Trade Wars Are Easy to Win

 

The President demonstrated his ignorance of the basics of trade once again this morning with a classic tweet:

Someone should tell that to Harley Davidson and Whirlpool who just cut forecasts due primarily to the impact of tariffs. At least their workers benefit as their jobs will remain in America. Oops.

At least the American farmer, the bedrock of our nation, remains unaffected. Damn. Don’t worry about the great American farmer, however, President Trump has just the plan to fix this.

Once again we find out that it is the politically connected who are protected from the destruction wrought by trade wars:

The Trump administration plans to offer billions of dollars in aid to farmers hit by tariffs on their goods, an emergency bailout intended to ease the pain caused by Trump’s escalating trade war in key electoral states, people briefed on the plan told CNBC.

The total aid amount is reportedly about $12 billion. A senior administration official told NBC News that the aid would be temporary.

The announcement could come as soon as Tuesday afternoon, hours after the president proclaimed on Twitter that “Tariffs are the greatest!” An industry source briefed on the plan said the package could use existing programs designed to mitigate price and coverage risks, and could target dairy, pork and soy products.

So, to combat the predictable effects of an ill-considered trade war, the President is going to mortgage the future to pay off those in the present. Well, at least Trump is starting to act like a typical Washington politician.

I hate to say I told you so, but…

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There are 153 comments.

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  1. Columbo Member

    https://www.merriam-webster.com/dictionary/temporary

    “Temporary” … patience is a virtue.

    • #1
    • July 24, 2018, at 10:58 AM PDT
    • 5 likes
  2. Ekosj Inactive

    What’s that line about summer soldiers and sunshine patriots? Anybody recall?

    • #2
    • July 24, 2018, at 11:02 AM PDT
    • 2 likes
  3. Jamie Lockett Inactive
    Jamie Lockett Post author

    Columbo (View Comment):

    https://www.merriam-webster.com/dictionary/temporary

    “Temporary” … patience is a virtue.

    “No government ever voluntarily reduces itself in size. Government programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we’ll ever see on this earth!” – Ronald Wilson Reagan

    More to the point – we’re spending $12 billion dollars to insulate a politically connected industry from bad government policy. Not only is that something conservatives are usually against, its something this President specifically ran against (cronyism and The Swamp). 

    • #3
    • July 24, 2018, at 11:06 AM PDT
    • 17 likes
  4. Hoyacon Member

    Only the NPR link seems to be working.

    • #4
    • July 24, 2018, at 11:13 AM PDT
    • 2 likes
  5. tommybdeepv Inactive

    Jamie Lockett (View Comment):

    Columbo (View Comment):

    https://www.merriam-webster.com/dictionary/temporary

    “Temporary” … patience is a virtue.

    “No government ever voluntarily reduces itself in size. Government programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we’ll ever see on this earth!” – Ronald Wilson Reagan

    More to the point – we’re spending $12 billion dollars to insulate a politically connected industry from bad government policy. Not only is that something conservatives are usually against, its something this President specifically ran against (cronyism and The Swamp).

    His talk about draining The Swamp was only temporary – https://www.merriam-webster.com/dictionary/temporary

    • #5
    • July 24, 2018, at 11:13 AM PDT
    • 6 likes
  6. Jamie Lockett Inactive
    Jamie Lockett Post author

    Hoyacon (View Comment):

    Only the NPR link seems to be working.

    I’ll fix it after lunch. 

    • #6
    • July 24, 2018, at 11:17 AM PDT
    • Like
  7. Columbo Member

    Jamie Lockett (View Comment):

    Columbo (View Comment):

    https://www.merriam-webster.com/dictionary/temporary

    “Temporary” … patience is a virtue.

    “No government ever voluntarily reduces itself in size. Government programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we’ll ever see on this earth!” – Ronald Wilson Reagan

    More to the point – we’re spending $12 billion dollars to insulate a politically connected industry from bad government policy. Not only is that something conservatives are usually against, its something this President specifically ran against (cronyism and The Swamp).

    I doubt that it will the only industry that is temporarily “protected” while China takes its time to come to its senses. And it ain’t crony capitalism, in my opinion. What is more American than its farmers? The fight is with China and others with asymmetrical tariffs. The President is on a mission to reset the playing field. I don’t doubt his chance for success, or temporary nature of the battle, like you do. Time will tell.

    Patience.

