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Donald Trump's Misguided Trade Wars


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2018 Jun 10, 6:46am   3,358 views  25 comments

by ohomen171   ➕follow (2)   💰tip   ignore  

#tradewarsI have over 35 years experience in international trade. Here are some things I know well as follows:



1) I lived for 5 years in Brasil. When it comes to international trade, they have a Brasil first policy that Donald Trump would love. Massive import duties are imposed on virtually everything that must be imported to Brasil. The result is very high prices for any sort of consumer electronics, cars, clothes, shoes; the list can go on for pages. More affluent Brasilians leave with empty suitcases and buy most of what they need in other countries. The poor suffer and often cannot even afford the necessities of life.



2) I live relatively near the port of Oakland. Huge container ships full of goods dock at the port. They off load massive amount of goods made primarily in China but also in other Asian countries. The containers containing all of these goods sit empty at the Port of Oakland. The US runs a huge trade deficit with the rest of the world.



3) Germany has just the opposite experience. Massive cargo container ships come from Asian countries to German ports like Hamburg. The Asian goods are off loaded. The containers are filled with very high-quality manufactured goods from Germany that go back to Asia. Germany has a huge trade surplus and the largest foreign exchange reserves in the world. Does Germany have "a Germany First" trade policy putting massive import duties on products that come from other countries. No, they just do a better job of being competitive.



4) Donald Trump reads trade statistics that show these trade imbalances and concludes that it is unfair to the USA. These trade statistics do not show the whole picture of international economics. A lot of money comes back to the US from foreign countries that is not recorded in the official trade figures. I could write a book on this. If we did the statistics right, we might find that the US actually has a trade surplus with the rest of the world.



5) A cautionary tale from 1929-1932 is in order here. Most people believe that the stock market crashes of 1929 and onward caused The Great Depression. In those times long ago, only 2% of the US population was invested in the stock market. What actually caused The Great Depression was a series of trade wars with high import duties as Trump is doing now.

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1   Tenpoundbass   2018 Jun 10, 7:01am  

ohomen171 says
When it comes to international trade, they have a Brasil first policy that Donald Trump would love. Massive import duties are imposed on virtually everything that must be imported to Brasil. The result is very high prices for any sort of consumer electronics, cars, clothes, shoes; the list can go on for pages. More affluent Brasilians leave with empty suitcases and buy most of what they need in other countries.

Give it a rest we have the resources and capability to produce all of that, we used to do so. And had a healthy middle class while doing so. There's more of a precedence that says the opposite of what you are saying is actually better for this country.

ohomen171 says
4) Donald Trump reads trade statistics that show these trade imbalances and concludes that it is unfair to the USA. These trade statistics do not show the whole picture of international economics. A lot of money comes back to the US from foreign countries that is not recorded in the official trade figures. I could write a book on this. If we did the statistics right, we might find that the US actually has a trade surplus with the rest of the world.


Bilderberg money doesn't not end up in our pockets.

ohomen171 says
A cautionary tale from 1929-1932 is in order here. Most people believe that the stock market crashes of 1929 and onward caused The Great Depression. In those times long ago, only 2% of the US population was invested in the stock market. What actually caused The Great Depression was a series of trade wars with high import duties as Trump is doing now.


Investor bubbles caused the crash that caused the GD.
2   MisdemeanorRebel   2018 Jun 10, 9:38am  

ohomen171 says
3) Germany has just the opposite experience. Massive cargo container ships come from Asian countries to German ports like Hamburg. The Asian goods are off loaded. The containers are filled with very high-quality manufactured goods from Germany that go back to Asia. Germany has a huge trade surplus and the largest foreign exchange reserves in the world. Does Germany have "a Germany First" trade policy putting massive import duties on products that come from other countries. No, they just do a better job of being competitive.


Not True, Both Germany and the EU it controls have high tariffs, outsource only the very bottom low value added jobs, has strict limits for imports, and demand Chinese buy goods in exchange for allowing their goods into Germany. The Germans have Europe as a captured market and buy up to shut down any attempt at low value added manufacturing in Eastern Europe.

1 in 5 German Jobs involve manufacturing. The USA is like 1 in 8.

The Germans have NEVER embraced free trade. It's how they (and we) industrialized in the first place: High Tariff, aggressive Export.

When the UK adopted Free Trade, they lost the #1 slot within a few decades to Protectionist Germany and the USA. Don't repeat the mistakes of history.
3   FuckTheMainstreamMedia   2018 Jun 10, 9:59am  

How are we even here having this discussion? Wasn’t President Trump’s handling of the North Koreans supposed to trigger ww3 and nuclear Armageddon?
4   MisdemeanorRebel   2018 Jun 10, 10:07am  

Canada's tariff on US Diary is 270%

That's not a typo.

