Yes, Trump’s tarriffs are a manifestation of his Machiavellian understanding of power.
But don’t forget that like everything he does, from sexual assault to locking children in cages, he does it because FOX News propagandizes it.
And when your base believes your lies, you can shoot someone on 5th Avenue.
14
Hold a moment! Are you sure you mean "man"? Sounds far too robust.
2
Why does Trump keep getting away with his shenanigans? Easy answer - FEAR!
Republicans in power fear losing that power so they support him wholeheartedly.
Forever Trumpers fear anything and anyone that remove what little control they think they have over their lives. Trump gives them a semblance of control in a landscape of Oxycotin, climate change (impacting their homes, their jobs and very future),
Fear is what allowed a few thousand Nazi to exterminate 8 million people in the Holocaust and fear is what allowed less than 50% of Americans to vote in Trump.
The question I have for every American who is unhappy with the way things are going in your country, why do you stay home and don't get out en masse and protest??
France is literally at a standstill because the people of that country are mad at Macron for his plans to change the retirement system in that country.
After EVERYTHING Trump has done (and continues to do), why are the majority of Americans so apathetic to the situation??
I, of course, am speaking to the choir on this comment board but I just don't understand why the minor but vocal MAGA sector gets to dictate what the majority of people in the US don't want!
9
The sooner this evil would be king is taken down, the better. What a neurotic, uninformed, narcissist is doing to this country is pathetic. I continue to applaud your ability to call this maniac out. Thanks, Paul.
8
Trump is a “tariff man” because he is manipulating markets to make him & his criminal cronies bloodmoney. In trumpworld, the answer for anything is always the most obvious, what scam can TrumpCo. pull to make Don Donny, Don Corolene Style Cash. This is also the primary reason for his psychotic foreign policy. He spews insanity to tank markets. He pulls it back to boost markets. And Trumpworld profits. This is what his entire presidency is about. Wake up people.
11
Trump's trade wars, like his tax cut, have had the reverse effects from what he intended. Our trade deficit has gone up & US manufacturing has gone down. He continues with these trade wars because they are one way he can do as he pleases & reward friends while punishing enemies...ya know...dictator stuff.
2
Oh, the suspense! After that laughfest in London can Canadians expect to be hit with tariffs because we're a national security threat (been there done that) or do we get labeled as an unfair foreign government? I'm sure we won't have long to wait for a deciscion.
2
There is another reason. Can you guess what it is? Here's a hint. I should be writing this comment in Russian.
4
Is there a way that a headphone tuned to Krugman's messages can be glued to Trump's head so that some wisdom can penetrate into Trump's dense brain?
1
Arguably the biggest shakedown artist in American history. The Democrats have only themselves to thank for this fiasco. They're the ones who decided to put all their chips on the asylum issue.
"Sanctuary states look the other way. Shouldn't you?"
1
You write “... white guys in diners — who are, we all know, the only Americans who matter — these voters are driven more by...”
Sarcasm is not attractive or clever, whether it comes out of Trump’s mouth or yours.
It is especially toxic in the New York Times, which needs to maintain its credibility. Please speak clearly and truthfully.
Not all of your readers are as clever as you think yourself to be. And for those who are more clever, lines like this are puerile.
1
There is NOTHING this guy does every day that is above board or for the benefit of the American people. NOTHING. Hey senators, do your duty and follow your oaths of office and rid us of this parasite. Otherwise, please voters, get rid of them.
6
Ignorance can be fixed,stupid is forever. To borrow a phrase from "Bull Durham", trump has a five cent head in a millionaire's game. This is the first president in my lifetime who is dumber than the people who elected him.
4
The man is a Moron, corrupt,vain, ungodly, bully and half of Americans love him because he hates the other half. Divide and conquer works against enemies and countrymen.
5
The answer to your question is simple:
Because he is an incompetent, ignorant fool who has no understand of international relations and world finance, unless it has something to do with Russia.
3
I aint no high priced, nobel prize winnin', Econ-no-mist....but I do know one thing.
Years ago....when USA had high tariffs on China......we had us sum industry.
Then we made China "most favored nation", dropped tariffs, and abandonned NAFTA, creating a giant collapse of Mexico's economy and an immigration problem.
NOt to mention the complete collapse of US industry.
...
Now we are raising tariffs on China...and lo and behold.....US industry is making a comeback.
...
Please explain Perfesser.
Trump is weak. A weak person needs things that make him appear strong. Tariffs do that. It makes it look as if big tough Donald did something bad to the French or Canadians or whoever else made him look stupid and feeble and weak. For Trump, covering up weakness and insecurity is at least as important as greed.
4
Is it time for Krugman and the NYT to cry uncle?
Today would be a pretty good day to do it.
and yet - as much as I love to read Paul Krugman over my breakfast coffee, it's like music to my ears ... I can't help thinking any reference to his opinions by Trump supporters would start with Fake News, and bad NYC Liberals out to stop Trump solving the world's problems.
('If only Hitler knew these terrible Brownshirts were bashing up people in the street, he'd fix it !' ... unwilling to believe he was ordering it)
Houston to Base: Who pays the tariffs that the Dotard imposes on foreign goods?
Base to Houston: The company importing the goods. Isn't it obvious, you dummy!
Houston to Base: Think again. It's the U.S. consumers, like you and me. Higher tariffs mean higher prices. You think companies are going to reduce their profits by absorbing the costs of the tariffs? Get real!!
Base to Houston: But ... but ... but .... Donnie never told us this! That tariffs were going to lead to higher prices.
Houston to Base: The perfect Con Man. You don't even know that you have been snookered!
5
"U.S. trade law offers Trump more freedom of action — more ability to do whatever he wants — than any other policy area."
Bulls-eye! The narcissist in chief enjoys throwing rocks in the water just to watch the ripples through his own celebrating reflection. That's what it's all about. That's what everything Trump is about. He's got a disease, remember?
4
It boils down to this: tariffs are a spiked club. tiny t is a caveman at heart (where a heart can be discerned - his figurative heart is a vestige long ago fossilized and replaced with cheap stone) who feels most virile when swinging wildly, a beserker looking for a fight.
2
Because he's a moron who thinks tariffs generate revenue.
1
As the comments reflect, Trump's actions more than hint at SEC issues. How many insiders get word, in advance, about Trump's tweets about tariffs? Maybe the only folks who get the advance word are those managing Trump's securities portfolio. (Maybe he also passes tips to his kids.). Not all of this can be happening via unrecorded winks and nods.
Hard to see how Trump's market manipulation directly affects his equity stakes in his golf resorts. But, his tweets certainly keep his name prominent in support of his name-licensing deals.
For Trump, it is "all about the brand, baby." He still cannot believe that he got elected and he's been able to get away with so much, so far. His minions in government probably think the same.
Meanwhile the warped G.O.P. and radical right are loving their increased power to, among other things, appoint judges, impose religion through government (1st Amendment be damned in the process), and deregulate.
But the worst about Trump is that he exemplifies and supports the most selfish and meanest in too many Americans. It is as if the Trumpists are not satisfied about how difficult our society can be. They seem hell-bent on making it harder.
3
Tariffs don't just give Trump the power he craves. They are also an indication that Trump is a one-tool person. Tariffs are that tool. There's an old saying that if your only tool is a hammer, then every problem is a nail. Tariffs are Trump's hammer.
3
Thanks PK for another insightful column. You put this one over the top when you brought up the "white guys in diners!" Who thought that up anyway? Thanks again Mr. Krugman.
3
Trump's "policies" clearly are -- and will continue to -- cause pain. My fear is that Trump and the right-wing-conspiracy-mongering eco-system will simply redirect that pain and anger toward immigrants and those always-waiting-around-the-corner-to-get-you Radical Left Democrats.
This is a phenomenon one historian has dubbed "sado-populism." You gain political momentum by hurting your own base and channeling the pain.
Unfortunately, he and his comrades in Russia only have to fool a few thousand people in a few swing states to pull this off.
1
Why is Trump a tariff man?
The man is simple-minded... in every arena.
And he's a one-trick pony.
2
I believe the aid package to farmers is now $28 billion. $28 billion!! That’s more than the auto industry bailout.
3
Another on target, Dr. Krugman! Could you get another article out tonight, despite the despair from all of this, you bring hope!
1
Trump has exposed the folly of granting the executive branch too much unilateral power.
Its too dependent on having an adult in the WH.
Say what you wish...as a piece in the NYT a few months back said...the U.S. needs to 'decouple its economy from China's'. Tariffs help accomplish this goal...
We need to decouple because China foremost is not worthy of the world stage (esp. Uighur concentration camps, technology and business/industrial rip-offs, stealing 23 million Federal government and contractor employee OPM records and other incredible cyber espionage, militarization of the S. China Sea, disappearance of its own people, etc...). It's a rouge nation run by a Communist mafia just like the USSR.
Decouple to slowdown China's massive effect on climate change - their factories are now not spewing out as much pollution that is changing the climate in the US and the world. According to PBS's Miles O'Brien, China generates 66% of their electricity by coal-fired plants. BTW, their coal industry is a major economic sector and is not going anywhere anytime soon contrary to their state propaganda...
Go here for China's pollution in Calif - https://www.nytimes.com/2014/01/21/world/asia/china-also-exports-pollution-to-western-us-study-finds.html
You will also note that most articles and reports are from 2014. Is the US big media too timid to let us know that China, and US consumption of its overly cheap goods, drives climate change in 2019? What would the markets do then for crying out loud?
"Tariffs let him exercise unconstrained power, rewarding his friends and punishing his enemies."
Any area where Trump's freedom of action is unconstrained is an area where we will see horrible abuse. He grants pardons to war criminals and gives the Medal of Freedom to the likes of Ed Meese. He does so because he can and he knows he will outrage his "enemies." Oh, and I'm sure he thinks the Geneva Conventions, not torturing enemies, and international law in general are all for sissies. And we all know what a manly-man Donald Trump is!
Let us not forget that Trump NEVER changes his views on anything!
He took out a full page ad calling for the Central Park 5 to be executed, and, even when they were fully exonerated, and the real attacker confessed and his DNA matched what was on the victim, Trump persists TO THIS DAY in believing they are guilty and should be executed.
After Trump was teased by Obama at the White House Correspondents' Dinner (where everyone is teased) he latched on to Orly Taitz and her crackpot conspiracy invention that Barack Obama wasn't REALLY born in Hawaii, but rather in Kenya, and isn't an American citizen. Trump believes it to this day, and has spend every day of the last 3 years determined to undo everything Obama did, as if to erase his Presidency from existence (shades of his boss, Putin).
So it's no surprise that his head would explode before he will admit that his tariffs are a total failure, achieving exactly the OPPOSITE of what he claimed (as did his tax cut).
And, of course, exceptions are the perfect vehicle for further graft and bribes.
Somewhere in Trump's hidden tax files we'll probably find some answers. He's all about his money and the good of our country is not his motivator. He's in a position to abuse the office of President to further enrich himself and his rich friends. This has a side effect for him as well. His rich cronies will thank him & praise him (maybe only in private). But there are the two things that run his life - praise & money.
Why is Trump worse than Bush II? Bush II started two endless wars. Bush II trashed the world economy and sent the U.S. into a decade of deep recession.
The only major thing Trump did was in his first few days - the massive Republican tax give away to America's wealthy - AGAIN.
Trump is worse only because of his transparency. This secretive liar is unabashedly blaring Republican mindset to all Americans. Those who have a brain should pay attention like they never have before. I have been preaching anti-Republicanism for decades. It has fallen on deaf ears even among Democrats.
Christians, now, are the enemy of life on earth. How far do you want to let them go?
There are just two kinds of Republican - rich ones and dumb ones. It is the dumb ones, however, that give them their political power. Tremendous forces are and have been at work in America to manipulate the American mind set. These messages have come from all quarters with a financial interest broadcasting spin to various levels of lies 24/7 for decades.
The best lies have some truth and Trumps lies reveal a great deal of fundamental truth. We are awash in false news.
It's all about what Trump is hiding from the American people in his tax returns and business accounting financial records.
China if you are listening can we see them? Iran? Cuba? North Korea?
2
For the narcissistic Donald, tariffs are only toys in the hands of a child money prevented to grow as an adult.
Dead on, Mr. Krugman. Zero-sum is the only game the loser in chief can play.
"...while overall growth has been solid, the areas of weakness have come precisely in those things Trump tried to stimulate." Well, no surprise there. His ignorance and ineptitude, his categorical dismissal of any expertise and his narcissism combine to give him the Anti-Midas touch. Everything he touches turns to garbage. All his life. Everything.
1
It's all psychological pathology with Trump.
He is a tariff man for the same reason some firefighters are pyromaniacs. Full stop.
He never paid an invoice in full.
1
What is being described by Mr. Krugman sounds like some New York politics that would have been portrayed in movies.
Oh forgot. Trump is from New York. But man, what a rotten actor and his script writer must be an eleven year old.
Trump has convinced the magats that he understands markets. The are too dense to see the truth.
Please debate Andrew Yang on the 4th industrial revolution... from a non-economist (but numerate) perspective. Yang’s math adds up. Don’t be another out of touch columnists, like T. Friedman. Debate Yang or retire and give up your column.
Somebody let Donnie loose in the control room and he found out he could push any button he wants, "Gee, what does this button do?" Zap, another tariff. What a marvelous way to run a trade policy. We would be better off to park a new eighteen wheeler in the White House driveway so every once and awhile little Donnie can sit in the cab and go, "Zoom, Zoom!!" or blow the horn.
Just wait until North Korea launches some rockets on Hawaii or Seattle right before Christmas. Trump will be a rocket man then too!
Want to profit from Trump's misguided economic policies? Buy stock in companies with big buy-back plans and large dividend yields. All the money from Trump's bonkers tax cut goes straight through the companies and on to investors. Apple, for one, is like a hose spraying tax-cut money.
Next, take some of that money and give it to Democrats. You'll make even more when one of them wins and Trump's trade war ends. The S&P will rocket.
Then go out to dinner and toast the end of this idiocy.
It's not so complicated and not so psychological. Trump uses the freedom he has in setting tariffs to manipulate the market. He tips off his posse, gins up his trade war, then he, his crooked family, cutout cronies and Republican co-conspirators short the market on the way down; buying depleted assets at bargain prices. Then he announces a phony tentative agreement, or some sort of nebulous "progress"; and voila! The markets shoot up, the gang all makes a fortune. Rinse, repeat, rinse repeat. It should be an Article of Impeachment but its too covert and arcane to investigate. I'm sure all the big Republicans - Graham, McConnell, McCarthy - are all in on it. That's one reason for their rock solid support of a self admitted traitor. As for the Americans affected by it, who cares? They're the little people, the fools, bigots and Fox addled suckers who vote Republicanwhile the GOP takes their health care, throws them off food stamps, pollutes their air and water, calls them "takers" and laughs at them behind their backs.
1
First, I wouldn't call Trump a man. He is a seventy year old child - a stunted human being. I agree that the power element is part of it, but I believe that there is also a pathological desire on the part of some of his more delusional, but influential cronies - S. Miller, for example - to create a financially disastrous situation such as existed in Germany before Hitler took power, in order to consolidate the dictator's (Trump's) power, by taking advantage of the chaos while "saving" the country. The depth of the craziness in the many conspiracy theories/irrational policy notions harbored by this administration and advisors is obviously extreme. That this is not understood by millions of voters is incredibly dangerous.
Trump is a bully. Using tariffs, he threatens and intimidates. To him that is how America should negotiate and treat the rest of the world. He thinks he is Making America Great Again. His base would agree. His base is ignorant, and doesn't know or care that the higher costs of tariffs are paid by Americans, including Trump groupies. But why would Trump appeal to anybody who isn't ignorant? After all he's an ignoramus, who, as George Will put it, doesn't know what it is to know anything. Whether it's a devastated State Department or a diminished NATO or chaotic trade policy or caged immigrant children or massive graft in the Administration or massive damage to environmental quality, the Trump presidency will leave a legacy of harm to America's institutions, quality of life, and standing in the world.
Trump learned that the heart and soul of the American TV watcher was fully taken in waiting for the "Your FIRED" pronouncement. "100% Tariff on French Wine!" is this reality TV show's latest big moment. Its the clear simplicity of a Tariff that makes it Trumpian. Tweet it, it's done. And it is anti-elitist in its directness and brutality. Moreover, its effects are also direct, reminiscent of the exit interviews of contestants who lose. China 'strikes back', Brazilian steel will tremble with rage are the equivalent. The rest? False news!
4
His campaign promise was, "I alone can fix it," and he meant that about everything. He needs to make spectacular displays of power to show it. He needs vocal opposition he can attack for Fox and his base. He needs constant fighting. Not many people understand what his tariffs are, why they fail, who they fail, and where they hit hard. Meaning that he can disinform a tariffs the way he disinforms about everything else. It's all or nothing: a complete cult of personality or complete downfall and disgrace. Which makes it hard to explain why the Democrats don't have an army of people right now in and among the tariff victims, taking direct testimonies about the damage being done by Trump to the very people who support him.
5
"Tariff" is the big red button he pushes often to momentarily redirect attention. He will not settle tariffs with China until after next November. Why would he? Tariffs have been much too valuable a campaigning tool the last 4 years.
3
The tariffs also allow him to manipulate the stock market. the Donnie lets his cronies know before he imposes a tariff so they can sell quickly then buy again when the market dives. it's just a game they like to play.
4
It seems so shortsighted that our Wall Street led economy exported manufacturing, investment wealth, and our know-how to other nations over many decades. We would have been richer had all those businesses and money remained here making us a big exporter instead of now being an importer. We would have been even richer. It makes Cents to keep Dollars here.
1
Trump is a tariff man because he is not in a business that cares about tariffs and he's not a well informed person about economics and international relations. He thinks of tariffs as a form of intimidation which he thinks will force governments to comply with demands in a negotiation setting. He just does not understand how tariffs actually work and how people have responded to them historically. He skims information from the mass media but he never bothers to study subjects in depth.
4
The more I think about this the more I realize how much of Trump's failure as a businessman is due to his lack of understanding how to treat people. He fails, on a fundamental level, to understand how to get the best out of others without antagonizing or alienating them. He and the GOP are a very good fit. All they care about is the money.
5
Largely, the problem with Trump is that he, rather than his policies, controls the narrative. Mainly, the country is not embroiled in a debate of what he actually does and has done. He has, one hates to say it, "shrewdly" taken the focus off his actual governing, and put it on outrageous tweets, conflicts within our two sides of the political spectrum, and individuals who should never be the target of crossfire by a president. This is obviously intentional.
By doing this, very little has been centered on what he does, what he has done, and whether it is good or bad policy. The press feels obligated to cover the "outrageousness" because, after all, it is the president speaking. Weak coverage exists in terms of actual debate of the issues.
3
Or he wants to cause international upheaval, which would benefit Putin. All roads lead to Putin.
3
It may be useful to ask the question, "How does Russia benefit" when faced with many puzzling actions of DT.
3
As poorly as Trump is doing with trade and labor the Democrats are against whatever he does. He has created a perception he is doing something for working people where as the Democrats say everything was fine the way it was. Is there an alternative?
If four more years of Trump won't change the Democrats nothing will but it will be fun to watch.
1
Paul, you almost mentioned it when you said " U.S. trade law offers Trump more freedom of action — more ability to do whatever he wants — than any other policy area." Trump needs a constant stream of news about his 'initiatives' to keep trumpists believing he is acting and achieving things. When I ask trumpist friends what exactly he has done, they come up short of answers. but the stream of tweets give them the impression he is acting.
1
Even though the manufacturing sector is shrinking and farmers are on the verge of bankruptcy, the stock market is surging and unemployment is the lowest is decades. Obviously Trump while claiming to be helping factory workers and farmers is actually helping multi-national corporations the most. Who knew Trump was a closet globalist?
Trump is not really a tariff man. He is a negotiator, and a good one. He is using his power to threaten and impose tariff's to get the American people better (fairer) deals. He has succeeded in doing so, more so than any predecessor of his in recent memory. He should get more credit for it, but sadly all people do, including Mr. Krugman, is complain.
2
@Bill
If your only source of information is the Trump administration and his resident advisors at Fox News, I suppose I can understand why your conclusions are so out of conformance with the news. Trump is in a trade war and he cannot close the deals, so far. Every time he reaches an impasse, he responds by threatening more tariffs, and it has not worked, so far. So what was supposed to be a transient blimp in costs while better trade relations were achieved has turned into a protracted trade war.
3
Tariffs get other countries' attention. So, they do work. We as citizens may pay them--Navarro hasn't figured that out yet--but they do drive the trade action where we want it.
1
"the areas of weakness have come precisely in those things Trump tried to stimulate"
So whatever Trump takes on ends in a botched job...why is this not surprising? But he can hire people that are more effective than him to carry out his malevolent designs.
As much as I hope otherwise I believe that once impeachment fails in the Senate and Trump gets re-elected, we...meaning the American people...will finally get to see and feel what unchecked far-right rule means. Apparently, reading the experiences of other countries that have endured far-right rule just isn't enough to stimulate the imagination. It may end up being a brutal lesson that will usher in a few more decades of sanity once it's over...but at what cost? Conservatives should wake up and realize that unless they are well-off, white, and Christian, without any of their genome 'tainted' with ancestors of other color or religion, they could be among the down-trodden sufferers. That actually doesn't leave many people safe from exploitation, abuse, or being 'put-away.'
