Trade Wars: Episode VI – Return of the Luddites
The future is Mao
The inauguration is not until next week. There is plenty of time to overturn the stolen election. He can take it all the way to the Supreme Court if he has to. Trump can still be pope if Mike Pence has the courage.
Sorry, I had to make that joke. If you’re looking for an authority on the Catholic Church you’re going to have to look somewhere else. I heard about the new pope like everyone else, but didn’t follow the conclave and the events preceding it. I had heard the names of a few people in contention for the role, but didn’t know anything about them.
Although I had no idea who would be picked, I didn’t think it would be an American. I didn’t think that would ever happen. As far as I can tell, it doesn’t seem like many people had that on their bingo card. I’m not Catholic and not religious in any way, but I think it’s awesome having an American pope. He will probably be the first pope many of us can relate to, not necessarily on religion, but on things like sports, food, movies, music, shows, etc.
Pope Leo XIV, as he has called himself, is a fan of the White Sox. He attended the first game of the 2005 World Series. He went to Villanova, which is a basketball powerhouse, and is a fan of the Wildcats. He’s probably a fan of Michael Jordan and remembers the Walter Payton and Jim McMahon years.
It looks like he has an account on X and has criticized JD Vance on immigration. Illinois has no partisan registration, but he has voted in Democratic and Republican primaries. He might be a Never Trump Republican. I wouldn’t be surprised if he reads some Substack newsletters. In the off chance anyone reading this knows him, please let him know I would love to have him as a reader.
At 69, he’s not young by any means, but he’s not too old to be unfamiliar with classic rock. Maybe he’s a fan of The Beatles, The Rolling Stones, The Who and The Eagles. Maybe he’s a Parrot Head and rocks out to Aerosmith. Maybe he watched Seinfeld, The Sopranos, Breaking Bad and Game of Thrones. I have no idea if he does or did any of those things, but it wouldn’t be a surprise.
Being from Chicago, he probably has all kinds of opinions on the best restaurants and food there. On X, since he was chosen, I have seen plenty of deep dish and hot dog jokes. He might be a big fan of art and Chicago has one of the oldest and most famous art museums in the country.
Whatever his interests are, I wish him the best. Considering who our president is, we’re not showing the world our best people. Hopefully, he can be a countervailing force. He’s certainly going to have a lot on his plate. Running any large organization is a tough job, but especially so when it has a presence on every continent. I would give him all kinds of advice, but I wouldn’t know the first thing.
Trade? Where we’re going, we don’t need trade
I do, however, know a little about what I will be discussing here, which is Trump’s quest to make the US into a third world dictatorship. The hits just keep coming. Last Sunday, he announced that he would be imposing 100% tariffs on all foreign-made movies. Whether that actually happens, nobody knows, but I highly doubt it. How it would even be carried out, nobody knows that either. My guess is Trump forgot about it no more than five minutes after posting it on Truth Social.
I have to admit it would be funny if foreign-made movies had to be made in the US. It would be weird for Gladiator to take place in Rome, Georgia, but we’d get used to it. James Bond would have to be Jim Bob Bond. Harry Potter would have to be rewritten entirely. I can see it now, Harry Potter and the Prisoner of Alcatraz, Harry Potter and the Order from Phoenix, Harry Potter and the Half-Blood Trump and Harry Potter and the MAGA Hallows.
It wouldn’t be enough to just remake recent movies. We would have to remake old ones, too. I can’t wait to see The Sound of Country Music, A Clockwork Orange Man and Lawrence of South Dakota.
The biggest trade-related news of the week was the “trade deal” negotiated with the UK. It’s the first one that has been put together after weeks of Trump insisting hundreds of deals were imminent. It’s not really a trade deal. It’s more of a framework for future negotiations on a few items such as aluminum, cars and steel. Even on those things, it’s light on details.1
Calling it a plan is being way too generous. It’s more like a plan to have a plan. Even if the details are worked out and everything goes perfectly, it doesn’t provide much of a guide to any future negotiations with other countries. Of all the US’ significant trading partners, the UK is one of the few it has a trade surplus with.
Unlike some other foreign leaders, Keir Starmer has tried to make nice with Trump. Part of it is because he wants to maintain US support for Ukraine and he wants to show his constituents that he got a good deal. Since becoming prime minister in July, he has struggled and needs to find a way to become more popular.
