Friday Insights-November 29, 2024
A big week for the President-Elect.
I hope you had a safe and Happy Thanksgiving. Despite a rash of troubling reports out of Mar-a-Lago and elsewhere about the Trump administration and the concept of Equal Justice Under Law, I did.
Trump walks on January 6 charges.
On Monday, Special Counsel Jack Smith filed a motion to dismiss the federal charges associated with the January 6 insurrection and other crimes against Donald Trump. The charges have been dropped, and Trump is now free of federal charges. The United States now needs to engrave an asterisk next to the words “Equal Justice Under Law” on the Supreme Court building. Enough said.
Tariffs.
President Trump, not known as a student of history, announced 25% tariffs on goods imported from Mexico and Canada. When I read that, I immediately thought of the Smoot-Hawley Act, tariffs that led to the Great Depression. George Santayana wrote, “Those that cannot remember the past are condemned to repeat it.”
Trump is likely unfamiliar with Smoot-Hawley, but if someone had mentioned it to him before his November 25 announcement, he might have assumed it was “good” legislation because Josh Hawley sponsored it. Senator Hawley, of course, was not alive in 1930.
The tariff announcement may be a bluff from the master of The Art of the Deal, intended to trick Mexico and Canada into getting more serious about stopping drugs and migrant criminals from entering the U.S. If that is the case, Mexican President Claudia Sheinbaum may call Trump’s bluff by placing a tariff on U.S. goods entering Mexico. Thus, the net effect of the tariffs will be to cost Mexico and the U.S. jobs (jobs lost due to lost exports), which could precipitate inflation and unemployment.
Economists, of course, point out that tariffs are not paid by the exporting country but by consumers in the importing country. Thus, the United States's imposition of tariffs raises prices for American consumers.
PBS reports that Carl B. Weinberg and Rubeela Farooqi, economists with High Frequency Economics, said:
Imposing tariffs on trade flows into the United States without first preparing alternative sources for the goods and services affected will raise the price of imported items at once. Since many of these goods are consumer goods, households will be made poorer.
Stock Market Manipulation?
Although there is no evidence that Trump or his aides considered the impact on the stock market before announcing the tariff plan, the announcement created an opportunity for investors who knew of the plan to make a large profit by selling certain stocks short. One example is that GM imports thousands of trucks annually from Mexico, so GM stock dropped by over 8 percent shortly after the announcement.
As I said, there is no evidence of insider trading, but given the number of millionaires and billionaires roaming the corridors of Mar-a-Lago, I wonder.
Mr. Hegseth and Ms. Gabbard
There is nothing new to report on two troubled Trump cabinet picks. Republican Senators, I hear, would not be upset if Pete Hegseth withdrew his nomination as Secretary of Defense. Maybe he could join Matt Gaetz on Cameo.
I suspect Vladimir Putin is closely watching Tulsi Gabbard’s nomination with his fingers crossed. If Gabbard is confirmed as Director of National Intelligence, Russia and other enemies of the U.S. could save a lot of money on drones and other surveillance of military facilities supporting U.S. defense assets.
I continue to expect the Hegseth nomination to be withdrawn. Trump’s continued refusal to have nominees vetted by the FBI may be what sinks Hegseth. Senators must know as much as possible before considering the Hegseth and Gabbard nominations. Did Hegseth drug a woman before assaulting her?
Before the Senate considers Gabbard’s nomination, the FBI must also investigate the troubling allegations against “likely Russian asset” Tulsi Gabbard. If the Senate allows Gabbard to be approved by recess appointment, the Senate will be guilty of dereliction of duty.
Mr. Phelan, Secretary of the Navy?
On Tuesday, President-Elect Trump announced his choice of John Phelan, a major Trump donor and supporter, for Secretary of the Navy. The problem is that Phelan is a financier and art collector. He never served in the military. Wow. I wonder if Phelan looks forward to working with Pete Hegseth.
Boris Epshteyn, entrepreneur.
Mr. Epshteyn is Donald Trump’s friend and advisor. The Trump transition is now investigating him for soliciting consulting retainers from people seeking top jobs in the Trump administration. The Trump transition denies the allegations, but I am not so sure given the details reported in the news.
Thank you.
Thank you for reading Friday Insights. I hope the remainder of your Thanksgiving weekend is safe and happy.