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The Capricious President

Trump’s tariff decision was poor and his defense of it was even worse [1], but perhaps worst of all was the way that he came to make that decision [2]:

But the public show of confidence belies the fact that Trump’s policy maneuver, which may ultimately harm U.S. companies and American consumers, was announced without any internal review by government lawyers or his own staff, according to a review of an internal White House document.

According to two officials, Trump’s decision to launch a potential trade war was born out of anger at other simmering issues and the result of a broken internal process that has failed to deliver him consensus views that represent the best advice of his team.

Whatever one thinks about the merits of raising tariffs on certain imports, this is an unacceptably slipshod and arbitrary way for any president to make important policy decisions. Because there was no internal review, no one can pretend that the administration thought through the implications of this decision and weighed the potential costs and benefits of doing this. The president made a significant, potentially costly decision more or less on a whim, and because he has dishonestly invoked national security to justify what he’s done he can probably get away with his capricious decree. Trump’s own public defense of his decision shows that he didn’t understand the likely consequences of what he was doing and doesn’t care about those consequences even when they are repeatedly explained to him. Even if you happen to agree with the action taken, the haphazard, incompetent manner in which it was done should alarm you. There is a strong whiff of “do-somethingism” about Trump’s decision, and that almost always means that the decision is a bad one made for the wrong reasons.

Jeff Spross sums up [3] very well why Trump’s decision is so poor:

Instead, we’re getting a hastily constructed policy premised on a transparently dishonest idea.

Just as he did with the travel ban, Trump is trying to use national security as a cover for things that have nothing to do with it. Perhaps he does this because he thinks he can use national security rhetoric as a way to bludgeon critics of his actions, or perhaps he is just looking for a convenient pretext, but whatever the reason for saying this it is dishonest and wrong.

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28 Comments To "The Capricious President"

#1 Comment By David Nash On March 3, 2018 @ 2:07 pm

Capricious. Angry. Impulsive. Angry. Ignorant. Angry.

These are not the Bug, they are the Feature. It’s what America wanted, at least more than it did Hillary Same-Old-‘Stuff’.

I hear all manner of talk how these proposed tariffs are bad. But I go to Walmart and find everything “Made in China”, and hear how unemployment is a problem in the USA. I am not an economist (I don’t have three hands), but there seems to be a disconnect here. ( I can’t believe I am close to defending Trump — mea culpa.)

Are all tariffs bad? If so, for who are they bad? Can someone not ideologically idiocized explain this to a plebe?

#2 Comment By JR On March 3, 2018 @ 2:25 pm

Look at this way…he hasn’t bombed Korea yet.

#3 Comment By GregR On March 3, 2018 @ 2:57 pm

There is absolutely nothing about these tariffs that make any sense. Beyond the fact that economists know that tariffs generally harm the country that imposes them more than the ones they target, the one thing you never should apply tariffs to are manufacturing inputs.

Manufacturers generally have no good alternatives. If you need A36 steel to build a car you can’t replace it with A37 steel without completely re-engineering and certifying the vehicle. You must buy A36. A consumer however has all the options in the world to replace one good with another. If you need a pickup you can simply buy a F150 instead of a Chevy and get on with your day.

So these tariffs are going to decimate US manufacturing at the same time they do almost nothing to help the US steel industry. Because the US steel industry’s problems are structural. The bulk steel mills we have were built during WWII and no-one is going to finance the construction of new ones to meet inflated prices everyone knows will go back down once this temper tantrum calms down.

So China is going to raise tariffs on US motorcycles (Harley-Davidson’s), and sorghum, and bourbon. Things they can buy easy alternatives to anywhere in the world. While we still have to import over priced steel from the rest of the world anyway.

#4 Comment By GregR On March 3, 2018 @ 3:24 pm

David my last post was being written before your question was asked so I apologize for the double post…

Basically the issue is that all tariffs do is increase prices on items downstream of them in the retail chain. While economists will tell you that all tariffs are a bad idea because they increase the cost of goods for the consumer and have minimal impact on protecting the jobs you are trying to protect anyway at least in some cases they may be politically argued for.

