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Peter Navarro serves as President Donald Trump's Senior Counselor for Trade and Manufacturing. He is also a key player in the MAGA movement. It was Navarro who went to jail in July 2024 for his refusal to testify before the January 6 Committee; to say the least, he is loyal.
But he is also the architect, along with Commerce Secretary Howard Lutnick, of the tariff "war" which threatens to explode. He has attracted the ire of Elon Musk, whom he has described as a "car assembler," not a "car manufacturer." Musk retorted that Navarro is "dumber than a sack of bricks, but that would be unfair to the bricks."
Such outbursts demonstrate that the debate over tariffs divides the MAGA faction from newcomers like Musk. Musk is a globalist in his perspective, while Navarro, who has an economic Ph.D. from Harvard, says Musk is a buccaneer who has little compassion for Americans, which he believes, with some justice, were hurt by free trade. Along with Stephen Bannon, Navarro is the heart of MAGA.
Navarro, however, is as narrow in his approach to Musk as Tesla's owner is with the President's counselor. To call Musk more an assembler than a manufacturer is narrow. Ford did not invent the automobile; he improved and cheapened manufacturing using the theories of Frederick Winslow Taylor. With the assembly line, he increased production and lowered prices. He even gave his workers good pay, which allowed them to purchase a vehicle. Musk is just like Ford in many ways, so trying to distinguish between an assembler and a manufacturer is somewhat confusing.
Navarro also ignores the fact that globalism has been a reality for over a century. American businesses went overseas for various reasons. In 1918, the United States Congress passed the Webb-Pomerene Act, allowing American manufacturers to invest in foreign countries and avoid antitrust laws.
Indeed, Ford, to lower his wage costs, invested in the Soviet Union in 1927. In Josef Stalin's Russia, labor guarantees in pay and safety were of little concern. Ford's operation turned out vehicles and trucks, as well as tractors or "Fordsons," providing the USSR with 85% of those farm vehicles. The USSR also had an investment in the US, the Amtorg Trading Company, which also had a shady reputation for illegal goods. This was all done at a time when the U.S. did not recognize the USSR as a legal regime.
Tariff walls ended these relationships. Fordney McCumber Act, passed in 1922, erected a tariff wall, but not so large as to impede trade. In 1930, the Smoot-Hawley Tariff jacked up rates during a slump. From 1930-32, particularly due to the Smoot-Hawley Act, world trade declined by 40%, which plunged economic growth. The Stock Market crash helped to increase unemployment in 1930 to 9%. The tariff helped raise it to over 25%.
When Franklin Roosevelt came to power in 1932, he was persuaded by his Secretary of State, Cordell Hull, an anti-tariff Tennesseean, to lower tariffs to jump-start American investment, which had also slipped substantially between 1930 and 32. History does not favor Navarro. The "rust belt" calamities of the 1990s notwithstanding.