DV Journal

America has your back. That has been the message of U.S. foreign policy to the world’s vulnerable since the end of World War II.

That sense that America is behind you was a message for Europe against the threat of the Soviet Union and has been the implicit message for all threatened by authoritarian expansionism.

From the sophisticated in Western Europe to the struggling masses worldwide, America has always been there to help. Its mission has been to serve and, in its serving, to promote the American brand — freedom, democracy, capitalism, human rights — and to keep America a revered and special place.

America was there to arbitrate an end to civil war, to rush in with aid after a natural disaster, to provide food during a famine and medical assistance during an infectious disease outbreak. America was there with an open heart and open hand.

If you want to look at this in a transactional way, which is the currency of today, we gave but we got back. The ledger is balanced. For example, we sent forth America’s food surplus to where it was needed, from Pakistan to Ethiopia, and we opened markets to our farmers.

The world’s needs established a symbiotic relationship in which we gained reverence and prestige, and our values were exported and sometimes adopted.

President Trump has characterized us as victims of a venal world that has pillaged our goodwill, stolen our manufacturing and exploited our market. The fact is that when Trump took office in January, the United States had the best-performing economy in the world, and its citizens enjoyed the products of the world at reasonable prices. Inflation was a problem, but it was beginning to come down — and it wasn’t as persistent as it had been in Britain, for example.

Trump has painted a picture of a world where our manufacturing was somehow shanghaied and carried in the depth of night to Asia.

In fact, American businesses, big and small, sought out Asian manufacturing to avail themselves of cheap but talented labor, low regulation, and a union-free environment.

Businesses will always go where the ecosystem favors them. The business ecosystem offshore was as irresistible to us as it was to a tranche of European manufacturing.

The move to Asia hollowed out the old manufacturing centers of the Midwest and New England, but unemployment has remained low. Some industries, including farming, food processing and manufacturing, suffer labor shortages.

We need manufacturing that supports national security. That includes chips, heavy electrical equipment and other essential infrastructure goods. It doesn’t include a lot of consumer goods, from clothing to toys.

Former California Sen. S.I. Hayakawa, a Republican and a semanticist, said you couldn’t come up with the correct answer if your input was wrong, “no matter how hard you think.” Trump’s thinking about the world seems to be input-challenged.

The world isn’t changing only in how Trump has ordained but in other fundamental ones. Manufacturing in just five years will be very different. Artificial intelligence will be on the factory floor, in the planning and sales offices, and it will boost productivity. However, it won’t add jobs and probably will subtract them.

Trump would like to build a Fortress America with all that will involve, including higher prices and uncompetitive factories. While not undermining our position as the benefactor to the world, a better approach might be to build up North America and welcome Canada and Mexico into an even closer relationship.  Canada shares much of our culture, is rich in raw materials, and has been an exemplary neighbor. Mexico is a treasure trove of talent and labor.

Rather than threatening Canada and belittling Mexico, a possible future lies in a collaborative relationship with our neighbors.

Meanwhile, Canada is looking for markets to the East and the West. Mexico, which is building a coast-to-coast railway to compete with the Panama Canal, is staking much on its new trade deal with the European Union.

Trump has sundered old relationships and old views of what is America’s place in the world order. No longer does the world have America at its back.

This is a time of choice: The Ugly American or the Great Neighbor.

Since resuming office, President Trump has not for one minute parted from his promise to leverage tariffs to ignite a new “golden age.” At times, he seems to be working continually to stimulate major trading partners into arrangements that make America great again. However, anyone attempting to follow the bouncing tariff proposals may get dizzy. What is the president trying to do, and why does it seem so hard to make final decisions?

To whatever degree the tariffs are about controlling access to America’s economy and securing something in return, a fluid situation will result. Trump’s expensive bargaining chip may also require him to navigate a strange political alliance — one that frequently forms when the government puts its thumb on the scale of business matters.

In February, Trump announced 25 percent tariffs on all goods from Mexico and Canada and a 10 percent added tariff on China. Days later, after outcries, the tariffs were delayed and coverage modified. More recently, we were told that tariffs would be expanded to more nations — perhaps all nations — with each border tax charged equal to what they charge America.

A “sauce for goose is good for the gander” approach might spur agreements to bring down tariffs, which could be positive. However, there are more questions to consider before drawing that happy conclusion.

Is this primarily an effort to leverage trade partners to reduce the entry of fentanyl and other illegal drugs? To protect U.S. industries from low-cost foreign competition? To re-industrialize America? To garner revenues that help balance the budget? All this and more?

