Monday, July 03, 2017

Trump Considering Trade Tariffs: Is That Good or Bad?


U.S. Balance of Trade since 1960. Green indicates net inflow in dollars from abroad. Red indicates net outflow in dollars to foreign entities (source). Alexander Hamilton would not approve.

by Gaius Publius

A drive-by for a long holiday weekend. As noted here earlier, according to the writers at Axios, including former Politico denizen Mike Allen, Trump is strongly considering imposing trade tariffs on some foreign-produced products like steel.

Here's their report minus the fear-inducing headline (emphasis in original):
With the political world distracted by President Trump's media wars, one of the most consequential and contentious internal debates of his presidency unfolded during a tense meeting Monday in the Roosevelt Room of the White House, administration sources tell Axios.
  • The outcome, with a potentially profound effect on U.S. economic and foreign policy, will be decided in coming days.
  • With more than 20 top officials present, including Trump and Vice President Pence, the president and a small band of America First advisers made it clear they're hell-bent on imposing tariffs — potentially in the 20% range — on steel, and likely other imports.
  • The penalties could eventually extend to other imports. Among those that may be considered: aluminum, semiconductors, paper, and appliances like washing machines.
One official estimated the sentiment in the room as 22 against and 3 in favor — but since one of the three is named Donald Trump, it was case closed.

No decision has been made, but the President is leaning towards imposing tariffs, despite opposition from nearly all his Cabinet.
The Trump plan was reportedly designed by Commerce Secretary Wilbur Ross, Steve Bannon, and policy advisors Peter Navarro and Stephen Miller — in other words, the anti-"globalists" in the administration.

No decision has been made, but one may be forthcoming fairly soon.

The Consequences

There are two ways to look at the consequences of this action, if it occurs. One is from the neoliberal establishment in both parties — "trade war," "loss of jobs," and particularly (quoting from Axios) "bad global politics."

The other way is this: Tariffs built America for nearly 150 years since its birth, protecting American industries from the ravages of industrially stronger nations. We became a 20th Century powerhouse thanks to tariffs and trade protection. The same is true of every developing country — that tariffs are good for the local economy — which is why the international (neoliberal) giants want to crush protectionism (unless it protects them).

After all, it's called "protectionism" for a reason. Economies need protecting from predatory giants in every age.

Further, if reverence for the founders carries any weight with you, especially reverence for our currently lionized founder Alexander Hamilton, U.S. trade protectionist policies — and government economic interventionist policies in general — start right at his desk:
Hamilton was alone among the “founding fathers” in understanding that the world was witnessing two revolutions simultaneously. One was the political transformation, embodied in the rise of republican government. The other was the economic rise of modern capitalism, with its globalizing networks of production, trade, and finance. Hamilton grasped the epochal importance of applied science and machinery as forces of production.

In the face of these changes, Hamilton created (and largely executed) a plan for government-led economic development along lines that would be followed in more recent times by many countries (particularly in East Asia) that have undergone rapid industrialization. His political mission was to create a state that could facilitate, encourage, and guide the process of economic change — a policy also known as dirigisme, although the expression never entered the American political lexicon the way its antonym, laissez-faire, did.
Do these moves by Donald Trump "echo Alexander Hamilton"? Even Bloomberg News thinks so.

Your Bottom Line

If this occurs, and you're one of those who hates Democratic Party neoliberalism, cheer this action and do it publicly, despite what you think of Trump — and despite however strongly pro-neoliberal Democrats want to shame you into silence.

Supporting the current neoliberal global order keeps all of us in our poverty-fueled place. This is what #RealResistance should be about — opposing rule by the rich — not following party flags and banners regardless of where they lead us.

And if that leads to a trade war, it would in any case, even if Bernie Sanders were the president doing it. After all, anyone who dares to threaten the current global organization of money, work and resources (the #RealResistance) will be resisted back, and the rhetoric will sound very much like the rhetoric in that Axios article — "be very afraid."

My thought: If we not willing to change the way the world is run, we'll never move out of the painful place were in until the whole thing just comes apart. Best to take down the current situation in pieces. Protecting American jobs and local industries is a great way to start.

Mes centimes,


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At 1:20 PM, Anonymous Hone said...

Gaius, I love your columns and really do hear you and understand your position, but PLEASE! You remind me of Nick Kristof and his immediate response of support for Trump for the bombing of Syria. We do not need impulsivity here. Take a breath and think this through. Can we have faith in anything Trump thinks of doing or anything he does? I don't think so! It is crystal clear that Trump taking this on is BAD. Given he is at the helm, there is no good in sight.

You completely ignore that Trump is a total impulsive vindictive moron and his advisors are extremely dangerous - we cannot expect that he and his crew will develop any constructive policy that involves knowledge and planning or that any good will come out of this bull-in-a-china-shop White House. Trump changing the world order on trade? He is a disaster on wheels and this would be a disaster in the making.

Trump does not know what the hell he is doing so PLEASE do not make a case for anything he dreams up. You know history but he does not and does not care. Hamilton not withstanding, Trump knows nothing about economics, world trade or much of anything else related to this issue or anything at all. He will bungle it all and cause a disaster of huge proportions for sure.

Save your support for this for another time and another administration to follow through. This is not the time to make drastic changes to world trade with Herr Trump and his insane advisors in charge. Bannon is set on destroying us and the world anyway. Let's not help him along.

At 2:18 PM, Anonymous Anonymous said...

If you make it more expensive to offshore/re-import production than will companies start relocating back to the US? The idea is not Trump's and should be judged on it's merits. If China, Japan, India retaliate with their own tariffs can the US still benefit as a country? NAFTA and the WTO were all part of the fascist takeover of the US by multinational corporations and usurped the power of democracies. The idea is worth discussing and do remember Obama was pushing TPP up until his last day in office.

At 3:10 PM, Anonymous Anonymous said...

Yeah, GP. Finally a topic with two real sides to debate.

The world has gone pretty purely capitalist, neoliberal, global free trade... whatever you want to call it.

And that was bound to help the cheap labor states at the expense of existing industrial states' workers (since at the core, capitalism is the transfer of labor wealth to the owner caste).

So we can debate whether the world has, in fact, gone way overboard in the .1% leeching from the 99.9% regardless of borders. And we can debate whether neoliberalism is good exactly because it spreads wages around the world, which helps those who would never have had a job anyway.

But: "...protecting American industries from the ravages of industrially stronger nations." isn't a complete diagnosis.

For American industries to be protected, they must first exist and be viable. In 50 years of shitting our factories and skills overseas, we are left so hollowed out that we HAVE NO industries to protect any more. This asshole wants to start a trade war just because he can and it might hurt china a little... briefly. But it will disembowel American consumers (maybe a side goal of his) and the retaliation by all nations that are affected will mean that americans won't be able to buy their electronics, TVs, phones, clothing, food (not in season locally) and so forth.

Lumber? think no more American forests. Steel? nope. not enough capacity. I could go on and on.

At 5:58 AM, Anonymous Anonymous said...

GP, one simply MUST presume that if trump is for it, it has to be bad. That has to be the baseline.

Off topic: You have to read this:

I suspect... no.. I KNOW that as time passes there will be more and more such predictions based on actualities developing far faster than anyone's model currently suggests.


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