Portside

One of the biggest biases in American life is the idea that Republicans are “good for business.” But if you’re a business with any need to receive commercial parcels from other countries, Republicans are pretty bad for you right now.

Numerous industrialized countries throughout Europe and Asia have suspended business parcel shipments to the U.S. in advance of a Friday change to the so-called de minimis rules. In most countries, only letters and gift parcels under $100 are being let through, though postal services in Italy, Lithuania, Bosnia-Herzegovina, Thailand, the Czech Republic, and others have suspended sending all packages to the U.S. regardless of value. E-commerce firms like Etsy and eBay have also suspended shipping of U.S.-bound parcels from some countries. Private shippers like FedEx could be used, though that will be much costlier.

Before this year, any shipment valued under $800 was allowed to enter the country without duties or inspection. This created a surge of packages, primarily from China, getting around normal shipping processes, thus enabling Chinese e-commerce retailers like Shein and Temu to charge shockingly low prices for goods suspected of being made with slave labor and violating copyright. As Shein and Temu grew, textile factories across the U.S. shut down and lawmakers searched for a solution.

Back in May, the Trump administration ended the de minimis exemption for China and Hong Kong, after an initial order was delayed for three months because no structure for collecting that many tariffs and conducting that many inspections—millions per day—was laid out. The administration appears to have done the exact same thing on packages from other countries, advancing the policy before devising the infrastructure. (International posts can use the same system they use for packages over $800, but obviously they do not have faith in being able to do it at scale.)

International postal services are obligated under the Trump order to collect the duties and taxes, and they need systems in place to do that. There are third parties like Zonos that are certified to collect on behalf of an international postal system, and that might be a work-around, but those relationships have to be established. There’s an actual international system to smooth out these kinds of disputes called the Universal Postal Union, but good luck getting the Trump administration to submit to the dictates of an international consortium.

I should say that this isn’t that big a deal. As Lori Wallach of Rethink Trade pointed out over email, less than 10 percent of de minimis packages enter the country by post, and the eventual working out of the China ban on de minimis has led to a substantial drop in this kind of package volume. It’s just one of life’s little hassles, and an unnecessary one. For small entrepreneurs, even short-term delays or cost spikes from shipping through more expensive services could be fatal to their business.

You can make a case for stopping de minimis from countries that exploit the loophole; I have done so. You can make a good case for changing the exemption from $800, a level Congress only set in 2016, to $100, as the administration has effectively done. But you cannot make a case for doing any of this before setting up the processes for how it will all work.

That’s ultimately the problem with Trump’s version of state-run capitalism, even if you agree with the idea behind individual actions. It’s all being done in such a shortsighted way, or for the purposes of punishing enemies and rewarding friends, that there’s no way to disaggregate the salutary policy in theory with the cock-up in practice.

Take the Trump administration’s acquisition of a 10 percent stake in Intel, which no less than Bernie Sanders has endorsed. “If microchip companies make a profit from the generous grants they receive from the federal government, the taxpayers of America have a right to a reasonable return on that investment,” Sanders said, a consistent stance for him dating back to the debate over the CHIPS Act.

But the Trump administration isn’t giving Intel a generous grant; that money was already out the door before Trump took office. Trump claimed that Intel’s CEO was a Chinese operative and demanded that he resign, following which, or in mitigation for which, he grabbed the 10 percent stake. The implication is clear: Trump wanted a payoff—protection money, really—or he would hurt the company. That is far different than seeking equity in exchange for federal support.

Intel now must issue more stock to accommodate the giveaway, which will make it marginally more difficult to raise new capital. Meanwhile, the feds’ new stake gets the company no support to make higher-end chips or acquire more customers. Nor are there any governance changes on the horizon to fix a company that has been far more concerned with its own stock price than engineering feats. Intel has maxed out shareholder payouts over the past two decades, and has so little to offer that it had to suspend dividends a year ago.

So Trump bought into a dying company with structural deficiencies. Maybe in some way, the stake ensures that Intel’s foundries will stay in business. But that’s just treading water. The whole problem with the industry is that the playing field for a domestic chip manufacturer relative to overseas competitors and fabless chip designers is woefully uneven. And Trump is actually exacerbating this disparity through his other deals.

Trump allowed Nvidia to sell chip designs to China for a dubious 15 percent export fee, and waved in Apple’s overseas chips after getting a gold-and-glass statue from its CEO. These deals directly undermine the company whose stock Trump just seized. And the sunk cost of buying the stake will only heighten this contradictory position.

There are other examples of Trump taking a minority stake that has jump-started the business, as with rare-earth producer MP Materials, which now has a $500 million contract with Apple. But Intel’s problems go far deeper than a nascent rare-earth company, and a major investor like Trump is likely to gauge the stock price instead of performance as a metric of success, pushing for a return in exactly the ways that got Intel into trouble in the first place.

In some primitive sense, it might be good to get equity stakes in exchange for government support. In reality, a far more coordinated effort would be needed to actually preserve that investment and Intel’s place in the semiconductor industry, much less enhance them. There’s more to market-crafting than taking on stock, especially stock in a failing company. But that’s the primary way Trump conceives of it.

And it’s the same across the board. Equity interest in defense manufacturers like Lockheed Martin that are already effectively wards of the state may sound appealing. But do we really want to take the notional influence Lockheed has on U.S. foreign policy and make it more institutionally cemented with an equity stake? Should what’s good for Lockheed literally be what’s good for the country?

There are times when tariffs can be employed to good ends to boost domestic manufacturing. Blanket tariffs on all goods, including ones that can’t be produced in the United States, and on components for domestic manufacturing, are just stupid, as is the whipsawing of tariffs from one level to another so nobody can plan or invest. And predictably, U.S. manufacturing output is collapsing outside of data centers, new orders are down, stagflation with higher inflation and higher unemployment is starting to bite, and “recession specials” are popping up around the country.

You can sit around and debate theories about state capitalism and optimal concepts for government’s relationship to business. I first heard about government equity stakes as a more efficient means for corporate taxation from Dean Baker years ago. If you subscribe to the theory that taxation is a public seizure of private resources, then an equity stake is no different than the corporate tax, and by the same token regulation is no different than corporate governance. And you can say that the last interventionist effort in the economy by Joe Biden was too reliant on corporate whims and should have leaned on more public ownership of infrastructure in industries like energy.

I’m here to say that none of this theorizing matters right now, relative to the specific circumstances. We don’t have fantasy world industrial policy but the actually existing position of Donald Trump dictating the economy from on high, devoid of any strategy outside of the two inches between Trump’s face and whatever CEO is sitting in the Oval Office. It’s frequently slapdash and contradictory, and it is on a trajectory to make the entire country poorer. Just because it occasionally rhymes with decent policy doesn’t make it supportable.

David Dayen is the Prospect’s executive editor. His work has appeared in The Intercept, The New Republic, HuffPost, The Washington Post, the Los Angeles Times, and more. His most recent book is ‘Monopolized: Life in the Age of Corporate Power.’

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