Procrastination rules!

I successfully kicked the can down the road on writing an ambitious think piece about Trump and tariffs.

For weeks, I’ve been feeling guilty about not delivering my magnum opus take on Trump’s tariffs.

But, then again, I’ve never had much of a take on tariffs. (As evidence, note that I have no clue whether the word is spelled tarrifs or tariffs, and constantly have to rely on spell-checker.)

Having majored in college in economics (among other things), I of course absorbed the free trade orthodoxy.

But in the later 20th Century, it kept emerging that reasonable leaders wanted to put reasonable thumbs on the scales of trade. For example, the Northeast Asian governments wanted their firms to dominate the world automobile market, and the firms were working hard to deserve that domination.

Still, many other countries didn’t want to see them fully succeed. Most countries seemed to want to maintain some automobile manufacturing at home for economic, sociological, and military reasons. Even the ideological free trader Ronald Reagan imposed import quotas (a cousin of tariffs) on Japanese car makers, which led them to build assembly plants in the U.S. And the U.S. has had a 25% tariff on pickup trucks for 60 or so years, which appears to be highly popular with pickup truck fans.

All in all, these kind of pragmatic compromises struck me as fairly reasonable.

But, while I lost my faith in the economists’ dogma of free trade, I never developed much enthusiasm for tariffs either.

Also, over the decades I’ve mostly lost interest in punditizing about economic questions. You can make big money by being right about the economy, so the field attracts a lot of competent talent (besides a lot of incompetents as well). Instead, I concentrate on subjects where being right is bad for your career, so I don’t have as much competition (although, I’m happy to say, it is building).

Still, I wish we had done more back at the turn of the century to slow offshoring to China. Bernie Sanders has, I believe, argued that Bill Clinton giving up some of the Presidents’ power to Congress to impose tariffs on China was taken as a message to American CEOs that the political leadership wouldn’t hold them back from shutting down their American plants and outsourcing everything.

Jerry Pournelle in 1999 argued for a simple 10% tariff on everything as a defensive way to slow outsourcing, to throw some grit in the gears of the rise of China, but still allow it when the foreign cost advantage got too sizable to ignore. Why a moderate universal tariff? Jerry was concerned about Washington’s history back around the turn of the 20th Century of corrupt sausage-making when it came to tariffs.

But note that Jerry’s scheme was defensive: to slow the rise of a strategic rival and allow more American factory workers to finish out their careers doing what they knew how to do.

I thought it made sense back then under NAFTA to treat Mexico as our China, our own low-wage platform for polluting industry, but one that would never ever be a military threat to the US.

Unfortunately, we didn’t do many things like that to slow the decline of American manufacturing.

So, now, if we want to rebuild America’s manufacturing might, we can’t just use moderate defensive steps but have to undertake a carefully-considered, broadly supported, multi-year plan to rebuild certain supply chains within the U.S.

That’s not a bad idea, and the Biden Administration did some of that for particularly strategic industries.

For instance, they induced the Taiwanese to not put all their chipmaking baskets in dicey Taiwan (legally speaking, who exactly is sovereign of Taiwan?), but to also invest in purple Arizona.

Similarly, the Biden Administration tried to get a rare earths mine in California reopened and a rare earth refining plant in Texas built, but that has been slowed by the usual environmental reviews. Plus, the Chinese boosted their rare earths production last year to drive down prices to make investment in rare earths outside of China less attractive in the short run.

You might expect Trump to greatly expand these efforts to other industries.

In general, though, building new factories in America is a multiyear process. So, if you want the American economy to benefit from tariffs by recreating state-of-the-art supply chains, it would make sense to announce tariffs will be imposed on a future date when industry has had a chance to adjust so as to minimize short-term chaos that might lead to the tariff being cancelled and the whole concept of tariffs being discredited.

But, on the other hand, enunciating a long-term plan that carefully distinguishes high-priority industries (say, jet engines) from low-priority industries (e.g., socks), building broad support for The Plan, and then sticking with it year after year are not among Trump’s predilections.

He likes making deals, the more startling the better.

So, it’s hard to see how imposing tariffs today to reap the benefits years down the road due to massive investments in state of the art factories would happen under Trump.

It’s not impossible (although highly difficult) for some leader to do this. But Trump’s personality, age, mercurialness, and second-term status don’t seem well-suited to that kind of confidence-inducing long-termism.

Hence, today, Trump suspended his new tariffs on everybody except China for 90 days. And stocks soared.

So, I’m glad I didn’t write my 3,000 word essay on tariffs.

What are your thoughts?