So why don’t they work? For a few reasons, but lets take a look at the steel industry right now and just work with it.

1) The cost of mild steel worldwide is in a multi-decade long slump because there is far more capacity on the market than there is demand for it. Basically there is so much excess production capacity no-one is building new production. But for those foundry already in operation they have to pay their fixed costs wether they make any steel or not, so they are better off making as much as they can and selling it at a small loss rather than making nothing and taking a huge hit.

Just making up numbers, lets say it costs $1billion to build a steel foundry which costs you about $5m a month for your debt service. If you make no steel you have to come up with $5m a month. If you run it at full capacity all month lets say you can sell that steel for $7m but it costs you $3m/month in operating costs. So not having the steel mill running costs you $5m/month, running it and selling it at a loss costs you $1m/month. So it is better to run full out, sell the steel at a loss and take a small loss.

This is where the world wide steel industry is right now. There is more capacity than demand, massive debt service costs and no-one is building new capacity. Now the reason US steel mills shut down is that ours were built during WWII and were never updated, so they are inefficient, costly to operate, and their debt has been paid off. So with no debt service to pay it is cheaper to close them down, and no economic justification to rebuild them because no one wants to buy the steel anyway.

So how to tariffs effect this… Not at all, no one is going to build a new 1$billion steel mill for what everyone believes is a short term temper tantrum. The price even with tariffs probably won’t justify the cost to pay off the bank notes to build the factory anyway, and it would be very risky. All this does is distort the market and allows the remaining inefficient US mills to stay in business a little longer and make outsized profits for a little while.

But there are more problems.

1) The port of New Orleans for instance is where about 3m tons of steel passes through every year on its way to US car manufacturers. When Bush implemented the same tariffs thousands of workers at the port lost their jobs.

2) Those car manufacturers are now paying 25% more for their steel (US steel manufacturers will of course raise their prices to the new import price). Which means all US built cars are going to get more expensive.

3) Foreign built cars imported to the US will also get more expensive, but actually less so. Because US manufacturers have to buy bulk steel and fabricate parts from it (and pay tariffs on the wasted steel), while foreign manufacturers only have to pay tariffs on the weight of steel actually in the car. So a US car will become about $500 more expensive and a foreign car imported to the us will be about $250 more expensive.

4) Lets say you are a US manufacturer of aluminum cans sold all over the world… You inputs just got 10% more expensive compared to a EU aluminum can manufacturer… how are you going to compete?

Long term these tariffs may protect the 200,000 off steel jobs in the US, but they are going to put at risk the 6 million manufacturing jobs. In response the countries that export steel to the US are going to target our sports that they can easily replace. High tariffs on US built motorcycles may prevent us from selling them Harley’s but consumers can just buy a Yamaha instead. High tariffs on Sorghum will devastate US farmers, but Chinese farmers can buy corn from Brazil instead. High tariffs on US bourbon is going to kill Jack Danials, but consumers can buy Scotch pretty easily instead.

Even if you want to put tariffs on goods, and economically it is pretty rarely justified. When you do you want to put tariffs on goods that have easy alternatives. Steel may be the absolute worst thing you could tax because it is needed for all domestic manufacturing. Even if you are making plastic parts you are still making them in a steel building, with steel casting equipment, delivered on steel trucks…

#5 Comment By Ken Zaretzke On March 3, 2018 @ 4:29 pm

“Are all tariffs bad? If so, for who are they bad? Can someone not ideologically idiotized explain this to a plebe?”

As Ian Fletcher explains in *Free Trade Doesn’t Work*, tariffs are only bad if they are ill-conceived. Fletcher argues for a “natural strategic tariff” that would apply equally to all imports. Related to that idea is this historical lesson that the author draws from our recent experience:

“Unfortunately, [Ronald Reagan’s] trade pragmatism, while preferable to the extremism of Bill Clinton and the two Bushes, was not guided by any thoroughgoing critique of the underlying economics of free trade–beyond the idea that it sometimes didn’t work in America’s favor. As a result, Reagan did not go beyond relatively narrow tactical interventions.”

