Peking Duck
Trump tactically focuses trade war on China, at least for now. Comrade Musk oversees glorious car and battery factories in Shanghai workers' paradise.
As I discussed yesterday on Fox Business (link above), President Donald Trump made a wise tactical decision to focus the nation’s trade struggle against China first, leaving room for other countries to present deals that will neutralize their trade surpluses with the United States.
TALKING POINTS - Trade
Trump appears serious about committing America to fighting back in the trade war China has been waging against the United States.
Trump effectively decided to focus on fighting China first in the same way in early 1942 during World War II that President Franklin Roosevelt and British Prime Minister Winston Churchill agreed on a pragmatic Germany-first war plan even though Imperial Japan had attacked the United States directly. This was a similar recognition that resources and the capacity to absorb trauma were finite (and also of the need to keep allies on side—in that case the Soviet Union from seeking a separate peace with Germany). But that did not mean narrowing the overall scope of the war.
China will not offer Trump a deal that will actually end the trade deficit. Doing so would require floating the yuan, establishing the rule of law, enforcing fair environmental and labor regulations and other steps that are inimical to the CCP and might undermine the CCP. Beijing will likely offer a lame deal like the 2020 “Phase One” (Phase None) deal, which it broke anyway. Only strategic de-linkage from China will work.
Trump is right to use tariffs to bring pharmaceutical production home—key to national security and American health. (I wrote about this critical dependency in the Washington Times in 2023.)
Trump still seems serious about eliminating trade deficits with other nations. Time will tell if he will follow through. Done on a net basis, this can still mean some deficits with some nations if we have surpluses with others, but overall balanced trade that ends overconsumption in the USA and resulting export of jobs and growing foreign ownership of U.S. assets.
Trump may finally be reversing the disastrous decisions dating from the Nixon administration of lowering tariffs below 10% even when other countries take advantage of us. These mistakes were compounded with NAFTA, the WTO, and “normal” trade relations with China. Time will tell if Trump will follow through with the general deficit elimination. Wall Street and establishment Republicans are betting he won’t.
It’s noteworthy that Japan is first in line to begin negotiations with Secretary of Treasury Scott Bessent—our best Treasury boss in memory and the first in memory not beholden to Wall Street or the panda huggers. Given that Japan is our most important ally in the Pacific, if not the world, my vote is to go much harder on the wealthy, condescending moochers of Europe and on Canada and Mexico and to allow ample time for trade equalization with Japan, which is dramatically increasing its defense spending. We should also recognize that we have a trade surplus with important ally Australia.
TALKING POINTS - Elon Musk and “Peter Retardo”
It was wrong for Elon Musk to call Trump trade advisor Peter Navarro “Peter Retardo” over Navarro’s support for Trump’s trade policy.
Only one of the men has a car factory in China.
Only one of the men has a battery factory in China.
Only one of the men praised China on the 100th anniversary of the Chinese Communist Party.
Only one of the men called for a Beijing-run “special administrative zone” for Taiwan that would consign free Taiwan to the fate of now-unfree Hong Kong.
Only one of the men got rich on government-funded corporate welfare, and;
Only one of the men runs a corporation that has lost half its market value since December.
That would be Elon Musk. It is not a surprise he reportedly has opposed tariffs on China and is running a public campaign against Navarro, who is fiercely loyal to Trump.
Musk’s employees at DOGE, including “Big Balls,” have exposed noteworthy government waste, but barely put a dent in the $2 trillion annual budget deficit which is adding relentlessly to the $29 trillion national debt. The real cuts to government, if they occur, will be instigated by a President’s Budget Request for Fiscal Year 2026 that contains cuts—assuming Trump can get Congress to go along. Other substantial cuts will come from “RIFs,” which are reductions in force that cut bureaucrat headcount. Some agencies (e.g., Treasury) have announced and commenced these while others (e.g., the Defense Department) have not.
Musk is now hurting Trump more than he is helping. He should be given a discrete task like managing the Pentagon’s transition to drone warfare and told to stick with that.
MORE ON TRADE - Excerpts from our trade-focused last episode of Domino Theory, including where Trump is going, the feminization of the Democrat elite, and the antics of “Manila Shoelaces.”
