of his tariffs because they are illegal or even unconstitutional.  Such a decision could lead to undermining his assertion of unlimited power.

He floated the idea of returning some of the tariff revenue to American taxpayers.  This may have been an attempt to encourage the Court not to see tariffs as taxes.  It probably won’t work, leaving him in violation of his MAGA promise to not raise taxes.

On immigration, Trump promised what amounted to the complete elimination from the U.S. of undocumented or illegal immigrants, starting with the most criminal.  Dating from his first presidential campaign, that promise was the MAGA cornerstone.

He made clear he was trying to deport as many as possible, even if they were not criminals.  In fact, law-abiding, productive residents were the easiest to target, which concerned some people who had supported his policy.  He even reduced legal immigration. 

His anti-immigration policy had been the binding force among his supporters.  Last week, that changed. 

Trump said that the U.S. lacks people with “certain talents,’ who should be admitted so they can train Americans.  Some loyal Trumpers disagreed with that and with his willingness to admit 600,000 Chinese students.  Georgia GOP Rep. Marjorie Taylor Greene, the ultimate Trump backer, dissented, so Trump called her “wacky” and ceased supporting her.

When asked if his policy would displease MAGA backers, he asserted that he alone had invented MAGA.   That statement implied they must follow his lead.  However, because he had adopted policies espoused originally by others, that leadership is now in question.

He recognized that the U.S. cannot go it alone, especially in technical areas.  He may come to realize that the economic growth he wants depends on a growing population resulting from legal immigration.   Because of issues related to the immigrants’ ethnicity, he may encounter even more MAGA opposition.

After his first term, Trump prided himself on having kept the U.S. out of armed conflict.  That struck a contrast with the Democrats, pleasing his backers.  The bombing run he ordered on Iran began to raise doubts, though he excused it by noting that no American lives were lost.

Last week, he strayed even further from his commitment.  He stationed a huge American aircraft carrier, the world’s largest warship, in the Caribbean Sea as an obvious threat to Venezuela.  It might have been better placed in the South China Sea to face down Chinese marine aggression than to confront a relatively minor portion of the drug trade.

Trump risked restoring America’s role as the “world’s policeman,” a policy completely contrary both to his claim to being a peacemaker and his policy of keeping the U.S. out of foreign conflicts.  America First now seems to allow for the use of American military power abroad.

MAGA is melting.

 

 

 

Trump's ego undermines his policies

 

Gordon L. Weil

Imagine a president who wanted to add to the national territory, sought to reform banking, and staged a bold fight on tariffs.  He won the presidency but without winning a popular majority.

Donald Trump?  This describes him well, though he has not yet succeeded on any of his goals.

But it isn’t Trump.  You may well have never heard of this president.  He was James K. Polk, the eleventh president.  Unlike Trump, he pledged to serve only one term, and he did.  Also, unlike Trump, he achieved all his goals. 

Most importantly, he served without displaying outsized ego or self-promotion, resulting in his historical anonymity.  But he changed the nation.  If you want to make America great again, Polk’s presidency is part of the past that Trump would restore.

Anyone who aspires today to the American presidency must have a big ego.  The task and the responsibility are so great that a person with a normal view of their limits would not have enough self-regard to carry them through a campaign much less the presidency.  But Trump’s view of himself surpasses any of his predecessors.

Trump’s ego is the hallmark of his administration.  He makes extravagant claims about his memory, his knowledge of science, his wealth, and his ability to use power effectively.  He sees his supposed success in real estate as proof of his extraordinary ability to make deals among nations.

He seeks to burnish his status by adding vast territory to the United States (Greenland, Canada, though the Panama Canal seems to have been dropped), and returning the banking system to the banks, and making the U.S. economically independent.  He would by himself turn the tide of American history.

With no embarrassment he has made clear that his political style relies rely on threats to his GOP friends and foreign allies, and depend heavily on flattery.  Foreign leaders quickly found that unbounded praise is an essential tool in inducing him to alter his policies.  They also never tire of admitting their dependence on the U.S. with the resulting need to stay on his good side.

Nowhere is this more obvious than his attempt to collect nominations for the Nobel Peace Prize from the leaders of other nations.  He may believe that a rush of high-level nominations will enhance his chances.  It looks like gaining endorsements for one’s candidacy during a political campaign. 

Trump appears to consider the praise and support he actively cultivates as a sign that others recognize his outstanding qualities and accomplishments.   His ego allows him to miss their obvious flattery, not representing their sincere beliefs, but as a necessary tool of their own foreign policies.  He is not widely regarded as the “very stable genius” that he claims to be.

Nominating him for the Peace Prize amounts to merely promising to write to the Norwegian Nobel Committee.  Nominations remain secret for 50 years.   Sinking small vessels on the high seas, threatening to use force against Venezuela and Nigeria or sending the military to repress domestic free speech will deny him the Prize, no matter what else he does.

