Sadly to say, there’s a silver lining to the looming Trump trade war.
The silver lining is that a full-fledged trade war will mark the end of the Trump presidency and the populist movement in U.S. politics
But it’s sad. As tariffs and counter-tariffs fly, the stock market will crash, farmers in the Midwest will go bankrupt and millions of workers will be laid off.
Trump famously cites his degree from the University of Pennsylvania’s prestigious Wharton School of Finance, but it’s clear he didn’t pay attention in class. If he did, he would recall that the last trade war sparked by the United States led to the Great Depression.
The President wrote in “Think Like a Billionaire” that “it can be smart to be shallow,” and it’s obvious that he hasn’t thought deeply about the impact of tariffs. On Wednesday, Germany’s Daimler-Benz warned that shipments of its Mercedes SUVs to China from its giant plant in Alabama will be reduced by tariffs. German exports to China from deep-South Alabama? Does Trump have any comprehension of the interconnected complexity of the modern economy?
One of the reasons for this fiasco is that Tump and his economic advisors are all old men. Their ideas about economic trade gelled before Federal Express, containers and the Internet. Trump is 72, Commerce Secretary Wilbur Ross is 80, U.S. Trade Representative Robert Lighthizer is 70, National Economic Council Director Larry Kudlow is 70, and Trade Council Director Peter Navarro is 68. No new ideas here.
Trump’s cuts to corporate tax rates (led by Gary Cohn, who then resigned over opposition to tariffs) pushed the stock market to record highs in January. Since then worries about a trade war have cut stock market returns to zero for the last six months.
So, picture the November midterms. The stock market has crashed, layoffs are rising, farmers are giving up and Trump is belatedly realizing there’s a problem. Belated because cable television appears to be his only connection to reality. And, unfortunately, trade is a complicated story that doesn’t lend itself to easy coverage. It will be several months before closed factories and foreclosed farms show up on cable news.
But the upshot of the trade war will be a blue wave that sweeps Democrats into control of the House and at least a slim majority in the Senate. Trump probably won’t have to worry about impeachment, but his platform will be finished.
America will learn again the value of free trade and the danger of populists. But it will be a painful lesson.
Chris Jennewein is editor and publisher of Times of San Diego and, like Trump, a graduate of the University of Pennsylvania.