Tag: tariffs

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free trade & free markets international affairs tax policy

Trump’s Tariff Question

China, trade, war, tariffs, economy

If Donald Trump fails to re-​take the White House in November (and then for real in early 2025), his legacy may quickly devolve into a matter for historians, not live politics. After people calm down and the culture war stuff recedes (once again, if allowed by events), what will be left to argue over are a half-​dozen major issues, which include war, mass migration … and tariffs.

Tariffs have long been Mr. Trump’s major hobby horse; he gets excited about 100 percent levies. The whole business about the “bloodbath” quote was his insistence that American auto industry will be destroyed if Trump himself doesn’t get the chance to erect ultra-​high tariffs against automobiles from Mexico.

Trump looks at tariffs on foreign goods as harming foreign nations and helping us, the Americans.

But it is worth noting that economists from Adam Smith and David Ricardo onward have regarded tariffs as chiefly harming consumers within the country that erects them. 

At Reason you can read Veronique de Rugy make the classic free-​trade case, anew, in “No, Trump-​Style Tariffs Do Not Grow the Economy.” If Frédéric Bastiat didn’t convince you, maybe de Rugy will.

But something’s missing. Surrounding Trump’s talk against free trade in general and China in particular there was always another element that neither Bastiat nor de Rugy emphasize: free-​trading with China helps Chinese and Americans, sure; gotcha — but it also helps the Chinese state, and its ruling Communist Party. 

“Trump is an avowed restrictionist on both immigration and trade,” de Rugy writes. But both unchecked immigration and free trade present problems not economic so much as political. It’s about real bloodbaths, actual warfare, not metaphorical ones.

Even if Trump misdiagnosed the domestic economy, he saw problems with China perhaps more clearly than anyone else.

This is Common Sense. I’m Paul Jacob.

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Illustration created with PicFinder and Firefly

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free trade & free markets national politics & policies too much government

More of the Same?

USMCA, NAFTA, Trump, free trade, harbor scene, protectionism, tariffs,

For those who hated NAFTA, and have supported Donald Trump in his complaints about “the very bad deal” that the North American Free Trade Agreement [allegedly] has been, I ask: what was bad about NAFTA that isn’t in Donald Trump’s new version, the United States-​Mexico-​Canada Agreement?

Actual question. I am not in the least bit interested in gotchas, here. I am willing to celebrate USMCA when (a) I can make sense of it and (b) it proves not just more of the same.

The thing I liked best about NAFTA was that it had “Free Trade” in the title. I like free trade. Trade is good; freedom is good. It is not generally bad to trade with Mexico and Canada — for Mexicans, Canadians, and Americans. I simply have trouble believing that politicians and their aides (along with overly-​friendly lobbyists) know better than market competition what the terms of those zillions of deals should be.

But I freely admit, what I didn’t like about NAFTA was that there was more “free trade” in the title than in the agreement itself.

NAFTA was managed trade. 

As far as I can make out, so is USMCA.

Oddly, I just heard two of the three Daily Wire guys* praising USMCA for setting quotas on how much of what can be produced where.

Quotas and mandates and the like are not free trade.

“Managed trade” is just another way of saying “protectionism.” Savvy politicians don’t even like calling it “managed trade.” They call it “fair trade.” 

Free trade is fair enough. Politicians’ “fair trade” isn’t free enough.

This is Common Sense. I’m Paul Jacob.

 

* Andrew Klavan and Michael Knowles, recent podcasts: dailywire​.com.

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Illustration: Dutch free traders in Harbor Scene by Abraham Storck  (1644 – 1708)

 

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free trade & free markets government transparency media and media people national politics & policies too much government

Most Outrageous Negotiation Strategy Yet

Trump cards, Donald Trump, The Madman Theory, strategy, negotiation, deal, trade, tariffs, trade war

The best defense of Donald Trump’s presidency, so far? He is smarter than the rest of us, and knows how to negotiate with bad guys and insider players. We have to discount what he is saying, the theory goes, because he is not telling truths … obviously. 

He is negotiating.

Take nothing at face value, including Trump’s professed beliefs.

Protectionism, for example. Trump has long been against NAFTA and the modern version of “free trade.”* But, as I noted in late July, Trump does not seem to be demanding managed trade, or high tariffs as a means to protect American producers, or even tariffs as a means to increase government revenue. He appears — at least some of the time — to be using tariffs as a way to bargain other countries to reduce their tariffs.

This method has not worked in the past.

But is Trump different enough a politician to pull off a “madman” strategy to get leaders in other countries to do the right thing and reduce their tariff and regulatory burdens on their own countries?

A long shot — and several sectors of American business are being hurt right now in this “negotiating” (threat) phase of Trump’s outrageous gambit.

Another area where one might express such hope for a master-​negotiator president is in reining back the Pentagon. In the run-​up to November 2016, Trump sure seemed defiant of the neo-conservative/neo-“liberal”/center-left establishment on foreign policy.

But now he just signed a huge increase in the Pentagon budget: an $82 billion increase.

Is Trump’s plan to bring big-​spending military-​industrial complex lobbyists to heal by first giving them what they want?

That. Won’t. Work. 

This is Common Sense. I’m Paul Jacob.

 

* Post-​WWII trade policy has consistently defended treaty-​based global trade, but with heavy elements of protective tariffs, regulations and subsidies, making the whole thing look less like Free Trade and more like Mis-​Managed Trade.

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