#6 Comment By SF Bay On March 3, 2018 @ 4:40 pm

GregR, thanks for the clear information about tariffs. It’s a pity Trump doesn’t have a functioning brain. This is just not that hard to understand. We are heading into a trade war because Donald Trump is feeling whiny?

This was completely predictable back in Nov. 2016. I hold the 62 million fools who voted for Trump personally responsible for the ongoing ruination of this country.

#7 Comment By David Nash On March 3, 2018 @ 5:23 pm


My thanks. Your answer to my question is very informative in a area where I am ignorant.

(Might I say, it is also as courteous as it was unexpected. Again, thank you for taking the time.)

#8 Comment By rayray On March 3, 2018 @ 6:52 pm


Very useful. Many thanks.

And to @David Nash – worth noting that unemployment is at a low right now. In fact, it is low employment that is making Wall Street nervous since it may lead to higher wages (God forbid) and then possibly inflation.

The problem with Trump’s tariffs (and why they caused such a widespread and immediate backlash) is that they aren’t being used to address any truly acute or longterm issue. They are the product of a fit of pique, the result of an ignorant and thin skinned fool.

#9 Comment By Youknowho On March 3, 2018 @ 7:38 pm

@Greg R

Thanks for a good comment on tariffs. There are cases when they work. And cases where they don’t. Tariffs on the raw materials for your manufacturing are a perfect case of when they don’t.

When Henry Clay and Friedrich List came up with their theories they knew when tariffs were good, and when they made no sense. But now we have too many people arguing about absolutes, either protectionism or free trade, without looking at the particulars., because being an ideologue is much less work than having a scientific outlook.

(Being an ideologue means that once you determined that potatoes and deadly nightshade are of the same family, you decide to either eradicate potatoes or to make deadly nightshade salad).

#10 Comment By Youknowho On March 3, 2018 @ 7:41 pm

No only is the policy driven by caprice, but it is also corrupt.

Mr. Larison. I know that when you talked about the bad decisions made about Qatar, you did not expect to find out that the decision was made because the Qatari decided not to give a loan to Count Ciano – sorry, Jared Kuschner..

We are indeed trapped in a Three Stooges movie…

#11 Comment By TR On March 3, 2018 @ 8:13 pm

GregR: Three million tons of steel per annum doesn’t equate with “thousands” of lost jobs in the New Orleans port.

#12 Comment By GregR On March 3, 2018 @ 8:40 pm

Happy to.

Just a fun statistic I ran across today… There are about 160,000 people employed in the US steel industry. There are also about 120,000 people employed just by German car manufacturers in the US. The German car companies in the US obviously make a lot of cars for domestic consumption, but also export huge numbers of cars back to Europe.

BMW is actually the largest vehicle exporter in the US. Making up about 20% of the total value of all vehicles exported from the US by itself. In fact the largest car plant in the world is in Spartanburg TN, owned by BWM, and exports roughly 70% of its production back to Europe.

I didn’t think about this previously, but it is worth pointing out… Because the US will no longer be a competitive buyer of steel produced world wide, expect the glut on steel to get worse. This means there is a real chance that at the same time US steel prices go up the cost of steel in the rest of the world will go down. So US manufacturers will become even less competitive as our cost of goods moves opposite the cost of inputs the rest of the world faces.

#13 Comment By Hexexis On March 3, 2018 @ 9:43 pm

“unacceptably slipshod and arbitrary way for any president to make important policy decisions.”

Nor are there acceptably slipshod & arbitrary ways to make policy decisions; altho this is Trump M.O. for the past 30+ yr.

Our obeisant press never wavered in its labels of “businessman,” “deal maker,” “negotiator” for guy that was always cynical, impulsive, vengeful. To express shock @yet another Trump faux pas (now one that can affect only adversely the country he supposed “runs”) is disingenuity-googelplexed.

#14 Comment By georgina davenport On March 3, 2018 @ 10:09 pm

Trump is not so much capricious but irrational borderline delusional.

#15 Comment By Realist On March 4, 2018 @ 1:48 am

Yeah, Trump is stupid. I thought that was settled a long time ago.

