Trump's Amazingly Prophetic 1990 Playboy Interview

Mike Mish Shedlock

Playboy asked Trump what he would do as president. He replied "Tax every Mercedes-Benz and all Japanese products"

At age forty-three, Donald Trump’s 'Playboy' Interview presaged what would be one of the most important elections since the end of the Cold War. The snips are amazingly prophetic.

PB: How far are you willing to push adversaries?

Trump: I will demand anything I can get. When you're doing business, you take people to the brink of breaking them without having them break, to the maximum point their heads can handle—without breaking them. That's the sign of a good businessman: Somebody else would take them 15 steps beyond their breaking point.

PB: What if your pushing results in losing the deal?

Trump: Then I pushed him too far. I would have made a mistake. But I don't. I push to the maximum of what he can stand and I get a better deal than he gets.

PB: How do you feel about Japan’s economic pre-eminence?

Trump: Japan gets almost 70 percent of its oil from the Persian Gulf, relies on ships led back home by our destroyers, battleships, helicopters, frog men. Then the Japanese sail home, where they give the oil to fuel their factories so that they can knock the hell out of General Motors, Chrysler, and Ford. Their openly screwing us is a disgrace. Why aren't they paying us? The Japanese cajole us, they bow to us, they tell us how great we are and then they pick our pockets. We're losing hundreds of billions of dollars a year while they laugh at our stupidity. The Japanese have their great scientists making cars and VCRs and we have our great scientists making missiles so we can defend Japan. Why aren't we being reimbursed for our costs? The Japanese double-screw the US, a real trick: First they take all our money with their consumer goods, then they put it back in buying all of Manhattan. So either way, we lose.

PB: A group of Japanese visitors to New York was recently asked if there were anything in the US they would like to buy. The answer: towels.

Trump: That's fair trade: They'll take the towels and we'll buy their cars. It doesn’t sound like a good deal to me. They have totally outsmarted the American politician; They have no respect for us, because they're getting a free ride. Of course, it's not just the Japanese or the Europeans—the Saudis, the Kuwaitis walk all over us.

PB: Sometimes you sound like a Presidential candidate stirring up the voters.

Trump: I don't want the Presidency. I'm going to help a lot of people with my foundation—and for me, the grass isn't always greener.

PB: But if the grass ever did look greener, which political party do you think you'd be more comfortable with?

Trump: Well, if I ever ran for office, I'd do better as a Democrat than as a Republican—and that's not because I'd be more liberal, because I'm conservative. But the working guy would elect me. He likes me. When I walk down the street, those cabbies start yelling out their windows.

PB: What's the first thing President Trump would do upon entering the Oval Office?

Trump: Many things. A toughness of attitude would prevail. I'd throw a tax on every Mercedes-Benz rolling into this country and on all Japanese products, and we'd have wonderful allies again.

National Security

And so here we are. We now call it "national security".

President Trump considers 25% Tariffs on All Auto Imports as Matter of "National Security"

After numerous flip-flops we are back to a 1990 trade mentality. Did his position ever change, or is this all part of the deal?

Eurointelligence Chimes In

It is generally advisable not to make any forecasts that concern Donald Trump. But when it comes to German cars he has been only too consistent ever since his Playboy interview in 1990 when he promised "I’d throw a tax on every Mercedes-Benz rolling into this country"

Trump yesterday started a process that could could end with the imposition of a 25% tariff on imported cars by this time next year. The US Department of Commerce has up to 270 days to investigate the matter, and then Trump has 90 days to make a decision on the basis of the Department's report. Congress is not involved.

We have the sense that this is not the last time we will be writing about the 1962 Trade Act, under which Trump has been launching this action. It includes the catch-all national security override which Trump has also used to justify the steel and aluminium tariffs. There is no need even to discuss the merit of this argument. But we don’t think that it is possible, legally, to obtain a judicial override of a President’s invocation of national security.

No country in the eurozone would be more affected than Germany. German car makers exported half a million cars last year at a total value of €20bn. FAZ runs an estimate by Gabriel Felbermayr, of the Ifo Institute, who puts the total damage to the German economy at €5bn. That number strikes us as too low. It does not sufficiently take into account all of the total network effects: expectations of further trade tariffs, lower investments in supply chains given those expectations, and financial effects such as lower stock prices.

If the US were to impose tariffs on cars, the EU would almost certainly retaliate. In seven days, Trump will decide whether to end the EU's exemption from import tariffs on steel and aluminium. The expectation in Brussels is that the exemption will be cancelled. The EU will then impose retaliatory tariffs on a selected range of US products.

FAZ concludes that the result of the Department of Commerce's investigation should be a foregone conclusion despite the promise of a fair and transparent procedure. They took note of Trump tweeting that there will soon be very good news for US automobile workers.

The decision will also test the solidarity of the EU, since Germany is going to be the country most affected by this. France and Spain export no cars to the US. Fiat owns Chrysler, but produces its vehicles for the US market in the US itself.

The FT quotes some experts in the US as expressing hope that these tariffs would never be introduced because the US consumer would revolt, or the Republican Party would. It sounds to us like the over-confident forecasts in 2016 by liberal US commentators who predicted Trump would not become the Republican candidate, and then that he would never be elected.

