Very little of what you’ve heard about presidential ‘deals’ is true. It’s really a shakedown on behalf of Trump’s desires and corporate whims.
Evidence is growing that the decent U.S. economic picture this spring was mostly a mirage. Employment has close to flatlined over the past three months, with large downward revisions for May and June. (This is what happens when you defund government data collection: The initial numbers are inaccurate and the revisions are larger. Errors are likely to increase given that on Friday, President Trump fired Erika McEntarfer, the head of the Bureau of Labor Statistics, in retaliation for the bad figures.) Labor force participation is down and the only real job growth is coming from health care and related services, precisely the industries that were savaged with at least $1 trillion in cuts in the Republican mega-bill. The economy is converging toward stagflation, with higher inflation and higher unemployment.
Paul Krugman argues that the data finally reflected the significant tariff uncertainty among businesses. Since April, no company has had any idea what their long-run costs of production would be; this has chilled investment and therefore hiring. There was a discrepancy between soft survey data, which confirmed this investment freeze, and the hard data, which didn’t. But the hard data has caught up.
So there was a stagnation. But now we have more certainty … maybe. The day before Trump’s August 1 deadline for tariff deals, he released a new tariff schedule set to go into effect this Thursday. The schedule reflects a baseline tariff rate of 15 percent, with some add-ons for countries like India and Canada and Brazil. There’s a possibility that businesses now know what they’re facing, and can adjust.
But the idea that all these deals set the new rules of the road in stone doesn’t tell the whole story. Beneath the surface are more carve-outs, exclusions, and special gifts for the industries with enough well-placed lobbyists to obtain them. “This is all just a con,” said Melinda St. Louis of Public Citizen’s Global Trade Watch. “[Trump] successfully used the real anger that people have about the status quo free-trade regime to claim he was upending things, when in fact we are seeing him double down on this corporate-rigged trade model.”
Alongside this, Trump has a pathological need to make more threats to demand more tribute and announce more “wins.” So the negotiations never really end, and the certainty never really sets in. That’s damaging not only to the global economy but to the credibility of the country. Trump perceives the leverage of the U.S. market more highly than the countries he’s trying to shake down. In the long run, they could just bolt, and that’s always been the biggest danger from the tariff mania.
IN APRIL, I WROTE A STORY saying that the better way to look at these tariffs was more like sanctions, imposed worldwide to force concessions out of foreign countries and companies, while having little to do with America’s economic needs or the ability to expand domestic manufacturing. That story holds up. Trump put out big tariff numbers with the intent that countries would come running to him, offering goodies to get those numbers down. As I wrote, it’s “a funhouse-mirror version of the neoliberal era: using trade as a bargaining chip to win other policies.