Meanwhile, Canadians are importing huge amounts of car parts from China and Europe, and claiming the end product should be tariff free for NAFTA when they import into the USA.
5   anonymous   2019 Feb 11, 11:29pm  

Trade wars could cost 2 million US jobs - White House under pressure to ratchet down trade conflicts

As U.S. business leaders grapple with consequences of the Trump administration’s inclination to use tariffs, new research released this month detailed the potential scale of the self-inflicted pain.

Washington DC-based consulting firm Trade Partnership Worldwide put together a report estimating the possible effects should the US go through with threatened escalation in tariffs on Chinese goods and new duties on foreign autos.

The damage inflicted to the US economy due to tariffs already imposed, as well as possible additional tariffs and retaliation, could end up shaving 1% off of GDP growth, while costing more than 2 million jobs, the economists found.

Higher tariffs on Chinese goods alone, which are scheduled to go into effect on March 1 if no deal is reached, would result in the loss of nearly 1 million jobs.

Those direct effects do not take into account losses accrued from the loss of business investment due to increased policy uncertainty.

The job losses, the report claims, would be spread across every US state.

Opposition to the Trump administration’s trade policy has attracted bipartisan support in the US Congress, with some momentum building to pass legislation that would limit presidential authority over trade policy.

But the bills that have been introduced would only address the tariffs that have been imposed on steel and aluminum imports – as well as potential tariffs on foreign-made autos. Both the metals tariffs and the review of possible auto tariffs cite national security as a basis for imposing tariffs.

The new legislation, if passed, would not curb the president’s power to target alleged unfair trade practices through tariffs, as is the case with China.

The White House is not just under pressure from lawmakers. Business leaders have reportedly redoubled their efforts to prevent a further escalation in the trade tensions with China, ahead of the fast-approaching March 1 deadline.

Trump administration officials delayed the implementation of tariffs that were scheduled to go into effect on January 1, pending the outcome of trade negotiations with China. But with less than three weeks left to strike a deal, reports indicate that the two sides still do not even have a draft of an agreement.

https://www.asiatimes.com/2019/02/article/trade-wars-could-cost-2-million-us-jobs/
6   anonymous   2019 Feb 11, 11:31pm  

Don't like the Asia Times ?

The ongoing U.S.-China trade war can put to risk at least 2 million U.S. jobs. The figure will increase if the U.S goes ahead with the proposed 25 percent tariff on other Chinese imports starting early March.

A new study has revealed this while examining the effects of the current trade war with China and trade issues with other countries.

The warning comes at a time the U. S just had a strong jobs data that cheered all. The jobs data had shown an addition of 304,000 jobs in January, much higher than what the analysts had expected.

However, the report predicting heavy job loss has been dubbed "exaggerated" by some analysts.

Scott Kennedy, a trade expert at the Centre for Strategic and International Studies said the report “likely overstates the job impact” and did not consider the scope of new jobs if China could make the needed structural adjustments.

The research by the Washington-based “Trade Partnership Worldwide” was commissioned by the pro-free trade lobby group “Tariffs Hurt the Heartlands.”

The report warned of a tough scenario coming from a 25 percent tariff imposition on all Chinese exports from March first week in case a deal fails to happen.

The report shows how the Trump administration’s plan to use tariffs to boost the U.S manufacturing will actually backfire.

American exports will be hurt

The report notes that the retaliatory tariffs on U.S. exports by China, the European Union, Canada, and Mexico will indeed weaken American exports.

The U.S. manufacturers will suffer from the high tariffs as costs of importing components will shoot up and affect their competitiveness in the export market.

The research unveiled multiple scenarios based on the adverse impact the China tariffs will inflict on GDP, families, and jobs plus the costs of retaliation. The study also said the potential economic fallout would stay on from one to three-years.

The base scenario of moderate damage

The base scenario talks about tariffs prevailing as on November 1, including those steel and aluminum tariffs, plus tariffs of 25 percent on Chinese exports to the U.S and some retaliation.

This would chop away 0.37 percent from the U.S. gross domestic product (GDP) and the impact on a four-member family will be US$767 per annum and it can lead to loss of 934,700 jobs.

The worse scenario can be a combination of all the three other scenarios, in which the GDP loss will be 1.04 percent. This will take away 2 million plus jobs from the U.S. economy.

