Customs Enforcement Stakes Entire Fortune on Single Import Operation
Hail to the (Tariff) King: Trump's Groundbreaking Bet on Protectionism
Share Tweet Text Email Print Link Edit
As apprehension swelled over the weekend regarding the approaching stock market turmoil caused by US import tariffs on global merchandise, President Donald Trump was teeing off at a senior golf tournament in Florida. Even posting a video of one of his drives on "Truth Social" with enthusiastic onlookers' applause. Meanwhile, Commerce Secretary Howard Lutnick was bubbling with optimism on television. "The troops of millions of people fine-tuning iPhones, these folks will come to America." But assembled under the supervision of engineers, maintained by mechanics and electricians. Currently, Apple manufactures approximately 90% of its iPhones in China.
Is Trump now gambling on higher stakes than ever with his comprehensive tariffs on nearly all imports? Such a move would represent the biggest political and economic wager of his life, risking the US economy, his legacy, and the political fortunes of his compatriots. It would mark a tabula rasa moment, reshaping the world economy andundoing several decades of free trade policy in a single blow.
Trump is determined to enforce an economic gunboat policy under the international spotlight, a spectacle unfamiliar since World War II. Trump expressed himself accordingly, emphasizing that as long as there is a US trade deficit, the tariffs will remain. Negotiations are undesirable, insists high-ranking government officials. Companies from all industrial nations must prioritize the US economy. The reasoning goes:
Motive. It doesn't make sense to maintain the jobs of the manufacturing industry in low-wage countries with the poorest working conditions, where items are imported for bargain prices, thereby straining one's own economy.
Economy. By increasing the price of imported foreign products with tariffs, we can attract more industry within our borders. Those who still aspire to ply their trade on the US market must produce their goods domestically.
Side Effects. Consumers would logically choose these domestic products due to their lower price tag. The US trade deficit would shrink, potentially also reducing the outflow of dollars and the debt problem that has plagued the US for a while.
However, this argumentation chain is pieced together from Trump's statements and those of his team. There is no known coordinated strategy from the US government. "Nobody knows what the hell is going on," a close aide to the White House told "Politico" before Trump initiated the tariff offensive last week. Instead, what Trump desires happens, while everyone watches intently. Just as he prefers it, stirring anxiety and keeping the world engrossed in his ever-changing moves.
Radical or calculated? Even though many Republicans and Democrats disagree, there is a consensus that something needs to change within their own country to address societal dissatisfaction. This discontent stems from daily financial concerns and the feeling that, despite all political promises, nothing truly changes for the individual in the end. Trust in state institutions in the United States remains historically low, at around 20%. The problem is homegrown. The USA was the prime advocate of globalization, succumbing to corporate pressure to produce more cheaply abroad for greater profits at home.
Jobs lost, opportunities missed Many industrial jobs moved overseas, particularly to Mexico and China. Then came cheap imports from foreign companies that made many products, such as consumer electronics, affordable, but also suppressed wages in the USA. The financial crisis burst the bubble and exposed a societal problem that has been exacerbated by the COVID-19 crisis: the skewed income and wealth distribution coupled with a porous social safety net. Trump had already won his first election in 2016 due to dissatisfaction with this unrealized promise of globalization, not everyone benefited from.
Economy "Peking Is the Biggest Culprit" Trump Issues a Deadline for China – or Else Tariffs at 104% Many industrial jobs moved overseas, with China being the primary destination. This shift was followed by cheaper imports from foreign companies that made many products, like consumer electronics, affordable but also kept wages low in the USA. The financial crisis unmasked a societal problem that has been intensified by the COVID-19 crisis: the skewed income and wealth distribution, combined with a porous social safety net. Trump had already won his first election in 2016 due to dissatisfaction with this unfulfilled promise of globalization, not everyone benefited from.
