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Trump's Bullshit Trade Tantrums

Trade Wars Are Destructive. Of Course Trump Wants One.

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President Trump has been spoiling for a trade war since before his election. Now, he has taken the first meaningful step with his decision to impose tariffs on steel and aluminum imports. And, as with so many other policies he has supported, he appears to have little understanding of this one.

Invoking a rarely used law that allows the president to restrict trade on national security grounds, Mr. Trump said he would impose a 25 percent tariff on steel and a 10 percent tariff on aluminum. He made the announcement on Thursday at a hastily convened meeting with executives of those two industries. Many White House aides, including Mr. Trump’s chief economic adviser, Gary Cohn, appeared to be caught off guard by the decision; on Wednesday, Mr. Cohn had warned that he might resign if Mr. Trump went through with the tariff plan.

The administration offered few details about how long the tariffs would be in place and whether they would apply to all countries, including those with which the United States has a trade agreement, like Canada, Mexico and South Korea.

The stock market fell sharply after the announcement because investors feared that the move was the first of several that could result in escalating disputes in which the United States and its trading partners impose new tariffs. Mr. Trump seemed to confirm that fear on Friday morning when he tweeted that “trade wars are good, and easy to win” — an argument that contradicts virtually everything we have learned about how such scenarios play out.


The steel and aluminum tariffs are ostensibly aimed at punishing China, which has been driving down prices for those commodities by producing far more metal than the world can use. But Mr. Trump’s move will have a limited effect on China because much of the steel and aluminum the United States imports actually comes from allies like Canada, Brazil, South Korea and Mexico. Further, the move could hurt American businesses that use these metals, including auto and construction companies, which will now pay more for a critical raw material.

If Mr. Trump were truly interested in getting China to reduce its excess production, he would have worked with the European Union, Canada, Japan, South Korea and other countries to put pressure on Beijing. Those nations tend to be closely aligned with the United States and have also been hurt by China’s mercantilist economic policies.

But rather than make common cause with them, Mr. Trump has angered American allies with this move. Top officials in Canada and the European Union are already threatening to retaliate forcefully against the new Trump tariffs. They could do so by bringing cases against the United States at the World Trade Organization, or by doing what Mr. Trump did and unilaterally imposing new tariffs on American exports like soybeans and Boeing planes. As it happens, Canada imports more American Steel than it exports to the United States, giving it the ability to hurt the very industry Mr. Trump claims to want to help. The country’s foreign minister, Chrystia Freeland, says Canada buys about half of American steel exports.

It’s also not clear that these tariffs will help Mr. Trump achieve his goal of increasing manufacturing employment in the United States. For example, businesses located in this country already produce about 70 percent of the steel used here. Experts say for every new job at a steel mill or aluminum smelter that is created by this trade decision, the country could lose as many or more jobs at businesses that use those metals, which will now cost more. This is one of the reasons that trade wars are, in fact, not easy to win.

Mr. Trump clearly sees trade as a zero-sum game. He and some of his most protectionist advisers, including Peter Navarro, think that if China and Mexico sell the United States more things than they import from America, they are winning. The president wants to turn the table on them with tariffs and other trade restrictions. But trade is much more complicated than that. Tariffs are blunt instruments that can hurt countries that use them, just as much as they can help.

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.
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Trump’s Tariff Folly

From that bastion of liberalism, the WSJ editorial board. Behind a paywall. Anyone here subscribe?

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His tax on aluminum and steel will hurt the economy and his voters.
By The Editorial Board

Updated March 1, 2018 10:51 p.m. ET

Donald Trump made the biggest policy blunder of his Presidency Thursday by announcing that next week he’ll impose tariffs of 25% on imported steel and 10% on aluminum. This tax increase will punish American workers, invite retaliation that will harm U.S. exports, divide his political coalition at home, anger allies abroad, and undermine his tax and regulatory reforms. The Dow Jones Industrial Average fell 1.7% on the news, as investors absorbed the self-inflicted folly.

Mr. Trump has spent a year trying to lift the economy...
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Can someone sign him up for a 8th grade intro to macroeconomics class?
 
Full WSJ article below. Pro Tip: google the article title and wsj and you can usually get the full text in one of the links in the "top stories" section of google.


Donald Trump made the biggest policy blunder of his Presidency Thursday by announcing that next week he’ll impose tariffs of 25% on imported steel and 10% on aluminum. This tax increase will punish American workers, invite retaliation that will harm U.S. exports, divide his political coalition at home, anger allies abroad, and undermine his tax and regulatory reforms. The Dow Jones Industrial Average fell 1.7% on the news, as investors absorbed the self-inflicted folly.