    • #7
    • July 24, 2018, at 11:19 AM PDT
    • 4 likes
  8. Misthiocracy secretly Member

    < sarcasm >

    How else are you gonna pay for a $15 minimum wage?

    </ sarcasm >

    • #8
    • July 24, 2018, at 11:31 AM PDT
    • 4 likes
  9. Spin Inactive

    Well, this will at least get CNN off his back for a day or two, right?

    • #9
    • July 24, 2018, at 11:49 AM PDT
    • 1 like
  10. Spin Inactive

    I think your use of the word “damn” as a hyperlink is a violation of the CoC and you should be censured…

    • #10
    • July 24, 2018, at 11:52 AM PDT
    • 1 like
  11. Herbert defender of the Realm,… Inactive

    Didn’t Trump say he was gonna use money raised from tariffs to fund building the wall? Maybe this 12 billion is the remainder?

    • #11
    • July 24, 2018, at 11:53 AM PDT
    • 3 likes
  12. Hang On Member

    Been out cherry picking?

    • #12
    • July 24, 2018, at 11:54 AM PDT
    • 1 like
  13. Jamie Lockett Inactive
    Jamie Lockett Post author

    Spin (View Comment):

    I think your use of the word “damn” as a hyperlink is a violation of the CoC and you should be censured…

    I agree. I think I should be made to climb a ladder as punishment. 

    • #13
    • July 24, 2018, at 11:58 AM PDT
    • 7 likes
  14. Spin Inactive

    Here’s where I’m at: lately I’ve been thinking “What’s the use? It never gets better.” This is more evidence. The swamp will never be drained. The government will never stop growing. It’s hard to get jacked up about this, and it’s hard to see it as some kind of grand strategy. Where’s the whiskey?

    • #14
    • July 24, 2018, at 11:59 AM PDT
    • 4 likes
  15. PHCheese Member

    Think of trade as a game maybe bowling. To get a strike China needs to knock down 4 pins where as the USA needs ten. Those are the rules as set up now. Trump comes along as says he is the new scorekeeper. Both need 10 for a strike. He might settle for 8 vs 9

    • #15
    • July 24, 2018, at 12:04 PM PDT
    • 2 likes
  16. Herbert defender of the Realm,… Inactive

    Seriously….. I think tariffs are the wrong approach, But isn’t the President being humiliated in having to make this request just going to encourage our trade adversaries to keep it up?

    • #16
    • July 24, 2018, at 12:05 PM PDT
    • 1 like
  17. Jamie Lockett Inactive
    Jamie Lockett Post author

    PHCheese (View Comment):

    Think of trade as a game maybe bowling. To get a strike China needs to knock down 4 pins where as the USA needs ten. Those are the rules as set up now. Trump comes along as says he is the new scorekeeper. Both need 10 for a strike. He might settle for 8 vs 9

    That’s not how trade works. At all. 

    • #17
    • July 24, 2018, at 12:06 PM PDT
    • 6 likes
  18. Herbert defender of the Realm,… Inactive

    PHCheese (View Comment):

    Think of trade as a game maybe bowling. To get a strike China needs to knock down 4 pins where as the USA needs ten. Those are the rules as set up now. Trump comes along as says he is the new scorekeeper. Both need 10 for a strike. He might settle for 8 vs 9

    China is used to propping up weak links in its economy…. the U.S., and the Republican’s in particular ( prior to trump takeover) have touted freemarket ethos… will we extinguish this ethos?

    • #18
    • July 24, 2018, at 12:15 PM PDT
    • 3 likes
  19. TES Member
    TES

    Columbo (View Comment):

    https://www.merriam-webster.com/dictionary/temporary

    “Temporary” … patience is a virtue.

    “Nothing is so permanent as a temporary government program” -Milton Friedman

    • #19
    • July 24, 2018, at 12:51 PM PDT
    • 5 likes
  20. Columbo Member

    TES (View Comment):

    Columbo (View Comment):

    https://www.merriam-webster.com/dictionary/temporary

    “Temporary” … patience is a virtue.

    “Nothing is so permanent as a temporary government program” -Milton Friedman

    It is not a government “program”.

    Time will tell. Remember where you heard it first.

