Tag Archives: tariff

The Tariffs that Broke the Camel’s Back

Gary Cohn

On March 7, 2018, President Donald Trump signed a sweeping steel tariff act into law via executive order. As of the writing of this blog there have been several material changes made to this tariff in terms of the countries subject to it and the products covered. In addition to steel, the tariff initially included aluminum, washing machines, and solar panels.  It is unclear what the long-term legacy of these tariffs will be. However, in the short term they have conclusively led to Gary Cohn’s departure as the Director of the National Economic Council under President Trump. The exact circumstances of Cohn’s resignation are murky, but Jack Ohman, the artist of the cartoon above, thinks that Cohn was kicked out. Bret Stephens, author of the editorial “Gary Cohn’s Breaking Point,” believes that Cohn hit a breaking point either personally or professionally. Whatever was happening behind the scenes between Trump and Cohn, clearly the steel tariff was the straw that broke the camel’s back.

John Knott’s Right in the Middle of his Speech and this untitled cartoon by Jack Ohman work well together as bookends. Both cartoons address the same subject: the professional fallout of unpopular tariffs. Their differences highlight how divisive tariffs are as a tool for boosting the national economy. In Right in the Middle of his Speech, President Hoover is paying the price for the Smoot-Hawley Tariffs at the hands of the voters who have had two years to observe the effects of the tariff. In Ohman’s untitled cartoon, it is Gary Cohn who’s career is plummeting even before the steel tariffs were officially signed into law.

Gary Cohn and President Trump had a fraught working relationship. Before joining the Trump Administration, Cohn was a high-ranking employee with Goldman Sachs. The two had very different points of view regarding what would be best for the economy of the nation. Donald Trump was the first presidential candidate since Herbert Hoover to run on a platform of economic protectionism. By contrast, Cohn was a globalist and proponent of free trade.

The difficulties between the two men took a personal turn in the aftermath of the August 2017 Charlottesville protest, Rally for the Right. The Rally for the Right was comprised primarily of alt-right political groups that included white supremacists and neo-Nazis who chanted anti-Semitic slogans and waved Nazi flags. Counter-protestors showed up to oppose the Unite the Right rally. While violence did erupt between the two groups, it was the neo-Nazis who were there for Unite the Right that had showed up with weapons and shields. It was also a neo-Nazi supporter that drove a car through a group of counter-protestors, injuring 19 and killing one.

The public outcry was immediate; however the Trump administration was slow to issue an official response. When President did respond to the incident in Charlottesville, it was via a tweet which read in part “…There is no place for this kind of violence in America. Lets [sic] come together as one!” (Trump). People were shocked by the weak response. The day after this tweet President Trump had a press conference where the American public expected him to denounce the hateful ideology of the neo-Nazis and the violence committed by their supporters. What Trump said instead of that was, “There were many fine people on both sides” (Wang, “Read the Transcript…”).

There was a great deal of anger from many quarters due to Trump not only failing to condemn the vicious bigotry of the neo-Nazis, but saying they were “fine people”. Gary Cohn, a Jewish man who gave generously to Jewish charities, was standing in the lobby of Trump Tower when the President made these equivocating remarks. Then Cohn was left to field economic questions immediately after Trump completed his statement. In the aftermath of this, Cohn would publicly criticize the Trump administration’s response to Charlottesville but without naming the president explicitly. “…that the Trump administration “can and must do better” to condemn hate groups and “do everything we can to heal the deep divisions that exist in our communities”,” (Kelly, “Gary Cohn, Trump’s Adviser, ….”). In that same article Cohn said the only reason he did not resign was that he wanted to shepherd through tax cuts that he had helped author, a once in a lifetime opportunity.

However, after the tax cuts were passed into law in December of 2017, Cohn and Trump began butting heads over the prospect of the heavy steel tariffs President Trump wanted to impose. Cohn was among many voices that protested the tariffs. Once it became clear that the tariffs were going to happen, Cohn tendered his resignation within days. Cohn resigned on March 6, 2018 and Trump signed an executive order to enact tariffs on March 8. The reason he gave was that if Trump was not going to listen to his advice, there was little point in holding the position of Director of the Economic Council.

