Bloomberg Businessweek (May 2025)

Год выпуска: May, 2025

Автор: Bloomberg Businessweek

Жанр: Бизнес

Издательство: «Bloomberg Businessweek»

Формат: PDF (журнал на английском языке)

Качество: OCR

Количество страниц: 104

The Mar-a-Lago Theory of Trump’s Tariff Obsession

Last July, just before Donald Trump’s first and only debate with Joe Biden, a team from Bloomberg Businessweek traveled to Mar-a-Lago to interview Trump about his plans for the economy if he returned to the White House. Our 90-minute discussion spanned all the major topics: tax cuts, deregulation, China, the Federal Reserve and the fate of Fed Chair Jerome Powell. Afterward, as we were leaving, our team compared notes about what we’d learned and what had most surprised us. In the latter category, everyone was struck—and frankly a bit puzzled—by how eager Trump had been to talk about William McKinley, the 25th president. Twice, Trump brought him up unprompted, discoursing at some length about how McKinley was “the most underrated president” and one who “made this country rich.”

McKinley was, of course, a fervent protectionist and author of the McKinley Tariff Act of 1890, which raised average import duties to almost 50%—among the highest rates in US history at the time. In hindsight, Trump’s fixation with the man he admiringly dubbed “the Tariff King” was a clue that foreshadowed the global trade war he’d launch on “Liberation Day,” April 2.

Trump’s sweeping tariff regime roiled markets, driving the S&P 500 to the brink of a bear market and sending yields on long-term US bonds soaring. Wall Street titans, including many who’d backed Trump, reacted with alarm. Ken Griffin called the tariffs a “huge policy mistake.” Bill Ackman warned of “economic nuclear war.” Jamie Dimon grimly predicted a recession as the “likely outcome.” The scale and suddenness of Trump’s attack on US trading partners only magnified its impact—including the panic that ensued. No one had quite grasped what was coming. It cut against what investors thought they knew about Trump: that he should be taken “seriously, not literally”; that although he was disruptive and unpredictable, he ultimately longed for a booming stock market and the imprimatur of success he believed it conferred on him. And so, the thinking went, he’d never do anything to truly jeopardize that.

Even Trump’s closest economic advisers read him wrong. In a client note last year, Treasury Secretary Scott Bessent, who was then running the hedge fund Key Square Group, predicted “an economic lollapalooza” to rival the Roaring Twenties if Trump were to return to the White House. Bessent wrote that it was foolish to worry about across-the-board tariffs, which he saw as “unlikely” since “tariffs are inflationary.” He added: “The tariff gun will always be loaded and on the table but rarely discharged.”

Trump’s abrupt reversal on April 9—pausing tariffs on most countries just days after announcing them—only intensified the economic whiplash from a trade war that already seems destined to define his second term. Even as he eased some measures, he escalated others, ratcheting up duties on Chinese goods to 145%. Trump’s actions stand to reshape global trade and alliances while casting doubt on the dollar’s status as the world’s reserve currency. It could upend domestic politics too. An April 8 YouGov survey found that only 16% of Americans said they believe Trump’s tariffs will improve their financial well-being, while 55% thought tariffs would hurt them—views that were consistent across age, race, gender and income groups.

After everyone misread Trump’s intentions, the multitrillion-dollar question is what he might do next. It’s entirely possible, even likely, that he doesn’t know himself. But looking back at our July meeting, I’ve come to believe he revealed more about his thought process, on trade and everything else, than I appreciated at the time.

An odd thing happened in the middle of our interview. Bernd Lembcke, Mar-a-Lago’s longtime manager, happened to wander by. Trump halted the discussion and called him over. With pride, he had Lembcke tell us the cost of a club membership: $700,000. But that price would soon rise. “In October we’re going up to $1 million,” Lembcke told us, to Trump’s evident satisfaction.

Trump’s message was clear: Now that he’d secured the GOP nomination and built a steady lead over Biden, access to Mar-a-Lago—and to Trump himself—would come at a premium. It was, after all, prime real estate, and prospective members were eager to get in. “We are not desperate,” Lembcke told us. Rather, Trump was charging more simply because he could.

Amid the turmoil of his tariff rollout, Trump and his allies put forward a series of justifications, some of them contradictory, for his motives and objectives: protecting and creating American jobs, forcing manufacturers to return home, eliminating trade deficits, punishing China and extracting concessions from ungrateful US allies. But given his aggressive push to remake global trade through the threat of US tariffs, a different explanation may better illuminate Trump’s worldview, one that could be characterized as the Mar-a-Lago approach to economic statecraft.

