The Wall Street Journal Errs on Trade Policy

I have subscribed to and read the Wall Street Journal for well over thirty years. Admittedly, the Journal leans right and that’s alright with me since I too lean right. Despite that tilt, the Journal tends to minimize the political spin on the news that has long plagued other national journals such as The New York Times and the Washington Post, both of which have sacrificed integrity to serve as outlets for the Democrat National Committee and increasingly the featherweights in the Progressive wing of the Democrat Party. As such, they have suffered the same fate as their preferred candidates and their talking points – rejection by working class Americans.

But the Wall Street Journal is not immune from such myopia themselves. While the Journal leans right, it is fundamentally a globalist and abhors the disruption of the current world economic order. Of course that current world order requires the United States to subsidize the remainder of the world through one sided tariffs, restrictive rules by other nations and turning a blind eye towards the corruption and intellectual property theft that is endemic in national governments and economies – particularly in the Chinese Communist Party (CCP). In other words, maintain the status quo.

Like other media institutions that have abandoned fact in favor of speculation, the Journal has been on a rant ever since Mr. Trump announced tariffs just prior to April 2. For instance, last Saturday’s edition of the Journal posted the following headlines on page 1 – above and below the fold:

World Takes Urgent Steps on Economy

Stocks’ Wild Week End in the Green

Wall Street Sound the Alarm About Trade War’s Impact

Bissent Walks a Tightrope on Tariff Policy

In addition, the Journal included four more stories critical of the tariffs and three editorial columns similarly critical, and these just topped a week long deluge of similar articles. One might suggest that this is a bit of overkill. But the real capper is that none of these articles were about “facts.” They were all about opinions, speculations, and conjectures and virtually all of them relied on a forty year old formula embraced by successive administrations and urged by an endless stream of Yale graduates in the State Department– most of whom never met a country that they didn’t feel was maligned by the hard work and good fortunes of America and therefore deserving of America’s largesse without question or consequences. It is that group-think that has brought America to this point – the point where the international community no longer thinks of America as Uncle Sam, but rather Uncle Sugar, or more likely Uncle Stupid. It is hard to imagine a trading regimen that is more burdensome to American business than the current status quo. And just as importantly, it is a trading regimen that those critical of Mr. Trump’s tariff regimen – including the Wall Street Journal – offer no alternative but more of the same.

Beyond clinging to the demonstrable failure of the last half century of trade policy their opposition to Mr. Trump’s tariff policy fails on one additional but existential element of Mr. Trump’s tariff policy – that is that the imposition of tariff’s once in place will last forever. It is as if they belief that it will be the last decision ever made on tariffs and the forecast of doom and gloom can be graphed by a straight line on an economic chart. Their whole criticism of the use of tariffs is premised on this basis and while it may have been true under the rigid former President Herbert Hoover in the 1930’s, it simply ignores the fact that Mr. Trump has already changed the policy, delayed the policy, accelerated the policy and applied the policy selectively based on changing circumstances. They seem to forget that Mr. Trump is a successful businessman who has perfected the art of the deal and who is ultimately flexible as dynamics of “the deal” change. Anyone who believes that any element of the tariffs will remain unchanged over the next ninety days is a fool waiting to be taken – particularly given the seventy-five plus nations already negotiating new trade agreements.

So how is it that the those clinging to their opposition to tariffs can speculate and opine about the tragedy that is about to befall us all if they have already seen that Mr. Trump is ready, able and willing to change the tariff policy based on shifting economic data. Politicians and the money changers on Wall Street may not be able to adjust to changing times but Mr. Trump can and does.

Before you get all huffy, let me assure you that I too am a globalist – just not a Barack Obama globalist who thinks that America must go hat-in-hand to apologize for its success and try, like socialists everywhere to make the outcomes, rather than the opportunities, equal. You don’t have to be Uncle Sugar or Uncle Stupid to recognize that America’s economy is inexorably tied to the world’s economy. And in the conduct of trade policy there must be a recognition that those nations with developing economies may need assistance, but that assistance is the duty of all of the successful economies to assist and not just America – whether it is through financial aid or asymmetric trade policies.

And in the end, trade policy, like life itself, is dynamic, ever changing and in need of adjustment routinely. We all have to do the same in the transaction of our own lives. Why would we think that the business of our nation requires anything different.

And finally, it would appear that Mr. Trump has learned a lesson in international affairs from former President Ronald Reagan who recognized the fundamental weakness of the Soviet Union – it was its failing economy. The decades of confrontation between the United States and the Soviet Union was resolved not with weapons and the loss of life but rather with economic leverage. Mr. Reagan recognized that the Soviet Union was out of gas and that with additional economic pressure it would fail. So he engaged in a military build up. The United States could afford bigger ships, faster airplanes, better armor and munitions and more sophisticated electronics and that the Soviet Union could not. Mr Reagan basically spent the Soviet Union to its knees and the rest is history. Mr. Reagan may have said, “Mr. Gorbachev, tear down this wall.” but really meant that he had already torn do his economy and his ability to proceed.

And that same is true with the use of tariffs. The American economy remains strong and the threat of being shut out of the American marketplace will get the same attention as Mr. Gorbachev’s reaction to the arms race. Tariffs are just a tool to raise money. In fact, if that is Mr. Trumps intention that he is indeed a fool. But it is not and those who continue to believe that Mr. Trump doesn’t know what he is doing are going to suffer a high price for their mistakes – and that includes the money changers on Wall Street.

Please tell me that you don’t think that trade policies made in the 80’s and 90’s are still appropriate to today. Me? I think I’ll wait at least ninety days to see how this plays out – and by that I mean both my pen and my portfolio.