Category: free trade & free markets

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free trade & free markets international affairs

Sabotage or Neglect?

UK, British, steel, manufacturing, China

“It might not be sabotage,” says Member of Parliament Jonathan Reynolds. “It might be neglect.”

Reynolds serves as the United Kingdom’s Business Secretary. He’s talking about the behavior of Jungye, the Chinese owner of troubled British Steel. 

“The conscious decision not just to not order raw materials but to sell existing supplies of raw materials …” Reynolds fulminated, leading him to tell the BBC that “he doesn’t want any future Chinese involvement in British steel making.”

Over the weekend, the UK Government seized British Steel, with Reynolds explaining that “he was forced to seek emergency powers to prevent owners Jingye” from “shutting down its two blast furnaces, which would have ended primary steel production in the UK.”

“They wanted to close down steel production in Britain,” argues Nigel Farage, an MP and leader of Reform UK, “This is a big strategic decision by the CCP.”

Asked if he was accusing the Chinese owners of “lying about the numbers,” the fiery Farage replied, “Yes, absolutely,” adding, “Lying about everything.”

In a single day, Saturday, Parliament passed emergency legislation to facilitate the Business Secretary’s request. 

One opposition MP called it a “botched nationalization,” as the company is still in Chinese hands. It seems more a rescue attempt for Chinese owners who don’t want to be rescued. 

Takeaway? Maybe China isn’t such a great economic partner after all. 

Free countries are reluctantly rediscovering that we still live in a dangerous world, in which we better be able to protect ourselves and not depend on the sworn enemies of freedom. 

This is Common Sense. I’m Paul Jacob. 

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free trade & free markets international affairs tax policy

The Tariff King

The fight over the president’s tariffs is taking place in Congress. 

Or is it?

“House Republicans blocked on April 9 an effort by Democrats to force a vote on halting the reciprocal tariffs imposed by President Donald Trump,” explains The Epoch Times, “which are currently paused for three months.”

Let’s make that clearer. These now-​infamous/​much-​debated “reciprocal tariffs” went “into effect” immediately after midnight yesterday. As Republicans “sneakily” worked to change the rules to disallow any congressional move to dissolve the president’s declared emergency — which, by Congress’s own legislation, gives the executive a great deal of latitude to change tariff rates — and Democrats moved to do just that, get rid of the “state of emergency,” President Trump put most of his tariff hikes on hold for three months.

Except for those on China — now in effect, at a rate of 125 percent.

It sure looks like Trump’s main concern is trade relations with China, not Lesotho or Israel or anywhere else. And much can be said about China’s trade policies (try selling American consumer goods in China) or respect for intellectual property. But it is the matter of constitutionality that interests me most.

Whatever the alleged merits of high tariffs, unilateral free trade, or any of these issues, these policies should not be decided by the president; the Constitution gives Congress the responsibility “to lay Taxes, Duties, Imposts and Excises” and “regulate Commerce with foreign Nations.”

By handing the president “emergency” powers to change tariff policy in the first place, Congress has abdicated its role in setting tax policy. Republicans in the House seem gung-​ho about Trump’s prerogatives. And Democrats haven’t sought to repeal the International Emergency Economic Powers Act, which gives the president legislative taxing authority.

Apparently, Congress wants the president to be king.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets national politics & policies regulation

Egg Prices Crisis

eggs, inflation, bird flu

“Get used to high egg prices,” The Atlantic blurbed Annie Lowry’s February 27 article, “it was a miracle they were low in the first place.” 

Titled “It’s Weird That Eggs Were Ever Cheap,” it appears to have an agenda: prepare us for yet higher prices, or worse: no eggs.

“Consumers are furious,” explains Ms. Lowry, emphasizing that eggs are a very, very popular food. “Or at least they were, until a highly pathogenic form of bird flu spread to American flocks in 2022. Today, the Department of Agriculture is tracking 36 separate outbreaks across nine states. The disease has led to the death or culling of 27 million laying hens — nearly 10 percent of the nation’s commercial flock — in the past eight weeks alone.”

The culling of flocks — and which birds are selected — could potentially be the most controversial element of the story. Donald Trump, on the campaign trail last year, complained about the cull orders and promised to bring down egg prices fast. 

But his administration’s new five point plan is no quick fix:

  • subsidize on-​farm biosecurity upgrades
  • compensation to farmers forced to cull their flocks
  • investing in bird-​flu vaccines and therapeutics
  • nixing some regulations
  • increasing foreign imports. 

That comes to $1.5 billion spending increases to lower egg prices!

But it was a jokey comment by USDA Secretary Brooke Rollins that sent Trump critics into paroxysms. “I think the silver lining in all of this is, how do we solve for something like this?” said the Department of Agriculture head. “And people are sort of looking around, thinking, ‘Maybe I could get a chicken in my backyard,’ and it’s awesome.”

Ha ha. 

But taking the joke as a serious proposal? The yolk’s on them. 

This is Common Sense. I’m Paul Jacob.