In addition to the professional, economic disagreements between the two men, there was doubtless a large amount of personal conflict. President Trump has always valued personal loyalty above any other characteristic of the people who work with and for him (Olen, “Trump’s Creepy, Autocratic Obsession with Loyalty). Cohn’s criticism of the Trump Administration’s handling of the Charlottesville incident stung. While Cohn and Trump were on a similar wavelength regarding the tax cuts, the steel tariff was Trump’s personal pet project; thus, when Cohn spoke out against the tariff, there is little doubt that President Trump saw the action as further evidence of Cohn’s disloyalty.

Ohman’s cartoon depicts the moment that Cohn officially resigned on March 6, 2018 (Ohman). Visually it is incredibly similar to John Knott’s cartoon Right in the Middle of his Speech.  As Cohn leaps from the crumbling steel infrastructure, he insists, “I jumped, I swear…”; meanwhile, Trump is standing on the construction platform and appears to have kicked Cohn from the building. There’s good reason for Cohn to insist that the departure was of his own volition. Before he left Goldman Sachs to join the administration as the Director of the National Economic Council, Cohn was on the shortlist of candidates to replace the CEO of Goldman Sachs; thus, resigning as the result of a stubborn president would look much better for his career than being fired.

The steel tariffs are referenced in this cartoon by the crane labeled “Art of the Steel Tariff,” which is also a play on the 1987 autobiography about Trump– The Art of the Deal– that actually was authored by ghostwriter Tony Schwartz. In Ohman’s cartoon, the “Art of the Steel” crane seems to be out of control. The cable is whipping back and forth, and the hook is snagged on a beam of the steel infrastructure that Cohn has just been kicked from. This is likely more than simple artistic license. One of Cohn’s pet projects was the rebuilding of American infrastructure; bridges, railways, power grids, and so forth (“Gary Cohn Joins the Exodus”). Such infrastructure projects would require lots of steel and aluminum, which would be made more expensive by the tariffs.

The last notable feature of the comic is the sign behind President Trump, which reads “Trump Chaostruction Inc.” In addition to many other industries, the Trump Organization included construction companies. Ohman makes reference to this as he makes a portmanteau with “construction” and “chaos.” One of the things that the Trump administration has been criticized for is the high churn rate among appointees and employees. In the first year of his administration the turnover rate was more than 40% (Keith, “White House Turnover was Already Record Setting….”). At the time of his departure, Gary Cohn was the highest-ranking member of Trump Administration to leave, a move that prompted speculation about instability. Trump responded to that criticism with the following tweet:

The new Fake News narrative is that there is CHAOS in the White House. Wrong! People will always come & go, and I want strong dialogue before making a final decision. I still have some people that I want to change (always seeking perfection). There is no Chaos, only great Energy!

The circumstances of the two cartoons are very different. The Knott cartoon Right in the Middle of his Speech was created with the benefit of hindsight. It was published more than two years after the implementation of the Smoot-Hawley Tariff. In contrast, this untitled cartoon by Ohman was published the day after Trump’s steel tariffs. Hoover supported the Smooth-Hawley tariff; Cohn opposed Trump’s steel tariffs.

Nonetheless, both cartoons use the same visual language and have the same moral: tariffs can be deadly to a politician’s career. This is illustrated in both cases with the politician falling from a structure. Like Knott, Ohman chooses to focus his cartoon on the personal consequences of a tariff. Trade wars, recessions, high prices, and other pitfalls of tariffs are incidental to the point the artists are making.

 

 

Works Cited

Diamond, Jeremy. “Top Economic Adviser Gary Cohn Leaves White House in Wake of Tariff Rift.” CNN, 7 Mar. 2018, www.cnn.com/2018/03/06/politics/gary-cohn-white-house-tariffs/index.html. Accessed 9 Apr. 2018.

The Editorial Board. “Gary Cohn Joins Exodus.” The New York Times, 6 Mar. 2018. The New York Times, www.nytimes.com/2018/03/06/opinion/gary-cohn-resignation.html. Accessed 8 May 2018.

