Trump claims to be a free trader who wants to eliminate tariffs altogether as well as industry subsidies and non-tariff trade barriers across countries. He proposes higher tariffs to eliminate them.
Making Sense of Trump’s No Tariff Call
Please consider Making Sense of President Trump’s Call for Zero Tariffs.
>Is that no-tariff objective serious after all that Mr. Trump has said in favor of them?
>Probably not. As recent talks with Europe help show, most nations have industries they are determined to protect—including the U.S.—which makes it hard even for the most ardent free traders to level the global trading field completely. It is one reason the global trade deals that do exist are so complex and often uneven, and why they are likely to stay that way.
>The U.S. initially pushed the zero-tariff line in recent talks with Europe, but both sides quickly watered it down.
>The U.S. insisted that automotive trade be exempted from the talks, even though the U.S. is pushing Europe to eliminate its car tariffs and has threatened tariffs as high as 25% on European car imports, if they don’t.
>The reason vehicles aren’t in the talks: The U.S. auto industry itself relies on 25% tariffs to protect U.S. trucks from import competition, and the Trump administration wanted to preserve that. The European Union, on the other hand, blocked U.S. efforts to consider agricultural subsidies because it wanted to preserve the Common Agricultural Policy, which relies on subsidies. Also off the table: U.S. “Buy America” provisions, which block foreign firms from government contracts.
Looking for a free trade advocate? Look in this direction, not at Trump. He’s a free trade hypocrite.
Mike “Mish” Shedlock
“The U.S. initially pushed the zero-tariff line in recent talks with Europe, but both sides quickly watered it down.”
I would assume that zero-tariff was a starting point for negotiations. I would also assume that zero-tariff is a fantasy.
They will pay us vast sums of money? Trump has no idea how tariffs work. The importers will raise the prices of the goods they are selling to cover the cost of the tariffs. American consumers will pay for the tariffs. Just like Mexico will pay for the wall lol. He keeps telling his cult members that there is a free lunch for them and they believe it. Just like the seven new US Steel plants that will never materialize but he has to keep talking about. All politicians are liars but he has taken it to a whole new level.
Dismantling of the communists in beijeng is top priority for Trump,end the communist slave state.Nothin you can do about mexico,they make all our vehicles and the cartels are overrunning the country plus china loaning us trillions every year so americans can afford the ridiculosly marked junk they produce (remember sears craftman lol),would sears be still in business today if they kept craftman in Conus instead of outsourcing all their once top notch tools (now complete shoddy junk) to china.
The way to fix the problem of guns is for the good guys to give up theirs?
Apparently the only one listening to the (debated and flawed) Ricardian arguments are US Crony corrupt politicians. If UNILATERAL Free Trade is always good for everyone, everywhere, everytime, why are Canadians, Chinese, Japanese, the EU, etc. so evil or stupid? Wouldn’t their economies just go into the stratosphere if they dropped all their barriers? Japan has lost two decades.
The whole thing is more complicated – you can explain the benefits entirely by the DEBT we are accumulating to buy cheap stuff while paying welfare (instead of wages) to the displaced. Heads, the multinational crony corporations win, tails the displaced workers become wards of the state and the workers and taxpayers lose. Crony capitalism. Corporate welfare.
Meanwhile keep all the horrid regulations in place that prevent anyone from starting or running a viable business starting as an individual.
The flaw in the system is not “tariffs”, nor the “buying of cheap imports”. Unemployment is an artificial creation. Artificially pushing wage rates higher than the market rate causes an increase in labor supply, and a decrease in labor demand. The result is a surplus of labor, which we have artificially labelled “unemployment”.
In the absence of a minimum wage law, only the most labor inefficient jobs would be exported, and exporting those is a good thing. The result would be more jobs kept in the US. The benefits of retaining jobs goes far beyond the monetary benefits. People with jobs had more self pride, commit less crimes, have less tendency to become addicted to drugs, are more apt to own homes, are more apt to be involved in the community, and more.
When you raise wage rates above the market rate, it necessarily means more jobs exported. Businesses don’t export jobs for no reason – they do it because the economic circumstances force them to. Exporting jobs, they may save money in some areas, such as labor or regulation, but there are also areas where costs increase, notably shipping, increases in travel, more layers of management, increases in intellectual property theft, and sometimes quality issues. Only when the benefits outweigh the costs do businesses export jobs. Inefficient jobs have the most savings, so they are exported first, but artificially raising wages invariably means more jobs must be exported.
My personal opinion is that it is very stupid to force jobs overseas, and then pay people benefits. It is much more efficient to pay them a lower wage, and then supplement that wage to assure them a decent standard of living. Is it smarter to pay part of their wage, or all of their wage?
Looks like all countries want trade policies that BENEFIT THEM.
And if a foolish country rolls over and plays dead, that country will be ruthlessly taken advantage of.
And if that foolish country suddenly wakes up and demands better, all the grifter countries cry bloody murder.
Welcome to the real world Mish.
Or, is it the reverse? Maybe he really wants free trade, but constantly calls for tariffs, so it doesn’t look like it? I totally agree that he’s a free trade hypocrite, but as for what he really wants, I haven’t a clue, and honestly, I’m not sure I’ll ever have a clue what exactly he was trying to accomplish, even after he’s gone. My best guess is that he has an incredibly short attention span, and combined with a tendency to say whatever is on his mind, and, as a result, his discourse is like a series of disjointed sound bites.
Is there an underlying philosophy that guides him? An actual goal that he is trying to accomplish? I’m increasingly inclined to believe not.
Why not try listening to the guy? The words that come up frequently are “fair trade”. It seems that the underlying philosophy is reciprocity. President Trump would probably be happy with zero tariffs on both sides — but he could live with 25% tariffs on both sides. Reciprocity seems to make a lot more sense than the Unilateral Free Trade demanded by certain theoriticians.
The other side of the trade question which the Unilateral Free Traders never seem to touch is non-tariff barriers. Whether it is EU regulations banning curved bananas, or mercantilist China’s “Make it In China 2025” policy, or Japanese peer pressure against buying foreign cars — non-tariff barriers are a major real-world issue which the over-simplified free trade model generally ignores.
It is just my opinion, but I believe Trump has imposed tariffs to bring trading partners to the bargaining table. For all I know his end game may be to push USA tariffs to the breaking point and have other countries respond likewise until the SHTF. Then possibly all tariffs will be removed worldwide.