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I’m a Tariff Man
From the President’s Twitter account: “President Xi and I want this deal to happen, and it probably will. But if not remember … I am a Tariff Man.”
“When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so,” the president wrote. “It will always be the best way to max out our economic power. We are right now taking in $billions in Tariffs. MAKE AMERICA RICH AGAIN.”
The mocking reactions were predictable enough from both the right and the left. It’s interesting, too. From the left it seems we’ve finally found a tax the Democrats don’t want to embrace and a willingness to tell unionized industrial workers in America to go pound sand. From the right, we’ve finally found an issue where they’re willing to say that Ronald Reagan was full of it.
“Wait a minute,” you say. “NAFTA had its roots in the Reagan Administration!” True enough, but Reagan’s was also a presidency full of protectionist tariffs and policies*:
- Forced Japan to accept restraints on auto exports;
- Tightened considerably the quotas on imported sugar;
- Negotiated to increase the restrictiveness of the Multifiber Arrangement governing trade in textiles and apparel;
- Required 18 countries, including Brazil, Spain, South Korea, Japan, Mexico, South Africa, Finland, Australia, and the European Community, to accept “voluntary restraint agreements” that reduce their steel imports to the United States;
- Imposed a 45% duty on Japanese motorcycles for the benefit of Harley Davidson, which admitted that superior Japanese management was the cause of its problems;
- Raised tariffs on Canadian lumber and cedar shingles;
- Forced the Japanese into an agreement to control the price of computer memory chips;
- Removed third-world countries on several occasions from the duty-free import program for developing nations;
- Pressed Japan to force its automakers to buy more American-made parts;
- Demanded that Taiwan, West Germany, Japan, and Switzerland restrain their exports of machine tools;
- Accused the Japanese of dumping roller bearings on grounds so that the price did not rise to cover a fall in the value of the yen;
- Accused the Japanese of dumping forklift trucks and color picture tubes;
- Extended quotas on imported clothes pins;
- Failed to ask Congress to end the ban on the export of Alaskan oil and timber cut from federal lands;
- Redefined dumping so domestic firms can more easily charge foreign competitors with unfair trade practices;
- Beefed-up the Export-Import Bank, an institution dedicated to distorting the American economy at the expense of the American people in order to artificially promote exports of eight large corporations.
This was not out of character for Reagan. In the 1980 Republican Platform his ideals toward trade was laid out in clear and simple language. “The [Carter] Administration’s inability to ensure fairness and equity between our nation and some of our trading partners has resulted in massive unemployment in many core industries. As we meet in Detroit, this Party takes special notice that among the hardest hit have been the automotive workers whose jobs are now targeted by aggressive foreign competition. Much of this problem is a result of the present Administration’s inability to negotiate foreign trade agreements which do not jeopardize American jobs. We will take steps to ensure competitiveness of our domestic industries to protect American jobs.” (Emphasis mine.)
As international trade agreements began to be hammered out, through the Republican Administrations of the two Bushes and the Democratic Administrations of Clinton and Obama, how did this work out? Not so well? Hey, these jobs are gone and ain’t coming back. No Reaganite worth his salt would embrace Trump’s tariffs, right?
Again, from the ’80 Reagan platform with my emphasis:
The Republican Party believes that protectionist tariffs and quotas are detrimental to our economic well-being. Nevertheless, we insist that our trading partners offer our nation the same level of equity, access, and fairness that we have shown them. The mutual benefits of trade require that it be conducted in the spirit of reciprocity. The Republican Party will consider appropriate measures necessary to restore equal and fair competition between ourselves and our trading partners.
If you asked any conservative if we should unilaterally disarm militarily they would rightfully look at you as if you had grown a second head. Yet, they will insist on complete unilateral disarmament in trade. But, Trump, right?
*Source: Mises Institute
Published in General
That’s a lousy analogy. Being against disarmament doesn’t mean that you’re for war. It means you’re in favour of being prepared for war.
