Donald Trump has never been on good terms with corporate America. Yet his ostensible trade agenda was no more opposed to the interests of big business.
In recent weeks, Tech billionaire Including Jeff Bezos, Mark Zuckerberg and Bill Gates — who once assumed ambivalence (if not hostility) toward Trump — paid their respects to him at Mar-a-Lago. Elon Musk has become the world’s richest entrepreneur President’s right hand man. And Trump’s pick for Treasury Secretary, hedge fund manager Scott Besant, won massive applause Within the financial industry.
Although Trump has courted big tech and Wall Street, he has promised to enact trade policies that would hurt both, along with countless other U.S. industries.
On the campaign trail, Trump promised tariffs of between 10 percent and 20 percent on all imports into the U.S., as well as 60 percent tariffs on Chinese goods and 25 percent import surcharges on Canadian and Mexican goods — at least, until now. Neighbors stop the flow of all immigrants and drugs across America’s northern and southern borders.
This protectionist agenda is far more radical than anything Trump attempted in his first term. It threatens to disrupt American tech companies Increase in semiconductor costsBy depressing stock valuations Decline in economic growth And Fueling a global trade warAnd The US auto industry is disruptedwhose supply chains were built around the assumption of duty-free trade with Mexico
Thus, American investors, executives and entrepreneurs watched Trump’s first day in office with bated breath: Will his inaugural address and initial executive orders prioritize corporate America’s financial interests over a relatively free global exchange — or his own ideological fix on the trade deficit?
Trump’s Day 1 actions did not fully clarify his priorities on this front. in him Inaugural speechThe President reiterated his broad commitment to protectionism. Meanwhile, his administration Ready to launch Federal investigations into America’s trade deficit in general, as well as the trade practices of China, Mexico, and Canada in particular.
Still, Trump didn’t actually institute any new tariffs on his first day in office, as his administration’s arch-protectionists had hoped he would.
Investors interpreted Trump’s warning as a sign that he would pay attention His advisors push For more limited and extended tariff policies; Stocks are up Monday when The US dollar has fallen (A stiffer tariff would increase the value of the US currency).
Wall Street’s relief may be premature. Trump seems as ideologically irritated by America’s trade deficit as ever. And on Monday night, Trump said his administration was thinking Implementation of 25 percent duty “I think February 1” in Canada and Mexico. Still, his comments about the impending tariffs were off-the-cuff in response to a reporter’s question, and Trump has a history of falsely predicting the fulfillment of various campaign promises. In about two weeksIt is not clear whether he was referring to an actual plan that was the work of the administration.
How he intends to balance his protectionist instincts against his desire for a booming stock market and billionaire class remains unclear. Trump’s upcoming trade memorandum does not end his administration’s intramural conflict over trade policy, but rather prolongs it.
Why Wall Street took comfort in Trump’s Day 1 trade action
In recent weeks, arch-nationalists in Trump’s orbit — including his longtime immigration adviser Stephen Miller — have pressed Trump to immediately declare a national emergency on trade. The Wall Street Journal.
That would theoretically give Trump broad authority to quickly enact steep tariffs.
(Something though legal process (As tariff approvals require either an investigation or comment period, the International Emergency Economic Powers Act of 1977 would arguably provide Trump with a legal basis to grant such procedural finesse, once he declares an emergency.)
But on day one, the president refused to take that approach.
Trump touted his commitment to protectionism in his inaugural address, pledging to “immediately begin reforming our trade system to protect American workers and families.” He promised to “tariff and tax foreign countries to enrich our citizens” and establish an External Revenue Service to collect these taxes from foreign companies (Trump’s plan to establish a new agency to perform a function already filled by U.S. Customs and Border Protection the case is unclear). The president even devoted several paragraphs of his speech to enthronement President William McKinley, champion of extremely high tariffs.