These things matter, but let’s consider another possibility: The tariff movement is mainly about Trump, a modern colossus who stands empowered and athwart U.S. entry points. One who, rattling the keys to the world’s largest legally safe consumer market, uses tariffs as a lever to change how the world works. Perhaps tariffs are, in a sense, tribute.

Economic theory can reveal a lot about political behavior, including how a president enjoys enough support to wield a policy that, all things equal, costs Americans quite a bit of money.

In the case of federal regulations like these, my 1983 Bootlegger-Baptist theory of regulation has been called on by regulatory scholars to explain features of the NAFTA trade deal and the Clean Air Act; OSHA safety standards, interstate trucking regulation, and the Pure Food and Drug Act; regulation of genetically modified organisms; gambling legislation; blood donation; the 1990s tobacco settlement; and pending AI regulation.

The theory gets its name from regulating the Sunday sale of alcohol in American states and cities. This tends to occur when two distinct groups join the cause: Bootleggers (who enjoy a day without legal competition) and traditional Baptists (who have argued that consuming alcohol is immoral). Both favor Sunday closing laws but for decidedly different reasons.

Time and again, when a regulation is proposed, one group takes some moral high ground. The other — maybe bootleggers, legal businesses better positioned to navigate a new regulation than their competitors, or industries protected by tariffs — laughs all the way to the bank.

Meanwhile, politicians can appeal to moral sympathies with a sincere smile while caring for well-heeled bootleggers.

In today’s tariff conversation, “Baptists” may make strong and sympathetic moral arguments about reducing drug deaths, improving federal revenues, and generating a more level international playing field. Each point is richly supported by public interest groups.

The obvious candidates for the “bootlegger” camp are the industries tariffs protect. Tariffs reduce their competition and enhance their profits. Others might include wealthy taxpayers who see their future bills lightened by an alternative form of government revenue. Some bootleggers might even put on Baptist clothing, perhaps sincerely, as they call for higher tariffs — but the profit motive remains.

Finally, there’s Trump, the politician-broker who, as gatekeeper, gains tribute — call it political currency — from both groups. The president may believe tariffs are a moral imperative and see himself playing a major Baptist role. Like countless politicians before him, he is also the chief enabler of the bootlegger.

To secure a position that is not in the immediate best interests of U.S. consumers, Trump can lean on an invisible network of bootleggers and Baptists.

President Trump’s new tariffs on China are critical in bolstering America’s healthcare security and supply chain resilience. While some healthcare organizations have voiced concerns, these new measures and additional targeted tariffs are not just essential but urgent for protecting our national interests and ensuring a stable supply of critical medical products.

Public opinion is behind the president’s actions. A dozen public opinion surveys recently audited by the New York Times found that polling tends to be split evenly on new tariffs. Yet, support dramatically shifts in favor of tariffs when directed at China.

Leading Group Purchasing Organizations and medical product distributors invest heavily in growth and acquisitions, celebrating soaring stock values. These same organizations could strategically allocate resources to bolster domestic production and forge alliances with American manufacturers. This approach could reduce reliance on imports and mitigate the effect of tariffs altogether.

The tariffs will incentivize companies to invest in U.S.-based production, reducing our vulnerability to foreign disruptions. In the past decade, in the face of disasters and health emergencies, America has faced severe shortages of critical medical supplies due to over-reliance on Chinese imports. By fostering domestic manufacturing, we can ensure vital medical products are available when we need them most.

Starting March 4, the economic playing field became even more even. The president announced a new 10 percent tariff on all Chinese goods. Once combined with existing tariffs, Chinese medical gloves will be taxed at 70 percent at these new rates, masks and respirators at 45 percent, and syringes at 120 percent. These tariffs are beginning to reverse years of exploitative trade practices by bad actors. The bottom line effect of these tariffs on large healthcare systems is modest compared to the value and security of a domestic supply.

Critics argue that a global supply chain provides redundancy, but the United States’ overdependence on foreign sources exposes it to geopolitical tensions and trade restrictions. For example,  the majority of exam gloves used in America come from Asia or are routed through third-party, non-democratic nations. Building up domestic manufacturing ensures a reliable baseline supply, providing reassurance about the stability of our healthcare supply chain.

This strategic shift enhances national security, boosts the domestic economy, and creates jobs. The administration recognizes that economic incentives are needed to make this transition viable, aligning with bipartisan congressional support for strengthening domestic manufacturing capabilities.

While some claim tariffs affect healthcare costs, the long-term benefits outweigh short-term adjustments. Domestic production can stabilize prices and potentially lower the costs of federal healthcare programs like the Veterans Administration, Medicare and Medicaid.

