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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
People who freak out about Dow spikes and troughs are like global warming alarmists who see doom in unseasonal weather.
I’ll have you know that Donald Trump’s middle name is ‘circumspection’.
It was the biggest drop in six weeks.
How would they possibly know that, anyway? Did they speak to everyone who placed a “sell” order and ask why they placed the order? Did they commission an instant poll? Or did they just assume event X happened, then the market dropped, and post hoc, ergo propter hoc?
That’s exactly how it works. It’s reasonable assumption as fact.
So, when you pay more for your washing machine due to Trump’s import tariffs, you can be pleased with the fact that the higher taxes you are paying represents an act of patriotism.
It’s like when Joe Biden said that we needed to raise taxes because “we’ve got to be patriotic.”
First Biden and now Trump are using nationalist rhetoric in the service of higher taxes on the middle class.
This is the frustration of many conservatives around here and in politics in general – they see a contradiction where there isn’t one at all.
Like Drew said, he’s saying he’s willing to use a tool to get to his ideal. But just like with throwing around making the left play by their rules sits uncomfortably with some folk, so does this.
It’s the tool that makes the man, not the outcome.
We have this idea that there is something largely unethical about the tools being suggested, when they are about as ethical as spanking or putting a toddler in timeout.
I thought the losses were a result of the dems winning the house :p
The problem is that Trump is using American middle class consumers as his personal playthings.
American middle class consumers get stuck with paying the bill in the form of higher taxes when they purchase the items they need and want.
Trump will have to face middle class voters in 2020. These are people who have been forced by Trump to pay more for their washing machines and other goods.
They aren’t going to be too happy about it.
We are also footing the bill for increased welfare for (as it has now been reported) cheaper immigrant labor (an unfortunate byproduct of free trade policy) AND unemployed Americans.
So forgive me for failing to see much of a difference.
If you impose higher taxes on American middle class consumers, as Donald Trump has, it is going to be difficult to get these people to vote for you on election day.
Trump might think that he is sticking it to the Chinese. But in reality, Trump is sticking it to the American middle class.
And American middle class people vote.
One of my favorite arguments in these types of threads is that the government should not pick winners and losers. By “the government” it is assumed we’re talking about our government. But somewhere a state actor, whether it is China, the EU, Mexico or Canada, is making decisions designed to make the American worker the loser. Once they eliminate their American competition do you really believe that there won’t be more costly ramifications down the line?
If capitalism has a great failing it is its myopia, the inability to see beyond the next quarter or fiscal year. And that criticism does not mean I am for a planned economy or don’t believe in creative destruction. But not all destruction here is creative. When we destroyed the textile industry in America it’s not because we found a new and exciting alternative to clothing. Nothing replaced steel or the automobile. We just replaced who was making them and where they were being made.
In the old Soviet Union, the workers were employed. There was plenty of work.
But the work wasn’t productive. So, when the Soviet worker got off work and tried to obtain some consumer goods, he found that all the work he did resulted in a low standard of living.
That’s why only focusing on “protecting American jobs” and “protecting the American worker” is myopic.
The reason why Americans go to work is so that when we are done working we can go to the store and purchase high quality goods and services.
When President Trump places obstacles in the way of the American consumer and makes everything more expensive by increasing import tariffs, this defeats the purpose of going to work in the first place.
So if Trump continues down this path, the American worker will work longer and longer hours in order to obtain fewer and inferior goods and services.
Fortunately, the corporate tax cut and individual income tax cuts more than counteract the destructive impact of Trump’s import tariffs. At least so far that is the case. But if Trump keeps jacking up the taxes, he will face a revolt in 2020.
Some say this boils down to pro/anti Trump. I do not agree. I believe it boils down to pro/anti laissez faire. Some apparently believe that all is well with the current global trade in the world today. I do not see it that way. I see the USA moving in a direction where our manufacturing ability has been hollowed out and our economy exists on services. That is a danger to the middle that exceeds a 5 or 10 percent increase in stuff we buy. If one believes the Chinese are malevolent actors, then we need to do something to change our current policy. We need to change the Chinese policy as well. How can that be done without tariffs? And, if it is really the only tool, how can it be effective if it is never used? I don’t want tariffs for the fun of it. I want tariffs because I believe it is the only effective way to change the Chinese behavior. And according to what I read, the tariffs are costing the Chinese about 5 times what they cost the American consumer. So for those of you who don’t believe we have a problem, there is really no way to convince you a fix is needed.
You know what’s reliable? Say “I’m not advocating a planned economy…” and the next comment will start, “In the old Soviet Union…”
How does one make the leap between being wary of unfair trade practices by foreign governments to full blown communism? Either it’s either full Laissez faire or the gulags?