    • #20
    • July 24, 2018, at 12:53 PM PDT
    • 3 likes
  21. Frozen Chosen Inactive

    Trumps policy looks a lot like national socialism. We’re already giving farmers billions of dollars. Trump is simply buying votes with our tax money. No difference from the Democrats

    • #21
    • July 24, 2018, at 12:59 PM PDT
    • 8 likes
  22. Jamie Lockett Inactive
    Jamie Lockett Post author

    Columbo (View Comment):

    TES (View Comment):

    Columbo (View Comment):

    https://www.merriam-webster.com/dictionary/temporary

    “Temporary” … patience is a virtue.

    “Nothing is so permanent as a temporary government program” -Milton Friedman

    It is not a government “program”.

    Time will tell. Remember where you heard it first.

    How is it not a government program?

    • #22
    • July 24, 2018, at 1:03 PM PDT
    • 4 likes
  23. PHCheese Member

    Jamie Lockett (View Comment):

    PHCheese (View Comment):

    Think of trade as a game maybe bowling. To get a strike China needs to knock down 4 pins where as the USA needs ten. Those are the rules as set up now. Trump comes along as says he is the new scorekeeper. Both need 10 for a strike. He might settle for 8 vs 9

    That’s not how trade works. At all.

    It’s not supposed to but it is.

    • #23
    • July 24, 2018, at 1:06 PM PDT
    • Like
  24. Hammer, The Member

    If, as some predict, Trump’s talk about tariffs is mere talk, designed to set up negotiations and there are no actual tariffs being implemented – I question the wisdom of that strategy, especially when it has a real impact on markets and behavior based on predictions and expectations. But I’d have less of a problem with it if that was the case. Actual tariffs are pretty much universally bad. Just like liberal redistribution programs, when you rob from Peter to give to Paul, Paul may claim to be better off, but there are a lot of unforeseen consequences (the way Peter may have invested or otherwise spent his money, etc… etc… ad infinitum), and the economy suffers as a whole. It is nonsense to suggest that, well, the US is Paul and 
    “the rest of the world” is Peter, and besides, Peter is already a thief. Whether we like it or not, we live in a global economy.

    If anyone is actually interested in this subject – it is a complicated subject that goes back as far as Cicero, from Adam Smith, through Milton Friedman and right up to now – this thing has nothing to do with a personal loyalty to or distaste for Donald Trump. He is merely the latest person talking about things that have been discussed for hundreds of years. It is an interesting subject and one that really is worth a closer look.

    I recommend this Econ Talk podcast about international trade and tariffs; it is absolutely worth the listen.

    • #24
    • July 24, 2018, at 1:13 PM PDT
    • 8 likes
  25. Hammer, The Member

    Columbo (View Comment):

    TES (View Comment):

    Columbo (View Comment):

    https://www.merriam-webster.com/dictionary/temporary

    “Temporary” … patience is a virtue.

    “Nothing is so permanent as a temporary government program” -Milton Friedman

    It is not a government “program”.

    Time will tell. Remember where you heard it first.

    Tariffs, whether we like it or not, are redistribution just like any other redistribution scheme, with all the downfalls. One of the more immediate and longer-lasting downfalls is the effect that it has on those who benefit. Why do you think Montana has democratic senators more often than not? Because farm subsidies are important to the people who vote – if you don’t give subsidies to begin with, markets adapt. Maybe farms have to shift to other crops or different types of income, and maybe (like the hansom cabs) they disappear altogether. But once you establish subsidies, you establish dependence. Try taking that away from corn farmers. Why do you think Iowa sets its primary before everyone else?

    We can pretend that tariffs are somehow different because, on the surface, they only impact foreigners. But it doesn’t actually work that way. Foreigners invest in US markets, other US manufacturers and retailers rely on foreign goods. To borrow from Friedman, again, you may set up a tariff on yellow paint, thinking that you’re helping out the paint manufacturer in the US or punishing the foreigner… but the pencil manufacturer in the US suffers, the pencil sellers, the schoolchildren…. ;) And, at the end of the day, all of those costs are spread around and relatively unseen (though certainly not nonexistent), while the benefits are direct. Cancel the tariff, and you’ve got yellow-paint manufacturers all over the news, protesting in front of the white house. Those are real faces, just like the faces of little Dreamers that we saw pasted all over when the Republican congress tried to tackle immigration reform.