J.E.F. “Gary Cohn Resigns as Donald Trump’s Economic Advisor.” The Economist, 7 Mar. 2018, www.economist.com/blogs/democracyinamerica/2018/03/tariff-rifts-0. Published the day after he resigned

Keith, Tamra. “White House Staff Turnover was Already Record Setting. Then More Adivsers Left.” National Public Radio, 7 Mar. 2018, www.npr.org/2018/03/07/591372397/white-house-staff-turnover-was-already-record-setting-then-more-advisers-left. Accessed 16 Apr. 2018.

Kelley, Kate, and Maggie Haberman. “Gary Cohn, Trump’s Adviser, Said to Have Drafted Resignation Letter after Charlottesville.” New York Times, 25 Aug. 2017, www.nytimes.com/2017/08/25/us/politics/gary-cohn-trump-charlottesville.html. Accessed 17 Apr. 2018.

Knott, John Francis. Right in the Middle of his Speech. 15 Oct. 1932. America’s Historical Newspapers, infoweb.newsbank.com.ezproxy.lib.utexas.edu/iw-search/we/HistArchive/?p_product=EANX&p_theme=ahnp&p_nbid=L63Q49PFMTUyMjMzMzk1Mi42MTE4MzI6MToxMjoxMjguODMuNjMuMjA&p_action=doc&s_lastnonissuequeryname=4&d_viewref=search&p_queryname=4&p_docnum=1&p_docref=v2:0F99DDB671832188@EANX-10483D9233E8A080@2426996-10483D92A9E93CD3@17-10483D94E2A30003@.

Ohman, Jack. “Jack Ohman.” GoComics, Universal Press Syndicate, 8 Mar. 2018, www.gocomics.com/     jackohman/2018/03/08. Accessed 14 May 2018. Cartoon.

Olen, Helen. “Trump’s Creepy, Autocratic Obsession with Loyalty.” The Washington Post, 30 Apr. 2018, Opinion sec. The Washington Post, www.washingtonpost.com/blogs/plum-line/wp/2018/04/30/trumps-creepy-autocratic-obsession-with-loyalty/?noredirect=on&utm_term=.3d0a68b808d2. Accessed 11 May 2018.

Stephens, Bret. “Gary Cohn’s Breaking Point.” The New York Times, 7 Mar. 2018. The New York Times, www.nytimes.com/2018/03/07/opinion/gary-cohn-breaking-point.html. Accessed 8 May 2018.

Trump, Donald J. “The new Fake News narrative is that there is CHAOS in the White House. Wrong! People will always come & go, and I want strong dialogue before making a final decision. I still have some people that I want to change (always seeking perfection). There is no Chaos, only great Energy!” Twitter, 6 Mar. 2018, twitter.com/realDonaldTrump/status/971006379375972354.

—. “We ALL must be united & condemn all that hate stands for. There is no place for this kind of violence in America. Lets come together as one!” Twitter, 12 Aug. 2018, 10:19 AM, twitter.com/realDonaldTrump/status/896420822780444672?ref_src=twsrc%5Etfw&ref_url=https%3A%2F%2Fwww.vox.com%2F2017%2F8%2F12%2F16138610%2Fcharlottesville-nazi-rally-trump-tweet&tfw_site=voxdotcom.

Wang, Christine, and Kevin Breuninger. “Read the transcript of Donald Trump’s jaw-dropping Press Conference.” Dwd. www.CNBC.com, CNBC, 15 Aug. 2017, www.cnbc.com/2017/08/15/read-the-transcript-of-donald-trumps-jaw-dropping-press-conference.html. Accessed 16 Apr. 2018.

Blind Politics

politicalcartoon2-lively

Trump’s “Foreign” Policy is a cartoon that seeks to map out some of the ideas that Donald Trump has had about other nations. In the cartoon, Trump is explaining his foreign policy, which includes labels like “RAPISTS” on Mexico, “OUR PAL PUTIN” on Russia, and “DROP BOMB HERE?” in the middle east. All of these labels are references to things that Trump has said about these countries before, and all of them point toward the fact that Trump thinks about the rest of the world in an ethnocentric way, influencing all of his decisions on policy. One policy in particular that Trump is especially vocal about is his policy to keep low-skill manufacturing jobs in the U.S. by putting tariffs on imported goods (Rich). Although Donald Trump seeks to boost the success of American companies by cutting America off from the rest of the world, his policies may only harm American industries like what happened during the Great Depression.

