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      The Theories Behind the Trump Shock

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      There are two related theories of what Donald Trump’s dramatic revision of the global trade system is intended to accomplish.First, the goal is to revitalize American manufacturing, our capacity to build at home and export to the world. The global free trade system that took shape in the late 20th century served the American empire and American G.D.P. but at the expense of America’s earlier role as a manufacturing powerhouse — and because manufacturing jobs were such an important source of blue-collar male employment, at the expense of the working-class social fabric.Meanwhile, over time, our manufacturing base didn’t just move overseas, it moved into the territory of our greatest rival, the People’s Republic of China. So rebuilding industry in America has two potential benefits even if it sacrifices some of the efficiencies offered by global trade. Factory jobs fill a particular socioeconomic niche that’s been filled instead by drugs, decline, despair. And having a real manufacturing base is essential if we’re going to be locked into great power competition for decades to come.Under this theory, though, it would seem like tariffs would be most effectively deployed against China, countries in China’s immediate economic orbit, and developing countries that are natural zones for outsourcing. But the Trump administration has deployed them generally, against peer economies and allies. The policy seems much more sweeping than the goal, the potential damage to both growth and basic international comity too large to justify the upside.Which is where the second argument comes in — that this policy is about fiscal deficits, not just trade deficits and manufacturing. The same global system that made America a net importer also enabled us to borrow immense sums, but we are reaching the point where that borrowing cannot be sustained, where interest rates on the debt will crush our policymaking capacities even if there isn’t an overall flight from the dollar.Here tariffs serve several purposes. Most straightforwardly they generate revenue without striking the kind of grand bargain on Medicare and taxes that the two parties are just too polarized to make. (The only way a Republican president can preside over tax increases is to implement them unilaterally while insisting that they will fall mostly on foreigners.)We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      in US Politics

      Trump extends deadline for TikTok sale to non-Chinese buyer to avoid ban

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      Donald Trump said he will sign an executive order to extend the TikTok ban deadline. This is the second time the president will have delayed the ban or sale of the social media app, and will punt the deadline to 75 days from now.The TikTok deal “requires more work to ensure all necessary approvals are signed”, Trump announced on his Truth Social platform on Friday.ByteDance, TikTok’s parent company, issued a statement in response to the executive order: “ByteDance has been in discussion with the U.S. Government regarding a potential solution for TikTok U.S. An agreement has not been executed. There are key matters to be resolved. Any agreement will be subject to approval under Chinese law.”Congress passed a law last year forcing TikTok to either divest or sell its assets in the US. The law stemmed from concerns that the app’s Chinese owner, ByteDance, could use the social media platform to manipulate Americans. The first deadline to ban or force the sale of the app was 19 January. But, on his first day in office, Trump signed an executive order to delay that decision to 5 April. Now the new deadline will be in mid-June.Earlier this week, the president met with potential buyers for TikTok and said his administration is “very close” to a deal. Among those who’ve reportedly thrown in bids are a consortium of investors led by the software giant Oracle, asset manager Blackstone, Amazon, Walmart, billionaire Frank McCourt, a crypto foundation, and the founder of the adult website OnlyFans.TikTok is a tremendously popular social media app with 170 million users in the US. Investors and corporations see huge appeal with owning the app and its secretive algorithm.ByteDance has said it has no plans to sell TikTok and in previous court filings said a divestiture “is simply not possible: not commercially, not technologically, not legally”.After announcing sweeping tariffs on dozens of countries, Trump hinted on Thursday aboard Air Force One that he might lessen the trade penalties on China if ByteDance were to approve a sale. The country faces a 54% tariff on goods imported to the US. “We have a situation with TikTok where China will probably say we’ll approve a deal, but will you do something on the tariffs. The tariffs give us great power to negotiate,” he said.In his Truth Social post Friday, Trump reiterated that sentiment, saying: “We hope to continue working in Good Faith with China, who I understand are not very happy about our Reciprocal Tariffs (Necessary for Fair and Balanced Trade between China and the U.S.A.!).skip past newsletter promotionafter newsletter promotion“We do not want TikTok to ‘go dark,’” he continued. “We look forward to working with TikTok and China to close the Deal. Thank you for your attention to this matter!” More

