We are now one-eighth of the way through US president Donald Trump’s second term. For some, there is light at the end of the tunnel. Nobody knows what the short-, medium- or long-term effects of his tariff wars will be.
Is the United States on the cusp of a golden age, as he claimed on the day of his second inauguration? Or is the only discernible golden aspect of his tenure the profits made by his cronies from his cryptocurrency activities? Or the tawdry gold features newly plastered around the walls and fireplace in the Oval Office in Washington?
When we remember that the US was the prime mover in the campaign to end tariffs and to render capital mobile across the globe in the heady days of GATT, the General Agreement on Tariffs and Trade, and the once all-powerful WTO, the World Trade Organisation, Trump’s presidency represents the complete reversal of an American orthodoxy.
The wealthy class in the US were the winner in the era of capital and trade globalisation. Not so the workers. It is true that manufacturing employment was exported by wealthy countries to the rest of the world – whether China, Ireland or elsewhere. It is true that global foreign direct investment sought out taxation breaks and lower labour costs wherever they could be found. It is true that this globalism was the prime mover in developing protection for intellectual property rights used in overseas manufacturing and employment opportunities.
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Ask yourself this: could the huge accumulation in the private wealth of US corporate shareholders ever have happened if manufacturing had been kept at home unless intellectual property rights in relevant technologies had also been upheld by the rest of the world? Globalisation of the rights of capital was part of a two-way street in which tariff-free trade also operated.
Why shouldn’t the communist state in China steal and exploit American intellectual property if America feels completely free to curb Chinese exports by imposing crippling tariffs?
What Trump has done is to convince himself and American voters that the United States can expect long-term to reap the benefits of some aspects of the global economy while building tariff drawbridges on that two-way street.
Why shouldn’t the communist state in China steal and exploit American intellectual property if America feels completely free to curb Chinese exports by imposing crippling tariffs? Why shouldn’t the Chinese exploit their dominant position in rare earth production to cripple US manufacturing in retaliation?
Tariffs on US steel and aluminium imports are a case in point. Does raising the US domestic price for steel and aluminium presage a golden age for US producers or consumers of those products? If the domestic United States’ prices of those commodities and products rise, does that assist US exporters of goods which embody them?
Will the US economy benefit from expanding domestic production of higher-cost steel or aluminium?
If the effect of those particular tariffs is to reduce global demand and prices for non-US steel and aluminium production, does that really damage the economies of the rest of the world? Will the US economy really benefit from expanding domestic production of higher-cost steel or aluminium?
Trump has already convinced himself that boosting business confidence is an important aspect of building his golden age for America. Erika McEntarfer is the most recent victim of his determination to wish things right with the US economy. She was head of the federal agency charged (like the Irish Central Statistics Office) with independently assessing and verifying labour market statistics.
She disappointed Trump greatly by doing what she had to do – and had always done previously – since her bipartisan appointment, namely adjusting previous overestimates of employment growth in line with developing data returns.
Will Trump’s tariff wars succeed in doing what he desperately wants – to produce an upturn in the US economy that is felt by consumer-voters in time for the forthcoming midterm congressional elections? Are workers’ wages and prices likely to create an electoral bounce for the president? Opinion polls suggest that voters are significantly dissatisfied with his domestic economic policies.
These domestic issues – and the Trump-ordered cynical redistricting gerrymander in Texas – rank hugely in Trump’s priorities
Will Trump now fire Jerome Powell, head of the Federal Reserve board (the US central bank), in an attempt to have the board lower interest rates while the inflation rate still hovers above the board’s target rate? Would such a sacking improve or disimprove US business confidence?
These domestic issues – and the Trump-ordered cynical redistricting gerrymander in Texas – rank hugely in Trump’s priorities. Holding both Houses next November is paramount.
After his “success” in deflating the Iranians, his buddy, Israeli prime minister Binyamin Netanyahu, is spoiling Trump’s Middle Eastern policy by Israel’s sustained savagery in Gaza. Starvation – as practised by Hamas on hostages or by Netanyahu on an entire population – is cruel, repugnant, medieval and criminal. Trump could halt that if he really wanted to.
Trump’s threatened sanctions on Russia should come into effect this week. Will they?
Likewise, his erstwhile buddy, Russian president Vladimir Putin, is a war criminal whom Trump could stop in Ukraine if he wanted to. His threatened sanctions on Russia should come into effect this week. Will they?
In the last Trumpian analysis, business confidence, stock market sentiment, and voter feel-good factor, eyeing the midterms will decide.
