The Briefing, Vol. XIII, Issue 18
May 5, 2025
This week:
- Tariff grief and uncertainty
- Is this really all about China?
- Scott Jennings for Senate?
Outlook
If he has done nothing else, President Trump has proven that Congress should, once he is gone, change its laws on tariffs going forward. Trump is not abusing his power. He is doing exactly what Congress allowed presidents to do with a Carter-era law allowing unilateral presidential tariffs in times of presidentially declared emergencies. This is probably more power than any president should have.
But with the understanding that none of this will change until after the Trump era, the bigger question in everyone’s mind right now is: What is going on with these tariffs? What is going to happen to my retirement savings? Will the U.S. come out on top?
Trump Tariffs: Already, the economic troubles since “liberation day” have left Trump’s poll numbers in worse shape than they had been previously. Not that Trump needs to worry about polls, since he won’t be on the ballot again, but many other Republicans will be.
Conservatives and believers in free market economics are of one mind when it comes to tariffs. Tariffs are, in principle, bad, in that they restrict and punish the sensible, voluntary financial transactions that make free markets work. This is why the stock market reacted so negatively a month ago, when Trump announced new tariff rates for various countries, including close U.S. trading partners. Anticipating tit-for-tat tariff retaliation, the markets plunged on Apr. 2, what Trump had called “liberation day.”
Granted, since Trump put a 90-day pause on most of the tariffs, the S&P 500 index has completely recovered what it lost. But there is still a lot of uncertainty going forward. Investors worry about whether history won’t repeat itself in a month or two.
The above does not mean tariffs are never appropriate. Trump has pointed out how, in the 19th Century, when the U.S. had a much more business-friendly tax and regulatory environment, tariffs provided a substantial amount of government revenue. But we are no longer anywhere close to that world today.
Moreover, as we noted previously, the uncertainty stems chiefly from a lack of clarity as to the Trump administration’s goals with its tariffs. Is the administration really determined to shift the financing of the U.S. government from the income tax to tariffs? Or is it angling for better trade terms with various trading partners? Or is it trying to bring lots of off-shore U.S. jobs back?
Trump has at various times articulated all of these goals, but they are not mutually compatible. For instance, if the manufacturing jobs do come back, then tariff revenues decrease and cannot fund even a slimmed-down government’s operations. Alternatively, if the threat of tariffs is being used to establish negotiations and better trade terms, then the jobs will never come back and of course the tariff revenue will be insignificant.
Is this all China? The alternative theory for all of this sounds like a stretch, but the situation on the ground suggests that it might actually be the best explanation available — namely, that this whole business with tariffs is really all about putting economic pressure on China, the one country whose 145 percent tariffs Trump has not paused.
China stands out from other countries in that it actively cheats in trade. And we use this word “cheat” not in the specious sense — such as “dumping” cheap goods, subsidizing industries or currency manipulation — but in the sense that the Chinese actively use trade to steal American intellectual property and then rig their courts against foreigners to prevent them from having any recourse. Unlike “dumping” and subsidies, which help American consumers by lowering prices, these non-tariff practices serve as de facto barriers to trade.
If the goal is to put pressure on China, then is Trump succeeding? Some argue that no, China is doing great. Xi Jinping has Trump on the ropes. He is blinking.
But in truth, the picture isn’t so rosy for China right now.
Some have noted that, since this tariff fight began, China has been forced to exempt multiple U.S. imports from its regime of retaliatory tariffs — including necessary inputs for the manufacture of plastics. But this is really just a minor matter compared to the dire state of China’s economy, which was already evident before any of this tariff business began.
China’s crisis: The Shanghai Composite Index, even if one ignores its brief and frothy peaks in 2007 and 2015, has not gained any value at all since September 2017 — the S&P 500 has more than doubled in the same period. Chinese citizens are not allowed to invest in foreign assets, so they tend to put their savings into real estate. But China is now in the throes of a real estate collapse, with several major home builders going bankrupt and an undetermined number of Chinese citizens saddled with mortgages on homes that will probably never be built.
China’s fabled Belt-and-Road Initiative is suffering from irreparable reputational damage after one of its nearly-completed buildings in Bangkok collapsed in an earthquake. China’s municipalities are carrying debts at unsustainable levels. And, for more than a year, the Chinese economy has been in a deflationary spiral that has prices and wages in a mutually reinforcing decline.
