Tariffs and Exclusions

 I was angered to read that crony capitalism would soon be returning to the United States (Firms Elbowing to Lobby Trump over his Tariffs, New York Times, November 22, 2024: A1, A22). In the first term, the Trump administration excused some firms from having to pay the tariffs on goods imported from China and other countries around the world.

Exclusions from paying the tariff are usually given to firms if a reduction in the quantity of goods they import would harm Americans. However, the Times reports that one study, of 7000 applications for exclusions, found that firms that increased their donations to Republican political entities had a better chance of receiving an exclusion than firms that increased financial support of Democratic entities.

Of course, large firms with a sophisticated lobby staff or consultants, were better able to put forward requests for exemptions, greatly disadvantaging small businesses. I wonder if firms booking into Trump’s hotels had a better chance of getting an exclusion?

We can expect that in the second term, firms will be even better placed to lobby. They have had four years to build up their capacity. Or can we? Trump has always maintained, that it is the Chinese exporter who will pay the tariff not the importer or the American consumer; so shouldn’t the exporter get the exclusion, rather than the lobbying importer?

Krugman made the same point in today's NYT

Republican Mind-Set

I was just reading Walter Isaacson and Evan Thomas’s The Wise Men, an account of the foreign policy work undertaken by Dean Acheson, Averell Harriman, and their colleagues during and after the Second World War.

According to Isaacson and Thomas (Chapter 19), during Joe McCarthy’s rampage through the State Department looking for Communists and other undersirables, one of Dulles’s subordinates, responsible for internal security, being “vindictive and shrewd, hired 350 zealous but inexperienced investigators who quickly went to work ferreting out Foreign Service officers deemed drunkards, homosexual, incompetent, or ‘incompatible,’ a flexible category. They were replaced by true believers.”

Replacing civil servants seems to be a long standing part of the Republican play-book. This time will it end in another tragedy or in farce? I fear tragedy.