Unintended Consequences

Trade War:  The Trade War is on and maybe, just maybe the war with the little Rocket Man is off, at least for now.  Surrounded by a group of steel and aluminum workers Trump announced his much ballyhooed 25% tariff on steel imports and 10% tariff on aluminum imports, promising that they would reinvigorate the US metals industry, returning “one million” workers to the mills.  Like the millions watching his inauguration and the millions who voted illegally, this million number was made up, more likely around 33,000 workers will be put back to work, with gains more than offset by the 179,000 workers in metal consuming manufacturing businesses who are likely to lose their jobs.  At least initially, Mexico and Canada will be exempt from the tariffs although Trump also held out the possibility that other countries will be exempt too, subject to further negotiations. Trump justified the tariffs by claiming that they were essential to protect national security, a tenuous argument since trade wars with allies can be pretty threatening to peace and security, which is one of the reasons that trade agreements are considered so important.  Most Republicans are fairly distressed about the tariffs so much so that the usually complicit Speaker Ryan finally spoke up saying "I disagree with this action and fear its unintended consequences,” by unintended consequences he meant the damage that will be done to the economy and the unwinding of any of the benefits of recent tax cuts.  The almost always mute Senate Majority Leader McConnell said "There is a lot of concern among Republican senators that this could sort of metastasize into a larger trade war." In a Washington Post op-ed uber conservative billionaire and major Republican donor Charles Koch expressed his dismay by pointing out that “Countries with the freest trade have tended to not only be the wealthiest but also the most tolerant. Conversely, the restriction of trade - whether through tariffs, quotas or other means — has hurt the economy and pitted people against each other.” Koch or not, he’s pretty much right about that.  VP Pence who usually jumps to attention when one of the Koch Brothers calls and who supposedly was opposed to the tariffs said nothing, but did stand by Trump sporting his usual adoring stare. Republican leadership is now threatening to push through legislation to prevent the sanctions but not everyone disagrees with Trump’s protectionist trade views, Senator Bernie Sanders commended Trump for “identifying that unfettered trade is a problem” but questioned his approach and three Democratic Senators, Manchin (West Virginia), Casey (Pennsylvania) and Brown (Ohio), up for reelection in states that Trump won bigly agreed that Trump was right to target the trade problem. Bottom line is that as a result of the tariffs and the more likely than not trade war that follows, prices of goods will go up, eating away at any of the benefits of the recently passed tax legislation, to the extent that there were any real benefits, a double whammy for high tax state residents who didn’t benefit from the tax cuts in the first place but who will be hurt by rising prices.  While Trump was launching his trade grenade, eleven other countries signed off on the Trans Pacific Partnership trade pact, the one that the US is no longer in.    

The Korean Gamble:  As their country was being slammed with steel tariffs, South Korean diplomats arrived in Washington DC yesterday on a mission of peace, delivering a verbal invitation from North Korea’s Kim Jong Un for Trump to meet with him as soon as this May to discuss and possibly negotiate an end to the nuclear standoff.  Without consulting with his aides and experts Trump enthusiastically accepted the invitation, in part because he is convinced that he and only he can solve the Korean problem and in part because he was happy to divert attention away from his Russia, Mueller and erupting Stormy Daniels problem.  In exchange for improving his international standing and legitimizing his regime by actually getting a sitting US president to meet with him, a major coup for a North Korean leader, Kim Jong Un has made no significant concessions but is holding out the possibility of the denuclearization of the Korean peninsula and has promised to hold up any new missile and bomb tests at least until after the meeting, he’s even agreed to allow scheduled US-South Korean maneuvers go on as planned.  That’s the good news.  The not so good news is that the North Koreans have done this before, President Clinton came close to achieving a solution only to see it fizzle, a number of pundits liken the North Korean strategy to Charles Schulz’s Lucy and Charlie Brown football gag, the one where Lucy continuously grabs the football back at the last minute.  Another concern is that despite Trump’s huge ego and complete confidence that he can singlehandedly convince Kim Jong Un to give up his cherished nukes, he probably can’t, especially if he goes off half cocked without the benefit of State Department expertise and the cooperation and input of the South Koreans, Japanese and Chinese. Just the thought of a cooperative “Tuesday” Trump giving away Seoul before morphing into a “Thursday” Trump and spurring the Little Rocket Man into nuclear fury is enough to cause serious indigestion and a run on iodine pills.  As to the State Department, Rex Tillerson was caught off guard by Trump’s sudden agreement to meet Kim Jong Un, so much so that his spokeswoman dismissed the possibility of any direct meeting right before Trump announced his willingness to participate.  May isn’t that far off, we still don’t have a South Korean ambassador or an assistant secretary for east Asia, last Friday was the last day of work for our one senior North Korean expert, one-time aide de everything Jared doesn’t have much of a security clearance and it’s been rumored for weeks that HR McMaster, the respected and knowledgeable national security advisor is on his way out.  North Korea without nukes is tantalizing but a lot could go wrong.                

The Battle for California:  While working on peace with North Korea, Trump through his on again, mostly off again BFF Attorney General Session is in the process of waging war on California over the state’s so-called sanctuary laws.  Essentially, Trump and Sessions take the view that all undocumented immigrants are either criminals, terrorists or potential criminals and terrorists and they want the state to help INS with round up and deportation. In addition to just being morally opposed to the concept of going after their undocumented residents especially those leading law abiding lives, California takes the position that local law enforcement needs the trust of the community to get its job done and that to the extent that communities believe that the local police are acting as INS agents, they won’t cooperate, crimes will go unreported by victims fearing retaliatory deportation, and crime rates will go up as the real violent criminals feel emboldened to prey on fearful immigrant communities.  In addition to going after California in the courts the Trump administration is threatening to withhold moneys and grants wherever possible because at the end of the day California, like most of the more immigrant friendly states is blue and who needs to fund blue states anyway.  Along those lines Trump is also threatening to veto the Omnibus Spending Bill that has to be passed by the end of the month to avoid another government shutdown if it includes any money for the much needed Gateway Tunnel from New York City to New Jersey even though he previously promised New York’s Senator Schumer that funding for the crucial tunnel was a done deal.  That promise must have come on a Tuesday, by Thursday Trump had realized that New York and New Jersey are mostly blue and therefore not all that deserving.  Who needs another tunnel anyway, aren’t rowboats, swimming lessons and water wings more than enough?