#16 Comment By Emil Bogdan On March 4, 2018 @ 4:04 pm

I’m thinking of “banana republics,” countries whose economies specialize in exporting bananas, in other words, undeveloped agricultural economies lacking a complex manufacturing sector. Free market economics teaches that such economies are better off mass-producing bananas, cheap and easy and people all over the world want to buy it, instead of trying to compete with the Dutch or the British or the Americans or the Japanese in the realm of complex manufacture. Grow your bananas, sell them to Europe and the US, use the money to buy electronics and medical devices and cars and other stuff those guys make once they’re all fueled up on your bananas. Good luck! Seriously, the same economic laws that say market distortions are bad also tell you to focus on bananas, cotton, timber, oil, wheat, raw materials and simple agricultural products, if that’s what nature has blessed you with.

Let’s say you’re the leader of one of these banana economies and you believe that your people are capable of more, and they even have a small burgeoning manufacturing sector which _could_ develop even more, and maybe even come to compete in certain parts of the global market, if only it had a little protection and a little more time. So why not put a tariff on foreign goods in that one sector of the industrial economy, combined with further tax incentives and other favors and encouragements for the industry at home, of course. The truth is that politicians throughout the United States use policy to manipulate the national market constantly to gain special favors for their local economies. They do so because it makes sense, but it’s a question of how and when. Trump doesn’t know what he’s doing, but that doesn’t mean taxes, tariffs, special treatment, encouragement, discouragement and the like won’t stay with us forever. The Koreans and Japanese built their modern economies by rejecting the “focus on bananas forever” nonsense and aggressively pursued their industrial development with the help of tariffs, and before them, America did the same. Trump’s mistake is obviously that we’re not undeveloped but a highly developed economy in rapid and constant transformation, and his recipe is undeveloped maybe because he’s undeveloped, but he’s also probably incapable of grasping the same thing most of us are incapable of fully grappling with. His policy is a blip and I wouldn’t put a tariff on foreign steel, but I also don’t have any great ideas about how to predict and prepare for the coming economic transformations.

#17 Comment By Youknowho On March 4, 2018 @ 5:46 pm


Every country that wants to get out of the trap of providing raw material follows the advice of economists like Friedrich List, who advocated the judicious use of tariffs (the key word is “judicious”). It was by following such advice that Germany went from an agricultural backwater to an industrial powerhouse that two world wars could not destroy. Ditto Japan, and Korea.

But no serious economists would advocate putting a tariff on a raw material for industries – which is what steel and aluminum are.

As with coal, Trump seems determined to save last century industries, instead of concentrating on building this century’s ones.

#18 Comment By Bruceb On March 4, 2018 @ 6:52 pm

Remember the first set of tariffs, waking machines and solar panels. The solar industry, (as well as wind), had made great strides in the last few years, in profitability and reduction of polluting fuels. Who would want to restrict such progress? (Clearly this is a retorical question.)

Reminds me of the old saying – Socialism for the wealthy. Capitalism for rest of us.

#19 Comment By rayray On March 4, 2018 @ 6:58 pm

This is really the salient question. If tariffs could be useful, they should be used, obviously with great care and research. But to my mind they are less relevant than, to use Emil Bogdan’s term, encouragement.

But “encouragement”…i.e. support of education and research to develop or refine the next economy takes a president with intelligence and foresight. It takes a president who has enough intelligence and foresight to HIRE people who have intelligence and foresight. Trump is not that president.

And it’s more than just Trump. The GOP in general has become, as some have deemed it, the “stupid” party. All that matters is protecting the rich donors and keeping the base ignorant enough to keep voting against their best interests. The last thing the GOP needs is an educated populace.

The US will always have a steel industry at some level – it could even get bigger if the calculus between manufacture, worker protection, and shipping costs shifts. But what’s next? If you really want to know, look at what China is investing in…AI, machine learning, space tech, alternative energy.

Imagine what could be done if we weren’t being forced to finance the biggest military in the history of the world.

#20 Comment By CharleyCarp On March 4, 2018 @ 6:59 pm

How hard must Global Laughingstock Donald J. Trump stamp his feet to make people stop laughing at him? This is the conundrum upon which the fate of the world depends. The answer is obvious: no amount of stamping his feet will earn him respect, but he has to give up seven decades of firm conviction to accept that. We’re doomed.

