Mr. Trump’s Wild Ride
Mr. Trump’s Wild Ride is not an attraction at Disneyland. But it is a big risk that he and his administration are taking with us and the American economy due to the massive trade deficit. No President since World War II has taken action to solve the problem, even though they knew that the USA was getting hammered in foreign trade. Starting with Harry Truman to Joe Biden, no one would do anything about it. Donald Trump tried during his first term but now during his second term, he’s all in.
Foreign nations make trillions of dollars from trade with America, far more money than we make from them. Trump believes that countries abroad are ripping us off. Only with the wild gyrations in the stock market are Americans becoming aware of this. Prior to this most were blissfully ignorant. Why? The legacy media press ignores it because it’s too boring and complicated for the evening news. But when folks see their 401k’s losing value, suddenly it becomes news and alleged experts on geopolitical economics appear everywhere to blather about it. Most of the “experts” on the legacy media, print and broadcast, want Trump to fail. So as soon as the stock market goes dramatically down, you get panic in the barnyard.
As Treasury Secretary Scott Bessent said, “We are in a peculiar situation when the media and the market cheer for the hollowing out of our economy, and screech and howl when someone attempts to fix it.”
It’s mind numbing.
On April 2nd Trump announced wide ranging tariffs on the world, his plan is to restore manufacturing and investment in the United States. He wants the American worker to prosper, making products that are sold fairly around the world. An easy example is American cars. One would be hard pressed to find them in Europe or Asia. If you do, some poor sap could have bought a Rolls Royce for the price they paid for a Ford. Why did members of the United Auto Workers Union show up at his Rose Garden announcement to support President Trump? Simply because these workers have been watching for years as plants were shuttered and their jobs vanished.
Our products go all over the world, but many of them cannot get into the individual countries, like our neighbors Mexico or Canada. There are tariffs imposed on American dairy products in Canada, heinous import duties. Same holds true for some American crops going to Mexico. Our trade deficit with Mexico is $172 billion. So, Trump has one of two choices when it comes to world trade imbalance. He can ignore it or fix it. He’s decided to be the “fixer-in-chief”.
The only nation who currently doesn’t want to play fair is China. There is no way on earth that the government of China is our friend. They are a ruthless enemy of the United States. Last year China got at least $300 billion more in trade than we got from them. $300 billion that the Chinese are using to fund their military. The amount of money spent is astonishing, and it’s going to offensive weaponry. They have more than enough to defend themselves. Why would we help fund their war machine?
We buy more Chinese products than any other place on earth, by far. Just go to Target or Walmart and look at where clothing, kitchen tools or appliances are made. Not here. This isn’t about iPhones, but spatulas, polo shirts or hand mixers. This country can make these products at reasonable prices as long as the playing field is level. Any economist worth his salt will tell you that there is no way any country can compete against slave labor. Tariffs can hopefully negate that bad behavior.
There are 1.5 billion people in China, and they need to be fed and housed. China needs us more than we need them. It’s about time that they start buying American products in greater volume than they previously have. Their currency, the Yuan, is not the standard currency of the world. They have to do business around the world in dollars, but China has to sell the majority of what it produces in America, or its economy will go in the tank.
Why does China have a huge amount of money invested in American land, buildings and Treasury bills? The Chinese make a ton of money from interest income on their investments in Treasury bills alone, darn near as much as they make from trade. More money for their military. There’s nothing for them to invest in their homeland.
The wild ride is likely to continue until the world recognizes that Trump is not some front porch checkers player, but a skilled negotiator who made his bones in the building jungle of Manhattan. Nobody makes the kind of money he has made by being a rube that can be taken advantage of.
The best strategy is to sit back and let this businessman do his thing. Trump’s not the typical politician who is worried about getting reelected. He wants to vindicate his reputation, be remembered as a great President, not as an enfeebled old fool like his predecessor.
Making trade fair and balanced will be a remembered contribution to the Nation that will last for a long, long time.