And sure enough the editors of the New York Times are whining about trade war:
The steel and aluminum tariffs might, on their own, have only a small impact on the economy. But the greater fear many experts have is that Mr. Trump is just getting started and will impose new tariffs on a host of other imports, sending the United States into a much broader trade war, the likes of which the world hasn’t seen since the Great Depression. That would have a large and devastating economic impact, in the United States and around the globe.
as are the editors of the Washington Post:
The key is to exempt close treaty allies such as Canada, Japan, Korea and Germany from the new tariffs. Not only is there no national security risk from importing their steel and aluminum, there would also be national security harm from weakening them economically and alienating them diplomatically. And Commerce Secretary Wilbur Ross’s original proposal included a proviso allowing certain exemptions, based on “an overriding economic or security interest of the United States †or, in the case of aluminum, on “their willingness to work with the United States to address global excess capacity.â€
China, South Korea, Vietnam, India, Brazil, and the Bolivarian countries of South America all subsidize their steel production. That results in substantial overproduction of steel and dumping which pushes U. S.-produced steel out of international markets. Most of the overproduction is on the part of the Asian countries where production has skyrocketed. This has been going on for years, in some case decades.
Imposing countervailing tariffs against these countries has been an available option for years. We’ve just elected not to exercise them and the consequence has been the ongoing hollowing out of the U. S. steel industry and the loss of U. S. jobs.
U. S. and European steel production have been stable for decades. The best case scenario would be for all of these countries to end their subsidies. Imposing tariffs is a distant second best but it’s better than sitting there fat, dumb, and unhappy. Other countries’ policies are harming the United States and its people. Isn’t that the definition of war?
A lot of commentators and politicians overseas say this is a repeat of the Bush steel tariffs of 2002. Unlike Bush, Trump really believes in reciprocal trade; it’s about the only consistent political position he’s had his whole life. Other countries would be foolish to retaliate or take this to the WTO instead of negotiating; Trump is very likely to escalate then to fold.
The other observation is Trumps interview with the New York Times in December. He said the trade deficit with China was 300 billion a year but he believed intellectual theft was another 300 billion a year. No doubt he believes with respect to our allies we need to add the cost of providing their defense to trade figures; that figure is probably in the hundred of billions.
My question is is it really trade when there’s no exchange of goods or services; instead one side is giving pieces of paper…
“Trump really believes in reciprocal trade”
How do you know this? He says lots of stuff, then later says something different or acts contrary to what he said. I think speculating about motives with Trump is foolish.
That said, I don’t know where this goes. I don’t really know how to choose among the different schools of thought on this as i don’t think there is compelling evidence either way. However, if I was going to use tariffs, I would do them in a more targeted manner. Figure out about what each country is subsidizing their steel, then set their tariff accordingly. If they don’t like it then you talk and tell them you will reduce the tariff in proportion to how much they lower their subsidy. Should work if you had a good deal maker in charge. As I understand it Trump is just setting an across the board tariff.
Steve
Odds are this will be a complete Trump clown show, and nothing will really come of it. He’s not really a fighter, and if it’s not liberals or women he doesn’t have the courage to take on the establishment. In my heart, I believe that the time for protectionism was when the jobs were actually in America. Getting the jobs back in a good way would be a long arduous process; not something that fits within a daily news cycle of Fox News and its main brainwashed victim.
I would note that the day Trump announced the tariffs; Xi Jinping’s right hand man arrived in DC to figure out what could be done before the intellectual property theft investigation results are announced. This was after another politburo member visited last month where meetings did not go well.
Remember last year Trump ordered the Syria strike while Xi was visiting.
I have 100% belief that negotiations with the present government of China using tactics of proportionality and targeted response, is a recipe for failure. Other places and parties have tried that in recent years and got steamrolled.
“Getting the jobs back in a good way would be a long arduous process; not something that fits within a daily news cycle of Fox News and its main brainwashed victim.”
Some of us have been doing it for years, and continue to do so. And yes, it’s an arduous process. What do you do about it except impotently masturbate on a blog site?
“using tactics of proportionality and targeted response, is a recipe for failure. Other places and parties have tried that in recent years and got steamrolled.”
They got steamrolled when they tried to negotiate. Set the rate without negotiating, what Trump is doing now, then let them come negotiate. The deal maker in chief surely gets us a good deal. No?
Steve
Your comment points to why I think we should maintain as little contact as possible with any country of a billion people and an authoritarian government.
China exports steel to several of the countries that import steel to the U.S.. Several of the countries have trade actions against China. Instead of carving up the world between friends and enemies, I wish the NY Times (and the media in general) would do a better job describing the nature of the market.