Tag: trade war

Pro-Growth War?


Anti-China hawks in the US are eager for a New Cold War that would disentangle the two mega-economies, especially their technology sectors. They see the inevitable economic disruption as a necessary evil to bolster US national security. And there might be even a partially beneficial economic offset if a slice of Asian manufacturing returns to American shores.

But some nationalists are more optimistic about the potential economic gains from escalating the current trade conflict into something broader. According to this view, the New Cold War would pit the two economies in a high-stakes competition for technological supremacy — and thus geopolitical dominance — in the 21st century. The sense of urgency would force each side to marshal all of their resources and talent in pursuit of victory. Space Race, meet the AI race. The resulting scientific advances and tech innovation would boost both economies. And with prosperity rising, neither side would risk the cold war turning into a hot one.

The seeds of this hot-take argument might be found in the 2014 book War! What Is It Good For?: Conflict and the Progress of Civilization from Primates to Robots. In it, archaeologist Ian Morris argues that war, over the long run, “has made humanity safer and richer,” in part because of the military-driven investment in scientific and technological research. Or maybe the inspiration was the 1998 film Armageddon which has a scene where the American president tells a global audience that “all of our combined modern technologies and imaginations, even the wars that we’ve fought, have provided us the tools … to prevent our own extinction’’ from an approaching planet-killer asteroid.

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.

We have three potential culprits for the anticipated economic slowdown: incompetent companies; a dumb Fed Chairman; or Trump’s interminable trade war with China. How would an economic detective assign blame? Let’s take the three in order.

US vs. China Might Not Be a Forever Trade War, But It Sure Feels Like It Right Now


As that great and learned scholar Vizzini once noted, one of two classic blunders is getting involved in a land war in Asia. But trade wars might also qualify. “Donald Trump’s trade battle with China is starting to look like a forever war — a quagmire with no end in sight, no clear path to a resolution and more potential land mines for an already weakening global economy,” Bloomberg’s Shawn Donnan argues.

At the very least, President Trump’s “trade wars are good and easy to win” axiom isn’t playing out. Not only did the president say he’s imposing 10% tariffs on another $300 billion of Chinese goods starting Sept. 1, but Beijing looks like it’s not expecting a resolution any time soon as it lets the renminbi weaken, or “crack seven” in traders parlance. The Financial Times calls the move “a clear sign that Beijing is prepared to use the currency as a weapon and let the trade war drag on.”

And drag on and on and on to where, exactly? Neil Shearing of Capital Economics sees…

Milton Ezrati joins City Journal editor Brian Anderson to discuss the Trump administration’s trade negotiations with China and the “Green New Deal” proposed by newly elected Democrats in Congress, like Rep. Alexandria Ocasio-Cortez (D-NY).

Proponents of a Green New Deal claim that the plan will prevent damage from climate change. The scale of the proposal is massive: its goals include expanding renewable-energy sources until they provide 100 percent of the nation’s power and eliminating greenhouse-gas emissions for industry and agriculture. To pay for it, Ocasio-Cortez recently suggested a 70 percent income-tax rate on top earners, which Nobel Prize-winning economist and New York Times columnist Paul Krugman described as “reasonable.”

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.”

And this from AEI’s Derek Scissors: “With China effectively closing its market through protection of state-owned enterprises and coercive technology transfer, the US is not obligated by any reasonable standard to open our market fully to Chinese goods, services, capital, or people.”

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  At the recent G7 Summit, all was not well. Trade imbalances were discussed, with US President Donald Trump going so far as suggesting everyone throw all tariffs out the window with the bath water, and even the playing field once and for all. Then the rumors started…..    that Trudeau started sweating after that comment […]

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Spreading Joy to Soyville, RV-Style


Ohio farmers are worried. But a guy named Sonny has swung by in his RV to reassure them. Sonny Perdue, the US Agriculture Secretary, is on an RV tour of several “flyover” states, reassuring farmers along the way that tariff tiffs will not harm them.

As the soybean industry assailed President Donald Trump today for launching a trade war with China, U.S. Agriculture Secretary Sonny Perdue said Trump assured him that farmers in Ohio and across the country “will not be allowed to be the casualty in a trade dispute.”

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.

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It’s accepted wisdom that Trump’s new tariffs are a bad idea, and will hurt the American economy more that they will help.  This opinion, to which I myself subscribe, has nothing to do with the particular tariffs.  This is general principle embraced by most on the right, and even many on the left. Nonetheless, I […]

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The distinguishing feature of war is that it’s the one time that most people recognize that it becomes appropriate to do inappropriate things. It’s wrong to kill another man, unless you’re doing it in war, at which point it becomes okay due to necessity at best and at worst something you need to take up […]

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