The trouble in this particular case is that the EU, and Germany specifically, will find it hard to engage with Trump in a process of deal-making. Germany is totally over-reliant on the good functioning of the global trading system. Trump wants Germany to cancel the Nordstream 2 gas pipeline, switch from US to Russian gas, and raise military spending. We see no chance of a deal here.

1990 Policy Still Intact

Given that his trade policy dates all the way back to 1990, one can reasonably conclude his trade policy is not a bluff. He is doing exactly what he said he would do.

By the way, how did Trump get elected?

The answer is blue collar workers in Ohio, Indiana, Michigan, and Wisconsin voted for Trump. Those are states that Hillary ignored because they were in her pocket.

Germany's Dilemma

FAZ noted in an article that the EU is in a genuine dilemma. Iran is now asking the EU to increase oil purchases, and to insist that European banks will continue to fund business with Iran. Iran will otherwise withdraw from the nuclear deal.

Berthold Kohler, a FAZ commentator not normally lost for words, expresses genuine bafflement at the sight of Trump threatening tariffs on cars, and of Merkel and President Xi Jinping agreeing to preserve the multilateral trading system. We note that it is easy for the world’s largest and second largest exporters to agree to this because they are both dependent on countries like the US to run persistent trade deficits. Unlike China, however, Germany does not have a plan B.

France Turns to Russia

Le Monde noted in its coverage of Emmanuel Macron’s bilateral meeting with Vladimir Putin in St Petersburg that there is now a completely different tone from only a few months ago.

EU-Russia relations are thawing, thanks largely to Donald Trump. Given the known position of the (likely) new Italian government, we are convinced that the EU’s sanctions against Russia will be gradually phased out, starting soon.

Expect a Trade War

Trump believes trade wars are winnable.

At times, Trump appears to waver, but his 1990 conviction always returns. It's all part of the deal.

But it's a deal that Germany will never accept. Nor is it a deal that Germany should accept.

For starters, paying 20% more for Liquid Natural Gas (LNG) from the US instead of pipeline gas from Nordstream 2 is silly. Besides, the LNG infrastructure is not even in place.

More importantly, Trump has proven, time and time again, his word cannot be trusted. At any point in time, any country can and should expect Trump will make further demands.

Economic and political commentators expect there will not be a global trade war because everyone loses.

Yes, everyone does lose.

But what if Trump doesn't think so?

Related Articles

  1. Visualizing Trump's Trade Flip-Flops On Actual Shipping Routes
  2. Trump Shuffle: China Runs Rings Around Trump's Trade Policy by Standing in Place
  3. Yet Another Trump Trade Shuffle (Flip-Flop Arguably a Better Word)

Don't worry. It's all part of the ego.

Mike "Mish" Shedlock

Comments (25)
caradoc-again
caradoc-again

He is at least being authentic. WYSIWYG but you just might not like seeing it or getting it.

No. 1-25
Roadrunner12
Roadrunner12

The US at war with the world continues, as expected alliances are changing.

Blacklisted
Blacklisted

Trump 1990: “The Japanese have their great scientists making cars and VCRs and we have our great scientists making missiles so we can defend Japan. Why aren't we being reimbursed for our costs? The Japanese double-screw the US, a real trick: First they take all our money with their consumer goods, then they put it back in buying all of Manhattan.”

Instead of targeting a specific industry, why don’t we simply get a rebate for the large volume of business we do with a country? If we are going to allow certain industries to get screwed by politicians, and since graft will never be eliminated in the world, why aren't we at least being reimbursed for our excessive costs?

Since 100% free-trade is a Utopian pipe dream, just as Socialism, what’s wrong with negotiating a trade deal that’s at least more equitable, if not completely in our favor. What’s the big deal if Mercedes’s and Lexus’s get priced out of more people’s price range, forcing more people to buy American? Just think, it would also ramp-up the auto repair business. If we believe war is good for business, why isn’t it good for cars to self-destruct after the warranty runs out?

Nothing is logical in politics. Democrats want to tax soft drinks, cigarettes, gas, and carbon to hopefully get less of it, but they think you get more productivity by taxing labor. We impose sanctions on brutal dictators largely due to their harsh treatment of their citizens, even though the purpose of sanctions is to impoverish citizens to the point of desperation that they will over through their govt.

The illogical actions of govt are endless because the objectives are always the same - enrich the politician. The only way to get meaningful reforms of any kind is to eliminate the career politician by imposing short term-limits. In the meantime, a few tariffs are much less destructive than the asset stripping techniques used by the Economic Hitmen, CIA, and military to obtain natural resources. How many lives, property, and treasure has been lost trying to replace Assad in Syria simply to replace Russian gas with the natural gas pipelines from Qatar and Saudi Arabia?

Kinuachdrach
Kinuachdrach

Blacklisted has the right take on the situation. And how stupid was Hillary Clinton not to notice that the rich liberals who buy Mercedes were going to vote for her anyway -- the people in play were the guys who used to have jobs making things in the US.

