Taxation Without Representation

The only thing I dislike about working for The Dispatch is that I’m forbidden from using profanity, and even that barely qualifies as a complaint. “No swearing” is the lightest of burdens for a writer.

But it’s getting heavier every day.

On Tuesday, a.k.a. “liberation” eve, the president addressed an upcoming vote in the Senate to block some of his tariffs on Canada. Don’t do it, he warned Republicans. Americans will die if you do. Fentanyl is being brought into the country across the northern border, after all, and one way to discourage people from using it is, and I quote, “by Tariffing the value of this horrible and deadly drug in order to make it more costly to distribute and buy.”

The guy who just touched off a global trade war appears to believe that drug smuggling is taxed. How do you do justice to that without cursing?

It’s inane by its own logic. If Donald Trump earnestly believes that tariffs will deter illegal drug trafficking, why wouldn’t he jack up the rate to, say, 100,000 percent? Why not make Canadian fentanyl impossible to afford instead of “more costly”?

If nothing else, that would maximize the competitive advantage for American mom-and-pop fentanyl dealers. Or at least force Canadian drug cartels to move production to the good ol’ U.S. of A.

Every day, hour by hour, news hits the wire that tests my tolerance for Dispatch policy. If you’re not moved to curse a blue streak by the thought of Laura Loomer arguing with the national security adviser in the Oval Office over whether his intelligence deputies are sufficiently “loyal” to the president, you’re well and truly boiled.

Still, the sweeping tariffs announced on “Liberation Day” are a special cause for swearing. They’re not the most sinister policy Trump has set in his second term; that distinction belongs to the blanket clemency he granted to the January 6 insurrectionists. They might not even be the most damaging thing he’s done. Ending the Pax Americana that’s prevented new world wars from starting over the past 80 years will likely cause more human misery in the long run than trade policy will.

What makes the “Liberation Day” tariff-palooza special is how comprehensively perverse it is—legally, economically, and diplomatically. The rationales for it are incoherent and contradictory. The formula it relies on to calculate “reciprocal” tariff rates is daft and very well might have come from ChatGPT. Despite Trump’s pretension to populism, it will hit the working class hardest. According to Nobel-winning economist Lawrence Summers, it might plausibly cause a long-term wealth loss to the tune of … $30 trillion.

It’s probably the closest the U.S. government has ever come to sanctioning its own country.

It’s f—ed in every way.

In every way.

To start, these supposedly “reciprocal” tariffs aren’t reciprocal.

If reciprocity is what Trump had wanted, he would have followed his favorite Bible verse and demanded an eye for an eye. A foreign country that imposes, say, a 10 percent tariff on American goods would be tariffed 10 percent in turn. Then it could decide for itself whether to lift its tax on U.S. imports or bear the burden of having its exports taxed at the same rate here.

That’s not what happened Wednesday. The president imposed a baseline 10 percent tariff on nearly all American trading partners, including ones with whom we run a trade surplus, then jacked up the rate for each individual country according to a formula supposedly designed to make the trade balance between that nation and ours “fair.”

That formula wasn’t based on an eye for an eye. Instead of simply mirroring each country’s taxes on American goods, the White House appears to have divided the dollar amount of the trade deficit we’re running with each nation by the dollar amount of their exports to us. Then it divided that number in half. Et voila—that’s the new tariff rate.

In a country as rich as the United States, doing things that way is destined to produce freakishly steep penalties on poor countries, not necessarily on predatory ones. It’s a simple matter of purchasing power: We’re a huge nation with lots of disposable cash and high labor costs, so we’re probably spending much more buying from you than you are from us. 

Consider the tiny African kingdom of Lesotho, which was hit with one of the stiffest rates (50 percent!) under the new scheme the president proposed yesterday. A small, impoverished country like theirs can’t afford to purchase costly U.S. goods, so we end up importing a lot more of their stuff (diamonds and textiles, mostly) than they import from us. That’s created a steep trade deficit, and under the new Trump juche formula, steep trade deficits necessarily mean crushing, grossly disproportionate tariffs.

Result: Goods from Lesotho will now be taxed at a higher rate than goods from China. 

Or take Vietnam and Bangladesh, two nations that produce lots of things for American companies. The strongest strategic case for U.S. protectionism is that we need to reduce our consumption of Chinese goods urgently; the easiest way to do that in the short term is to incentivize businesses to shift their manufacturing to more cooperative nations where labor is cheap—like, say, Vietnam and Bangladesh. Logically, that would mean lower tariffs on those two. Instead, thanks to Trump’s formula, they’re facing garish, economy-crushing rates of 46 and 37 percent, respectively.

How is a small, poor country ever supposed to get out from under a tariff calculated this way? In a system based on true reciprocity, Lesotho could cancel its own taxes on American goods and wait for the White House to respond in kind. But under Trump’s system, it would presumably need to ramp its spending on U.S. products way up, erasing the trade deficit. And even if it had the money to do that, which it doesn’t and surely won’t once the new tariffs kill demand for its exports, it would still be facing the 10 percent baseline tariff that the president has imposed globally—except for, er, Russia, Cuba, and North Korea.

