Ian Welsh

The great problem with Trump, predictively, is that he’s fickle. He often doesn’t do what he says he’ll do. Even if he was sincere he’s easily handled by flatterers. The best model for Trump is an arrogant and touchy king who wants to be made to feel he’s amazing.

This means that court games matter even more than in a normal Presidency, and those who play them best have the most power and influence.

But even a good courtier can step wrong with Trump and be pushed out. The limelight has to stay on Trump himself. A courtier can have great power, but the credit and the media must flow to the top. The last thing any courtier wants is to have people saying publicly that they’re the power behind the throne.

Trump also likes to please people, especially mobs of people and he can sometimes get the bit between his teeth and run with an idea no matter what anyone around him says.

Preamble aside, Trump did come back and back to some of the same issues.

Thirty Percent Tariff on Chinese Goods

This will raise costs for American businesses and for consumers. Prices will rise more than the actual cost, as many businesses will use this as an excuse to raise prices even more than their costs. It will not significantly improve US jobs because China’s cost structure is more than 30% cheaper than America’s. It will help other foreign producers, however, and it will lead to a lot of scamming, where Chinese goods are shipped to a third party, scrubbed, and sent to the US, similar to the way Europe is now buying so much “Indian” oil. But…

Mass Deportation Of Immigrants

This is one of those places where I’m uncertain how serious Trump is, especially when it comes to measures like using the national guard. But let’s say he does manage to both massively slow immigration and remove many current immigrants. The effect is an inflation riptide: it will reduce rent, and increase the price of groceries (because most farm workers are immigrants. There will be general wage increases in businesses which can afford them, offset by demand declines. Deported immigrants don’t consume, after all. Because there is a significant and increasing problem with long-term illness and disability, the labor market will wind up even tighter.

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Some people will win from this pair of policies and even win fairly big. If you’re in a business with pricing power, it’ll be able to afford the increased wages, if you’re in one that can’t, the businesses will fail and you’ll lose big. We’ll have to see how much the price of housing and rent drops to have a full feel for this. Ironically, for this to really work would require anti-trust action against large landlords who are colluding to increase rent. Withdrawing some federal price-support for housing prices would help cause a collapse in housing prices which would benefit a lot of people, but hurt the upper classes. Of course those upper-classes went for Biden, not Trump.

NATO

Trump’s going to push hard for increased NATO spending by members. They’ll say they’re going to do it, in most cases, then won’t. At this point there’s a chance that Trump leaves NATO. I think, of all his policies, this is the one where there’ll be the most pushback from elites, including many people in his own administration, so I’d say odds favor NATO surviving, but it’s not a sure thing. If the US does leave NATO, it will be a huge boon for the world, and the best thing which could happen to Europe, forcing them to get serious about handling their own affairs. The policies Europe should follow are not those America wants.

Favoring gas cars and disfavoring Electric Vehicles and Sustainable Energy

Obviously a disaster for the environment and climate change. Effectively a subsidy for American automobile producers, who are behind on EV tech and production, but it also puts them into a national ghetto, as the rest of the world moves towards electric and hybrid and they fall behind even further. I assume Musk will push hard against the EV part of this, we’ll see whether he succeeds.

Trump has more proposed policies and his allies have many more. How much of Project 2025 will be enacted is unclear. Trump repudiated it, but the architects will be a big part of his administration. We’ll touch more on these in a later article.

The basic issue is that policies need support from each other. If you want re-industrialization you need to do a number of things. Tariffs would be part of that, but they aren’t all of it. Mass deportation of immigrants could work economically, but not at the same times as measures aren’t taken to deal with long term sickness in the native population, and so on. Proper automobile policy would be to invite branch plants and insist on local part sourcing in addition to tariffs, so that domestic producers learn and the jobs are in America.

Trump’s fundamentally a scatterbrain. He’s not a systems thinker, and the people in his adminstration are ideologues of a set of policies which won’t work economically, so Trump’s economy is unlikely to be overall great, though there will definitely be some winners. In 2028 there will be an opening for someone with more genuinely economically populist ideas, because many people will have been hurt by the Trumpconomy.

More later.