The current trade spat threatens to make this last problem much worse, since it means Chinese consumers are in no position (and in many cases have no desire) to absorb the products that Chinese manufacturers have been making for export to the U.S. This has many Chinese factories idled, and many workers upset.
There is one additional factor beyond this, which is difficult to verify because of the Chinese government’s ruthless censorship of the news. Before any of these tariff wars had begun, there were already murmurs of nationwide protests by Chinese factory workers not being paid for their work. In some cases, workers might actually be setting their factories on fire in retaliation for non-payment of wages. And note that this was all already happening before the tariffs idled so many more factories.
Trump’s economy: In comparison to all that, any problems the U.S. economy faces have to seem pretty mild. Despite investor uncertainty and a small but significant shrinkage of GDP in the first quarter of the year, the U.S. labor market has proven resilient, with an above-expectations 177,000 net jobs being created during April.
There is still some hope out there that Trump has been disabused of trying to create a tariff-induced utopia, pressed instead into the more sensible approach of making good bilateral trade deals with other countries and putting the screws to China. There is a lot of hope out there that things will just kind of … work themselves out as far as the economy goes.
But of course, hope is not a strategy. Trump, whatever he thinks of tariffs, must avoid the trap that Biden fell into when his ideological preference for stimulus spending led to the inflation that undermined his presidency.
Governor 2026
New York: Northern Tier U.S. Rep. Elise Stefanik (R) had to back out of her appointment as UN ambassador, chiefly due to the likelihood that Gov. Kathy Hochul (D) would leave her House seat open for a long period, tightening the screws on the narrow Republican House majority just as the GOP tries to extend the 2017 Trump tax cuts.
But now Stefanik is considered her most likely and most formidable general election opponent.
A new Republican poll found Hochul leading Stefanik only by single digits — 46 to 40 percent. When given the question in the abstract, 61 percent of respondents said it was “time for someone new” to be governor. Stefanik is the easy favorite in a Republican primary over fellow Rep. Mike Lawler (R) and Nassau County Executive Bruce Blakeman (R).
Senate 2026
Kentucky: CNN commentator Scott Jennings (R), star of many conservative YouTube clips “owning the libs” and a native of Western Kentucky, seemed to have ruled out a Senate run when he signed a new contract with CNN. But then he mysteriously tweeted on Friday that “something big is coming,” along with a photograph of himself and President Trump on Air Force One. Some have consequently theorized that he now appears likely to jump into Kentucky’s open-seat U.S. Senate race to replace the retiring Sen. Mitch McConnell (R).
Jennings, who is known for his quick wit and sense of humor, may just be trolling his social media followers. But if not, a run to replace McConnell would put him into a crowded race with a couple of heavies — McConnell protege and 2023 gubernatorial nominee Daniel Cameron (R), the Bluegrass State’s former attorney general, and Rep. Andy Barr (R).
Minnesota: Rep. Angie Craig (D), who famously positioned herself as a moderate on crime after being assaulted in her apartment building in Washington D.C., is running for Senate to replace the retiring Sen. Tina Smith (D). Her announcement was immediately preceded by all the Republicans in Minnesota’s congressional delegation filing an ethics complaint against her, just one more confirmation that she is the strongest Democratic candidate and the one they would rather not face.
Former Rep. Dean Phillips (D), who was ostracized for mounting a token primary bid against Joe Biden in 2024, has endorsed Craig.
In the primary, Craig faces Lt. Gov. Peggy Flanagan (D).
The Republican field is a bit of a depressing topic — the most prominent candidate is former NBA player Royce White (R), who was blown out in his 2024 challenge against Sen. Amy Klobuchar (D).
Ohio: If newly appointed Sen. Jon Husted (R) has to face the Democrats’ strongest candidate, former Sen. Sherrod Brown (D), he will start off with a slight lead, according to a new poll. The survey of 800 voters, from Bowling Green State University, has him leading in such a contest 49 to 46 percent.
He would lead former Rep. Tim Ryan (D) by a more substantial margin of six points — 50 to 44 percent.
This is pretty good for Husted if only because the poll shows him with such low name recognition. Despite his having served in statewide offices for many years, most recently as Lieutenant Governor, 47 percent have neither a favorable nor an unfavorable opinion of him. This means there is room for positive growth, no matter whom he faces.
