
Black leaders feel under siege after Trump's D.C. takeover
Donald Trump's unprecedented takeover of Washington, D.C.'s police force is testing the limits of his presidential authority and ratcheting up fears that other cities also led by Black elected officials will soon be caught in his crosshairs.
Trump, citing flimsy and misleading statistics, declared a 'crime emergency' in the nation's capital, seizing control over local law enforcement from three-term Mayor Muriel Bowser and deploying some 800 National Guard troops to city streets.
'This is Liberation Day in D.C. and we're going to take our capitol back,' Trump proclaimed, echoing World War II-era language associated with emancipation of Italy from facism and the German Nazi occupation. Trump added that his action would 'rescue our nation from crime, bloodshed, bedlam and squalor and worse.'
The National Guard troops, who will work alongside the Metropolitan Police officers, will be tasked with clearing homeless encampments, protecting landmarks and keeping order in the city. It's an unprecedented presidential power grab that Bowser herself said is unnecessary, but has very little recourse to stop given the 'special conditions' outlined in the Home Rule Act.
While Trump's supporters have cheered him on, his detractors say the move is nothing more than the president, once again, leaning into racist tropes to cast Black elected officials as incompetent and minority citizens as threats to society. During his wide-ranging press conference, Trump also singled out Baltimore, Chicago, Los Angeles, New York and Oakland — all of which have Black mayors and large minority populations that overwhelmingly voted against him in his three presidential runs — as crime ridden.
'He has never thought well of Black elected leaders, and he's been explicit about that,' said Maya Wiley, the president and CEO of the Leadership Conference on Civil and Human Rights. She added that she views Trump's actions as a tactic to undermine liberal dissent.
'It's also clear from his previous statements that he has always searched for excuses to assert might over places he does not have political support and that will not just do his bidding,' she added. 'Washington, D.C., has been one of those cities.'
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Bowser worked to quell tensions between her and Trump stemming from his first term. This included painting over the yellow letters of the city's Black Lives Matter Plaza, which was formed in a response to police brutality during the national protests of 2020. Prior to Trump's inauguration she traveled to Mar-a-Lago to discuss possible areas of collaboration.
In late April, Bowser helped lure the Washington Commanders NFL franchise from suburban Maryland back to D.C., with Trump cheering the move in a social media post as a 'HUGE WIN' for the city and it's 'incredible fan base.' Days later, she appeared with him at the White House to announce the city would host the NFL Draft in 2027. (Last month, Trump injected himself again by threatening to scuttle the deal to bring the football team back to D.C. if the team didn't return to its original name, which is considered a racial slur against Native Americans.)
None of that appears to have deterred Trump from launching his federal takeover.
'I think this is a moment for the mayor to question whether her strategy, which has been appeasement, has been a success,' said Paul Butler, a Georgetown law professor and former federal prosecutor.
He described Trump's actions as a 'bogus declaration' but suggested there is likely little reprieve D.C. officials will gain trying to challenge the president's declaration in court.
'While the court reviews whether he appropriately has this power, the Supreme Court and other lower courts [have] generally allowed him to … proceed with what he wants to do, until they get around to deciding the case,' Butler added. 'It opens the doors to further militarization of the police, not just in the District, but in the other cities that he named.'
This is not the first time Trump has ignored the wishes of local officials and deployed federal troops. During the height of federal immigration raids in Los Angeles, which sparked protests that turned violent, Trump federalized some 2,000 California Guard troops against the wishes of Mayor Karen Bass, who is Black, and California Gov. Gavin Newsom.
Baltimore Mayor Brandon Scott told The Recast that Trump's actions in D.C. and his singling out of other Black-led jurisdictions, including his own, is nothing more than a 'diversion and distraction tactic' to shift the focus from a volatile economic climate and the release of materials associated with Jeffrey Epstein, the disgraced financier and convicted sex offender.
'It's also the continuation of the president, unfortunately, spouting these racist-based, right-wing propaganda talking points about cities and Black-led cities,' said Scott, who last month said his city is in the midst of a historic reduction in violent crime. 'For the president to say that we're too far gone — it's just obscene, obnoxious and just not based in reality.'
Maryland Gov. Wes Moore, a combat veteran, chastised Trump for using military personnel for political gain.