One of President Trump's early pronouncements was an encouragement to the Germans to build in the US more of the cars they sell in the US. That sounds like the true win-win solution to the unsustainable trade imbalance. Threatening tariffs is probably simply a negotiating tactic to get those hide-bound Germans to take the idea of internationalization of production more seriously.

caradoc-again
caradoc-again

Macron is moving towards Russia. Whatever they decide, don't trust the EU. If you consider them strong allies, no matter the President, think again. At the same time Macron is with Putin the Baltic states are requesting more US troops be stationed on their soil.

AWC
AWC

So, if the competition builds a better product, destroy him through the use of government force? Ravings of a lunatic. This isn’t going to end well.

AWC
AWC

This guy’s not a businessman. He’ a wannabe Robber Barron.

AWC
AWC

Go buy a Buick and get back to me on quality issues. For sure, you’ll see why they need protection.

ZZR600
ZZR600

OK, go ahead, add 25% tariffs on Mercedes and other European cars. I guess Europe could tax Tesla, Hollywood films, Netflix, Faceboo, Google etc...lose lose situation for all

AWC
AWC

Same crap that killed the British car industry.

AWC
AWC

And the USSR auto industry was protected. How did that work out?

AWC
AWC

But, what’s good for Wall Street is good for America, right?

Blurtman
Blurtman

I actually took an International Econ course taught by Yellen at UC Berkeley in 1988 or thereabouts. Laura Tyson and Yellen were selling the neoliberal(?) viewpoint that we should exit older industries like car manufacturing and focus on high tech, biotech where we have a lead. Neither could fathom that countries would catch up and in some areas even surpass us. (China). In an essay question on an exam in Yellen’s course, I took more of a Trumpian slant and said we should rehab older industries like cars, and get competitive. And look at trade imbalances and take steps to address. Not the correct answer. And Japan was kicking ass no one could see their fall from grace.

Roadrunner12
Roadrunner12

Not surprisingly, according to Reuters, German officials have said that “Trump’s America First’ trade policy, his administration’s professed disdain for the World Trade Organization, as well as his withdrawal from the Iran nuclear deal, have pushed China and Germany into closer alignment.”It is not clear if the Trump administration is that incompetent or if this is done on purpose, in full knowledge that its actions will only further isolate the United States on the world stage and push states that previously held more adversarial positions closer and closer together. If it is done on purpose, one has to wonder what sort of mindset is behind the leadership which is on a self-destruct mission, and how it expects to maintain its worldwide empire, all the while irking its traditional allies

RonJ
RonJ

A previously 25% Chinese tariff on U.S. cars sounds like a trade war. What % Chinese tariffs have been on other U.S. goods?

I was listening to some commentary the other day about how China was let into the WTO and how we were told they were going to abide by the rules, but then they didn't. Mentioned in that commentary was that some 60,000 U.S. factories have closed. That represents a lot of U.S. jobs lost.

Tengen
Tengen

Trump sounds like a guy who knows little about Japan in that interview. Japan paid dearly for our "protection" with the Plaza Accord in 1985, forcing the Yen to rise against their wishes and putting enormous pressure on their export-based economy. It's no surprise their lost decades began shortly after.

People could make an argument that Pax Americana was good for the world during the Cold War but it's deleterious to nearly all now, even to many Americans.

thimk
thimk

We are witnessing the end of American "exceptionalism"

Blacklisted
Blacklisted

Govt should certainly not kill competition, but that's the reality in the world of career politicians handing out favors to big donors. The lack of enforcement of EXISTING anti-trust laws and forcing transparency are why we have runaway healthcare costs.

The real issue that Trump was trying to get at in his PB interview is we are not getting paid for the service of protecting shipping lanes. Instead of punishing a particular industry, my solution is a simple rebate, which one could argue we already receive when they purchase our debt with the proceeds. The problem with this is we have to pay them interest, which exits our country.

The real issue, and the reason tariffs are back in vogue, is govt's are broke due to their largess/corruption/fraud, which is the result of career politicians that don't have to live by the laws they pass. Force short term limits and the ROI on political bribes declines significantly, along with malinvestment, which improves the economy, which solves most of the problems.

Blacklisted
Blacklisted
(deleted message)

GNI includes govt spending, thus debt.

Blacklisted
Blacklisted
(deleted message)

GNI includes govt spending, thus debt.

Blacklisted
Blacklisted

I hope we can all agree that central planners cannot alter the cycle. They only exacerbate it. The forced decline in the dollar from the Plaza Accord excellerated the sale of US assets, which brought home large capital flows to Japan, which blew their RE bubble. Their central planners, like ours after the tech and RE bubbles, made the problem worse by not allowing the malinvestment to flush.

Wait until you see what the popping of the debt bubble does to asset prices. Another Plaza Accord-type of meeting can be expected by the G20 by 2020-2021 to stop the runaway dollar. This will likely bring an end to the dollar as the reserve currency.

Stuki
Stuki
(deleted message)

Then quit the government force that is causing you such obvious problems……..

The problem of a schoolyard bully getting bad grades due to wasting his time bullying other kids, is hardly solved by banning other kids from doing better than him on tests; now is it?


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