On Thursday night, Donald Trump made a major economic announcement in the forum where all U.S. policy now occurs, Twitter. Fuming about the proliferation of undocumented immigrants coming into the country, President Trade Wars Are Good And Easy To Win said that starting June 10, he will impose a 5 percent tariff on all Mexican imports, a tax that will “gradually increase” to 25 percent and remain there until Mexico cracks down on people crossing the border into the U.S. The reaction to the move was, in a word, bad. In three words, really freaking bad. Terms like “disastrous,” “baffling,” and “colossal blunder” were thrown around, and with good reason: blanket tariffs on Mexican goods will have a serious impact on American consumers and companies—the ones already paying for Trump‘s ongoing trade war with China—and not in a good way. Glen Hamer, chief executive of the Arizona Chamber of Commerce, told the Washington Post the levies “will be terribly damaging.” Also, not very smart if the goal is to stop people from coming into the U.S., given that, should the tariffs damage the Mexican economy—which of course they are designed to do—more of its citizens might want to cross the border to find jobs. The Dow Jones Industrial Average, unsurprisingly, dropped 350 points, since investors were hoping Trump was about to end his self-defeating feud with Beijing, not start a new one with our biggest trading partner. So how did the incredibly dumb move—even by the standards of this collection of people—come to pass? Apparently the answer is Stephen Miller.
CNBC reports that while all of Trump’s actual economic advisors were opposed to the tariffs—which are typically used to counter trade violations, not as a border enforcement mechanism—they were pushed hard by Miller, who has spent his entire time in the White House using whatever means necessary to keep (non-white) people out of the country. (Most recently, he proposed busing detained immigrants to sanctuary cities in blue states as retribution for opposing his agenda.) Knowing that Treasury Secretary Steven Mnuchin, U.S. Trade Representative Robert Lighthizer, and National Economic Council director Larry Kudlow were staunchly opposed to what is, effectively, a tax on U.S. corporations and consumers, Miller seemingly struck at just the right moment. According to reporters Kayla Tausche and Tucker Higgins, Kudlow—who admitted the truth about who pays for these trade wars last month—is currently out of the West Wing for surgery on his hip. Per the Wall Street Journal, Lighthizer “tried to talk the president out of the move.”
Miller, whose role in making the Mexico tariffs happen was confirmed to CNBC by two sources, has made no secret of his disdain for immigration of any kind. Last month, he reportedly “demanded” to know why administration officials were taking so long to implement a regulation to deny welfare to legal immigrants that the angry 33 year-old predicted would be “transformative.” He was also unhappy about a lack of progress in overturning court-ordered protections for migrant kids, enraged that his fellow staffers weren’t eating undocumented children for breakfast. “You ought to be working on this regulation all day every day,” he reportedly shouted. “It should be the first thought you have when you wake up. And it should be the last thought you have before you go to bed. And sometimes you shouldn’t go to bed.” By numerous accounts, Miller was behind Trump’s purge of the Department of Homeland Security, which he believed was necessary because officials weren’t working fast enough on policies that “were legally questionable, impractical, unethical or unreasonable.”
Of course, it’s not entirely surprising that an lifelong xenophobe would be willing to put his white rage ahead of economic principles but it’s more than a bit concerning that he was actually successful at it.
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January 26, 2017: “Border security yes, tariffs no. Mexico is 3rd largest trading partner. Any tariff we can levy they can levy. Huge barrier to econ growth. Simply put, any policy proposal which drives up costs of Corona, tequila, or margaritas is a big-time bad idea. Mucho Sad.”
May 30, 2019: “I support President Trump's decision to impose tariffs on Mexico until they up their game to help us with our border disaster.”
The powerful U.S. Chamber of Commerce is mulling its legal options in response to the duties, the group’s senior vice president of international affairs, John Murphy, told reporters Friday. Murphy said the group has no choice but to look into every option to push back against the tariff policy. Business groups more broadly are discussing the possibility of suing the White House, a source told CNBC. A decision on how to proceed is expected by Monday.
While top business organizations have repeatedly slammed tariffs Trump levied on trading partners such as Mexico, Canada and China, a lawsuit would mark a major escalation in their opposition to White House trade policy.
In a statement, a White House spokesman said Trump is “taking action within his authority to protect our national security” and that if companies don’t like it they should take it up with Mexico. “Industry should be in communication with their counterparts in Mexico to encourage the Mexican government to work with the administration and stave off the dangerous crisis at our southern border as quickly as possible,” the spokesman added.
Another fun byproduct of Trump’s Mexico tariffs? It’s further undermined the possibility of a trade deal with China, which likely sees the U.S. president as even more erratic and volatile than it did yesterday:
Trump’s 180-degree turn on one of the largest U.S. trading partners is sending a ominous message to the international community that he can’t be trusted, Wall Street policy analysts said, adding that China, already skeptical of Trump’s reliability, is now less likely to sign a trade deal with him.
“We view this action as further deteriorating the U.S.-China trade fight. Chinese officials have stated their concern about the reliability of President Trump as a trading partner. These tariffs were announced the same day as significant advancement of the USMCA. If China does not believe a deal will stick, why negotiate?” said Ed Mills, public policy analyst at Raymond James, in a note.
While Trump and Chinese president Xi Jinping are scheduled to sit down at the G-20 summit next month, the development lowers the chances that a “substantive” meeting is possible, Mills said. “Trump’s readiness to hit a trading partner with new tariff threats soon after striking a trade deal will make China still more cautious about signing up to a deal that Trump then reneges upon, humiliating its leadership,” Krishna Guha, policy strategy analyst at Evercore, wrote in a note to clients. “Beijing will remain open to talking, but this cannot help prospects for an early breakthrough at G20.”
You’ll never believe it but Trump’s new Fed nominee wants to hold big, lucrative conferences at Mar-a-Lago
Oh, and she loves the idea of protracted, self-harming trade wars and thinks the Fed shouldn‘t be in the business of setting interest rates which, what?
In an interview with the Financial Times at the Trump International Hotel in Washington this week, Ms Shelton called on the Fed to “think about whether they are doing more harm than good”. If appointed to the board, she would be “asking tough questions” about its most basic mission, she said. . . Her big dream is a new Bretton Woods-style conference — “if it takes place at Mar-a-Lago that would be great” — to reset the international monetary system, replacing the current regime, mostly based on floating currencies. Ms Shelton said countries should agree to tie their currencies to a “neutral reference point, a benchmark” — which she envisages to be a “convertible gold-backed bond”.
She also supports the US president’s trade war with China, including the decision to ratchet up tariffs after turning away from a deal at the eleventh hour.
“Thank goodness he is sticking it out,” she said. “I’ve always thought we had to fight fire with fire with China, Europe’s talked about it for ages and never really did anything with teeth in it, and neither did the US until now.”
Investors who were hoping Trump would rescue the stock market are now counting on the Fed (CNBC)
A trade war with Mexico is more serious — and more political — than you might think (Washington Post)
Q: How to have lunch with Warren Buffett A: Spend at least $3.5 million (W.S.J.)
Lampert Draws Uproar From Warren, AOC on Sears Severance Pay (Bloomberg)
China Threatens Sweeping Blacklist of Firms After Huawei Ban (Bloomberg)
Dog has very specific demands for burger from upscale NYC restaurant (NYP)
— Michael Wolff’s new blockbuster is overflowing with titillating material
— From the archive: the lie that drew the U.S. military to Iraq’s doorstep
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