The ultimate expression of his ego may have been slapping an added 10 percent tariff on Canadian imports, because he disliked a television ad.  Tariffs are taxes and are supposedly based on economic considerations not presidential whim.

Much of the world sees through his personal management of American policy.  The country is increasingly held responsible for having elected him twice.  Because such a choice may be possible in the future, many countries grow wary of a close, long-term relationship with the U.S. 

Trump uses the powers of his office, enhanced by the backing of the Supreme Court and the GOP Congress, to serve his ego more than the national interest.  This may reshape the U.S. and its effect can extend well into the future.  He may not achieve his goals, but he is making his mark.

And the anonymous Polk?  In the four years of his presidency, he almost doubled the size of the country through the controversial Mexican War and astute diplomacy with Great Britain.

He also created an independent national treasury, arguing the U.S. could manage its own financial affairs, not the banks.  This led eventually to the Federal Reserve, the public-private arrangement setting monetary policy that Trump would now topple.

And Polk changed national tariff policy.  He lowered tariffs so they would cover the cost of government but not overly protect domestic industry, thus reducing prices.  This policy worked for 20 years.

Trump’s excessive focus on himself – his ego gratification – gets in the way of stable and sound public policy, conservative or not.  It offends many whose support he needs.

Displaying little ego, Polk acted for what he saw as the public good.  A contrast with today.

Trump on trade: good idea, bad execution

Gordon L. Weil

President Trump got something right.  But he is handling it all wrong.  It’s about tariffs and trade.

He understood that world trade no longer obeyed the rules that grew up after World War II and that the U.S. suffered from its clinging to the past.  Single-handedly, he decided to end the old order.

After the war, a new trade system was created.  It was called the General Agreement on Tariffs and Trade or simply GATT, and it fostered rounds of multinational trade negotiations.

The idea was that countries could gain improved access to foreign markets and to imports they needed and wanted.  Rather than benefiting from one-on-one deals with other countries, they could derive a net gain from a package of multinational deals.

The GATT system works reasonably well.  A so-called “rules based” system, it relied on all participants having the same commitment to the process and operating through market systems.  Dominated by the U.S. and Europe, it included countries that accounted for most world trade.

As other major players appeared, GATT was replaced by the World Trade Organization.  It accepted emerging countries where the government might still control markets, but which were supposed to evolve into open market economies.

The biggest new participant was China, a supposedly emerging economy.  President Bill Clinton supported its membership in the belief that its WTO participation would move it to the market system.  But with other state-run economies, China began to distort the rules-based system. 

President Kennedy once said of trade that “a rising tide lifts all boats.”  While that might have been true of GATT, it became increasingly evident that some big boats ignored the rules of navigation.  The U.S. and Europe continued to act as if the old rules were still observed.  Trump saw they were outmoded, and the U.S. was becoming a net loser.

Because consumers favor low prices without regard to the reasons for it, the U.S. trade deficits deepened.  Not only did that transfer economic power to China and other low-wage countries, but it cost the U.S. jobs, especially in manufacturing, a loss only partially offset by the growth of the service economy.

Trump promptly stepped outside the structure of rules-based world trade and destroyed it.  A compliant Congress allowed him to set tariffs that it was supposed to control.  Whether he acted legally without congressional approval is now before the Supreme Court.

Instead of using U.S. power to leverage other countries to negotiate a new system, Trump immediately raised tariffs on virtually all other countries (except for Russia).   In one stroke, multilateral deal making in trade was replaced by America First.  Existing trade patterns were abruptly toppled.

Trump’s approach was not exactly the art of the deal.  He simply sharply raised tariffs and expected other countries to come to him with offers to accept more U.S. products and to increase their investment in the U.S.  If he liked the offers, he lowered their tariffs.  The situation became more like an auction than a negotiation.  Flattering Trump personally also helped deals.

Most countries complied.   They could get tariffs lowered, though they remained well above their pre-Trump levels, if they made offers to open their own markets and boost their investment in the U.S.  But friendly relations or even alliances are suffering.   

America has reduced both its trade deficit and its partnerships with others.  Reduced trade means prices are rising in the U.S. and elsewhere, slowing economic growth.  The rest of the world has begun developing new trade relationships to protect against arbitrary U.S. policies.   But that change will take time.

One country has refused to go along with bidding to induce Trump to lower tariffs.   Though Canada is dependent on the U.S., Prime Minister Mark Carney believes the U.S. relies on some of its key exports and must eventually negotiate a deal. 

Canadians understand their country’s dependence on the U.S. won’t disappear quickly, but it moves to diversify its trade on the way to long-term independence.  It is developing its domestic market, long oriented to the U.S., and draws closer to Europe.

Beyond trade differences, Trump has crossed a red line.  He repeatedly asserts that Canada should become the 51st state.  He ignores the direct effect of his remarks on future relations with it and as a signal for other countries to reduce their dependence on the U.S.