'These actions by the president lack both data and a battle plan,' Moore said in a statement. '[The president] is simply using honorable men and women as pawns to distract us from his policies, which continue to drive up unemployment and strip away health care and food assistance from those who need it most.'
Chicago Mayor Brandon Johnson echoed Moore's sentiments.
'If President Trump wants to help make Chicago safer, he can start by releasing the funds for anti-violence programs that have been critical to our work to drive down crime and violence,' Johnson said. 'Sending in the National Guard would only serve to destabilize our city and undermine our public safety efforts.'
The pretext of Trump's actions appears to be a response to an attack on Edward Coristine, who is white and a former staffer at DOGE who goes by the nickname 'Big Balls.' He was allegedly assaulted by approximately 10 juveniles near Dupont Circle this month, according to a police report obtained by POLITICO.
It caught the attention of Trump, who posted on his Truth Social platform a photo of a bloodied Coristine and called for D.C. laws to be changed so that teenagers who commit violence can be tried as adults 'and lock them up for a long time, starting at age 14.'
Trump is deputizing key administration officials to help oversee the D.C. police, which he can maintain control of for up to 48 hours, but if he sends a special message to certain congressional leaders, he can extend that control for up to 30 days. Attorney General Pam Bondi will be in charge of D.C. police, Defense Secretary Pete Hegseth will direct the order to call up troops, while the District's U.S. Attorney Jeanine Pirro said on Monday that she is preparing to bolster prosecutions.
Bowser, the D.C. mayor, delivered a measured response to the federal takeover in her remarks following Trump's announcements.
'While this action [Monday] is unsettling and unprecedented, I can't say that, given some of the rhetoric of the past, that we're totally surprised,' she said.
We'll continue to monitor how this plays out in D.C. and if similar federal action is deployed in other major cities.
All the best,The Recast Team
ARRESTED AT SEA
The Israeli military last month intercepted the Handala, the flotilla carrying aid to Gazans, arresting 21 crew members. Among them was Chris Smalls, former president of the Amazon Labor Union. Smalls, the only Black member of the crew, told The Recast he believes he was singled out by the Israeli military because of his race and subsequently beaten. In prison, Smalls began a hunger strike, which he said lasted until he was released five days later.
Our colleague Teresa Wiltz caught up with Smalls, who in 2023 was an honoree on the Recast Power List, to talk about his experiences on and off the flotilla, what happened once he was released — and why he says he's going back on the flotilla as soon as possible.
This interview was edited for length and clarity.
THE RECAST: Can you talk me through what happened?
SMALLS: We were intercepted, illegally kidnapped against our will because we had intentions to go to Israel. They cut communications off from the outside world. There's at least a dozen ships [surrounding us]. We had to ride with them for about 12 hours before we were transferred to the port of authority.
THE RECAST: At what point were you arrested?
SMALLS: Well, once we were transferred to the immigration department, they violently assaulted me; seven authorities threw me to the ground. They put their knees in my back. They pushed my arm behind my back, and three of them levitated me on each side, while one of them was using my jewelry to choke me. Then they isolated me.
THE RECAST: Talk to me about what it was like in the prison.
SMALLS: Yeah, we were seven in one cell, not ideal for a hot, low-oxygen room. It was a heat wave, very inhumane conditions. It was bedbug-infested; I have scabies now because of it. Yeah, it was, it was pretty much hell. They had us strip naked, humiliated us, tried to break us down psychologically.
THE RECAST: Do you feel like you were being targeted because of your race?
SMALLS: Oh, 1,000 percent. It was not a coincidence that I was the last [of my group released with Hatem from Tunisia, the only other person of color left behind from the flotilla.]
THE RECAST: Tell me about the day they released you.
SMALLS: They came in, told us to get ready, we're going home. They threw us in the back of a van, and we were off to the Jordan border. We had no idea where we're going. When we got to the border, they just handed us $300 in cash and told us, 'Take a taxi to the airport.' So thankfully, I was able to meet some Palestinian people that allow me to use one of their cell phones and contact the coalition to tell them where I was at.
THE RECAST: Sens. Cory Booker (D-N.J.) and Andy Kim (D-N.J.) are your senators. Did you hear from them?