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      in US Politics

      The Guardian view on Donald Trump’s tariff ultimatum: tribute for access to America’s empire | Editorial

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      When Donald Trump stood before union auto workers in the Rose Garden he declared “Liberation Day”, promising to stand up for Main Street. Whether that pledge will be fulfilled is moot. He will declare victory either way. What the US president offered was not just an economic programme, but an imperial one.Mr Trump’s logic, if it exists, lies in the 397-page report on “foreign trade barriers” he brandished on Wednesday. Its message is brutally simple: you may sell your goods to Walmart shoppers, but only if you let US cloud services hoover up your data, US media flood your screens and US tech monopolies operate on their terms – not yours. TikTok is the test case for Trump’s platform nationalism: only US firms may mine data, reap profits and rule the digital empire.A one-week ultimatum and a fabricated national emergency lay bare the theatrics driving Mr Trump’s agenda. The US president’s proposed tariffs and economic nationalism are not about correcting trade imbalances; they are about coercing others into accepting American economic dominance – without requiring the US to sacrifice its domestic advantage.The US continues to run goods deficits not because it “borrows” from abroad, but because the rest of the world willingly exchanges real goods for dollars it cannot issue. Mr Trump demands tribute for that privilege: control over digital infrastructure, forced access for hi-tech rentiers and suppression of rival technologies. The realpolitik is that you can sell to American consumers – but only if you buy into American rules, platforms and financial dependencies. Though Mr Trump’s foreign policy is transactional, its domestic effect will probably be transformative – and not in a good way. Tariffs raise prices for everyone, especially the poor, while shielding local producers from competition. Meanwhile, as Mr Trump made clear, the revenues are earmarked not for public investment or industrial policy, but for tax cuts that benefit the wealthy. In this regime, tariffs redistribute upward: the poor pay more, so billionaires pay less.This is not so much anti-globalist as post-globalist. It seeks not withdrawal from the world, but a world that submits to new terms. The US empire still earns – but now demands more and spends less. Foreign aid is slashed and multilateral rules are replaced by bilateral bargains struck at speed. If allies want to trade, they must also license Google Cloud services, buy Boeing jets and resist Chinese influence. Trade, technology and security are bundled into a single, rent-seeking foreign policy.Markets, however, are less convinced – and their continued crashing reflects not just recession fears, but a dawning recognition that this model is not a one-quarter adjustment. It is a paradigm shift. The pain, even Mr Trump concedes, may be real. But for him, pain is purgative. It disciplines labour, justifies austerity and remakes the economy in the image of the deal.China’s retaliatory tariffs raise the prospect of a dangerous trade war. But Beijing is signalling that if it can’t win in the US-led system, it will build its own. For other major economies, including the UK, the task is not to replicate American leverage, but to reduce dependence on it – by deepening regional integration, investing in technological autonomy and limiting exposure to US-controlled chokepoints in finance, tech and defence. Resistance may provoke retaliation, but submission ensures subordination. In the long run, strategic cooperation – not bilateral concession – is the only durable answer to tariff imperialism. More

