Trump’s tariff pause is terrible for democracy

Whether you call it a reversal or a strategic retreat, Donald Trump’s tariff pause is bad for democracy. In short: the bond market held itself hostage and said it would shoot unless the president changed his mind. So he hit pause. 

Now, if the elected leader of the most powerful country in the world can’t implement an economic policy, what hope for wee Britain?

Of course, the tariffs on China remain – and that’s the big one, what should’ve been the focus all along. 

The West is falling; China and India are rising. We need to recalibrate not to stay ahead – that moment’s gone – but to survive, which means greater resilience in our supply chains. 

Tariffs, which have been around forever, might play a part in that project. If they’re so evil, why does the EU use them? Remainers who screamed at Trump need to explain why they voted to stay within a protectionist bloc. Brexiteer free-marketers need to explain why they voted to leave, putting barriers betwixt us and the continental market. 

In this vein: Reform, which we were told is Thatcherite, has to explain why it’s now for nationalising steel, and the Lib Dems, who are technically liberal, must explain why they’re calling for a “buy British policy” that amounts to twee autarky. “We ought to make more of our own,” said Tim Farron to the Commons on Tuesday. “Yes!” I yelled from the gallery: that’s the whole damn point!

Ah, but the market doesn’t like it, and “the market always wins.” People repeat that phrase with a knowing smile, as if said market were gravity or Celtic Football Club (true: we never lose). 

But the headless chicken behaviour of the markets in the last week doesn’t suggest sagacity, any more than the reckless – nay criminal – speculation that led to the credit crunch. 

It’s striking how many names on Forbes’ “30 under 30” list of entrepreneurs have gone to jail (you can google this phenomenon, it’s very funny): symbols of the White Lotus-isation of Western capital, swept along by fads as investors, starved of decent interest rates, chasing dodgy products and unlikely returns. 

The US stock market has been insanely over-valued for ages; the correction began when a Chinese firm invented a widget that proved chat AI can be open-source. In short, the gods of the market can be as capricious and dumb as any botoxed superfan at Mar-a-Lago.

But, oh, how the Left loves capitalism now. The same Left that 25 years ago marched against globalisation, against falling wages, child labour and Chinese gulags. Where are the Ralph Naders and Tony Benns of today? 

The Left’s capitulation to free trade purity represents a colossal loss of nerve, plus its severance from the working-class. Trump was able to take those voters because the Democrats abandoned them. Call tariffs outdated or insane, but they were also a nostalgic weapon of class war, blue-collar against white collar. The United Auto-Workers liked the tariffs.

The centre-Left elite, meanwhile, is paralysed by the economic orthodoxy that hamstrung Bill Clinton’s first administration and most social democratic governments since.

Why do you think the Labour Government does nothing beyond trying to balance its books? Terror of the markets; of quangos, of banks, of lifting a finger lest a sudden tremor in the local atmosphere cause the entire pack of cards to fall. 

This phenomenon was spotted by Tony Benn in the 1960s, when he found that whatever policy he wanted to follow, as an elected representative, he first had to run it past unelected money men. It undermined his socialism, which a conservative reader might regard as good. But it also offended his sense of patriotism and democracy. 

A country cannot truly govern itself if it cannot vote to do things and then make them happen. Brexit was a lesson in this; Trump also.

I am an economic nationalist: make no bones about it. I think there’s a role for tariffs in helping nations develop. It’s possible that Trump’s “drunk in Las Vegas” style of operating has destroyed their reputation for a generation, reducing protection to a bargaining chip rather than a means of reshaping the economy in a way that advances US interests. 

It’s also possible that continuing to single out China triggers a drop in the PRC’s quality of life that nudges the Communist Party towards militarism. (It’s forgotten that one consequence of the 1930 Smoot-Hawley tariff was to encourage Japan to invade Manchuria.) 

But at least there’s unity within the GOP that China is a bad faith player, that the West needs to decouple from its exports. (Note: this is exactly what we’ve been doing with regards to Russia. Beijing, which oppresses minorities and forces women to undergo abortions, is in a similar league of bad.)

Recent events have been dizzying and disturbing, made all the worse by the administration’s strange reluctance to explain and defend its policies. Even now, extending countries just 90 days to negotiate an alternative deal seems unduly short – and Republicans are asking why a notice period wasn’t the original plan.

Nevertheless, one has to acknowledge the effort to do something to re-engineer a developed economy in sharp decline; and wonder, if this method is dropped altogether, what is left? 

It seems Western nations cannot raise spending, cut taxes, negotiate a US trade deal, win a war, end a war, control immigration, deter crime or even politely inquire into the causes of mass child abuse. All that is left is to open a theme park. One prays the steel is locally sourced.