Donald Trump - who is still the President as of Tuesday - has been talking about starting a trade war for years and the possibility that he would ultimately make good on those threats has been variously pitched as something that could imperil markets because you know, upending global commerce and stuff.
I’m reasonably sure no one is interested in having a nuanced debate about the inherent risks of adopting a protectionist strategy, but suffice to say Trump’s pitch revolves around the idea that “Gina” and “Messico” and [fill in the blank] are “taking advantage” of “us” and that’s leading directly to the type of “American carnage” he described in his inauguration speech which sounded like it could easily double as the opening monologue for a Terminator sequel. Recall this:
For many decades, we’ve enriched foreign industry at the expense of American industry; Rusted-out factories scattered like tombstones across the landscape of our nation; We’ve made other countries rich while the wealth, strength, and confidence of our country has disappeared over the horizon.One by one, the factories shuttered and left our shores, with not even a thought about the millions upon millions of American workers left behind.
Fortunately, all of Ivanka’s branded products are made in America and definitely not in Bangladesh, Indonesia and China, so at least we’ve got that going for us. Oh, wait.
Anyway, Trump’s quixotic effort to make trade “fair” again has manifested itself in a number of ill-advised ideas including pulling out of the TPP and making life a living hell for everyone trying desperately to renegotiate NAFTA despite not having any real idea what it is Trump wants out of those renegotiations.
Of course effectuating real change is hard and reworking trade agreements like NAFTA is an inherently complex endeavor. Complex endeavors are not well suited to people whose work days start at 11, who may lack object permanence and who are inclined to “pull down their lip down and roll their eyes” at you when you try to explain something that’s important.
What’s far easier to understand is Whirlpool calling up and saying “hey, these fucking Koreans are eating our lunch in the residential washing machine hustle, is there anything you can do to make their washing machines less competitive?”
Now that’s something even a “very stable genius” can understand. If you’re Trump, that’s low-hanging fruit and by God, he grabbed it (by the pussy), on Monday, imposing a 50% tariff on large residential washing machine imports.
Whirlpool surged on the news and the company immediately rewarded Trump by giving him some campaign trail ammo. To wit, from Bloomberg:
Whirlpool Corp. said it’s adding 200 jobs after the Trump Administration imposed a tariff of up to 50 percent on large residential washing machines, a penalty aimed at imports from rivals Samsung Electronics Co. and LG Electronics Inc.
The new full-time employees will work at a factory in Clyde, Ohio, Whirlpool said on Monday. The American appliance maker also vowed to make broader investments in manufacturing and innovation.
And just like that, Trump has “made Clyde, Ohio great again” by starting a residential washing machine war with South Korea.
Here’s Whirlpool on the day:
Oh, and he also slapped a 30% tariff on foreign solar equipment.
Is any of that a good idea? Well of course not. Even if you agree with the message (i.e. that the U.S. needs to care more about protecting domestic industries), this ham-handed opening salvo underscores the notion that if you’re going to go out and start shaking shit up, you really need a plan.
These measures aren’t really a shock (per se), but the timing seems bad. For instance, the Mexican peso fell on this as traders try to decipher what this means for NAFTA. "Investors are often a bit more nervous about any sort of tariff-related news given the NAFTA talks are ongoing and that Mexico exports heavily to the U.S.," Banco Bilbao Vizcaya Argentaria’s Danny Fang told Bloomberg.
And of course this pissed off China and South Korea. “With regard to the wrong measures taken by the United States, China will work with other W.T.O. members to resolutely defend our legitimate interests,” Beijing’s Ministry of Commerce said in a statement.
For its part, Samsung offered the following hilariously blunt assessment:
Everyone will pay more, with fewer choices. This tariff is a tax on every consumer who wants to buy a washing machine.
There you go.
So maybe go ahead and buy an old school washboard before a sudden surge in demand from consumers trying to escape skyrocketing washing machine inflation drives prices up on those too.
And say a prayer for anyone involved in the NAFTA talks because this kind of casts doubt on whether the U.S. is a reliable negotiating partner.
Oh, and finally, I have a business proposition for you...