In "frank but fruitless" talks, Trump Provides ‘Clarity’ on EU Tariffs.
Hours after European Union trade chief Cecilia Malmstrom said she had “no immediate clarity” on whether the bloc will be let off the hook from planned U.S. tariffs, President Donald Trump laid down his conditions and repeated a threat if they’re not met.
Malmstrom described labeled talks with U.S. Trade Representative Robert Lighthizer in Brussels on Saturday as "frank but fruitless".
Europe was not exactly pleased with what came next.
Trump Provides Clarity
Trade War Winnable
Pledge to Fight Back
Minor Casualties So Far
I could not find where Malmstrom said trade wars were winnable, but Trump Tweeted "Trade Wars are Good and Easy to Win".
Elizabeth Warren Chimes In
Bad ideas and Elizabeth Warren go hand in hand, so it is not surprising that Warren says Tariffs Should Be Part of U.S. Trade Policy.
Kindergarten Arithmetic 101
No one wins trade wars. They are economic madness. Consider Kindergarten Arithmetic 101: Analysis of the Trade Debate
If Trump extends his wall to cover the entire border, instead of just the one shared with Mexico, and then bans or punitively tariffs every single good that uses steel as an input, recursively, as well; he just may succeed in driving up the domestic price of final goods, to the point where both nominal labor compensation and nominal raw materials prices can be increased at the same time.
In doing so, he will ensure that not a single American made product of any kind, will be internationally competitive over time. This is exactly what the Latin American import substituting “structuralists” did, back in the 50s and 60s.
Consider Common Sense
Tariffs are a way of complaining about getting goods and services to cheaply. Please charge us more!
Petition to Tax the Sun
Frédéric Bastiat's famous Petition of the Candlemakers, was a sarcastic plea on behalf of the candlemakers to tax the sun because of it's unfair advantage in providing free light.
Make your choice, but be logical; for as long as you ban, as you do, foreign coal, iron, wheat, and textiles, in proportion as their price approaches zero, how inconsistent it would be to admit the light of the sun, whose price is zero all day long!
We Do Tax the Sun!
As absurd as his proposal to tax the sun is, the US does precisely that. How?
With sugar and ethanol tariffs. Sugar cane grows much better in places like Brazil. They can produce it cheaper then the US, but our all-powerful sugar lobby has complete control over Congress. We tax both sugar and ethanol, the latter derived from Brazilian sugar.
Effectively, US hypocrites tax the sun.
As noted in How to Not Sell Cars: More Steel Tariffs Coming Up, there are about 6.5 million workers at manufacturers that use a lot of steel, but only 140,000 steelworkers.
Even if one foolishly believes we need to protect industry, it's horrendous math to do something for the possible benefit of 140,000 workers at a guaranteed expense to 6.5 million.
For a mathematical explanation of trade deficits, please see Trump's Tariffs Show He's "Clueless About Trade".
Disappointingly, there is debate over the merits of economic madness.
Mike "Mish" Shedlock