I know nothing about domestic UK politics so I have no idea whether his approach to Trump is wise, but I really hope he succeeds. If he remains unpopular going forward, the far-right Reform Party could continue to make gains and potentially supplant the Tories as the dominant party on the right. As bad as growth has been there for many years, just wait until Nigel Farage is in charge.
The biggest takeaway from the “trade deal” should be that the US is now a protectionist country. The 10% tariff Trump imposed on all countries is here to stay. In the case of the UK, the average US tariff imposed on its exports is now significantly higher than it was before Trump came back into office. If a country the US has a trade surplus with is going to be treated that way, it’s going to be much worse for most others.
During the campaign last year, Trump said he would impose a universal 10% tariff on all imports from all countries. His more sophisticated supporters insisted he didn’t really mean it. Take him seriously, not literally, they said. It sure looks like he meant it literally.
Publicly, some Trump officials like Scott Bessent have said they are using tariffs to isolate China. If that is the case (it’s not), things are not looking good. The “trade deal” negotiated with the UK does not address its relationship with China at all. What’s really going on is isolating China is just a post-hoc rationalization for an incredibly stupid policy. I have written before about how imposing tariffs on allied countries is a terrible way to counter China so feel free to check it out if you haven’t already.
The main premise behind the tariffs, the idea that trade deficits are inherently bad, is so idiotic I feel like I get dumber every time I think about it. Trump really believes that if the US is buying more goods from a country than it is selling to it that means it’s getting ripped off. Believing that is why he said ports being empty is a good thing. According to him, it means other countries are no longer stealing from us. Sure, there might be empty shelves, price increases and job losses, but Dear Leader says it’s for the greater good and he always knows best. Dear Leader can never fail, he can only be failed.
The following analogy should help drive home just how stupid the belief that trade deficits are inherently bad is. My main sources of food are restaurants and grocery stores. Because I buy stuff from restaurants and grocery stores and they don’t buy anything from me that means I have a trade deficit with them. By Trump’s reasoning, I’m getting ripped off and I need to put an end to it.
Luckily for me, there are things I can do about it. I have two options. One option is to start my own business and sell food to the restaurants and grocery stores I buy from. If I sell more to them than they sell to me that means I’ll have a trade surplus, which is inherently good because, well, just because. The other option is to just stop going to restaurants and grocery stores.
I’m happy in my current job so the first option is off the table, but I could try the second option. If I did that there would be good news and bad news. The good news is I would no longer have a trade deficit with restaurants and grocery stores and so they wouldn’t be ripping me off. The bad news is I would die of starvation.
Trading Places… with 1950s China
If you thought Trump’s idiocy on trade couldn’t get any worse, you were dead wrong. The week before last, he made news for saying people don’t need to have thirty dolls when they can just have two. Last week, in an interview, he doubled down on it and said people don’t need 250 pencils, they can just have five. That’s a more communist statement than anything Bernie Sanders has ever said. All this time I’ve been calling him Dear Leader, but it looks like I should be calling him Chairman Trump.
Over the last few weeks, a phenomenon has emerged, almost entirely online, which has been dubbed MAGA Maoism. Before going any further, no, Trump is not literally Mao Zedong. I don’t know what the worst case scenario with his economic policies and authoritarianism is, but it won’t involve millions of people starving to death. Still, there are a few eerie similarities between the two that are worth looking at.
Like Trump, Mao had a big cult of personality around him. Still to this day, he is a revered figure in China even though he is at fault for the deaths of millions. Trump’s personality cult is not nearly as strong and far-reaching as Mao’s was, but it’s greater than any president in US history. Plenty of presidents had fanatical followings, but none had the kind of control over their party that Trump has over the Republican Party.
Mao hated educated elites. In his eyes, they were standing in the way of socialism succeeding. He purged them from the government and every aspect of life in China. His ideal vision was forcing white collar workers to live in rural areas and do manual labor alongside peasants. Trump hates educated elites, too, at least the vast majority of them who aren’t supporters of his.
