How else do you deal with cheating and manipulative trading “partners”?

  • Verias PAC is free trade oriented but as to all the critics of Trump’s “protectionist” trade statements — what is the alternative?
  • What about the value of strategic industrial capacity

If other countries cheat on trade matters what is Trump to do?  Do critics believe in trade deals or not, and if so are we to ignore violations, manipulations and subterfuge? How many years do we protest?

Is there so much benefit to American consumers so as to look the other way? Do we just  complain with out inflicting pain, ad nauseam?

How long do you allow needed industry and capacity to atrophy? How long are we to be dependent on foreign sources for key commodities — short, mid-term, forever — when we do not have to be?

One argument is to let cheaters cheat to subsidize consumers here but it may not be that the cheaters only goal is to dump temporary excesses,  —  market dominance, market infusion, economic hegemony, could be the motivation all while using unfair practices including denying the US the same “opportunity.”  Think China.

Yes tariffs hurt consumers.  But none of the Trump proposals should be viewed in economic isolation.  Deregulating industry will allow domestic prices  to fall as will the recently reduced tax rates, as those are factors that must be built into costs of production and pricing in order to achieve an acceptable return on investment. And some hurt is the price of doing business, price of consuming for economic security.

We do not welcome inflation and we know tariff wars are not good and individual tariffs are a mixed bag,  but how do you bargain without projecting incentives/disincentive and come to be known as meaning it? The fear of tariffs helps keep all “partners” more in line with agreements but a paper tiger is ignored.

Back and forth reading —

Gipper did not take cheaters lying down

GOP Tariff Scolds Are Rejecting Reagan’s Steel Protection Legacy 

From “the architect”

Rove: Trump’s Tariffs Are a ‘Misplaced Action,’ Trade Wars Are Not Easy to Win

Friday on Fox News Channel’s “Happening Now,” former White House deputy chief of staff Karl Rove said President Donald Trump’s plan to impose tariffs on steel and aluminum imports was “a misplaced action.”

Rove said, “Well, I think it’s a misplaced action. The president tweeted out that trade wars are good and easy to win. No, they are not. The last really big trade war we had—started by the Smoot-Hawley Tariff—lasted more than a decade and it took World War II to get America out of the depression that helped bring on.”

He added, “So, look, we—we in the Bush administration—we attempted to help the steel industry by temporary tariffs, they lasted less than a year before they were declared in violation of our international treaty agreements and our trading partners threatened the United States with a very expensive retaliatory measures that would hurt American industry.”

Well of course other countries are going threaten retaliation, Did Rove and GW not know that in initiating tariffs???  So some tribunal declaration saved their bacon? The point is to drive others to the table is it not? So if the dumping or other violations continued Rove thinks that is the good lesson? Honest price advantage and being open to the benefits it presents manufacturers and consumers is good and it helps spur innovation in cost of production here but regardless strategic industrial capacity should be maintained.  There is no doubt a lot of factors that should be looked at to keep the cost of domestic production down —  labor/automation factors, ineffective EPA regs, and more.

And we also do not want to see the imposition of extreme US standards in all areas on other countries (or theirs here). Trade agreements should not be the stalking horse for one world government. The less encumbered market has to have a strong say.  We recognize such matters are a great balancing act.

Indeed Trump’s action has been telegraphed for a long time

July 2016 —  Those Reagan tariffs Trump loves to talk about

Reagan’s Harley bail out was a five year phase out protection and it arguably worked although improvements in Harley engines were key to their long-term salvation:

See here and here

And maybe it is not just about steel

Donald Trump is right, China cheats on trade

The Chinese industrial playbook consists of restricting market access for foreign technology, media and advanced manufacturing firms, intellectual property (IP) theft, cyber hacking of offshore competitors, buying foreign rivals in strategically important sectors and favouring state-owned enterprises.      . . .

David Dollar, a Brookings Institution senior fellow and former US Treasury emissary to China from 2009 to 2013, says Beijing is partially opening manufacturing, but car manufacturers such as Ford and General Motors have to operate through “awkward” 50-50 joint ventures with local partners.

“Most of the modern services sectors such as finance, telecommunications, media, and logistics are almost completely closed to foreign investment,” Dollar says. The US needs to play “responsible hardball” against China.

China Cheats on Steel Cuts, Says Greenpeace

Here is a story to make Donald Trump’s blood boil: not only has China been dumping its excess steel in world markets, roiling the U.S. steel industry, it has apparently been cooking the books while it pledges to reduce overcapacity. Financial Times:

China’s cuts in steel capacity last year primarily targeted mills that were already idle, doing little to reduce the exports that have fuelled trade tensions or address the blight of toxic smog, a study has found. Beijing has trumpeted its success in shutting up to 85m tonnes of capacity in 2016.

However, only about a third of that was producing steel, and the closures in operating capacity were outpaced by new plants or mills that restarted as prices rose, according to the study commissioned from consultancy Custeel by environmental campaign group Greenpeace.

Strong Chinese steel exports as domestic consumption peaks have stiffened opposition in Brussels and Washington to recognising China as a market economy under World Trade Organization rules — a status that would make it more difficult to bring anti-dumping cases. Beijing has countered by defending its efforts to cut excess capacity.

Much of Donald Trump’s appeal lay in his message that China was ripping the United States off—that the global trade agenda implemented by past administrations was being exploited by canny actors in Beijing to sell out the American worker. One need not count Trump as an economic sophisticate to concede that he does have a point, and the ongoing Chinese steel saga is exhibit A.

The Chinese steel glut has been a running story for some time now, but the Greenpeace report suggests that Beijing is not acting in good faith to fix the problem, instead fudging the numbers in a disingenuous effort to achieve market economy status in the WTO. And that is a potent illustration of a common Trump talking point: that efforts to integrate China into a rules-based trade order have instead allowed it to game the system, growing rich at the expense of the U.S. while reaping the benefits of the international trade order established by Washington.

Booming: Yet Another Economic Indictor Hits Multi-Decade Best, But Will Trump Undermine His Own Success? 

Shouldn’t we all just play nice?

We would like to see a better analysis of the net cost to consumers from Trump’s proposal should it go into effect. We note that:  raw materials like steel and aluminum are not the most expensive aspect to a finished product, it is labor.  Actual consumer items from foreign countries made with foreign raw material inputs are not necessarily affected by this action unless that country slaps an export tax. If they do that where is their market going to be?


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