We knew when we supported The Donald in the general election that we would have to take the good with the bad. It was better than taking the bad with the worse. The problem is that The Donald does not have any theoretical background. He has created a majority by picking and choosing positions. We still like our vote in the 2016 general election but we don’t like his position or recent actions on tariffs. Since the two candidates in the general election shared little except for the same positions on tariffs we still like our vote in 2016 because of The Donald’s actions prior to increasing tariffs. Unfortunately, The Donald’s lack of theoretical background means that we get tax reform (yea!) and the opposite, protectionism (boo!).
Sidebar: Herself ran as a protectionist although her husband was willing to sign on to reductions in tariffs. Given her dishonesty folks might have hoped that her articulated positions would not be implemented. We see no solution to hoping that she was dishonest about tariffs. End Sidebar.
The WSJ editorial board has a good summary:
Donald Trump made the biggest policy blunder of his Presidency Thursday by announcing that next week he’ll impose tariffs of 25% on imported steel and 10% on aluminum. This tax increase will punish American workers, invite retaliation that will harm U.S. exports, divide his political coalition at home, anger allies abroad, and undermine his tax and regulatory reforms. The Dow Jones Industrial Average fell 1.7% on the news, as investors absorbed the self-inflicted folly.
We have a few quibbles. We don’t know that it will divide his coalition and it will help a few workers but hurt the majority so we are in agreement with the WSJ. The Donald became a hero, and rightly so, when he reduced taxes on corporations and, to a lesser extent, on individuals. We wish he made another choice but we are not surprised given his rhetoric. The oddest quote came in this WSJ article:
“This is going to be effectively a tax increase,” said Brian Nick, chief investment strategist at Nuveen. [Emphasis added]
There is no need for modifiers. This is a tax increase. It will help a few substantially while hurting many a little. The problem is that The Donald has no theoretical grounding so he cuts some taxes while increasing others. On tariffs, providing lots of protection for a few while hurting many a little might make political sense but it makes no logical sense. Cutting corporate taxes benefitted many without hurting any particular group.
This is how it will be for the next seven years. The Donald will do some great things and some stupid things. It is better than the last president and better than the 2016 alternative. We would prefer it wasn’t so but it is. We would prefer that we had an optimal choice in 2016 but there wasn’t. We hope he will change his mind on tariffs but we are not holding our breath that he will undo this colossal mistake.