Casualties are Piling Up in Trump’s Trade War

As far as I understand it, the idea behind tariffs is to protect domestic industries from cheaper foreign alternatives. And that’s a choice that sometimes makes sense unless you’re wedded to the idea that the price of consumer goods and services is the only thing that ever matters. What the president doesn’t seem to have fully anticipated is that when countries retaliate against you for imposing tariffs on their products, they can do real damage to domestic industries. For example, the soybean growers are completely freaking out, and companies as diverse as General Motors, Harley-Davidson, and Whirlpool are raising the alarm that they are so far in the losing end of Trump’s trade war.

Trump is already making an effort to adjust, with a proposal to spend $12 billion helping out agricultural interests who are getting hammered and perhaps a massive 25 percent tariff on foreign automobiles that he intends to implement later this year. If he goes ahead with the latter plan, he’ll splinter his party.

Before Trump could impose tariffs on auto imports, the Commerce Department must issue a finding that they pose a national security threat to the United States. Several Republican lawmakers have said such a finding would be laughable, but the Commerce Department has flexibility to make a determination on its own.

A Commerce Department official, speaking on the condition of anonymity to discuss the process so far, said the review had not been completed and no final decisions had been made.

But even with a final decision at least one month away, many of Trump’s fellow Republicans are getting nervous.

“There are some in the economic community who view this as the bright line,” said Douglas Holtz-Eakin, a Republican and former director of the Congressional Budget Office. If Trump does this, Holtz-Eakin said, many Republicans have told him they will no longer “support the president any more. They are done.”

It seems like a strange line to draw. Trump’s self-dealing, his ridiculously incompetent and dishonest staff, his absurdly corrupt cabinet, his embrace of white nationalists, his child separation policy, his refusal to do anything about Russia’s threats to our electoral system, his war on the intelligence community, and his embrace of the worst world leaders and attacks on our traditional allies would all be clear moral lines that should never have been crossed. But the Republicans will tolerate all of that and draw a line instead on imposing tariffs on automobiles.

They’re getting a rude awakening that a deal with the devil always involves a deceptively attractive trade-off. They put up with Trump to get regulatory relief so they can pollute with impunity. They put up with him to get tax cuts. They put up with him because they hate Iran or want to do business in Russia. They put up with him because they want to fill the courts with Federalist Society stalwarts who will roll back labor rights, consumer rights, antitrust enforcement, civil rights, gay rights, and women’s rights. But the lunatic has a mind of his own, and he’s going to wreck whole industries and perhaps send us all into another global recession. A lot of rich people are going to lose a lot of money in this trade, and they don’t think that should be part of the bargain.

It’s hard to have any sympathy for these folks especially because, as always, the most significant pain will be felt by people who don’t have any cushion and can’t get by if they lose their job. They’ll be losing their primary home rather than selling off one of their vacation houses.

In limited circumstances, a tariff might save American jobs, but when they’re applied like this, with no rhyme or reason, what we get instead is a desperate effort to avoid the consequences. So, now there will be a $12 billion emergency spending bill to solve a problem we didn’t need to experience. Here’s how that looks:

The Trump administration announced on Tuesday that it would offer about $12 billion in emergency relief to U.S. farmers, who have been hit hardest from the administration’s protracted trade battle.

But [the president of the Minnesota Soybean Growers Association, Michael] Petefish said that “$12 billion damage is just sort of scratching the surface of the economic impact.”

Petefish added that an argument could be made that the trade war has caused $12 billion worth of damage to soybean farmers alone.

“What’s concerning is the future” Petefish said. “Are we going to keep pumping $12 billion into the farming economy? What we need is markets.”

Multiple GOP lawmakers have echoed Petefish’s concerns.

Sen. Ben Sasse (R-Neb.), for example, said on Tuesday that “America’s farmers don’t want to be paid to lose — they want to win by feeding the world.”

Trump counters that he’s a trade genius and his critics need to be patient and stop nipping at this heels. In the end, it will all be worth it.

The way the Republicans will try to handle this in a federal election year is to do a patchwork of triage. The hope is that the patient won’t die and will even be grateful that the people who shot them are willing to put gauze on the wound.

It’s likely to contribute heavily to lost seats in the midterms.

Martin Longman

Martin Longman is the web editor for the Washington Monthly and the main blogger at Booman Tribune.