Last week, a new book entitled “Elbows Up” appeared in Canada.  It is anti-American. The term refers to a quasi-illegal jab given to an opposing player while battling for a hockey puck.  Launched by Carney, a former hockey goalie, it’s a motto that all Canadians understand.

The U.S.-Canada clash symbolizes the change Trump has caused. World trade will be reformed, as certainly was needed.   But, thanks to his methods, America’s leadership is beginning to wane.   

Trump shows his worry about Supreme Court tariff case

 

Gordon L. Weil

Unlike almost all other countries, Canada has refused to make concessions to President Trump that would induce him to lower tariffs.  While he has taken actions on policies not yet in effect or to match a U.S. concession, Prime Minister Mark Carney insists in negotiations.

But trade talks are making no progress.  Instead of wasting time courting Trump, Canada is working hard on finding alternate markets and on increasing domestic trade.  But it attempts to keep talks going in the hope that the U.S. will realize its dependence on its major trading partner and ally.

Then, Ontario Premier Doug Ford, whose province is deeply involved in the joint American-Canadian auto manufacturing arrangement, vented his frustration with the talks.  As a Canadian Conservative, he had liked Trump’s return to office.  But the president’s tariff policy almost immediately turned him around.

Ford launched a one-minute television ad featuring long-ago remarks against tariffs by then President Ronald Reagan.  Trump immediately blew, impulsively cancelling what seemed to be the almost mythical trade talks with Canada.  Then, he added a new 10 percent tariff.  Out of this ad and Trump’s visceral reaction came a flood of misdirection.

First, was Reagan for or against tariffs?   He was a free trader who had just raised tariffs on Japan in retaliation for its protectionism.  While making this protective move, he sought to maintain his reputation as a free trader.  The statements Ford used were not out of context with Reagan’s entire remarks, but they were out of context with the complete circumstances of the times.

Trump claimed that Reagan “loved” tariffs, which also took his remarks out of context.  The former president tried to make clear that he did not like tariffs and their effects, but sometimes increasing them was necessary.  He did not use them like Trump’s broad-brush approach.

Second, Ford’s ad opportunistically took advantage of the fleeting moment when Americans would pay much attention to Canada, thanks to the opening of the World Series between the Toronto Blue Jays and the Los Angeles Dodgers.  It was an outburst of patriotic support for his province, home of the Blue Jays, and an outlet for his anger over Trump’s auto protectionism.

Third, Ford was seeking to put pressure on Carney.  They are not natural allies.  Besides, Ford’s Ontario has demands that differ somewhat from Carney’s Canada.   Canadian provinces often find themselves at odds with federal policy.  Ford could be seeking a deal that would benefit Ontario, but possibly at the expense of other provinces.

Carney obviously did not like Ford treading on his authority over foreign and trade policy.  He got Ford to withdraw the ad, but only after the first two games, both played in Toronto.  Ford wanted to keep exploiting the inevitable explosion of Canadian nationalism at the games, but he does not speak for Canada.  Carney showed Trump that he had no responsibility for the ad.

Fourth, Trump’s instant reaction scarcely hides the reluctance of the U.S. to arrive at a negotiated deal with Canada rather than simply forcing it to make concessions.  Trump apparently believes that delay weakens Canada and improves his own position.   He ignores the deep anger north of the border about his suggestion that Canada should become the 51st American state.

Fifth, perhaps the most important aspect of the ad flare-up is that it revealed what is truly worrying Trump – the possibility of a Supreme Court ruling unravelling most of his tariff policy.  Two federal courts have already ruled that most Trump tariffs are not allowed.  The case is now before the Supreme Court.

Congress permits the president to alter tariffs in a national emergency, but his current declaration does not meet the standard set by Congress in giving the president its power to set tariffs.  His complete control over tariffs would be unconstitutional.  And, it is hardly a national emergency when tariff talks with Canada are ostensibly ended because of a critical television ad.

Trump charges that Ontario’s Ford is trying to influence the Court’s decision.  But Ford only wants a trade deal on autos.   And it’s an insult to the Court that it, like Trump, would be influenced by a Canadian television ad.

Trump’s reaction could go beyond trade policy and increase his worries.  If the Supreme Court affirms the ruling of the lower court specializing in trade matters, it would be the first serious limit it has imposed on his powers.  If it supports him, the ruling would cement its backing for his virtually absolute power.

He believes that court actions can be influenced by his political pressure.  Federal courts, including the Supreme Court, led by judges he has appointed, have favored him.  By creating an improbable pretext for Ford’s ad, he may want to be seen as a victim, worthy of more judicial deference.

Carney, Powell stand up to Trump

Gordon L. Weil

President Trump seems to convert almost all leaders into fans, mostly because they know he thrives on flattery.  He readily accepts their artificial praise.