The human race will achieve the next stage of development when we find it sufficient to have only one horrific experience of a given type...
3
Sheer stupidity.
2
It's pretty simple. Trump is a tariff man because it makes him the center of attention. And 99% of his followers, like the president, know next to nothing about trade.
3
How does a New York real estate developer and reality TV star benefit one iota from tariffs?
The only people who benefit are the future generations of Americans who won’t grow up under the thumb of Communist China and the residents of Hong Kong who won’t be crushed under PLA tanks by a Beijing without fear of Western reprisal.
3
@Greg: The US is responsible for its own manufacturing demise. Between the erratic and evasive courts, the uneven laws of states, enormous health care overheads, guns, the out of date SAE measurement system, and poor schools, companies have just walked away from it all.
7
@Steve Bolger
You’re can-do patriotism is truly inspiring. It’s why everybody loves New Yorkers.
2
@Greg:You know why you in Hotlanta, and points elsewhere feel the way you do about New Yorkers, because they know more about Trump than you do; they've had to endure Trump far longer than the rest of the country.
Knowlege is power.
1
Trump has conflicted interests in everything he does, and considers conflicts of interest of no interest at all if done by people who further his interests.
It really is amazing to watch the so called land of the free and home of the brave lap up Trump's sadism.
9
With all the rise and shrinking of tariffs stock markets responded.
The one causing these mores, obviously knows hoe they move in advance.
Did anybody think of high volume trade as response to the unpredictable mores of this president, and followed the money with this aspect in mind?
2
The "Executive branch was given the power to impose temporary tariffs under threats to national security..." The problem of course is that as a Russian asset, the "threats to national security" all come from Donald Trump.
7
Thank you Mr. Krugman for a rationale explanation of why our president loves tariffs. The tariffs don't do any good for the economy but they give President Trump a way to reward friends and punish enemies with little congressional oversight.
7
The big question is this: Has the world trade been fair to the US?
China solely proves that the answer is NO. No to especially manufacturing workers in the US, not the rich people who can earn money from dealings with China while sacrificing poor workers in this country.
Fixing trade problems is the first step to normalize and revitalize American manufacturing industries. Trump's action is very direct and simple based on this understanding. What else tool or arm, do you think, are more effective than tariffs?
2
Free trade is not a level playing field for it advantages lower wage, lower taxing and lesser regulated countries hence China becoming the free trade Taliban.
Whereas, a tariff is a customs duty on merchandise goods and gives a price advantage to locally produced goods over similarly imported goods, raises revenue for government and protects local jobs which is exactly what any government should want.
Your President is President of the USA not the world and he is arguably acting in what he believes to be the long term benefit of Americans not the short term benefit of Wall street.
1
Another reason Trump and Republicans in Congress like tariffs: The tariffs bring in dollars to the U.S. Treasury lost to their tax cut. Never mind that we all pay for the tariffs, not other countries as Trump has falsely claimed. Never mind that the tariffs hurt our and the world economy.
2
It's all about the corruption... and cruelty.
5
'Why Is Trump a Tariff Man?'
Because his advisors told him walrus was already taken.
3
The financial titans, those all knowing masters of the universe who shift hundreds of billions of dollars based on Trump's trade utterances, have obviously never heard the story of "The Boy Who Cried Wolf" or the old adage, 'fool me once, shame on you, fool me twice, shame on me'.
Trading billions based on the babble of a known liar. That's capitalism, American style.
These are the people you are entrusting with your retirement funds. Sleep peacefully.
5
Tariff Man Trump, the con man fake billionaire, is a market manipulator. He is the ultimate insider trader dispensing tips to friends and family ahead of his tweets that move the markets up and down. He is doing this in plain sight, not behind closed doors. Meanwhile, the rest of us are played for suckers while he violates securities law claiming to be immune due to some twisted view of Article 2 of the Constitution. The constant talk of trade deals, then no trade deal, then trade deal, then no trade deal is such a blatant case of market manipulation that it is laughable.
8
I wish that Paul Krugman, a Nobel Prize winning economist, would write more on economics, or, in reality, political economy, and less on partisan politics. He loses credibility with respect to international economics, in which he is brilliant and accessible, when he sounds like a shill for progressives.
3
@lhc: What is "political economy"? Alteration of reality by force of will?
1
Yet more evidence of the true nature of Mr. Trump. The Mueller report and all the testimony provided more recently has made the case very clear. As Michelle Goldberg states (NYTimes, 5Dec2019), Mr. Trump is "the most corrupt and disloyal president in American history ... "
4
Trump says Peter Navarro is his "bad cop" on trade and all things economic. Is there "good cop" I missed?
31
@Rick: Trump is a classic extortionist who expects to be paid to leave the victim(s) alone.
5
"Trump’s tariff justifications have often been self-evidently absurd — seriously, who imagines that imports of Canadian steel threaten U.S. national security?" In addition to being absurd it's an insult to our great neighbor to the north. Dotard Don, explained his stab in the back of the Kurd's away by saying they weren't on the beaches at Normandy w/ us. Well, the Canadians were w/ us on Dday, but DD probably doesn't know that.
4
Mr Krugman,
Am I naive to think Donald Trump will eventually confront his dark side and stop imposing reckless tariffs? What are the chances he frees himself of his internal struggles by writing the things that trouble him in a journal? Will Donald Trump ever be capable at laughing at himself or begin to meditate with a focus on self-compassion and acceptance of his own humanness instead of meditating upon the bad luck of being born without concern for the harm he may cause others & himself? Does Donald Trump think of his good qualities and accept the possibility that he may have many bad qualities too? and be okay with it? Will Donald Trump ever realize that his shadow side is a reflection of his power, his honesty, and passion? Or will he ever feel safe enough to open up to someone he trust, possibly a therapist? Will it be a little over the top like Jimmy Swaggart's confession on February 22, 1988? Or like "The Irishman", Frank Sheeran?
@José Franco: Trump believes that admitting any mistake at this point would crumble the credibility of everything he has ever claimed.
The power the tweeter-in-chief feels when he executes his disastrous trade policies is what he's about. The feeling of power is his basic reason for living. Or, as you state, unrestrained power over others, rewarding his friends and punishing his (many) enemies is correct. He is like a cat burglar in the night trying to steal our democracy from us. Will Congress ever get rid of the outdated electoral college that put him into office?
3
I doubt Professor Krugman thinks this may be the best opinion he's ever written, but I sure do.
2
We needed inflation. Dont you see? Just think how great tariffs would have been for US geopolitical power, and for creating inflation had they been targetted intelligently rather than used like a demented petulant childs foot stamping?
Trump is merely doing his honest best to destroy the US economy so that he can get the promised Trump hotel in Moscow that Putin has promised him if he does it.
2
Exactly right. Trump has very deftly identified key powers that we have left to the discretion of the president under the assumption that they would be wielded responsibly. And he has immediately figured out that they can be exploited for similar leverage to reward friends and punish enemies and critics. Other examples are presidential pardons, foreign aid, and granting/denial of press credentials. And he is certainly also becoming adept at using Justice Department investigations similarly now with an ally in Bill Barr.
2
Certainly here in Oregon, the Trump's tariffs are far along on the road of putting many farmers and ranchers completely out of business, but they continue to support him.
Such support may originally be due, as Krugman suggests, to Trump-stoked fear of immigrants and liberals. But why that continues to work remains unexplained.
4
@Jim Remington: Trump makes death a better place for them by placating God's wrath at women choosing how to manage or terminate their own pregnancies.
Very interesting and thoughtful.
I wish you had addressed Trump's apparent belief tariffs laid on another country's goods, say China or Canada, are paid by the target country, when really, they are paid out of American importers' pockets and ultimately, American consumers' pockets.
2
@Peter Haney: Trump figures he socks it to China by undermining the value of its currency.
Presidential control of trade policy has worked well for decades. But as Dr. Krugman points out, it is vulnerable to presidents like Trump. (This is only one of the numerous duties congress has ceded over to the president. War-making powers is another.)
So why haven't we encountered a Trump-like president until now? Because until just recently in our history, political candidates were screened by the Party higher-ups to make sure they weren't too Trump-like. This worked well for centuries, but the public perception of back-room deals and old codgers in smoke-filled rooms screening candidates became too much for the public to bear. The public preferred to screen their own candidates through the primary system, and voila - we get Trump.
Turns out the old codgers knew what they were doing!
2
Mr. Krugman,
"Almost exactly one year has passed since Donald Trump declared, “I am a Tariff Man.” Uncharacteristically, he was telling the truth."
Not quite. Because, as true as the statement is, there's also the big lie that the other country is going to pay for those tariffs.
And then, after telling a truth candy-coated with a lie, 45 resorted to socialism (gasp!) when he subsidized the soybean farmers for the financial disaster he caused.
101
@Mark R. Actually it is well recognized that American citizens pay for those tariffs since businesses pass the tariff costs they incur (e.g. for parts, raw materials and the like) down their consumers in the form of higher prices for the finished goods. It is like a backdoor way of taxing Americans. Tariffs are taxes essentially. tRump doesn’t understand this or doesn’t care if he does.
17
@Mark R. "the big lie that the other country is going to pay for those tariffs." You are so right and Paul should have highlighted this. However, subsidies are not really socialism, this is where the government is both the payer and provider of goods and services. So Medicare or Medicare for All is single payer but provider of health care. Britain has true socialized medicine.
3
@Mark R.
Socialism is when the government, in the name of all citizens, takes over all forms of commerce...there is no private ownership. Everything is owned by "the State", which is run to benefit all of "the people" equally. Another pipe dream like "democracy", "freedom and liberty", "the Rule of Law" and "equal rights for all"...
3
I have learned over the years that peopel afflicted with one or more burdens to their mental well being are when not debilitated by them frequently "type a". That is to say they are active always doing something physical or mental that changes how they feel while also seeming to give them control over what they feel.
Donny is obviously very insecure. All of the type a things he does are related to making himself feel like he has control over things he has no understanding of that scare him.
And that is the best spin on the idea. I left out his obvious moral failings and tendency to avarice and cruelty. The last also being a sign of his deep seated insecurity.
1
"As best as I can tell from the endless series of interviews with white guys in diners — who are, we all know, the only Americans who matter — these voters are driven more by animosity toward immigrants and the sense that snooty liberals look down on them than by trade policy." I totally agree with your conclusions about Trump, but your language shows both that you understand that Trump voters are motivated by disrespect from coastal elites, and validates that feeling - not very effective.
1
Honestly, I prefer Trojan Man to Tariff Man. Gives new meaning to the term "protectionism".
1
Unfortunately, Krugman is spot on.
1
Our national economy is strong. We are becoming less dependent on communist China (an increasingly hostile power). Why should American voters care two figs about the global economy?
Also, the big farms made a big bet on selling soybeans to China that paid off for many years. Now, not so much. Too bad. I sympathize with them about as much as I sympathize with the Wall Street Bankers who bet big on housing before 2008- very little.
1
@Greg You may not sympathize with them, but you are subsidizing them. It is projected that farm subsidy payments from the federal government will constitute 40% of farm income for 2019.
3
Hardly a day goes by without my reading a defense of Trump which fails the following test: Would he say the same thing if Obama had done it?
1
@Tom McVeigh
Absolutely would have. But Obama sold America out to China just as eagerly as Clinton and Bush. It’s the number one reason I voted for Trump and will vote for him again.
2
Trump is clearly fixated on tariffs precisely because "U.S. trade law offers more freedom of action - more ability to do whatever he wants..." That's really a "prized privilege" for a normal, level-headed president. The problem is that Trump yearns and lives for power, privilege, and control. Trump demonstrates on a daily basis, that he rejects any notion of "Congressional Oversight" regarding the Office of the President. He operates the Office of the President as if it were his own business, prevents the appointed US Dept. leadership to testify before Congressional oversight committees... and his appointed Attorney General does everything he can to facilitate Trump's "overreach". When will this daily charade end?
3
Mr Krugman,
You don’t get it, I though you would when you mentioned the white guys in a diner.
It’s simple, manufacturing is gone from the US, period. The white guys, along with the president of his generation cannot accept that.
The simple reason he put tariffs on is that it is the simplest way to make him look good to that group of Americans who don’t want to face reality. There is no remedy to crest new manufacturing jobs. Place a tariff and the answer will come back ‘at least he’s doing something for us’
It’s that simple.
2
Like Professor Krugman, I’ve given up counting how many times markets have rallied in the belief that Trump was winding down his trade war, only to find that their optimism was unfounded and an agreement is even more unlikely. What perplexes me is not why Trump persists — Krugman’s explanation is as good and any of the others, which is to say probably wrong, because most likely Trump has no explanation for persisting — but rather why the markets keep playing along. Like Charlie Brown and the football, they keep setting themselves up for failure. These are the guys who are supposed to be smart, right? At least that’s what they tell us when they appear on business and investing shows, touting their products. But if I were that wrong about a very predictable outcome, I’d find another line of work.
2
Republicans should be expected to have reined in Trump long ago, since they are very pro-business and pro-trade. But since Reagan they have been locked into speculative theories about macro-economic policies which empirical evidence just does not support.
It all starts with economists who try to become rich by being advocates for policies that advantage business, using by representing hypotheses as proven laws. The idea that having an investor class that has excessive capital uncommitted will seek out new opportunities that are high risk because they are new because they are brave and smart was never based upon any facts. The psychology of people is to try to avoid loss and to prefer quick gains, and they also impose their egos upon their decision making. So when economies are slow or not steadily growing, investors avoid investing in anything risky. When they are losing, sometimes they minimize their losses and sometimes they shoot for the moon. When someone has one over a barrel, people will accept greater losses or forego smaller gains out of ego. No matter how good an idea seems, until it is applied nobody knows what will happen. Tax cuts don't produce surges in economic expansion, they produce deficits, but all tax cuts are welcome by tax payers. Supply being perturbed will automatically affect demand, because of economists who tried to apply the gas laws to economics, not because of conclusions based upon empirical evidence. All macro-economic hypotheses not proven.
@Casual Observer
The only thing they are “pro” is concentration of wealth and powerful on behalf of the wealthy and powerful. Business & trade was one way of doing that - they especially loved the exporting of jobs overseas as it broke the backs of American labor.
This doesn’t end with Trump, it ends with Bernie.
1
Another example of how all the Congressmen and women and Senators complaining about Presidents of both parties abusing their discretion to seize power from ther Congress , have no one to blame but themselves. ,And it is an issue where that indeed do have the power to correct the situation any day they choose. But they have long ago discovered that doing their job and actually making decisions causes them much more political grief and votes than simply passing that power to the President and/or the courts and then complaining about how it is being used.
A bunch of craven cowards whose greatest fear is losing and election and having to get a real job and actually work for a living like the rest of us.
1
@Jack Robinson You are exactly right. I want to add one more thing to your argument about Congressman. In addition to being worried about loosing in an election, they also want to pave their way for the more lucrative jobs as lobbyists when the Congress gig ends. That means, don't rock the boat.
1
"After all, the results of his trade war have been consistently bad, both economically and politically."
Really? What numbers are you looking at? That said, every time we are close to a deal, the Chinese renege on it. This is not Trump's fault. He staying strong, something his predecessor did do probably because he didn't even try to confront the Chinese. The Chinese are hurting and they will eventually make a a deal. Indeed, a deal will come, to be sure, and it will be one that benefits our country. I suggest, given your absurd criticisms over the Trump years, you stay in your Ivory Tower and leave the deal making to the pros.
1
I sometimes wonder how many market timers are making money on Trump's tweets and their impact on stock prices. Third party "insiders"?
1
Dr. Krugman,
Thank you for your clear and insightful piece.
I agree. Tariffs are just a way for Trump to practice pure corruption, at the expense of the American people.
I would add, though, that tariffs are a way of making him look superficially strong in the eyes of his low-information supporters.
8
Does anyone know if the products manufactured in China under his label have become subject to tariffs?
2
In this case I believe there is a simpler explanation to Trump’s use of trade sanctions. It has to do with his belief that trade wars have good propaganda value with one critical segment of his support base: white working classes, particularly in swing states. He thinks it plays well and for that reason, no one shall think for one minute that Trump will strike soon a grand bargain with China. Even if he does, expect him to re-open the case and re-start the war before election day.
In conclusion, tariffs provide the means to corrupt markets, and to reward both financial and political support for Trump. Trump does not give a hoot about jobs or benefits for workers, nor does he care about the productivity and profits of individual corporations and industries. What he cares about is money flowing into his own bank account, and tariffs are the most expeditious way to directly influence his power and revenue stream. With Trump, it’s always about the money.
5
A clear lesson to members of Congress of both parties.
Get rid of most or all of this presidential discretion with respect to tariffs.
135
@Howard You are right sir . Congress allowed the president to usurp its authority to "lay and collect tariffs " as stated in the constitution . This temporary power was to only be used in cases where national security was endangered . Congress should reassert its Constitutional authority .
26
I live in farm country among farmers who have seen the soybean market rise and fall so many times with Trump bloviating about trade deals that people are revisiting the story about the boy who cried "wolf."
177
@LewisPG
But, are they still going to vote for Trump, despite all the facts in front of their eyes?
26
@John , not all farmers vote for Trump, and not all appreciate being long-time progressives who are repeatedly accused of it. We can discuss economic matters, politics, etc. without hastening to condemn swaths of people through insisting on stereotyping them.
14
@LewisPG: Trump's fundraising is probably powered by access to advance notice of his disruptive moves.
9
Trump believes every country must trade with United States of America. Other countries have not looked around at population they count for 7billion of 7.3 billion people. Rest of countries start trading more among themselves, moment they do not need USA and forget about USA.
1
I think trump has little knowledge of markets and economics, an inability to hire, retain, and listen to suggestions from advisors, and no imagination. Those are in addition to his myriad of well known inadequacies.
In other words, tariffs are easy to deploy. His failure to grasp that the money comes from importers- not target countries- forces him to think the “billions rolling in” are good rather than the fact that they reduce domestic spending power.
It’s cutting off your own nose to spite the target’s face. That will never do anything but cause pain.
2
I wonder how much money can be made by peoples near President Trump can make by getting a hint of when he will tweet about bad news on negotiation situation with China. This is a recurring theme.
1
I am curious, Trump had a press conference several months ago with Chinese in the Oval Office and said China was going to buy 50 billion from American farmers. What has happened there?
1
Trump reminds me of the business class of the roaring '20's, if you're stinking rich with stinking rich friends you do not like fair market competition. Give me power to make laws that keep me and my buddies getting richer.....we all agree that if we are rich that has to be better for America. Right guys? Isn't that what we believe.....yeah....the stock market proves we're right....any doomsayers keep looking wrong.....the market will just keep going higher.....an early sigh of the Great Depression was sudden drop in cotton to 1 1/2 cents per pound.....agriculture got hit from over capacity due to refrigerated railroad cars....too many products for demand. We're repeating old mistakes denying laws of gravity.
"Anyone imagining that he’s going to change his ways and start behaving responsibly is living in a fantasy world."
And that is about the only thing we can count on. We don't know what the impeachment may bring. We really don't know how the election will turn out. We don't know if there is still time to mitigate some of the global weirding.
But we do know that t rump is not going to suddenly become a beacon of sense and restraint.
And that may, in the end, be our salvation. He will keep digging the hole he has been digging since day one, dragging his toadies down with him. In nine months there should be no doubt in anyone's mind who is paying attention that he has no business being in that office.
And those white guys in the diners; they are going to get shown that sciences like math still have the last word. His 35% of them isn't big enough to beat the other 65% of US. If we get out and vote, that is.
1
Since August 2019 Argentina Central Bank has spend US$22 billion in reserves to preserve the value of its currency.
In a Twitter Trump calls them for "intentionally carrying a devaluation of their currency" hence the threat of new tariffs.
But these are just facts. Trump must be right and the Argentine government must have been reading fake news and spending reserves unnecessarily. Or maybe the bank did not spend this money at all...and...(for me is hard to come with a logical explanation for this scenario, but I'm sure Trump guys can do it)
Either that or POTUS doesn't know what he is talking about. Or maybe he does and the only thing that matter is his supporters believing they are under another South American threat.
In summary: either he is lying or he is incompetent. Your choice.
2
Trump destroyed the US-Canada relationship with his insults and tariffs, and it will likely never be the same.
1
It is market manipulation, plain and simple.
Trump and his family will become richer than ever, and the rest of us are left to pick up the crumbs.
1
Marvel Studio: And your next super hero movie villain is... The Tariff Man.
22
I Wonder if he tips his family and inner circle every time before announcing new tariffs or the status of the up and down negotiations with China to enable them inside day trading and a hefty profit.
The tariffs are certainly enticing to Trump partly due to the power they can wield. He's a narcissist, we all know this.
But I do think tariffs are the right and possibly the only adequate response to China's harmful business practices of the last 25+ years. Also, it's not all about Trump. Robert Lighthizer is leading the trade discussions.
If you read about these practices regarding theft of intellectual property, limited market access to foreign companies, states subsides etc. then surely you would agree this is one of the most pressing matters for the US and the free world. Then of course there are moral issues of organ harvesting, mass state surveillance, and what practically amounts to ethnic genocide (Uighurs).
I certainly respect Mr Krugman, but it's far too soon to say that the tariffs haven't worked. That's a narrow and short sighted view. Many indications actually show that they are working. Only when this historical event passes can we look back and make a final determination.
3
Trumps tariff wars are political theater for the white guys in the diners and bars. What he will do is diddle with the issue until sometime around June, then he will settle the disputes with very little being changed, declare victory, and all his fans will say what a great job he did standing up to the Chinese, the Canadians, and the French.
