Tag: trade

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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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general freedom

Catching Something

virus, epidemic, coronavirus,

Our civilization depends on our ability to move about and trade. 

Which is based, in part, on trust and reciprocity and mind-​your-​own-​business. The basic ‘deal’ is ‘I won’t hurt you if you don’t hurt me.’

But it’s not just manners and morality. When we fear that being around others, especially strangers, could lead to catching a severe or even life-​threatening illness, the normal business of commerce breaks down.

Which becomes clear, now that a new disease in China threatens to break out worldwide.

Called the ‘2019 Novel Coronavirus,’ the illness has become widespread there, leading the government to quarantine the city of Wuhan, said to be the epicenter of the contagion.

“The lockdown follows fears that the respiratory disease could become a global epidemic,” writes Isabel van Brugen in The Epoch Times, “and as the United States this week became the fifth country outside of China — and the first outside Asia — to confirm a case of infection.”

“The closures,” said the municipal government, “will continue until further announcement.”

Pestilence and war are the two major reasons for this kind of collapse in normal commerce. But contagion may be less controllable even than war, so learning the lesson Wuhan’s inhabitants are now learning is something we can eagerly import from China right now.*

The lesson? 

Have food on hand, in case a pandemic bars you from going to market for days or weeks on end.

Wuhan folk are scrambling for supplies now.

Take it as a cue to shop for staples: stock up on bottled water, beans, sterno cans, and, say — with a tip of the hat to the beset Chinese — rice.

This is Common Sense. I’m Paul Jacob.

* Since my first draft, two more cities have been closed to travel, and six countries outside of China have experienced cases of infection. And questions have been raised about how transparent totalitarian China will be.

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virus, epidemic, coronavirus,

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national politics & policies Popular responsibility U.S. Constitution

Congress’s King

King of Diamonds, King Donald, Donald Trump, trade, tariff, power,

Politics today reveals a troubling dialectic.

Thesis: President Trump boasts that he is going to unilaterally “do something” as if he were Emperor, not President. 

Antithesis: Then comes pushback from political opponents and the media, castigating our current commander-​in-​chief for imagining himself a lawless dictator. 

Synthesis: This is soon followed, however, by the discovery that the president does have such awesome power. 

Legally.

In our constitutional system, can a president can just wake up one day and slap tariffs on imports? Well, numbskulls in Congress passed a law handing the president that specific power.

When President Trump declared an emergency to re-​direct money, appropriated by Congress for different purposes, toward building the Wall, many argued that the president cannot usurp Congress’s undisputed power of the purse. True, but irrelevant. Congress had indeed delegated all these undefined and largely unchecked “emergency” powers to the prez.

Last week, as the trade war with China was coming to a boil, Mr. Trump tweeted, “Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing … your companies HOME and making your products in the USA.”*

I thought, “Does Trump really think he has the legal authority to order all U.S. businesses to leave China?”

Yes … and apparently he does. It’s called The International Emergency Economic Powers Act.

“One of the enduring phenomena of the Trump era,” University of Texas law professor Stephen Vladeck told CNN, “is going to be the list of statutes that give far too much power to the President, but that many didn’t used to worry about — assuming there’d be political safeguards.”

Or that “the right person” would always be in office.

This is Common Sense. I’m Paul Jacob.

* Note that Mr. Trump did not order the companies to leave, but did assert his “absolute right” to do so.

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King of Diamonds, King Donald, Donald Trump, trade, tariff, power,

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Common Sense free trade & free markets government transparency insider corruption local leaders media and media people national politics & policies too much government

Never Trust a Politician

salt, lies, politicians, politics, Donald Trump, truth, economy, trade

One of my more persistent critics on this site asked, last week, why I might believe anything the current president says — considering all the lies.

For reasons of decorum I won’t repeat his exact wording.

The odd thing about the comment was not the vulgarity, though (unfortunately). It was the idea that I was relying upon belief in Donald Trump’s veracity. The whole point of my commentary regarding Trump’s handling of trade and foreign policy was to read between some lines.

I try never to believe anything … er, everything … any politician says.

In Donald Trump’s case, though, there are lies and there are fictions and there are exaggerations. And corkers … and “negotiating gambits.” Separating the wheat from the chaff from the grindstone is not always easy.

Based not only on some of what he says, but also on results-​thus-​far from the EU negotiations, Trump’s idea of “fair trade” appears to be multilateral free trade. But he has chosen a bizarre method to get there: the threat of high-​tariff protectionism — which in the past has led to multilateral protectionism, not free trade.

Trump sees everything as a contest. Trade isn’t a contest as such. It’s win-​win. But trade negotiations are contests. And Trump’s game of chicken is dangerous.

Regarding foreign policy generally, though, he seems to be playing a more familiar game: we can outspend everybody. The recent increase in Pentagon spending is bigger than Russia’s annual military budget!

So, who pays? Americans in

  1. higher taxes and 
  2. the consequences of massive debt, as well as in
  3. the higher prices from his tariffs.

That’s awfully daring of him. For us.

This is Common Sense. I’m Paul Jacob.

 

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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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Accountability free trade & free markets general freedom national politics & policies property rights responsibility too much government U.S. Constitution

The Trump Trade Enigma

Trump, worship, trade, trade war, tariff, free trade, trade deficit

President Donald J. Trump, former “reality TV” star, often seems merely to skirt reality.

“Our trade deficit ballooned to $817 billion,” President Trump exaggerated to the “men and women of U.S. Steel” last week. 

“Think of that. We lost $817 billion a year over the last number of years in trade,” he went on. 

“In other words, if we didn’t trade, we’d save a hell of a lot of money.”

This is the sort of dopey bunk a drunk at a bar might say, after the fourth shot had obliterated any remnant of economic understanding from his synapses.

But the president said this in Granite City, Illinois, in front of cameras, a live mic, and a cheering crowd.

And yet, as I wrote yesterday at Townhall, Donald Trump is now explicitly aiming at a worldwide free trade policy, negotiating to break down trade barriers and get rid of subsidies on … well, “non-​automobile industrial goods.”

I’m almost afraid to ask him why not all industrial (and, for that matter, agricultural) products. Could one expect a coherent answer from someone who does not understand that an $817 billion “trade deficit” means that we, the consumers of the United States of America, got stuff from each billion spent? Each dollar?

And yet, if he pulls off worldwide free trade agreements — for whatever reason — he may almost be worth the attention that Bussa Krishna, of the southern state of Telangana, India, gives him.

The man set up a shrine to worship Donald Trump.

I will never do the same. But I’d tip my hat to almost anyone who fosters trade, and the peace and progress trade brings to the world.

This is Common Sense. I’m Paul Jacob.

 

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