China Is Ready for a Trade War

Maybe when Donald Trump announced tariffs on steel and aluminum and another $50 billion or so worth of imports from China, he was thinking: "What are they going to do about it?" He is about to find out. The Chinese ambassador to the U.S., Cui Tiankai, yesterday warned him that China plans to respond to the U.S. measures with its own measures of the same scale and intensity. Before announcing what products will be hit be their tariffs, the Chinese government was waiting to see what products the U.S. will target.

The list of products the U.S. will target is now coming into focus. Yesterday, the administration released a list of $50 billion worth of products—mostly electronics, aerospace, and machinery—that will be subject to a 25% import tariff. The detailed list of specific products runs to 1,300 items, and includes things like parts for trash compactors, cassette players, smart cards, and video projectors.

Now it is China's turn to announce the U.S. products that will be hit by tariffs. The list initially includes 106 categories of items, including airplanes, cars, and soybeans. The Chinese are not stupid. Each of the products chosen was picked for a reason. Putting a tariff on airplanes will get the attention of Boeing, which has contractors making parts in many states. Furthermore, if Chinese airlines stop buying Boeing airplanes, they can easily switch to Airbus, with no economic loss. So this is a loss for the U.S. but not for China. A tariff on cars will hurt General Motors and Ford, but there are plenty of competing cars available in China from Japan and Europe, so Chinese consumers won't be hurt, but it is a safe bet that General Motors and Ford will howl loudly about how Trump's tariffs are causing the U.S. to lose jobs.

But the biggies here are soybeans, pork, and other agricultural products. The goal of hitting farm products is to get Trump's attention and maximize the pain inflicted on his supporters. The red states Trump won in 2016 (and would like to win again in 2020) are mostly rural states, where agriculture is the mainstay of the economy. In fact, the unease there is already playing out, before any tariffs have been announced. In places like Sioux County, IA, which ranks first among Iowa's 99 counties in agricultural exports, farmers are already nervous. One farmer, Brad Te Grootenhuis, sells 25,000 of the county's 1 million hogs every year and stands to lose hundreds of thousands of dollars if China imposes a tariff on pork. Although he supported Trump in 2016, if the price of pork declines, he will consider abandoning Trump. That, of course, is precisely what the Chinese are gunning for. China bought $42 million worth of Iowa pork in 2017, and if they stop buying it, there will be a lot of unsold hogs running around Iowa, forcing prices way down and making a lot of Iowa Republicans open to sending Trump a message in the all-so-important 2020 Iowa caucuses. All it will take is for some enterprising Republican to spend the next 2 years in Iowa yelling: "I support free trade. Repeal the tariffs."

None of this is surprising. Economists have long known that on the whole trade benefits all the partners and that protectionism leads to more protectionism, which hurts all the partners. Trump may be getting a lesson in Economics 101 soon. (V)

Trump Will Use the Military to Guard the Border

Yesterday, Donald Trump said that he will send the National Guard to defend the Mexican border. This new move could be a result of his complete inability to get Congress or Mexico to finance a wall on the border. Deploying the Guard within the country to defend the border is legal and has been done before. Nevertheless, members of the National Guard don't have the training or equipment used by the Border Patrol, so while this move is sure to excite Trump's base, it probably won't actually reduce the number of undocumented immigrants entering the country.

Trump continues to single out the caravan of people walking slowly from Honduras, through Mexico, in the direction of the U.S., as a major threat. He also said that he might eliminate foreign aid to Honduras. Of course, that would just increase poverty in the already very-poor nation and make more people desperate to get out and risk trying to make it to the U.S. A more rational approach would be to increase aid to Honduras to help its economy and make life better for people there so they wouldn't try to escape. But more aid to Latin America is not what Trump's base wants to hear, so that's not on the menu. (V)

The Book Behind Trump's Policy Decisions

Some presidents, including Barack Obama, were voracious readers. And undoubtedly, their reading influenced their thinking on policy in one way or another. Donald Trump, by contrast, is not a voracious reader. He probably hasn't read anything much longer than a fortune cookie since he became president. Be he is nonetheless influenced by books. Or, at the very least, by one book, namely Jean Raspail's The Camp of the Saints.

