Tag: free trade

Trump’s Trade Travesty

 

On Friday, August 30, Trump confidently tweeted that anyone who thinks that his aggressive trade war with China could lead to a recession is sadly misinformed. He offered his own two-part explanation for a possible economic downturn. First, unnamed but “badly run and weak companies” are being undone by their own incompetence. Second, their present plight has not been caused by the trade war, but rather by the Federal Reserve’s failure to rapidly cut interest rates.

Chairman Jerome Powell has become a frequent target of the President’s ire. To be sure, the Fed did trim rates by a quarter of a point, from 2.25% to 2.00%, in July 2019. But Trump wanted the Fed to cut rates, already low by historical standards, by a full point. Even more, he wanted the Fed to further jolt the economy through another round of bond repurchases. In an attempt to prod Powell into action, Trump accused Powell of having a “horrendous lack of vision.” When Powell did not blink, Trump doubled down. “As usual, the Fed did NOTHING! It is incredible that they can ‘speak’ without knowing or asking what I am doing,” he tweeted. “My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?” So much for the traditional independence of the Fed. Trump then lashed out at the private sector by ordering corporations to find alternatives to China. So much for limited presidential powers.

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The Wonderful Logic of Nancy Pelosi

 

Here is a pretty pickle. The Speaker of the House, Nancy Pelosi, has stated that she will fight against any US-UK Free Trade Agreement because of the Irish border. Yet some in the European Union have indicated that they will compel the Irish government to enforce the EU’s border and harden it up to protect the single market from the dangers of American goods in the event of a trans-Atlantic deal.

The great scare is that chicken washed in chlorine or hormone-treated beef might enter the EU single market via Ireland. Like a zombie apocalypse, this would somehow spread as far as the Ukrainian and Turkish borders, infecting all citizens of EU-occupied Europe with American standards. Quelle horreur! The consequences for Europe could be dire; lasagna might actually be made with beef.

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For a Better America and World, Free and Open Trade

 

Trade is good for America. This from the Trump administration’s Office of the US Trade Representative sums up the benefits well: “The United States is the world’s largest economy and the largest exporter and importer of goods and services. Trade is critical to America’s prosperity — fueling economic growth, supporting good jobs at home, raising living standards and helping Americans provide for their families with affordable goods and services.”

With apologies to Han Solo in Star Wars: The Force Awakens, “Crazy thing is, it’s true. The faster growth, the higher living standards — all of it. It’s all true.”

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After protracted smashmouth negotiations, the United States, Canada, and Mexico agreed to replace the North American Free Trade Agreement (“NAFTA”) with the new United States Mexico Canada Agreement (“USMCA”) on November 30, 2018. The new USMCA is largely NAFTA with certain positive elements drawn from the Trans-Pacific Partnership (“TPP”). Unfortunately, certain new protectionist provisions unnecessarily […]

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Begun, It Looks Like the US-China Trade War Has

 

It appears the war of words is over between the US and China. Or, more accurately, the conflict is moving beyond just words. The Wall Street Journal reports: “Beijing said it would retaliate immediately after the Trump administration announced Friday that it will impose tariffs on $50 billion of goods from China, raising the potential for a trade war between the world’s two biggest economies.”

So, escalation. But how does it end? Probably not with China tweaking its state capitalist economic model anytime soon. That would require, if anything, a sustained, multiyear effort where, for instance, Chinese firms benefiting from theft of American intellectual property would face severe sanctions. As my colleague Claude Barfield argues, “Should Beijing remain obdurate against market-opening reform, the US should progressively close off sectors to Chinese investment and operations in this country. Further, in a progressive ratcheting up, Chinese companies should be excluded from US capital markets, including stock exchange listings and the use of American underwriters for capital offerings.”

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Trump’s G7 Free Trade Zone Is a Breathtakingly Ambitious Idea. But Has It Been Thought Through?

 

President Trump’s idea to turn the G7 into a free trade zone strikes one as a bit impulsive and underthought. After all, the Trump trade record this year seems to suggest a different direction, from solar panel and washing machine tariffs back in January to the steel and aluminum tariffs in March to China tariffs perhaps coming up.

