Donald Trump has been president for less than three months, largely governing his country by ‘executive order’, rather than legislation. Congress has played little part, other than to approve some spending cuts and an interim budget. Trump has been working to the blueprint Project 2025, devised by a far-right group before the election. He denied knowledge of its existence, but it has been the origin of most of his decrees. It would require a substantial tome to begin to address the effects of the orders to date, but it is worth highlighting some astonishing actions and outcomes.
It is usual for US presidents to choose their cabinet, and many senior civil servants, but Trump’s recruitment process has been astonishing. Rather than seeking to select on the basis of expertise, the criteria seem to have been reduced to one factor: unswerving loyalty to himself. A prime example is his health secretary. Robert F Kennedy Jr is a lawyer, a politician, a conspiracy theorist, an anti-vaccine activist, and has no real medical background. In other appointments, Trump has dismissed many career specialists – army, security, intelligence, and legal – who he perceives may not be loyal to him.
Trump’s revenge
Trump also mounted administrative attacks on anyone who had been involved in investigating or compiling evidence about his illegal activities, sacking them, barring law firms, and so on. Then thing went seriously downhill.
On 15 March he invoked an obscure 18th-century law called the Alien Enemies Act to justify deporting 137 Venezuelans he says are associated with a Venezuelan gang. A federal judge swiftly blocked the deportations and ordered the planes carrying Venezuelans heading to El Salvador to return. But the White House said that the court order came too late on a Saturday night, after it had already sent the Venezuelan immigrants to El Salvador.
No due process was followed, and it transpired that a man with legal right to live in the USA had been deported. His wife and five-year-old son only found out where he was when his wife saw him in the El Salvadoran prison on TV. The White House admitted the “clerical error” but had no intention of trying to get him back. A judge has ordered them do so.
A number of people have been deported or refused entry to the USA arbitrarily, on the basis of social media comments unfavourable to Trump or one of his policies or actions, an approach more akin to Soviet era East Germany than a western democracy.
Meanwhile Congress does very little, apart from Senator Cory Booker, who wrote himself into the Senate annals on Tuesday 2 April, when he set a new record for the chamber’s longest speech by holding the floor for more than 25 hours. The New Jersey Democrat took the floor at 6:59pm on Monday, saying he was doing so with the “intention of disrupting the normal business of the United States Senate for as long as I am physically able” in order to protest the actions of President Donald Trump and his administration.
Economic insanity
Trump deliberately waited until the New York Stock Exchange closed on ‘Liberation Day’ before making an announcement that shocked the world. He had indicated that he intended to introduce tariffs on imports to the USA, but the scope and scale of those he announced were ludicrous. He described them as “reciprocal”, which was simply untrue. As well as being ridiculous, the methodology for calculating them was infantile.
(If you are not very familiar with tariffs, and why they are rarely used, please see my short explainer, which Yorkshire Bylines published previously.)
We all had ample opportunity to see during the pandemic that Trump has no understanding of science. He has even less understanding of international trade and macroeconomics.
Trump’s presumption is that any country selling more to the USA than it purchases is acting unfairly, and “ripping America off”. That is a very foolish assumption, as I will explain shortly. He asserts that the trade imbalance is caused by tariffs and or trade barriers, but his ‘reciprocal’ tariffs were calculated on this basis by a crude formula, suspiciously like one suggested by ChatGTP, the AI app.
The calculation actually applied, although somewhat sketchily, appears to be “take the trade deficit for the US in goods with a particular country, divide that by the total goods imports from that country and then divide that number by two is a ratio of imports divided by exports” (BBC Verify). Nonsensical, but economists and mathematicians are in short supply in the cabinet. Everybody gets a 10% tariff whoever they are (2% to 4% is usual in the World Trade Organization).
The tariffs announced are still confusing, because some of them are added to the existing tariff, so China goes up by 34% to 54% (and potentially to 105% by this Wednesday), but others replace existing tariffs. Some specific goods have tariffs that apply universally. Cars, for example, have 25%. What effect will all this have? Well, the Dow Jones, the stock listing of big US companies, fell 5.5%, a bit more than when Covid-19 struck. That represents a $2.7tn drop in company values in two days.
Tariff war
The whole thing will take weeks to become clear. Some countries are hitting back with their own tariffs on US goods. I will give a sad example of what this insanity can do. You may recall that Trump said nobody had heard of Lesotho when Elon Musk identified the small southern African country for aid cuts. In the tariff table, it was described as imposing 99% tariffs, so has been hit with 50%.
In fact, the tiny country is very poor, and the government gets very little revenue from income taxation. The population cannot afford American goods, so very little is imported. The country does have rare minerals and diamonds, which it exports to fund education, health and government services. Now that trade will be subject to 50% tax, which may drastically reduce its ability to offer its citizens basic services.
We don’t know what effect this will have yet for the UK or Europe. Nobody can yet scope it. Take just two examples. A UK chemicals exporter is expecting a boost for their organic chemicals exports to the USA; their competition is from India and China, who have higher tariffs, so they will now have a competitive advantage.
Car sales is another unknown. US manufacturers assemble cars but the expensive components, engine and so forth, are sourced from specialist manufacturers, with various parts crossing the borders with Canada and or Mexico multiple times. USA ‘manufactured’ automobiles might aggregate higher tariffs then those from the UK or Japan.
We do know that prices on a great many goods in the USA will increase dramatically. Some companies may plan to relocate production to avoid tariffs, but it is a slow process, and Trump may change again. And the next president might not be mad.