SMALLS: Yeah, I hadn't heard from any of them. I mean, they take money from AIPAC or whatever they do. I'm not surprised. You know, it is what it is. It's a shame, you know. But that's the reason why I went, to shed light on this and for American citizens to be outraged about where our taxpayer dollars are going.
[Editor's note: An aide from Booker's office said in a statement, 'Since being made aware of Mr. Small's detainment, Senator Booker's office worked with the U.S. Department of State and the Israeli Embassy to obtain information about the circumstances of his detainment, his treatment and ensure he was receiving assistance.' Kim's office did not respond to a request for comment in time for publication.]
THE RECAST: Are you going to do it again?
SMALLS: Yeah, of course. I'll definitely, definitely do it [with] other folks for sure..
WHAT WE'RE WATCHING THIS WEEK
Thorny Texas tilt — Democratic Reps. Lloyd Doggett, the dean of the Texas congressional delegation, and Greg Casar, who heads the Congressional Progressive Caucus, may compete for the same Texas district if Texas lawmakers approve new redistrict maps. POLITICO's Gregory Svirnovskiy explores Doggett's push to get Casar to run in another district — one that's a Trump +10 — instead of the safe Democratic district.
And more…
TODAY'S CULTURE NEWS
A royal extension — Meghan Markle and Prince Harry have reportedly extended their partnership with Netflix with a multiyear, first-look deal.
Snoop Dogg goes down under — The 'Drop It Like It's Hot' rapper and former ambassador for the Olympics last year was just named headliner for next month's Australian Football League's Grand Final,billed as 'the biggest event on the Australian sporting calendar.'
Country singer opens up about boyfriend, Kash Patel – Country singer Alexis Wilkins swatted away any unease about her 19-year age gap with boyfriend Kash Patel, the head of the FBI.
'Modern Family' star changes name, drops new music – The actress that played Lily on the hit show, Aubrey Anderson-Emmons, is reportedly changing her stage name and also debuting an indie pop EP.
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Applied Materials' shares sink on weak China demand, tariff risks Shares in Applied Materials (AMAT) sank 14% before the bell on Friday after the chip equipment maker issued weak fourth-quarter forecasts on sluggish China demand, fueling concerns over tariff-related risks. Reuters reports: Read more here. Shares in Applied Materials (AMAT) sank 14% before the bell on Friday after the chip equipment maker issued weak fourth-quarter forecasts on sluggish China demand, fueling concerns over tariff-related risks. Reuters reports: Read more here. China's economy lags in July under pressure from tariffs and a weak property market China's economy lagged in July as factory output and retails sales slowed and house prices dropped, according to data released on Friday. President Trump's tariffs have added to uncertainty on exports and are looming over the world's second-largest economy. Concerns linger despite Trump extending a pause in sharp hikes in import duties for 90 days, beginning Monday, following a 90-day pause that began in May. AP reports: Read more here. China's economy lagged in July as factory output and retails sales slowed and house prices dropped, according to data released on Friday. President Trump's tariffs have added to uncertainty on exports and are looming over the world's second-largest economy. Concerns linger despite Trump extending a pause in sharp hikes in import duties for 90 days, beginning Monday, following a 90-day pause that began in May. AP reports: Read more here. Taiwan lifts 2025 growth forecast, defying US tariff worries Bloomberg News reports: Read more here. Bloomberg News reports: Read more here. These tariffs are bananas An interesting spot from this week's inflation data: Prices for the reliable, potassium-heavy banana have jumped to their highest price ever recorded. Banana prices peaked around $0.64 per pound in the post-COVID inflation wave and then went on a slow downward trajectory. That is, until April 2025, when President Trump announced his first wave of sweeping tariffs. Prices are now hovering near $0.66 per pound. As the Yale Budget Lab chief Ernie Tedeschi noted on X, the average tariff rate on banana imports went from virtually nothing to very much something as Trump imposed tariffs on most US trading partners. That's nuts! An interesting spot from this week's inflation data: Prices for the reliable, potassium-heavy banana have jumped to their highest price ever recorded. Banana prices peaked around $0.64 per pound in the post-COVID inflation wave and then went on a slow downward trajectory. That is, until April 2025, when President Trump announced his first wave of sweeping tariffs. Prices are now hovering near $0.66 per pound. As the Yale Budget Lab chief Ernie Tedeschi noted on X, the average tariff rate on banana imports went from virtually nothing to