With many of President Trump’s policies, he and his critics agree about the likely effects even if they sharply disagree about the wisdom of those effects.
Consider this list of predictions: Elon Musk’s efforts to cut government spending will weaken the federal government. Trump’s overhaul of the Justice Department will make it more loyal to him and his allies. His immigration policies will reduce the number of people coming to the United States. His Europe policies will cause the continent to be less reliant on the U.S. His assault on D.E.I. will shrink diversity programs in both the government and the private sector.
Tariffs, however, are an exception. Trump and his critics don’t disagree only about whether they are a good idea; the two sides also have diametrically opposed predictions about what will happen if Trump implements even some of the tariffs he has promised.
His critics — including some Republicans — believe that imposing fees on imports will damage the U.S. economy. They say the possibility has already created uncertainty that is anathema to business investment. When more tariffs are in effect, they will raise prices for consumers and hurt more American manufacturers than they help. (Think of an automaker that will have to pay more for the raw materials and parts it buys from overseas.) Some people who are alarmed by Trump even tell me that they’re quietly rooting for him to go big on tariffs because they think it will damage his presidency.
Trump’s advisers have a very different prediction. They believe the concerns about uncertainty are overblown. They think the mere threat of tariffs will cause other countries to reduce their own barriers to U.S. companies. (Already, European Union officials have signaled they will cut tariffs on American cars to appease Trump.) And Trump’s team says that tariffs will have more benefits than downsides.
Navarro’s case
If you’re hoping to understand the Trump argument, I recommend today’s episode of “The Daily,” in which my colleague Ana Swanson interviews Peter Navarro, a senior White House adviser whose writings have influenced Trump’s views. Navarro first warned about the economic threat from China years ago, when many mainstream Democrats and Republicans still argued that China’s rise would benefit the U.S. Today, those mainstream figures agree China as a worrisome rival — even if they think Navarro is wrong about the correct policy solution.
In Navarro’s conversation on “The Daily,” he says that the strong economic performance and the low inflation during Trump’s first term — when he imposed tariffs on China — show that tariffs don’t have the downsides many economists forecast. “It’s not going to be painful for America,” Navarro said. “President Donald John Trump has proven that tariffs work for the American people, and they’re going to be even more — much more — important this second term.”
Specifically, Navarro argues that the U.S. is such an important market that foreign companies will cut their prices and accept lower profits rather than pass along the cost of tariffs to consumers. He also predicts that suppliers, such as those that sell parts to automakers, will relocate to the U.S.
It’s still possible that Trump will not follow through on many of his tariff threats. He delayed planned tariffs on Canada and Mexico after the stock market reacted poorly. And The Wall Street Journal reported last night that Republican senators skeptical of tariffs were maneuvering to reduce Navarro’s influence in the White House. They hope Trump’s other economic advisers, some of whom are awaiting confirmation, will help their cause.
But at least some major tariffs seem likely to go into effect, as Ana has reported. Last week, Trump announced that 25 percent tariffs on steel and aluminum would begin March 12. He also directed his aides to design reciprocal tariffs, which would place the same fees on a country’s exports to the U.S. that it places on imports from the U.S.
It sets up a fascinating real-world experiment in which two sides of a debate have very different expectations about what will happen. You can listen to “The Daily” here.
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