Donald Trump’s motives in his economic policies are benign on a surface level. According to him, one of the biggest problems with our country is that industries are moving production plants out of America since labor is cheaper in other countries, and then these companies are distributing their goods in the U.S. without having to pay taxes for imports. In this way America is losing both low-skill manufacturing jobs and tax revenue from tariffs on foreign-made goods. His policy is to prevent or discourage companies from doing this by putting taxes on their imports into the U.S.

Trump has repeatedly vowed to impose high tariffs – or the threat of high tariffs – to bully American companies into keeping jobs in the United States. His favorite example is Ford Motor Co., which plans to build a massive plant in Mexico. Trump has said that before he takes office he will persuade Ford to change course by threatening to charge the company a 35 percent tax on cars imported back into the United States (Robert).

This policy is a bit more feasible than many of his other policies, but his no-compromise attitude and business background may cause him to force companies to decide between selling to America or to the rest of the world.

So what’s been interesting about Trump is he has really appealed to this older sense of nationalism as opposed to modern American conservatism. He criticizes outsourcing of jobs to other countries, things like that. So that’s his economic point of view. Then you throw in things on immigration – the Buckleyan conservatives are open to skills-based immigration. Let’s bring the best and brightest from around the world to America. The  view is that those individuals are a threat to the people who live here now, and we should only bring them in very, very limited numbers. (Robert)

The kind of America that Trump believes in is a kind of America that is self-sustaining, isolated, and free of foreign influence without benefit. Putting massive tariffs on imported goods discourages trade and encourages consumers to buy domestic goods, but trying to force this has never worked.

Trump is interested in running the country like a business. He seeks to be the CEO instead of the diplomatic leader. This comes into play when he talks about NATO and relations with Japan. “If we’re attacked, Japan doesn’t have to do anything. They can sit home and watch Sony television… They have to pay… It’s got to be a two-way street” (Henderson). Trump is talking about the Treaty of Mutual Cooperation and Security signed in 1960. This treaty requires both nations to defend each other in case of an attack, but article 9 of the treaty stops Japan from coming to the aid of the U.S. in the event of an attack. This treaty was made since “alliance with Japan is crucial for America’s Asia-Pacific strategy and security,” (Henderson) but Trump is instead looking at this alliance as a business opportunity. This goes back to the ethnocentric ideas that Trump has. It is a privilege to use the best military in the world, so other people have to pay for it, simple as that. The only problem is; it is not as simple as that. “Mr. Trump regards treaties with other countries as contracts that needed to be reviewed to see whether they benefited Americans” (Rich). Concerns that are rising about Trump’s relations with other countries are very similar to the concerns brought about by the Smoot-Hawley Tariff. This tariff, passed by Herbert Hoover during the Great Depression, started global trade wars that became detrimental to both American and world economies. If Trump seriously gives up an alliance with the Japanese for lack of profit, he will inevitably set off a chain reaction of instability in Asia, that could spread even further. An alliance with Japan is necessary not only for peace between nations, but also for trade. Donald Trump is trying to look out for his own country, but he is doing it through an ethnocentric lens. Doing this has led to mistakes before, such as when Franklin Delano Roosevelt passed a 42 percent tariff on Japanese cotton in 1936 in hopes of stimulating the American textile economy. This action was later referred to as the “cotton blunder” because of the backfire it caused; Japan responded to this tariff with a counter-tariff and a threat to trade with other nations instead of the U.S.

There are times when being a businessman is useful, but being able to balance this skill with good diplomacy is more important for the President of the United States. Because Donald Trump sees things through an ethnocentric viewpoint, he fails to recognize that benefitting other nations through alliances and trade agreements can be good.

Bibliography

Henderson, Barney. “Donald Trump Savages Japan, Saying All They Will Do Is ‘watch Sony TVs’ If US Is Attacked and Threatening to ‘walk’ Away from Treaty.” The Telegraph [UK] 5 Aug. 2016: 1+. Print.

Johnson, Sean Sullivan;Jenna. “Trump ramps up rhetoric on trade.” The Washington Post. (July 1, 2016 Friday ): 1348 words. LexisNexis Academic. Web. Date Accessed: 2016/11/15.