Even though China news is awaited on its stand at the next round of talks in Beijing scheduled later in February, President Trump’s upcoming summit with North Korean President Kim Jong Un in Hanoi from Feb 27 to 28 Kim has moderated the media attention on the trade war negotiations.

https://www.ibtimes.com/us-china-trade-war-puts-2-million-jobs-risk-america-2762081
7   anonymous   2019 Feb 11, 11:39pm  

Don't like IBT or Asia Times ? How about the South China Morning Post Business Section ?

Currently, US$250 billion of Chinese exports to the United States are subject to tariffs of either 10 per cent or 25 per cent, but the number of goods on the higher tariff range will increase on March 2 if US and Chinese negotiators do not reach a deal.

While the tariffs are partly aimed at reviving US manufacturing, the study finds that retaliatory tariffs levies on US exports by the likes of China, the European Union, Canada and Mexico are causing US exports to weaken.

Trump’s tariffs also mean that US manufacturers have to pay more for the imported components they use in their own products, making them less competitive to export.

Researchers looked at four scenarios based on actual or threatened tariffs, and examined the potential economic fallout over a one- to three-year period.

Scenario one

Also known as “the base scenario”, it looks at if all the tariffs that were in place on November 1 remain in effect, including steel and aluminium tariffs and quotas, plus tariffs of 25 per cent on US imports of selected goods from China, plus retaliation.

This scenario would trim 0.37 per cent from the level of US gross domestic product (GDP) over three years, costing the average family of four US$767 per year, and result in net jobs losses of 934,700.

Scenario two

The base scenario plus US tariffs of 25 per cent on vehicles and parts imported from countries other than Canada, Mexico, the European Union, South Korea and Japan, plus retaliation.

The report predicts that this scenario would shave 0.43 per cent from US GDP, cost the average family of four US$902 per year and result in 1,040,200 in net job losses.

Scenario three

The base scenario plus US tariffs of 25 per cent on all remaining imports from China, plus retaliation.

Researchers estimate this would cut 1.01 per cent from US GDP, cost each family of four US$2,294 per year, and cause 2,159,500 in net job losses.

Scenario four

All three scenarios combined.

Researchers estimate this would reduce US GDP by 1.04 per cent, cost a family of four US$2,294 and cut 2,235,400 jobs from the US economy, net.

The report comes at a time when the US jobs market is in good health, leading some to conclude that it overstates the risks.

Some 304,000 jobs were added to the workforce in January, more than double the gain expected by analysts.

“I think the downside has been overestimated. We are also not seeing GDP contraction. Part of that is probably due to the fact that US oil and gas imports have helped with jobs, GDP growth and exports.”

Scott Kennedy, a China expert at the Centre for Strategic and International Studies, a US think tank, added in a tweet that the report “likely overstates [the] job impact” and does not take into account the jobs that would be added to the economy if China makes structural reforms.

However, the study does illustrate the economic tightrope being walked by the US government under Trump.

The Trump administration has been trying to force Beijing to reform its economy in a way that would create a level playing field for American firms doing business in China.

It has given China a tight deadline within which it must stop engaging in the sort of nefarious practises that have irked foreign businesses for years.

By March 1, Beijing must agree to structural changes with regard to “forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture”, said a White House statement after Trump and Chinese President Xi Jinping met in Argentina on December 1 and agreed on the current trade war truce.

However, in its aggressive pursuit of reform, the US government risks hurting its own economy, some analysts have warned.

Indeed, it has been a common mantra of free traders that the US tariffs are conducting a form of “self harm”.

“You have to ask what the tariffs do to your own economy,” the former US trade representative and World Bank chairman Robert Zoellick said in an interview in Hong Kong last month.

Meanwhile, in an open letter to current US Trade Representative Robert Lighthizer penned last year, technology giant Apple said: "It is difficult to see how tariffs that hurt US companies and US consumers will advance the government's objectives with respect to China's technology policies.”

https://www.scmp.com/economy/china-economy/article/2185446/us-china-trade-war-slash-almost-one-million-jobs-us-economy
8   anonymous   2019 Feb 11, 11:41pm  

The "report" cited in the three article immediately above. 30 pages

https://tradepartnership.com/wp-content/uploads/2019/02/All-Tariffs-Study-FINAL.pdf
9   MisdemeanorRebel   2019 Feb 12, 9:13am  

Kakistocracy says
Trade wars could cost 2 million US jobs - White House under pressure to ratchet down trade conflicts


And it's not.