Mr. Trump has spent a year trying to lift the economy from its Obama doldrums, with considerable success. Annual GDP growth has averaged 3% in the past nine months if you adjust for temporary factors, and on Tuesday the ISM manufacturing index for February came in at a gaudy 60.8. American factories are humming, and consumer and business confidence are soaring.

Apparently Mr. Trump can’t stand all this winning. His tariffs will benefit a handful of companies, at least for a while, but they will harm many more. “We have with us the biggest steel companies in the United States. They used to be a lot bigger, but they’re going to be a lot bigger again,” Mr. Trump declared in a meeting Thursday at the White House with steel and aluminum executives.

No, they won’t. The immediate impact will be to make the U.S. an island of high-priced steel and aluminum. The U.S. companies will raise their prices to nearly match the tariffs while snatching some market share. The additional profits will flow to executives in higher bonuses and shareholders, at least until the higher prices hurt their steel- and aluminum-using customers. Then U.S. steel and aluminum makers will be hurt as well.

Mr. Trump seems not to understand that steel-using industries in the U.S. employ some 6.5 million Americans, while steel makers employ about 140,000. Transportation industries, including aircraft and autos, account for about 40% of domestic steel consumption, followed by packaging with 20% and building construction with 15%. All will have to pay higher prices, making them less competitive globally and in the U.S.

Instead of importing steel to make goods in America, many companies will simply import the finished product made from cheaper steel or aluminum abroad. Mr. Trump fancies himself the savior of the U.S. auto industry, but he might note that Ford Motor shares fell 3% Thursday and GM’s fell 4%. U.S. Steel gained 5.8%. Mr. Trump has handed a giant gift to foreign car makers, which will now have a cost advantage over Detroit. How do you think that will play in Michigan in 2020?

The National Retail Federation called the tariffs a “tax on American families,” who will pay higher prices for canned goods and even beer in aluminum cans. Another name for this is the Trump voter tax.

The economic damage will quickly compound because other countries can and will retaliate against U.S. exports. Not steel, but against farm goods, Harley-Davidson motorcycles, Cummins engines, John Deere tractors, and much more.

Foreign countries are canny enough to know how to impose maximum political pain on Republican Senators and Congressmen in an election year by targeting exports from their states and districts. Has anyone at the White House political shop thought this through?

Then there’s the diplomatic damage, made worse by Mr. Trump’s use of Section 232 to claim a threat to national security. In the process Mr. Trump is declaring a unilateral exception to U.S. trade agreements that other countries won’t forget and will surely emulate.

The national security threat from foreign steel is preposterous because China supplies only 2.2% of U.S. imports and Russia 8.7%. But the tariffs will whack that menace to world peace known as Canada, which supplies 16%. South Korea, which Mr. Trump needs for his strategy against North Korea, supplies 10%, Brazil 13% and Mexico 9%.

Oh, and Canada buys more American steel than any other country, accounting for 50% of U.S. steel exports. Mr. Trump is punishing our most important trading partner in the middle of a Nafta renegotiation that he claims will result in a much better deal. Instead he is taking a machete to America’s trade credibility. Why should Canada believe a word he says?

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Mr. Trump announced his intentions Thursday, so there’s still time to reconsider. GOP Senators Orrin Hatch (Utah) and Ben Sasse (Nebraska) spoke up loudly against the tariffs, but a larger business and labor chorus is required. Mr. Trump is a bona fide protectionist so he won’t be dissuaded by arguments about comparative advantage. But perhaps he will heed the message from the falling stock market, and from the harm he will do to the economy, his voters, and his Presidency.
 
If we did as well with the rest of the world as we did with Mexico, our economy would be insane. We'd have to set up an armada to keep people from coming to America to work. But according to Trump, Mexico is screwing us. What an idiot!
 
They definitely don’t laugh at our fool of a leader now. Not a chance.
 
Alright who’s going to be in the next round of resignations now? Cohn and Mnuchin?
 
I'm sure all of those car manufacturing states must be loving this latest round of tweets. Michigan, South Carolina, Alabama. But hey if Trump voters want more expensive cars, goods and fewer jobs...who am I as a coastal elite to judge?
 
Yep—we need to get them Germans and Japanese to build some o’ they cars over hea!
 
I'm sure all of those car manufacturing states must be loving this latest round of tweets. Michigan, South Carolina, Alabama. But hey if Trump voters want more expensive cars, goods and fewer jobs...who am I as a coastal elite to judge?

Scott Walker already “respectfully asked” for Trump to reconsider.

What a putz.
 
they know he represents the party base
 
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