12/10/2019 Opinion | Why Is Trump a Tariff Man?

- The New York Times

Why Is Trump a Tariff Man?

Itʼs all about the power — and the cronyism.

By Paul Krugman
Opinion Columnist

Dec. 5, 2019

Almost exactly one year has passed since Donald Trump declared, “I am a Tariff Man.” Uncharacteristically, he was telling the truth.

At this point I’ve lost count of how many times markets have rallied in the belief that Trump was winding down his trade war, only to face
announcements that a much-anticipated deal wasn’t happening or that tariffs were being slapped on a new set of products or countries.
Over the past week it happened again: Markets bet on an outbreak of trade peace between the U.S. and China, only to get body slammed
by Trump’s declaration that there might be no deal before the election and by his new tariffs on Brazil and Argentina.

So Trump really is a Tariff Man. But why? After all, the results of his trade war have been consistently bad, both economically and
politically.

I’ll offer an answer shortly. First, however, let’s talk about what the Trump trade war has actually accomplished.

A peculiar aspect of the Trump economy is that while overall growth has been solid, the areas of weakness have come precisely in those
things Trump tried to stimulate.

Remember, Trump’s only major legislative accomplishment was a huge tax cut for corporations that was supposed to lead to a surge in
investment. Instead, corporations pocketed the money, and business investment has been falling.

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At the same time, his trade war was supposed to shrink the trade deficit and revive U.S. manufacturing. But the trade deficit has widened,
and manufacturing output is shrinking.

The truth is that even economists who opposed Trump’s tax cuts and tariffs are surprised by how badly they’re working out. The most
commonly given explanation for these bad results is that Trumpian tariff policy is creating a lot of uncertainty, which is giving businesses
a strong incentive to postpone any plans they might have for building new factories and adding jobs.

In that case, however, why doesn’t Trump do what the markets keep wrongly expecting him to do, and call it quits? His continuing tariff
obsession seems especially strange given growing evidence that it’s hurting him politically.

It’s important to realize that Trumpian protectionism wasn’t a response to a groundswell of public opinion. As best as I can tell from the
endless series of interviews with white guys in diners — who are, we all know, the only Americans who matter — these voters are driven
more by animosity toward immigrants and the sense that snooty liberals look down on them than by trade policy.

And public opinion seems to have become far less protectionist even as Trump has raised tariffs, with the percentage of Americans saying
that free trade agreements are a good thing as high as it’s ever been.

So Trump’s trade war is losing, not gaining, support. And one recent analysis finds that it was a factor hurting Republicans in the 2018
midterm elections, accounting for a significant number of lost congressional seats.

Nevertheless, Trump persists. Why?

One answer is that Trump has long had a fixation on the idea that tariffs are the answer to America’s problems, and he’s not the kind of
man who reconsiders his prejudices in the light of evidence. But there’s also something else: U.S. trade law offers Trump more freedom of
action — more ability to do whatever he wants — than any other policy area.

The basic story is that long ago — in fact, in the aftermath of the disastrous Smoot-Hawley tariff of 1930 — Congress deliberately limited
its own role in trade policy. Instead, it gave the president the power to negotiate trade deals with other countries, which would then face
up-or-down votes without amendments.
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12/10/2019 Opinion | Why Is Trump a Tariff Man? - The New York Times
It was always clear, however, that this system needed some flexibility to respond to events. So the executive branch was given the power
to impose temporary tariffs under certain conditions: import surges, threats to national security, unfair practices by foreign governments.
The idea was that nonpartisan experts would determine whether and when these conditions existed, and the president would then decide
whether to act.

This system worked well for many years. It turned out, however, to be extremely vulnerable to someone like Trump, for whom everything
is partisan and expertise is a four-letter word. Trump’s tariff justifications have often been self-evidently absurd — seriously, who imagines
that imports of Canadian steel threaten U.S. national security? But there’s no obvious way to stop him from imposing tariffs whenever he
feels like it.

And there’s also no obvious way to stop his officials from granting individual businesses tariff exemptions, supposedly based on economic
criteria but in fact as a reward for political support. Tariff policy isn’t the only arena in which Trump can practice crony capitalism —
federal contracting is looking increasingly scandalous — but tariffs are especially ripe for exploitation.

So that’s why Trump is a Tariff Man: Tariffs let him exercise unconstrained power, rewarding his friends and punishing his enemies.
Anyone imagining that he’s going to change his ways and start behaving responsibly is living in a fantasy world.

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Paul Krugman has been an Opinion columnist since 2000 and is also a Distinguished Professor at the City University of New York Graduate Center. He won the 2008
Nobel Memorial Prize in Economic Sciences for his work on international trade and economic geography. @PaulKrugman
A version of this article appears in print on Dec. 6, 2019, Section A, Page 30 of the New York edition with the headline: Why Is Trump a Tariff Man?

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