Pay to play

Trump is signaling that his tariff policies will be scaled down from what he campaigned on:

President-elect Donald Trump’s aides are exploring tariff plans that would be applied to every country but only cover critical imports, three people familiar with the matter said — a key shift from his plans during the 2024 presidential campaign.

If implemented, the emerging plans would pare back the most sweeping elements of Trump’s campaign plans but still would be likely to upend global trade and carry major consequences for the U.S. economy and consumers.

As a candidate, Trump called for “universal” tariffs of as high as 10 or 20 percent on everything imported into the United States. Many economists warned that such plans could cause price shocks, and many Republicans in Congress might have criticized them.

Two weeks before Trump takes office, his aides are still discussing plans to impose import duties on goods from every country, the people said. But rather than apply tariffs to all imports, the current discussions center on imposing them only on certain sectors deemed critical to national or economic security — a shift that would jettison a key aspect of Trump’s campaign pledge, at least for now, said the people, who cautioned that no decisions have been finalized and that planning remains in flux. The people spoke on the condition of anonymity to describe private conversations.

How will what is critical to “national and economic security” be determined? The answer is $$$$$$$$:

With Donald Trump threatening to impose steep tariffs upon his return to office this month, US firms are bracing for impact. But an analysis of Trump’s last presidency identified one way to boost their chances of avoiding the levies: donating to the Republican party.

While the initial stage of the president-elect’s tariff agenda is designed to hit America’s largest trading partners – Canada, Mexico and China – it is US firms that pick up the bill, paying duties imposed on the goods they buy from these markets. Such additional costs can prove devastating.

The federal government typically allows a carefully selected group of businesses from paying such levies. Thousands of companies applied for exemptions, and permission to import items without paying a new tariff, during Trump’s first presidency.

An academic study of which applications were, and were not, successful found that firms were more likely to win approval if they had significantly donated to GOP campaigns. Firms that had significantly donated to Democratic campaigns were meanwhile less likely to win approval, the analysis found.

“A process that should have been ‘arm’s length’ has been distorted by politics,” said Veljko Fotak, associate professor at the University at Buffalo, and one of the report’s co-authors.

Tariff exemptions can provide “years of benefits” worth “a lot of money” to companies that win them, noted Jesus Salas, associate professor of finance at Lehigh University, and another co-author. He described it as “shocking” that companies had been found to be less likely to obtain support after backing the Democratic party.

There are numerous reasons why corporate America is rallying around Trump, and this is certainly one of them.