All of this is so perverse that I half-believe the theory that the White House came up with its formula not by consulting with economists but by asking AI.

Endgames.

It isn’t even clear what the endgame of this trade war is. In theory, “reciprocal” tariffs are designed to pressure other protectionist nations into dropping their taxes on U.S. goods. The endgame is global free trade: By playing tit for tat, the White House would be breaking down barriers abroad and leveling the playing field for American manufacturers. In the words of Treasury Secretary Scott Bessent, speaking last month, “If you take it to zero, we’ll take it to zero.”

But that can’t be Trump’s endgame here. He keeps talking about how much tax revenue the government is supposedly going to raise from all this. If the trade war ended with all sides canceling their tariffs, where would the revenue be coming from?

Another theory is that Trump’s endgame is all about rebuilding our country’s manufacturing base. The president doesn’t want other nations dropping their tariffs on U.S. goods; he wants them moving production here, creating American jobs. He wants American consumers to buy domestically produced products, not the cheaper stuff from abroad. By eliminating the advantage foreign manufacturers currently enjoy, he’s making America competitive again.

For that to work, businesses need certainty. No one’s going to take the risk of building an expensive new plant in the U.S. if the trade policy that makes that option momentarily worth considering might disappear tomorrow. “If you want stuff being put in the ground, you have to tell people the price, and the price needs to be fully inclusive of the tariff risk,” an official from the president’s first administration told Politico.

According to the Washington Post, the White House appears to understand that. Talking points are circulating today that the new tariff rates are not up for negotiation. But … how confident are you that that’ll stick? 

His own son advised U.S. trading partners just this morning on social media to hurry up and negotiate with the president before the new tariffs take effect. Does that mean the new rates aren’t set in stone? Could they suddenly be lifted six months from now if he’s in the right mood? You know how he is; the siren song of a “deal” is forever beckoning.

Why would a company recalibrate its long-term financial plans to account for Trump juche when Trump juche could (and probably will) be reversed out of the blue without notice?

There’s no endgame here. The president simply wanted to signal in the broadest, most dramatic way possible that trade deficits are Bad and Unfair and he was willing to instigate a market meltdown and possible recession to do it. Bessent, his highest-ranking economic adviser, didn’t even pretend to know what was going on when he was interviewed about all of this yesterday afternoon. He couldn’t even confidently answer a question as simple as “Are the new tariffs on China in addition to, or in place of, the current tariffs on China?”

All you need to know about how hamhanded this has all been is that two islands uninhabited by humans were among the nations targeted yesterday. Perverse.

For my friends, everything.

Legally perverse, too.

The Senate vote that I mentioned earlier ended up in a rare loss for Trump. Four Republicans joined with Democrats on Wednesday to pass a resolution, 51-48, that would rescind some of his tariffs on Canada. In theory, that’s the first step toward Congress reclaiming its Article I power to levy taxes from the president.

But in practice, it’s meaningless. The Republican majority in the House won’t dare take it up. 

To put that differently: A global trade war that could plausibly destroy tens of trillions of dollars in wealth has been left to the devices of an elderly authoritarian dope who wants to tax drug deals because the branch of the federal government that’s supposed to wield that authority doesn’t have the nerve to do so.

That’s also f—ed in every way.

It’s a flagrant abuse of the trust Congress has placed in the president, for one thing. The executive’s power to impose tariffs unilaterally is an “emergency” power granted to him by statute in 1977. But despite Trump’s assertions to the contrary in yesterday’s presidential decree, there’s obviously no “emergency” that warrants global tariffs.

You could maybe convince me that there’s an emergency with respect to China given the threat it poses to American interests. But Lesotho? That’s a gross distortion of the law’s intent. Only if one believes that trade deficits are an “emergency” per se would it make sense, and that’s absurd given how tiny some of those deficits are and how prosperous America has become while running them.

Allowing one man to run a trade war will also lead to perverse civic outcomes. The power to impose tariffs implies the power to lift them, after all.

Democratic Sen. Chris Murphy believes that’s Trump’s true endgame in building a juche regime. Tariff-palooza isn’t about onshoring manufacturing, he argued last night, it’s about placing the president at the center of the U.S. economy and forcing businesses to supplicate to him for relief. The Founders gave Congress, not the executive, the power to tax because “British kings used taxation to reward loyalty and punish dissent,” Murphy noted. And that’s no theoretical risk in this case: Trump has already used some of his other presidential powers in precisely the same way.

Every day that passes with the tariff magic wand safely in the president’s hands is a day that the United States operates under an ethic of, “For my friends, everything. For my enemies, the law.”

Legislative duty.

