Dem
47
GOP
53
This is starting to get into dog bites man territory—since this is what, the fourth time it's happened in the last 3 months? In any case, once again, the administrations of Donald Trump and Xi Jinping have agreed to temporarily roll back the new, insane tariffs. The time frame is 90 days, which is ostensibly meant to allow for the negotiation of a more permanent trade deal.
By virtue of the rollback, American duties on Chinese imports will drop from 145% to 30%, while Chinese duties on American imports will drop from 125% to 10%. Wall Street was pretty happy about this news, as the Dow shot up 1,000 points yesterday, while the S&P reached its highest level since early March. For what it's worth, Dow Jones futures were down about 100 points as of 2:00 a.m. PT, so the bounce could be pretty temporary.
We don't pretend to know exactly what's going on here. Is this business of Trump decreeing harsh tariffs and then backing down because he just can't handle it when the heat (and the negative coverage) increases? Is it some sort of negotiating ploy? Is he deliberately manipulating the stock market, either for the benefit of himself and his friends, or because he believes that the thing that people will remember is the "The Dow was up 1,000 points!" stories? Who knows?
Whatever the case may be, if Trump or anyone else wants to claim that there is some method to this madness, there are a few problems. First, the stock market is still down relative to when he took office. The Dow Jones, to take one example, was at 43,487.83 on January 20, and is now at 42,410.10. Further, supply chains have already been disrupted, and the effects WILL be felt, at least to some extent. It is also the case that American businesses, and foreign nations, have both learned they cannot trust this administration, and are leery of making any sort of substantive investments or commitments. Finally, there is no actual trade deal with China (or with the U.K., for that matter), and either situation could go south at any time. In short, he is not winning.
That said, if one is looking for reasons to be optimistic, there are a couple of things we could point out. The first is that, by all indications, Xi is willing to play ball. That was not (and is not) guaranteed; the Chinese president certainly could have taken (and could take) a position that the U.S. needs to squirm for a while. The second is that when it came time to talk turkey, Trump did not send an amateurish buffoon like Peter Navarro. No, he sent the professional negotiators who have been doing this for the U.S. government for many years. Perhaps the President and his team actually do appreciate the value of expertise, even if they pretend otherwise.
On a vaguely related note, shortly before Trump announced the tariff rollback, he unveiled his executive order on drug prices. As of the moment, at least, it is what we suspected: full of sound and fury, but signifying nothing. The XO directs HHS Secretary Robert Kennedy Jr. to come up with price targets, ideally 50%-90% less than current rates, and then to negotiate with Big Pharma to achieve those targets. If they don't comply, the administration will theoretically impose cuts unilaterally.
In other words, it's the Trumpy version of appointing a blue-ribbon panel. Anybody can take a list of prices and come up with lower prices. Heck, maybe the administration can just adapt the formula it uses to calculate how much in tariffs that penguins should pay. And anybody can talk to pharmaceutical executives about cutting prices. Heck, they might even drop prices by a few percentage points, just to give Trump a "win" so that he moves on to other things. But the notion that a 40% or 50% or 60% reduction is in the offing is simply laughable. It is true that, say, people in Peru pay far, far less than people in the United States, but that is because it is all the Peruvians can afford. Someone has to foot the bill for R&D, and that is customers in America (and other western democracies). And if Trump tries to unilaterally impose cheaper prices, then Big Pharma will sue, just as they did when he tried it 6 years ago, and they will presumably win, just as they did 6 years ago.
Incidentally, there is one other question we don't have a great answer to: Why is Trump so obsessed with getting "wins" right now? The next election is still 500 days away, and by that time nearly all of this will be forgotten. Is it just that he needs praise and adulation on a regular basis, the way an addict needs his crack? That's the best explanation we've got, but maybe there's something we're missing. (Z)