    • #25
    • July 24, 2018, at 1:23 PM PDT
    • 8 likes
  26. Hammer, The Member

    PHCheese (View Comment):

    Think of trade as a game maybe bowling. To get a strike China needs to knock down 4 pins where as the USA needs ten. Those are the rules as set up now. Trump comes along as says he is the new scorekeeper. Both need 10 for a strike. He might settle for 8 vs 9

    But never think of trade as so two-dimensional as all of that. Anything like tariffs will always benefit the seen at the expense of the unseen, and the unseen is virtually always a much larger group.

    • #26
    • July 24, 2018, at 1:26 PM PDT
    • 6 likes
  27. Jamie Lockett Inactive
    Jamie Lockett Post author

    Hammer, The (Ryan M) (View Comment):
    We can pretend that tariffs are somehow different because, on the surface, they only impact foreigners.

    This itself is a fallacy: tariffs are taxes on all Americans to benefit a few Americans. 

    • #27
    • July 24, 2018, at 1:28 PM PDT
    • 4 likes
  28. Hammer, The Member

    Also, for what it’s worth – regardless of what actually ends up happening, it is disconcerting to see this sort of tweet from the President. No, Tariffs are not the greatest. He’s using “tariffs” essentially just to say “force.” He could just as easily say “if you are unfair, we’ll blow up one of your buildings.” While I can understand (and even partly sympathize with) his desire to use forceful language, it comes at the expense of economic illiteracy, which is not a good thing. And the way he puts it makes him sound even more foolish – if we threaten a drone strike, we don’t say “drone strikes are the greatest!” We say “we’re willing to do what it takes, and we’re serious.” Powerful language is fine, but he needs to be more careful about how he attempts to come across as powerful.

    • #28
    • July 24, 2018, at 1:36 PM PDT
    • 3 likes
  29. Herbert defender of the Realm,… Inactive

    Hammer, The (Ryan M) (View Comment):

    If, as some predict, Trump’s talk about tariffs is mere talk, designed to set up negotiations and there are no actual tariffs being implemented – I question the wisdom of that strategy, especially when it has a real impact on markets and behavior based on predictions and expectations. But I’d have less of a problem with it if that was the case. Actual tariffs are pretty much universally bad. Just like liberal redistribution programs, when you rob from Peter to give to Paul, Paul may claim to be better off, but there are a lot of unforeseen consequences (the way Peter may have invested or otherwise spent his money, etc… etc… ad infinitum), and the economy suffers as a whole. It is nonsense to suggest that, well, the US is Paul and
    “the rest of the world” is Peter, and besides, Peter is already a thief. Whether we like it or not, we live in a global economy.

    If anyone is actually interested in this subject – it is a complicated subject that goes back as far as Cicero, from Adam Smith, through Milton Friedman and right up to now – this thing has nothing to do with a personal loyalty to or distaste for Donald Trump. He is merely the latest person talking about things that have been discussed for hundreds of years. It is an interesting subject and one that really is worth a closer look.

    I recommend this Econ Talk podcast about international trade and tariffs; it is absolutely worth the listen.

    Pretty sure that it has moved beyond talk into the tariffs have been and continue to be implemented. Trump thinks he can force the other nations into saying chicken first….. I have my doubts. But in the meantime real damage has been done.

    • #29
    • July 24, 2018, at 1:43 PM PDT
    • 1 like
  30. Hammer, The Member

    Jamie Lockett (View Comment):

    Hammer, The (Ryan M) (View Comment):
    We can pretend that tariffs are somehow different because, on the surface, they only impact foreigners.

    This itself is a fallacy: tariffs are taxes on all Americans to benefit a few Americans.

    Even if you think of it as an impact on China (which you cannot), it is still a fight that we cannot win, almost by definition. Our political system is structured in such a way that negative feedback has political consequences in a way that simply doesn’t occur in China. The possibility of successful lobbying or turned elections in the US is real, while the possibility of regime overthrow in China is extremely remote. In other words, they could weather virtually any “negative political ramifications” storm far longer than we could. Therefore, if it is a strategy of “hit them hard and make them suffer,” it’s a poor strategy, because not only will we suffer more, we will also experience a political backlash.

    If, on the other hand, it is a short-term strategy by Trump to cater to a particular constituency (as I mentioned, Iowa with the corn subsidies or Montana with the farm subsidies), then he is effectively harming the US in the interest of potential, very short term, political gain. None of us should be happy about that.

    • #30
    • July 24, 2018, at 1:49 PM PDT
    • 7 likes
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