Trump Is Doing Exactly What He Said He Would. Who Could Have Predicted That?

Maybe the oligarchs deserve what’s coming. But the rest of us don’t.

When democracies die, big business and wealthy individuals often play a crucial role in their demise. They provide a would-be strongman with financial support; their control of or influence over news media ensures that he receives favorable coverage, while his opponents are trashed. They do this because they expect to be rewarded with policies that favor their interests and imagine that they will in effect be shareholders in the new autocracy.

What comes next is familiar to anyone who studies history (which the oligarchs don’t.) Eventually it becomes clear that they don’t own the dictator they’ve helped install; he owns them. Maybe they’ll like some of his policies, maybe they won’t, but in any case they’re not in control — and they soon learn that criticizing the big man isn’t just fruitless, it’s dangerous.

In the past this script has typically taken a few years to play out, but this is the internet age, so right now in America the process seems to be taking only a few weeks.

Donald Trump’s decision to launch an all-out trade war, not with China, but with our neighbors and allies — who are gearing up for large-scale retaliation — probably isn’t the most important thing happening right now. I’ll talk in a minute about what is. But it has certainly come as a wake-up call for business.

It would be funny if it weren’t so serious. Actually it is funny if you’re into gallows humor. Trump spent the entire campaign proclaiming that he was a Tariff Man, promising high tariffs and asserting that we were somehow subsidizing Canada and Mexico. Yet businesses and bank analysts blithely assumed that he didn’t really mean it. On Inauguration Day he made a very specific promise: 25 percent tariffs on Canada and Mexico by Feb. 1. Yet the newsletter I receive from Goldman Sachs summarized the day with the headline “A More Benign Tone on Tariffs,” and declared

Despite Trump’s comments, we continue to believe the odds of a 25% tariff on Canada and Mexico are low (20%).

And Jamie Dimon, CEO of JPMorgan, told everyone to calm down about Trump’s tariffs:

If it’s a little inflationary but it’s good for national security, so be it. I mean, get over it.

Is Dimon getting over it right now?

I have great respect for the economics team at Goldman, which has called many things right over the years. But like many in the business community, they are clearly clueless when it comes to facing the new political reality.

One team I don’t respect is the editorial board at the Wall Street Journal. But they got it right with Friday’s editorial:

The question, however, is, what did they expect? The Journal has spent decades promoting the economic ideas of charlatans and cranks; now it’s upset to find out that cranks are in full control, but they aren’t their cranks. And Trump spent the entire campaign signaling his intention to start a destructive trade war. It’s a bit late to be shocked, shocked that he meant what he said.

What should really have the Journal upset, however, is Trump’s response:

What you need to understand is that in MAGA world, calling someone a “Globalist” isn’t just an insult; it’s a threat of retribution. And I’d put fairly high odds on the proposition that sometime in the fairly near future the Journal will issue an abject, groveling apology for daring to question Trump Thought.

For as I said, the trade war, drastic as it is, isn’t the most important story right now. It takes second place to what looks like a quiet takeover of the machinery of government.

Here’s how it works: Scott Bessent, the Treasury secretary — whose selection was, financial types assured me, an indication that Trump wouldn’t go wild — has given associates of Elon Musk, who as far as we know aren’t even government employees let alone officials with the right security clearance, access to the computers at the Treasury department that control the federal government’s financial plumbing — that make payments to contractors, workers, everything.

This situation gives Musk’s minions the ability to download millions of Americans’ private information. But people who understand the system better than I do say that it also effectively gives them control of public spending. Congress may have passed a law mandating that money be spent for some public purpose; but Musk and company may simply, in effect, tell the system not to cut the checks.

If this is really the case, and serious people say that it is, we may already have experienced what amounts to a 21^st-century coup. There may not be tanks in the streets, but effective control of the government may already have slipped out of the hands of elected officials.

I’ll have more to say about this once I understand it better, and also as events play out. But meanwhile business goes on — or, in many cases now that the trade war has begun, maybe it doesn’t go on. So let me get back to the tariffs.

As I get ready to hit the publish button, stock futures are down — but not nearly as much as the situation seems to warrant. Investors still seem to believe that there’s a good chance that Trump will use some minor concessions (about what?) to declare victory and dial the tariffs back. As I wrote about the same time Goldman and Dimon were telling us to chill out, this market complacency is a self-defeating prophecy: muted market reaction makes it likely that Trump will continue and expand his trade war.

And even if some of the tariffs prove temporary, the Rubicon has been crossed. We now know that when the United States signs an agreement, on trade or anything else, the president will treat that agreement as a mere suggestion to be ignored whenever he feels like it. That revelation in itself will do huge long-term damage.

All of this was entirely predictable. But there are none so blind as those who will not see.

MUSICAL CODA