Still, it’s not hard to see why investors have responded favorably to Trump’s actions. The president initially kept his protectionist promises abstract. While his pledges on other policy fronts have been firmer — for example, he promised to repeal Joe Biden’s emissions ban on new vehicles and designate international drug cartels as foreign terrorist organizations — he has not formally reiterated his commitment to a universal tariff.
Instead, Trump’s advisers to say Journalists On Monday he will issue a sweeping memorandum directing federal agencies to investigate America’s trade deficit, as well as alleged abusive trade practices by China, Mexico and Canada.
Trump’s refusal to take more drastic immediate action may indicate that the business wing of the Trump White House is at least trying. something Impact on trade policy. Earlier this month, The Washington Post reported that Trump aides were considering a proposal Narrow Trump’s Universal Tariff PlanAs such it would only apply to sectors deemed critical to America’s national or economic security. Trump’s initial restraint on trade lends credence to such reports of his administration’s scale-back ambitions.
Of course, Trump’s threat Monday night to impose 25 percent tariffs on Canada and Mexico called that restraint into question. And futures markets initially declined in response to Trump’s comments. Yet the president has long made it clear that his promise to impose huge tariffs on America’s top trading partners is a gambit to win border enforcement concessions from our nation’s neighbors. It is therefore possible to interpret his repetition of the threat as an act of posturing.
Trump has strong incentives to moderate trade
It’s entirely possible that Trump’s warning on trade will indeed end on February 1, if not sooner. But there are at least three reasons to think Trump will reward Wall Street’s early optimism and abandon his most aggressive trade policies. First, these policies will benefit virtually no major interest groups within the Trump coalition. Second, Trump has historically been obsessed with stock market performance on his watch. And third, he has recently expressed a willingness to subordinate staunch nationalism to the economic needs of Big Tech.
Imposing even a 10 percent duty on all imported goods would not only harm various business interests, it would likely Increased costs for consumers. Thus, such responsibility would hurt both Trump’s donors and voters.
If Trump’s first term is any guide, his universal tariffs won’t even benefit American manufacturers, who will be vulnerable to higher costs and retaliatory tariffs from foreign countries. Generally speaking, presidents want to avoid making policies that harm the majority of their coalition in favor of a narrow band of ideologues. And that’s what might implement Trump’s grandest vision for trade policy.
Second, universal tariffs would hurt the stock market. During Trump’s first term in office, He observed Market performance obsessively, tweeting about it endlessly and suggesting that stock values were a barometer of sound policy, warning in 2018, “If Democrats take over Congress, the stock market will collapse.”
Finally, Trump has recently shown some sensitivity to the interests of his new friends in tech, even when those interests conflict with the principles of right-wing nationalism. Over the holidays, Elon Musk sparred with his fellow party members over the desirability of high-skilled immigration and H-1B visas, which help American tech companies hire foreign talent. Trump ultimately expressed support for Musk’s position.
Trump really believes in protectionism
All of this said, as deep-seated as Trump’s policy beliefs are, the notion that free trade hurts America is one of them. Trump has become Advocate for comprehensive responsibilities on foreign goods since at least 1988, when he called for a 15 percent to 20 percent tariff on imports from Japan.
Ineligible for a third term in office, Trump faces no binding political constraints. According to New York Times, Trump thinks he has a “captain” to execute his ideological vision and “sees himself as his own best adviser.”
When the Washington Post reported that Trump aides were pushing back on his universal tariff plan earlier this month, he suddenly announced In Truth Social, “Washington Post story, citing so-called anonymous sources that don’t exist, falsely says my tariff policy will be rolled back. This is wrong.”
Trump struck a similar tone on Monday night. And his memorandum could serve as a prelude to all of his signature trade proposals, laying a stronger legal foundation for imposing a universal tariff and punitive tariffs on America’s top trading partners.
In supporting Trump, many in corporate America bet on his sanity and loyalty. As Monday showed, that’s not the safest bet.