Rich, Motoko. “Abe to Meet Trump to Press Japan’s Case on Security and Trade.” The New York Times 11 Nov. 2016: 1+. Print.

Robert, Siegel. “Nationalism V. Conservatism: What Trump’s Rise Means For The GOP.” All Things Considered (NPR) (2016): Newspaper Source. Web. 24 Oct. 2016.

“Trump’s protectionist rhetoric worries Chinese.” Global Times (China). (March 17, 2016 Thursday): 817 words. LexisNexis Academic. Web. Date Accessed: 2016/10/24.

Roosevelt’s Cotton Tariff

A good customer threatens to walk out

A Good Customer Threatens to Walk Out is a political cartoon by John Knott seeking to give immediacy and perspective to the problem of Franklin Delano Roosevelt’s new tariff on cotton goods during a fragile time in the history of the United States of America: The Great Depression. The cartoon depicts the two parties affected by the tariff – The Japanese and American textile departments. Although the “Raw Cotton for Export” is plentiful, and “Japan’s Textile Industry” is readily available, trade cannot occur because of the piece of paper that is sitting between the Japanese and American characters – the tariff on Japan’s cotton goods. The editorial accompanying this cartoon, “Cotton Blunder,” tells the story that explains the visible tension in the scene. Effective June 20th, 1936, President Roosevelt decided to raise taxes on Japanese cotton by 42 per cent. “The new tariff action will give [Japan] an excuse to retaliate by buying less raw cotton from America and more from other countries” (“Cotton Blunder” 9). Although Roosevelt was trying to help American textile companies by placing a tariff on Japanese imported textiles, it only angered Japan and threatened to perpetuate the Great Depression even further due to its implications.

After the devastating stock market crash of 1929, America’s economy had started a seemingly unstoppable downward spiral. Herbert Hoover was the standing president at the time, and although it was not his fault the American economy had crashed, it was his fault it had gotten worse. One of the worst decisions he made as president was passing the notorious “Smoot-Hawley” Tariff Act which imposed 20,000 record-high taxes on imported goods. As if facing increased inflation and skyrocketing prices for common goods was not bad enough, now people were expected to pay extra money for foreign goods (Henderson). Though it was supposed to stimulate domestic economy, it only closed the metaphorical Pandora’s box of American economics before hope could escape. This tariff hurt other nations’ economies as well, since the U.S. was previously a prominent trade partner for many countries. Now, however, their goods were not selling in the U.S. so the immediate reaction from affected countries was to enact tariffs of their own in response. Consequentially, the “Smoot-Hawley” Tariff Act set off a chain of trade blockades in the global marketplace until the world had become divided into economic blocks; effectively making the Great Depression a worldwide event.

The “Smoot-Hawley” Tariff Act was not only the downfall of the Herbert Hoover administration; it was also a catalyst for the rise of the Franklin Delano Roosevelt administration. In his campaign for president, FDR told the American people that he would lower tariffs during his presidency. True to his word, after he was elected, FDR passed the Reciprocal Trade Agreements Act in 1934. (Koyama) This act allowed Roosevelt to negotiate reciprocal trade agreements with other nations. However, in 1936, Roosevelt was faced with a dilemma: Northern American textile companies were pushing for government intervention in their competition with the increasingly successful Japanese textile market. “The immediate effects of this tremendous increase in imports from Japan, irrespective of the relation of their total volume to the total American production and consumption, were the ever-present threat to the American price structure and the resultant uncertainty and instability which had marked the American market since the influx began” (Murchison 273). But as wary as Roosevelt was about this problem of a weakened domestic industry, he was also reserved about implementing tariffs. He sought a gentleman’s agreement with Japan to set a quota that would limit shipments to about 45,000,000 square yards of cotton annually in order to regulate the influx of foreign goods. Unfortunately, talks for this agreement suddenly collapsed in May, and as a result, Roosevelt passed a 42% tariff on Japanese cotton goods.