Steve Bannon, Trump’s former chief strategist and someone who understands him as well as anyone, recently told me that Trump sees the US from the perspective of the real estate developer he once was—and that this explains his powerful impulse to impose tariffs on foreign nations. “The message Trump is sending is that the American market should be considered premium,” Bannon explained. “It’s prime real estate. And you’re going to have to pay a premium to get access to it.” In other words, the US is like Mar-a-Lago: an exclusive, gilded domain others are clamoring to enter. “This is a central part of his economic model,” Bannon continued, “that foreigners are going to have to pay a premium to get access through the golden door. It’s not tariffs as we traditionally think of them. It’s a new revenue stream to take the tax burden off domestic corporations and individuals.”

Every president aspires to leave his lasting mark on history. Trump, who was impeached twice, voted out of office and relegated to political exile, might be more determined than most. His actions in the first week of April make it clear that his faith in tariffs as the engine of American renewal—his conviction that aggressively increasing the cost of access to the US market is an untapped wellspring of national prosperity, a kind of free lunch— is the animating idea of his presidency.

But presidents who try to impose sweeping plans tend to fail. And even when they don’t, unanticipated consequences often thwart their ambitions. Two decades ago, George W. Bush and Karl Rove pursued a grand plan to engineer a political realignment. They believed that, by steering government funds to religious organizations, reforming immigration laws to appeal to the growing Hispanic population, privatizing Social Security and offering private savings accounts as an alternative to Medicare, they could fortify the Republican coalition and lure away Democratic voters, whose interests would increasingly align with market principles. They failed on almost every front. Voters revolted, and Bush left office with record-low approval ratings.

More recently, Biden set out to reverse decades of deindustrialization and engineer a green revolution by persuading Congress to pass trillions of dollars’ worth of legislation. The Chips and Science Act and the Inflation Reduction Act aimed to greatly enhance domestic semiconductor manufacturing and bolster American innovation, while also funding clean energy projects, electric vehicles and sustainable technologies that would address climate change and inflation. But Biden’s landmark laws, also including the American Rescue Plan, contributed to price hikes that American voters were unwilling to tolerate, paving the way for Trump’s return to the White House.

Presidents don’t like to let go of their big ideas. McKinley’s tariff was poorly received and was followed by steep price increases. In the 1890 election, voters turned on his party, costing Republicans their House majority and nearly half their seats. But McKinley’s faith that tariffs would bring prosperity never dimmed. Elected president in 1896, he promptly raised them even higher and used the threat of further increases as leverage with foreign nations until his assassination in 1901.

Trump, too, hasn’t really backed down. His pause on tariffs for 70-odd countries was dwarfed by the larger ones he imposed on China. In addition to his launching a full-blown trade war with China, his 10% universal tariffs remain in place, along with sectoral duties on steel and autos. Even as he announced his pause, Trump groused that investors had gotten “yippy” and that bond markets had grown “queasy.” He didn’t sound like someone second-guessing his core beliefs. “Nothing’s over yet,” he said defiantly.

Although he might have encountered a setback, all signs suggest his strategy remains very much intact—that he still believes, as McKinley did, that protectionism is the key to an American renaissance.

If Trump presses ahead with aggressive tariffs, we may eventually get clarity about who’s right: him, or the economists, bankers and investors who warn that his approach will shrink global trade, rekindle inflation, damage the US economy, and leave America poorer, weaker and more isolated than before.

Trump’s Trade War

• Running the global economy like The Apprentice
• Tariffs are Trump’s entry price to the prime US market
• Testing the power of Americans’ love for cheap stuff
• Economists dust off an old word: Stagflation
• The most powerful person in DC not named Trump

In Context

• Hostility at the border puts a chill on US tourism
• The drive to bring Formula One back to Africa
• The Right Stuff: Welcome to the unreal world, graduate!
• Growth in Vietnam is built on Cambodian sand
• Salt finds a place in America’s energy recipe
• Now arriving: A good burger served at 35,000 feet
• A Walk With: Fashion designer Brunello Cucinelli
• GM’s Mary Barra is still all in on EVs (mostly)
• What’s a fair wage for workers with disabilities?
• The rise and fall of the stock market’s music man

The Man Meltdown

• Masculinity is in again, but men are still at sea
• The complex allure of the “manosphere”
• Why more and more young men are skipping college
• The guy who brought men to MAGA
• What makes a man look like a man today?
• Netflix’s Adolescence dives into toxic digital culture
• Working-class men don’t see themselves in today’s jobs

Pursuits

• Summer Travel Special: Classic American resorts
• CEO Diet: Where the boss goes to unwind
• DOGE throws a wrench in national park vacation plans
• Ultraluxury ships lure the cruise-averse to sea
• This year’s hot destination? Greenland
• Watch Special: Going plum crazy for purple
• An inside look at the creation of a brand-new Rolex
• The standouts at Watches and Wonders in Geneva
• Van Cleef brings the automaton into the 21st century
• Cadillac puts a charge in its flagship Escalade
• Chernow’s Mark Twain: A big lesson in bad business
• What to read, watch and listen to in May

Exit Strategy

• This month’s puzzle: An M&A name game

скачать журнал: Bloomberg Businessweek (May 2025)