Tariffs And The Rift On The Right

Talk abut your ironies! A Republican Administration is advocating massive government intervention into the marketplace in the form of a dizzying array of tariff regimes on multiple countries. You have to think that Smoot and Hawley (pictured to the right) are reveling in their graves. That congressional tandem authored legislation in the 1930s (signed into law by Republican President Herbert Hoover) that imposed massive tariffs on more than 20,000 imported goods. It’s generally understood that instead of “protecting” American companies and farmers, that policy led to retaliatory tariffs (sound familiar?) that worsened the Great Depression and helped collapse the global economy. 

This current round of protectionist trade policies is also starting to cause a political rift among conservatives and libertarians on the Right—people who have long supported free trade and opposed tariffs. Eric Boehm recently wrote about the Canadian tariffs in the libertarian magazine Reason, “What happened to the days when Republicans believed businesses should be free from interference from Washington? What [Treasury Secretary] Lutnick is talking about is central planning, plain and simple.” 

And, conservative commentator and radio host Erick Erickson had this take on tariffs, "Republicans risk repeating the same mistake Democrats made in the last four years—becoming so focused on everything else that they forget it's the economy, stupid."

So, in addition to the very practical question of whether the tariffs will actually have a positive impact on the U.S. economy, there is real political risk for President Trump in the potential unraveling of an important part of his coalition.

My Brush With Corporate Fame

Back in the early 1980s, I was employed as a young public opinion analyst for the renowned survey firm of Cambridge Survey Research/Cambridge Reports, Inc. One of the syndicated products of the firm was a 1,500-member, in-person survey conducted nationally each quarter. The survey covered a wide range of topics, including: politics, economics, energy, and consumer confidence. Several large corporations subscribed to the survey—including its extensive written analysis—for a hefty fee (at least it seemed hefty in the 80s).

Many of the larger subscribers would request personal data presentations by principals of our company. One of these was Chrysler Corporation. Chrysler was headed up by its legendary CEO Lee Iacocca. Iacocca was previously president of Ford Motor Company, where he was responsible for the development of several iconic American cars—most notably the Ford Mustang. His tenure at Chrysler was marked by an incredible financial turnaround—helped in part by a 1979 federal loan guarantee. 

In 1981, I was tapped to do the personal data presentation to Iacocca and the Chrysler Board of Directors. One of our partners was originally scheduled to be there, but was unable to make it. So, as a 29-year-old analyst, I headed to Detroit with celluloid transparencies in hand. I knew of Iacocca and his reputation for flying into fits of rage—while chomping down on an ever-present cigar. To put it mildly, I was nervous. 

I waited outside the Chrysler boardroom for my scheduled 10AM presentation. Ten o’clock came and went—as did 11AM, 12PM and 1PM. At around 2:30PM, the board meeting started to break-up, with people streaming out of the room. Then, Iacocca himself strolled over to me, shook my hand and said, “I’m sorry, kid. Our meeting went a little long and we just don’t have time for your presentation. I’m sure it was brilliant.” He smiled and walked away. So, all of my angst was for naught. But I did get to meet a celebrated American CEO and live to tell the story.