The markets haven't been too much disturbed by his posturing, and if the economy is still looking like it does now, there could well be a nice election rally.
I weep for our country.
1
There are some thoughtful insights here. However you've ignored the strong possibility that the flip-flopping tactic is being used at deliberate moments to bounce the market, a pump and dump scheme. I witnessed this type of scheme firsthand with a friend who was involved in creating a cryptocurrency. A shady character showed up in their relatively small group claiming to be a young chinese trader. He had insider knowledge of some type and was able to organize a small private group of collaborators that he instructed on when to buy or sell, with deadly accuracy and large profits. Finally he misled the group, instructing them to pump and then selling off, leaving them holding the bag. Everyone was curious but noone could find out anything solid about this trader, only piece together a picture based on his behavior. The running consensus is that he was actually a team of hackers also running a crypto mining operation. My friend who I witnessed this through was a moderator for the very active IRC group.
What is truly amazing is being subjected to ridiculous arguments by so called conservatives justifying these actions. The party that used to vehemently oppose any actions by the federal government to intercede in free market principles.
But then again, they continue to believe the republican part is the party of Lincoln. News flash, that hasn’t been true for at least 60 years.
2
Prof. K writes "... someone like Trump, for whom everything is partisan and expertise is a four-letter word. " Exactly.
Experts are sometimes wrong, as we all are. In Econ, look at what experts said about US housing prices ca. 2002-2006. Oops. The thing is, what makes them experts is study and experience in their fields. The result of that is that they are right a much higher percentage than non-experts like Trump. The common sense metric is to compare prediction results with coin tosses. If you can't do much better than random guesses, ~50%, you are not much of an expert.
Experts tend to tell Trump what he can't or shouldn't do, and he doesn't want to hear that. So he disregards and belittles them in favor of the true source of his stable genius, his Gut.
2
Mr. Krugman: I'm no economist but is it too much of a stretch that we're merely witnessing market manipulation? Call Kushner, tell him to short and oops, miraculously, down goes the market the next day.
1
Precisely because Trump has nearly absolute control over trade and tariffs, a large part of his tariff strategy is geared towards his reelection and that means keeping his base's loyalty intact. His base agrees with Trump's claim that all our trading partners cheat us in one form or another and the only way we can deal with this is through tariffs or forcing them into trade agreements Trump views as favorable to the US. His base also swallows Trump's claim that the tariffs are payed by the targeted countries and do not affect their costs at the store. Hence Trump can play his game of keeping his base happy. A clear-cut case is his recent statement seemingly postponing a settlement of the trade disputes . with China to beyond the 2020 elections. To his base, which does not comprehend the economic implications of trade disruption on the international order, this shows his continuing toughness with China as well as his confidence in being reelected, both necessary aspects to drive China to its knees and surrender to Trump's demands. In the meantime they keep on believing that the hijacked jobs will come back if Trump is given more time.
1
The current government run by individuals who have spent their entire lives taking advantage of the tax, bankruptcy, trade, political and financial processes to increase their wealth. Greed will always be at the forefront of their decisions. Until Congress takes back control of the government from the Executive branch greed will win. Unfortunately, the North won the war but the South has won the ultimate battle for control of government so the likelihood of that happen is nil.
1
because it is primarily a regressive tax on the poor. rich or poor, we all consume about the same amount of consumer goods (food, clothing, basic stuff) but maybe not the same priced version at retail. But a pound of steel in a cheap car is the same as a pound of steel in an expensive car. so it is a regressive tax and cheaper items have to increase on cost to the consumer at a much higher percentage than do expensive goods to cover the same raw material price increase. since there are a lot more poor people to than rich people, the tax costs the poor far more and funds Trump/Ryan's unsustainable tax cuts.
2
Congress has been augmenting the power of the Presidency for a while. In particular, the President's authority on Tariff's is congressionally given. Rather than moan about the problems of a deficient President, Congress should assume its responsibility to regulate tariffs. The assumption that we would have a reliable competent executive belies recent history. Congress has a large part to blame by ceding power to the executive branch. When someone like Trump decides that he is President for Life and gets the military to go along the error in its ways will be blatantly obvious. Let's hope we don't get to that stage before Congress curbs executive power to its limits prior to WWII.
2
Mr. Krugman, you make it sound like Trump has deliberated carefully, with the help of experts, selecting tariffs from dozens of possibilities.
Unlikely methinks.
I’d say it’s because tariffs are (deceptively) simple actions that fit into sound bites, and are a simplistic container for revenge and justice. Nothing more.
This is an example of something I’ve observed repeatedly during Trump's presidency: Observers attempting to find the deep meanings in Trump's actions.
Newsflash: There isn't any "there" there.
It's not just a quaint error to assume depth behind Trump's actions. It's rather dangerous.
Knowing a person's philosophy allows others to respond with the expectations that a person who holds a set of beliefs can be trusted with a shred of predictability. Having some sort of consistency is what makes trust such a valuable commodity. That’s how relationships are built, even with one’s enemies.
Trump’s randomness, his lack of predictability & consistancy is exhausting and unproductive.
Fans of Trump might argue that Trump’s inconsistency, his unpredictability is a feature, a wily clever weapon in Trump’s strategic arsenal. But we’ve already seen these sort of one-trick-pony policies fail when they call for a nuanced response in a changing landscape.
Then we observe that there is no “there” there.
The takeaway? It means Trump’s choice of a particular strategy is bound to fail because it is built upon a foundation of … nothing.
Expect nothing more.
8
Let’s not ignore the likelihood that Trump is “frontrunning” markets in advance of his tweets on tariffs, minting money via proxies. Everything about his character and history says he would not miss this lucrative insider trading opportunity.
5
I am certain that the shorts are in place before the announcement and that calls are being purchased during the drop.
1
Let's not forget, Trump has convinced his base that tariffs are good, and that they're paid for by other countries. How many times has he claimed that China is paying those tariffs on Chinese imports? This is blatantly false, yet he repeats this lie often and his supporters believe him. He will do anything to win votes, as we know; this includes enacting terrible policies that raise prices on consumer goods and hurt farmers. And some people will believe anything he tells them.
1
Trump is a tariff man for the same reason he's a sanctions man. He learned quickly that the president is not all-powerful but that he has a couple of really nasty things he's allowed to do without anyone else's permission. Any surprise that Trump gravitated toward these things? Or that as soon as he's gone we need to pass laws making it more difficult for any president to wage single handed war -- economic or political -- on other countries?
6
Does Professor Krugman think that the United States can run trade deficits forever? Certainly, the world's appetite for printed dollars will wane. What happens when oil is priced in Euro or Chinese juan -- because of American profligacy -- and the world no longer wants OR NEEDS our currency? Trump is thinking about the future. Professor Krugman is a voice for selling out our workers and the future of the country.
3
Trade deficits are growing under Trump, thanks to his unending trade wars. U.S. manufacturing is shrinking for the same reason.
Trump isn’t conducting trade wars to shrink the deficit. That’s a fig leaf.
7
If anyone doesn’t think Trump knew in advance of today’s job numbers when he said earlier this week that a China trade deal might have to wait till after the elections, I’ve got a big, beautiful wall to sell him.
2
@elliot you obviously didn’t read the article. Krugman’s point is that these actions are driving up deficits , both trade and budgetary. But , why would we expect trumplicans to read.
1
Trumpublicans don’t need to read. Their leader keeps telling them everything is fine and their enemies are suffering.
They don’t need to see proof—that would cut into their TV watching.
1
Because he lacks even the very basic understanding of how the WTO or international trade works. He seems to be convinced that all the tariffs being collected from China is going into US coffers. Nothing could be further from the truth. The tariffs are either being absorbed by US companies or are being passed on to American consumers as a silent tax. There isn't a man-jack around the president willing to disabuse him of this notion.
4
I know that writers do not write their own headlines, so Krugman may be forgiven for "Why Is Trump a Tariff Man?" I think the answer to the question was given to Trump when his staff informed him early in this disaster that no he cannot use nuclear bombs.
Trump has said trade wars are good and easy to win. I take him at his word, which is normally not worth much. But here he has the power to wage them, and he's going all out to indulge his fantasies. As long as the economy holds up, his base will think he's winning.
2
Trump lacks the consistency to make tariffs work.
There are defendable reasons to disincentivize American companies doing their manufacturing in low wage countries, especially in China, but no one in their right mind would move their factory when tariffs might change again tomorrow or when maybe an exception can be bought with some campaign donation.
The latter is very problematic, as the sources of donations to politicians can be legally hidden from the public.
6
Knowing everything we know about Trump, were he to "discover" that his tweets about trade have the power to move markets, would he not use this to his own advantage? Would he not fall victim to some less than scrupulous Wall St bankers suggesting he tweet for their gain?
Conspiracies aside, protectionism is in line with most of his base and he's already proved that he doesn't need to shill to GOP party line about free trade or deficits or anything else as long as he delivers judges and tax cuts.
3
Forever Trumpers are crowing about the general state of the economy and stock market and gleefully pointing out that Bill Maher and Paul Krugman are rooting for a recession to make Trump look bad. I suspect backroom deals are being hashed out which will reward Trump bigly in some discrete fashion.
1
It is widely reported that DT doesn't believe his security briefings. If this is true, it seems very unlikely that he'll put much faith in economic briefings either, unless his advisers dispense with the facts and just tell him with what he wants to hear.
Surrounded by yes men, what could possibly go wrong?
2
Dr. Krugman hit the nail on the head.
Like their complete reversal in relations with Russia, the GOP no longer really believes in free markets. (Their actions speak differently than their words.)
The GOP is all about rewarding its donors -- picking their own winners and losers. Mix in Trump's agenda of personal enrichment and self-dealing, and one gets a highly biased and uncertain playing field.
Pro-business? Bosh.
8
I am suspicious that Trump may be using his power to control the markets short term. He says something negative (tariffs) and the market tanks. He then "walks back" the comments and the market recovers. I would not be surprised that a slum lord like him would not take advantage of a power like that. It would be an easy way to make a quick buck for someone like him.
5
Why? Quickest payoff for insiders. No wait for federal pork contracts to be written, no wait for Congress to do anything, same day payoff, or even payoff before the announcement. Plus, complete authority to do any amount of market manipulation without either oversight or consequences. Irresistible scam, worth billions.
If it chokes a small manufacturer to death, puts the brakes on innovation and technology, or just costs consumers, so what: if you’re a big enough entity, or merely hold stock in one, there’s joy to be had.
4
Trump is a tariff man because he controls it. He can move markets at will and with a nod and a wink to his cronies he can more than repay the debts he owes to the various oligarchs who he is fronting. The question is can he get off the hook?
4
Tariffs are an ineffective method to achieve an end to trade disputes. All they do is raise prices in the country advancing a tariff, reduce demand for products, and force the supply chain to change and invest capital in countries whose resource costs are too high by comparison. They artificially manipulate the economics of free trade and balance. I have always viewed the person implementing tariffs as ignorant to global economic realities. Scarce capital resources should and need to flow to countries with the lowest resource costs to increase participation in the global economy and keep prices to a minimum. The laws of supply and demand play out through the free-hand of economics and the rule of prices to balance supply and demand. trump is ignorant to these realities and the sooner he is replaced the better the global economy will be.
1
You're preaching to the choir. Unfortunately most trump supporters don't read your column and don't recognize a conman as facts are few and far between on Fox News. It's a strange phenomenon how republicans can garner so much support from so many who continue betting against themselves. Every day I wake up to discover another lesson in how crazy this world has become. I'm not sure if anything makes sense anymore where tweets rule the narrative.
4
Trump should have been impeached for lying to Americans that the tariffs against Chinese imports were paid by the Chinese.
And if he really believed that, he should have been impeached for having his porch light on, but not being at home.
3
Reports that Trump's farm bailout, his big payoff to farmers for the lost trade he caused them, has cost US taxpayers twice that of the auto bailout (paid back by the automakers) is a clear message all voters could grasp. Heck of a talking point.
7
Two other factors which I believe contribute are his simplistic thinking and lust for power.
He doesn’t think anything out he just knee jerk reacts. The long term nuances of a decision are somehow lost on his great wisdom.
And despite having no clue how to wield it, he revels in the power of the presidency and constantly strives to grab more. It makes him look tough and leader like in his eyes.
2
And he gets his guidance from Fox “news” hosts.
" Anyone imagining that he’s going to change his ways and start behaving responsibly is living in a fantasy world." Of course, it does no good to say that this was Trump...always. Before he was elected his business MO was to there for anyone to see if they cared to look. The same one he practices as president. The irony is that the same folk who see him as an "antidote" to "snooty liberals" are the same folk who are hurt the most. Talk about "cutting your nose off to spite your face"!
3
Trump is too lazy to actually consult and develop an economic policy. He doesn't have to negotiate tariffs: he just pulls the lever. And this way Trump can "punish" those countries that he thinks are "cheating" the U.S. If there's a move that doesn't require him to read a brief, he's on it.
1
And to punish leaders like Macron who have the audacity to laugh at him!
Expensive wine and cheese anyone?
Donald Trump has not taken being president seriously for a minute. Donald Trump never wanted, intended, or expected to be president. His campaign was a put-on of Hillary bashing but Hillary Clinton turned the joke on him by not showing up and making him president. Why is anyone surprised when Donald Trump clowns his way thru the presidency as he did the campaign?
3
He thought he would parlay losing the election by financing a personal TV channel with campaign donations.
Now he has discovered that he has created an adoring audience and can make billions for not much effort, for as
long as he wishes.
3
The reason why Trump is a Tariff Man is simple: the financial deficit caused by his brainless and self-interesting tax cut needs to be covered. But by whom? The foreign countries are his immediate ATMs.
Clearly his math and economics level is at one-grade level at best.
1
Paul. Have you seen the latest job report, inflation numbers, unemployment, wage growth, minority unemployment numbers? Climb out of your echo chamber and join the real world. You were WRONG about Trumps policies. Be a man and admit it.
It’s great to know conservatives embrace federal intervention in markets. Such integrity in maintaining consistent principles. Shows you exactly how much they can be trusted, which is not at all.
2
He's a failed, 6-time-bankrupt, "businessman," who has no idea how economies or governments work, and is so ignorant, and such a bully, he can't think of anything else to do. He doesn't know what will happen, and doesn't care. And he will still claim that he has been successful. He has ruined the business of million of small companies. He has ruined our trade alliances. Maybe this is a way to prop up the mega-monopolies, who are getting all the corporate welfare that small businesses are not getting, as if $2 TRILLION in tax cuts, for the filthy rich, were not enough for them.
4
@ChesBay -- I should have said thousands of small business owners, not millions.
Trump did not know what a tariff was. He only understood, or was told, that it hurts the "opposing party". Following his instinct to "hurt the enemy" he put tariffs on imports of China and others. Now, because he loves power that he believes Congress cannot limit, he plays "put the tariffs on" nations he wishes to squeeze so they will succumb to his will. And he does this without understanding or without even trying to understand. For quite a while he said China was paying the tariffs. Beside his great propensity and inherit genetic make up of pure FOOL, Trump believes he must use the powers he has, and even the ones he doesn't know he has, to upset the processes of the United States Government. This makes the US unsafe to deal with, and even to live in, because Trump only considers his welfare and not the "peoples" nor the nations. Trump is foolish and the republicans support fools, because of the "birds of feather" philosophy.
1
The tariff seesaw allows him to watch his minions and world leaders grovel and kiss his ring to save themselves.
1
@Ellen (Mrs. Gary here) Not seeing much groveling from North Korea, China, Canada, etc. recently.
Trump is actually turning out to be an incompetent managed economy guy. He promotes dying industries and disparages industries of the future all for what he sees as his political self interest. His “vision” seems confined to a rear view mirror.
3
This one is easy. He is "Tariff Man" like he is "Pardon Man." He obviously found out there are some things he can do unilaterally as POTUS and these are two of them. The great negotiator couldn't negotiate his way out of a paper bag so he needs to find things he can do without actually having to go through Congress.
3
Since this appears to have gotten lost in the system:
"Tariffs let him exercise unconstrained power, rewarding his friends and punishing his enemies." In other words Trump is incapable of understanding the word moderation. Worse yet, it shows up in almost every area of his presidency and how he reacts to things. This does not bode at all well for the future if he is re-elected. Why? Because the economy will not continue to create jobs. The economy/corporations will eventually react badly to one of his numerous missteps. Both he and the GOP will attempt to blame other factors and people but they (and he) will have precipitated the crisis with their actions and inactions.
Trump can love tariffs all he wants. He can love his way of making a deal even as it backfires on him and the nation. But where are the adults in the room on this? Where are the patriots who are our legislators? He can exploit this loophole all he wants but there must be someone in Congress who is alarmed enough to see if there is a way to end this stupid game of his. If the Republicans care at all about their rich donors, especially the corporate ones, they will find a way to stop Trump's tariff war. In fact, they'd find a way to stop him period.
The worst thing of all about Trump's presidency is the waste, not just the economic waste but the waste of talent, time, and allies. No country is an island in the global economy.
12/5/2019 9:37pm first submit
12/6/2019 7:44am 2nd submit
2
There is a prescient warning implicit in this column, which isn't just "spot on" but is the spot itself: trade wars have inevitably led to shooting wars.
Hoover signed Smoot-Hawley into law, imposing tariffs on 23,000 specific products. It helped trigger the depression and economic consensus is overwhelming that it prolonged and deepened the Great Depression.
Krugman insightfully -- persuasively -- describes trade as the gun Trump uses to shoot people dead on 5th Avenue. It is in fact the only weapon he can fire at will and does whenever he needs a testosterone boost.
The Great Depression was devastating for Germany, which had five years of previous prosperity -- thanks to American loans and goodwill. Unemployment hit millions of Germans, as companies shut down or downsized. Others lost their savings as banks folded. Germany became fertile soil for Hitler and his Brown Shirts. The rest is history, a tragic, needless outcome of economic nativism run amuck.
I don't think Krugman can overstate his point: trade wars become real wars. Only this time no one wins.
This column should be a siren call that's heard above the din of Trump's dangerous cacophony.
3
There is a prescient warning implicit in this column, which isn't just "spot on" but is the spot itself: trade wars have inevitably led to shooting wars.
Hoover signed Smoot-Hawley into law, imposing tariffs on 23,000 specific products. It helped trigger the depression and economic consensus is overwhelming that it prolonged and worsened the Great Depression.
As Krugman insightfully -- persuasively -- describes trade as the gun Trump uses to shoot people dead on 5th Avenue. It is in fact the only weapon he can fire at will and does whenever he needs a testosterone boost.
The Great Depression was devastating for Germany, which had five years of prosperity -- thanks to American loans and goodwill. Unemployment hit millions of Germans, as companies shut down or downsized. Others lost their savings as banks folded. Germany became fertile soil for Hitler and his Brown Shirts. The rest is history, a tragic needless outcome of nativism run amuck.
I don't think Krugman can overstate his point: trade wars become real wars. Only this time no one wins.
For me this column should be a siren call that's heard above the din of Trump's dangerous cacophony.
1
"Tariffs let him exercise unconstrained power, rewarding his friends and punishing his enemies." In other words Trump is incapable of understanding the word moderation. Worse yet, it shows up in almost every area of his presidency and how he reacts to things. This does not bode at all well for the future if he is re-elected. Why? Because the economy will not continue to create jobs. The economy/corporations will eventually react badly to one of his numerous missteps. Both he and the GOP will attempt to blame other factors and people but they (and he) will have precipitated the crisis with their actions and inactions.
Trump can love tariffs all he wants. He can love his way of making a deal even as it backfires on him and the nation. But where are the adults in the room on this? Where are the patriots who are our legislators? He can exploit this loophole all he wants but there must be someone in Congress who is alarmed enough to see if there is a way to end this stupid game of his. If the Republicans care at all about their rich donors, especially the corporate ones, they will find a way to stop Trump's tariff war. In fact, they'd find a way to stop him period.
The worst thing of all about Trump's presidency is the waste, not just the economic waste but the waste of talent, time, and allies. No country is an island in the global economy.
12/5/2019 9:37pm first submit
1
Yes to all of this, and the Republicans don't care.
1
Trump is ‘tariff man’ because it’s one of the few tools he knows how to use. He has no clue how to govern, but he can easily throw his weight around and vent his spleen by slapping tariffs on foreign goods. It’s also a way to recoup some of the tax revenues lost when the $1 trillion Trumpublican tax cuts for the rich was enacted.
Con man that he is, Trump keeps trying to sell these tariffs as taxes on foreign countries... while the Walmart shoppers in their red MAGA caps pay the freight. He’s literally picking their pockets while doing a fan dance to keep them distracted.
And it seems to be working.
3
Incoherence is the word to describe dumpsters trade wars. I mean Argentina a currency manipulator. The man is a menace to the country and the world. Give him an insane asylum to run, from the inside as an inmate. See the movie King of Hearts.
1
Excellently put Mr. Krugman. He also will not assume responsibility for the many farmers in the US who have committed suicide for not receiving funds from trade in the tarriff countries Trump is still playing the corporate back and forth deals with those Countries when farmer bankruptcy has climbed 24% in the USA, and they cannot pay their mortgages and massively expensive farming equipment bills. He was a poor business tradesman as reported by his VP lady at Trump Inc, and he is a poor tariff negotiator, continuously thinking pressure will cause a win. It won't.