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      in Elections

      Lawsuit Challenges Trump’s Legal Rationale for Tariffs on China

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      The New Civil Liberties Alliance — a nonprofit group that describes itself as battling “violations by the administrative state” — sued the federal government on Thursday over the means by which it imposed steep new levies on Chinese imports earlier this year.The new filing, which the group said was the first such lawsuit to challenge the Trump administration over its tariffs, set the stage for what may become a closely watched legal battle. It comes on the heels of President Trump’s separate announcement on Wednesday of broader, more extensive tariffs targeting many U.S. trading partners around the world.At issue are the tariffs that Mr. Trump announced on China in February and expanded in March. To impose them, Mr. Trump cited a 1970s law that generally grants the president sweeping powers during an economic emergency, known as the International Emergency Economic Powers Act, or IEEPA.Mr. Trump charged that an influx of illegal drugs from China constituted a threat to the United States. But the alliance argued in the lawsuit, on behalf of Simplified, a Pensacola, Fla.-based company, that the administration had misapplied the law. Instead, the group said the law “does not allow a president to impose tariffs,” but rather is supposed to be reserved for putting in place trade embargoes and sanctions against “dangerous foreign actors.”Port Manatee in Palmetto, Fla., on TuesdayScott McIntyre for The New York TimesMr. Trump cited that same law as one of the legal justifications for the expansive global tariffs he announced with an executive order on Wednesday. That order raised the tariff rate on China to at least 54 percent, adding new levies on top of those that the president imposed earlier this year.Mr. Trump’s new order specifically described the U.S. trade deficit with other nations as “an unusual and extraordinary threat to the national security and economy of the United States.”For now, the alliance asked the U.S. District Court in the Northern District of Florida to block implementation and enforcement of the president’s earlier tariffs on China. “You can look through the statute all day long; you’re not going to see the president may put tariffs on the American people once he declares an emergency,” said John J. Vecchione, senior litigation counsel for the alliance.A spokesman for the White House did not immediately respond to a request for comment. More

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      in Elections

      Apple Plunges 9 Percent, Leading a Tech Sell-Off

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      Apple led a sell-off of tech stocks on Thursday, falling about 9 percent. Its drop was one of its steepest intraday declines since early 2019, when the company plunged 10 percent after it warned that iPhone sales in China would fall short of its expectations at the time.Wall Street analysts who follow the company have been looking for signs that Apple will be granted a tariff exemption by the White House, as it did when the Trump administration began its previous round of tariffs in 2018. But after President Trump’s news conference yesterday, there was no indication that Apple would receive any relief.As a result, many analysts were scrambling to update their forecasts on Apple’s profits. The company counts on the sale of devices for three-quarters of its nearly $400 billion in annual revenue, and it makes almost all of its iPhones, iPads and Macs overseas.The investment bank TD Cowen estimates that every 10 percent of tariffs on a product imported from China, India or Vietnam — where Apple does most of its manufacturing — would reduce the company’s profit by more than 3.5 percent. The Wall Street advisory said Apple could offset that profit decline with a 6 percent price increase for every 10 percent of tariff. Given that China is being hit with 54 percent tariffs and that it makes 90 percent of the world’s iPhones, the price of most $1,000 iPhones would jump to about $1,300. More

