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The big story today is Donald Trump’s tariffs and their deleterious effects on the global economy. Markets are tanking. Economists are reeling. The head of the Federal Reserve is saying these tariffs are likely to raise inflation and slow economic growth. Some big names on Wall Street are talking about our teetering on the front edge of a recession.
The rest of us are scratching our heads. What’s the end game?
Trump claims the tariffs are simply a way to raise capital — and, he predicts, force goods to be made in the United States, which would make them tariff-free. Economists will tell you that’s not how tariffs work. Tariffs are a tax, paid for by anyone buying anything from another country — everything from iPhones to avocados. In other words, just about everything will cost more. He’s implied that we will collectively share this prospective pile of cash. History says we won’t.
Sometimes you don’t need “60 Minutes” or Woodward and Bernstein to tell you something isn’t right. With a few years of reporting experience, I’ve learned not only to follow the facts, but also to listen to my gut. My gut is telling me we are being lied to. Something’s very off with Donald Trump’s tariff pitch.
Wednesday, Day 1 of the Trump tariffs, was dubbed “Liberation Day” by the president. In less than 48 hours, it has come to mean that millions of Americans are being “liberated” from their retirement funds. Check your 401(k). Dread ‘em and weep. The S&P 500 lost 10% of its value in just two days.
Sure, the markets aren’t buying Trump’s claims, and economists think what’s happening is insanity, but there seems to be something more insidious at play here.
First, remember Congress, not the president, was given the power of the purse. It should be Congress that enacts tariffs. Historically, Congress has given that power to the president only in cases of national emergency. Where’s the emergency now?
Senator Angus King, an independent who caucuses with Democrats, called this latest power grab by Trump a “five-alarm fire.” “Congress made a decision some time ago that in an emergency situation, the president should have the power to enact a tariff in … a war or something like that. But the problem is this president is defining emergency as whatever he thinks it is. There’s no emergency. What Congress needs to do is pull that power back,” King told The Washington Post.
But what if it isn’t just a plan (no matter how bonkers) to make America richer? What if it is actually about amassing more power? Just as universities and law firms have recently done, this could be about Trump forcing private industry, key institutions, and foreign governments to bend the knee.
Senator Chris Murphy, Democrat of Connecticut, has a theory, and it’s as frightening as it is plausible. He says the tariffs aren’t economic policy. They are political weapons. He explained his theory on social media. Because he did such a good job of it, here is a lengthy excerpt.
“This week you will read many confused economists and political pundits who won’t understand how the tariffs make economic sense. That’s because they don’t. They aren’t designed as economic policy. The tariffs are simply a new, super dangerous political tool.
“You see, our founders created a President with limited and checked powers. They specifically put the power of spending and taxation in the hands of the legislature. Why? Because they watched how kings and despots used spending and taxes to control their subjects. British kings used taxation to reward loyalty and punish dissent. Our own revolution was spurred by the King’s use of heavy taxation of the colonies to punish our push for self governance. The King’s message was simple: stop protesting and I’ll stop taxing.
“Trump knows that he can weaken, and maybe destroy, democracy by using spending and taxation in the same way. He is using access to government funds to bully universities, law firms and state and local governments into loyalty pledges. Healthy democracies rely on an independent legal profession to maintain the rule of law, independent universities to guard objective truth and provide forums for dissent to authority, and independent state/local government to counterbalance a powerful federal government. But the private sector also plays a rule [sic] to protect democracy. Independent industry has power.
“The tariffs are Trump’s tool to erode that independence. Now, one by one, every industry or company will need to pledge loyalty to Trump in order to get sanctions relief. What could Trump demand as part of a quiet loyalty pledge? Public shows of support from executives for all his economic policy. Contributions to his political efforts. Promises to police employees’ support for his political opposition.”
If Murphy is even half right, this is a further erosion of our democracy and yet another step toward autocracy.
From Senator King, a grim warning: “This is dangerous stuff, and … I don’t like a lot of things the administration is doing in terms of policy, but this structural collapse of our system where power is basically being given to one person — I don’t care if it’s the Archangel Gabriel — it’s dangerous, and that’s the moment that we’re in.”
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Stay Steady,
Dan
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