I strongly side with Musk on this one.
ZeroHedge has a good writeup “Navarro Is Truly A Moron”: Musk Slams Trump Trade Czar In Ongoing Tariff Feud
I am struggling mightily trying to keep up with events.
Navarro on Musk
“We all understand in the White House (and the American people understand) that Elon’s a car manufacturer. But he’s not a car manufacturer — He’s a car assembler. In many cases, if you go to his Texas plant, a good part of the engines that he gets (which in the EV case are the batteries) come from Japan and come from China. The electronics come from Taiwan… what we want — and the difference is in our thinking and Elon’s on this — is that we want the tires made in Akron. We want the transmissions made in Indianapolis. We want the engines made in Flint and Saginaw. And we want the cars manufactured here.”
That dispute happened over the weekend. The feud escalated today.
About Navarro and Ron Vara
Former Trump Chief of Staff Mick Mulvaney sides with Musk regarding Trump advisor Peter Navarro:
“I would have fired [Navarro] a long time ago. I would have fired him when he got caught making up his academic sources for his papers, with his Ron Vara imaginary friend.”
Trade Is Not Between Nations
Fundamentally, trade is not between nations. It’s between individuals. Neither Trump nor Navarro understands that key point.
Both look at trade as having a winner and a loser. And both view trade as bilateral.
These are key fundamental errors. Period. You cannot fix a problem you don’t understand.
One of the few times in the past hundred years the US had a trade surplus was the Great Depression.
Rand Paul on Trade
Senator Rand Paul gave a interview regarding trade with Kudlow.
Here’s a link to Rand Paul with Kudlow. Please play the video.
Paul: “We get a reduction in trade deficits when we go into recession. … a 50 percent tax on shoes from Vietnam. You think we going to make shoes in the US? It’s also not a bad thing shoes are not made here. Adam Smith talked about the division of labor. A fundamental aspect of capitalism is the division of labor and trade. Something so fundamental, you shouldn’t try to stop.”
Kudlow challenged Paul on “fair trade”. Paul responded beautifully.
Just play it.
The Fundamental Problem
The fundamental problem is there are no restrictions on deficit spending or trade imbalances.
Nixon started this in 1971 when he ended gold convertibility.
Prior to that, if nations spent too much and deficits soared interest rates would have to go up to stop the gold outflow or the deficit would have to drop.
Imbalances were self-correcting because of this control. There is no control on spending now. Tariffs will not and cannot fix this problem.
Nixon’s treasury secretary John Connally famously told a group of European finance ministers worried about the export of American inflation that the “dollar is our currency, but your problem.”
Balance of trade issues, soaring debt, declining real wages, and the demise of the US middle class are now our problem.
Are We Having Fun Yet?
Apparently Musk has had too much winning. Tesla sales are crashing globally and Musk has had enough of tariffs.
But Musk got what he bargained for when he took the job.
Regarding Reciprocal Tariffs
Reader: “Tariffs are reciprocal. All Canada has to do is to lower the tariffs they charge the US to what they want the US to charge them.”
USMCA IS reciprocal right now.
In extremely minor instances where it isn’t, TRUMP negotiated the deal.
Please read over and over Cheese Was a “Key Achievement” of Trump’s USMCA Trade Agreement
The fact of the matter is Trump has no legitimate right to unilaterally break a deal ratified by the Senate 89-10.
The additional pertinent fact is Trump just proclaimed to the world that he may not honor any deal, even those he signs. At some point there is a cost to this lack of trust.
Related Posts
April 8, 2025: Tariffs on China Will Exceed 100 Percent as Trade War Escalates
Tweets and Comments of the Day on Tariffs
April 8, 2025: Tariff Strawmen and Why Prices Didn’t Rise in Trump’s First Term
A reader thinks that because prices didn’t rise in Trump’s first term, the same is true now.
April 8, 2025: Consumer Credit Unexpectedly Declines with Huge Negative Revisions Too
Economists expected a $15.0 billion rise in consumer credit. The Fed reported -$0.8 billion.