very much something as Trump imposed tariffs on most US trading partners. That's nuts! Tapestry forecasts annual profit below estimates on tariff pain Tapestry (TPR) stock fell 8% before the bell on Thursday after the Coach handbag maker forecast annual profit below estimates. The company cited higher costs due to tariffs that have hit its margins. Reuters reports: Read more here. Tapestry (TPR) stock fell 8% before the bell on Thursday after the Coach handbag maker forecast annual profit below estimates. The company cited higher costs due to tariffs that have hit its margins. Reuters reports: Read more here. Tariff confusion drives record volume at Los Angeles Port (Bloomberg) — The Port of Los Angeles said it handled the highest container volume in its 117-year history last month, as uncertainty over President Donald Trump's tariffs drives shippers to front-load cargoes. Already the busiest port in the country, LA moved more than 1 million twenty-foot equivalent units (TEUs) in July, an 8.5% increase from a year ago, the operator said on Wednesday. That includes containers entering and exiting its terminals, with loaded imports rising by a similar percentage to nearly 544,000 TEUs. The total volume handled was 14.2% higher than in June. Read more here. (Bloomberg) — The Port of Los Angeles said it handled the highest container volume in its 117-year history last month, as uncertainty over President Donald Trump's tariffs drives shippers to front-load cargoes. Already the busiest port in the country, LA moved more than 1 million twenty-foot equivalent units (TEUs) in July, an 8.5% increase from a year ago, the operator said on Wednesday. That includes containers entering and exiting its terminals, with loaded imports rising by a similar percentage to nearly 544,000 TEUs. The total volume handled was 14.2% higher than in June. Read more here. Pharma tariffs are likely weeks away, Reuters reports US tariffs on pharmaceutical imports are coming but not imminent, Reuters reported Wednesday, citing unnamed sources. Trump has previously warned duties on the drug industry could reach as much as 250%. Reuters reports: Read more here. US tariffs on pharmaceutical imports are coming but not imminent, Reuters reported Wednesday, citing unnamed sources. Trump has previously warned duties on the drug industry could reach as much as 250%. Reuters reports: Read more here. Brazil's Lula announces $5.5 billion in credits for exporters hit by US tariffs Brazilinan President Luiz Inácio Lula da Silva has announced a plan that includes $5 billion in credit to help local exporters handle tariffs . Associated Press reports: Read more here. Brazilinan President Luiz Inácio Lula da Silva has announced a plan that includes $5 billion in credit to help local exporters handle tariffs . Associated Press reports: Read more here. Swiss say tariffs could raise costs for US F-35A jets The original price of the 36 fighter jets Switzerland is buying from the United States could go up by more than $1 billion due to the impacts of tariffs. Reuters reports: Read more from Reuters here. The original price of the 36 fighter jets Switzerland is buying from the United States could go up by more than $1 billion due to the impacts of tariffs. Reuters reports: Read more from Reuters here. AI boom could help manufacturers adapt to global tariff landscape Mark Bendeich of Reuters details how the confluence of supply chain disruption from Trump's tariff policy and the rise of AI software solutions is leading to increased innovation among manufacturers. Richard Howells, SAP vice president and supply chain specialist, emphasized that the uncertainty surrouding Trump's trade policy is driving the technology push. "That's how it was during the financial crisis, Brexit and COVID," Howells stated. "And it's what we're seeing now." Read more here. Mark Bendeich of Reuters details how the confluence of supply chain disruption from Trump's tariff policy and the rise of AI software solutions is leading to increased innovation among manufacturers. Richard Howells, SAP vice president and supply chain specialist, emphasized that the uncertainty surrouding Trump's trade policy is driving the technology push. "That's how it was during the financial crisis, Brexit and COVID," Howells stated. "And it's what we're seeing now." Read more here. GE Appliances to invest over $3B in US, moving from China and Mexico GE Appliances will move production of its refrigerators, gas ranges and water heaters from China and Mexico, investing over $3 billion to expand plans in five US states. AP News reports: Read more here. GE Appliances will move production of its refrigerators, gas ranges and water heaters from China and Mexico, investing over $3 billion to expand plans in five US states. AP News reports: Read more here. Bessent dismisses China investing in US as part of a trade deal Treasury Secretary Scott Bessent ruled out Chinese investments as part of a US trade deal. When asked if China would