1
Why doesn’t Prof Krugman ever offer a constructive suggestion on dealing with China?
1
Ask yourself: Has free trade with China made America a better country or not?
The "President" (if he can be called that) is blatantly using tariffs to extort other countries. What he is doing is illegal. He is a criminal. He must be stopped.
1
What we have here, is a failure to communicate!
He doesnt get it about anything.
Acting out, acting like a thug, and APPEARING powerful to mask his insecurities as a leader and as a thinking adult is his M.O.
If we have learned anything about tariffs its that they really dont work. But then again you have to be able to learn and sadly our president gets low marks for learning.
3
It’s all about the campaign contributions
1
Socrates' attitude, according to Plato:
“It’s better to change your opinion than to persist in a wrong one.”
Trump's attitude, according to Krugman:
"he’s not the kind of man who reconsiders his prejudices in the light of evidence."
Ecce homo: Trump is not Socrates. But he may be Thrasymachus.
@Jim Muncy. Appreciate the reference, but if Wikipedia has the bio correct, a disservice to a learned philosopher! Invented the period (.) and the colon. Great man.
Great photo!
Well, Alexander Hamilton was very prescient...there would be scoundrels who would occupy the WH. Why, now is it so difficult to get a demonstrably criminal scoundrel out of the office. Also why should we have expected the scoundrel to have so many complicit disciples. Hey, you Senate repubs, revisit your oath of office and act accordingly.
2
Hey, to the average Trump voter, he's doing stuff.
1
If things get really bad the clown Trump will slap a Trump tariffs on Blue State goods and services.
2
Or worse , he will eliminate SALT deductions to punish them. Oh, right he already did.
1
You got it almost right. White, Christian guys far from salt water are the only Americans who matter nowadays. We must all beware of offending their delicate sensibilities or they will declare Trump emperor by divine right.
4
Who can answer that headline?
Icahn.
1
In Russia the Oligarchs line the pockets of the political leaders or they are replaced. That is what Trump wants for America, his own oligarchs who are loyal only to him.
3
Where's the recession, Prof. Krugman? When you predicted it would follow Trump's election, did you specify that it would be at least three years int he making, preceded by record employment numbers? Can the Nobel committee ask for their award back, if someone becomes so partisan that they cannot fairly process and present information?
1
Few of us really understands ‘tariffs.’ On foreign products they just sound like a normal tax that do not really affects individuals or ‘regular’ people but maybe only the wealthy ones.
@Suzy Sandor
Of course "Few of us really understands ‘tariffs.’"
According to my understanding, tariffs are like a tax we impose on imported goods.
When manufacturing companies buy those imports they pay the tariff, and when they sell the price of their products includes the tariff. Finally, when those products are sold the individual buyers they pay the tariff.
2
@Suzy Sandor If you buy a product that is subject to the tariff, or that contains products that are subject to the tariff -- say steel -- then you pay the tariff. You might not see it, because it's built into the price, but you pay it.
There are no distinctions made between "regular people" and the wealthy in paying tariffs. It falls on everyone who buys those particular products. If the product is purchased more by wealthy people, say caviar, they pay more. If it is purchased more by regular people, say consumer goods from China, they pay more.
Trump's tariffs are certainly falling more on "regular people."
3
SDNY needs to investigate the equity trades of Don Jr., Fredo and the Kushners. Trump knows that certain tweets will move the markets in a certain direction.
When Trump announced a delay in a deal with the PRC (uncharacteristic for Trump) I immediately thought that someone took some short positions in advance.
3
Successful global trading is dependent on long term consistency and trustworthiness. A President's term is finite whereas global trading is continuous, and therefore the President should not address it with a short term perspective or in a partisan manner. Rather the President should understand and respect what exists and of course push for continuing improvements as are and will always be necessary, with the objective of leaving office with America's global trading as well or better than received for the next President regardless of their party. Trump has shown no capability to see beyond the moment, understand, or listen, and is viewed by the world as untrustworthy, untruthful and impetuous, resulting in the jeopardization of American leadership in global trading.
2
I have also question who is profiting from the market ‘s reactions to all of this. Is our illustrious Secretary Ross front running statistics , for example.
Are any journalistic resources being devoted to these problems? Can we trust that the proper authorities are even trying to insure the so called level playing field?
What will be the market’s reaction if and when evidence of manipulation is revealed?
3
Chinas reaction to US tariffs on its manufactured goods is to stop purchasing say soybeans from the US and purchase them from Brazil. The reaction of the US farmer is to cry bankruptcy and so the US government subsidizes the US farmer. If the world production of soybeans is in balance the world price of soybeans will now be lowered by the sale of subsidized US soybean to non Chinese markets. That is to say the Chinese can now buy soybeans at a lower price and use the extra moneys to offset the US tariffs on its manufactured goods.
3
I'm taking this discussion to the Dollar Store, which provides graphic examples of the effects of tariffs on U.S. consumers. AA or AAA alkaline batteries were, for years, sold at dollar stores at four to a pack. Now, it's three - or in some cases, only two. Pens that were three to a pack are now two. On and on throughout the store, you see less being offered to maintain that "dollar" price. American consumers, especially the tier that depends on dollar stores, not China, are clearly the ones paying these tariffs. Whether these particular consumers next November will support the man who imposes these tariffs and shrinks their purchasing power remains to be seen.
7
@wirelugs
Unfortunately, those who frequent the "Dollar Stores" don't have the time to read newspapers which means they know something is not working but don't know what it is.
2
This is analysis -- an ability of Trump to implement a political spoils system -- is no doubt true, but I think there is another intellectual factor at work.
Trump is particularly prone to the common fallacy of seeing the national economy as a business. And that exports are a measure of the profit of that business. So he is after cutting the "losses" from our trade deficit with tariffs.
He does not understand, at all, that the economy is not a business. And even if you adopt that flawed analogy, the profits would be the growth of that economy, not its exports.
But tariffs hurt growth.
His whole framework for understanding the economy -- and pretty much anything else for that matter -- is wrong.
9
Professor Krugman, you won a Nobel prize in economics for your work on international trade.
No one really has been able to tell us so far, but perhaps you can: where is the standard predicted effect of the trade war showing up in the data?
Maybe I can help. Let’s see, farm subsidies costing taxpayers billions, increased cost of consumer products costing extra billions, market uncertainty diminishing capital investment. Those are just a few.
Why does Trump persist in his oscillating tariff actions? Why does he do anything? Corruption is one answer, but he also needs to keep the base behind him and under the impression that he is acting in their interests. A rational trade policy that is not aimed at increasing corporate profits would in fact be in the interests of working people, but such a policy would take a considerable time to be effective and would probably be painful at first. Either tariffs or exchange-rate adjustment would necessarily increase prices before causing jobs to move back to the US and raising wages. Of course it should be kept in mind that anything which increases wages, such as a minimum-wage increase, will increase prices. But politicians, including Trump, obviously want to avoid the short-term pain of higher prices. In fact despite alarmist stories in the media of the harm done by tariffs there has been no significant increase in overall inflation. If there is any rationality in Trump's actions, this is how he wants things. He keeps announcing actions against foreign trade, then backs off before it does much real harm (aside from the uncertainty which Krugman has alluded to). There is no reason to suppose that he really favors the economic interests of working people rather than plutocrats. It should be kept in mind however that international trade was an issue which Trump could seize on because Democrats clearly did not prioritize protecting the interests of American Workers.
2
Why Is Trump a Tariff Man?
The answer "is not in the stars"; basically you answered the question, although it is much more important the second part: "rewarding his friends and punishing his enemies."; as he threatens the supply chains of those companies that do not support him: bribery, it is clear.
We saw the example of the Apple plant that was build in 2013 in Texas and he affirmed in the presence of Tim Cook, the CEO, that was new, and took credit for it... Cook did not correct him for fearful obvious reasons; it dependes for his products of many parts from China.
5
@Dr. Ricardo Garres Valdez
Thank you for saying "bribery" out loud. It's a word that gets amazingly little use, in an era where bribery is rampant.
I read in a history book that in Ming Dynasty China, taking a bribe was a capital offense, for which a government official could be publicly executed. Nowadays we solve the bribery problem by making it taboo to talk about it.
4
It's time for Congress to take back their Constitutional authority over tariffs now that Trump has made a mockery of them. But, the irony that needs explaining is why is the economy doing so well when Trump's economic policies are so bad? We keep on hearing about the huge $10 trillion in corporate debt, lack of investment in production, job losses in manufacturing, farmers suffering due to Trump's tariff war with China, and yet, the markets are near all-time highs, jobs keep on increasing, and unemployment is at an all-time low. And, of course, the "tariff man" gets all the credit. So Professor Krugman, what's up [pun intended] with the Trump economy that is persuading many to vote for him in 2020?
@paul, it’s simple , cause and effect. Trump rode in on a growing economy. His actions will not fully effect the economy for years. See Bush 2 terms. The economy didn’t crash until the waning months of his last term.
1
@Paul Wortman
The economy is doing well because it was managed by a well-educated president, Barack Obama, for 8 years. What's keeping it afloat now, under an idiot president, is sheer inertia.
1
"But there’s no obvious way to stop him from imposing tariffs whenever he feels like it." This is true as long as the Republicans in Congress act like Trump's door mat. The obvious way to stop him is to vote all of them out of office.
6
One of the bigger Trump lies is that China is paying billions of dollars to the US and that tariffs are a source of income to this country. Occasionally columnists explain that tariffs are a tax ultimately paid by US consumers, but this explanation is drowned out by Trump's constant repetition that tariffs bring us billions of dollars.
7
Battling Tariff Man on the tariff front is a lost cause. We need to focus on things we can accomplish today to improve America.
So let's tackle at least one gnawing narrowly-scoped economic problem. Let's help West Virginia get back on its feet and perhaps even lead America's comeback. Let's begin with all those flat-topped mountains the coal industry walked away from (same thing happened in Southern Illinois) when the coal petered out.
Those denuded mountains look horrible now, but they'll look beautiful with hundreds of wind mills parked on them generating megawatts of cheap electricity for West Virginians. Coal miners, retrained as tower installers, will be needed to erect the mills. Hundreds of retrained coal miners will be needed as permanent mechanics to keep them running. Local economies and school district budgets will be lifted. And the coal tailings, and their associated pollutants, will stop growing and ruining the health and lives of local communities. If we wanted to give deserving, hardworking people an actual Christmas present, we would begin this project now with help from federal development dollars.
7
The explanation for why trump is a tariff man is simple. He does it because he can.
What's really troubling is the erosion of Congressional power to impose tariffs. Sadly the Constitution is rather vague on the subject but the historical legal consensus is that the power to authorize tariffs lays with Congress. As usual, trump has used the ambiguities of Constitutional law to expand his power beyond that intended by the authors of the Constitution.
1
As Krugman says, expertise is now out of fashion in Congress. In fact, being knowledgeable about something is usually a black mark against a candidate.
1
Literally every prediction Krugman has made that the economy would falter under Trump has been wrong. The booming jobs numbers today once again prove how wrong he is. Perhaps he needs to rethink his understanding of economics.
3
@Jon S I don't think Mr. Krugman ever predicted the economy would falter, only that Trump's mercurial nature puts at risk an economy that was thriving before he took office. And he's right that Trump's impulsive nature creates a lot of needless volatility.
6
@Jon S
It's called inertia. Barack Obama fixed many of the problems left from the Bush administration and we're still benefiting from his management. But the benefits won't last forever under an idiot president.
Two words: market manipulation.
7
Trump tariffs is a political ploy. he will withdraw them just before the elections so as to win the farm vote
3
It will be too late by then... once you’ve lost your farm and your farmer commits suicide it’s over and MAGA is a deathly joke.
I agree with Krugman about the crony capitalism behind tariffs and other letters about stock market manipulation. I would look at profits of Russian oligarches and shell companies linking stock manipulation and tariffs, rather than family members. The up side of all of Trump's pronouncements is the cooling of the overheated market. I have great fears of a bubble bursting, and Trump's pronouncements on trade tend to take some of the wind out.
2
But, but, tariffs are good proclaims Trump to his gullible audience. China is paying billions of dollars into our treasury Trump claims.
Sadly, his base believes that nonsense.
And yes, businesses are stymied as to how to plan given the mercurial nature of Trump.
And now the jobs report indicates more than a quarter of million jobs were created in November and the masses cheer Trump’s policies without reading the fine print.
Sadly, many gravitate toward the flim-flam artists whether they be revival tent preachers or politicians without attempting to see if the claims are true and achievable.
6
@Dan
I recently rewatched the brilliant ASCENT OF MAN TV series from 1970. In his concluding lecture Professor Bronowski made two points: that US citizens need to be educated, as a basis of good government policy, and that knowledge needs to be widespread, to prevent the rise of an intellectual elite.
Now we have millions of Americans who are ignorant and thus vulnerable to Trump's lies about how the country works. ( I am constantly hearing Republicans claim that Trump, not Hillary Clinton, won the 2016 election) Bronowski commented on this too, warning that if the US loses its intellectual dominance, the power is likely to transfer to some other nation.
Or, perhaps, ignorance and a failure of curiosity will spread over all of Mankind like a new Plague.
Then the few who have retained their wits can spawn a new Renaissance.
Seeing his "one to one" dealing with Ukraine, it seems most likely that his predilection to unilateral negotiations is that he believes he can "bully" his way through that type of deal, and get his special "favors" along the way, whereas a multinational negotiation has a lot of eyes on it, making the deal about the substance, and not about the person bluster and extortion that seems to be the limits of Trumps deal-making. Even with the tariffs, he uses them as an extortion tool - "do what I want, or I will hit you with a tariff - and injure your nation" has been heard multiple times in the past two years since he rolled out his tariff-man dealings.
10
Paul,
Our government worked more smoothly with laws like the the ones you describe. After all, trade policy needs to be flexible and shouldn't be bogged down in Congress?
Then along comes someone like Trump.
Someone who is guaranteed to abuse any power given to him (and even some not given to him).
The problem, to my mind, is not these extraordinary powers but the way we elect presidents. The new focused group phrase Republicans are slinging around is that "impeachment is an insult to the 63 million voters who elected him". Nevermind that 66 million (got that, 3 million more) voters voted for his opponent!
"63 million" appeared suddenly, but now it's said by Republicans all the time. It has to have been a focus group creation. Before, they were saying things like, 'He won the Electoral vote'. But that wasn't good enough for the American people who want believe that they, and not some random system (and if to those who don't know it's random, please study the Electoral College), elect our president.
Fix our election system and you fix our trade policy.
3
@Thucydides
I read in a history book about a Renaissance ruler, Philo[ II of Spain, who did not understand economics. The best sentence was "he discovered that the more gold he had, the more gold everything cost".
One of Trump's latest moves is to deprive 700,000 poor people of food stamps. This, while he increases subsidies for big-business agricultural firms who have been economically hurt by his reckless trade wars. The poor get the shaft from a president who ran as a populist in 2016.
16
@Whole Grains
Unfortunately newspapers like the Times kept repeating the myth that Trump was a populist, eventually turning it into a dirty word. Trump is a dictator wannabe, as seen by the way he posed in front of the Lincoln Memorial surrounded by tanks and other military hardware.
After Trudeau, Macron and several other world leaders were captured on video ridiculing Trump during a spontaneous discussion at the NATO summit, I suspect we can anticipate some tariffs on critical materials for both France and Canada.
Trump's skin is just so microscopically thin when it comes to ridicule, his anger at being ridiculed will make him "hit back 10 times harder" and, as discussed by Dr. Krugman, tariffs are Trump's weapon of choice.
11
Trump has always been obsessed with trade and tariffs. In the 80's he was railing against the Japanese trade imbalance. Now his biggest target is China. It is uncanny how similar the rants are.
1
All of Trump's ideas and values are a few generations old, from the 1930s or earlier. His attitudes about tariffs, taxes, immigrants, blacks, women.... learned from his father? The slogan is make America great AGAIN - the definition of reactionary.
9
I have a simpler explanation for setting and removing tariffs on a monthly basis. Trump and his cronies are making a bundle in the stock market by having prior knowledge of Trump’s tweets on the tariffs that causes the wild swings in the stock market.
9
Exactly, 100%, perfectly correct, Mr. Krugman:
To paraphrase: President Trump is a Tariff man, because he is and entitled, silver-spoon-birthed control freak, who believes that the world and all its wealth are his to use.
Justice? Meritrocracy? the Wisdom of the markets? Each of these are competing metrics are the basis of economic theories and have enthusiastic proponents.
Mr. Trump, however, approaches the complex economic interactions of the United States and other countries form an unusual, narcissistic perspective: "What makes me feel powerful?"
11
I'd love to see Jim Jordan and Devan Nunes and the rest of them release their investment portfolios, including dates of transactions.
14
Follow the money....If the SEC did not report to the President one would hope they could investigate shorts on stocks and other market gyration investments. Perhaps Trump talking about Ukraine is a distraction from those who are making money on insider trading pre/post market statements on trade.
It’s always about the money and there is no shortage of cons and manipulators surrounding this family...perhaps this is where focus should be placed...
10
Has anyone investigated Trump and associates stock market activity? Is it possible that market manipulation is behind his antics?
Is his public yo-yo ing on China trade and other similar issues designed to purposely influence the up and down movements in stock indexes. If his cohorts are being tipped off several days prior to Trump announcing bad economic news that impacts the market and selling indexes short, then several days prior to a positive announcement that keys a market rally again given a heads up so they can jump back in, this is insider trading and adding millions to the Trump portfolio.
6
The answer to you headline is simple.
Trump is a demagogue and swing state blue collar workers are desperate for jobs that are leaving to slave labor countries.
Trump is two faced. If he was really for bringing back these jobs he would have brought his and Ivanka's trinket factories in slave labor India before they went belly up.
He was, is now and will always be a free trader despite what he says on tariffs.
3
Impulsiveness and unpredictability are standard features in Trump's armamentarium; this, combined with his rampant incompetence, invites corruption to lead his misbehavior...and abuse of power. And Tariffs are just a distraction, however self-defeating in practice. This is one more reason he must be ousted...to save this Republic from ruin.
2
Trump has a one track mind. The only thing at the end of that track worth bothering with is money. If tariffs get him money that's great. If they inconvenience his enemies, that's great. If they do both, even better.
6
I've read a few of Krugman's editorials about tariffs. All I can remember of them is that tariffs are bad and Trump is worse. Does anybody remember anything else?
Trump craves attention but he learned early that he only got it when he misbehave. It has been a winning strategy for him all his life. Tariffs are another tactic in his strategy and wow do they work. The flaw in this bid for attention is that he can't stop using the same tactic until it destroys what it is aimed at with a lot of collateral damage to boot.
Trump supporters have bought into the simplistic view that if only China wasn't such a bad actor the US would have a thriving manufacturing workforce making huge dollars. The reality is that automation is what steals human jobs. And it is Republican policy primarily that has for decades dismantled the unions to the point where some States have laws called Right to Work, an Orwellian title if ever there was one.
What tariffs are is Trump's tactic for attention but the Republicans' strategy to arouse the patriotic fervor of the rural communities that have been taught to believe that China and Democrats indifference is the cause of their misery, not Republican political machinations and lawmaking.
8
Continuing to give Trump the power to levy tariffs in a complex global economic system in the hope that he will negotiate a good trade deal is like giving an unruly tantrum-prone toddler a hammer in hopes that he can fix an iPhone.
Regardless of how you feel about free-trade, the use of tariffs, and current trade deals, Trump, as with so many other Presidential responsibilities, is temperamentally and intellectually incapable of executing a plan that will result in a positive outcome for the United States.
Trump destroys; he doesn't create. He's a slave to his narcissism not a leader with a vision and plan. He plays with tariffs and threatens trade wars because it makes HIM feel good in the moment. Makes HIM feel "strong". That is all that matters.
The toddler in the Oval Office is taking a hammer to American global economic and diplomatic power that was built up over many decades. It will take just as long to repair, and it will never be quite the same.
1
Like 99+% of Americans, Trump is not an economist. So forgive us if we think that tariffs are a way to keep regimes like the one in China from damaging our economy by stealing our intellectual property, restricting the sale of American stuff in China, and flooding our country with stuff produced inexpensively by impoverished Chinese laborers. You economists—or magicians used to pulling financial rabbits from their hats, can argue about whether tarries are good or bad. But smart non-economists intuitively believe that we need to do something and that, perhaps if we had done something long ago—like imposing tariffs, the American blue collar and middle class white collar worker wouold be much better off.
@ehillesum
My middle son had a High School elective call fashion retail (almost 30years ago) it turned out to be the best basic economic class I have ever seen. Taught the students the entire journey for a garment from growing if it was cotton or manufacture of the cloth if polyester and all the costs along the way including if it was imported or not. Markups, tariffs and how every step effected the final price. Perhaps we need more education rather than gut feelings or intuition.
1
Oligarchies are like mafias. Different families are associated with cliques in different regions. Trump and his cronies are affiliated with lots of Russians, Lithuanians and others in Eastern Europe. That includes the GOP and lobbyists who are former GOP members of Congress.
It seems there are few who haven't been working with Russians or Eastern Europeans (Hungary is another) for quite some time. There is also the NRA.
But back to trade... Trump's brutish style is applied consistently, whether it is his relationship with women who stand up to him or competing mafias (China), when it comes to trade.
Trump is no different from the party he heads. The only conviction they have is amassing money. How that money is amassed, we now know, doesn't matter. It's all good, as long as it flows upward.
