Definitely maybe tariff relief on electronics

Smartphone and laptop buyers got some good news over the weekend with a lower tariff on Chinese-made electronics, at least for now. The exemption’s messy rollout exposes at least three problems with the Trump administration’s trade policy.

The obvious problem is uncertainty. The other two are signs of deeper rot in Washington. Tariff exemptions create perverse incentives for lobbyists, and they give the president a way to reward friends and punish enemies.

Uncertainty: Nobody seems to know what’s going on with these exemptions. They appeared unannounced in an executive order released at 10:37 PM on Friday night.

The next day, Commerce Secretary Howard Lutnick said the exemptions were temporary and that further unspecified tariffs were on the way in a month or two.

On Sunday, Trump posted on social media that “There was no Tariff ‘exception’ announced on Friday. These products are subject to the existing 20% Fentanyl Tariffs, and they are just moving to a different Tariff ‘bucket.’” In separate remarks, he said he was open to further exemptions.

Special interests: When it comes to lobbyists, the best policy is not to encourage them. If Trump gives exemptions for electronics, then lobbyists for autos, clothing, toys, machinery, and other tariffed products will descend on the White House, expense account credit cards in hand. All this political activity takes companies’ attention away from what they should be doing, which is making better products at better prices.

Retribution: Trump also now has another weapon of retribution. He has already gone after law firms, universities, and media outlets that have angered him. Now he has leverage over companies he dislikes, dangling exemptions in exchange for political support or other favors. And if they don’t go along, he can blow up their businesses.

Friday’s electronics exemption is a welcome breath of fresh air, even if it’s short-lived. Still, America has a dysfunctional trade policy. America’s tariffs remain among the world’s highest, and Trump has opened new corruption opportunities that did not exist just a few weeks ago.

America is no longer the free trade oasis it once was, and we are all poorer for it.