Don’t be alarmed if you see flames rising from the White House lawn. That’s only the bonfire of the pieties to which President Trump is consigning every belief that Republicans once held dear. Long ago incinerated are GOP claims to be the family values party, the law-and-order party and the fiscally conservative party. Those shibboleths went up in smoke when Republicans backed a president who pays off a porn star and endorses an alleged child molester for the Senate, assaults his own Justice Department while asserting that he is above the law, and runs up trillion-dollar deficits. The latest log on the fire is the Republican claim to be the party of free markets.
Trump’s contempt for laissez-faire ideology has long been evident — and did not stop the GOP from backing him. “The free market has been sorting it out, and America’s been losing,” then-Gov. Mike Pence of Indiana said during an event in Indianapolis on Dec. 1, 2016. Trump, standing next to him, chimed in: “Every time, every time.”
Now the United States is supposed to start “winning” by imposing 25 percent steel tariffs and 10 percent aluminum tariffs – a.k.a. taxes – on our closest allies in Europe and North America. Oh, and the administration is also going to compel power-plant operators to buy energy from money-losing coal and nuclear plants that are too inefficient to survive otherwise.
Trump is substituting the heavy hand of government for the “invisible hand” of the marketplace. Companies that rely on foreign steel or aluminum that they cannot get from a domestic producer can apply for tariff waivers from the Commerce Department. The Post reports that the process “has bogged down amid several thousand applications for relief.” It’s a safe bet that relief will go to the best-connected companies — just as the initial benefits from the energy-purchase scheme are likely to go to “the Appalachian coal mining firm Murray Energy and the Ohio-based utility FirstEnergy,” both of which have chief executives who “have contributed heavily to Trump and GOP political activities.”
That’s the way things work in Trump’s swamp. The president mysteriously lifted sanctions on the Chinese telecom giant ZTE after China provided trademark protections to Ivanka Trump products and a $500 million loan to a project in Indonesia that includes Trump-branded properties. Trump met with Ukrainian President Petro Poroshenko after the Ukrainians paid at least $400,000 to Trump’s personal lawyer, Michael Cohen. Maybe these are coincidences, but I doubt it.
Trump is implementing the kind of crony capitalism that the world leaders he so admires — Vladimir Putin and Recep Tayyip Erdogan — have created in their countries. Companies must pay obeisance to the Supreme Leader — or else. Trump, for example, tried repeatedly to get the Postal Service to double shipping rates on Amazon, likely to punish its CEO, Jeffrey P. Bezos, for his ownership of The Post, which runs articles (like this one) critical of him.
The problem for our democratic allies is that they have regulations preventing their companies from engaging in corruption, so they have no effective way to fight back against tariffs. All they can do is protest the injustice. My heart went out to Canadian Foreign Minister Chrystia Freeland when she said on Sunday: “So what you are saying to us, and to all of your NATO allies, is that we somehow represent a national security threat to the United States. … Seriously?”
Seriously. Trump doesn’t care that Canadian soldiers have fought and bled alongside Americans for a century. In Afghanistan, Canada lost 158 troops in a U.S.-led NATO mission. All of that counts for nothing with a president who is determined to rearrange the economy according to his own mad whims. Trump is convinced that trade deficits are inherently bad even though few serious economists would agree. (The fastest way to cut the trade deficit is to have a recession, because it will reduce consumer demand.) He is further convinced that the United States has a trade deficit with Canada — even though his own trade representative reports an $8.4 billion surplus. No amount of evidence can dispel his illusions.
The losers are going to be not only U.S. allies but also U.S. consumers and workers. My Council on Foreign Relations colleagues Benn Steil and Benjamin Della Rocca estimate that steel tariffs will kill 40,000 auto-industry jobs by raising the cost of domestically produced cars. Retaliatory tariffs will increase the pain substantially. Iowa’s pig farmers could be devastated if Mexico proceeds with plans to impose a 20 percent tariff on American pork. That would be a $560 million hit on just one industry in one state.
There’s a good reason Republicans used to believe in free trade and free markets: They understood that capitalism was the most efficient economic system. But, as former House speaker John Boehner just said, “There is no Republican Party. There’s a Trump party. The Republican Party is kind of taking a nap somewhere.” Actually, the Republicans aren’t napping. They are helping Trump toss more logs on the bonfire of their pieties.