offer a multi-billion dollar pleadges like Japan, South Korea and the EU, Bessent said no. Bloomberg News reports: Read more here. Treasury Secretary Scott Bessent ruled out Chinese investments as part of a US trade deal. When asked if China would offer a multi-billion dollar pleadges like Japan, South Korea and the EU, Bessent said no. Bloomberg News reports: Read more here. Tariffs bring in record $27.7 billion in July as Trump calls haul 'incredible for our country' Yahoo Finance's Brett LoGiurato and Ben Werschkul report: Yahoo Finance's Brett LoGiurato and Ben Werschkul report: Xi takes aim at US 'protectionism' in phone call with Lula Leaders of the BRICS nations seem to be in talks. Brazilian President Lula spoke with China's leader Xi after meeting with India and Russia. This outreach comes after President Trump pulled Brazil into his trade war. During the call, China's Xi urged for coordinated efforts against US protectionism. Bloomberg News reports: Read more here. Leaders of the BRICS nations seem to be in talks. Brazilian President Lula spoke with China's leader Xi after meeting with India and Russia. This outreach comes after President Trump pulled Brazil into his trade war. During the call, China's Xi urged for coordinated efforts against US protectionism. Bloomberg News reports: Read more here. Soybean futures fall after Trump extends trade truce with China Soybean (ZS=F) prices fell back below $10 a bushel on Tuesday, after news of the US-China trade truce extension. Traders saw this truce as likely delaying major grain-purchasing deals between the two nations until later this year. Bloomberg News reports: Read more here. Soybean (ZS=F) prices fell back below $10 a bushel on Tuesday, after news of the US-China trade truce extension. Traders saw this truce as likely delaying major grain-purchasing deals between the two nations until later this year. Bloomberg News reports: Read more here. European Union awaits US follow-up on trade deal promises BRUSSELS (Reuters) - The European Union could not say when a joint statement on tariffs with the United States would be ready, nor when the White House would issue an executive order on European car import duties, a spokesperson said on Tuesday. The EU and U.S. reached a framework trade agreement at the end of July but only the 15% baseline tariff on European exports had so far come into effect, as of last week. EU officials previously said a joint statement would follow the deal "very soon" along with executive orders from U.S. President Donald Trump on key carve-outs. "It is an agreement that we believe is strong and the best we could have ... Of course, we expect the U.S. to take further steps that are part of this agreement but I don't believe at this stage we can put a timeline on these engagements," the European Commission spokesperson said. Read more here. BRUSSELS (Reuters) - The European Union could not say when a joint statement on tariffs with the United States would be ready, nor when the White House would issue an executive order on European car import duties, a spokesperson said on Tuesday. The EU and U.S. reached a framework trade agreement at the end of July but only the 15% baseline tariff on European exports had so far come into effect, as of last week. EU officials previously said a joint statement would follow the deal "very soon" along with executive orders from U.S. President Donald Trump on key carve-outs. "It is an agreement that we believe is strong and the best we could have ... Of course, we expect the U.S. to take further steps that are part of this agreement but I don't believe at this stage we can put a timeline on these engagements," the European Commission spokesperson said. Read more here. 'Climate of uncertainty' remains after China-US trade extension Zhou Mi, an expert at the Ministry of Commerce-backed Chinese Academy of International Trade and Economic Cooperation, told Bloomberg that there remains a "climate of uncertainty" despite the latest 90-day pause on additional tariffs enacted by the US on Monday. The Trump administration 'frequently sends out a range of signals, often through its negotiation tactics and public statements — some of which even contradict each other,' Zhou told Bloomberg. 'This creates a climate of uncertainty that makes businesses and markets increasingly concerned about the stability and outlook for economic and trade policies between China and the US, as well as the US and other countries." Average US tariffs on good imported from China currently sit at 55%. Read more here. Zhou Mi, an expert at the Ministry of Commerce-backed Chinese Academy of International Trade and Economic Cooperation, told Bloomberg that there remains a "climate of uncertainty" despite the latest 90-day pause on additional tariffs enacted by the US on Monday. The Trump administration 'frequently sends out a range of signals, often through its negotiation tactics and public statements — some of which even contradict each other,' Zhou told Bloomberg. 