Does Anybody Know What Is Going On?
“Do we have anybody in the newsroom who knows anything about tariffs?” The Senior Editors at most frequently read publications know the answer. It is no.
I laughed. Bill Maher, on his TV show, asked George Will, the conservative commentator, about tariff authority and related issues. This is a part of the exchange:
Bill Maher: “The tariffs, that’s not really something the president is allowed to do unilaterally.”
George Will: “No. A constitutionally enumerated power of Congress is to regulate trade with foreign nations. Congress, in its absent minded way, has now become a spectator of government… I have a chronic, incurable trade deficit with my barber. I buy a haircut from her, she buys nothing from me.”
Will enlarged the exchange to include the President’s claim that trade between countries should reflect something close to an even exchange. Markets don’t work that way—supply and demand defy the number pushers in the Office of Management and Budget (OMB). Or, the political hacks that want nothing more than the leader’s approval.
In the Spring of 1987, I went to the White House with then Secretary of Commerce Malcom Baldrige. Ronald Reagan was the President, and George Shultz was the Secretary of State.
Baldrige and I were advocates for what was pejoratively called “industrial policy”. We argued that a number of countries, and at the time, particularly Japan, were denying market access to US semiconductor companies, stealing their intellectual property, and supporting their leading companies with massive subsidies.
I remember a lively debate among those in the Reagan Cabinet about how we should fight back with our own market intervention. George Shultz was the most formidable advocate for a competitive market unhindered by government interference.
Shultz was the one most likely to argue that the semiconductor industry would be better off without active government support and that, to the extent governments (especially Japan) were subsidizing chips, they were indirectly subsidizing a range of US industries that used them. And he argued, it is a good thing when countries with much less market power do better—democracy is advanced by international well-being.
Baldrige and I argued that the semiconductor industry was so strategic we had no choice but to intervene. Intel, at the time, was our leading semiconductor company and, of course, led the lobbying effort to gain government support.
Bottom line: a chip consortium, Sematech (Semiconductor Manufacturing Technology) was formed in 1987 as a public-private consortium. It was co-funded by the U.S. Department of Defense and leading US semiconductor companies (Intel led the charge).
The initiative was meant to coordinate research and development (R&D), improve manufacturing, and secure America’s leadership in chip technology.
Today a list of leading companies in what is called the “chip industry” is quite different. Nvidia leads the list. According to Gartner (a leading consulting business) in 2024 Nvidia’s sales were $76.7 billion while Intel’s sales were $49.8. Year-over-year growth for Nvidia was 120.1%; Intel, 0.8%.
Nvidia did not exist in 1987; it was founded in 1993.
George Shultz would have a “I told you so” grin.
Tariffs distort markets. President Trump wants to use them to raise money, not build companies. And, today they are often a part of foreign policy, not staging for improved market dynamics.
If tariffs are to be helpful to future US economic outcomes, they must be used sparingly, and a case should be made to Congress, which has under our Constitution the power to levy them. Congressional action follows debate, we need real debate on the use of tariffs.
Relatedly
Multiple lawsuits are pending that challenge the President’s authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA). Regardless of the reasons for imposing tariffs the authority should be clear. The Supreme Court should fast track a case that offers the opportunity for a precedent setting decision.
Al Sikes is the former Chair of the Federal Communications Commission under George H.W. Bush. Al writes on themes from his book, Culture Leads Leaders Follow published by Koehler Books.