These people are crooks. They not only need to be defeated, but the entire last three years needs to be investigated, catalogued and prosecuted. What these people have done to our government and our national treasures must not be allowed to go unaccounted for and unpunished.
7
Exactly, 100%, perfectly correct, Mr. Krugman:
To paraphrase: President Trump is a tariff man, because he is an entitled, silver-spoon-birthed control freak, who believes that the world and all its wealth are his to use.
Justice? Meritocracy? the Wisdom of the markets? Each of these are competing metrics are the basis of economic theories and have enthusiastic proponents.
Mr. Trump, however, approaches the complex economic interactions of the United States and other countries form an unusual, narcissistic perspective: "What makes me feel powerful?"
Tariff's are a regressive tax on American Consumers. What Republican doesn't love a regressive tax.
5
Trump learned that the heart and soul of the American TV watcher was fully taken in waiting for the "Your FIRED" pronouncement. "100% Tariff on French Wine!" is this reality TV show's latest big moment. Its the clear simplicity of a Tariff that makes it Trumpian. Tweet it, it's done. And it is anti-elitist in its directness and brutality. Moreover, its effects are also direct, reminiscent of the exit interviews of contestants who lose. China 'strikes back', Brazilian steel will tremble with rage are the equivalent. The rest? False news!
1
Trump’s tariffs and his trade war with China have damaged the economies of the US, China, and the rest of the world. These economic policies have caused more harm than the crimes for which he will be impeached.
And you know what? He may be making a lot of money on this.. Him going back and forth on tariffs moves markets. And he wrote the book on the Art of the Deal...
We truly have no checks and balances. All of those regulatory agencies, all of them are under the control of the executive branch which is under the control of guess who? We the people always thought that the Justice Department was independent and above control by the President. That is what we believed since Nixon’s Justice Department. Wrong. Think today and dishonest Barr. Some think that the S.E.C. Is independent, think again. My area of practice is securities law and a review of rule making shows less new rules adopted in 3 years than a quarter under a President of any party. Don’t cheer that there is less regulation because someone is scammed when the markets are controlled by the robber barrons (pardon my French, Melania and Stephanie) and that someone is the little guy in the markets and the pension funds, which are big guys, holding the interests of little guys. Yes prattle about insider trading because, it is likely happening. I would love To know the stats on SEC enforcement for the last 3 years. FDR did not establish the SEC and make it the most noble agency of the government for the fun of it. Think crash of1929. Yea sure, deconstruction of the administrative state. All roads do lead to Putin.
1
If you want Trump to back off the tariffs, then you also need to tell us what you will do about the China problem other than tariffs. Just whine and ask them to play fair? Twenty unsuccessful years of trying that disqualifies that approach. So what would you do instead? I readily concede that Trump has been absolutely ham-handed in how he is handling the "trade war" including stupidly punishing our allies. I keep waiting from some fragment of a better approach from the Democrats which would give me hope that there is someone - anyone - I could gladly vote for besides Trump. But Democrats seem caught up with Quixotic health care proposal and transgender bathroom access. Who will deal credibly with the China problem? I won't vote for anyone who will not strongly oppose China.
"So that’s why Trump is a Tariff Man: Tariffs let him exercise unconstrained power, rewarding his friends and punishing his enemies."
With Trump, you're either for him or against him. When fact witnesses testify against him, they're de facto never-Trumpers.
Such a black and white world drives every single admininstration policy, including FEMA distributions during weather crises, immigration, foreign policy, economic policy, military pardons, you name it.
One thing Dr. Krugman leaves out is the inherent corruption of how Trump drives financial markets with his tweets. I'd love to see the portfolios of Wilbur Ross and Trump himself to see whose profiting from inside knowlege of erratic Trumpian predictions on his various trade wars.
Another term of Trump spells even more crony capitalism, along with crackdowns on dissent. I wonder how many citizens realize how much danger we face.
7
I think Dr Krugman gives trump credit for more rational thought than he deserves. I'd like to suggest that he likes tariffs so much because he thinks action is attacking and tariffs are attacks. He likes tariffs because they suit his vindictive brutish nature.
2
"It’s all about the power — and the cronyism."
Exactly true.
For decades he has envisioned himself as the best and richest macho man ... ever. Strutting around, making people obey him and his beliefs of the day.
Why didn't 63 million see this 4 years ago? More realistically, why do they adore him for this?
I guess masculine self-centered dominance is attractive to a lot of people?
1
"His continuing tariff obsession seems especially strange given growing evidence that it's hurting him politically." But here's the truly scary thought--it can only hurt Trump politically if he intends to hold an election. It's the same reason he doesn't care if Giuliani is currently in Ukraine engaging in the very behavior Trump is going to be impeached for. With the Attorney General and the Secretary of Defense in his back pocket, it's pathetic that Democrats, who have complained for 3 years about Trump's norm breaking, won't see this one coming. If you don't worry about Trump shattering the mother of all norms, then you haven't been paying attention.
One more thing. Bravo! to "expertise is a four letter word."
2
Trump is a tariff man because tariffs are easy. The concept is simple to explain, simple to decree, and popular with people who have not seen the government take any action on keeping jobs in America.
And they raise tax revenue without anyone ever hearing the word "taxes." Bonus! If anyone does mention it, we can just say "Look! We got China to pay our taxes!!"
In summary, Trump likes them because he actually believes that someone else - China or Mexico - pays them, and doesn't believe that they are a sales tax paid by Americans. He actually believes he can bully other nations into doing what he wants. And he gets a lot of votes with them - even from the very people whom they hurt economically.
From Trump's viewpoint, what is the downside?
1
I think you nailed the reasons, Paul. Good work.
1
I am convinced that Trump is Tariff Man because he can be. He likes the ability to exercise that power. Almost everything else that he has attempted has been challenged in the courts and he has lost. Like a true narcissist, the power in and of itself is what is important to Trump. Don't over think it.
It is simpler. Trump doesn't understand economics and neither do his advisers (who he doesn't listen to as well). Anyone else notice how many exemptions get granted the day after the tariff is announced? Government picking winners and losers.
The cronyism makes sense given who Trump is and how he acts. But that dynamic is probably accidental. Trump really does believe he knows what he's talking about when it comes to tariffs. His original tariff goals with China were impossible for China to accept. Trump was and probably still is attacking China for building its economy. We were told that American companies were being robbed of technology. Yet, not only have I not seen one example of such theft, it's important to recognize that, if technology was being stolen, American companies willingly made these deals with China. Trump needed a boogeyman and so the technology theft came in handy. The point is that Trump is pro tariffs because he's a bully and he doesn't like the idea of those Chinese people bettering America. Same goes for NAFTA. Those brown people down in Mexico we're taking advantage of America in Trump's deranged view of global economics. Canada was only dragged into the melee when Trudeau criticized Trump. It's more complicated than one can state in a New York Times comment, but Trump keeps expanding the trade war and it's all about bullying.
"...and he’s not the kind of man who reconsiders his prejudices ." He STILL refuses to profess that the "Central Park Five" were innocent, even after DNA proved them so.
1
Why does trump keep doing what isn't working and what actually harms him? Ego. Does anybody really expect trump to admit he was wrong and reverse course? Oh, no. He's going ride this down to the bottom.
1
i disagree.
the reason trump likes tariffs is because they don't require any thinking.
it's the lazy man's way and trump is probably the laziest potus--in terms of ACTUAL work who has held the position in the modern era.
rallies for the uninformed and ranting on TV don't qualify as work.
1
I hope someone is keeping a watchful eye Rudy's stock trades. Maybe someone at the FBI or the SEC?
1
I keep wondering how this relates to his own holdings. What are they, anyway? Who is handling them in the "blind trust"? Does he shoot his mouth off to move their value up or down? Is he short selling when things appear to be going downward? Does he buy more when they bottom out?
Too many people love to watch (and hear) a bully in action - provided he doesn't target them OR provided THEY ARE TOO DENSE to understand that he is targeting them.
1
Trump is using tariffs to wreck our economy as a reward to the Russians for helping to get him elected.
Trump doesn't impose tariffs for economic reasons.
He doesn't even understand the economics behind them.
Trump does it because his feelings are hurt.
Or he does it to "look strong"
Trump thinks tariffs are a club he can use to hurt people who are mean to him and doubt his "genius".
Monday morning, if it takes that long, will bring a new round of tariffs against Canada, France and Britain.
How dare they laugh at him!
Trump's bruised ego is not a national emergency allowing him to bypass Congress, yet Republicans will roll over on their backs and allow him to do so again.
The GOP isn't strong. Republicans aren't patriotic.
McConnell and the rest are weak men who run and hide when the schoolyard bully threatens them.
They are too timid to stand up to him.
Cowards, each and every one.
Vote Democratic in 2020.
Every office, every seat.
3
Its not enough anymore to criticize Trump's tariffs.
We live in a new era which demands a complete overhaul of world trade policies and institutions.
I'd rather see Krugman attempt to take on the effort to overhaul the system, which isn't working. If he cannot do that, then his criticisms towards Trump are irrelevant in my view.
Put up or shut up.
In other words Trump has been the quarterback in international trade. Well, the quarterback has fumbled the ball, and in fact doesn't even know the plays. Answer, take him out of the game, especially since he has just left the G-7 field in total ridicule.
If you like French wines you better stock up now, and just waiting for the tariffs on Canadian wine.
I almost felt a tinge of sympathy for trump after his comeuppance at the NATO summit the other day. But then I caught myself, remembering all the people this president has cruelty mocked and bullied himself, including young Greta Thunberg. By those standards, Mr Trudeau’s comments were nothing, other than being true.
Imagine being gossiped about by no other the the Princess Royal. I guess you can add Scotch and Whiskey to the tariff list now.
Tariffs are required to level the playing field for those exposed to global competition, as otherwise their industries willl migrate to those countries that have worker willing for less
At some point, every country in history has made the decision to protect its vital industry - even if waving tariffs would led to lower consumer prices.
That has been the case in agriculture since the 1920' s
Food is too important a resource to be outsourced. That is
e.g. why Canda has 200% + import taxes on dairy products
Mr. Krugman has yet to understand that manufacturing falls into this category. He needs to read Peter Drucker's "The Next Society" to understand why manufacturing would follow the path of agriculture
No other US economist has done more damage to the US manufacturing sector with now proven wrong theories of the distributive effects of free trade (read David Autor, MIT) than Mr Krugman
He needs to visit Syracuse NY to see what his theories have wrought. Or read the NY Times
Becoming a steelworker liberated her, than her job moved to Mexico
To see what damage he has caused. But if you read his "In Praise of Cheap Labor" you will see that he couldn't care less to his fellow Americans that saw their jobs disappears.
Instead he calls his complains a "moral outrage"
https://www.economist.com/special-report/2001/11/03/the-next-society
https://slate.com/business/1997/03/in-praise-of-cheap-labor.html
1
You have to think he's manipulating the market. We have no idea, since he will not release his financial data, where his money is invested? Or his familes'? Or his cronies? Shorting the market maybe? At least that would make some sense of his moves!
238
Jerry, my thoughts exactly. Every time he announces a tariff, the market fluctuates. Who’s placing Trump’s bets? I certainly hope this possibility is under investigation. What would be the investigating agency? The SEC?
33
@Ms Fabiola
And who is ultimately in charge of SEC? Maybe Bill Barr? And who is his boss?
10
@Jerry in NH
If anyone is taking advantage of the markets because of Trump tweets and tarif moves I would start looking at the inner circle.
Probably start with Fox. Like fox in the hen house.
Then maybe Family, even extended.
Then his good buddy, Putin and Putin's friends. Oligarchs?
19
Trump views everything as a zero-sum game; hence, either we are winning at trade or losing. If Canada is succeeding at whatever, then we must be losing, so we have to strike back. The playbook is mixture of bluster, cheating and caprice.
177
@Jamie The softwood lumber "dispute" is a classic example of "...either we are winning at trade or losing. If Canada is succeeding at whatever, then we must be losing, so we have to strike back."
Despite losing every NAFTA and WTO ruling on it, the US attack on Canada's softwood industry keeps coming back. Like cockroaches. Too bad for US home builders who much prefer Canada's slow-growth wood to fast-grow from the US south.
8
Yes, Trump's predilection for one-on-one bilateral trade deals and animosity toward multilateral agreements is all too clearly a recipe for corruption on a global scale. Piecemeal, ad hoc policy, rule by exception rather than through broad frameworks that establish stable, commonly understood rules of engagement for all, is a precondition for kleptocratic cronyism to thrive.
10
While I absolutely agree with the conclusion that Trump has become addicted to tariffs precisely because it is an area in which the executive has nearly unchecked power, I am willing to believe that Trump began his term, and possibly his candidacy, in favour of tariffs on the basis of a simple principle: that companies can, through tariffs, be forced to do things inside the United States -- especially manufacturing -- that are less expensive to do elsewhere.
Two corollaries:
1. Trump's principle of manufacturing in the United States never applied to Trump himself. (See this classic Letterman interview in which Letterman informs Trump where his products are made: https://www.youtube.com/watch?v=MLc-sgxTv4s)
2. Knowing what we know now, it is inconceivable that Trump has ever weighed the costs of tariffs on any level.
13
Tariffs are consistent with the Republican agenda of taxing consumption rather than taxing income and wealth, the latter forms of taxation despised by the Republican Money Class. Working Class Republicans fail to understand that the enemy of their enemy is not their friend.
13
This article is precisely why I'll never vote for the Democratic party favorite candidates such as Biden, or those who latch on to party-favored trade policies like Buttigeig and the like.
Krugman mischaracterize most everything about trade in favor of an agenda that makes certain economists and multinationals happy while ruining the lives of millions of people.
It's time to allow a new generation to form better world trade policies. The generation in power has failed miserably.
@Reeducated, I agree that policies to check corporate power, especially corporate influence over Politics, are critical.
I think you will find that multinational and large domestic companies thrive in both tariff-free and tariff-rich environments. As a historical matter, I think you will find that lower tariffs and freer trade lead to significantly lower prices on goods and services; to more and deeper connections between countries and peoples; to less hostility and fewer threats between countries; and to the democratization of technology and the reduction of certain kinds of corporate power, as happens when everyone in the world has a smart phone.
1
At Wharton, which Trump loves to boast about how he attended, they include games theory in the curriculum. There’s an important assumption of the theory that participants are rational actors, and always base their moves on what is in their best interests. The problem with Trump is the assumption of rationality, at least what normal people would consider rational. What motivates him seems to be keeping himself in the limelight and watching people get upset. So he is using tariffs, a means of influencing the behavior of trading partners and something he has power over, as a means of getting what he wants, which is not better trade conditions for America, but getting lots of attention for himself.
It’s either that, or he’s using the volatility for gain.
8
@Richard I'd love to see the Trump family's stock portfolio. I tend to think he is gaming the market for his monetary benefit.
2
Tariffs are the perfect weapon for someone who has always confused bullying with negotiation. That said, tariffs do have their place, applied sensibly and delicately. Unfortunately, sense and nuance are not in Mr. Trump's arsenal. But as others have said, they sure do make him seem tough.
Maybe more to the point, and perhaps buried in the comments that in my hurried reading I missed, is this speculation, natural enough when one considers the con-man's history:
A phone call from one of those 1- numbers to a broker the night before a new tariff is announced.
I'm sure the Trump SEC has its eagle eye on it.
Maybe we'll know when the Supremes get around to making the financials records of Trump Enterprises public.
8
A better question is "why have democrats historically been in favor of tariffs? The answer is because every nation, including the U.S. have particular values, industries, and other features that they want to protect by barring imports. In the U.S. we want laborers world over to have the benefits that our workers want. China wants to employ it's billions of workers by importing jobs from other countries. They negotiate deals or erect tariffs. And so it goes. Wait, Schiff says that's bribery.
@Kent Kraus
No Schiff says bribery is coercing an allied foreign government to lie and smear his political rival for his own benefit before releasing funds already allocated by congress.
And that is bribery, extortion and high crimes.
2
Yes, the president has enormous power, that's why we have to be careful how we vote - or how we sit home on election day and let the other guys vote.
11
The conservative fantasy is that america has been victimized economically by countries like Japan, China, Mexico and Canada. The narrative has been that the decline of industrial america, mostly in red states, is due to external actors and has nothing to do with domestic politics and policies, yet nothing could be further from the truth.
It has been domestic policies that have looked away from supporting education in order to help workers move to more lucrative activities that need to be reassessed. Policies that have purposely weakened unions have weakened wages and reduced consumer demand in areas where increased demand would result in local economic expansion.have rarely made it to the front page of newspapers. Renewable energy sources that would be highly profitable on the global scale are forced to compete with the politics of the fossil fuel industry with the result that other players will soon take the lead when we could have been there already !
Trump's tariffs have been nothing more than a diversion involving domestic industrial politics, sold to conservatives as the solution to america's industrial problems when the real problems are stagnant low wages and industrial policies that support the entrenched interests that are clearly doing all they can to put off the future, even if it advances climate disaster , pollutes water and air and leaves workers destitute, without heath insurance. At some point even conservatives will have to wake up to Trump's fantasy !
27
I agree w @Walter—but there’s another factor at work here. Americans generally believe that, due to their country’s size and economic and military might—and, of course to being Gods favourite, that foolish actions have no consequences. This idea may infect every superpower in its day—it certainly has a hold on a substantial number of Americans right now.
I suspect that it is worse than you think. The Tariffs were supposed to be "shock and awe". Canada capitulated some, Europe made some accomodations, But the big win was supposed to be subjugation of China. If he could put China on its knees, begging for mercy, Trump would have been a big winner. China is big, but not yet dominant, and so our moral suasion and cultural hegemony may still have had some room to nudge them our way toward cooperation rather than antagonism. It is true that policy has not been very effective, but at least China felt some tethering to our system in supply chains etc.
So, here comes T with his aggressive and antagonistic tariffs, expecting China to buckle. Instead they held out and retaliated and found out that their domestic economy had passed a point where they could resist. The game is now tied and they have the upper hand, no longer afraid of us and worse, no longer feeling they need to accept our cultural outlook. Thanks Mr. Trump, we better learn Chinese, dress in silk, accept Huawei and learn Chinese dance, and sorry Hong Kong and Uyghurs.
9
Tariffs are neither the problem nor the answer. Crony capitalism is the problem. Nobody has found the answer.
Crony capitalism is a zombie that shambles on from state to state and from country to country. It never fails to fail. Yet it arises to fail again. It killed the public option and infested the ACA. It has produced the student loan debacle and an endless, rent-seeking corporate lobbying campaign. Crony capitalism destroyed a once vibrant manufacturing sector of our economy and is working to bring down Social Security and Medicare.
Crony capitalism has given us the modern Republican Party and its Republican President as well as neoliberal Democratic Party. We desperately need a candidate and a party committed to driving ending crony capitalism and preserving our Republic.
370
@OldBoatMan Is there such a thing as non-crony, pure as the driven snow, capitalism? Historically, every capitalist in history wanted and sought to become a monopoly. They dread competition and "free markets."
23
@AJL Ask Bernie Sanders.
7
@OldBoatMan
Crony capitalism/predatory capitalism/ monopoly capitalism/state supported capitalism -- can't just blame Trump -- good ol' Bill Clinton , George W Bush, and Obama did their darnndest to shore up the system. Get the FED to lower those rates!!! (not)
Cuomo, de Blasio similarly. All the perfectly functional sidewalk cuts in this UWS nabe are being replaced. WHY? Lots of work, the end product may well prove to be inferior-- no expansion seams in many cases... and the broken pavement in the middle of the blocks and in the median at 116th and B'Way e.g. have been there for at least three decades. All complaints are ignored. Which politician is rewarding which campaign contributor has this contract. Ditto the subways. Cleaning costs much less than flash technology which is why it can't be done. How much money was wasted redoing the 168th St. #1 subway station when what the beautiful Guastavino vault needed was a good bath. When will the lowered suspended ceiling come crashing down -- and when will those elevators be fixed and was that really necessary. ?? How are people to exit that station if the elevators really do not function? Where are the stairs? Costs??
MTA busy installing the .5 billion flash tech. Friend of?
Needs vs. ?? charity-home. Hopeless. I no longer even try to complain. Were are the cute "free library" bookfeeder boxes? (Can't have em on the UWS! -Helen told me.
6
Not knowing the background to the tariffs question, I had been wondering why one person, the president, had the right to change things that affect so deeply and directly the entire country. How can one person be given so much power over the economy without the consent of Congress. It seems that no one expected a person like Trump to come along and create confusion if not crisis. This is another reason why it is crucial for Congress to maintain and strengthen its authority to oversee the actions of the administration.
14
@Frank Casa
Frank, you say 'no one expected a person like Trump to come along . . ,". I did, and so did many others. Clinton and Obama so neglected the wages and interests of the people they set the nation up for a con man. Hillary provided no answer, and the Democratic party sold out to her and provided her with 250 super-delegates before the selection process even began at the convention. It won't be permitted to happen this time, and the man who should have run last time, a man who will take care of the interests of the people, Bernie Sanders, will run and win.
3
Given recent events, my office colleagues and I have a betting pool on how long it will be until Canada gets hit with new tariffs as a consequence for our PM being two faced...err...a security risk to the United States. The average window was 3 weeks.
285
@Vince Trade theory and policy are reduced to who looking at whom when ones back is turned or whether the mike is "hot".
There is a Nobel prizes waiting there for all you academic trade economist.
