President Trump is on a roll. The Wall Street Journal, its editors persistent and virulent critics of Trump\u2019s tariff policy, headlined two recent articles \u201cForget TACO. Trump Is Winning His Trade War,\u201d and \u201cThe U.S. Economy Is Regaining Its Swagger\u201d. Surely not \u201cfake news\u201d.<\/p>\n
Trump aimed to replace the post-Second World War trading order with one more favourable to America, and he has. Trump aimed to weaponise and monetise an American asset, its huge economy, and succeeded. He aimed to reap huge revenues from tariffs, and they are running at something like a $300 billion annual rate. He aimed to prevent our trading partners from using WTO rules to gang up on him, and he succeeded in picking them off one-by-one. <\/p>\n
Consider the deal announced with Japan. The 25 per cent tariff<\/a> initially set on Japanese goods including, crucially for Japan, its cars, was lowered to 15 per cent. Japanese markets were opened to American rice and other agricultural products, and to US cars, to be imported tariff-free and with no added Japanese-concocted product changes \u2014 concessions Obama and other presidents sought but failed to obtain. <\/p>\n Japan agreed to buy 100 Boeing aircraft, will provide \u201cup to\u201d $550 billion in investment, financing and loan guarantees for various projects, with the profits to be distributed \u201cbased on the degree of contribution and risk taken by each party,\u201d according to Japan\u2019s Cabinet Office. Japan declared its deal with its largest export customer \u201cmission accomplished\u201d, and even though not quite the negotiating triumph that the overly exuberant commerce secretary Howard Lutnick originally reported, this remains a win for America.<\/p>\n As the Gershwins\u2019 1937 song hit puts it, \u201cThe odds were a hundred to one against me \u2026 They laughed at me \u2026 Now they\u2019re fighting to get in \u2026 Who\u2019s got the last laugh now?\u201d.<\/p>\n Surely it is Trump<\/a>, although there are two clouds on his political horizon that have the potential to produce devastating storms. His popularity among younger voters is in close to free-fall. He is not carrying non-Maga voters with him on the \u201cBig Beautiful Bill\u201d which they believe helps the wealthy. Nor on his deportations of hard-working, tax-paying illegal immigrants. And he is seen as not doing enough to keep prices down. <\/p>\n The second cloud is a threat to his plan to ride a booming economy into the mid-term elections. The word \u201cbubble\u201d is being whispered on Wall Street, and JP Morgan Chase analysts spy \u201cred flags\u201d. Shares are selling at 26 times forward earnings, far above their historic average of 18. Amazon might be providing a leading indicator of an inflationary spurt: it raised prices on inexpensive goods, including products made in the US, by an average of 5 per cent last month. The manufacturing sector is weakening and the housing market is becalmed. A share price drop, rising consumer prices and a weakening economy is a combination not on Trump\u2019s wish list.<\/p>\n