Economists also failed to predict the Great Recession, almost to a man.
10   anonymous   2019 Feb 12, 9:17am  

Please be patient...
11   MisdemeanorRebel   2019 Feb 12, 9:27am  

Kakistocracy says
Please be patient...



Don't need to be. History shows Tariffs work Great: US All 19th- Mid 20th Century, Japan, South Korea, Taiwan... China.
12   anonymous   2019 Feb 12, 9:33am  

MisterLearnToCode says
History shows Tariffs work Great


Bad for business: History shows tariffs don’t work

All I really needed to know about tariffs I learned from the movie “Ferris Bueller’s Day Off.” In a famous scene, Ben Stein, playing a humorless social studies teacher with a monotone voice, is giving an economics lecture to a group of disinterested, gum-popping teenagers.

When the students failed to respond to any of his questions, Stein said, “Anyone? Anyone?” With a classroom full of silent students, Stein answers his own question and moves on. The focus of Stein’s lecture was the Smoot-Hawley Tariff Act. It is one of the funniest moments in a classic movie.

Historically, tariffs, or taxes paid on imports and exports, were a tool for governments to collect revenues. Tariffs also were a way to protect domestic products. Theoretically, with an increase in the price of imports, American consumers would choose to buy American goods. Recently, President Trump proposed dramatic increases to tariffs on steel and aluminum. The Smoot Hawley Tariff, though, is a great example as to why Trump’s tariffs are not a good idea.

In an attempt to bolster the U.S. economy during the Great Depression, Congress passed the Smoot-Hawley Tariff Act after the stock market crash of 1929. The legislation increased tariffs on farm products and manufactured goods. Many economists at the time feared the impact of the new tariffs.

Despite his own concerns, President Herbert Hoover approved the increased tariffs. Other nations countered by raising tariffs on American goods, bringing international trade to a standstill. Unemployment increased, making the Great Depression much worse.

Since that time, most policymakers, regardless of political affiliation, have favored lowering barriers to trade. International trade allows nations to specialize in certain industries, becoming more efficient. International trade also spurs innovation as nations and corporations seek advantages.

With higher tariffs, consumers often pay higher prices and have fewer choices. Since Trump’s announcement, the stock market has been quite volatile, taking investors on a terrifying roller coaster ride.

It is too bad that economics has developed a reputation as a boring academic subject. Economics is much more than guns and butter or playing the stock market. Economic forces drive our everyday lives. The discipline studies decision making at the individual, group and governmental level. Despite Ben Stein’s lackluster presentation, it is really quite fascinating.

If there is a trade war, Columbus might pay the highest price. In a March 22, 2018 article, the Washington Post wrote that Columbus would be the hardest-hit city in America during a trade war. Elkhart, Kokomo and Lafayette also are on the Washington Post’s list of the top 10 most vulnerable U.S. cities during a trade war.

It is pretty easy to see why increased tariffs would hurt Indiana cities. One-third of the American soybean harvest goes to China. Much of our local manufacturing is for export. Manufacturers need materials like aluminum and steel. A trade war would increase the cost of production. Additionally, corporations such as Cummins operate factories overseas.

There are certainly issues to iron out with our international trading partners. It is important for the United States to avoid steep trade imbalances. The U.S. should also protect intellectual property. We also want to hold our trading partners to the wage standards that we have in the U.S. We will also want safe working conditions and a clean environment.

But starting a trade war will not solve these problems. It will only make our economic problems worse, won’t it? Yes or no? Anyone? Anyone?

http://www.therepublic.com/2018/04/04/04042018cr_aaron_miller_column/

Even funnier is "we" are paying for the tariffs - not China - that is covered in another post.
13   MisdemeanorRebel   2019 Feb 12, 9:35am  

Kakistocracy says
Bad for business: History shows tariffs don’t work


Neoliberal nonsense. It industrialized the USA (compare to Cent/Sou American countries that happily no-tariff imported from Europe), Japan, South Korea, China, Taiwan, Germany, and many others. The US had big fat tariffs from 1792 to the 1960s. Guess when America began having trouble?!

Kakistocracy says
Even funnier is "we" are paying for the tariffs - not China - that is covered in another post.



Nope, we gain property taxes, jobs and income taxes, corporate tax, the money AND the Goods. With no tariff, we lose the money, jobs and income tax, property tax, corporate tax, etc. and just get the goods. And with a tariff, if we don't make it, we still get extra revenue from those insisting on buying foreign goods.
14   anonymous   2019 Feb 12, 9:42am  

MisterLearnToCode says
Neoliberal nonsense


Read all that in less than 2 minutes plus type a response - wow.