These tariffs are indeed a blip, and we’ll see if he climbs down out of the tree a bit next week. The psychology remains, though, and I think attacking North Korea is very much within the realm of possibility. He’ll be responsible for the deaths of tens of thousands. Maybe then people will respect him.

#21 Comment By JLF On March 4, 2018 @ 8:47 pm

If the readers of The American Conservative who actually read serious articles closely enough to offer intelligent and thoughtful comments like these are so disparaging of Donald Trump, who voted for him in the first place? The answers to that question and the one that logically follows, why?, might give some indication of where this country is heading in the next dozen years or so.

#22 Comment By Youknowho On March 4, 2018 @ 9:34 pm


I for one voted for Hillary, to keep Trump out of a job for which he was woefully unqualified. Now, my only consolation is to say “I told you so” to those who voted for him and are now dismayed.

Frankly, I would have voted for Moe Howard if he ran against Trump. After all, Moe was the smart one of the trio…

#23 Comment By JeffK On March 5, 2018 @ 11:30 am

@GregR says:
March 3, 2018 at 3:24 pm

You are absolutely right. In my career I have participated in ERP projects at 2 steel manufacturers, and one aluminum manufacturer. I have been in manufacturing all my life. Old, obsolete, paid off facilities only have three options. Run wide open in an attempt to mitigate their inefficiencies, close, or rebuild with state of the art technologies. When the world has a glut of capacity, option 3 (rebuild) usually isn’t a viable option.

Also, from the facilities I have seen, automation is the real job killer. One facility I was at in Detroit runs with about 10% of the production workers that were on site 30 years ago, with greater output. Note also, that maintenance techs outnumber production workers at least 2, if not 3, to one. Maintenance techs are good, skilled jobs, often paying about $30/hr. Somebody has to keep that job killing technology in good running condition.

Not to troll you, the Ford F150 body is now aluminum.

PS. Trump is an idiot with no understanding of manufacturing and basic economics.

#24 Comment By GregR On March 5, 2018 @ 12:16 pm


Even in the case of a Banana Republic trying to launch a new manufacturing industry tariffs would be a bad way to go about it. There are good ways to support new industry, but tariffs are just a very inefficient way to do so.

In this specific case lets assume the domestic manufacturer is making toasters. What are the effect of these tariffs….

1) First this small company probably can’t manufacture enough toasters to supply the entire country so the population has to spend an outsized share of its income on toasters. This is going to depress the toaster market as people switch to untested bread, or make more paninis. Making it harder for the domestic manufacturer to grow into a shrinking market.

2) The domestic manufacturer probably makes a low quality low feature toaster instead of a high quality one. But with the captive market they never really have to suffer the brunt of better competitors. They can just sell substandard products to people who have no other choices.

3) Because there is no price pressure the domestic toaster manufacturer can charge more for poorer quality again because of the lack of market forces. This also means there is no incentive or option to sell globally. The prices are to high, and inefficient manufacturing makes it impossible to sell overseas anyway.

Now a consumer product like toasters is bad enough, but when the tariff is placed on manufacturing inputs with few reasonable options it cascades down into every other manufacturing sector. So not only is that product not very good domestically, it also effects all other manufacturing.

But there are good ways to stimulate a new manufacturing sector. Things like low tariffs on inputs means your nascent toaster manufacturer can buy cheap steel to make toasters will help out. Better training programs will help decrease the cost of labor, and increase productivity. Government backed export loans help directly to drive down the financing of foreign sales. Stable, predictable, and fair legal systems mean foreign buyers feel safe contracting in the home country.

What you desperately do not want to do is to apply tariffs to inputs forcing the rest of the world to apply retaliatory tariffs to your bananas. Sure you may protect the local toaster company, but when 90% of your economy is growing bananas you need to keep doing that, and doing that well. In the US 160,000 people working in the steel industry, something like 6,000,000 manufacturing jobs are dependent on steel inputs, and the entire rest of the economy is dependent on steel goods.