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free trade & free markets international affairs tax policy U.S. Constitution

Legal Trade War

Donald Trump

Donald Trump’s imposition and changing of tariffs, all by his lonesome — without Congress — vexes more than a few critics.

His authority to do this, however, derives directly from laws passed by Congress.

The U.S. Constitution gives Congress the power to “lay and collect Taxes, Duties, Imposts and Excises” under Article I, Section 8, which includes tariffs, since they are taxes on imported goods. But Congress has legislated hand-​offs to presidents, allowing significant flexibility on tariffs.

The idea seems to be that, as Commander-​in-​Chief, the president should handle trade because … like war, it has to do with foreign countries.

Laws allowing presidential discretion include Section 232 of the Trade Expansion Act, Section 301 of the Trade Act of 1974, and the International Emergency Economic Powers Act of 1977. 

The first says that the president has broad discretion to define as threats to national security all sorts of things and then impose tariffs and other trade restrictions in response.

The 1974 legislation authorizes further along Trump’s favored line, the power to retaliate against “unfair” foreign trade practices.

The IEEPA grants sweeping powers in a declared national emergency.

So if free traders and others are alarmed at Trump’s seemingly dictatorial powers regarding tariffs, it isn’t new. It has been built into the Imperial Presidency. While Congress could take its constitutional authority back, there is certainly no groundswell to do so.

Also not new?

What setting up high tariffs have historically done: elicit similar tariffs in retaliation. 

Yikes: the kind of trade war that made the Great Depression “great.”

This is Common Sense. I’m Paul Jacob.

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The Real Free Trade Problem?

tariffs, international, trade, economics, TDS, Trump Derangement Syndrome

Trump Derangement Syndrome is not a mysterious disease. He triggers people for reasons. Still, there is no excuse for smart folks to fool themselves into misunderstanding his sometimes genius.

Take the subject of yesterday’s Common Sense, trade protectionism. Trump is plain speaking on this issue, and it is all-​too-​obvious that Trump harbors old autarkist notions of trade: it’s as if he resents having to pay foreigners for anything. 

His apparent resentment of benefiting others — alien others — is what’s so ultra-​right-​wingéd about him, and why leftists instinctively hate him.

And it’s why many free trade economists regard him as a complete and utter moron. His basic attitude appears to be that trade that benefits The Other must hurt us, and that’s just plain wrong.

But sometimes traders do aim to harm us.

This is where Trump’s attacks on trade with China make more sense. For when we deal with China, we don’t just make Chinese workers and businesspeople stronger, we make the Chinese State stronger — most particularly, the Chinese Communist Party. And that organization has set itself as the enemy not only of the United States but also of all competing states … and the very idea of individual freedom.

Free trade is great, because voluntary trades make both sides better off, and all sides are positively advantaged even when many participants are out-​competed and required to re-​tool, re-​group, and re-invent.

Yet, free trade with those who seek to destroy you is quite problematic. And this is not often figured into the elaborate reasoning offered by free-​market advocates.

Trump instinctively knows this, looking warily at those who would use the strength they gain from their people’s trades to transform market power into military power. There exist free traders who think this cannot happen. They are wrong. 

The point is to recognize threats and defend ourselves while also embracing the mutual benefits of trade whenever possible.

This is Common Sense. I’m Paul Jacob.

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The 51st State?!?!

Canada, United States, border, trade, economics

“What I’d like to see?” confessed the president. “Canada become our 51st state.”

Why?

“We give them military protection,” he offered. 

Then things got weird.

“We don’t need them to build our cars,” Donald Trump added. “We don’t need their lumber. We don’t need them for anything.”

Shocking? Yes. But not just for the disrespect shown to our northern neighbors. 

What’s most shocking is our president’s ignorance of economics. While we don’t “need” Canada for any of the things Trump mentioned, we’re better off trading with Canada than not. The sending of “billions of dollars” up north is neither charity nor waste; the gains both sides make are apparent in the voluntary trades themselves. 

It’s as if he thinks if “we” must pay anyone, it should be to ourselves, that is, to our fellow countrymen.

Behind this is that old crank notion, protectionism: “we have big deficits with Canada, like we have with all countries.”

Now, it’s true that Canadians send more raw materials to the U.S. than we send to them, and that we send them more dollars than they send us theirs: that’s what “trade deficit” means. 

But how is this bad for us? 

Trump doesn’t explain. “I look at some of the deals made and I say, ‘Who the hell made these deals?’ They’re so bad.”

Mr. Trump identifies no specific trade rules or agreement; he doesn’t say which are unfair, or why; nor does he say who made them. But the trades that pile up to that overall deficit, each was made by Americans and Canadians who thought the deal best for them.

Trump’s seemingly goofy idea of adding Canadian provinces to the U.S. as new states would have one great benefit: more trades with these good people than ever. This belies Trump’s far, far more troublesome notion that we need nothing from Canada. We need everything. As Canadians do.

That is, freedom.

This is Common Sense. I’m Paul Jacob.

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