Unlike Mao, Trump’s hatred of educated elites isn’t rooted in ideology. He’s an educated elite himself having gone to Penn. Plenty of those close to him are also educated elites.2 Trump doesn’t have any kind of coherent ideology. Other than seeing trade as bad, he has no sincere beliefs about much of anything. That’s why, for example, he will go back and forth from endorsing a tax increase on the highest earners to opposing it depending on who he most recently talked to.
Since taking office, Trump has made turning the federal government into his own personal fiefdom his main mission. He has tried to rid it of anything and anyone not to his liking. The people he has surrounded himself with have almost all enthusiastically joined him in that effort, i.e., Pete Hegseth, RFK, Kash Patel.
From an efficiency and fiscal responsibility standpoint, the DOGE has been a complete failure. For Trump, that’s okay because he never cared about those things. If you look at the DOGE as part of a purge of the federal government of anyone Trump doesn’t like, then it looks like a more successful endeavor. Trump doesn’t care about wokeness per se, but Musk is obsessed with it and their interests just happen to align. Mao made sure to get rid of everyone in the government who was not 100% on his side and Trump is trying to do the same.
The good news is Trump doesn’t have total control over the government like Mao did. His efforts to fire federal employees have faced setbacks and it’s not clear how many will leave in the end. Still, his efforts have wreaked havoc, especially the destruction of USAID, and have put many people on edge for no reason. It’s not just federal employees who Trump has tried to purge.
Trump has zealously gone after universities, especially elite ones like Columbia and Harvard. Spoiler alert, what he’s doing has nothing to do with concerns about antisemitism and free speech. If anyone believes Trump is genuinely concerned about those things and wants universities to be more tolerant places, congratulations on being the dumbest person alive. We have never had a president as hostile towards free speech as he is and he is more than happy to make antisemitic remarks and hang out with antisemites when he feels like it.
His attacks on universities are part of his effort to go after those he doesn’t like. Take a look at this letter sent to Harvard over the week by Linda McMahon, our Education Secretary. It gives away the game. It makes only one reference to antisemitism and none to free speech. What it is saying is Harvard will be denied federal grant money solely because Trump doesn’t like the people there.
To be sure, some universities, especially Harvard, have recently done a terrible job when it comes to supporting free speech on campus. During the last decade, some of our elite universities allowed crazy, far-left ideas to run amok, frequently gave in to the illiberal demands of a few students and needlessly damaged their reputations. All of that is bad and should be ended. I’m glad to see Harvard’s president push for changes and hope he and others like him are successful.3
If you’re curious about where I stand on free speech, see here. Defending the right to free speech is the one issue where I would call myself a hardliner. I’m proud to say I’m extreme, fanatical, uncompromising and militant. If defending the right to free speech conflicts with anything else, I will side with it just about every time.
As for wokeness, anyone who’s ever read anything I’ve written on that subject knows where I stand. From the second it first showed up, I have been adamantly against it. At the same time, I have never believed that the solution to it is to use the force of government. As is always the case with Trump, no matter what the ill is, he is a cure way worse than the disease.
Mao had a Cultural Revolution and Trump wants to have one, too. If Trump had his way, our universities would be nothing more than propaganda tools for him. The quality of education would fall through the floor and they would cease to be magnets for people from all over the world. If it got bad enough, educated people might start to move to other countries that were more hospitable. That’s what happened to China when Mao was in charge. Almost every educated person there who had the ability to flee did so. Because of that, China had a brain drain, which likely held back its economy for decades.
Other places have experienced a brain drain when they went after educated people or just regressed backwards. Germany in the 1930s is an example as is the USSR. Even the UK saw a decline in educated immigrants moving there after Brexit.
Today, the US is not at risk of having a large brain drain, but it is at risk of becoming a less attractive place for educated immigrants. Other countries are taking notice. France has been trying to entice scientists from the US and elsewhere to work there. The EU is trying to attract them as well. I don’t expect a large number of educated immigrants to flee from the US any time soon, but odds are the number coming here will decline if it hasn’t started to already.
China isn’t going to see a huge influx of educated immigrants moving there, but it doesn’t necessarily need it. By virtue of having well over 1 billion people, it can focus on educating its native born population and not have to rely on immigrants. The US doesn’t have nearly as many people and will need immigrants to succeed in its efforts to counter China.