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      in US Politics

      Asian countries riven by war and disaster face some of steepest Trump tariffs

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      Developing nations in south-east Asia, including wartorn and earthquake-hit Myanmar, and several African nations are among the trading partners facing the highest tariffs set by Donald Trump.Upending decades of US trade policy and threatening to unleash a global trade war, the US president announced a raft of tariffs on Wednesday that he said were designed to stop the US economy from being “cheated”.“This is one of the most important days, in my opinion, in American history,” said Trump on Wednesday. “It’s our declaration of economic independence.”He hailed the moment as “liberation day”, but the tariffs are likely to be met with loud protests from some of the world’s weakest economies. One expert said Trump was likely to be targeting countries that received investment from China, regardless of the situation in that country. Chinese manufacturers have previously relocated to countries such as Vietnam and Cambodia not only due to lower operating costs, but also to avoid tariffs.The tariffs come as many countries in south-east Asia are already grappling with the fallout from the cuts to USAID, which provides humanitarian assistance to a region vulnerable to natural disasters and support for pro-democracy activists battling repressive regimes.Cambodia, a developing economy where 17.8% of the population live below the poverty line, according to the Asian Development Bank (ADB), is the worst-hit country in the region with a tariff rate of 49%. More than half of the country’s factories are reportedly Chinese-owned, with the countries exports dominated by garments and footwear.Next worse-hit is the landlocked south-east Asian nation of Laos, a country heavily bombed by the US during the cold war, with 48%. According to the ADB, Laos has a poverty rate of 18.3%.Not far behind is Vietnam with 46% and Myanmar, a nation reeling from a devastating earthquake on Friday, and years of civil war following a 2021 military coup, with 44%.Indonesia, the biggest economy in south-east Asia, faces a 32% tariff rate, while Thailand, the second-largest, has been hit with a rate of 36%.Major US rival and trading partner China has been hit with a 34% reciprocal tariff, on top of the 20% levy already imposed.Dr Siwage Dharma Negara, a senior fellow at the ISEAS-Yusof Ishak Institute in Singapore, said the tariffs on south-east Asian nations were intended to hurt China.“The administration thinks that by targeting these countries they can target Chinese investment in countries like Cambodia, Laos, Myanmar, Indonesia. By targeting their products maybe it will affect Chinese exports and the economy,” he said.“The real target is China but the real impact on those countries will be quite significant because this investment creates jobs and export revenue.”Tariffs on countries such as Indonesia, he said, would be counterproductive for the US, and the detail of how they would be applied remained unclear.“Some garments and footwear [companies] are American brands like Nike, or Adidas, US companies that have factories in Indonesia. Will they face the same tariffs as well?” he said.Stephen Olson, a former US trade negotiator, said countries in south-east Asia would be forced to reconsider their relationships with Washington. “A closer tilt towards China could be the result. It’s hard to have constructive, productive relations with a country that has just dropped a ton of bricks on your head,” said Olson, a visiting senior fellow at the ISEAS – Yusof Ishak Institute.“The world’s largest importer has now essentially hung a sign on its border saying ‘closed for business’,” he added. “We are now faced with two plausible scenarios: Either the impacted trade partners hold firm and retaliate in the hope that Trump will be forced to back down, or they look to cut deals with Trump in order to avoid the tariffs. It is unlikely that either scenario will end well.”Other nations among the hardest hit are several nations in Africa, including Lesotho – a country that Trump claimed “nobody has ever heard of” – with 50%, Madagascar with 47% and Botswana with 37%. Lesotho, a small mountainous kingdom surrounded by South Africa, has the second-highest level of HIV infection of the world, with almost one in four adults HIV-positive.In south Asia, Sri Lanka is facing a 44% tariff. In Europe, Serbia faces a 37% rate.In addition to the reciprocal tariffs on a few dozen countries, Trump will impose a 10% universal tariff on all imported goods. That tariff will go into effect on 5 April, while the reciprocal tariffs will begin on 9 April.The US president has justified the changes by saying they are retribution for countries that have long “cheated” America, and the levies will bring jobs back to the US.But economists have warned the sweeping changes will raise costs, threaten jobs, slow growth and isolate the US from a system of global trade it pioneered, and furthered over several decades.“This is how you sabotage the world’s economic engine while claiming to supercharge it,” said Nigel Green, the CEO of global financial advisory deVere Group.“The reality is stark: these tariffs will push prices higher on thousands of everyday goods – from phones to food – and that will fuel inflation at a time when it is already uncomfortably persistent.” More

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      in Elections

      Chinese Auto Giants Dongfeng and Changan Are in Talks to Merge

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      The state-owned automakers, longtime joint venture partners of Ford and Nissan, might combine operations as Beijing consolidates its sprawling car sector.Two of China’s biggest state-owned automakers are in advanced discussions to merge, in a deal that would create a formidable manufacturer of cars and military vehicles but could also create problems for their American and Japanese partners.Dongfeng Motor and Changan Automobile have conducted detailed talks on how to combine their operations and told their foreign partners of their intentions, said two people with detailed knowledge of the discussions who were not authorized to comment.Although little known outside China, each company produces slightly more cars for its own brands and through joint ventures than global automakers like Mercedes-Benz or BMW. Dongfeng and Changan together make about 5 million cars a year — more than Ford Motor and almost as many as General Motors or Stellantis, the giant that owns Fiat, Chrysler and Peugeot.A merger of Dongfeng and Changan would represent a significant consolidation of China’s auto market, the world’s largest, and another sign of the country’s rapid embrace of electric vehicles. Both companies have considerably more factory capacity for producing gasoline-powered cars than they need.Beijing’s hope is that a combined company will be able to close excess factories for gasoline cars and become more successful in electric cars.China’s national government owns controlling stakes in Dongfeng and Changan. Dongfeng is a leading supplier of military vehicles to the People’s Liberation Army and Changan is a subsidiary of a Chinese military contractor, which could draw unwanted attention from the Trump administration to a new, larger military supplier and its joint venture partners.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More