The book's title comes from the parts of the Bible that describe the apocalypse (specifically, Revelation 20:7-9). The plot involves some twists and turns, but what eventually happens is that a large number of refugees from India—who are repeatedly described as a "horde" and a "swarm" and a "dark mob" and are portrayed in highly stereotypical and pejorative terms—end up in southern France. By the time they arrive, having already been in Belgium and South Africa, the French government perceives them as a major threat and tries to stop them. But, like everyone else in the history of the planet, they defeat the French army. And then, per Wikipedia's plot summary:

The migrants make their way north, having no desire to assimilate to French culture, but continuing to demand a First World standard of living, even as they flout laws, do not produce, and murder French citizens, such as factory bosses and shopkeepers, as well as the ordinary people who do not welcome them. They are also joined by the immigrants who already reside in the Europe, as well as various left-wing and anarchist groups. Across the West, more and more migrants arrive and have children, rapidly growing to outnumber whites. In a matter of months, the white West has been overrun and the pro-immigrant governments are established, while the white people are ordered to share their houses and flats with the immigrants. The village containing the troops is bombed flat by airplanes of the new French government, referred to only as the "Paris Multiracial Commune." Within a few years, most Western governments have surrendered. The mayor of New York City is made to share Gracie Mansion with three African-American families from Harlem, migrants gather at coastal ports in West Africa and South Asia and swarm into Europe, Australia, and New Zealand, London is taken over by an organization of non-white residents known as the "Non-European Commonwealth Committee" which force the British queen to have her son marry a Pakistani woman, millions of black Africans from around the continent gather at the Limpopo River and invade apartheid South Africa, and only one drunken Soviet soldier stands in the way of hundreds of thousands of Chinese peasants as they overrun Siberia.

In short, the book is incredibly racist, even by the standards of its day (it was published in 1973), and it's a real pip now. It's very popular among white nationalists, and is described by the Southern Poverty Law Center as, "the favorite racist fantasy of the anti-immigrant movement in the US."

If one takes this book seriously, then one could very well overreact to a story about a large number of brown-skinned Third World refugees descending on the United States. But how did it get on to Donald Trump's radar? Well, Steve Bannon and Stephen Miller are fans, and the book has also become quite popular with some of the Fox News folks recently, including Tucker Carlson and Sean Hannity. At least two of those individuals, namely Miller and Hannity, spent the weekend with Trump at Mar-a-Lago, and surely the novel came up in conversation. And so, here we have another huge difference between presidents 44 and 45. Barack Obama was influenced by Herman Melville, William Shakespeare, Abraham Lincoln, Mohandas Gandhi, John Steinbeck, and Ralph Ellison, while Trump is influenced by a book that would not be out of place at a cross burning. (Z)

Rosenstein Approved Mueller's Investigation of Manafort

Robert Mueller is a special prosecutor, not an independent prosecutor, as Ken Starr was. In practice, this means that Mueller needs his boss, Deputy AG Rod Rosenstein, to approve major decisions. It has now come out that Mueller asked Rosenstein for permission to go after former Trump campaign manager Paul Manafort, and Rosenstein granted permission.

In an Aug. 2017 memo, Rosenstein wrote that investigation of possible financial crimes committed by Manafort and his connection to Russian government officials in the past falls within the scope of Mueller's investigation. The memo was made public in court proceedings this week, but a large amount of the 3-page document was blacked out because it contains sensitive material.

The new filing has a number implications. First, Mueller is not a rogue operator, going places he shouldn't be going. He has had the full backing of the Justice Dept. official in charge of his investigation. Second, Manafort's claim that absent Mueller he wouldn't have been indicted is nonsense. The filing makes it clear that the Justice Dept. was already on to his illegal behavior. Third, Trump is going to be very angry that Rosenstein is doing his job and not protecting him. If he gets angry enough, he could fire Rosenstein and set in motion another Saturday Night Massacre, with unpredictable consequences. (V)

Mueller Sends Someone to Jail

Robert Mueller's investigation has produced its first jail term. Dutch lawyer Alex van der Zwaan, who lied to Mueller about his dealings with Trump campaign chair Paul Manafort in connection with business in Ukraine, has been sentenced to 30 days in prison and ordered to pay a $20,000 fine.

That sort of sentence, which is pretty much a slap on the wrist, certainly suggests a deal has been made. Unlike the other folks who have already pled guilty, van der Zwaan has not entered into an ongoing cooperation agreement with the Special Counsel, but that could just mean that he's a small fish who has spilled his guts and is not going to have anything more to spill. Needless to say, all of this is speculative, since nobody is talking. Yet. (Z)

Democrat Wins Judicial Election in Wisconsin

These days, just about any state-level election attracts a lot of interest, as people search for clues about what is going to happen in November. That is particularly true of the states that Donald Trump won by less than 1% of the total vote—Wisconsin, Michigan, and Pennsylvania. And so, Tuesday's election for a new justice on the Wisconsin Supreme Court was national news. The winner was Rebecca Dallet, a liberal Democrat, whose 55.7% of the vote dispatched Republican Michael Screnock and his 44.3%. Nearly a million Wisconsinites cast ballots, which is a staggering number for a special election, particularly one being held in the midst of a snowstorm.

