President Trump’s Big Bet

A former U.S. trade representative says Mr. Trump is counting on three things to win his trade war: leverage, revenue, and re-industrialization.

Good Morning!

Here are today’s highlights:

• The Wall Street Journal says it’s time to start looking for signs of recession.

• Sarah Segal is thinking about bringing her husband into the business. Any thoughts?

• Before he could open his restaurant, a chef in San Francisco had to help the city find the tiny dots on its own map — or pay a $10,000 fine.

• In 1977, Selma Miriam founded a restaurant that thrived despite having no waiters, no printed menu, no cash register, and no advertising. “The people who need us, find us,’ she said.

THE ECONOMY

Will Americans tolerate “a little disturbance” to the economy? “President Trump’s simultaneous trade wars with Canada, Mexico, China, and the European Union amount to a huge economic and political gamble: that Americans will endure months or years of economic pain in return for the distant hope of re-industrializing the American heartland. It is enormously risky. In recent days, Mr. Trump has acknowledged, despite all his confident campaign predictions that ‘we are going to boom like we have never boomed before,’ that the United States may be headed into a recession, fueled by his economic agenda. But in public and private he has been arguing that ‘a little disturbance’ in the economy and the markets is a small price to pay for bringing manufacturing jobs back to America.”

• “Michael Froman, the U.S. trade representative from 2013 to 2017 and now the president of the Council on Foreign Relations, distills Mr. Trump’s arguments into three categories. ‘When the president thinks about tariffs, he is usually thinking about three things: leverage, revenue, and re-industrialization,’ Mr. Froman said on Wednesday.”

• “‘The leverage is working, for now,’ he said. Mexico and Canada have come up with plans for reducing the amount of fentanyl crossing the border, even if they are handing Mr. Trump programs that they implemented previously but have repackaged or revived in response to his demands.”

• “Mr. Trump also loves the idea that tariffs bring in revenues. In his Inaugural Address he spoke admiringly of President William McKinley, who pushed for huge tariffs in the 1890s, and he argued that the period was a high point for American economic policy. ‘Instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens,’ Mr. Trump said on January 20.”

• “But again, the facts do not always sort out that way. While the U.S. government brought in more than $60 billion in tariffs from China in Mr. Trump’s first term, it also compensated American farmers who were hit by retaliatory tariffs imposed by Beijing. That cost nearly as much.” READ MORE