If the tariffs are all they are cracked up to be - why are so many mom and pop shops that rely on steel etc. closing up shop because of higher prices and or supply chain disruptions ?

Anyone told the Dotard there is such thing as a supply chain, a global one at that.

The drug dealers know this better than anyone in our administration, have a better understanding of it and how to use it to maintain maximum profits without declaring bankruptcy or going out of business

Last time - for today anyway. Whatever you remember from 1950s, 1960s, 1970s, 1980s, - it's gone. Just like the movie - "Gone With The Wind"

Productivity improvements will result in less workers needed.

Businesses are not charity organizations and go out and hire people because someone in the administration tell them to.

Business exists to make a profit, stay in business, reward stock holders if applicable and the less people they need to produce the same result - the better because the profit margin increases.
15   MisdemeanorRebel   2019 Feb 12, 9:44am  

Kakistocracy says
Read all that in less than 2 minutes plus type a response - wow.


Yes, I've heard the neoliberal argument 100x times.

It completely dismisses the fact that for the first 2/3rd of US History, during which we became the World's Industrial Superpower, we had big fat Tariffs, averaging over 30% across the board with near or above double-digit GDP growth annually.

Overseas factories don't pay US Corporate Tax, Local Property Taxes, Income Taxes, Sales Taxes, etc. Nor do they abide by US Labor or Enviro Laws.
16   anonymous   2019 Feb 12, 9:44am  

MisterLearnToCode says
Yes, I've heard the neoliberal argument 100x times.


That would also apply to the standard rah rah from the base
17   anonymous   2019 Feb 12, 9:45am  

MisterLearnToCode says
first 2/3rd of US History


News flash - America is well past Peak Empire - what worked in the fist 2/3 is not going to work in this third.
18   MisdemeanorRebel   2019 Feb 12, 9:46am  

Kakistocracy says
News flash - America is well past Peak Empire - what worked in the fist 2/3 is not going to work in this third.


Correlation doesn't equal Causation, but it's the best starting point.

America began to lose headway when we dumped reasonable Tariffs for one-sided Free Trade, and Skill based Immigration for Extended Families and Diversity.

Kakistocracy says
News flash - America is well past Peak Empire - what worked in the fist 2/3 is not going to work in this third.


Imitate success, and if you find yourself wallowing, go back to first principles.
19   anonymous   2019 Feb 12, 9:49am  

We are in the twilight of being number one - get used to it.

When the dust settles in a few more years - lets celebrate if we can maintain a respectable 2 or 3 in the world.
20   anonymous   2019 Feb 12, 9:53am  

MisterLearnToCode says
go back to first principles.


That would be a great thing to do - if we had not abandoned whatever we had for principles decades ago in favor of outright greed, meeting quarterly numbers to appease wall street, activist investors, hedge fund managers, etc.

Don't even want to spend much time right now considering what passes for principles in this country anymore - those that gave all in the assorted wars especially WWII would be turning over in their graves to see what they fought for has turned into.
21   MisdemeanorRebel   2019 Feb 12, 9:55am  

Kakistocracy says
We are in the twilight of being number one - get used to it.


Nah, that's Carter-Obummer defeatism. Again, I don't trust policy recommendations from those who claim the US is the font of Great Evil.
22   anonymous   2019 Feb 12, 10:01am  

We are one of several major purveyors of Great Evil.

If the nations' empire life span and being numero uno was based on a 24 hour or military clock - we are past 1200 hours and the referees are not going to reset the game clock.
23   MisdemeanorRebel   2019 Feb 12, 10:23am  

We're about to experience growth never seen before in all of humanity. It'll make the Agricultural Revolution or the Settlement of the New World look like a joke.

We're headed to a post-scarcity regime, lead by the USA.
24   anonymous   2019 Feb 13, 4:17am  

MisterLearnToCode says
We're about to experience growth never seen before in all of humanity. It'll make the Agricultural Revolution or the Settlement of the New World look like a joke.

We're headed to a post-scarcity regime, lead by the USA.


You and I will never see this in our lifetimes.

We way get to witness something never seen before in all of humanity - growth as you describe, it won't be.
25   MisdemeanorRebel   2019 Feb 13, 7:21am  

Kakistocracy says
You and I will never see this in our lifetimes.

We way get to witness something never seen before in all of humanity - growth as you describe, it won't be.


Let me get out my SPF 5000 so I can go outside due to the total destruction of the Ozone Layer.

With my poncho just in case the acid rain comes.

Fortunately, the Democrats unilaterally disarmed our ICBM arsenal so we don't have to worry about Nuclear Winter.

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