'This creates a climate of uncertainty that makes businesses and markets increasingly concerned about the stability and outlook for economic and trade policies between China and the US, as well as the US and other countries." Average US tariffs on good imported from China currently sit at 55%. Read more here. Swiss precious metals group wants 'a formal and binding decision' on Trump gold tariff promise Not everyone is fully satisfied with President Donald Trump's social media statement on not putting tariffs on gold after uncertainty in the bullion market in recent days. "President Trump's statement is an encouraging signal for trade stability," Christoph Wild, president of the the the Swiss precious metals association ASFCMP, stated on Tuesday. "However, only a formal and binding decision will provide the certainty the gold sector and its partners require." Read more here. Not everyone is fully satisfied with President Donald Trump's social media statement on not putting tariffs on gold after uncertainty in the bullion market in recent days. "President Trump's statement is an encouraging signal for trade stability," Christoph Wild, president of the the the Swiss precious metals association ASFCMP, stated on Tuesday. "However, only a formal and binding decision will provide the certainty the gold sector and its partners require." Read more here. China urges firms not to use Nvidia H20 chips in new guidance China has told local companies to avoid using Nvidia (NVDA) H20 processors, especially for government work. This makes it harder for Nvidia to recover billions in lost sales in China and affects the US government's plan to benefit from those sales. This latest move by China appears to be in response to the deal Nvidia and AMD (AMD) made with the US government over the weekend to pay the US 15% of the revenue for AI-related chip sales to China, adding a monetization layer to the Trump administration's tariff policy that has reoriented global trade relationships. In recent weeks, Chinese officials warned several firms against using these less advanced chips. The strongest advice was to keep J20 processors out of government national security projects, both for state-owned and private companies. Bloomberg News reports: Read more here. China has told local companies to avoid using Nvidia (NVDA) H20 processors, especially for government work. This makes it harder for Nvidia to recover billions in lost sales in China and affects the US government's plan to benefit from those sales. This latest move by China appears to be in response to the deal Nvidia and AMD (AMD) made with the US government over the weekend to pay the US 15% of the revenue for AI-related chip sales to China, adding a monetization layer to the Trump administration's tariff policy that has reoriented global trade relationships. In recent weeks, Chinese officials warned several firms against using these less advanced chips. The strongest advice was to keep J20 processors out of government national security projects, both for state-owned and private companies. Bloomberg News reports: Read more here. Japan's Nikkei hits record high on tariff relief, tech rally The Nikkei 225 (^N225) hit a record high Tuesday as easing US tariff fears boosted optimism, led by tech stocks and tariff relief. Bloomberg News reports: Read more here. The Nikkei 225 (^N225) hit a record high Tuesday as easing US tariff fears boosted optimism, led by tech stocks and tariff relief. Bloomberg News reports: Read more here. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data


The Hill
12 minutes ago
- The Hill
Note to critics of the Trump tariffs: This is not the 1930s
You could practically hear the cheering on Thursday as critics of President Trump finally got what they've waited months for — some indication that tariffs might (finally!) drive prices higher. Yesterday's Producer Price Index report showed wholesale prices jumped 0.9 percent over the last month, the biggest gain since June 2022. It followed another benign Consumer Price Index report published earlier in the week, making it all the more surprising. But, more than three-quarters of the gain was driven by services price escalation; there was some rise in the cost of machinery and other end goods, but the impact from tariffs was inconclusive. Here's a fact: No one — not Fed Chairman Jay Powell, not Goldman Sachs' CEO David Solomon, not Paul Krugman, who predicted markets would collapse if Trump were elected in 2016, nor all the talking heads on Bloomberg and elsewhere who have blasted Trump's tariff regimen — has any idea how his upending of global trade terms will turn out. There has never been a country that dominated the global economy as the U.S. now does, nor has there ever been a president like Trump determined to take advantage of that clout. Many have compared his tariffs with the stiff duties imposed by the Smoot-Hawley Act of 1930, but there are huge differences between then and now, which may account