Larry Jacob

Trump’s Tariffs

When will people realize that one has to focus on what President Trump does, not on what he says. I don’t know the man, personally, but based on what I have read and been told, in his previous life as a businessman he was not exactly a nice man. Also, his incessant tweeting is annoying, inappropriate and unpresidential, and White House personnel have turning over at a high rate. I say, so what? Previously, he was not in politics, where one has to be skilled in lying, cheating and obfuscation, where one has to be polite to those he loathes, and say one thing and do another. He was from the rough and tumble ruthless world of NY real estate where one has to scratch and claw to succeed, where people tend to be brutally direct, and where they say what they mean and mean what they say.

I did not vote for a nice guy with whom I would like to “hang out” on Friday nights. I voted for a president who was tough enough and ruthless enough to deal with Putin and China and North Korea and Iran and ISIS and the DC political “swamp.” I voted for someone who could and would solve America’s problems, of which there are many at the moment. I did not want “nice.” I have had “nice” for the past eight years, and I did not like the results. Enough “nice,” already! Arguably, the two “nicest” presidents in my lifetime have been Jimmy Carter and Barack Obama, but I firmly believe that they were also the worst presidents during that period.

I ask you, if you were seriously ill and needed an operation to save your life, which surgeon would you want, the nice, polite one of average competence or the arrogant, nasty SOB who was the most highly skilled? I know which one I would choose. That’s also whom the voters chose.

So far, President Trump has done, or is trying to do exactly what he promised in his campaign. How refreshing. (Remember Bush 41’s phony campaign pledge: “read my lips. No new taxes?) Remember how that worked out?

Let’s review Mr. Trump’s report card, briefly:

1. Elimination of needless regulations that discourage business.

2. Proposed immigration bill, including border security and a path to citizenship for law-abiding “dreamers.”

3. Aggressively fighting gangs and opioid addiction.

4. Fighting for fair and reciprocal trade deals.

5. Rebuilding infrastructure.

6. Paid family leave.

7. Success against ISIS.

8. Necessity to retain Guantanamo.
9. Strong support of Israel, including recognition of Jerusalem as its capital.
10. Strong support for veterans.
11. Sustained low unemployment, including record lows for blacks and Hispanics.
12. Job creation, including new plants being built.
13. A moderate justice appointed to the Supreme Court.
14. Record-breaking stock market.
15. Tax reform, which has already encouraged several companies to hire additional workers and pay out employee bonuses.
16. Respect for the flag.
17. Heroism by “ordinary” Americans during natural disasters.
18. Energy independence.
19. North Korea’s Kim has requested a face-to-face meeting with Mr. Trump (and South Korea). The President has agreed but only to discuss NK’s denuclearization. Meanwhile, the sanctions are remaining in place. Many have compared this breakthrough to President Nixon’s visit to China, which ushered in a whole new relationship with that country. This development is most encouraging, but, for now, let’s be cautiously optimistic.

Remember, all this has been accomplished in just a little over one year in office and with sustained opposition not only from the Dems, but also many in his own party, not to mention a largely hostile media.

And, now to the current issue – tariffs.

As we all know, yesterday, President Trump announced the imposition of a 25% tariff on imported steel and 10% on imported aluminum for which he was roundly criticized. That was the headline. But, as they say, the devil is in the details. Just to back up, we all know that tariffs are a double-edged sword. History has shown that, generally, they backfire as trading partners retaliate in kind.

Perhaps, the most infamous example of this was the Smoot-Hawley Tariff Act of 1930 sponsored by Senator Reed Smoot and Representative Willis Hawley. The ill-advised protectionist act imposed tariffs on some 20,000 imported products. America’s trading partners quickly and predictably retaliated. The conventional wisdom among economists and historians is that this contributed to and greatly exacerbated the effects of the Great Depression. I agree.

However, before you rush to sell your securities and stock up on gold and silver consider the aforementioned details and remember President Trump’s penchant for using hardline policies as a negotiating tool. Don’t forget, he built a fortune on the “Art of the Deal.”

Lost in the headline was President Trump’s statement that he was exempting certain allies, such as Mexico and Canada, and, moreover, that he would be “very flexible” about exempting other allies. So, I think that our allies in Europe and the Pacific rim can probably rest easy as well. It is very clear to me that he is sending a message to certain countries, such as China, that have been engaging in unfair trade practices, such as “dumping .” You will recall that re-negotiating unfair trade practices was one of his campaign pledges. I view this as consistent with, for example, his actions regarding our NATO partners who had not been paying their fair share for defense.

Additionally, I think this action was triggered, in part, by a recent Department of Commerce report that the substantial influx of foreign aluminum and steel was decimating our own manufacturers of these products. The obvious result of this has been loss of manufacturing jobs. The more subtle result is that in the interest of national security we need these industries to be healthy in the event of war. In that event, we cannot allow ourselves to be at the mercy of foreign powers who might turn adversarial, such as China or even those who are currently friendly, such as Canada and Brazil.


I suspect the President’s “endgame” is not to start a trade war. I’m sure he knows the ramifications as well as we do, if not better. His aim is to renegotiate certain unfair trade practices, which have been highly disadvantageous to America.

Don’t forget another detail, namely that these tariffs will not take effect for 15 days, which leaves plenty of time to negotiate. Along those lines, today, the Huffington Post reported that many of our trading partners are “lining up” to apply for exemptions. These include various EU countries as well as Brazil, our second largest supplier of steel behind Canada, Japan, South Korea, and Argentina. I expect that most, if not all of them will receive exemptions, leaving only the 500- pound gorilla, China.

As I said, the Chinese have not been playing fair, and Trump intends to rectify that. Given his stellar track record to date, he deserves the benefit of the doubt in this instance. Like I said, don’t sell your securities and load up on gold and silver just yet.

About the Author
Larry was born and raised in New York. He is 73 years old. He has a Bachelors Degree in Accounting and a Masters Degree in Marketing Management, and worked in the financial industry for 42 years in accounting and Compliance. Larry is also a veteran, whose hobbies are reading and golf. He has been writing a blog for three years, which is being read by people in 90 countries.
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