3
I have a dreadful suspicion that someday someone will uncover a pattern of stock market transactions that 'miraculously' anticipated Trumps' various tweets and pronouncements about trade and tariff issues and made a boatload of money for individuals in his orbit.
1090
@Jay Fleming -- Hey, Trump's supporters have to pay for the Mar-A-Lago memberships somehow. Recall that he doubled the price after winning the election... nothing like cashing in on good fortune. And no 'conflict of interest' because "those rules don't apply to the president."
132
@Jay Fleming I have thought the same thing for quite a while. It's true that there is a pattern here of the market being up or down prior to statements from the president "validating" the market moves. It's happening all the time. Is the SEC watching this?
84
@Jay Fleming
I believe people give trump too much credit. His decision making is based only on a shallow objective..the appearance of power. No real thought goes into it.
38
The latest Economist predicts that next year will be the worst for the American economy since 2009, chiefly because of Trump's trade war with China. He does not understand, or will not acknowledge, the harm his tariffs are doing to the world's two largest economies, which account for 40% of the global economy and thus have enormous effects on other countries that rely on China and the United States for markets. U.S. manufacturing has slowed and our farmers have lost the huge Chinese market for agricultural exports. U.S-China trade declined by 13% in the first eight months of this year, says the Economist, warning that "supply chains are deeply intertwined and often company-specific; even a modest unwinding of ties as companies scramble for new partners and costs rise."
15
Sadly, Trump doesn't even understand how tariffs work repeatedly claiming that he has China pouring billions of dollars into our treasury. The advantage to him, in addition to playing the powerful man throwing his weight around, is that he can claim to his low-information base that he is getting us billions of dollars from China. They cheer and clap, he is momentarily buoyed, and the country pays.
26
@Anne-Marie Hislop Those same clapping hordes at the rallies are those same virulently anti-tax folks that would bolt if they even thought this was a tax on their goods - they rather have their schools close than pay any extra taxes. Yet, because the government programming through FOX has convinced them otherwise, and any talk about how tariffs really work are just Fake News, then we will be stuck here and likely doomed to repeat this cycle. Those same folks will readily accept the reason for the crash as being the impeachment, or the election of a democrat, or anything that points somewhere other than at their dear leader.
Oh, why oh why didn't Pelosi mention that the farm bailout has cost US tax payers twice that of the auto bailout (and the automakers paid that back) when she had the stage during yesterday's town hall?
21
While agreeing with everything our good Dr. K. cites, there may be another reason for tariff man, which would be the same reason that some people say this POTUS makes statements regarding tariffs which he knows will cause market volatility: perhaps there are people in his administration (or overseas potentates or strong-men?) who have taken beneficial market positions using foreknowledge of such announcements.
Besides the general fact that volatility is what makes profits for Wall Street bankers, there is precedence for this administration's officials taking such beneficial market positions, recalling the NYTimes reports on Carl Icahn's "adviser/not adviser" role in this administration and his dumping of stock before steel tariffs were announced, along with several other similar officials' similar misconduct.
Of course, some people think the above is merely the jaded, cynical opinion of one person; maybe they're correct.
87
I agree with Mr. Krugman 100%, but may I add one other consideration, each time Trump either eases or implies possible additional tariffs the markets move instantly. If it were known hours or days in advance the market returns betting one way or the other would be huge, as well as risk free. Possibly the ultimate market grifter Wilber Ross has shown Trump a new trick.
18
I think it's far more simple.
Trump wants to take those actions that the president can do on his own. Whatever it is.
If the president can do something unilaterally, then Trump will use that power.
It's risky to assume there's any greater strategy behind his decisions than that he makes them on his own.
240
@Sarah I thought that was the gist of Mr. Krugman's point? Or are you responding to reader comments?
1
@Sarah
That is one of Dr. Krugman's points in the article...
@Sarah I think that's the point Krugman is making. And I agree with you.
1
I have felt that someone must be profiting from the ups and downs of the stock market during the Trump Presidency; it feels to me like stock market manipulation; I feel like I have whiplash from watching the story on negotiations with North Korea and China go back and forth - a deal is imminent, no, talks are off, etc. The other thing I believe is that Trump is using tariffs, along with any other way to use his power, to benefit his family's business overseas, in addition to political benefit here in the US. He can use his office to reward or punish foreign leaders who are receptive, or not, to favorable treatment for his business in their countries. I think this is one of the reasons he has gravitated toward leaders like Putin and Erdogan, who he knows are corrupt, and one of the reasons he fights releasing tax returns and business records.
16
My take is that it is pretty simple why Trump is into tariffs. It's something he can do that gives him power and attention and that is all there is to it.
There is no grand plan, there is only a lever he can pull and he gets a power rush and lots of attention. That is also why, with Trump, there will never be an agreement with China. That happens and the attention is gone.
Yes, I am sure that the politics about it is not lost on Trump. Being able to provide exemptions for those that are willing to dance with him and provide him money is also a big part of it. But that is also about power and attention.
I would love to see him removed from office by the Senate, but that isn't going to happen. Trump is still their ticket to power in their minds and they are not going to give that up.
So, it's going to be the election as the last hope to have him gone and I don't have a lot of hope there either. Those that support him are rabid in their support and will vote. I am afraid too many that find him distasteful will sit out the election.
That, and the Republicans will push the label "socialist" in a Joe McCarthy way onto the Democratic nominee and far too many will buy into it without doing their own research.
Not sure how we got here and I am not sure how we can get out and back to sober and sane leadership.
10
The naiveté of most people is that they think that the stock market is all that matters,. Trump is jacking that around like a ping pong ball, so it is all artificial. It will crash, it is not a matter of if, but a matter of when. There are far more indicators that need to be looked at to determine the real status of the US Economy.
8
@Bill Dooley
I agree with you. The real status of the US economy is a disaster because of the levels of debt at nearly all levels of the economy. The so-called "prosperity" we are reportedly enjoying is future income drawn back to today through excess debt enabled, in part, by low interest rates and weakened regulation. Every day, the depth of the coming reckoning grows worse. Asset inflation that has been driven by low interest rates and too much money sloshing around is barely acknowledged in most measures of inflation, which is much, much higher than reported (check shadowstats.com).
3
It seems that the president is using tariffs as a means to shake down people into supporting his campaign and other Republican candidates. The tariff exemption process is a good way for this to happen, make a donation and receive an exemption.
22
It is pretty obvious that Trump has to keep a campaign pledge to those displaced Americans whose jobs went to China, and Mexico, and Vietnam.
But he cannot get those jobs back since the corporations that run America are bound to their rich boardrooms, not to poor Americans, and so those jobs will stay where unions are illegal. And he cannot give guaranteed jobs or stipends to the poor and the powerless, for Trump above all is devoted to the same concepts that got Scrooge into trouble, no mercy for the poor.
So Trump uses the treasury to spin wheels, and gain votes, though he is accomplishing nothing.
Hugh
18
Republicans have deep roots with the tariff. It was one of the most prominent and controversial planks in Lincoln's platform in 1860 (South Carolina almost dropped out of the Union when the slave owner Jackson raised the tariff the 1830s and only agreed to stay when Jackson backed down) and every Republican president supported increasing the tariff until after the Great Depression, when it became clear that the tariff wars had made the depression worse.
Tariffs were extremely high in the late 19th Century…much higher than anything Trump has proposed so far. And we had a boom and bust cycles in greater frequency than we do today. Republicans also opposed immigration in those days and portrayed the Irish the same way Trump portrays Latinos.
But Trump’s tariffs are proposed after most of the horsepower has already left the barn. So of course they have the potential for being disruptive in the short term and possibly in the long term.
One of the reasons for Trump’s popularity in rural areas is that there were once factories there that have moved overseas. Democrats need to offer an alternative plan to revitalize rural areas if they want to take back the rural congressional districts, which, interesting enough, were largely Democratic in the late 19th Century.
4
@Robert Scull
The Green New Deal offers enormous potential for rural communities because manufacturers of solar panels and wind turbines can be incentivized to locate there. Instead of giving millions to fossil fuel corporations every year, that money should go to developing alternative energy. After all, alternative energy manufacturing can be located almost anywhere. Fossil fuel jobs require people to abandon their rural homes and go where the oil is.
9
@BG
Yes, the Green New Deal is a great idea in the tradition of Roosevelt and Truman. The best candidate to promote this will be a candidate who already has a track record in gaining the vote of rual independent voters: Bernie.
As a former international trade economist who worked for decades with trade disputes over tariffs (anti-dumping and countervailing duty investigations), I can say that Trump's actions are an aberration and violate the spirit of international trade law. U.S. trade disputes are resolved transparently by the U.S. International Trade Commission and Commerce Department through objective, fact finding of prices, economic injury to domestic producers and workers that happen in stages over 1-2 years. Any findings or conclusions can be appealed to the U.S. Court of International Trade or to the World Trade Organization. Industry, consumers, the stock market are informed in the process which can take several years or more. It's slow, gradual, based on factual evidence, and reviewed by courts or arbitration panels. This policy has worked well since WWII.
15
Giving a child control over a cookie jar allows him to indulge himself to his delight. But what about American industries, farmers and citizens hurt by the child's whims?
Sure the child has been subsidizing (at taxpayer expense) losses to some farmers (mostly red-state large conglomerates) but that still leaves businesses which need to absorb higher costs, deal with lost markets, and citizens to pay higher prices.
Thus far citizens have not noticed higher prices or decided they don't care enough to complain. Perhaps the impact on citizens is not that great but the impact on markets is disruptive and yet there is no market pushback.
Two reasons:
First, in Corrupt Trumpland facts are fluid and flexible. If economists document tariffs harm the markets and increase costs to Americans, Corrupt Trump claims the tariffs are bringing in billions of dollars to build walls, keeping Americans safe in their homes AND foreign countries are paying the higher prices not Americans.
Facts are not just malleable, to MAGAts and Republicans they simply don't matter. Denial of facts is now the foundational principle of the Republican Party and Corrupt Trumpland. It's hard to argue any position, conjecture, observation if you are dealing with people who make up their own "facts."
Second, markets and people fear retaliation from Corrupt Trump. He has shown he is a mean, vindictive loser. If you cross him with the truth, he lashes out with the power of the presidency and his Twitter cudgel.
28
@JABarry ......well said
Obviously giving the president unilateral power over imposing tariffs is a huge mistake. Trump seems to have captured some credit for his sanctions against China. Both parties harbor tremendous resentment for China's climb to parity with the US economy.
1
Trump's periodic on and off tariff moves appear to be reflected in many of the the sawtooth stock market shifts for the past year. Anyone who knows he is about to announce another tariff change might have a wonderful opportunity to time the market.....
15
@Tom
You are on to something, I feel it a certainty.
@Tom ......that would never happen.....and its illegal....
Tariffs also allow Trump to play Santa Clause by giving farmers taxpayer money for the hurt they are experiencing. But, as with all things Trumpian, the bulk of these payments go to the wealthiest, while poor farmers are being driven out of business.
20
Professor, you are the expert in the economics of international trade but let me suggest another possible reason for Tariff Man.
Tariffs strike me as a blunt instrument both economically and politically; geopolitical hammers if you will. They require little finesse or understanding of complexities.
As such, they are the ideal "tool" to a man who is a blunt instrument; a man with a limited capacity to reason.
So, tariffs and Trump are made for each, both with the subtlety of a hammer.
24
@Fred
This analysis, seen also from the light of Trump's habit to go back on his word, gives a whole new meaning to the word "cave man".
There is a good side. The flexibility granted to the president refers to trade laws that affect the economy and even if it is a disgrace, it would be worse if the criminal law would give Trump the flexibility of "locking-up" persons if he perceives they are dangerous to him. I cannot imagine the long list, starting with Hillary and Biden and lots of journalists. Most of all, in an election year.
3
Yet another week, yet another column about Trump. It looks like Trump found a way to captivate his opponents so that they can talk about little else.
How about giving a platform to the Democratic candidates?
7
I’ve been surprised at how little the markets actually have care about trump in general. I have long believed that when he was elected the markets would (will) crash due to his incompetence. The difference I now believe is that his voters - who are driven by emotion, fear and animosity - are very different from the markets who are driven by data, shareholders, and payrolls. Those two worlds can’t live in parallel forever though and trumps actions on tariffs may be the thing that “crashes” them together. Let’s just hope it happens this year before the election.
7
The Trump Wall st Administration passed Tax cuts for mostly the wealthy in December 2017. That was followed by a Consumer Tax Tariffs flashing main show that kept everyone off balance and confused as the consumer tax tariffs paid down some of the deficit the tax cuts created. So the wealthy pay less in taxes and the consumers pay for the wealthy's government services. Now I understand! Wall Street wanted tax relief. Trump is of the street.
10
This country was once financed by import duties. One of the first US governmental functions was the Customs House. The move to zero tariffs can be argued by economists and politicians but let’s not make these fees out to be something heinous by the Trump administration. One question that I haven’t seen asked is why does a President have the ability to play with the tariffs like an auctioneer.
4
@From Where I Sit Your question was clearly answered in Dr. Krugman's column. Please reread, as the explanation was very interesting.
8
Did you even ready the article? Because he can.
Speaker Paul Ryan floated the idea of placing Duties on imports. The idea was quickly withdrawn after protest.
December 2017; Trump and Republicans pass 1.5 Trillion dollar tax bill that benefited mostly the wealthy. It included much applauded 15% foreign profits tax meant to bring back business, but lowered 21% corporate rate still meant it was profitable to leave.
Old idea of Duties was renamed Tariffs by Trump which was a new consumer tax. Presumably, the new Tariffs taxes would pay down the deficit ballooned by the tax cuts to mostly the wealthy.
Additionally; massive multi billion dollar fines have been levied against major Corporations .
Between the Tariff taxes and the large fines, the deficit increase by the tax cuts is being largely reduced.
So the wealthy now pay less and the consumer pays more. The deficit is reduced. The foreign profits tax is still lower than the national corporate tax rate so business will continue to leave.
Did everybody watch everything happen? Did you keep your eye on the shells as they were shifty?
2
@PATRICK
I was watching the shells, and I saw that the deficit hit a record $1 Trillion. If Tariff taxes and corporate fines reduced the deficit, it was by just a little from that lofty level, and still way too high. There have been cuts in Medicare services as a result. Republicans are talking about cutting SNAP, which is the food stamps program. If Republicans remain in power next year, they will go after Social Security, Medicare and other programs with abandon. Please don't try to minimize the damage done by the tax cuts.
3
@PATRICK The deficit is growing.
1
@Michael
I'm sorry you grasped my comment other than intended.
Let me put it simply thus; the rich bought their tax cuts and shirked social responsibility and we have to pay to support the rich by paying tariff taxes.
1
We know from his past practice as a businessman, that Donald Trump and Trump industries, has a very sketchy history. I hear reports of 9 bankruptcies and numerous charges of underpayments to vendors and short changing workers. Many of his operations in the business world are on the edge of illegal. Allowing him access to the power of our marketplace will be a disaster for many of us as he manipulates trade to benefit his friends. Were his friends all good standing American industries, that might not pose a problem for many Americans, but his very best, loyal business partners are the Russians. He appears to owe the Russians all of his worth, and then some. What do you suppose Donald Trump is willing to give to them to cover those debts?
26
"Nevertheless, Trump persists. Why?" Because 45% of the country will support him no matter what he does and no matter how destructive his policies become.This is what we are dealing with. Those 45%, and only those 45% could be waiting in bread lines everyday and they would still believe Fox News when they tell them the bread lines exist because of Liberals and Immigrants.
74
@Josue Azul “ONLY those 45%“??? That is a huge number, if you haven’t notice—near half the population. That should give pause to thoughts about how to best bring about a return to normalcy.
"Anyone imagining that he's going to change his ways and start behaving responsibly is living in a fantasy world."
I can't read this without thinking of the pundit class who were convinced that Mr. Trump would morph into a serious adult upon assuming the heavy responsibilities of the U.S. presidency.
That was not going to happen...because it could not happen.
36
The Trouble is US 'free trade agreements' are not always 'fair trade agreements.' Whenever possible the US uses trade to leverage advantage and high prices for its big corporations, which are of course large donors and lobbyists. A very recent example is the revelations from the UK that a post-Brexit trade agreement with the UK might involve forcing the NHS to buy life saving medicines from US big pharma at higher prices which could have a devastating effect on an under-resourced service.
26
Well, again we see that the root of the "Trump" problem is that Congress long ago decided to duck any responsibility it could.
13
@chairmanj
Now we are paying dearly for their ducking that responsibility!
Pretty sure that the root of the Trump problem is his sociopathic personality and narcissistic nature. And the millions of people who were conned into voting and supporting him.
1
I'm not an economist, but was trained as an Industrial/Organizational psychologist, and I would agree that Trump's behavior is all about power--things that he can do autocratically with no one to stop him. I do have to wonder whether he plays the market when he knows he is going to slap a tariff on some country. My own sense is that the market is remarkably resilient in spite of the tariffs.
23
@Habakkukb ....i would think that IT and certain insiders are given a "heads up" about some insider trading......although illegal......when has that stopped this administration.....
And here I've been thinking that Trump was tariff-crazy because some of those "many people" who tell him odd things had suggested that tariffs would impress his MAGA base. Or maybe when he found it such an easy game, he relished the power of pushing those buttons.
I'd like to join Nancy Pelosi's prayer meeting....
35
China is no friend of ours. And we need to send the message. If we imposed trade sanctions, both sides would be hurt but the message would be sent. If we impose tariffs, the economists speak out in horror. But truth be told, except for small details, trade sanctions are tariffs are the same thing.
@michjas China may be no friend but you can't wish or tariff China away. Proponents of trumpian thought always have this as a fall back argument.
20
@michjas How about France, who is currently under threat of a second round of massive tariffs?
10
Through most of America's history most Americans have been impoverished but their lives are not the subject of history. Canada is a trading nation and free trade has been very good for us and it has been very good for America.
America's economy is by far the largest economy in the world and we all suspect tariffs will shrink the world's economy.
What we don't know are unintended consequences and whether the might be good or bad.
I didn't get my fresh local endames this year they were all spoken for but this years citrus from Spain, Morocco the middle East and South Africa was first rate and inexpensive.
Tariffs are a very interesting way to roll the dice and although he doesn't know much Trump knows how to roll dice.
The nice thing about a trade war is the USA will decide which of its citizens will benefit and which will lose biggly should tariffs become another zero sum game. I understand the beaver is about to be replaced by the blue cow.
5
American economy is big, no doubt, but the European economy is just as big, you cannot compare the USA economy to Germany, when comparing economies you have to look at the EU as one entity.
When you do that you will see how close they really are.
8
@Rober
With about the same size populations and double the GDP growth somehow the USA provides less upward mobility, less education, less security, poorer health and less not more of what we call freedom.
America is a free trade zone at least until there are restrictions on trade across state lines but my perspective as a Canadian and tariffs will not be kind Canada where we try to have a shared prosperity.
I am not a Europhile. I am heavily involved however in the economic well being of the USA.
We can and do compare the economies of the USA and Luxembourg because basic human needs are measured and whether it is a billion or million individual rewards can be measured as a share of the whole.
I do not understand what you are saying when you say we can't compare the USA and Germany economies, we can and do.
An economy is not an accident it is by design it can exacerbate or ameliorate inequality but most of us live in a local economy.
The success of Canadians looking for the blue cow on dairy products is a tribute to Canadians understanding of trade. When Koch Industries bought Georgia Pacific and its lackeys in congress slapped tariffs on Canadian softwood lumber it was a signal that government was able to rob from the poor and give to the rich.
If you want to compare the USA to Germany it is simple
https://en.wikipedia.org/wiki/List_of_countries_by_income_equality
1
@Rober Tell that to the Brexiteers.
In his book “Talking to Strangers” Malcolm Gladwell observes that a functioning society needs us to trust one another, but some suspicion is necessary. I would like to trust that my president and legislators are generally acting to benefit Americans and the betterment of our worldwide community. But, I don’t feel that way about our current president or his party. Trump has learned how to use the government to benefit himself. So, we taxpayers are assisting the bottom line of many of his golf clubs. His advocating for Putin and following much of the Putin foreign policies, especially in the Middle East, makes me wonder what he gets out of it – not we as a nation, but Trump. Will he eventually receive permission from Putin to build a tower in Moscow? And the tariffs, who do they help? I’m afraid most benefit some investors and never the general American public. The farmers in my area grow fewer soybeans (why do they grow any?) and for some reason aren’t receiving much aid – is PA too far north? It’s all about benefitting Trump and the nation suffers and the GOP becomes a party no longer respected but disbelieved.
36
"The most commonly given explanation for these bad results is that Trumpian tariff policy is creating a lot of uncertainty, which is giving businesses a strong incentive to postpone any plans they might have for building new factories and adding jobs."
I've seen/heard/studied this "business uncertainty" rationale since the almost 40 years I've been out of grad school. Seems to me its only another argument for the capitalist class to keep all of the gains of productivity increases and the enslavement of the working class for themselves.
Ronald Reagan was the start of this "voodoo economics" model that has continued to this day. People are afraid of being one or two paychecks from bankruptcy. My family is lucky; good choices were made to allow us to be set for the rest of our lives. That doesn't mean, however, that we aren't concerned for those who haven't had the "luck" or good fortune that we've had.
There will always be poor people. But its all relative. When the relatviity gets out of hand, however, there will be a correction. I hope and pray its not violent.
31
He's running the country like a mob boss. He sees our defense policy and alliances in terms of a protection racket. As for trade, all he cares about is that he gets a piece of the action.
