Trump's bewildering error on the politics of trade

Voters’ exhaustion with the Democratic Party, and the party’s exhaustion with itself, go far to explain Donald Trump’s victory last November. The president saw the weaknesses and attacked them. He’s instinctively outrageous and likes nothing better than driving his opponents crazy — but his provocations usually have an intelligible political purpose. And they worked. Tactically speaking, he knows what he’s doing.

Or so I thought. Attacking government payrolls as recklessly as DOGE is now attempting might be initially popular with much of Trump’s base, but the risks to innocent bystanders, and the political damage that might ensue, are obvious. Worse, his second-term trade policy, far more radical than before, threatens the economy with an almighty structural shock. Voters didn’t ask him to wreck the economy before rebuilding it. His tariffs aren’t that popular at the outset. Before long they’ll be detested. He’ll get the same blowback over higher prices that plagued the Biden administration, and he’ll have far fewer excuses.

It’s bewildering.

Trump ran as the commonsense candidate. Democrats aligned themselves with — or chose not to distance themselves from — views that dismay too many voters. Equality is racist, genders are assigned at birth, there’s no such thing as an illegal immigrant, you can’t have too much government spending, and so forth. And they put defending these ideas ahead of dealing with the economic hardships that were top of mind for most voters. These foolish priorities allowed Trump to channel swing voters’ frustration and run as the plain-speaking realist.

"America First" as the guiding principle of foreign and economic policy does have a whiff of common sense. But few voters will see waging trade war as the commonsense way to go about it. Businesses are already facing higher costs, cutting their earnings forecasts and rethinking their investments. The stock market has slumped and investors fear worse is to come. Inflation is inching back up, expected inflation has surged and consumer confidence has turned down as households ponder what lies ahead.

The administration promises its most radical trade initiative yet on April 2: a far-reaching scheme of "reciprocal" and sectoral tariffs. That will mean endless negotiation and renegotiation with every trading partner across multiple product lines. It seals the end of decades of cooperation on trade and entrenches heightened uncertainty as a permanent condition. The likely mix of slower growth and accelerating prices has economists talking about stagflation. Is there such a thing as commonsense stagflation? Even for Trump, that would be a stretch.

The president might think his supporters agree that tariffs are a beautiful thing. Some of them do, no doubt. The proportion of Americans who see trade as a threat not an opportunity increased abruptly after 2020, almost entirely because of a shift among Republicans. But in 2021 Americans still split two to one in favor of seeing trade as an opportunity. As always, pay attention to how the question is posed. Last year one poll found that 56% favor "tariffs on goods made in other countries if those countries have put tariffs on American products." But once trade-offs were added to the question — "if it increased the price of things you buy at the store," "if it decreased the innovation and growth in American businesses," "if it decreased American jobs at companies that depend on those tariffed goods" — the pro-tariff majority collapsed.

A sensible protectionist, if such a thing existed, would surely prefer a settled, orderly system of impediments to competition that lets investors, producers and consumers plan ahead — not constantly fluctuating threats, vague and ever-changing rationales for barriers that might or might not be imposed, abrupt dismantling of integrated markets that U.S. producers have built and come to rely on, and gratuitous rhetorical assaults on U.S. friends and allies. The formula appears to be endless chaos, with Trump at the podium waving his baton. Moderates and independents will loathe it.

Whatever else happens, tariffs will certainly raise prices, and who any longer doubts that Americans detest inflation? The issue crippled Joe Biden. Democrats made things worse by denying or minimizing the problem. (Why are you obsessing over inflation? Prices are higher than before but no longer rising so fast.) Unbelievably, Trump and his team are fielding a defense that’s equally deaf to the concerns of ordinary voters. (The economy needs a pause to detox. It’s no big deal. Roll with it.) While Biden’s policies did make inflation worse, the pandemic was the bigger cause and voters know that wasn’t his fault. Trump will try to blame his inflation on the Federal Reserve — starting a quarrel that will wound the economy even more, by the way. Voters won’t buy it. The president’s trade war is a war of choice. He will own its effects.

One last thing. Trump successfully enslaved Republicans in Congress — not because he convinced them on trade and countless other matters but because he commands such support among the party’s electoral base. If stagflation arrives, that support will erode. At which point Republicans in Congress might be brave enough to remember what they believe. That wouldn’t be good for the president.

Trump’s victory in November was an astonishing accomplishment. He could have settled for his place in history, delivered some of the popular things he promised (secure the border, roll back woke, trim regulation, cut taxes and public spending a bit) and savored his triumph. His most ardent supporters must be delighted that he isn’t satisfied and is intent on outright upheaval. Everybody else will soon be saying, "Please make it stop."

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners. Clive Crook is a Bloomberg Opinion columnist and member of the editorial board covering economics. Previously, he was deputy editor of the Economist and chief Washington commentator for the Financial Times.