On April 2, Trump announced his new tariff policies: there would be 10% tariffs across the board on all imports and much higher rates for the European Union, China, and dozens of other countries. He called it Liberation Day. And he said this would "Make America Wealthy Again."
Over the next two days, the U.S. stock market had a drop in value equal to what it had in 2020 at the beginning of the Covid pandemic and lockdowns.
China retaliated by announcing that it would hit U.S. goods with an additional 34% tariff to match Trump's new tariff on China.
On Saturday, April 5, the 10% universal U.S. tariff took effect.
On Tuesday, April 8, Trump told Republicans: "I know what the hell I'm doing."
On Wednesday, April 9, at 12:01 a.m. Eastern Time, the Liberation Day tariffs officially went into effect. In the morning, at 9:33 a.m., Trump said in a social media post: "BE COOL! Everything is going to work out well."
Then, amazingly, in the early afternoon, at 1:18 p.m., Trump announced in a social media post that he was pausing his highest tariffs for most countries for 90 days, although the 10% tariff would remain, and China would be hit with a tariff of 145%.
When Trump was asked to explain his change of mind, he told reporters: "Well, I thought that people were jumping a little bit out of line. They were getting yippy, you know, they were getting a little bit yippy, a little bit afraid."
This is hard to explain. From Liberation Day to yesterday morning, Trump was a radical protectionist (perhaps persuaded by Peter Navarro). But by yesterday afternoon, Trump seemed to have decided that radical protectionism was wrong (perhaps persuaded by Elon Musk and others). So what's going on?
As I argued a few weeks ago, it's a mistake to think Trump cares about ideas or theories--cares about whether protectionism is correct or not--because as a grandiose narcissist, all he cares about is himself and whatever he has to do to win and maintain his alpha male dominance. Trump's politics is the chimpanzee politics of dominance, deference, and counter-dominance in which Trump must always be the King of the Mountain.
In exercising his arbitrary, absolute power over tariffs, Trump draws the eyes of the whole world to himself, so that by tapping a few words in a social media post, he shakes the global economic system.
Consider this remark in a New York Times article: "For a while, the tariffs created a dynamic Mr. Trump most enjoys--global leaders coming to him and, as he said on Tuesday night, 'kissing my ass' in search of deals. Administration officials said that more than 75 countries had reached out to them."
That's what he wants--most of the world "kissing my ass." But instead of kissing his ass, China retaliated by raising their own tariff barriers to U.S. goods, which is now at 125%. This forced Trump to raise the tariff on China to 145%. China's retaliation has showed resistance to his dominance over the world.
At the same time, Trump's reversal of his tariffs for most countries, at least for 90 days, shows his fear of the American resistance to his dominance that would be provoked by creating a financial crisis that would create a recession or even depression.
The resistance to Trump's despotic dominance can take many forms. I have written about the Lockean evolution of nonviolent resistance. And there is growing evidence of nonviolent resistance to Trump during the first months of his new term.
One form of nonviolent resistance to despotic tariffs that deny the natural right to free trade is smuggling. Smuggling to evade tariffs and restrictions on trade (such as Prohibition) is an old American tradition, and Trump's tariffs will Make American Smuggling Great Again.
The U.S. has only 26,000 customs officers to enforce tariffs, and that's not enough to prevent smuggling. For example, goods from China can be covertly transported to the U.S. and sold on black markets. Alternatively, importers of goods subject to high tariffs can lie to customs officials about the goods being imported. When imported goods arrive at a U.S. port of entry, importers must submit paperwork electronically to the U.S. Customs and Border Protection detailing the value of the imported items, where they were made, and what materials they include (for example, how much aluminum and steel is contained in some garden furniture); and based on that information, the importers calculate the tariff they must pay. Customs agents must review the paperwork and then clear the goods for release. Importers have either 10 or 30 days to calculate what they owe and make payment to Customs. Customs officials can do spot checks and random inspections, but since it's impossible for them to check everything, there will be lots of smuggling, especially when the tariffs are exorbitantly high.
Over 10 million shipping containers per year pass through the Port of Los Angeles alone. Imagine being a customs official charged with inspecting those containers to detect smuggling. The number of containers entering that one port per day (27,400) exceeds the total number of customs officers across the U.S.!
A Container Ship
If there is a natural right to free trade, there is also a natural right to protect free trade from oppressive tariffs through smuggling.
2 comments:
I agree Trump wants to be a despot. But let me add that people who have studied his views on trade agree that for many decades he has had the honest belief that other nations are all ripping us off, and the solution is tariffs.
This view comes out of a basic zero-sum, win-lose view of the world, and in that view it makes sense to be the tyrant because then you are the person doing all the winning.
Oops, accidently published my comment as anonymous.
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