Officially, seats on the court are nonpartisan, though these days it's hard to say that with a straight face. This election fell particularly short of that standard, as heavyweights from both sides of the aisle weighed in. Dallet had endorsements from Joe Biden and Sen. Cory Booker (D-NJ), among others, while Gov. Scott Walker (R-WI) and the NRA campaigned hard for Screnock. With the victory, the Republicans' majority on the court was shaved to 4-3. Meanwhile, the Party has that much more reason to be nervous about what's coming in November. (Z)

Republicans Are Getting Nervous about McCain's Health

While talking about the impending death of one of your long-time colleagues is not something people like to do too openly, in private Republicans are worried that John McCain isn't going to make it. There is already speculation about whom Gov. Doug Ducey (R-AZ) would appoint to keep McCain's seat warm until the November special election for a permanent successor to fill out McCain's term until January 2023. Names that are surfacing include McCain's wife, Cindy, and former senator Jon Kyl. The problem is that there is not really an obvious candidate, In addition, having to defend two seats in the same state at the same time (as Republicans have to do in Mississippi and Democrats have to do in Minnesota) is always tougher than the usual one Senate race.

The date May 30 looms large here. If McCain can hang on until after the filing deadline of May 30, most readings of the Arizona law say that there would be no special election this year and Ducey's appointment will last until a special election in 2020. If McCain dies or resigns before May 30, there will be a primary in August for the special election, which would be held on Nov. 6. (V)

Three-quarters of Americans Say Major News Outlets Report Fake News

A new Monmouth University poll shows that 77% of Americans believe that major television and newspapers report "fake news." Of those, 31% said they do it regularly and 46% say it happens occasionally. Broken down by partisanship, 89% of Republicans, 82% of independents, and 66% of Democrats believe the media engage in this practice.

These aggregates are interesting, but looking at the crosstabs we get a different picture. Among Republicans, 75% trust Donald Trump more than they trust CNN. Among Democrats, it's 5%. Men trust Trump over CNN 45% to 39%, but with women, only 25% trust Trump and 56% trust CNN. Faith in Trump increases with age and also increases with the income of the respondent.

Monmouth also asked about Trump vs. Fox News. Republicans trust Trump over Fox News 35% to 21%, with 40% trusting them equally. Democrats, however, trust Fox News [sic] much more than they trust Trump, with 39% saying Fox News is more reliable than Trump and only 8% saying Trump is more reliable, but 36% of Democrats trust them equally.

Finally, Monmouth also asked about Trump vs. MSNBC. As expected, 72% of Republicans trust Trump over MSNBC but only 5% of Democrats do. So while the top line that 77% of Americans think the media is reporting fake news is alarming, when you look at the details, Republicans see CNN and MSNBC as the source of the fake news and Democrats see Fox News are the source of the fake news. Now the 77% makes a bit more sense. (V)

O'Rourke Is Raking it In

Rep. Beto O'Rourke (D-TX) is a decided underdog as he tries to unseat Sen. Ted Cruz (R-TX) this year. However, he is certainly giving himself more than a puncher's chance. O'Rourke has been outraising the Senator by a 3-to-1 margin this year, according to FEC filings, and when the next reporting deadline arrives, it appears that the trend will continue. We don't yet know how much Cruz raised in Q1, but it's apparently nothing to brag about, because his campaign has said nothing. O'Rourke's campaign, by contrast, has proudly announced a haul of $6.7 million. That's big, even by Texas standards.

There hasn't been much polling of the race so far. The one poll done this year, by PPP, had Cruz ahead by 8 points, 45% to 37%, with 18% undecided. That puts the challenger within spitting distance, especially if 2018 does turn into a wave year, and especially if he can win the votes of most of those undecideds. The latter is certainly possible, since the undecideds surely know everything they need to know about Cruz, and so are just waiting to learn what kind of candidate O'Rourke is. The symbolic importance of Texas, as the biggest of the red states, is such that if the DSCC thinks O'Rourke can win, they will pull out all the stops to help him. (Z)

Leftist Candidate Has Huge Lead in the Presidential Race

In Mexico. Former Mexico City Mayor Andrés Manuel López Obrador (known as AMLO) has an 18-point lead in the run-up to the July 1 Mexican presidential election. If AMLO wins, Trump is going to have a new problem, namely a neighbor who despises him and who will not cooperate with him on anything. The election of AMLO would be a huge break with the past, in which relatively conservative and pro-American politicians served as president of Mexico. An out-and-out hard leftist who would try to thwart Trump at every turn would be something new and could lead to increasing tensions between the two countries. What would Trump do if AMLO nationalized some American businesses in Mexico and paid the companies a pittance? Of course, the election is 3 months away, and things can change, but the opposition to AMLO is split among three other candidates, and support for AMLO appears to be growing rather than shrinking. (V)

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---The Votemaster and Zenger