Textile interests expressed satisfaction today over the president’s proclamation raising tariff walls in an effort to halt a sharp increase in shipments of cotton cloth from Japan to this country. President Roosevelt acted after the tariff commission reported importations of Japanese cotton goods rose rapidly during the first quarter of this year following failure to effect a “gentlemen’s agreement” with the island empire to restrict cotton textile exports to the United States. By proclamation issued yesterday under the 1930 flexible tariff act, the president increased tariffs approximately 42%, effective June 20. The higher rates will apply to the types of cotton cloth of which Japan supplies about 90% of this country’s imports, the remainder coming from Great Britain and Switzerland. The proclamation followed recommendations of the tariff commission, which investigated costs of domestic and foreign cotton cloths last year. (Tariff Hiked on Japanese Cotton Goods)

This article came out about the same time that the Dallas Morning News editorial came out. As Knott’s cartoon points out, southern cotton producers and middle men had benefitted from Japan’s increasing presence in the marketplace since Japan bought raw cotton from American manufacturers; a fact overlooked by the Roosevelt administration when making the decision to implant the tariff. In trying to stimulate the northern cotton textile companies, he effectively killed southern ones. This wasn’t the only problem Roosevelt now faced; he had also started a trade war with the Japanese. There are two ways they could retaliate now; either by implementing a counter-tariff on American goods in Japan, or by simply halting trade with the U.S. therefore Japan appears to be an unhappy customer in the cartoon, verbally threatening to take his trading business elsewhere. A frightened Uncle Sam is seen to the right, frantically asking for someone to call for Mr. Hull, the current secretary of state. After this cartoon was published, it was Mr. Hull that, with cooperation from the Japanese Embassy at Washington, could peacefully end this potentially disastrous tariff (Woolner).

This cartoon is comedic due to its use of visual humor. The Japanese man appears angry, slamming his fist on the counter, anyone’s natural response upon learning that they have been betrayed. The way the man is drawn is also a source of humor, since features like big teeth and large, circular glasses give a stereotypical American view of the Japanese at that time.

Franklin Delano Roosevelt made a big mistake by raising tariffs; a mistake that he should have avoided after seeing the negative effects raising tariffs had on the country under Herbert Hoover’s administration. He would have started a trade war with Japan and worsened the Great Depression if not for the efforts of the secretary of state at that time, Cordell Hull. In the end, Japan and America made a compromise in trade and America survived this “cotton blunder.” The lesson learned was that what may be a good idea in theory can backfire when a president’s vision fails to reach further than his own borders.

Bibliography

Balio, Tino. “Surviving the Great Depression.” Grand Design: Hollywood as a Modern Business Enterprise, 1930-1939. Ed. Charles Harpole. Vol. 5. New York: Charles Scribner’s Sons, 1993. 13-36. History of the American Cinema 5. Gale Virtual Reference Library. Web. 24 Oct. 2016.

Berglund, Abraham. “The Tariff Act of 1930.” The American Economic Review, vol. 20, no. 3, 1930, pp. 467–479.

“Cotton Blunder.” The Dallas Morning News 26 May 1936: 2. Print.

Henderson, David R. “Hoover’s Economic Policies.” The Concise Encyclopedia of Economics. Indianapolis, IN: Liberty Fund, 2008. Print.

Koyama, Kumiko. “The Passage of the Smoot-Hawley Tariff Act: Why Did the President Sign the Bill?” Journal of Policy History 21.2 (2009): 163–186. Web.

Murchison, Claudius T. “American-Japanese Cotton Goods Agreement.” Journal of Marketing, vol. 2, no. 4, 1938, pp. 272–277.

“Tariff Hiked On Japanese Goods.” Newspapers.com. The Lincoln Star, n.d. Web. 24 Oct. 2016.

Woolner, David B. “Hull, Cordell.” Encyclopedia of the Great Depression. Ed. Robert S. McElvaine. Vol. 1. New York: Macmillan Reference USA, 2004. 485-486. Gale Virtual Reference Library. Web. 24 Oct. 2016.

Zeiler, Thomas W. “Tariff Policy.” Encyclopedia of American Foreign Policy. Ed. Richard Dean Burns, Alexander DeConde, and Fredrik Logevall. 2nd ed. Vol. 3. New York: Charles Scribner’s Sons, 2002. 531-546. Gale Virtual Reference Library. Web. 24 Oct. 2016.