“I don’t call it protectionism; I call it destructionism.”
Ronald Reagan
“Tariffs are the greatest!”
Donald Trump
Mid-Continent Nail of Poplar Bluff, Missouri doesn’t quite know what hit it. One day there were more orders than it could handle, the next it was laying off 60 workers from a force of 500. By Labor Day it may cease to be a going concern. Welcome to MAGAnomics.
That the POTUS has little idea how tariffs and protectionism affect the economy has been clear since he started down the road toward what may end up being his most damaging legacy, no small feat. The random imposition of duties on both friend and foe, begun with a 25% tax on foreign steel, may drive America’s largest nail producer out of business, and threatens widespread job losses by the end of summer. There is no evidence of any specific plan these unilateral actions support, merely blustering from the President that habitual cheaters, allowed to prosper by all previous administrations, are getting their due and will soon come crawling for relief, ready to fully surrender to the will of our great negotiator.
That can’t come fast enough for the now beleaguered employees of Mid-Continent, whose orders plunged 50% when it adjusted for the higher costs of raw materials. In an ugly irony that is sure to be repeated across the country, the once vibrant jobs creator may have to move to Mexico in order to survive, where it can escape the steel tariffs and produce nails to be shipped back to the US market. For now they have joined the long and ever growing line of companies seeking exemptions from Trump madness. Can you say crony capitalism?
Trump swears trade wars are easy to win. If only US Auto Manufacturers, presumably the primary beneficiary of such a conflict, shared his confidence. Under the umbrella title of the Alliance of Automotive Manufacturers, virtually the entire US Auto as well as cottage industries penned a document that urges the President to “consider” other avenues in working to “ensure free trade”. Urging Trump to consider anything is like trying to get rid of sand in your eye after cutting onions; the effort isn’t just futile, it’s surely going to make things worse.
Free trade has been a GOP brand for decades, the one discussion in which they could proudly stick out their chests and be the adults in the room. Now there is a child in the White House throwing protectionist fits and pandering to a base with an infantile understanding of the subject… crickets are chirping. Nobody, it seems, has any appetite for becoming the subject of a 6AM tweet storm or rally anecdote. In June, Senate Majority Leader Mitch McConnell couldn’t throw up his arms fast enough, declaring it would be futile to pass legislation to check the ridiculous loop hole that allows Trump to cite national security concerns for starting a multi-front trade war. “Why waste time,” said the man behind countless resolutions to terminate Obamacare sent to its creator for signature.
Trump has repeatedly declared that any trade deficit means we’ve been hoodwinked. His punitive actions against Canada were launched in the name of dairy farmers, one of America’s most legislatively coddled collectives. Yet and still, as a rule, US farmers will suffer across the board in any trade war. Soybean producers, heavily dependent on buyers in China, are already suffering from reprisals solely the result of Trump inanity.
But fear not! Today Trump announced he is ready to toss $12 billion around to ease pain in the hustings. Subsidize specific losers of unilateral sanctions he bestows trying to produce specific winners. Nice.
The plan has been received with what has become signature GOP subservience. “Mr. President, of course we’ll take the pork, but please reconsider this thing. Far be it for us to do anything to ruffle your free flowing, and fully natural tresses, but we’re getting killed here. When markets are gone, they are gone. Aren’t we maybe shooting ourselves in the foot… sir!”
Perhaps no lesson the 20th century taught US policy makers was more widely accepted on a bipartisan basis than the conclusion Smoot-Hartley protectionism was disastrous to our economic well being. Everything we have done since the Great Depression has been in line with the maxim that free trade is fundamental to prosperity. Now an unhinged nihilist is aggressively destroying what it took 70 years to meticulously craft, having convinced his base of wretched malcontents that he knows more than all who came before him.
How far will this folly go? Remember Mid-Continent Nail? It is both telling and disturbing that laid off workers, Trump voters all, were willing to give their career destroyer more than the benefit of the doubt, expressing faith the President knew best and would ultimately deliver them to a better fate. They better get in line quick, because like every other group who believed in Trump and lost big, that line is going to do nothing but grow. BC