Trade Insights

The apparently unplanned announcement from Trump that the U.S. was imposing tariffs on steel and aluminum imports provided an unusual amount of insight into the Trump Administration, but perhaps more on the GOP Congress. The announcement of tariffs came without any apparent preparation. There was no formal statement prepared. The Departments of Treasury, State and Defense first heard the news from television. It was chaotic, which is what we have in Trump. It also tanked the stock market, and since we have been hearing constantly about how Trump has driven the stock boom, should we expect a statement that Trump is not responsible in any way for the crash in the market? Maybe not.

The policy itself was not only nonsensical, it was also destructive. I’m not even sure there was a policy behind the announcement. Trump initially said it was intended to counter steel dumping on markets by the Chinese. However, it penalized our allies who have not been dumping steel such as Canada and Mexico. The next day, after the EU and virtually every other steel an aluminum producing country threatened retaliation, Trump virtually blew the minds of every economist CEO and Republican Congressperson by saying that trade wars were good and easy to win. His statement ran contrary to, well, pretty much all human history and led to two World Wars. Then he said the real target was the EU, which had a huge trade deficit with us (which was untrue). Tomorrow there may be another target – or more likely another crisis.

We’ve come to expect this kind of chaos, confusion, and utterly ignorant statements from Trump, but the Congressional response was unexpected by some. There was a strong push back from GOP Congresspersons. Some expected the GOP to support Trump’s statements or at least his policy pronouncements, but the reality has always been that the GOP Congress is owned by big money and that means Wall St.

Paul Ryan says nothing after racist statements from Trump, misogynist statements, he supports the unethical (if not illegal) activity of Nunes to obstruct the Russian election interference, but when Trump imposes tariffs potentially costing Hedge Funds billions…

The potential internecine conflict between Trump and GOP Congress may reveal the true nature of the two, but the sad reality is that it will be at a cost to the Middle Class.