This approach contributes to the sustainability of our healthcare system. Over time, stabilizing prices through local production could lower the costs of federal healthcare programs than on unpredictable international markets.

Some healthcare leaders waffle on tariffs and have called for tariff exclusions on critical medical supplies, claiming a lack of quantity of resources needed for the industry. However, an exclusion process has consistently been a loophole that allows companies to continue outsourcing critical manufacturing overseas and curtails investment in domestic manufacturing.

Instead of exclusions, policymakers should focus on providing tax incentives and Medicare payment adjustments for companies willing to invest and manufacture in U.S.-based production facilities. This approach aligns with the broader goal of building a resilient domestic supply chain and ensures that American ingenuity and manufacturing prowess are at the forefront of our healthcare industry.

The healthcare supply chain is too important to leave at the mercy of foreign suppliers whose priorities may not align with ours. Targeted tariffs are a key component of a larger strategy to reduce dependency on imports and ensure American healthcare providers have reliable access to critical supplies.

Trump’s approach will protect American patients and strengthen our national security for years. By reshoring production to the United States, we reduce our exposure to international risks and create a more robust and dynamic domestic manufacturing industry.

This strategy will lead to innovation and significant job creation, fostering a healthcare system that is better prepared to face future challenges. Domestic makers of critical medical supplies stand ready to compete against global competition, so long as it’s a fair fight.

When President Donald Trump announced plans to slap a 10 percent tariff on oil and gas imports from Canada, he shined an uncomfortable spotlight on a little-known fact about American households.

Millions of them rely on Canadian oil to keep warm.

While the idea of a tank full of heating oil firing up the furnace may sound quaint to some, it’s how nearly five million U.S. households heated their home in 2023, according to the United States Energy Information Administration. About 80 percent of them are in the Northeast. In New Hampshire, more than 40 percent of residents use home heating oil, and it Maine it’s more than half.

Much of that oil comes, not from Texas or Oklahoma, but from Canada. As a result, the National Energy Assistance Directors Association the cost of oil-based heating would increase by $117 to $1,576 on average if Trump’s tariffs take effect.

America imports Canadian oil because of its proximity and the network of established pipelines that serve both nations. But it also uses Canadian oil because it’s the sort of heavy crude similar to the oil from California that many U.S. refineries are designed to process.

Around 25 percent of all oil refined in America comes from Canada.

The alternative to heating oil is natural gas. Cheaper to produce – and healthier for the environment – it accounts for 43.1 percent of electricity generation in the U.S., according to federal statistics.

Not only that, but Pennsylvania, America’s second-largest producer of natural gas, could easily provide the natural gas needed to replace heating oil demand in the region.

And so, while the public policy debate has largely focused on the tariff policy, people in the energy sector are asking another question: Why are so many Americans still burning oil when the U.S. is the largest producer of cleaner natural gas?

Because of a successful effort by the Biden administration and its green allies to block energy infrastructure to take natural gas where it’s most needed.

There have been many pipeline proposals to take natural gas from the prolific Marcellus and Utica shale regions of Pennsylvania, says Marc Brown with Consumer Energy Alliance. But those proposals ran into heavy resistance, particularly in blue states like Massachusetts and New York.

“Any one of those projects would have reduced energy prices, increased the electricity grid’s reliability, and reduced emissions.”

Supporters of expanded U.S. natural gas note the irony of environmental activists and Democratic governors going to court to keep more Americans burning imported oil.

New York banned fracking in 2014 after a six-year moratorium sparked by unverified environmental concerns, despite a 2009 ConEdison report praising the state’s “safe, robust natural gas infrastructure,” including 10 pipelines.

Natural gas allies received a boost in 2012 when the U.S. Energy Information Administration (EIA) argued prices would likely drop if a pipeline from New Jersey to New York was expanded. The EIA said the expanded pipeline would help reduce bottlenecks from natural gas rich Pennsylvania to New Hampshire and the rest of New England.

But three years after New York banned fracking, the administration of then-Gov. Andrew Cuomo (D) halted two major natural gas pipelines from Pennsylvania.

In Massachusetts, Gov. Maura Healey (D) recently demanded energy companies lower their prices after the state’s public utilities commission approved a 25 percent price increase on natural gas. But the progressive Democrat previously bragged that she “stopped two pipelines from coming into this state.”

Access to natural gas in the Bay State has become so problematic that in 2018 and 2019, some Massachusetts utilities issued moratoriums on new residential natural gas hookups due to “insufficient pipeline capacity.” Energy companies shifted focus to truck transportation of oil and natural gas, extending delivery time of shipments – and driving up costs.

