Economy

Trump Demands Tariffs for Some Reason. Any Reason.

Written by SK Ashby

Trump has talked tough on China since long before he even ran for president, but now that he's sitting in the oval office he's becoming angry because there's not much he can actually do to China.

According to Axios, Trump blew up at his advisers during Chief of Staff John Kelly's first week on the job to demonstrate just how much he wants to punish China for unspecified reasons.

"Bring me some tariffs" Trump reportedly demanded after ignoring his chief economic advisers Peter Navarro and Gary Cohn.

"John, you haven't been in a trade discussion before, so I want to share with you my views. For the last six months, this same group of geniuses comes in here all the time and I tell them, 'Tariffs. I want tariffs.' And what do they do? They bring me IP. I can't put a tariff on IP." (Most in the room understood that the president can, in fact, use tariffs to combat Chinese IP theft.)

"China is laughing at us," Trump added. "Laughing."

Kelly responded: "Yes sir, I understand, you want tariffs."

Gary Cohn, who opposes tariffs and the protectionist trade measures pushed by the Bannonites, had his shoulders slumped and was clearly appalled by the situation.

Staff secretary Rob Porter, who is a key mediator in such meetings, said to the president: "Sir, do you not want to sign this?" He was referring to Trump's memo prodding Lighthizer to investigate China — which may lead to tariffs against Beijing.

Trump replied: "No, I'll sign it, but it's not what I've asked for the last six months." He turned to Kelly: "So, John, I want you to know, this is my view. I want tariffs. And I want someone to bring me some tariffs."

Kelly replied: "Yes sir, understood sir, I have it."

At one point in the meeting, Navarro pulled out a foam board chart. Trump didn't pay attention to it, saying "I don't even know what I'm looking at here."

It's remarkable how reported conversations in the White House transpire almost exactly like I imagine they would.

Anyway, if Trump is so insistent, why haven't we seen tariffs materialize yet?

Well, it's not clear what legal rationale or authority Trump could use to impose them and even if he did they would almost certainly be challenged in court, but not by the Chinese. Major manufacturers and retailers from Wal-Mart to General Motors have already indicated through various media reports that they would immediately file a lawsuit to challenge any tax on imports from China.

And that's what we're talking about here. Imposing tariffs (taxes) on imports from China would not hurt China as much as it would hurt American consumers and companies who rely on imports from China. And it's not as if imposing tariffs would persuade American companies to purchase goods from American producers because, in many cases, American producers don't exist.

Those who can import goods from Canada and Mexico under the North American Free Trade Agreement (NAFTA) already do so but, as you know, Trump is also considering ripping up NAFTA.

I don't think it does anyone good to put this delicately. If Trump got his way and imposed tariffs on imports from China and unilaterally withdrew from NAFTA, we'd be completely fucked. The economy could immediately dive into recession if not something much worse. The price of almost every single thing you buy and use on a daily basis would immediately jump by 20 or 30 percent.

This should not be read as a defense of China. It isn't. We all know intellectual property theft and bootlegs are prolific in China, but this isn't going to solve that problem.

Trump has already handed Chinese bootleggers a big 'win' by withdrawing from the Trans Pacific Partnership (TPP), a trade agreement that would have united most of the Pacific against intellectual property theft.