108
Perfectly stated. Just as to a hammer, all problems look like a nail, to a petty mob boss like Trump all influence is leverage for extortion for his personal gain.
2
Interesting read.
I'm leaning Trump tariffs rewarding large donation corporations and the 1%.
You had me at "Tariff policy isn’t the only arena in which Trump can practice crony capitalism", but the article doesn't even scratch the surface on cronyism.
In Dr. Krugman's defense, the article would have to be devoted to cronyism.
Sen. Chuck Grassley makes sure he files for his welfare check though, doesn't he?
9
I'm so sorry to lower the tone but it's impossible not to. He's actually, most consistently, bronzer man. When challenged he folds - but the bronzer remains.
4
Trump has injected so much uncertainty into US markets that it is possible a house of cards has been created, teetering on collapse with every baffling move or pronouncement or tweet.
Is Russian money for our candidates along with their deepening control over our country worrisome to voters who are afraid of immigrants or the GOP who drink at a trough of their rubles? Nope.
11
"Instead, corporations pocketed the money, and business investment has been falling."
Nope.
Business investment in 2016 under Obama? $455 billion
Business investment in 2017 under Trump? $507 billion, a 13% increase.
Business investment in 2018 under Trump? $618 billion, a 36% increase
(W790RC1A027NBEA)
In 2018, as the Dems took control of the House with their 90% "marginal" tax rate ideas, the stock market tanked $5.5 trillion, consumer cofidence plunged 10 points and business investment, which had been increasing at a pace of $60 billion per quarter, dropped $40 billion, a $100 billion swing.
Now, the stock market is back at peak and business investment will likely follow.
Study and immerse yourself in rational expectations theory to begin to understand the complexity of economics.
1
@John Huppenthal
" the stock market is back at peak and business investment will likely follow" And this means what, exactly, to you.
Does it explain trillion dollar cuts in social supports madly desired by Trump, and fine with Republicans?
Will all that cash save our schools, our hospitals, our national parks?
In what way is the stock market a meaningful indicator of anything for most Americans?
That we are an incredibly wealthy country awash in very poor people. People with no prospects and failing hope?
In twenty or so years, when many corporations approach the stated goal of reducing their human work force by as much 90%, will the stock market compensate workers for beastly corporate decisions?
Or will we have yet another round of blaming unmotivated, unskilled, lazy workers trained by the slightest whiff of social compassion to loll on their couches eating bon bons, waiting for the call their Cadillacs have been serviced and are ready to go?
36
Jobs numbers? About the same as Obama. GDP? About the same as Obama? Remember that your guy inherited an economy with 75 consecutive months of growth. He gets the credit for whatever else he did beyond that, but be fair. Hopefully President Biden will keep the momentum going.
6
@John Huppenthal NIce numbers John, though you should have started with 2010 if your intent is to do an Obama/Trump comparison. Obama inherited a mess, and in 2010 investment had fallen to 147b. By 2015 it had climbed to 672b, dropped in 2016 to 437b, (an election year which historically will impact corporate investing) and has climbed back to 676b, though there has been another drop to the current 569b. All of which means, Trump, after a massive 1.5t giveaway, has only managed to reach the Obama years before losing 14%.
"Study and immerse yourself in rational expectations theory to begin to understand the complexity of economics."
11
Is the stagnation so secular now that 2.4% growth is considered “solid”? That’s the annual growth since the first quarter of 2017.
7
Mr Trump is a tariff man because of his tax cuts given to American businesses. To make up the fiscal shortcomings he is using tariffs to tax the middle and lower economic classes of American citizens.
Tariffs also allow wholesalers and retailers an restrained profit margin. It's Mr Trumps way of saying thank you to his big business supporters
19
As usual, Professor Krugman provides a well-reasoned and quite erudite exposition of Trump's tariff war "policy."
Notwithstanding the academic brilliance of Paul's opinion piece, I think a more mundane explanation for Trump's tariff war might also be possible: Extortion. (Comes natural to The Donald.)
And in general, I think that overthinking Trump's actions dignifies them with too much comment because they are not worthy of the sweat off Dr. Krugman's thought process...
35
It seems to me that the harm to manufacturing and agriculture from the Trump Tariff actions are seriously hurting his popularity in the States that produced the electoral college votes that put Mr. Trump in office. So I feel that the negative effect of his trade policies, if properly messaged, will cost the President any hope of being elected to a 2nd term.
His trade, tax, and environmental policies are costing the working taxpayers many billions of dollars and as your have cited recently these policies are also taking a toll on the health of Americans.
Even though I don't know, there is also the strong possibility that his trade policy malfeasance is being used by people very close to the trade and treaty negotiations and tweets to engage in very profitable but illegal insider trading. The U.S. Securities and Exchange Commission ( SEC) is an INDEPENDENT AGENCY of the federal government. The SEC holds primary responsibility for enforcing the federal securities laws, proposing securities rules, and regulating the securities industry, the nation's stock and options exchanges. Surely the SEC is watching the persons close to the various trade wars that the President has launched. Insider trading can get you thrown in jail.
I also can sense that the tariff exemption letters given to companies are an effective prompt for sizable donations to the Trump re-election campaign. It is a never ending flow of funds and potential support for Mr. Trumps re-election.
20
Trump's Tariffs are a tax on Americans. But not all Americans are equally affected. The wealthy 'donor class' most likely buy less from China and other impacted origins and classes of goods. Those tariffs affect mostly manufacturers sourcing components from China, and people shopping goods from there. People who stop at Walmart instead of Nordstrom's. Ordinary, non-political-donor-class people. So Trump's Tariffs don't heavily impact him, and people like him... they affect people who might have voted for him. Does Trump care about people who voted for him? Sure he does - just ask the farmers he's buying off with bailouts because of the huge negative impact Trump Tariffs have had on agriculture. It isn't enough, but Trump can spin it to look like he cares. Meanwhile, the revenue from the tariffs helps offset his "Tax Reform" and the deficit increase from that. Trump imposes his tariffs because it looks like he's doing something, and because it is easy for Trump to lie that those tariffs are actually accomplishing something positive... when in fact they are negatively impacting the US economy more than helping. But it's the spin that is important - "Trump is the first president to take on China..." Yeah, and how's that working out for you, anyway. Well, Trump doesn't talk about -that-. But ask a farmer, or a small manufacturer paying tariffs on manufacturing inputs. Or just watch Trump's spin and tell yourself he's a man of action, without considering the results of his action.
12
Now, I have to spend twice as much on French wine because France increased taxes on Amazon, Google, and Facebook. Aside from the question how tariffs are an appropriate response, assuming any response is needed, is Trump somehow getting kickbacks? Is he selling wine? Can Congress at least take this power away from him?
14
@Doug Lowenthal
He IS selling wine. He bought a winery in Virginia which is now ostensibly owned by his son Eric.
He already put a 25% tariff on wines from France, Spain, Germany, and some other European countries in October. The new proposed tariff only impacts French sparkling wines specifically.
And yes, Trump Winery does make a sparkling wine.
Disgusting that he gets away with this.
1
With Trump, its Occam’s Razor. Trump has threatened tariffs on French goods because he feels that Macron has insulted him, and Trump has the emotional maturity and burning desire for revenge of a 12 year old.
2
@Daggerz It’s impressive how he scrupulously avoids even the appearance of personal conflicts in his policy decisions.
Great article. Tariffs, and tariff exemptions, totally politicize international trade. That's all there is to it.
14
Pardon me for writing this, but Trump tweets before he thinks, creates bad policies and does not listen to experts in the field. Now he has gone against China in a big way without allies. He could have focused on stealing intellectual property and asked for an agreement, worker rights, any number of demands and our western allies would have signed on. But he alienated every one of them. He is not the ultimate dealmaker, he is the ultimate dealbreaker.
I am neither for protectionism, unrestrained free trade or "free trade" as defined and engineered by lobbyists working for interested companies.
What is wrong with "freer" trade with guardrails? Where our companies think twice before shutting down factories with well paying jobs and moving to a country with no worker protection or minimum wages? How can we expect to compete?
From what I read, NAFTA only helped the owners of companies in the U.S. and in Mexico, the workers got shafted.
TPP would have continued that "policy" across Asia. Why is that good for America?
4
@Gary Valan TPP may have been flawed but it was politically necessary to align Asian countries with US policy rather than China. The wise decision would have been to keep negotiating to improve TPP, not to walk away and get nothing in return. Negotiations among parties with competing interests will not reach agreement without each party giving up something in order to get something else.
27
@Gary Valan
Our companies have been doing this for decades. Running to southern states with no worker protections or minimum wage. All those good union jobs from northeastern and midwestern states went south. I have no empathy for them.
8
@Serban
Exactly. The TPP,imperfect as you said, was a powerful tool to not only solidify our partnership with a stronger Asian trading bloc, it also promoted stronger protection regarding intellectual property rights.
5
Regardless of the motivations, we should acknowledge that Trump’s tariffs are hurting China. That is a good thing. It is abundantly clear — even to a liberal economist — that China wants to make a deal and solve their trade problem.
3
@Justin True but China can tolerate the war longer, much longer. By that time the US will have permanently lost its soybean and other agri. market.
10
@Justin
Hurting China is not necessarily a good thing. Many other nations trade with China, so if the US tries to undermine the Chinese economy, it will hurt many allies of the US, such as Australia.
Trump’s trade war with China is hurting the US, China and the rest of the world. Trump has added policy uncertainty to US trade policy, and that is not a good thing, whether it hurts China or not.
12
Wouldn’t it be nice if we didn’t think we needed to hurt anybody in order to redress misbehavior in the globally interconnected marketplace? If we worked hard to build up our allies instead of alienate them, we might be able to leverage enough peer pressure to curb the worst of China’s misbehavior. And if we actually behaved according to the values we say we believe instead of always resorting to “American interests” as a way of excusing our own unfairness to other nations when there’s an extra dollar to be made or it’s just inconvenient to be moral, well, we might be worthy of global leadership and actually able to wield it. Instead, we have Mr. Tariff.
14
Also, punishing somebody by making them pay (which still seems to be what he thinks tariffs do) is the form of exercising power that he instinctively turns to.
7
What lever Trump can pull unilaterally, that's what he does. Tariffs, immigration, foreign policy, (or the lack thereof), and pardons. No negotiations, which suit him because he is not that good at it. At all. There is, unfortunately, one more lever he can pull, and that should frighten us all.
15
"White guys in diners" used to be less important, when two parties competed for their votes at all levels of government. When a decade ago we Democrats foolishly gave up competing strongly at state and local levels, and Republicans intensified their efforts, we got gerrymandering and voter suppression. Democrats may not like the increased power of white guys in diners, but we have ourselves partly to blame. The antidote is to compete for them once again. Bad tariffs would be one issue that might bring some of them back.
13
Are the tariff announcements mostly red meat for the base, another way of showing an attack on non-Americans?
I don't pretend to understand business, but it seems like the tariffs either don't go into effect, or are pulled back after a while, or are balanced by government subsidies....farmers being one example.
Is it mostly for show and a few stock trading insiders?
16
Tariffs make it appear that he is trying to do something for the country, but in fact they are a hidden tax on the American consumer, one that hurts the middle class and poor more than the rich.
Tariffs feed inflation that is paid for by the least able to pay and hurt international trade. Just ask our farmers whose trade with China has been hurt probably beyond redemption as China has chosen to buy crops from places like Brasil. And this hurts the tax payer as we have been forced to pay farmers subsidies to cover their 'temporary ' losses.
Trump has used tariffs as a blunt force weapon that he thinks will make others cooperate, but countries have chosen to go around us and not deal with us. In the end it will isolate us ever more from the rest of the world without solving problems that need to be addressed through delicate trade talks, but Trump the cave man that he is, really knows nothing of the art of the deal or even how to talk like a human being with others.
16
Tariffs and trade agreements are the President's personal toys, his private truck air horns. Mess with him and he'll tariff you. Mess with him and you won't get any of the breaks his friends are getting. It doesn't help that he gets support from his advisors on theses actions and these same advisors seem to have a personal stake in the game. This is a White House where a whole lot is personal. It's a very inward looking crowd.
I wish there was an actual plan of action laid out on how to deal with the likes of Chinese trade policies that are a real danger to the health of our economy. That plan would likely involve an organized effort of like minded nations working in cooperation with Trump. That's an option that has faded away in the rear view mirror as relations between Trump and those nations continues to deteriorate to a point where salvaging such an effort seems remote at best.
12
Trump is definitely using tariffs to move the media and stock market as needed. Part of his strategy is to act like a wild man, so that when he does offer something halfway reasonable, his plan is that the opponent will jump at the offer. Many of his opponents have seen through the strategy.
14
Good analysis! Ever since Newt's K-Street Plan, it has been a GOP priority to hand federal agencies over to corporate lobbyists in return for money and power.
This program is incoherent. It dissolves the stabilizing function of law into the anarchy of capitalist competition.
But the shift to Putinism-Trumpism does make sense. Those invested with legal power can pick and choose which cronies to back for electorial cash in hand.
Nothing unusual here. This is only the normal state of human governance that the U.S. struggled nobly for two centuries to overcome.
Trumpism merely confirms that there will be nothing at all great or exceptional about America.
20
It’s hard to believe that all these high-powered money managers are still jumping every time Trump snaps his fingers. You’d think they’d have learned to ignore him by now. The Chinese have. Kim Jong-Un has. European leaders have. It doesn’t bode well for how they’ll handle our money when the business cycle sends us down the deep hole of recession - or worse.
30
Since Trump likes to commandeer moves in the equity markets, why not institute a transaction tax? Then the money will add to tax coffers instead of to himself and his cronies.
13
Reading the comments, the paranoia and conspiracy theories being expressed would be funny if they weren’t so frightening. Does evidence even matter to the left anymore? The simple fact is that many non-economists (and economists) think tariffs are a good idea. So, barring any evidence to the contrary, it’s reasonable to conclude that Trump really believes that it’s bad for America to let China take advantage of us and really believes that NATO countries should pay their fair share, etc. Trump Derangement Syndrome is real and very evident in the left’s views on this and many other issues.
3
@ehillesum Actually you would be hard put to find many economists who think tariffs are a good idea except under very limited conditions. Except for Trump's tame in-house economist, you would have a difficult time locating many, or perhaps any, reputable economists who support Trump's tariff policy. However, much of the public fail to understand how trade actually works. Lastly, coming up with a fake label or a spurious syndrome is not the same as examining the evidence. Perhaps you should learn some basic economics first before commenting.
36
@ehillesum Tariffs makes sense when foreign producers price their products below costs in order to drive the domestic producers out of business. When the domestic producer fails the foreign producer then raises their prices as they capture the market the domestic market.
As long as the import prices are cheaper and there are no ready substitutes, the tariffs, which are a form of sales taxes, are passed on to the end buyer.
China has vastly more cheaper workers than we have people. Therein lies their cost advantage.
Tariffs were once so out of control that many economists and historians thought that it worsened the Great Depression. After WWII the industrialized nations entered into a treaty called GATT to curtail tariffs extolled.
4
@ehillesum
As if the evidence would mean anything to Trump and the Republicans.
If your only tool Is a hammer then every problem looks like a nail. Trump is a unidirectional thinker. He latched onto one idea that plays well with his base and so he uses it over and over again.
It doesn't matter if tariffs haven't solved the intellectual property problem. It also doesn't matter if tariffs will never return manufacturing jobs to Ohio. The base likes the message, Trump looks like a tough guy, it's great entertainment, so why not?
77
@carpenter
The technology and intellectual property issues can only be solved by sanctions and embargoes. Our capitalists are so focused on short term profits that they are willing to give away the store in the long run. A distortion caused in part by discounted cash flow analysis, where you would prefer a dollar's profit today to losing your business entirely 25 years from now.
16
The 800 pound gorilla in the room is just this; how much has the Trump family profited by selling positions just prior to the time the President announces another tariff or, conversely, indicates that there's a solution afoot? He is clearly manipulating markets for his own enrichment.
If the SEC and other regulators aren't looking into this, I have to ask why?
580
@Clyde , Because the SEC, like other financial institutions, have become inseparable from the corporatist financialization of capital we see everywhere. This means bankers make money on the money already in place and no longer invest in industry, or research and development the way they used to long ago. Nowadays the richest folks invest 80% of their fortunes in their own stock buybacks.
Rather than creating new wealth, these rentier economy players depend more and more on extraction (oil, coal) and exploitation (lowest possible minimum wages around the world) to survive.
Politics and high-finance are now irremediably welded. So forget the SEC or anyone else regulating Wall Street ever again. The business party has won, and it owns both Democrats and Republicans alike.
oz.
22
@Clyde
Once a Democrat is President again, you can count on a whole lot of investigations along these lines.
1
Why? Because we truly have no checks and balances. All of those regulatory agencies, all of them are under the control of the executive branch which is under the control of guess who? We the people always thought that the Justice Department was independent and above control by the President. That is what we believed since Nixon’s Justice Department. Wrong. Think today and dishonest Barr. Some think that the S.E.C. Is independent, think again. My area of practice is securities law and a review of rule making shows less new rules adopted in 3 years than a quarter under a President of any party. Don’t cheer that there is less regulation because someone is scammed when the markets are controlled by the robber barrons (pardon my French, Melania and Stephanie) and that someone is the little guy in the markets and the pension funds, which are big guys, holding the interests of little guys. Yes prattle about insider trading because, it is likely happening. I would love To know the stats on SEC enforcement for the last 3 years. FDR did not establish the SEC and make it the most noble agency of the government for the fun of it. Think crash of1929. Yea sure, deconstruction of the administrative state. All roads do lead to Putin.
15
Or simply.....Trump "on and off" tariff announcements are simply vehicles for market manipulation
Given that Trump has kneecapped virtually every federal regulatory agency, profiteering via market manipulation has become a very viable possibility
In fact, given the glaring corruption on display in this administration.....this explanation; though very simplistic, may be closest to reality
158
Its almost impossible these days to buy a consumer good that is not from China, in whole or in part. Maybe I don't buy the right things, but I have seen no price increases at the retail level since tariffs started being imposed. So it appears the prediction that tariffs will be passed along to the end consumer isn't exactly the case.
I remember, in the early 1980s, there was a protective tariff on motorcyles with engine displacements over 700cc. The way the tariff was structured, every exporting nation got a quota that they could bring in without the tariff, so nations that produced and shipped few heavyweight motorcycles to the USA, such as Italy, were largely unaffected. The tariff mostly hit the Japanese motorcycle companies. They responded by saving their exemptions for high profit "loaded" bikes. What happened is that most motorcycles with engines of 750 cc were downsized to 699 cc. Then, some were souped up with turbochargers to restore any lost performance.
But I have seen no product changes of any kind, or major pricing changes either. Somebody is paying. And some of the tariff revenue is going to provide economic relief to agriculture that may have lost some sales.
Frankly, I don't think we should be selling the Chinese anything other than agricultural products. But the capitalists want the profits than can be made in their market. As Lenin said, if we wanted to hang all the capitalists, they would sell us the rope.
6
@RM
".....I have seen no price increases at the retail level since tariffs started being imposed."
Yeah, I've wondered about the relatively calm pace of inflation. Your muse about businesses keeping their selling prices stable (mostly) for their buyers is good. They would be trying to retain customers until the other shoe drops and there's either a trade deal completed - or an election result that would get this guy out of the white house and out of their hair.
But "As Lenin said, if we wanted to hang all the capitalists, they would sell us the rope."
It'd also be nice if they'd try it on and take it for a test spin.
This rat-race for cheap labor is draining our culture.
1
@RM
Speaking as someone in the wine importing business, I know for a fact that the vast majority of European wineries impacted by the tariffs that went into place in October decided to delay price increases until January. Wineries asked their importers and distributors to work lean to avoid increases during the critical holiday season. These lower margins (on an already low margin business) are causing importers and distributors to avoid adding new jobs and to reconsider backfilling empty ones. This isn’t my assumption - this is absolute fact.
Also, in terms of timing, the first thing many importers try to do when they get a whiff of potential tariffs is to quickly bring in as much extra stock as possible pre-tariff. I brought in 6 months’ worth. Prices will go up as importers sell through those stocks and need to import more.
3
@RM Your personal annecdotal experience about the lack of price increasesis not credible. I would need to see real market statstical analysis.
Globalization as we did it has become a trap for our economy, and creating ecological damage.
We export pollution, but what we consume still pollutes.
All that transport back and forth of parts and assemblies and products is carbon consuming transport.
All that carbon to transport just enables production in places that produce more CO2 than we do per unit of production, with coal burning plants and more polluting tech.
Meanwhile, our economic troubles do no good for our ecology either. We drive older cars because our unemployed workers can't buy new. We do not make investments to reduce pollution, because we can't.
Tariffs are not yes/no. It is not Trump vs non-tariff.
We need to fix globalization and our economy, and there are productive ways to make tariffs work toward that.
For example, they could be a tax here on the pollution done there, and a tax here on labor abuses there. They could take the profit out of socializing costs onto the less developed world.
No, that is not what Trump is doing. However, Krugman does know a lot more than just "Trump is bad."
How about, "Trump is bad because he does tariffs the wrong ways for the wrong reasons?"
Then propose the right way and right reasons.
Stop covering for the wrongs of globalization as it is, and start showing a way forward.