for some of the unrelenting negativity about the president's program. Today, unlike then, the U.S. is the essential nation for producers of consumer goods. Americans spent $20 trillion last year, compared to $10 trillion by residents of the European Union and $8 trillion by Chinese citizens. Though the U.S. accounted for a larger share of global GDP in 1930 than it does today (35 percent vs. 26 percent), we were not the primary buyer of other countries' goods. In fact, in 1930, the U.S. enjoyed a trade surplus; last year, the U.S. had a net goods trade deficit of $1.2 trillion and an overall (including services) trade deficit of $918 billion — a record. Consequently, we have not seen countries retaliate against the tariffs imposed by the president as they did in the 1930s. The Smoot-Hawley tariffs averaged 59.1 percent on some 20,000 different categories of goods. In response, as the Foundation for Economic Education recalls, 'An outraged Canada slammed tariffs on goods that accounted for 30 per cent of American exports. France, Germany and the British Empire followed suit, either turning to alternative markets or developing substitute manufacturing that would replace goods previously acquired from America — or elsewhere, since many other countries were erecting wall-of-death tariffs.' This time, at least so far, there has been remarkably little of that retaliatory tit-for-tat. Some countries best positioned to punch back, like Canada, whose economy is inextricably integrated with that of its southern neighbor, have backed off threats to do so. Three-quarters of Canada's exports are to the U.S., and exports account for a hefty 34 percent of the country's GDP. A recent threat to slap U.S. tech companies with a heavy new tax vanished as Canadian officials tread carefully, hoping to eliminate the 35 percent tariff on Canadian imports not covered by the USMCA trade agreement, as well as a 50 percent tax on aluminum and steel imported from Canada. Otherwise, China is the most obvious hold-out to Trump's tariff regimen. Because of its grip on rare earths that are essential to U.S. manufacturers, and because it supplies a huge amount of cheap goods to American consumers, Beijing has serious leverage over the United States. Like Trump, they are willing to use it. Still, China's economy is struggling and President Xi Jinping must know that playing hardball with Trump will eventually be a losing game. 'Between 1929 and 1933,' the Foundation for Economic Education continues, 'U.S. imports collapsed by 66 per cent. Exports plummeted by 61 per cent. Total global trade fell by a similar amount.' Some consider the global depression responsible for much of the drop; others blame tariffs. Many economists and analysts today say that history should serve as a warning against the measures being enacted by Trump. The critics have relied too much on that historical comparison. In addition, political animus has driven liberal pundits to take (and promote) the darkest view imaginable about Trump's program. So far, most have been wrong. For months they predicted that tariffs placed on imports would drive inflation higher; they haven't. They predicted that the duties placed on imports would crush growth and lead to a recession. With consumer spending steadily advancing, according to credit card data, those dark days have yet to appear. Democrats are positively hoping for disaster. Trump ran on a platform of wrestling down Joe Biden's inflation; his adversaries are hoping he will fail, and they see tariffs as the likely agent of his failure. Bloomberg, MSNBC et the others have enthusiastically promoted the direst of predictions month after month, anticipating each new release of inflation data with the eagerness of kids waiting for Santa Claus. While glumly reporting month after month of weaker than expected inflation, the merchants of gloom inevitably add a '… yet.' They are positive that any minute now the tariff damage will blossom. They may be right; tariffs will almost surely boost prices, but the impact should be modest (after all, imports are only about 11 percent of our economy). At some point the pontificators will have to reassess their assumptions about how businesses and consumers will adapt to the higher duties. Many companies are scrambling to change their sourcing to avoid tariffs, and Americans are navigating around the price increases where possible. The end game for Trump is bringing more manufacturing to the U.S., beefing up industries essential to our security — like steel — and earning significant revenues as a valuable byproduct. How this all plays out is uncertain, but that Trump is committed to all three goals is not.


CNBC
13 minutes ago
- CNBC
Government as a shareholder brings real risks, says Dartmouth's Paul Argenti
Paul Argenti, Dartmouth Tuck School of Business professor, joins 'Squawk Box' to discuss reports of the Trump administration considering taking a stake in Intel, the downsides of industrial policy, and more.