The most perverse thing about him levying taxes while lawmakers look on passively, though, is that it amounts to taxation without (meaningful) representation. As I said on Tuesday, there’s no idea so quintessentially un-American. It’s the stuff of which tea parties—the 1773 kind, not the 2010 simulacrum—are made.

Legislators in a democracy can carry out their duties conscientiously in two ways. They can resolve to do whatever a majority of their constituents prefer, even if they disagree with the wisdom of that preference. Or they can resolve to do what they earnestly believe to be in their constituents’ best interests (or the country’s best interests) even if those constituents believe otherwise.

That being so, what’s the “conscientious” explanation for why congressional Republicans are letting Trump burn down the global economy and wreck U.S. economic alliances? They could stop him at any time by joining with Democrats to rescind his emergency powers. Why don’t they?

They surely don’t believe that his trade war is in their constituents’ best interest. A few might, but I’d bet several internal organs that the number of Republicans in both chambers who think Trump juche is a bad idea easily exceeds the number who don’t. How could it not? Apart from, say, Oren Cass, who are the economists who think tariff-palooza will be anything other than a historic disaster?

Imagine daffy old Joe Biden wandering into the Rose Garden with a “menu” of draconian tariff rates on a placard and seemingly no rhyme or reason to how he arrived at the numbers. What would the commentary about that from the congressional GOP sound like?

If Republicans in the House and Senate don’t believe in the tariffs, it must be that they’re prepared to let trillions of dollars be lit on fire because that’s what their constituents really, really want, right?

Well, sort of. What they want is for Trump to get his way, whatever “his way” entails.

In fairness, the polling on all of this isn’t great for the White House even on the right. Most Republicans are expecting prices to rise in the short term, are worried about tariffs and a recession, and will react the same way you have when they check their retirement accounts this evening. On top of that, it’s an open question how well the average American understands the mechanics of tariffs. (Trump sure doesn’t seem to.) If ever there were a moment when GOP members of Congress are justified in disregarding the judgment of their constituents and substituting their own, this is it.

But they won’t. To side with Democrats in stripping the president of a power he covets would be seen as a betrayal roughly as grave as voting for impeachment after January 6. It’s not that Republican voters want to wreck the global economy; it’s that they believe Trump is right about everything, that he embodies the will of The People (i.e., Trump voters), and that to sabotage him in his pet project would accordingly amount to something like treason. Any member who dared do so would be demagogued by the president, challenged electorally by one of his sycophants, and threatened by his fans.

They’d rather take their chances with furious swing voters in a post-recession general election than with insane Trump voters in a post-juche primary. Especially if they happen to represent a solidly red state or district.

So they’re going to stand aside. Congressional Republicans will let this catastrophe play out because the politics of Trumpist authoritarianism require taxation without representation. One of the biggest tax hikes in U.S. history will be levied not by the branch entrusted with that power by the Constitution, to maximize democratic accountability, but by an unaccountable term-limited autocrat whose supporters equate “the president’s desires” with the national interest even when he plainly doesn’t know what he’s talking about.

And hey, maybe the courts will do something to stop him. That’s the standard excuse for Republican cowards whenever Trump creates an emergency and they need an excuse not to punish him for it, right?

No bailouts.

I’ll end with a simple proposition. If Congress isn’t willing to stop Trump, it shouldn’t be willing to rescue him either.

David Frum made a compelling case on Wednesday that there should be absolutely, positively no bailouts of farmers as they suffer the consequences of the president’s destructive protectionism. Many Americans will face worse hardship from the White House’s decision to impose de facto sanctions on its own people. Farmers are relatively well-off, received financial assistance from the feds during Trump’s first-term trade war, and voted for him in droves last fall.

So why should they be bailed out? Trump was astonishingly candid during the campaign about what he intended to do on trade if given another turn in office. They supported him anyway, so they deserve what they’re about to get. Let them reap what they’ve sown, just like they do on the farm. 

If the president comes to Congress and asks for a truckload of money for them, Democrats should filibuster the effort ruthlessly. America’s farmers deserve relief from tariffs, they might concede, but there are only two ways that should happen. Either Trump can end his trade war or Congress can strip him of his tariff power and end the trade war itself. There’s no third “bailout” option.

If Trump critics have to live with a powerless legislature, Trump supporters should have to live with it too. 

Besides, farmers will be fine. If this trade disaster is half as bad as experts believe, we’re about to endure a years-long tantrum from Republicans aimed at blaming America’s economic decline on everyone except Trump. Farmers can cope with their pain the same way the rest of the right will, by screeching about “globalist” parasites supposedly jacking up prices unfairly to create a crisis which, but for that, surely wouldn’t exist.

Deep down, though, they’ll know the truth. Never in American history have a president’s supporters been as vulnerable to “I told you so” reproaches as Trump supporters are after reelecting a coup-plotting madman, and those of us who told them—and told them, and told them—before the election are going to remind them at every opportunity. Let that thought cheer you as your 401(k) disintegrates.