Opinion | Tap here to get this newsletter delivered to your inbox.
Good morning,
Whenever my daughter wants a new toy or book now, she tells me to “ask the computer if the mailman has it,” which always strikes me as a pretty astute understanding of commerce for a 3-year-old. Can we get her on the White House economic team? She would be an upgrade.
I don’t want to turn this into Tariff Talk—there’s plenty else to discuss—but what’s happening right now is a big deal. It’s striking to me how few people, even on the right, are putting up a cogent defense of the tariff policy. The WSJ editorial page, which more or less exists to shine Trump’s shoes, is in full-blown meltdown mode. I was watching CNBC yesterday and the normally reserved and GOP-friendly hosts were a step away from calling the administration idiots to their face. They couldn’t believe the apparent lack of basic economic understanding at play. Even the members of the Trump economic team who were dispatched to TV to calm the markets could barely come up with anything more than “let’s let Trump run the global economy,” which is something Howard Lutnick actually said on CNN with the Dow down 1300 points. It’s madness out there, folks.
Imagine, for a moment, you’re the CEO of Nike. Over the last couple decades, the shoemaker has shifted much of its supply chain from China to Vietnam. Half of Nike shoes are now made in Vietnam. The tariff on Vietnamese imports is now 46%. So what do you do? Trump seems to think the incentive here would be for you to shift all that production to the U.S. If you’re the Nike boss, are you going to spend billions of dollars to find, fabricate and build out new factories in America just so—by the time they actually come online—there will be a new president who will probably just take off the tariffs and render this whole exercise a pointless money hole? And who’s going to be making the sneakers in this new factory? The labor costs in Ohio are going to be a helluva lot more than they are in Ho Chi Minh City. So even if the factory starts producing American-made Air Jordans, will anyone buy them if they cost $1500? If I’m CEO, I think I would rather sit on the sidelines until this all plays out (which, in itself, is bad for the economy).
This may come across as cold-hearted, but we fetishize manufacturing in this country. Every president does it. Biden staked his economic policies on re-industrialization, then filled his legislation with so many ridiculous rules and regulations that nothing got built. Now Trump is prepared to torch the entire economy in the hopes of getting American companies to create more manufacturing jobs here. And to be sure, there are some things that absolutely can and should be made in the USA: microchips, weapons, planes. But even in these limited cases, the future of manufacturing is in automation and robotics. We’re creating policy for a world that no longer exists.
I don’t want to end the week on such a gloomy note, so I will say this. We’re living history right now. That’s the frisson you’re feeling. If you’re MAGA, it probably feels exciting. If you’re not, it feels scary. And nobody knows where we’re headed, not even Trump. One thing he’s right about is that a whole lot of our modern economy has been built on smoke and mirrors: easy money, cheap labor, and a revolution in software that created unheard-of returns. But it was a high, and like all highs, it can’t last forever. Something new is coming. And my glass-half-full take is that, lucky for us, Americans are really good at reinvention. We’ve done it before and we’ll do it again. Have a good weekend.
President Donald Trump’s “Liberation Day” tariffs, which slapped significant duties on 180 countries—with the highest on Cambodia and Laos—may end up benefiting China and “undermine” U.S. relationships in the region, several experts told Newsweek. Read the full story.
Week in Review:
Here’s a lightning-round recap of major storylines from the White House and the rest of the administration over the past week from Newsweek White House correspondent Daniel Bush.
- Shock-and-awe tariffs: Trump sent shockwaves through Wall Street and foreign capitals Wednesday by announcing sweeping new tariffs that were higher than many experts expected. Under the program, the U.S. will impose a minimum 10 percent tariff on most imported goods, and higher tariffs on select countries, including China (34 percent), South Korea (25 percent), and India (26 percent). Trump argued that the policy would unleash a new era of “economic independence” for the United States. Most economists warned it would raise prices for U.S. consumers and could tip the economy into a recession.
- Musk on the outs? Trump has reportedly signaled that billionaire Elon Musk will be stepping back soon from his role leading the Department of Government Efficiency initiative, or DOGE. Musk has emerged as the face of the Trump administration’s efforts to cut the federal workforce. The tech billionaire has earned praise from Trump, but his drastic DOGE cuts have also sparked widespread controversy. And at times Musk has even drawn more attention than the president himself. If Trump does make a change, Musk would lose a visible platform in Washington. But Vice President JD Vance has said that even if Musk departs from the scene he will still be an important ally. And Vance said DOGE won’t disappear anytime soon.
- A good sign for Democrats in Wisconsin: The liberal candidate won a closely-watched race for a state Supreme Court seat in Wisconsin on Tuesday, beating a conservative candidate who was endorsed by Trump and backed by Musk. The win was welcome news for Democrats, who have struggled to come up with an opposition strategy under Trump since he started his second term. In other election news, Republicans won special elections for two House seats in Florida, expanding their slim majority in Congress.
This is a preview of The 1600—Tap here to get this newsletter delivered straight to your inbox.