Let’s hope Larry Kudlow, Donald Trump’s chief economic adviser, is a fan of Hans Christian Andersen’s “The Emperor’s New Clothes,” the tale about the super-narcissist who wanted the most beautiful and elaborately patterned suit.
Our vainglorious leader has been slapping himself on the back for slapping tariffs on China, levies that he believes will put the world’s No. 2 economy on the brink.
The president, who fancies himself as the master negotiator, hiked the tariff on $250B of Chinese goods from 10 to 25 percent and then crowed on Twitter there is no rush to cut a trade pact with China “since these massive payments go directly to the Treasury of the US.”
The president seems to think Chinese are making those massive payments, which he believes will top the $100B mark, to Uncle Sam.
During yesterday’s appearance on Trump TV (e.g., Fox News) Kudlow set the president straight, saying the American consumers will pick up the tariff tab in the form paying higher prices for Chinese-made goods with China, which will take a hit via diminished exports to the US.
Trump’s tariffs are a tax on the American people, which is rich following the New York Times blockbuster story on the former real estate maven’s tax-dodging strategy.
According to the NYT report, Trump lost more money than any single taxpayer, a situation that allowed him to pay zippo income taxes for eight of the years between 1985 and 1994.
Trump ridiculed the Times piece as “very old information” and a “highly inaccurate fake news hit job.”
And, of course, he tried to turn the tables on critics by declaring himself a super-smart businessman, tweeting that real estate developers “were entitled to massive write-offs and depreciation" that would "show losses and tax losses in almost all cases."
According to the president: "You always wanted to show losses for tax purposes" and "renegotiate with banks." Trump called that "sport."
In other words, only suckers (like you and me) pay taxes.
‘But he isn’t wearing anything at all’
The royal weavers, in The Emperors New Clothes, tell the king that his new make-believe suit is invisible to those who are unfit for their palace jobs or are “hopelessly stupid.” The king puts on the clothes and parades before the royal court of yes-men who fawn over their king’s garments. The buck-naked ruler parades outside the palace gates before his adoring subjects who sing praises of in the majesty’s new duds.
A child in the audience outs the king, saying “But he isn’t wearing anything at all.” Liberated by the child’s audacity, the crowd screws up some moral strength and begs the king to get dressed and stop embarrassing both himself and them.
Let’s hope Kudlow in calling out Trump’s fantasy about tariffs-payers is playing the role of the child in Andersen’s story. Other members of Trump’s team of advisors should show the same honesty as the people in Andersen’s story and call out the president on his whoppers.
China Strikes Back
China today raised tariffs on $60B in US goods to strike back at Trump’s levies, sending the New York Stock Exchange into a tailspin, or as the Trump-cheering Wall Street Journal put it, creating new buying opportunities. Geez.
Trump responded via Twitter: “I say openly to President Xi & all of my many friends in China that China will be hurt very badly if you don’t make a deal because companies will be forced to leave China for other countries.”
China’s state-run TV fired back: “Whether the US wants to talk or fight in the next step, or take other action, China has already fully prepared its policy toolbox and prepared a comprehensive response.”