One of the features of Trump is how he seems to view China as not merely a trade rival to be competed with but as an arch enemy to be vanquished, while viewing Russia as a friend. There are many pieces of evidence for this but perhaps the most significant is how he he has imposed massive tariffs on just China (while backing off on most of his tariffs on the rest of the world) while Russia was excluded from all the tariffs. It is a curious reversal of long standing US foreign policy that viewed Russia (as the successor to the Soviet Union) as the enemy symbolizing the evil empire of Communism while Richard Nixon began the policy of engaging with China.

The contrast between China’s and Trump’s policy-making cannot be starker. China is big on long-term planning with its five-year plans, ten-year plans, and even longer-term strategic planning while Trump careens from one policy to another as the whim seems to strike him, reversing himself sometimes within a few days. He wants to somehow hurt China and thinks that high tariffs will damage their economy and cause them to grovel before him.
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What happens when you are confronted by an enemy and you fire all the weapons in your arsenal at it but after using up all your ammunition, you still fail to stop it and it keeps coming at you? Your only option then is to run like hell in the opposite direction. This is what Trump is learning.

Trump is finding this out the hard way as we can see from his reversals on tariffs, something that is comical to watch if it were not causing serious gyrations in the world economy. To his ignorant brain, the problem with the US economy was that it was running a global trade deficit in terms of goods. (It is running a global trade surplus in terms of services but since that is not something tangible, he does not seem to care as much about it.) He wants the US to have a global trade surplus on goods and thinks that the way to do that is to hugely raise tariffs on imports, making imports more expensive and thus reducing the local demand. He also wants to raise government revenue so that he can provide a tax cut for the wealthy, the desirability of which has long been an article of faith for Republicans, but which is in stark contradiction to their professed goal of cutting the deficit since their tax cuts would cause the deficits to skyrocket.

One can see how Trump would think that he could solve both problems with one stroke, by massively raising tariffs on imports. This would result in imports getting reduced while also raising revenues for the government, never mind that those two results work against each other since reduced imports would also mean reduced revenues. No doubt he thought that even if imports came down, the extra tariffs would still increase revenues. Of course there is the problem, known to anyone with even the mildest grasp of trade, that tariffs are paid by the importer and passed on to the consumer so any rise in revenues is effectively a tax increase on US consumers. Trump tried to bluff his way out of that by falsely claiming that the exporting countries would be paying the tariffs, something that even he, as ignorant as he is, could not possibly believe but thinks that the rubes will buy it.
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All of us are inundated with offers of a free trial period for some goods or services. The sellers of those products, from drugs to magazine subscriptions, know that it helps to get people hooked on their product and that there is no better way to get people addicted than to offer it free for a short period.

This also happens at the governmental level and Renee Dudley of ProPublica reports that major companies like Microsoft and Elon Musk’s Starlink are using this tactic in order to get the US government dependent on them so that they cannot escape giving them long-term contracts.

A few weeks ago, my colleague Doris Burke sent me a story from The New York Times that gave us both deja vu.

The piece reported that Starlink, the satellite internet provider operated by Elon Musk’s SpaceX, had, in the words of Trump administration officials, “donated” internet service to improve wireless connectivity and cell reception at the White House.

The donation puzzled some former officials quoted in the story. But it immediately struck us as the potential Trump-era iteration of a tried-and-true business maneuver we’d spent months reporting on last year. In that investigation, we focused on deals between Microsoft and the Biden administration. At the heart of the arrangements was something that most consumers intuitively understand: “Free” offers usually have a catch.
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Why did Trump, after insisting that the tariffs were here to say and rejecting any pause on their implementation, cave this morning and reverse himself, pausing them for 90 days? This caused the stock markets to shoot up today.

I said in an earlier post that my belief that Trump only cared about the stock market was proven wrong by the huge tariffs he imposed on pretty much every country, since he had to have known that such a move would tank the markets. Of course, it is always possible that he had the absurd idea that since he was imposing tariffs on goods imported to the US, the US stock market would remain stable and even rise while only those of other countries would fall. In a global economy, that would have been unrealistic since stocks tend to rise and fall together but we have to remember that we are dealing with an idiot and anything is possible when it comes to speculating about his thinking.

So why did he impose the tariffs in the first place?
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