The COVID-19 crisis during the 2020 election year could be temporarily exploited by Joe Biden, who won the election. The Democrat pursued a different economic policy: Biden kept most of Trump's tariffs from his first term and later imposed a 100% import tariff on Chinese electric vehicles and a 50% tariff on solar cells. Previously, he had initiated legislative projects with incentives for modern industries, offering subsidies for companies in strategic sectors like the semiconductor industry to expand or build production in the USA. Incentives for the transition to renewable energies were intended to create new, attractive industrial jobs.
However, Biden's government struggled with inflation and its consequences, and the long-term industrial policy was not enough for voters grappling with daily financial concerns. The Democrats also fell short, losing the White House and both chambers of Congress. Trump now claims that structural industrial policy is much simpler - everything can be solved with tariffs. Instead of spending money on subsidies like Biden, it now flows into the state treasury, making tax cuts possible.
Political Pressure: If Trump stays on his aggressive course and steers the USA towards a recession, he and the Republicans in their districts could face enormous political pressure. The President would have to hope that Americans are willing to suffer financially for many years for his vision of a newly industrialized Midwest. Moreover, there is a shortage of skilled workers for the quick industrial policy shift. There are already not enough qualified employees to fill industrial jobs according to the "Wall Street Journal," about half of US manufacturing companies have open positions that they cannot fill with suitable personnel: "The steepest labor shortage since 50 years."
Gamble or Bluff? It could be that Trump is not declaring war, but playing hardball, acting as aggressively and uncompromisingly as possible. Then a possible calculation could be that companies, just because of the short-term chaos campaign, announce their intention to move production to the USA. Like the Taiwanese chipmaker TSMC has already done. Afterwards, Trump could generously rescind the tariffs and celebrate himself as a dealmaker who fought and won for the USA with the toughest tactics. At least 50 of the countries affected by "retaliatory tariffs" have already requested talks, Trump said over the weekend.
Hurting Hearts of the Midwest In the Midwestern state of Michigan, where the automotive industry is more critical than anywhere else, manufacturers and their medium-sized suppliers are already feeling the bite of the steel and aluminum tariffs that Trump imposed first, according to the "Wall Street Journal." Now, general tariffs on China, Canada, and Mexico are looming. Auto parts used in Detroit and the surrounding area often come from these countries. The influential United Auto Workers union, which supported presidential candidate Kamala Harris in the campaign, cautiously supported Trump: The current mess is worth it if jobs in the industry return in droves.
Almost All Experts say this is Unimaginable on a Large Scale During Trump's first term, the aluminum and steel tariffs did not have the announced effect. Others warn apocalyptically that Trump is pushing the USA and the world into the abyss. Even those from the economy who wanted to see the Republican back in the White House are warning. If Trump keeps the tariffs, a "global economic nuclear winter" threatens, wrote billionaire Bill Ackman, a usual supporter of Trump. The investment bank JP Morgan now sees a 60 percent probability of a recession.
Winner or Loser If Trump is successful, he will join the ranks of the great presidents of the United States. As one who has practically refuted all warning economists with his gut feeling as a "deal maker." If he loses, he will still claim the opposite. Like he did on this Monday. While stock prices were crashing worldwide, Trump boasted about lower consumer prices and "zero inflation." This is already not true now, but will further diverge from the truth as soon as the tariffs hit with full force and increase the daily concerns of people.
- Trump's comprehensive tariffs on nearly all imports, if enforced, would challenge the US economy, his legacy, and the political fortunes of his compatriots, potentially reshaping the world economy and undoing several decades of free trade policy in a single blow.
- By increasing the price of imported foreign products with tariffs, Trump asserts that the US can attract more industry within its borders, making it necessary for companies to produce their goods domestically, thereby potentially reducing the US trade deficit and the outflow of dollars.
- Trump's economic policy, characterized by protectionist tariffs, aims to address societal dissatisfaction stemming from daily financial concerns and the feeling that, despite political promises, nothing truly changes for the individual in the end. However, many economists warn that Trump's approach risks plunging the US and the world into an economic crisis.