The media likes to report how he forces skeptics or critics to appease him in pursuing their own interests.  They end up settling for less than his original demand and consider the deal a win or else helplessly let him take advantage of them.

But this week, two people have carefully stayed on their own course despite his pressure.  Canada’s Prime Minister Mark Carney and Federal Reserve Chair Jerome Powell stand out from crowd.

When Trump first sharply hiked tariffs, then Canadian Prime Minister Justin Trudeau promptly retaliated.  His countermove, rare among the early U.S. tariff victims, was designed to get the U.S. to retreat.  Tariffs between the two countries soared to the point that would harm both sides.

To his credit, Trump realized he had gone too far, depriving the U.S. of needed fuel and raw materials.  He eliminated tariffs on trade under USMCA, the trade agreement among the U.S., Mexico and Canada.  Major barriers remained on steel, aluminum, autos and softwood lumber. 

The Canadian government changed when Carney took office.  Politically, he could not quickly reciprocate for the Trump cut, though he recognized that its effect on essential imports was harming Canadian consumers and industry.   He also found that the overall effect of the USMCA preference gave Canada the lowest U.S. tariff at 5.6 percent.

Trade talks repeatedly missed deadlines as Canada held firm.  To negotiate with the U.S. and provide some relief to Canadians, Carney has just reciprocally reduced Canadian tariffs to the USMCA level.  Some in Canada erroneously saw this move as appeasement, ignoring the fact that the U.S. had moved first.

Before acting, he called Trump, who apparently accepts Canada’s independent policy and recognizes U.S. dependence on some Canadian imports.  The New York Times reported that Trump said that he and Carney “are working on something.”  He continued, “We want to be very good to Canada. I like Carney a lot. I think he’s a good, good person.”

Carney had been ready to seek other trading partners.   Now, a deal on autos is likely and accords on the other three products are possible.  The U.S. and Canada may also be finding areas of agreement on the upcoming revision of the USMCA, under which Mexico has gained the most benefit.

If Trump has kind words for Carney, despite the Canadian’s independent stance, he does not hold back when it comes to the Federal Reserve’s Powell, whom he calls a “numbskull” for refusing to cut interest rates.  He’s gradually realizing that Powell does not act alone and that the kind of deep cuts he wants aren’t likely, no matter who sits on the Fed’s Open Market Committee.

Powell, who clearly believes in the Fed’s independence from the politics of the day, appropriately refrains from answering Trump’s attacks.  To do so would plunge the Fed into politics.

The Fed’s missions are maintaining full employment and controlling inflation, striking a delicate balance with the entire world waiting to judge its actions.  In recent years, it has leaned toward the fight against inflation.  Now, Powell’s analysis suggests that the Fed can ease up on inflation and reduce the interest rate until it sees the impact of higher U.S. import tariffs.

The current Federal Funds interest rate, used for lending among banks and dominating short-term interest from credit cards to mortgages, is set between 4.25 and 4.5 percent.  In July, two Trump appointees favored a one quarter percent cut, hardly the three percent that Trump wants, while the majority left the rate unchanged.  The media exaggerated this small difference.

Trump and his economists could have sat with Powell and made the case that the inflation risk is less worrisome, avoiding the usual unrealistic demands and threats.  The president would have been playing, perhaps persuasively, on the Fed’s court, but that’s not his style.

Instead, Trump attacked.  Based only on an unsubstantiated charge that a Fed member had cheated on a mortgage application, he demanded her resignation.   Knowing that it was grandstanding, the Justice Department baited Powell by demanding he fire her, though he has no such power.

The U.S. and much of the world depend on a soundly managed American economy and dollar, still the international reserve currency.  Trump would willingly endanger both if he could claim before the next election that he had boosted the economy to new heights.  He expects his Fed appointees to be his foot soldiers in this effort.

There’s no doubt that higher tariffs will increase some costs and prices.  Trump cannot make Powell responsible for that, simply because he won’t lower interest rates.  Trump may not understand that, but Powell does and holds firm.  So far, that works. 

The phony economics of Trump's trade policy

 Gordon L. Weil

“You can’t put lipstick on a pig.”   But you can try.

Trump’s petulant trade policy lacks any underlying economic theory.  He wants to eliminate the U.S. trade deficit no matter the cost or effects.  If imports cost more or new domestic production is more expensive, the price will be paid by American customers unless foreign suppliers swallow them. 

But a loyal member of the Trump administration is trying hard to make that brutal trade policy appear to have a rational economic basis.   U.S. Trade Representative Jamieson Greer asserts that Trump wants to almost instantly replace the entire world trade system that has grown up since the end of the Second World War.

International commerce is based on a division of labor under which each country exports the products and services resulting from its economic strengths and buys the output of foreign production that best serves the needs of its people.  Competition sometimes exists, improving choice and increasing value.

