The Wall Street Journal conducted an extended interview with Donald Trump on just one topic, dammit—what are we going to do about China. Most of the conversation between the WSJ’s Bob Davis and Trump consists of a near-comical shooting back and forth in an attempt to come close to the topic …
Davis: OK. So, I mean, to start with, so this is something you campaigned on, being tough on China. It’s been going on for two years.
Trump: Well, China and others, because we –
Davis: Yeah, yeah. Yeah.
Trump: We’ve been – we’ve been taken advantage of by many countries all over the world, not China. The EU has been a disaster for the United States. Mexico and Canada have been, you know, very, very hard on the United States. NAFTA was one of the worst trade deals ever made.
Davis: Right, right. But this – we’re focusing this one on China.
“Focusing” is not a term that can readily be applied to this conversation. Trump complains about the WTO, talks about his wonderful relationship with Chinese Communist Party Leader Xi, complains more about the WTO, and the G20, and fends off a thousand and one repeats of “yeah, yeah, yeah” on the part of Davis. Mostly the pair give every appearance of two people talking who are either not listening, or so enamored of their own voice that the statement from the other end of the line goes unnoticed. But when any possible action against China does wander into the fray, it comes down to Trump reiterating that his plan consists of tariffs, tariffs, and more tariffs. Because tariffs are good.
Trump: I happen to be a tariff person because I’m a smart person, OK? … The steel industry has been rebuilt in a period of a year because of what I’ve done. We have a vibrant steel industry again, and soon it’ll be very vibrant. You know, they’re building plants all over the country because I put steel – because I put tariffs, 25 percent tariffs, on dumping steel.
Except that’s not true. That’s not all true. The number of steel plants now, and the number of steelworkers, is actually less than it was in 2016. Just as has become obvious with cars and with coal, Trump’s magical steel industry recovery does not exist.
Since Trump began rattling the tariff threat, there has been a just under 2,000 job increase in the overall metal processing industry. However, that slim increase comes against a volatile background of much larger rises and dips. Mostly dips. Compared to where the industry was before the Great Recession, steel has shed almost 70,000 jobs. Trump’s tariffs may, or may not, have generated a small bump in that decline, but they’re a long way from reversing the trend.
And as Politifact reports, Trump said over the summer that US Steel was opening seven new plants, then six new plants, when in fact they were building no new plants. Not one.
No one has, or is, building massive new steel plants because that would represent an investment of hundreds of millions, if not billions, against the idea that Donald Trump wouldn’t change his mind tomorrow and decide that tariffs were bad, had always been bad, and he never liked tariffs. No one is going to make that bet, especially when they know that Trump, and his tariffs, are likely headed for the big steel trash can of history in less than two years.
In the meantime, Trump is happy to keep his tariffs in place.
Trump: They have to open up China to the United States. Otherwise, I don’t see a deal being made. And if it’s not made, we will be taking in billions and billions of dollars.
At multiple points in the interview, Trump gives him a pat on the back for those “billions” the government is making off of tariffs. Which, first of all, are not billions. It’s not even clear the government has made “millions,” since total tariff revenue from all sources in an average tax year runs to around two hundred million. But more importantly, Trump’s tariffs are not paid by China. They’re not paid by Chinese manufacturers. They’re paid by US companies and US consumers who purchase products from overseas. Those “billions,” if they did exist, would be coming out of US pockets.
For the moment, Trump is still pretending that steel is doing great. Three weeks ago, before the elections, Trump was making the same statements about the auto industry, including making visits to Ohio when he made claims about all the auto jobs “coming back” to the area. But General Motors, which stayed quiet when it might have made a difference to workers, has since had to admit that it’s closing multiple plants and ending tens of thousands of jobs.
Trump: Well, it’s one plant in Ohio.
Actually, it’s five plants.
Trump: But I love Ohio. And I told them: You’re playing around with the wrong person. And Ohio wasn’t properly represented by their Democrat senator, Senator Brown, because he didn’t get the point across. But we will all together get the point across to General Motors . And they better damn well open up a new plant there very quickly. You know, they haven’t closed – they’re reallocating it, it’s called. And I said, because their Cruze car isn’t selling, OK? They make a car called Chevy Cruze. And it’s not selling well. So I said: Then put a car that is selling well in there but get it open fast.
Both GM and Ford have made it absolutely clear that the biggest reason plants in the US are being closed is directly because of Trump’s tariff policies. Those tariffs mean that small cars need to be made in the country where they are selling most strongly. With tariffs making it impossible to move cars either way without pricing them out of the market. So people in Ohio are losing jobs, and small cars are disappearing from the market in the United States.
The tariffs are killing jobs and opportunities in the United States. And Trump’s alternative is … he has no alternative but more tariffs. And threats against American companies.
In a Tuesday afternoon White House press conference, Larry Kudlow made it clear where Trump was going with his effort to strike back at GM. Trump’s read on GM’s actions is that they would “rather make their electric cars in China.” And Trump’s response is that he’s going to “look at” the incentives given to electric vehicles (EVs) and “you may hear more announcements” on this point.
It’s easy enough to read these threats: Trump is going to end or severely restrict tax incentives for electric vehicles. Because he thinks that will hurt GM. Or China. Or just liberals. Or maybe all three.
Trump is slated to meet with Chinese president Xi at the upcoming meeting of the G20, where they will likely share the cake. But even if Trump lifts his tariffs, it seems extremely likely that he’ll carry through on threats to end EV subsidies—which will be a perfect compliment to his destruction of the CAFE standards. In the same press conference where he hinted at killing EV subsidies, Kudlow also bragged on low oil and gas prices, making it clear that’s what he regarded as the more important goal.
In the end, Trump will succeed in driving the EV industry out of the United States, ensuring that the most efficient and modern vehicles aren’t just built elsewhere, but are overpriced or unavailable in the American market.
And China will watch as the US throws away the future while embracing the past.