Shed a tear for Lawrence Kudlow, Arthur Laffer and Stephen Moore. Formerly numbered among Donald Trump's most valued economic advisors, and consequently his most assiduous defenders, they've been hung out to dry as the president announced the most consequential economic policy of his tenure: the imposition of tariffs on imported steel and aluminum.
Moore and Kudlow took to Fox Business Network on Friday, the day after Trump's tariff announcement, to complain that they were left on the outside looking in when Trump made his decision. They would have loved to catch the ear of a president known for taking the advice of the last person he heard from, but said they couldn't get in the door at the White House.
"We'd like to try to get in to see him and try to talk him out of this or at least ramp it down," said Moore, an economics fellow at the right-wing Heritage Foundation. "Whether it's going to happen or not is unclear. Whether he's already totally bogged down, I'm not sure."
Kudlow made the same point. "I'm quite certain the steel deal is done," Kudlow lamented to Fox Business. Asked if he thought he and his colleagues would have a chance to jawbone Trump in person before the tariffs were made official, Fox reported, "Kudlow simply replied, 'no.'"
This is an ironic reversal for three economic commentators who have no trouble getting airtime on CNBC and other business-oriented TV programs, and who could rightly consider themselves architects of Trumponomics. Laffer was a counselor to Trump during the presidential campaign of 2016. Following the election, Kudlow was touted as a possible chairman of the White House Council of Economic Advisors (the job went instead of Kevin Hassett). Moore has been outspoken in giving Trump credit for the run-up in stock prices during 2017.
The three were all massive fans of the tax cuts Trump signed in December. But all three also are devoted adherents to the principle of free trade. That's no surprise, since free trade has been a conservative tenet ever since Herbert Hoover's signing of the disastrous Smoot-Hawley tariff bill helped trigger the Great Depression, marking the high-water mark, and the death, of Republican protectionist policy.
Trump announced Thursday that he was prepared to impose a 25% tariff on imported steel and 10% on aluminum. The announcement came despite efforts inside the White House to stave it off, including from Gary Cohn, who as director of the National Economic Council is nominally one of Trump's top economic advisors. But Cohn and other free-traders evidently were outmaneuvered by Peter Navarro, a UC Irvine economist and protectionist hawk who heads the White House National Trade Council, and by Commerce Secretary Wilbur Ross, a multimillionaire investor.
The announcement, which must be followed up by formal action, caused an uproar in the investment markets and across the political and ideological spectrums. The Dow Jones Industrial Average gave up more than 420 points that day. The Wall Street Journal editorial page labeled the announcement Trump's "biggest policy blunder." Like other critics, the Journal editorialists cited the potential for setting off a global trade war that would harm consumers everywhere.
Thus far, however, Trump has remained adamant, stating that he won't even exempt traditional trading partners and economic allies such as Canada and Mexico from the tariffs.
"Tariff hikes are really tax hikes," they wrote. "But even if tariffs save every one of the 140,000 or so steel jobs in America, it puts at risk five million manufacturing and related jobs in industries that use steel. These producers now have to compete in hyper-competitive international markets using steel that is 20 percent above the world price and aluminum that is 7 percent to 10 percent above the price paid by our foreign rivals."
The authors implicitly raised the possibility that the tariff could undermine Trump's still-unrealized dream of economic growth exceeding 3% annually. And they dismissed Trump's claim that the tariffs are necessary for "national security."
"We aren't persuaded," they wrote. "Despite stiff competition from imports, many specialty steel producers are doing just fine and actually exporting steel to Mexico and Canada. Meanwhile, Canada is the number one exporter of steel to the United States. Does anyone really believe Canada is a national security threat to the U.S.?"
In response, Commerce Secretary Ross made TV appearances in which he dismissed accounts of the damage the tariffs could do to U.S. consumers. On CNBC, he calculated that the steel tariff would add 0.5% to "the price of a typical $35,000 car." That would be $175.
"So it's no big deal," Ross said contemptuously.