Does Anybody Know What Is Going On?
“Do we have anybody in the newsroom who knows anything about tariffs?” The Senior Editors at most frequently read publications know the answer. It is no.
I laughed. Bill Maher, on his TV show, asked George Will, the conservative commentator, about tariff authority and related issues. This is a part of the exchange:
Bill Maher: “The tariffs, that’s not really something the president is allowed to do unilaterally.”
George Will: “No. A constitutionally enumerated power of Congress is to regulate trade with foreign nations. Congress, in its absent minded way, has now become a spectator of government… I have a chronic, incurable trade deficit with my barber. I buy a haircut from her, she buys nothing from me.”
Will enlarged the exchange to include the President’s claim that trade between countries should reflect something close to an even exchange. Markets don’t work that way—supply and demand defy the number pushers in the Office of Management and Budget (OMB). Or, the political hacks that want nothing more than the leader’s approval.
In the Spring of 1987, I went to the White House with then Secretary of Commerce Malcom Baldrige. Ronald Reagan was the President, and George Shultz was the Secretary of State.
Baldrige and I were advocates for what was pejoratively called “industrial policy”. We argued that a number of countries, and at the time, particularly Japan, were denying market access to US semiconductor companies, stealing their intellectual property, and supporting their leading companies with massive subsidies.
I remember a lively debate among those in the Reagan Cabinet about how we should fight back with our own market intervention. George Shultz was the most formidable advocate for a competitive market unhindered by government interference.
Shultz was the one most likely to argue that the semiconductor industry would be better off without active government support and that, to the extent governments (especially Japan) were subsidizing chips, they were indirectly subsidizing a range of US industries that used them. And he argued, it is a good thing when countries with much less market power do better—democracy is advanced by international well-being.
Baldrige and I argued that the semiconductor industry was so strategic we had no choice but to intervene. Intel, at the time, was our leading semiconductor company and, of course, led the lobbying effort to gain government support.
Bottom line: a chip consortium, Sematech (Semiconductor Manufacturing Technology) was formed in 1987 as a public-private consortium. It was co-funded by the U.S. Department of Defense and leading US semiconductor companies (Intel led the charge).
The initiative was meant to coordinate research and development (R&D), improve manufacturing, and secure America’s leadership in chip technology.
Today a list of leading companies in what is called the “chip industry” is quite different. Nvidia leads the list. According to Gartner (a leading consulting business) in 2024 Nvidia’s sales were $76.7 billion while Intel’s sales were $49.8. Year-over-year growth for Nvidia was 120.1%; Intel, 0.8%.
Nvidia did not exist in 1987; it was founded in 1993.
George Shultz would have a “I told you so” grin.
Tariffs distort markets. President Trump wants to use them to raise money, not build companies. And, today they are often a part of foreign policy, not staging for improved market dynamics.
If tariffs are to be helpful to future US economic outcomes, they must be used sparingly, and a case should be made to Congress, which has under our Constitution the power to levy them. Congressional action follows debate, we need real debate on the use of tariffs.
Relatedly
Multiple lawsuits are pending that challenge the President’s authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA). Regardless of the reasons for imposing tariffs the authority should be clear. The Supreme Court should fast track a case that offers the opportunity for a precedent setting decision.
Al Sikes is the former Chair of the Federal Communications Commission under George H.W. Bush. Al writes on themes from his book, Culture Leads Leaders Follow published by Koehler Books.
Jim Bachman says
The term you are looking for is “squeeze.”
This is where a criminal organization or individual uses threats or intimidation to force someone (often a business owner) to pay them money in exchange for “protection” from harm, vandalism, or other problems
Deirdre LaMotte says
Bingo! The mafia addition
Richard Marks says
Great piece, Al. Thanks!
Yes Jim, and as the saying goes, “Is the juice worth the squeeze?”
Probably not when ones’s thirst is unquenchable and a bitter taste is left with those forced to take a sip.
Jeff Staley says
Al,
Great article.
Jeff
Jim Bachman says
We now have an additional clue why Trump sold out the US to China. His most recent financial disclosures show a significant position in NVidia stock.
Bob Brell says
“Does anybody know what is going on?” Certainly not the author or he wouldn’t ask the question and to review the comments section, one might conclude the same. To quote Bill Maher is a laugh! What does he know about economics or tariffs or the law? George Will warrants respect but to quote him as saying “Markets won’t or don’t reflect an even exchange of trade and leave it at that is disrespectful to George Will.
If you want to change the direction and level of the national debt, where do you start. Not with Congress. Congress is inept. Congress is the problem and have shown no willingness nor appetite to change the debt trajectory and that applies to both parties. Additionally, if you got outflanked by Eastern elite and the D.C. swamp during your first term, you don’t go there during your second term. You get outside the box and use your brain to undo the causes of debt which are manyfold. You start with bringing manufacturing back to the US (thanks to Obama and big business for sending it overseas), you rekindle the American dream for millions of workers who make things and want to work, own a home and care for their family, you cause investment on US soil, you tear down the barriers burdensome to investment principally the regulatory morass and so on and so forth. And how do you go about undoing decades of relegating the US to just another country bankrupting itself into Socialism. Can we not see Germany, France, England, Belgium and see the future?
Anyone who doubts Trumps intelligence belongs on the sidelines. You may not like him as a person but its crickets from his critics on his results. He found a silver bullet to turn the Titanic around, in the use of tariffs. All the experts and all the naysayers have so far been wrong. Who among us can measure up to Scott Bessant, Secretary of the Treasury. He’s smarter than 99.9%? Tariffs work. For you naysayers, go back and read Paul Samuelson’s Economics 101 and get up to speed on Keynesian economics.
Does Al really want to revert to where we are coming from? An out-of-control national debt, a hollowed out industrial America, growing unemployment, a widening division of income and Socialism barking at our door or maybe Communism?
Jim Bachman says
Socialism – government owning the means of production. Like Intel. Hmm. But that is more the national socialism flavor.
Deirdre LaMotte says
All I will add is Samuelson’s Econ 101 is turning over laughing or in dismay at your post.
Anyway, you want to talk national debt? Clinton was presiding over the biggest economic expansion in US history and balancing the budget, Republicans impeached him over a blowjob.
Trump STARTED with a sex scandal about paying a porn star hush money from the oval office.
Then he added 9 trillion to the debt, lost 5 million jobs, watched idly while 370,000 Americans died, and incited a coup to try to stay in power after losing an election.
And Republicans are outraged that we would impeach him.
Ha, and that was his first term. This term is about using his position of POTUS a to become a billionaire. Tariffs? Get out the popcorn, if you can still afford it, and stay tuned.