It also assumes that the only “weapons” in the ongoing trade war are tariffs. We might do better to be more competitive. We might do better to get out from under the unions.
Is this anything like being a leg man?
Not for nothing, protectionism of this sort is also why we pay twice as much as world market prices for things like sugar. It’s helpful to nobody but a certain, very concentrated set of interests at the cost of pretty much everybody else.
Preparedness without the will to execute is meaningless.
“We” as in nationalization? At what level are you willing to allow the government to participate in this drive for competitiveness on the international level? Or is this just a broad bromide? Good luck with your political drive to outlaw unionization.
No. We as in us. We have a problem with trade imbalance. We might do better in this regard if our companies were more competitive.
I don’t understand this question. I’m arguing for reducing government regulation.
We are negotiating trade deals with other countries. What powers are you willing to deligate to the federal government to this end to ensure equitable trade?
If you want to take tariffs off the table what is your preferred method of compliance enforcement? Surely there is something you favor that falls between the extremes of doing nothing and blowing the offending nation off the face of the earth with nuclear weapons.
I reject the premise of the question. I don’t advocate giving any more powers to the federal government. Quite the opposite.
The “new” tariffs have cost my company hundreds of thousands of dollars already. We estimate that it will cost us many millions of dollars over the next several years if they remain in place. And that’s to say nothing of the soft costs of responding to the changing landscape. That money goes directly to the federal government. I understand we can get some of it, if we ask nicely. So I turn the question back on you: how much money are you going to take from US companies to fund your preferred method of compliance enforcement?
So the answer is we do nothing. And that’s a legitimate answer if that’s what you truly believe. If any nation dumps product on our shores, of subsidizes their industries in a deliberate attempt to undermine American companies that’s not your problem, correct?
Funny how the President can do the same things that Ronaldo Magnus did — and somehow he’s a terrible person, but Reagan is still Saint Ronald.
The Reagan cargo cultists are shameless.
Fairness, reciprocity, equal and fair competition…sounds like FAIR trade, not FREE trade to me. It sounds like Trump. But , wait, ooh Trump…how icky. This can’t be correct. Trump is just a stupid barbarian. Dumb like a fox. He talks up his opposition as if he were making a marriage proposal. But while Trump is oooing and cooing, he has a hammer behind his back. What’s the hammer? The U.S. market is the hammer he knows he can drop anytime. Do we want fair, reciprocal, and equal relations with China? Well what we do not want is to wake up one morning to find ourselves completely dominated and controlled by China. That is where we are heading thanks to the near treasonous globalists of the Republican/Democrat Party and their giving away of our country over the past 40 years. I can’t blame the Chinese. They took what our “leaders” gave them and kept asking for more. Why wouldn’t they? Now there is a chief that sees what’s cooking in the kitchen and is intent on changing the menu. TARIFF MAN.
Thanks for this find @ejhill. We haven’t always been crazy.
When I first commented on this post, I said “Owsley, don’t do it. EJHill will not argue in good faith. You’ll just end up irritated.” But then I said “Well, I’m back to Ricochet, I’ll give it a go.” I ought to have listened to myself the first time. Owsley Out.
So asking for specifics is not arguing in good faith? OK. Good to know.
Reversing our current slide to subservience will not be painless. I do not know your company, but it sounds fairly large. I wish you well.
I’ve always been opposed to fair trade, myself.
You made your objection personal. Why not deal with it on a personal level?
There’s going to be some loss. The question is, how permanent is the loss and is there a potential long-term gain? Does the long term gain outweigh the short-term cost? Does the short-term gain outweigh the long term loss?
Free Trade international policy has had long term ramifications. You can not convince me that growing our welfare state exponentially in order to subsidize our consumption and standards of living was a good long term strategy, yet that’s the argument.
The answer can’t be “this sucks for me now, so it isn’t worth doing”.
And Wall Street had a 799 reaction to the “Tariff Man” comment.
Negotiation. How do it work?