Under the system that came to be managed by the World Trade Organization, tariffs were set at low levels and nations freed their trade with one another, treating each as its most favored partner.  Some nations benefit more than others from the low, reciprocal tariffs.  But most prosper from it.

The system has worked reasonably well and, more importantly, nations have become accustomed to it.  It has major problems, the result of historic change and attempts at manipulation by countries.  It needs reform, but Trump is throwing it out, because it has not given the U.S., the world’s largest economy, enough advantages.

One problem is that the manufacturing potential of developing countries has been hindered, limiting them to the sale of their raw materials.  The vestiges of colonialism have survived.

The other problem results from countries with state-run economies rather than open markets. The biggest mistake the U.S. made was to allow China to become a member of the WTO, enabling it to prey on free market countries by manipulating the value of its currency and exports.

Clearly, it’s time for the world’s trading partners to reform outmoded rules to deal with these and other issues.  The U.S. might have taken the lead in such reform, but it has refrained, because it has enjoyed the low cost of imports from China.

Greer says that, more than simply trying to enrich American industry at the expense of others, Trump intends to replace the relatively free flow of trade with something like a cut-throat unmanaged market.  U.S. nationalism is dressed up to look like a serious trade plan.

While his theory might be offered as a bold and original alternative to the WTO, it has in fact previously been tested, and it failed disastrously.  In 1930, the U.S. adopted high tariffs that Trump now tries to surpass.  They were meant to protect the U.S. from the Great Depression, but they stymied world trade and did not spur domestic industries. 

In two of the hardest hit countries, the Depression brought the New Deal in America and the Nazis in Germany.  High tariffs worsened the economic crisis worldwide.  Greer obviously hopes for better this time, but he ignores history.

Trump daily demonstrates that he has no carefully conceived economic strategy behind his tariffs.  Federal courts now consider whether his policy is even legal.  He uses emergency powers in a situation that may not qualify as an emergency.  And his haphazard application of tariffs is hardly a consistent response to an emergency. 

He uses tariffs as a political weapon, not an economic tool, raising them on Brazilian imports, because he dislikes its judicial system treatment of a former president.  He lifts tariffs on trade from India to pressure it to stop buying Russian oil.  He hits Canada hard, well, because it is still Canada.  Many of his actions are based on blatantly false data, but he persists.

He claims to be making deals. The art of the deal is that all participants believe they have benefitted.  He usually does not propose a satisfactory deal; instead, he makes other countries keep making offers, hoping to get Trump tariff reductions.  This is not dealmaking; it is bullying.

The proof that there is no coherent economic policy, despite Greer’s valiant effort, is the frequent adjustments that Trump makes day by day.  No specific level has an economic basis.   It is simply a matter of getting as much as you can now, ignoring longer term economic or political effects.  America loses allies, needed because trade is not the only challenge the U.S. faces.

When other countries hold firm or fight back or Trump realizes the degree to which the U.S. is dependent on certain of their exports, he may back down.  That’s called TACO – Trump always chickens out.  Is that real economic policy, Mr. Greer?

 

Trump attacks Fed's Powell

 

Gordon L. Weil

President Trump wants lower interest rates. He sees Federal Reserve Chair Jerome Powell as standing in the way.

He wants Powell to resign, but the Fed Chair won’t go.  Trump resorts to childlike name-calling, as if the misplaced ridicule will drive Powell to quit. That doesn’t work.

This is not the first time a president tried to get the Fed to support his policy.  Before the 1972 election, President Nixon wanted Fed Chair Arthur Burns to lower interest rates.  Using a wide array of tactics and threats, he induced Burns and the Fed to lower rates.  The long-term result was wild inflation, forcing the Fed later to impose extremely high rates.

Trump would like to fire Powell, just as he has dismissed members of regulatory bodies.  He has been almost completely successful in those moves because the Supreme Court has backed his concept of an all-powerful president.  But only “almost.”

In a May decision endorsing Trump dismissals, the Court responded to the departing regulators’ argument that its position could threaten the independent Fed: “We disagree. The Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States.”

The Court thus went out of its way to insulate the Federal Reserve from the powers it confirmed that Trump enjoys to remove members of supposedly independent regulatory bodies.  He was left only with the power to remove Fed officials “for cause.”

A person could be fired for cause if they had acted illegally, misused their office or had become incompetent.  Trump claims that Powell mismanaged the renovation of the Fed’s headquarters, enough for him to be fired for cause.  His actions on Fed interest rate policy are not a cause to fire him, though that’s obviously Trump’s intent.

Powell would likely resist any such dismissal and the matter would go to court.  Unless it changes course, the Supreme Court would protect Powell and the Fed’s intended independence from the politics of the day.  He could argue that he’s not responsible for building management and that no federal money is involved with costs being paid by banks.

An even more compelling reason for Trump not to try to remove Powell is the worldwide economic reaction.  The U.S. dollar plays a unique reserve currency role, and one major task of the Fed is to protect its value.  If a president could undermine that role for short-term political purposes, the world economy would be affected.