Of course, none of that makes a G7 free trade zone necessarily a bad idea. Not at all. In theory, at least, it’s a remarkable one, breathtaking in its ambition. As Financial Times trade reporter Shawn Donnan writes:

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(From my morning post on Indieconservative)   More

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The President tweeted this earlier today: We already have BILATERAL deals with six of the eleven nations in TPP, and are working to make a deal with the biggest of those nations, Japan, who has hit us hard on trade for years! More

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An Expat in Favor of Rattling the Cages of Countries with Large USA Trade Surpluses

 

Here are some observations from a retired Texan living in Switzerland, a land of free enterprise, and many small … and some large … manufacturers that export over half of what they make. This is a country with really solid primary and secondary schools that graduate literate young citizens; trade schools for the 80% and universities for the 20%; and a land where if you’re here illegally and you are not a true and registered refugee, you will be caught and unceremoniously deported. (Switzerland’s unfortunate decision to be coerced into the Schengen Agreement has led to complications with migrants first passing through EU countries.)

When a country like the United States signs trade deals such that most of its manufacturing is lost on the altar of “Free Trade” (i.e., that which was employing millions of skilled citizens making average incomes, and such that the R&D that heretofore went into improving the products from those now non-existent plants also was replaced), then you have what you have throughout the Midwest and Southeastern United States: many shutdown factories and towns with crumbling infrastructures; and, stagnant numbers of young American technical graduates.

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Richard Epstein contrasts two recent actions by the Trump Administration — the imposition of tariffs on steel and aluminum, and the blocking of a foreign company’s attempts to take over an American tech firm — to demonstrate when national security concerns justify restrictions on trade … and when they don’t. More

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Trump’s National Security Excuse for Trade Protectionism Is Almost as Bad as the Economic One

 

National security is the justification President Trump will employ if he takes action against aluminum and steel imports. As the president said last week, “I want to keep prices down but I also want to make sure that we have a steel industry and an aluminium industry and we do need that for national defense. If we ever have a conflict we don’t want to be buying steel [from] a country we are fighting.”

Really? Just what sort of military scenarios is the Pentagon feeding the White House? The top two suppliers of steel imports to the US are Canada and Brazil. Russia and China, on the other hand, are fifth and eleventh with 9% and 2% of imports, respectively. Indeed, as trade expert Phil Levy points out, the US currently has defense treaties with five of the 12 countries picked for potentially higher tariffs. Levy adds that the report itself notes that Defense Department steel needs require a measly 3% of US steel production.

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Richard Epstein responds to the Trump Administration’s proposals for revising NAFTA, answers some frequent criticisms of free trade, and explains whether a legal challenge to a NAFTA withdrawal would hold up in court. More

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Richard Epstein analyzes President Trump’s new plan for Afghanistan, the threat from North Korea, and how the US should respond to trade tensions with China. More

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On August 1, Republican Senator Jeff Flake of Arizona released a book called Conscience of a Conservative: A Rejection of Destructive Politics and a Return to Principle. The title is obviously taken from Barry Goldwater’s 1960 classic. But the subtitle gives you a better idea of what the book is about. The “destructive politics” of […]

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Richard Epstein reacts to the Trump Administration’s exhortations to “buy American” and tackles common misperceptions about international trade, NAFTA, trade deficits, and manufacturing. More

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Thesis: For 55 years conservatives would eventually win every argument on economics, trade, and immigration by chaining liberals to the whippin’ post of data analytics. America is now on the brink of ruin, conservatism on the brink of irrelevancy, and the two political parties are stranded on terra incognita. If conservatives don’t stop winning arguments […]

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Ricochet and the TPP

 

Ricochet began as a podcast and a subscription-based website, but quickly became a community that extends well beyond. Perhaps it would be more accurate to say it began with the unlikely friendships of its founders — @peterrobinson and @roblong — so the ensuing meet ups and social media interactions of members should not be surprising. Via Facebook, Twitter, or face-to-face, the debates and conversations don’t end here.*

Nor do they always begin here. And sometimes, that’s regrettable because I learned a thing or two that others could certainly appreciate. Case in point, @jamielockett proposed elsewhere that President Donald Trump’s decision to withdraw from the Trans-Pacific Partnership was a mistake. That led to the following exchange including myself, Jamie, and @jamesofengland, reprinted here (somewhat abridged) with their permission. 

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Listening to Commentary Magazine podcast, I was struck by some comments regarding Trump causing instability because of his supposed stance on free trade. I say supposed because so far his stance is poorly defined and he isn’t president yet. The comments that I’m referring to were that 1) free trade makes everyone richer and 2) […]

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Are Big Trade Deficits Really a Problem for the US Economy?

 

Trade_trucking_mexicoWho doesn’t like fresh thinking or novel ideas? Certainly the last decade of economic tumult offers opportunity for deep reflection on our priors.

Still, what to make of this assertion from venture capitalist Peter Thiel, who said the following in a speech the other day:

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