Driving onto the campus of Stony Brook University recently to attend a global trade conference, I passed the new research center under construction in the college’s technology park. I could see that the building’s foundation was done. Steel beams framed the half-built structure as workers jackhammered away.
At the conference itself, government employees, trade lawyers and consultants talked up the benefits of exporting. The small-business owners in the audience took business cards and brochures, sipped cups of coffee from the urn, and contemplated how they might do a little exporting one of these days.
Leaving the conference, I passed the construction site where steel girders glinted in the noon light. Those beams, if imported, now faced the 25 percent tariff ordered by President Trump in retaliation for what, in language evoking military threat, he called “an assault on our country.” In recent remarks Trump has described America as a nation “ravaged by aggressive foreign trade practices” and positioned himself as protecting workers who had been “betrayed.”
The bellicose talk visibly spooked some of his most conservative supporters, who, for whatever their positions on domestic issues, had consistently opposed protectionism throughout their careers, and reflexively defended keeping markets – foreign and domestic – open.
To provide visuals for a televised tariff-increase signing, the White House collected a bevy of hulking steelworkers with whom POTUS could shake hands and beam with their presumed post-signing appreciation. The steelworkers – and surely the owners of the companies they work for – indeed looked pleased that the president of the United States was raising the prices customers would have to pay to assure their livelihood.
News analysts, reporters, and policy commentators, whose own jobs are decidedly far less secure, immediately raised questions about the prospects of a trade war. Trump, never one to shy away from an argument, asserted the war was “winnable.” He looked like the kid in the schoolyard readying for a fight as friends stood behind him holding rocks.
Politicians who call for using tariffs as trade-war ammunition remind me of the old Woody Allen bit where he describes a fight where he hurt the other’s guy fist with his nose. This is what Trump is doing to us. By raising the price of imported steel by 25 percent, Trump effectively punches the public in our collective noses. We lose our freedom to choose cheaper or better-quality imports. As for the price differential, Washington pockets the change.
While prior presidents have indeed applied economic sanctions, they’ve been aimed at countries with whom relations have been chilly. At my trade conference, Jim Black, a partner with the SilvermanAcampora law firm in Jericho, recalled earlier years when a mention of the “Nasty Nine” nations referred to hostile states like Russia, Iran and Cuba.
“That number is way down now,” Black said shortly before lunch. One reason adversaries become friends is that trade brings nations together; sanctions drive them apart. Another speaker, trade expert Bill Laraque, dismissed the America First rhetoric.
“Trade sanctions aren’t going to make America great,” he said. “They are going to make America mediocre.”
Merely raising the cost of imports, he said, was no answer.
“What about improving the infrastructure? Charging ourselves more for steel is missing the point.”
As his swerve towards protectionism took shape last month, the president replaced his chief economic advisor, Gary Cohn, with TV talking head Larry Kudlow. The ousted Cohn is a free-market advocate. Kudlow, of course, is the well-dressed talking head who plays an economist on TV. He is an unrepentant supply-sider but by no means is he a trade hawk. It seems the president didn’t get that memo.
On March 6, one week before getting Cohn’s old job, Kudlow blogged on kudlow.com under the headline “Tariffs are Taxes,” tariffs and import quotas are what we do to ourselves in times of peace and what foreign nations do to us with blockades… in times of war. But now we are imposing sanctions on our own country by punishing with tariffs in order to make Americans more prosperous.”
In other words, we’re punching their noses with our faces.
“If ever there were a crisis of logic,” declared Kudlow, “this is it.”
Warren Strugatch is a partner with Inflection Point Associates, a consulting firm in Stony Brook. Contact him at Warren@InflectionPointAssoc.com