by David Stockman, International Man:

International Man: Trump’s America First economic policy seemed to help him win the 2016 election. He promised to renegotiate America’s trade deals and bring jobs back to the United States.

As president, Trump has used tariffs and other protectionist measures to try to reduce the trade deficit.

What do you think of Trump’s trade policies and tariffs?

David Stockman: The trade policies are idiotic. They haven’t improved the trade deficit. And have caused other problems.

We got the numbers in now for 2018 and we had the largest trade deficit in history!

The first point is that his trade policies are not accomplishing anything. In fact, it’s thrown many sectors under the bus. Manufacturers that import components from China are now paying much higher prices because of the tariff charge.

Farmers have gotten thrown under the bus in a major way. The whole agricultural export system that was patiently developed over many, many years has essentially been destroyed through retaliation.

Truth be told, there isn’t that much elasticity of supply in farm products in the short run. So, what’s happened is that South American soybeans are going to China. You can see on the trade maps that the bulk carriers are all heading from South America toward East Asia, and US soybeans are backfilling markets that used to be supplied by South America.

It’s one gigantic, pointless, stupid shuffle that has resulted from attempting to impose huge tariffs on one country.

Now, this is very different from the 1930s. Everybody likes to bring up a metaphor or image of the Smoot-Hawley Tariff Act. At least with Smoot-Hawley, it was across the board globally. It affected everybody.

What Trump has done is put an average of 19% tariff on $360 billion worth in goods, which is nearly 2/3 of the $540 million we import from China.

So, what’s happening?

Stuff is getting re-sourced and, frankly, re-badged to come from Vietnam, Malaysia, Indonesia, or other barren islands in the Pacific that produce nothing.

In some ways, it’s the craziest foreign aid program ever created. Trump doesn’t know that.

Maybe we’re finally doing some kind of restitution to the Vietnamese for destroying their country in the 1960s. We’re shuffling a lot of business their way and away from China, because Trump is trying to prove something to the movers in Beijing.

Trump often talks about the bad things going on in Mexico—saying that they need to enforce the border and threatening them with tariffs.

Mexico is going to be getting a lot of added value. The stuff that is produced in China will be shifted to finish production, packaging, or assembly in Mexico so that it doesn’t get hit with a Chinese tariff.

It’s rampant stupidity. The financial media, they cover this every day with bated breath about whether we’re going to get some kind of asinine phase one trade deal, which we actually now have. Maybe!

This is all without remarking on the chaos that’s being generated all over the world as a result of this giant-tariff-on-one-country policy that Trump has come up with on his own.

You don’t put a 19% tariff on $360 billion in goods from China, which can, with some adjustment, be produced in lots of other places around the world. It’s so obvious: A zero incremental tariff on the rest of the world suppliers is creating one giant arbitrage and incentive for re-sourcing production, relabeling stuff that now gets made in China and finished, assembled, and packaged somewhere else.

But this is where we are right now. How anybody thinks that any good could come out of this, or that it has anything to do with “Make America Great Again,” is beyond me.

Now, the one thing I will say is that it’s tarnished the idea of America first.

America First during the campaign applied to foreign policy and to our whole imperial presence all over the world—militarily, with all of these occupations, bases, and interventions.

At least in that arena, the metaphor of America First had some real power to stop being the policemen of the world and that the world can go on without American military intervention from one end of the planet to the other.

President Trump has tried to do that in little bits, but he’s constantly thwarted by the Deep State and the bipartisan establishment—who seem to think the US is the indispensable nation and that we need to be in every war, or the world is going to fall apart. That is of course totally untrue.

Where it counts with America First, Trump has made little progress, and where it shouldn’t have been applied—in trade, global commerce, and economics—it has made a disastrous mess.

International Man: Trump’s America First policy during the 2016 election appealed to the Rust Belt of the US and bringing jobs back. How have his trade policies impacted American industry and jobs?

David Stockman: I think there’s been a lot of boasting about anecdotes. In other words, some manufactures trying to curry favor with Washington put out a press release saying they’re bringing back 35 jobs. Maybe they are; maybe they aren’t.

Dell did it the other day, about manufacturing something in Texas that they were making there anyway. They had planned to move production of their high-end desktop abroad somewhere and they decided not to move it.

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