There are some good ways to implement tariffs however. Say a tariff on steel that is not manufactured to a certain level of environmental protection. Or food that is grown with certain pesticides. Even clothing that is manufactured with labor standards (or wages) below a certain threshold. These can all help to balance the additional cost we enforce on domestic producers because we don’t want chromium dumped into our drinking water, and pressure other countries to catch up to us in labor costs without massive distortions to the larger economy.

If used judicially, particularly as an anti-dumping measure tariffs can be economically justified, but they need to be crafted very narrowly (often against a specific company) not just applied to an entire industry.

JFL- Don’t ask me I voted for Clinton.

#25 Comment By JeffK On March 5, 2018 @ 12:53 pm

Here is something else. I read a long time ago that Singapore has very little land devoted to agriculture, therefore they have no farmers to “protect”. So no tariffs on food imports. Because of that, people living there enjoy some of the lowest food prices in the world.

So I googled it. A quote from the first article I read:

“Due to its limited agricultural land and resources, Singapore is almost entirely dependent upon imports for all of its food requirements. There are no import tariffs or excise taxes for all food and beverages, except for alcoholic beverages and tobacco products. A Goods and Services Tax (GST) of 7% is levied for all goods and services at the point of distribution.”

Something to think about if the desire is for consumers to pay low prices for the goods they buy.

A link to the article.

Where our industries are competitive, we should compete full stop. Where we aren’t, we should either make the investments to become competitive or allow imports.

The biggest problem is our massive budget deficit, which fuels our imports with cheap, borrowed money. The bills will come due some day. When they do we won’t be able to import much from developed countries because our fiat currency won’t be taken by our wealthier trading partners.

Our stable genius of a president just signed a massive tax cut, which will redistribute wealth to the top 2%. It will also create massive annual deficits again, which will hasten the demise of our currency.

What may eventually happen after that is anybody’s guess. But I don’t think it will benefit the ‘deplorables’ that voted for him.

It’s interesting on this website how many ‘conservatives’ keep talking up the fact that they have guns (and are almost looking for an excuse to use them against ‘the liberals’). If another major recession/depression ever comes to pass I think ‘the elites’ will be rebranded as ‘liberals’. Glocks and AR15’s may be the new torches and pitchforks.

#26 Comment By David Nash On March 5, 2018 @ 2:45 pm

@JeffK: “It’s interesting on this website how many ‘conservatives’ keep talking up the fact that they have guns (and are almost looking for an excuse to use them against ‘the liberals’). If another major recession/depression ever comes to pass I think ‘the elites’ will be rebranded as ‘liberals’. Glocks and AR15’s may be the new torches and pitchforks.”

Not to mention how few young bucks are talking this way, it’s mostly my generation of geezers. Back in 1984 (!) a movie came out which encapsulated perfectly what would happen. Red Dawn.


Of course, that isn’t conservative politically correct, but it’s what would happen. Firearms manufacturers and their toadies in the leadership of the NRA have sold a (very expensive) bill of goods for so long, their victims can’t think any other way.

(And, yes, I own and operate a firearm, with great pleasure, but — insanity is insanity. OTOH, in the Age of Trump, insanity is the new normal.)

#27 Comment By Jay C On March 5, 2018 @ 2:52 pm

Actually, Trump’s tariff “policy” makes a lot of sense if one views in the light of his campaign and campaigning style, where using simplistic sloganeering to rile up anger, resentment and a sense of grievance is basically the main motivation.
To wit: a “Presidential” tweet today:

“People have to understand, our country on trade, has been ripped off by virtually every country in the world whether it’s friend or enemy. Everybody.”

So of course, to his intended audience (the Trump-worshiping “base”), a tariff policy designed, in the image Trump has formulated, simply to punish those dirty, cheating foreigners and “stand up” for American industry (even where it doesn’t really exist), this is going to look like a “bold” policy move – however counterproductive.

As usual with virtually everything in the Trump Administration, it’s all about the “ratings”….

#28 Comment By prdoucette On March 6, 2018 @ 9:35 pm

Tariffs are the lazy man’s answer to a problem that actually requires hard work to solve. Trump is a lazy man and his laziness instead of leading to a greater America is only hastening its decline.