The oligarchs’ bet that the president-elect would retreat on promises that might mess with their wealth is paying off.
Trump is caving on tariffs, and he isn’t even president yet. I’ve argued previously that the interests of the business lobby and the rich would likely take greater precedence in Trump’s second term than they did in the first. But even I didn’t anticipate that Trump would surrender on the policy dearest to his heart before Inauguration Day.
The Washington Post headline was comically euphemistic: “Trump Aides Ready ‘Universal’ Tariff Plans—With One Key Change.” Such soft-pedaling didn’t fool the markets. News of Trump’s retreat prompted a favorable response Monday morning on Wall Street, with the struggling bond market rallying briefly and the overvalued dollar falling against other currencies. These moves reflected fleeting optimism that Trump’s economic policies would not be as disastrous as feared.
But that favorable response quickly reversed after Trump stated on Truth Social that the Post story “incorrectly states that my tariff policy will be pared back. That is wrong.” For good measure, Trump labeled the story, by the Post’s excellent Jeff Stein, “Fake News.” This well-worn phrase is, typically, Trump’s “tell” that a news story that irritates him is quite accurate, but the markets weren’t subtle enough to register that.
Trump campaigned on a pledge to impose across-the-board tariffs of 10 to 20 percent on all imports. Everybody except Trump, including his economic team, recognizes that this would be ruinous for the economy, raising prices (Kamala Harris was quite right to call the tariff proposal a national sales tax) and provoking retaliation from the roughly 200 countries with whom the United States trades.
Trump’s allies within the oligarchy that helped reinstall him have assumed that the president-elect is bluffing in order to obtain trade concessions (that’s the charitable view) or too brain-addled (that’s the uncharitable view) to put so foolish a plan into practice. Trump’s economic team, according to the Post’s Stein, still wants to impose tariffs globally, but “only on certain sectors deemed critical to national or economic security.” There’s no agreement yet on what those sectors might be, but discussions are underway, Stein writes, citing two anonymous sources, to impose them on “the defense industrial supply chain (through tariffs on steel, iron, aluminum and copper); critical medical supplies (syringes, needles, vials and pharmaceutical materials); and energy production (batteries, rare earth minerals and even solar panels).”
Trump denounced the Post for basing its story on anonymous sources, but these sources weren’t so very anonymous. Stein writes that the economic planning team behind this retreat consists of incoming Domestic Policy Council chief Vince Haley, plus Scott Bessent and Howard Lutnik, Trump’s nominees for Treasury and Commerce. I presume that either they spoke directly to Stein or they directed others to do so. It’s unlikely a leak like this would be unauthorized.
“Even the revamped plans,” Stein writes, “are strikingly aggressive.” No, they aren’t. We no longer know how high the tariffs will be or on which commodities they’ll fall. Trade negotiations always whittle down bold-sounding opening bids, and that opening bid just got a lot less bold. Will these contemplated tariffs truly apply to every country in the world? Almost certainly not.
Besides, a plan to adjust trade policy to shore up supply chains is hardly novel. The Biden administration affirmed last month that it’s raised tariffs already “on a select number of key sectors to safeguard U.S. supply chains in the face of unfair competition” and to “protect historic domestic investments” through its infrastructure bill, the CHIPS Act, and the Inflation Reduction Act, or IRA. Trump says he’ll repeal the IRA, but if Trump’s economic team is contemplating tariffs on solar panels is it really likely to revoke the IRA’s investment tax credits for solar? That wouldn’t make sense.