15
Tariffs when used in a judicious way, coupled with a thoughtful intelligent strategy that is executed competently as part of an overall trade policy has been effective before in our Country's past and could be again, maybe should be again. Now though we have Trump who is neither judicious, thoughtful, intelligent or competent. He's a gangster. We all know how this is going to end and it won't be with any "trade deal."
32
Announcing tariffs at the drop of a hat is Trump's method of asserting power. It is a response to all the ways in which he feels powerless (impeachment). It is essentially ONE BIG TEMPER TANTRUM....
113
@SMM and the GOP had their big temper tantrum from November 2008 until Inauguration Day 2017. It should lead all of us to wonder what has been ruined by these tantrums.
1
May I suggest an alternative--more sinister--explanation of Trump's manipulation of Trade News: He is doing what Joe Kennedy and his buddies did back in the 30's. He is manipulating the financial markets for personal gain.
Remember the scene in Godfather II when the Hyman Roth character, in Cuba, cut up the cake for his investors? Same Same. Roth said, "We now have what we have always wanted--Real Partnership with government."
Trump's circle of friends can certainly say that. Just not publicly.
22
@michael
We are not living in the 1930's. Whatever Joe Kennedy did or did not do does not exonerate Trump or his buddies for their corruption today.
Trump can turn markets up or down at will with just the announcement of tariffs; in general, a particular industry, a particular country, or any combination thereof.
J.P. Morgan, Jay Gould, et al would stand in reverant awe of a man with so little talent, protected by a wall of utterly servile politicians, and adored by an unthinking mob of millions bestride such a money-making machine.
Yes indeed. Trump loves tariffs.
134
@Ralph Averill - J.P. Morgan and Jay Gould would not be standing in awe. They would be standing in line to pay off or kick back a little to Trump for advance knowledge of his upcoming tweets, so they could ride the market profitably. Want to bet there are no living Trump friends doing that same thing right now...? Remember, this is Trump. He thinks he can get away with it, will never get caught, or never has to obey laws because he is president. And when it comes to grift and graft, Trump is the "King of Deals". Here we go: I tell you what's coming up, and you spend some of your profit on a nice condo in a Trump building. All legal... and besides, any investigation is "a hoax" and a "witch hunt". Besides, you can't indict a president, so it's not a crime.
4
I like your Orwellian conclusion that the purpose of power is power alone. I'd not seen that idea proposed before in an economic discussion. It does seem relevant.
48
Other reasons:
It excites his inherent pugnacity. He seems to have only a vague conception that there is life outside of fighting, winning, losing.
He once said winning trade wars was easy, because in his simpleminded way, the largest economy and market in the world should have the most power and leverage in a trade fight.
As a trade fight is America against another or others, he can arouse his base's chauvinistic instincts.
And yes, as Krugman explains, his tariff powers lets him surprise, unbalance, and annoy to his heart's content. And he can announce and do this the moment it comes into his head. For Trump, the presidency is a show that needs a fresh hook daily.
133
@Andy Moskowitz Whenever I see something describing the US economy or market as the "biggest" in the world, I remember that China has a billion (Billion!) more people who are potential customers and producers than does the USA. I don't believe that voters or politicians here in the US have come to grips with that huge fact. What Trump is doing is exactly the wrong response.
5
@Andy Moskowitz
Good comment. Donald suffers from Oppositional Defiant Disorder. He only feels alive and interested when he is in conflict.
There is little or no thought process with someone like this...they're running on pure disturbed emotion.
12
Elizabeth Warren was interviewed on Bloomberg today.
Her plan on handling trade relations particularly with China?
Don't go to war with your allies, which would then allow you to focus on China. Form a "comprehensive plan". Don't hurt farmers.
I half expected her to say that if we tend our garden now, there will be growth in the spring.
Not sure the other candidates will propose anything more of substance. Expect Biden, who seems to think China is not a problem in terms of trade.
And no, trade wars are not easy to win.
2
I got the reference to Peter Sellers.
1
Mr. Krugman has zerp understanding about the role of tariffs
Next time he fills his car with gas, he might contemplate why the 10% ethanol in the gas he pours into his tank comes from corn fields in Iowa, rather than Brazil, that can produce bio-ethanol cheaper and more efficiently than the US
The answer is tariffs. The reason they are in effect is that farming is too important to be outsourced. If it were, farming would largely disappear from the US
The same applies to manufacturing once it shrinks to a point that threadens national security- a point Mr. Krugman still has to understand
6
The fact is that the tariffs have hurt both US industry and US farmers.
The higher prices on raw materials, finished goods, and farm products have lowered demand and forestalled hiring.
39
@Lars:
Owners of the fields in Iowa receive government compensation to the tune of billions of dollars to grow corn for ethanol production.
58
We are net oil exporters. We have no reason to either produce nor import food to turn into fuel. It is neither efficient, carbon neutral, or anything but a bad practice here or abroad.
13
One of the more obvious reasons for continuation is that any change could be seen as an admission of failure. Rational thinking obviously isn't a part of the scenario, so a self-based response is inevitable. Given that he comes from a sector where tariffs aren't much of a factor, he's also arguably the guy least qualified to make judgment calls. The totally unrealistic expectations of American manufacturing resurgence, etc, simply prove he had no idea of the real state of play, either. This is 1940 revisited, and it's brought its prehistoric ideas and total lack of realism with it.
26
Surely, Professor, the roots of Trump's (sic) Protectionism lie in his lustrous academic career at The Wharton School, for, as everyone knows it was Joseph Wharton himself who made these tariffs part of economic canon. Beyond that, and even though the President may be feeling heat centering upon the difference between right and wrong as regards U.S. policy towards Ukraine, he may be being directed by those 70 or so Heritage Foundation plants in his administration to be a "Tariff Man". So either he's his own man (unlikely, as lawyers handle all of that), or he's the Heritage Foundation's man (whatever the name of it is), or he's The University of Pennsylvania's man, or somebody's man. It's rough to pin down. In any case, given the minuses which are adding up to the onset of recession, it does seem unlikely also that whatever policy these people (there it is again, but it's better than excessive use of "rather") tell him to impose, it won't keep the economy from tanking. Impeach? Convict? Not panaceas.
11
One weird aspect of Trump's tariff policy is that he tells his supporters that tariffs are paid by the exporting country. And even before planed tariffs are fully levied, he says "we're getting billions into the treasury." The American consumer pays the tariffs, and therefore, is likely to switch to an un-tariffed product.
38
While Trump, is imposing these tariffs on a whole range of countries, it's interesting to see what China is doing. China has continued ramping its trade with other countries and economic engagement with the rest of the world. It is close to concluding a vast free trade pact with Japan, South Korea, Australia, 10 Southeast Asian countries (and potentially India). Meanwhile, the US under Trump chose instead to pull out of the TPP, meant to counterbalance China's rising economic influence in the Asia-Pacific region. Well, I guess China's leaders are smart and know how to seize an opportunity.
Policy aside, they have also been attempting to seize the narrative. At a summit in Davos, Switzerland, Xi Jinping tried to portray China as an upholder of the multilateral, rules-based order. Whether or not you agree with him, you must admit that China looks somewhat better and more responsible (on the trade front) with all that Trump is doing.
Trump is a narcissist and wants to be in complete control. Tariffs and the wielding of executive powers give him that illusion. After Justin Trudeau's remarks about him were leaked, Trump stormed out of the NATO summit and make a jibe at Trudeau. But his unpredictability really is very predictable now. His attempts to leave everyone else guessing about his next move stem from a fundamental desire to hold the cards, to be seen as the one in control.
101
@Jack
I suspect that believing logic is part and parcel of Donald J Trump is a mistake. We see numerous references to down the rabbit hole and wonderland these days. The author of the Alice stories was a professor of logic and I suspect Trump is a resident of one of Lewis Carroll's realms where logic does not exist.
@Jack China is the now the champion of free trade only because it works in its favour.
Australia's free trade deals are suspiciously secretive and have decimated industries.
China is laughing at our stupidity.
1
A Tariff, DT wouldn't know a tariff from a deficit. He just likes to think if he can exert his bullying pulpit, that in itself would do some good, So far, it hasn't, and it is very doubtful that it will. One more year of this infantile outbursts, threats, etc. is exhausting, especially when one subscribes to, and reads a lot of newspapers digitally such as I do. It is good that it is the Holiday season, as I can escape it by baking, and stuffing myself to forgot the chaos, and noise.
28
@MaryKayKlassen , I've found that leaving "The tRump Topic" out of my first-page-headline reading each day helps me keep my understanding of events balanced.
Reading **about** The tRump Topic a day or two late gives time for others' first-glance outrage to go past and let me be outraged by contextualized events.
Likewise, starting the day reading non-US publications' daily headlines (in as many languages you can read, in my case, 4) really helps. You'll discover there's a wide world out there pouring out useful information.
tRump misbehaves just for headlines -- nothing much comes of most of the ones he causes (except ups-and-downs in the now brain-dead markets).
If you want news, read real news, not tRump's daily tantrums.
1
If you always assume that everything Trump does is for profit then everything he does will make sense. As Dr. Krugman mentions, tariffs are one of the powers of the president. So, if you produce X in the US and X being imported from country Y is eating your lunch, all you have to do is make a contribution to the "re-election fund" and X from country Y will be slapped with a tariff. Never mind that higher prices for X at home may doom other industries and the workers they employee.
Trump math is much simpler than Karl Rove's "The Math". Just think about how the decision puts money in his pocket right now.
50
The most damaging consequence of Trump's use of tariff as a default trade policy tool is that he has made it normal. No Democrat presidential candidate has opposed it. In fact, most if not all is supportive of it. Trump has opened the floodgate for future presidents to use tariff as a political tool to intimidate foreign governments, to punish domestic enemies and reward friends and supporters.
12
@Paul : Well carry on with Krugman. You'll make the world safe for Walmart products. Who'd have thought shopping at Walmart would be a sign of forward thinking in matters of foreign trade.
2
@Paul , I think virtually all Democrats and most Independents are against tRump's tariff games.
The challenge is how to turn "putting Article I over and above Article II" is not really a catchy vote-getting phrase -- although, perhaps, it should be.
I think virtually all Democrats assume that "undoing all the trade damage tRump has done as fast as possible" is a plank in everybody's platform.
5
@Paul
Countering the slob's tariffs would really involve wading into the weeds and there's not much data on the damage.
There's not much thought going into proclaiming those tariffs and the fallout is being quietly, somewhat painfully managed by the countries he's hit. Those countries don't want to acknowledge any pain they're feeling - to do so would put them in a more vulnerable position, and they want to hold steady for the negotiations.
Besides, it'll take a while for the pain to be felt locally inside their countries. It will be a while before their citizenry starts reaching for the pitchforks, but discontent is definitely building. And when people take to the streets..........enter the riot police - they can handle it for a while.
Our dear slob in the white house admires his wreckage but he doesn't have much experience with stamina. He really doesn't have much experience with nimble adaptation in running a successful sustained business, other than promoting his name and acting a part. And with all the new trading partners being established around the world these days, there's a good chance these countries won't even bother talking to him.
But today he's happy making a mess.
His little circle of american hustlers are happy too.
1
I think this started out as an impulsive, power-based move for Trump based on what he heard from Lou Dobbs. But now it's been embraced by his advisers as a way to squeeze China in a great power geopolitical grand strategy. China's economy is weakening, but because of its central planning it has ways to stabilize. The risk to China is that US companies will start redirecting supply chains through places like Vietnam. However, China is also building alliances in Africa, Europe and Latin America, potentially blunting any effect tariffs are having.
21
I have a different possible explanation for the Trump obsession with Tariffs. Years back, I'm sorry, but I wrote about instituting Duties on imports as a means of bringing back manufacturing I've always recognized as the backbone of the economy that creates value added profits to grow the economy to provide for the growing population. I meant well at the time.
Ryan picked up on it and put it forth. It was quickly shot down as a tax and Americans didn't like it, so Ryan let it slip into obscurity. But, a year later, it resurfaced with a new name; Tariffs. We all know Trump is a masterful salesman and has pushed it since then.
But before that, in December 2017, the Great Brain Robbery by the Trump Wall st Republican party occurred with passage of the tax cuts. But insidiously, a little recognized fact was that the much heralded new 15% foreign profits tax was still lower than the new 21% national corporate rate. That further incentivised the exodus of business. It was a scam.
So the big picture story is that the rich were given freedom from responsibility to support our society they benefit from, while slapping a consumer tariff tax on the 99% of us middle and lower class to offset the deficit created by the tax cuts mostly for the rich so they don't have to pay for some of their responsibility.
Now I can say, we should stop the tariffs taxes and legislate penalties on the exodus of businesses and wealth, not on we American consumers.
42
@PATRICK
Outside the walls of the asylum the numbers tell a different story and globalism has been very good for almost everybody especially the USA which continues to grow wealth faster than anybody. That the rich get richer and the poor seem poorer is as normal.
America's problems have always been inside its walls
6
@Montreal Moe
Unlike you, I present facts, not recaps. I support the 99% even though I would love to be a 1%, and that is what separates us. The fact remains, we have lost manufacturing infrastructure as well as vast capital to foreign lands and I'm on the right side on this one. "Globalism" is a fancy name for taking the money and running. I'll stay with the 99% versus you supporting the 1%. Thank you for responding however.
2
@PATRICK
I agree entirely but globalism and what happens inside a country are entirely different topics.
The USA is by design the least fair of all Western Democracies.
https://en.wikipedia.org/wiki/List_of_countries_by_income_equality
Globalism is globalism it has no ethics or values. It has made the world a much richer place. How the money is distributed internally is what separates healthy democracies from the USA.
It is domestic policy not globalism that has given America its gross inequality. Tariffs are another red herring and made Globalism seem a major factor in what is simply domestic policy choices. Globalism has been good for Canadians all across the board.
in Canada we talk about floors while the USA seems preoccupied with ceilings.
Globalism has provided the 99% of Canadians with a unique quality and quantity of life; that the USA has used globalism to exacerbate inequality is not the fault of globalism you keep voting for neoliberalism and top down governance.
2
I think our trading partners are a little more likely to play nice on trade if they know there's a real threat that bad behavior will be punished. No reason not to use it.
2
@Larry Thiel in a limited, even handed manner, not as a bat to hit trading partners over the head with over petty disputes. Farmers are the new welfare queens, Iowan farmers included, taking in 12 billion in handouts last year. Add that to what US consumers are paying for the tariffs themselves and it adds up to self inflicted economic masochism.
30
Trump's tariffs have reduced the imports from China, but overall imports have risen. There can only be two reasons. We are importing other goods that cost more and/or we are just importing more goods. Either way, the tariffs have not increased net US jobs and production. Even with steel, after an initial boost in domestic production, the price of steel has fallen dramatically.
This is because the tariffs are slowing down the global economy which is reducing the global demand for steel which is dropping global prices.
The operative word here is global. The prices of all commodities, and manufactured goods for that matter, are caused by global demand. Everything is global. There is no such thing as an isolated, domestic economy. Anything that reduces global demand, reduces the demand for goods for all nations.
Trump understands none of this. He cannot reconfigure global markets with his tariffs to the benefit of factory workers in Ohio. He cannot prevent China from buying soybeans from Brazil.
Over the Black Friday sales, I saw 50 inch 4K TV's for $200. They were off brand, but someone somewhere can make them and ship them to big box stores to be sold for $200. Now how can we compete with that, with or without tariffs?
The reality is that most US consumer manufacturing cannot compete with overseas sources. Trump cannot tariff his way out of that situation. He uses tariffs because that's the only tool he knows how to use. Wrong tool.
298
@Bruce Rozenblit - Trump is only concerned about creating illusions. This is why he loves Fox News as they corroborate his illusion and package it to his base. The GOP also reinforce his illusions and even elaborate on his conspiracy theories. An example of how Trump fools his base was his trip to the Apple plant in Austin. He used the media to create the illusion that Apple decided to bring back their manufacturing from China due to his tough negotiating skills with China. When in fact, the Apple plant has been open for six years and just received tariff exemptions on the Apple Mac Pro. Not only does Trump lie but, as Mr. Krugman points out, he uses the tariff exemptions as political leverage to gain support & to create the illusion that he's making big moves to bring good paying jobs to red states.
102
@Bruce Rozenblit :"Over the Black Friday sales, I saw 50 inch 4K TV's for $200. "
This is what passes for enlightened thought on foreign trade?
Don't worry, as soon as the last of those union workers in the US manufacturing sector die off, you'll realize your dream.
2
@Bruce Rozenblit , you said "Trump understands none of this."
Truer words were never spoke.
7
The tariffs are also a possible way for Trump or his family members to make money. Anyone who knows in advance when Trump will announce that we may make a deal soon or that there are new tariffs being imposed can make a killing on the stock market's volatility. While I cannot know for sure (no tax returns), I find it hard to believe that Trump would see an easy way to make money and not take advantage of it.
638
@Julie Salwen Trump has had financial successes, such as they were, not because he "would see an easy way to make money," but because he had the best legal advice money could buy. His personal attorneys may be and have been henchmen doing the dirty work, but his business attorneys are smarter and more effective. I am quite sure that there is an unseen army working to maximize profit from Trump's political whims. It's hard for us mere mortals to imagine what happens in that world.
9
@Julie Salwen - Trump's aides have already admitted that he lied this past summer when he told journalists that he had phone calls with China about imminent trade deal. Vanity Fair had a complete article enumerating the irregular stock activity that strangely coincided with President Trump's tweets or statements to the press regarding a supposed upcoming US-China trade deal. Maybe this is another article of impeachment for Congress to investigate?
https://www.vanityfair.com/news/2019/10/the-mystery-of-the-trump-chaos-trades
18
@Julie Salwen
His accountants or whom ever likely invests for him. This isn't done by t-Rump. They simply respond.
2
I have to wonder why markets keep responding to Trump's announcements of progress in the trade war. Are there investors making money whenever the markets rally on these announcements? I'm reminded of Trump's pump and dump schemes back before he became interested in politics, announcing some ambitious business initiative only to sell the stock when his bogus announcement caused it to spike. Markets eventually got wise to that ploy and quit rising to the bait. Who's profiting now, and do they have advance intimations of Trump's pronouncements?
350
@Peter Aretin It's really quite simple. Trump's tweets do have an effect. Bots can scan his twitter feed, making market decisions at computer speed based on what he spews out. Now, somebody somewhere has to create the algorithm, but it's probably pretty easy to test your algorithm against all of the recent tweet storms and see how to play the game.
33
@John in the USA
And the more bots/trades using that type of algorithm, the more likely tweets are to move the markets. It functions as a from of self-reinforcing "virtuous circle" until something fails - then it all ends in chaos and madness.
29
@Peter Aretin - "Investors" don't respond in the time frame required. "Speculators" and traders do so, and with "irrational exuberance." Speculators want to get rich quick; investors want to stay rich for the long haul.
2
Tariffs are the mechanism Trump uses to destroy the US economy and stature in the world. That is his real goal. It is part of his plan to destroy every institution that makes us strong. So we have government, agriculture, technology, etc. upended, losing talent, losing market position. This is not accidental. We miss the point if we focus on his personality. Look at the results of his personality smoke screen. While we point out his quirks and sneer, he's laughing all the way to our long term decline. One must ask if this is actually his plan or if he "is only following orders."
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@CH
I think you had a typo,,, I think it's part of Putin's plan (not Trump's) to destroy every institution that makes the US strong. It's clear to many of us that Trump isn't mentally capable of having a plan.
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@CH - I would bet my money on Trump having some sort of deal with Putin, given that the later is the wealthiest man in the world with gobs of oligarchical money laundered and stashed away all around the globe. Just from one source, the Panama Papers, around two billion was traceable back to Putin and who knows where else besides Panama, he and his crony inner circle have their buried treasure. The only thing that motivates Trump beyond throwing his weight around ("rope-a-dope") is his insatiable demand for wealth as well as being able to host Miss Universe contests so he could walk into the dressing rooms upon demand.
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@CH - Everything Trump does points back to Putin. And why? Perhaps a glimpse at Trump's tax returns would clarify things...? And does a person with 'nothing to hide', who is 'completely innocent', go to the lengths Trump is going to to hide those taxes? Is this how truly non-criminal people behave?
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How is it that a supposed businessman who purports to be a billionaire, but is afraid to release his taxes, and has bankrupted no less than 4 of his companies, in presiding over our tariff policy. That's like giving a 10 year old the keys to a tractor trailer and sending him on a cross country delivery.
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@greg - Indeed; which is why Congress is supposed to be in control of setting tariffs and trade policy, unless there is a 'national emergency' requiring unilateral action by the Executive.
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@greg
Also, don't forget that both his "University" and his "non-profit" were found guilty of fraud.
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@greg Why? The electoral college, and beyond that, white people wanting America to go back to the 50's (except for tax policy where the marginal rate was 70%).
7
Those who benefit from Trump's behavior don't want him to change. With all the Trump-induced stock market fluctuations, there is a question whether insider trading is also taking place.
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@CH
Good point, but I think there’s no question whatsoever.
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"Tariffs let him exercise unconstrained power, rewarding his friends and punishing his enemies"
Exactly Paul. Next up will be Canada after Trump went ballistic and called Justin Trudeau "two faced" over his remarks about Trump being late.
Next thing we'll hear is, another national emergency declaring Canada an enemy of America, and 100 % tariffs on all imports.
A little good news, by Christmas we should be able to cheer, Happy Impeachment Day!
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Cronyism and power, sure “side with me and I will mitigate, don’t side with me and I will punish.”
But it is also a tax increase of the regressive kind.
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