But that could change under the Trump administration, Brown said.

“Hopefully, projects receive approvals so that they can deliver much-needed relief to families and businesses–especially to those on low and fixed incomes that can least afford the exorbitantly high energy prices we see in the Northeast.”

And it may already be happening.

Trump has vowed to revive the proposed Constitution Pipeline from Pennsylvania to New York that was abandoned in 2020.

“It will bring down the energy prices in New York and in all of New England by 50, 60, 70 percent,” Trump said.

The Biden administration is doing what every administration pre-Trump has done: Get enamored and entangled in matters of foreign intrigue preferred by the intelligence community and defense contractors. While leaving the country to the whims of the market, a market that increasingly follows the whims of Washington. We’ve gone from America First to America Last.

Ukraine first!

The U.S. government has easily found over $42 billion and counting to send to war torn, bankrupt Ukraine. Both parties agreed to this in what basically amounted to an overnight session of Congress. The decision was made in a matter of days.

By comparison, the $50 billion we are supposed to give to the U.S. semiconductor industry in tax breaks and other incentives to manufacture chips here instead of Asia languishes in Congress. It is part of the Bipartisan Innovation Act (BIA), which will take a back seat to more funding and more votes on throwing money into Ukraine. This thing is lost.

Global Foundries, Intel, and Taiwan Semiconductor Manufacturing have all put plans to boost their semiconductor manufacturing here on hold because the CHIPS for America Act, part of the House and Senate’s so-called “China competition bill” (officially the BIA) is going nowhere fast, Nikkei Asia reported on July 5.

The war in Ukraine has caused commodity prices to rise. The market is speculating on shortages caused by shipping delays. Commodity traders from New York to Hong Kong are all pushing those prices higher based on assessed geopolitical risks.

China second!

Biden thinks rolling back tariffs on China will help. His team is actively in talks with the Chinese about which Trump-era tariffs to lower. They believe if they reduce tariffs on China imports, stubborn inflation will come down.

Apparently, the experts that are in charge now believe we import oil and gas from China, along with steaks and milk. Please don’t bother telling them, they’ll ignore you. They’re smarter than you.

They’ll also ignored the Peterson Institute for International Economics, no fan of the China tariffs. One would think the Biden administration would listen to them at least. Peterson economists wrote in a report dated June 3 that “the direct effect of removing tariffs on imports from China could lower consumer price index inflation by 0.26 percentage points —only marginally reducing inflation.”

That “marginally reducing inflation” assumes housing, food, and gasoline prices fall. If they rise, there goes your 0.26 percent win.

America last!

Because of these policies, a whopping 88 percent of Americans polled by Monmouth University say the U.S. is heading in the wrong direction.

Some 42 percent say they are struggling to remain where they are financially.

It’s fine, we can afford to send our oil and gas to the rich Europeans and a few billion to the Ukrainians, one of the most corrupt countries in the world, based on Transparency International’s Corruption Perception Index. (It’s ranked lower than Russia.) I am certain the Ukrainians will be good stewards of our gifts.  They want even more, by the way, so how about making that $65 billion?

Polls also show American voters are fine with China tariffs. The White House, and its cheerleaders at Bloomberg which has been advocating for a return to the status quo with China since Biden beat Trump, aren’t interested.

In April, a poll by the Coalition for a Prosperous America, conducted by Morning Consult, showed that 73 percent of American voters supported tough trade policies with China to protect U.S. industries and American workers. Biden then ignored them and removed tariffs on Southeast Asian solar producers, mostly all of them Chinese multinationals who have relocated there to avoid tariffs.

A high 71 percent of voters support tariffs on China. And 61 percent of them said increased imports have caused the U.S. to become dependent on China for goods that are critical to the U.S. economy and U.S. national security.

In May, a separate poll by Morning Consult said that Democrats supported tariffs on China in line with Republican voters. Democrat support was increasing. Biden’s support is waning. Who are this man’s voters again?

Morning Consult said, “Democrats now find themselves aligned with the plurality of Republicans who prefer to keep the tariffs in place, even if doing so means prices will stay high.”

There is a chance “only some” tariffs will be removed. But it is the trend that is the problem. It is chipping away at what U.S. trade representative Katherine Tai has repeatedly called our biggest leverage on China.

If China was smart, it would keep its retaliatory tariffs on the U.S. At this point, what is Washington going to do about it? In a policy of Ukraine first, China second, and the U.S. last, the answer should be obvious to Beijing–it will do absolutely nothing.

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