If the dollar’s status, reflecting international confidence in it, is threatened, then everything everywhere in the world will become more expensive.

Trump’s vacillating trade policy has led to domestic and international concern about American economic reliability. The doubt created by that concern translates to higher interest rates.  Attacking the Fed, Trump would make matters worse.

Surprisingly, a well-known economist urges Powell to resign, saying that continuing attacks on him will weaken Fed independence.   He ignores the certainty that Trump would replace with an ally who would follow the president’s policies rather than exercising the necessary independent judgment.  Economic expertise obviously does not produce political insight.

Powell does not set rates by himself.  The 12-member Open Market Committee decides.  For his removal to meet Trump’s demands, the rest of the members would have to be meek followers of whoever is the chair.  They aren’t.  Right now, some of them are reported to oppose any cut, while Powell foresees one or two this year.

Trump wants lower rates to encourage more borrowing for economic growth.  While they might somewhat offset the inflationary effect of his tariff policy, they could overheat the economy.  He also wants to keep up with other countries that have lower rates.  The Fed looks at the economy from a different and more long-term perspective than the president.

Trump’s concern may not be helping the economy as much as helping himself get past a recent huge increase in the national debt.   It may be the main point behind Trump’s position, though it is rarely stated. 

Trump’s One Big Beautiful Bill will increase the national debt by more than $3 trillion.  The federal government will have to pay off that debt and the interest on it that continually accrues. If the Fed lowers interest rates, those rates apply to federal debt and could lower the payments that must be made on the new debt.

By cutting interest rates, it could cut the cost of the OBBB.  That matters because the cost of servicing the national debt, even before OBBB, was greater than all defense spending.   Saving on debt service cushions somewhat the growing cost of chronic deficit spending.

Helping Trump meet this goal is not the Fed’s prime responsibility.  It is supposed to keep inflation down and employment up.  The inherent conflict between them and Trump’s urgent need to reduce the debt are at the core of Trump’s hostility toward Powell.  But it is not working.

Facing widespread insistence on the Fed’s independence, Trump seems to be backing down.  Treasury Secretary Scott Bessent asserts that the Fed engages in “persistent mandate creep into areas beyond its core mission.”  His conclusion: “What we need to do is examine the entire Federal Reserve institution and whether they have been successful.”

Fair enough.  Maybe whoever does that ought also to examine the entire Trump economic policy and whether it has been successful.  To many, he looks like the maestro of mandate creep.

 

U.S. foreign policy failing

 

Gordon L. Weil

Donald Trump set his highest priority foreign policy objectives: reducing or eliminating the U.S. trade deficit, ending the war between Russia and Ukraine and resolving the conflict between Israel and the Palestinians in Gaza.

He promised early results and took swift action once in office.  He has failed, thus far at least, on all three.

On trade, Trump misused emergency legislation to impose high tariffs to virtually all countries for trade in goods.  “I’m using trade to settle scores and to make peace,” he said.  Settling scores means eliminating unfavorable trade balances, which he claims were intentionally caused by other countries.  After that, Trump’s version of peace would presumably prevail.

He believed he could settle scores painlessly. Foreign suppliers would absorb the impact of the tariffs. They would pay the tariffs, increasing foreign revenues flowing to the U.S. Treasury.  If they raised their prices to cover the tariffs, higher cost American manufacturers could regain market share. 

He did not count on retaliation and resistance from others.   He resisted accepting that end-use customers would pay for the tariffs. He ignored the effect of retaliation on essential American imports. And he did not take account of the impact of his constant tariff changes on corporate investing and consumer confidence.

But retaliation came from China and Canada, both providers of essential imports. Retail prices began to increase.  The stock market sank as tariffs rose.  Partners began to diversify their trade away from the U.S., losing confidence in the reliability of American policy.  The dollar as the world standard wobbled.  Trump backed off.

As for Ukraine, Trump had boasted that he could settle the conflict in a day.  That would have to mean the full and immediate surrender of Ukraine to the Russians, resulting from a cutoff of U.S. support.

Trump thinks little of Ukraine. His first impeachment was caused by his attempt to force Ukraine President Zelenskyy to dig up evidence against Hunter Biden.  He knew nothing of the centuries-old effort by Russia to suppress Ukraine, even going so far as starvation, or of Putin’s failure to keep earlier “peace” agreements.

He believed that Russia would ultimately overpower Ukraine, which should, in effect, surrender to prevent the unnecessary loss of life.  But Ukraine and powerful European allies understood that Putin would not respect a settlement and was trying to relaunch Soviet-style domination. 

With or without the U.S., Ukraine would resist no matter the cost.  When Trump realized he was dealing with two, not one, strong-willed forces, he essentially abandoned his peacemaking, potentially leaving the defense of Ukraine to itself and its European allies.

