Javier Milei in a speech before the World Economic Forum in 2024: “If measures are adopted that hinder the free functioning of markets, competition, price systems, trade and ownership of private property, the only possible fate is poverty.” (see #1)
Donald Trump on his tariffs in April 2025: “You know, someone said, ‘Oh, the shelves, they’re going to be open.’ Well, maybe the children will have two dolls instead of 30 dolls, and maybe the two dolls will cost a couple of bucks more than they would normally. But we’re not talking about something that we have to go out of our way. They have ships that are loaded up with stuff, much of which — not all of it — but much of which we don’t need.” (see #2)
Is there a difference between Donald Trump and Javier Milei? Yes, an emphatic “yes”. Trump is a classic central planner with all the limitless self-regard that the position demands. Milei is reintroducing free markets to a country that has not had many for decades. With Trump, we get a person who asserts the power to determine how much we deserve and “need” and how much we should pay for it. Milei is dialing back Trump-style manipulations with impressive results. The other shoe has yet to drop in the U.S. on the fundamental disorder to supply chains from Trump’s economic illiteracy in his tariff campaign. Stay tuned, The Big Beautiful Bill or no, there are troubling signs in the consequential durable goods sector.
Let’s start with Milei’s Argentina, and add Poland’s rise to the mix. After decades of socialistic Peronism, Argentina under Milei is teaching a lesson to Donald Trump. Year-over-year, the nation’s economy has grown 7.7%. Poverty is beginning its downward slide. Milei has corseted government interference (for instance, ending rent control in Buenos Aires), cut spending, restrained the money supply, and eliminated many price controls. The result is an Argentinian renaissance.
Poland showed the way for Milei. In 1989, Leszek Balcerowicz, Poland’s Finance Minister after the shedding of communism, cut spending, balanced the budget, reigned in the money supply, ended many government spending programs, basically freed-up the economy, and Poland took off (see #3). It remained free of Brussels by not joining the euro. We would be happy with 3% growth in GDP. Poland is humming at 5%.
Where is Donald Trump leading the U.S.? In some ways, in the opposite direction. All governmental interventions are not equal in their effects. Some have greater impact than others. Supply chains are crucial. That which disrupts supply chains ripples down to layoffs, repos, and personal bankruptcies. After treating the U.K. like the CCP, one in which we amazingly had a trade surplus, Trump is targeting South Korea and Japan with 25% tariffs. It’s madness.
Expect showrooms and car lots to have fewer offerings in that industry of the most durable of all durable goods. No big deal for Trump, we only deserve two to choose from, right?
It’s all over the place, everywhere you look in automotive industry reports. Signs are abundant of a coming automotive industry recession. Quoting AutoForecast Solutions, industry insiders such as F & I and Showroom expects “light-vehicle sales will fall for the first time since 2022 due to uncertainty around the tariffs”. It’s a perfect storm of a Federal Reserve skittish about inflation and keeping interest at their current level, Moody’s downgrading of the U.S. credit rating, Conference Board Leading Economic Index’s fall of nearly 2% in March-April, rising loan defaults, etc. (see #4)
No wonder Trump is on a jihad against Fed Chairman Jerome Powell. Trump wants easy money to paper over the effects of his tariff war.
In putting makeup on the pig, President Trump and his spokespeople trot around citing normal manufacturing shifts (Mercedes, BMW, Honda, Hyundai, Kia, Stellantis and Toyota) that were planned and announced before Trump announced his America-the-victim-of-the-world tariff war, as if the resulting chaos is a stroke of genius. Trump should take this comedy routine on the road.
Buyers aren’t stupid. If people see price increases on the horizon, they buy while the getting is still good. The numbers are the numbers. The June auto sales numbers fell by 2.6 million from April to June. March and April were great because tariff reality would soon set in. Jonathan Smoke, chief economist at Cox Automotive Inc., put it bluntly: “The party is over.” This isn’t a mysterious happening according to Smoke: “It’s clearly slowing. It’s because of affordability getting worse and forcing what we think will be production declines to keep supply in balance.” (see #5) Translation: Think again about buying that new car.
The goal is reshoring. Laudable, but the method asinine. It jumps over the question of why they left. Is it merely the attractiveness of slave or peasant labor? Cheaper labor overseas has always existed and yet the country grew. What happened between then and now? We decided to muck up the works. By law and government interventions, we turned organized labor into an extortion racket. We taxed and regulated our way into near oblivion. We have greater difficulties in building anything. Try to build power plants, refineries, dams, mines, roads, power lines, even housing, in the good ‘ol USA. Home-grown NIMBYs and greenie revolutionaries have a greater influence on our economy than Malaysian peasants.
Conversely, we could tack in the opposite direction and make our country accommodating to industries. It’d be like the mysterious voice in Field of Dreams: “Build it (a free economy) and they will come.”
Instead, we have a president and his Republican Party fan club who’d rather throw up a wall, like a curtain, to hide the extortion racket and the government bludgeoning of economic activity, and then paste “Make America Great Again” over the mess. Jargon replaces accountability.
In that good ‘ol USA, central planners like Trump, not us, decided that we needed upscaled electric golf carts to replace our family sedan. Anything large powered by fossil fuels was to be pounded into dust by CAFE standards. The car industry played along because they’re essentially cowards. Hitching your industry cart to government and its activists, whether Friends of the Earth or MAGA tariff-enthusiasts, depending on who temporarily holds the reins of power, can be an economically unhealthy thing to do. Watch California become a Third World nation, er state.
And it shows in the crap foisted on us. It’s high-priced, underpowered, loaded down with gimmicks to mask their shortcomings (turbochargers); beset by stunts like cylinder deactivation, on/off engine disruptions during idling, the carbonization of direct fuel injection, the notorious 10-spead transmissions; and range anxiety coupled with spontaneous combustion of battery packs for those “virtuous” EVs.
At least The Big Beautiful Bill (BBB) corrected some of the folderol. The only problem is that we have a Donald Trump (DJT) intent on wreaking havoc on the guts of economic activity. What the BBB giveth, DJT taketh. Sounds like central planning.
RogerG
Sources:
1. Milei’s speech can be viewed in YouTube at https://youtu.be/4z44XP4u9Xs?si=OEB-mRfFMY2xts1U.
2. “Trump says children could have ‘2 dolls instead of 30’ with his tariff plan”, Alex Gangitano, The Hill, 4/30/2025, at https://thehill.com/homenews/administration/5275798-trump-says-children-could-have-two-dolls-instead-of-30-with-his-tariff-plan/.
3. “Shock Therapy: What We Can Learn From Poland”, Taylor Marvin, Prospect Journal, at https://www.prospect-journal.org/articles/2010/11/11/shock-therapy-what-we-can-learn-from-poland.
4. “2025 Auto Sales Slump Forecast”, Hannah Mitchell, F & I and Showroom, 6/3/2025, at https://www.fi-magazine.com/376082/2025-auto-sales-slump-forecast.
5. “Car sales plummet following pre-tariffs panic buying: ‘The party is over’”, Ariel Zilber, The New York Post, 7/1/2025, at https://nypost.com/2025/07/01/business/car-sales-plummet-following-pre-tariffs-panic-buying-the-party-is-over/.
6. An excellent synopsis of Milei’s success can be read at “The Milei ‘Miracle’ Is a Vindication of Free Markets”, The Editors, National Review, 7/8/2025, at https://www.nationalreview.com/2025/07/the-milei-miracle-is-a-vindication-of-free-markets/.