Liberation Day was April 2. The liberation lasted one week because people got tired of WINNING. We needed a pause. Capitulation Day was April 9. Trump blinked then and has blinked some more.
If Trump is a business-class president and the trade war is just a negotiation tactic, as many argue, then Trump has just given away the store. The whole world saw weakness, failure. The Art of the Retreat has begun. It’s over, we’ve lost.
If Trump is a working-class president and trade war is not a negotiation tactic, but the endgame in a fundamental restructuring of the economy, then nothing has been lost. A 90-day pause is no big deal. As long as he doesn’t continue punting and punting forever (TikTok).
This is the debate: is MAGA a working-class movement or pro-business? It can’t be both here. Either trade wars are good and easy to win, as Trump proclaimed in 2018, or they’re just a negotiating tactic to be wound down.
AMZ Sellers Love Trump Redux
In February I wrote about how many Amazon sellers love Trump. Certainly not all of them, but most. Since Liberation Day, and continuing through Capitulation Day and the time of publish, this class has been hammered. A slew of articles in the Times, WSJ and more detail the chaos. The money quote comes the CEO of a toy company to President Trump.
“You are a great man and you love the USA. I am a big supporter of you… Please exempt toys from tariffs. We only have 255 days left till Christmas.”
Small businesses plead for relief from crushing costs of Trump’s tariff war (New York Post)
This is exactly what is going on in that world. Existential crises abound. In fact the articles are muted in tone compared to what people are feeling. Some are looking at how to wind down or do something else. Even bankruptcy.
Just a couple months ago they were of the opinion that the trade war was a negotiating strategy that would be end after some trivial concessions. Some thought a true shellacking of China and a revitalization of American manufacturing was coming. Today they don’t just hope they were right. They are praying for relief.
The big question on their minds is, how long will this last? The vast majority need it to end within 90 days. About half believe it will be all over in a month.
How long will it last? The answer lies in whether MAGA is business class or working class, capital or labor.
I believe the truth is somewhere in the middle. While Trump wants to cut taxes and be a pro-business president, he has a decades-long record of advocating for an 18th-century mercantilism-style economy. If he believes anything, this is it. And this is his only chance. It’s now or never.
Another core value of his is political convenience. Expedience trumps values. The cable news chryons are paramount. Trump doesn’t want to lose too many episodes. He has a low tolerance for pain.
And of course much of how he operates is being made up as he goes along. This isn’t 4D chess, it’s whatever is expedient on a day-to-day basis.
Factoring all that in, that he’s a true believer who didn’t read his business textbooks or go to class, but pragmatic enough not to burn it all down, while still making it all up as he goes along … I believe Trump will try to straddle the fence and choose some middle ground to hold his coalition together for as long as possible.
I think tariffs on China stay around the 50% range permanently, and the rest of the world between 10-20%, with carveouts galore. For a date on when the trade war ends, watch the working-class base. For now they aren’t fazed, but watch prices. When they start to feel the pinch, and Trump’s floor of support looks ready to collapse, that’s when Trump fully retreats. My guess is 30-60 days from today.
Return of Free Trade
I’m optimistic. Free trade was the default consensus between both parties for so long that we forgot why. We forgot the arguments for trade. The Boomers inherited the prosperity of trade. It was the work of the Silent Generation, the Lost Generation and their parents.
They are all dead now. People alive today need to relearn those lessons. And after we do, the debate will be over. We will revert to the default of market-friendly capitalism as espoused by Adam Smith, classic economics and business schools everywhere.
I almost don’t want the trade war to end if it means protectionism will hang around for another cycle or two. I want it to go away for another 100 years. So let’s go ahead and jump all the way in, get the suffering out of our system so we can move forward. That debate is happening. As a business nerd, it’s been exhilarating.
Expat Chronicles 