After the Hamas attack on Israel, Trump fully backed the Israeli response.  But Israel gradually went beyond a proportional response.  It seeks to take over Gaza, the Hamas home base, on the way to complete domination of Palestine.  Trump offered the fantastic prospect of turning the territory into an American seaside resort after expelling the Palestinians.

As the harshness of Israeli actions became apparent, sympathy grew for the target Arab populations.  Critics of Israeli policy toward the Palestinians could find themselves labelled as antisemitic by Israeli Prime Minister Netanyahu and Trump’s supporters. 

Netanyahu stepped up his inhumane pressure on Gaza, eventually starving many there.  Israel’s international support faded. Even Trump responded to the starvation and increased both his pressure on Israel and his distance from it.  Some Israelis warned the nation could become an international pariah. 

Trump had bet on Israel, but slowly came to understand the advantages of improved links with Arab states and the disadvantages of giving Netanyahu unconditional support.  His peacemaking on behalf of Israel turned into dealmaking with the Arab nations, with Israel excluded.

Trump’s policies have failed.  Tariffs could not be drastically raised.  Ukraine and Russia would fight on.  Israel would prolong the Gaza War.

Trump may yet turn all this around.

He should roll back his across-the-board effort to “settle scores” and negotiate individual accords with major trading partners.  Top priority should go to Mexico, Canada and, if possible, China. Each accord must be objectively screened for its potential domestic impact, and deficits must be accepted as a fact of life.

On Ukraine, the U.S. should join with Europe to tighten sanctions on Russia and let Putin know that Ukraine will have long-term support until a ceasefire and negotiations without any preconditions take place.

Joining also with the Europeans, the U.S. should make clear that a two-state Israel-Palestine solution must be adopted, no matter how difficult that would be.  The rebuilding of Gaza and its society should begin under a newly elected Palestinian Authority.  The U.S, could be the economic partner of Israel and Arab countries in creating a truly regional economy.

These may seem like unrealistically lofty objectives.   But Trump has the potential to surprise and influence the world by changing course. 

Trump's trade policy fades; tariffs come up short

 

Gordon L. Weil

American exports should be greater than American imports worldwide and for every country.  That’s the essence of President Trump’s tariff policy. 

To the extent that any country has a positive trade balance with the U.S., it is “robbing” the U.S.  To fix the imbalance, the U.S. now imposes tariffs or threatens to use them on imports to make them so expensive that American producers, with higher costs, can compete.

Even taking this policy at its face value, it is a failure.

Trump has squeezed other countries to force them to the negotiating table where they should make concessions to get him to back off the tariffs.  The signs are that he will achieve a lot less than he set out to get.  And neither side may be better off.

Two talks last week revealed that his policy was not working.  Meeting with Canadian Prime Minister Mark Carney, Trump said that the U.S. did not need his country’s exports, asserting that America could be self-sufficient.  Carney, an experienced negotiator, avoided debating the point, but merely noted that Canada is the biggest customer in the world for U.S. exports.

Trump is so focused on the trade balance in goods that he ignored exports and the favorable U.S. balance in services or his country’s reliance on Canadian oil, uranium and other essential goods. He failed to recognize that many products, like automobiles, are truly international, making it impossible to label them as coming from a single source.

After Trump again grandstanded about his desire to make Canada the 51st state and Carney’s understandable rejection, the two sides retired to begin closed, substantive talks going beyond scoring on one another.  In effect, Trump recognized that he needs a deal, which Carney already knew.

The second event was the announcement of a trade deal with the U.K.  Ever since Brexit, the Brits have sought a comprehensive trade arrangement, possibly a free trade deal, with the U.S., to compensate somewhat for losing Europe.  But the U.S. has had a favorable trade balance with Britain, giving it no reason to make a major deal.

That changed.  Trump needed an early trade deal to justify his tariff policy.  British Prime Minister Keir Starmer needed an accord to show the U.K. still has a special relationship with the U.S., and that the Labour Party could bring home a trade deal responding to some of Britain’s hopes.  Both leaders congratulated themselves on making a long sought after deal.

That may have been good politics for each of them, but it wasn’t true.  The deal removed some of the trade measures that Trump had applied to the U.K. without justification, but the Financial Times, a leading British newspaper, noted that it still left the U.K. worse off than it had been before Trump returned to office.

A deal with China really could matter, and both sides need it.  Trump looked anxious in claiming prematurely that talks with Beijing were under way, when at best contacts took place about starting talks.  At last, they have begun.  With China, the president’s tariff policy might produce results, though whether China keeps its promises would remain in doubt.

Overall, the Trump tariff policy is failing.  Originally focused solely on imports of goods, the policy missed the effects on domestic prices, access to essential imports, American exports as other countries retaliated, and the trade-stopping effects of astronomic tariff rates.  He now seems to begin to understand the implications of his one-note trade policy.