The US still enjoys many advantages and is nothing like China was in the 1950s. Our universities still are the best in the world. We have Silicon Valley and other innovation hubs that no other country can yet match. Still, China is trying to catch up and is making headway in areas like EVs, AI, semiconductors and military technology of all sorts.
Trump is obsessed with manufacturing and so was Mao. In Mao’s vision, China would quickly progress from an agrarian society to an industrial powerhouse and he was the one to do it. He was going to forcibly move people from working in agriculture to working in manufacturing. His plan was called the Great Leap Forward. In case anyone is not familiar, it was one of the worst policy disasters in human history.
Moving from an agrarian economy to an industrial economy can be done, but it doesn’t happen overnight. A country doesn’t industrialize without the required know-how and experience, which not many people in China in the 1950s had. When agricultural workers were forced to be manufacturers, they stopped producing food. Because of that there was a famine and millions starved to death.
Like I said, even in the worst case scenario, nothing remotely like that will happen here. Still, there are some very bad scenarios and even good scenarios are not that good. Trump says he wants to make the US a manufacturing center again, but tariffs won’t do that even if they don’t destroy the economy. In the best case scenario, tariffs won’t cause a recession or raise unemployment very much, but they still will make prices go up, which will be bad for businesses and consumers. They will also fray our alliances and make countering China harder.
The biggest difference between the US economy today and China’s economy in the 1950s is the former is service-based while the latter was agriculture-based. If Mao’s vision had actually worked, it would have been great for China. Moving from agriculture to manufacturing is progress and is part of how a country develops.
If Trump’s vision comes to pass, the US will be much worse off for it. Having an economy based on knowledge and service workers is the final stage of development. Going back to manufacturing would be a big step backwards. It would require effectively banning technological innovations of all sorts. Anything that could take away jobs would have to be stopped. That’s a great way to ensure productivity takes a nosedive and living standards fall.
Trump’s vision will not come to pass no matter what he does. Manufacturing jobs are not going to come back here en masse. Even if they somehow did, not many people would be willing to do them. It’s one thing to fantasize about the supposed good old days of working in steel mills and on assembly lines. It’s another to actually do those jobs. People are not going to trade their air conditioned desk jobs to go work in a scorching hot factory with dangerous objects flying everywhere.
As I mentioned earlier, the MAGA Maoism phenomenon is almost entirely online. It mostly consists of influencers posting memes about the virtues of manual labor and how it’s manly and tough. Call me presumptuous, but I get the feeling none of those social media keyboard warriors have ever worked in manufacturing. I’m hard pressed to think any of them would give up their lucrative grifts to go make toasters.
That’s something that’s always cracked me up about those touting the virtues of manufacturing. Almost to a tee, none of them have ever worked in a factory and never would. Trump has lived a lavish lifestyle since he was born. His entire adult life has been spent losing money or playing a businessman on TV.
Howard Lutnick loves to talk about how great it will be to have manufacturing jobs here, but his entire career has been in finance. I can assure you he will not be working in an iPhone factory. Before he became Treasury Secretary, Scott Bessent was a hedge fund manager, which he has done for his entire career. I don’t think he plans on going to work in a textile mill.
Negotiating a comprehensive trade deal normally takes around 18 months to complete. A month ago, Trump paused most of the tariffs he imposed, but they will resume in two months unless he pauses them again or withdraws them.
Almost every right-wing populist or populist-like figure has solid education credentials. Josh Hawley went to Stanford and Yale. JD Vance went to Yale Law School. Ted Cruz went to Princeton and Harvard. Pete Hegseth went to Princeton and Harvard. RFK went to Harvard and UVA. Ron DeSantis went to Yale and Harvard. Stephen Miller went to Duke. Tucker Carlson went to Georgetown.
One Harvard faculty member who has been consistent in his opposition to wokeness and what Trump is doing is Steven Pinker. Having become a target of woke cancellation efforts, he could have done what many others have done and gone MAGA, but he hasn’t. From the beginning, he has been steadfast in his support for free speech. I have long thought well of him and how he has handled the last few years has only reinforced that. Larry Summers has been very good on free speech, too. He has opposed wokeness and has been very vocal against the antisemitic elements at Harvard, but has also vehemently opposed what Trump is doing.