Trump’s Tariff Strategy Seeking a Safe Harbor

Long a proponent of the benefits of tariffs, Donald Trump claims they will fund his proposed tax cuts and revive American manufacturing.

There is near-unanimous consensus among economists that tariffs are self-defeating and have a negative effect on economic growth and economic welfare, while free trade and the reduction of trade barriers has a positive effect on economic growth. Source: Wikipedia.

Despite the consensus among economists that tariffs are a hidden tax on American consumers, if Donald Trump believes something, it must be so. Well, it can be deemed so if you’re the most powerful person on the globe.

Yet the implementation of his tariff strategy has been highly erratic — on and off, stair-stepping up and down, country to country, product to product. Heather Cox Richardson, in her Letters from an American, reports, “Trump has changed tariff policies at least 50 times” through May 30.

The voyage of the HMS Trump Tariffs, created by ChatGPT.

Trump’s consistently inconsistent behavior has birthed an investment strategy based on TACO, for “Trump always chickens out.” Buy an investment when the price falls after a tariff announcement, then sell at a profit when Trump backs down and the price recovers.

I’m hoping this arm of Trump’s octopus will be cut off after a ruling from the U.S. Court of International Trade earlier this week said a president does not have “unbounded authority” to impose such global tariffs. The U.S. Court of Appeals has granted a temporary stay to allow the judges time to review the ruling and the administration’s arguments in favor of broad, unilateral tariff policiies. May it only be temporary.

Meanwhile, the trade winds keep blowing.

The Big Beautiful Bill

President Trump's so-called big beautiful bill to extend the tax cuts from his first administration and pay for them through cuts to federal spending — programs like Medicaid and SNAP — is struggling to be birthed by the House. Not hopeful that it will die in the House, I felt obligated to express my opposition to my Congressional representative:

Representative Rogers,

While House Republicans were holding middle-of-the-night hearings on the president’s so-called “big beautiful bill,” the CBO was analyzing the impact of the legislation, if passed:

The CBO estimates the tax provisions in the proposed bill will add some $3.8 trillion to the national debt over the next decade.

After decades of Republican arguments during Democratic administrations that the federal debt must be reduced, the Republican hypocrisy is unfortunate, although not surprising. The tax cuts of the Bush and first Trump administrations fueled the debt. Why should we expect the second Trump administration to change behavior?

It’s not what you say, but rather what you do.

The CBO analysis also projects that the top 10% of earners will receive about 65% of the tax cut benefits. The cuts to social programs like Medicaid and SNAP will cause households in the lowest quintile to lose about $1,035 in income next year. That’s substantial for low-income Alabamians, who are living on the margins.

Not surprisingly, the CBO analysis contradicts Republican claims that the bill will not cut benefits, that it will only eliminate waste, fraud, and abuse.

As expected, you’re taking from the poor to further enrich the rich. We see no consideration of increasing the tax rate on the wealthiest Americans, who can afford to support the country that has enabled their success.

I urge you to have the courage to oppose this legislation. You were elected by the people of your district, not by President Trump.

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Addensum: The House narrowly passed the bill on Thursday, May 22, by a vote of 215-214. All 212 Democrats present voted against the bill, joined by two Republicans. One Republican representative voted "present," and two did not vote. Mike Rogers supported the bill.

The bill moves on to the Senate.