But his performance in talks with Carney and Starmer suggests he can’t adjust his demands.  Better qualified negotiators try to save the appearance of his claims, while making realistic arrangements.  One result is that the British deal is not a comprehensive pact, but simply covers specific items, with many details left to be completed.

Not only is his high tariff policy fading into face-saving pacts limited to a few products, but Trump himself seems to be fading.  What should have been said about Joe Biden as his term wore on, seems to be increasingly true for Trump. He restates broad themes, but lacks the energy or grasp of details to go further.  He leaves that to others.

When asked what the Declaration of Independence, posted on his office wall meant to him, he said it was a declaration about “unity and love” when it was about rebellion and anger.  When describing the U.K. trade deal, he read from prepared written remarks, possibly for the first time, showing no sign of understanding the deal.

He continues to ring the chimes for his key policies: mass deportation of illegal immigrants, stopping other countries from “robbing” the U.S., and slashing the federal government.  The question arises if he is capable of making these policies work as they face growing opposition.

 

 

U.S. becomes economic island; Trump's tax increase

 

Gordon L. Weil

In his avalanche of actions, President Trump has adopted an across-the-board tax increase. Like many of his other moves, he should have asked Congress to approve, but he chose to act on his own.

He is using powers meant for a true national emergency to radically increase tariffs as he launches his personal view of trade policy and seeks to use trade as a weapon against other countries, both friends and allies. 

Trump’s trade policy is aimed at making the U.S. economically self-sufficient.  The rest of the world sells more to the U.S. than America sells to them.  Trump charges they profit because they cheat.  In his view, the U.S. buys imports at rigged, low prices, rewarding countries that use their profits from enormous U.S. sales to subsidize their own economies.

He uses tariffs to force up the price of imports.  As import prices rise, higher cost American goods can compete.  In fact, U.S. producers may be able to raise their prices.  After claiming he would restore the economy and combat high prices, he has admitted that prices will rise because of his tariff policy and the country might face a recession. That’s hardly what he promised.

Higher prices are the taxes he imposes to finance his notion of the proper role of tariffs.  But the price is wrong. And Congress did not give the president emergency authority to use tariffs as he does and effectively raise taxes.

The U.S. is the world’s only economic superpower, for the time being at least, and Trump takes advantage of its strength to remedy what he sees as the victimization of the U.S. and to force other countries into line.  By his unchecked action, he raises prices. That has the exact same effect as if Congress had raised taxes to support a new policy.

Trump’s view fairly recognizes that traditional free trade does not always work.  Countries must have market economies where buying and selling are free for free trade to work.  But some countries that benefit from the low tariffs that are part of free markets have state-run economies that allow them to take unfair advantage of the system.

Take China, the worst offender.  Robert Lighthizer, Trump’s trade guru, correctly opposed China’s admission to the tariff-cutting World Trade Organization, because of its state-run system.  It became a WTO member by lying about its intentions.  Countries like China have made a mockery of free trade, but U.S. consumers lap up their lower cost goods.

Higher consumer costs are not the biggest problem.  Underlying Trump’s policy are several economic assumptions that have been disproven.

Much trade is based on economic efficiency, with countries specializing in production where they are strong. Trade naturally favors exchanges among countries selling what they are best at producing and buying from others whose goods are better or cheaper than their own.  That’s an efficient division of trade.

Trump complains that most other countries are using the system to take unfair advantage of the U.S.  That ignores the role of consumers in a market economy.  A nation’s import-export balance usually results more from what its domestic market wants than the trade treachery of others.

The U.S. depends on some countries for essential resources, like rare earths, uranium and even some types of oil.  A tough trade policy can get in the way of meeting essential needs.  As an alternative to easing trade policy, Trump pressures Ukraine to become a major low-cost supplier of rare minerals supposedly to repay American aid to its defense against the Russian invasion.

The Trump trade policy also ignores the reaction of other countries.  He assumes they will have to accept the loss of sales to American competitors.  He has argued they will pay more tariff revenues that will fatten the federal budget, though he increasingly recognizes that those revenues will ultimately come from American consumers when they pay higher prices.

He has little obvious concern whether, faced with American protectionism, foreign governments will reject his “beggar thy neighbor” policy.  But they retaliate, trying to reduce their U.S. imports and to punish the U.S. for its tariff increases.  The U.S. itself then retaliates. This spiral is the essence of a trade war.

Finding the U.S. an unreliable trading partner, other countries are likely to seek new trade relationships. The world economy can be reshaped if Trump persists.  For example, Canada could consider joining the EU customs union to replace its former free-trade relationship with the U.S.

As world commerce reconfigures, the U.S. dollar would lose influence as the most accepted reserve currency.  With that loss goes much of American economic power in the world.  

The political equivalent of protectionism is isolation and the loss of world power.  That could happen if Trump’s “America First” turns the country into an economic island.