The middle class just got a significant tax cut. It’s real and now. The middle class has also suffered inflation, economic erosion, and corruption for decades. The middle class (the ones I know at least) don’t think more buying power at Walmart and Amazon are worth the loss of economic engines/spark plugs in their communities. Not in the long run, which is just about now for those who started counting in the 70’s and 80’s.
Maybe it’s different for me. I live in Chicago. Everywhere I look I see empty factories and warehouses, vacant lots which used to be factories or warehouses, or blocks full of new(ish) bank branches, cell phone stores, and currency exchanges where there used to be factories and warehouses. In many places the loss of the economic engines bringing in outside capital would have immediately ruined the way of life for people, but in Chicago where our shrinking puddle is still larger than most places the effect isn’t as immediate but more and more it’s becoming noticeable. Corrupt and negligent debt accumulation tends to become noticeable when the honey pot starts running dry.
I’m not saying that tariffs are the answer to everything, but I do agree with President Trump (and Reagan and the Republican platform of the 80’s) that we can’t pursue free trade unilaterally while our trading partners are actively weaponizing trade against us. I’m not talking about us being ossified and using government to perpetuate the ossification; I’m talking about our partners knowingly doing us long term harm and us doing something about it.
Yeah, ok. So what? Do you really think that’s what we’re calling for here and now? We’ve lost outlets for productive work, and we want that productive work back here (as opposed to elsewhere). We can’t service-economy ourselves to prosperity. We can’t spend ourselves to prosperity. We can’t indebt ourselves to prosperity. What do you think would happen to your consumer buying power if we were to really address our national/local/private debt problems? Would the vaunted Walmart buying power still stand without all of that debt and welfare? I doubt it; there is no substitute for actually producing things in your own borders in order to achieve long term prosperity.
This applies to sub-economies within the larger economy too. As an American I want more productive work here. As a Chicagoan I want it in Chicago instead of Akron. As a southsider I want it located closer to Midway than to Ohare.
That made me chuckle.
Our manufacturing ability has not been hollowed out nor does our economy exist only on services.
https://www.stlouisfed.org/on-the-economy/2017/april/us-manufacturing-really-declining
The issue, if anything, is employment in manufacturing and that is decreasing but because of automation to a much greater extent than foreign competition.
The irony is that Donald Trump, Paul Ryan and Mitch McConnell put us on the path towards the correct strategy for making America a better place to start a business by cutting corporate income tax rates and cutting income tax rates.
But now Trump has, at least partially, offset the benefits of that tax cut legislation by increasing taxes on the American consumer, directly lowering their standard of living.
What we should do is cut taxes, not raise taxes. Well, at least Trump is right half of the time.
Sounds correct. That’s still a problem though. If employment doesn’t come from farming, raw materials, or manufacturing then where does it come from? Service mostly. Government in some places. Trades. How is that manufacturing profit injected back into the local economy if manufacturing employment is down? Few desirable ways as far as I can tell. Or, in some areas it isn’t reinjected – the economies and communities simply dry up or implode.
Also, to the extent that the employment decline is caused by unfair trade practices then we should address those unfair trade practices.
Finally, even if automation is the main culprit, I still want those robots working here instead of somewhere else for whatever marginal lifeblood they bring to my community. To the extent that these robots are somewhere else instead of here because of unfair trade practices then we should address those unfair trade practices.
I am a middle class guy who knows going to the dentist is going to hurt. However, in the long game I am better for it.
You can’t fix something that is in disrepair for nothing. We have been on the short end for as long as I can remember. It must be corrected for our childrens benefit and ours.
I will accept higher costs as long as the goal is to put my fellow ex middle classers back to work.
I believe this is Trumps goal.
I agree with this wholeheartedly.
So you think he should be MORE of a populist.
From scores of other places; the guy who sells the widgets the robot makes, who transports the widgets, who insures the robots, who finances the robots, who fixes the robots, who prepares invoices, who pays invoices, who runs IT,… How many of those positions are less desirable than working an assembly line?
“Fairness” generally exists (or doesn’t) in the eye of the beholder. Lower prices tend to benefit many more people than tariffs.
Who has been on the short end of what? How?
Things made here are now made elswhere.
Yes, there are supporting roles, but there are supporting roles whether the production is here or whether it’s elsewhere, there are supporting roles whether the production is done by robots or by people. I’m talking about the part of the equation that’s changed, the part where we have far fewer conduits, the part where some of those supporting roles (or the quantity of them) disappears with with offshoring or automation. There aren’t enough supporting roles to absorb everybody. Otherwise we wouldn’t have a Rust Belt or a dissipating flyover country.
And sold to Americans at a lower cost.