The traditional method employed by politicians is to give away the store as an opening bid. And then wonder why our trading partners don’t feel any compulsion to reciprocate such a tempting offer.
I’m glad we finally have someone at the table who knows a thing or two about negotiation.
Do you guys remember back to July when the President raised the specter of tariffs with trade partners in Europe. “Tariffs are great!” he said . . . and what did Juncker do? He blinked. He agreed to work toward no tariffs at all. Which is what the President wanted all along.
This is called “negotiation.”
Reagan was good for business, but he was no knee-jerk defender of all of its precepts and wishes. As EJ says, he used plenty of Oval Office pressure to achieve politically popular results, often without formal legislation. In the case of cars, he couldn’t and didn’t keep Japan out, but he gave Detroit enough breathing room to come up with products that turned them around–Ford’s Taurus; Chrysler’s minivans. What happened ten or fifteen years later was their fault, not his.
There was a funny editorial cartoon–Herblock in WaPo, I think–of two bundled-up Russians reading Pravda skeptically. “Reagan Denounces Wall Street” the headlines says. “Bah”, says the woman angrily, “Those editors think we’ll swallow anything!”
But it was true. “I’ve had it up to my keister with these bankers”, he famously declared.
And exactly where does the loyalty of “Wall Street” begin and end? With the United States or just the United States dollar?
Wall Street panicked in July, too, then rallied when Juncker came to the table.
Let it play out.
Most, but not all of those Reagan deals harmed us, but “Reagan did it” isn’t an argument for giving the Federal government power to pick winners and losers. Tariffs are just fine if they are uniform and across the board. E.G. no government discretion. If we imposed a 10% across the board tariff on everything, it would be the equivalent of a 10% devaluation, which given the dollar’s role is probably a good thing because the dollar is always overvalued. And While most countries would adjust their currencies partially or completely, if China pushed its currency down, they’d probably face restrictions in other trading partners. That’s what economies do, they adjust and change and slip between our fingers but still an across the board tariff would help close the current account deficit and would impose costs on China. Giving the Federal government more power to pick and chose what we import and from whom, is the kind of power that corrupts, distorts, forms interests and never goes away and will some day be in the hands of Democrats.
Like!
Investors can handle good news and bad. What markets hate is uncertainty. Playing hardball to get a good deal is fine, but giving yourself cutesy nicknames doesn’t really help the process (China already knows he is serious about getting a good deal for the US).
Characterizing Reagan as anything but a believer in free trade is simply false. He understood the benefits of freedom in trade as in all economic activity. Reciting a handful of exceptions to the general rule does not change the nature of the rule.
I find it curious you had to delve into the party platform to find words to suggest Reagan was Trumpian on this issue. Did the “Great Communicator” never express these ideas himself?
Trump simply does not understand how trade (or alliances) works. Thinking tariffs make us rich is economic illiteracy.
The actions listed were actions of his administration. And the party platform was written by people handpicked by Reagan’s campaign. I also chose to quote the platform because it is fashionable among the anti-Trump crowd to declare that current President’s approach is outside of everything the Republican Party has traditionally stood for. This is just an out-and-out lie.
As Reihan Salam wrote last June in National Review, “For all my misgivings about Donald Trump’s economic diplomacy, he has not rejected the modern Republican party’s stance on trade. Rather, he has made a break with George W. Bush’s approach while harkening back to Reagan’s.”
EDIT: From Bill Niskanen, a member of Reagan’s Council of Economic Advisors, “The consistent goal of the president was free trade, both in the United States and abroad. In response to domestic political pressure, however, the administration imposed more new restraints on trade than any administration since Hoover.”
No one said the actions listed were not actions of his administration but that they represented exceptions to Reagan’s policy on trade rather than demonstrating it.
You’re right, the Republican Party has not always been a free trade party. Smoot and Hawley were both Republicans.
Saying President Reagan’s actions did not support his policy is a Trumpian stretch, no?
No. Administration’s make policy concessions all the time.