Much to the surprise of many investors, President Donald Trump followed through on his threat to increase the 10% tariff on $200 billion of Chinese imports to a 25% tariff. So much for the art of the deal.

The President is sending mixed signals as he talks about possibility of agreement but he also talks about a new program to buy agricultural products from American farmers to distribute as food aid around the world. That would require appropriating funds and another issue is that American farmers have always preferred the greater reliability of trade to aid. In the 2018 election Republican support faded in farm country, and a long term escalation in the trade war could have negative political repercussions for Trump in 2020.

However, no candidate better knows how to communicate with his base than the president. The “tough on China trade” stand steals a page from the Democratic playbook. Trade, like infrastructure and prescription drug pricing, is an issue where Trump’s ideology is more in line with Democrats than free-trade Republicans. Democrats will have a tough time attacking Trump on trade policy, giving him plenty of maneuvering room.

Democrats are so focused on Trump, that House legislation to strengthen the Affordable Care Act has received little attention. House Speaker Nancy Pelosi is beginning to soften her opposition to impeachment as the Administration defies nearly every Congressional inquiry for information on the Mueller Report. While some have cried “constitutional crisis,” it’s better described as a constitutional confrontation.

As a young Congressional aide during Richard Nixon’s presidency I well remember the tension over whether he would hand over the Watergate tapes. The demand for the tapes went to the Supreme Court, and Nixon complied. It appears that the missing information from the Mueller Report may go through the judicial system up to the Supreme Court, where even with the Republican majority the outcome is far from clear. If the Democrats keep on the single note of Mueller they will be losing their ability to deliver on health care, infrastructure and the environment which are the issues they won on in 2018.

Could Higher Tariffs Play into Trump's Hand?
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