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.
Mathematical Madness
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”.
Economic Madness
Disappointingly, there is debate over the merits of economic madness.
Mike “Mish” Shedlock
Puh-leeze. This old trope is tired and dead.
I live in greater Silicon Valley and there are plenty of well-trained and educated people out of work simply because they might have gray hair and are considered too old to “fit in culturally” with the Millennial generation.
And if companies were that desperate for trained help, they could use some of that cash they are hiding from USA taxes overseas to train USA citizens in the exact skills they want. The investment wouldn’t even be that much. Perhaps 3-5 few thousand per person in volume.
But Noooooooooooo… Seems they and apologists like yourself, would rather just complain that company/economic growth is stalled because there aren’t enough trained people. Sheeze.
The average American has taken your advice to improve skills and education. Again, in the absence of income, getting into debt is the only way to do that as well.
And you might not give a damn now. But at some point, you will! The election of Trump is a shot across the bow. This has just started!
“We can’t have an open borders, zero tariff policy while our so-called trading partners protect themselves in so many ways, including tariffs. “
Why can “we” not have that? How does it benefit some random American guy to be forced to pay more for something he needs, instead of being able to buy it from the cheapest provider? And ditto, how does it benefit him to be barred from bidding on a contract to provide work for his buddy down the street, just because some hack has decided the two of them live in two arbitrarily separate political entities? And how does it benefit him to be forced to bid higher than someone else, just because he is forced to pay more for steel, oil, water, air and everything else, than someone living on the other side of the street or ocean must?
There’s nothing economically magical about drawing weird lines on a map, calling the resulting mishmash “nation states;” and stuffing them full of clueless blowhards pontificating about whom other individuals should and should not be allowed to buy toothpaste from. If Arizona seceded from the US (it would still be plenty larger than many countries), would Arizonan’s then suddenly be better off by being forced to pay punitive tariffs of Texas oil? And on water from Colorado? Would Arizonan steelworkers benefit from having to pay double for steel compared to their neighbors across the new border? And how does this new eastern border somehow magically differ from the current, southern, one?
What’s good for “America,” is just a simple summation of what is good for each individual American. There is no such thing as “good for” America the abstract entity. The borders of, and their interpretation, which are entirely arbitrary.
Europe is about the same physical size as the US, but is divided into nominal countries instead of states. If America was arranged that way, would the above-mentioned trade policies of Arizona suddenly make Arizonans better off? Is the only reason Arizonans’ benefit from being able to buy Texas oil at a decent price, that the lines on our map are arbitrarily named “state” ones, rather than “nation” ones? Or would everyone in every state, city, small town and household, also be better off having to pay tariffs on anything he bought from someone from the “outside?”
There is a reason economics is very specific about dealing with, and only dealing with, INDIVIDUAL rational actors. Not arbitrary aggregates of such. Individual rational actors are whom make economic decisions. As in, decide what to supply and what to demand. And are the ones who have utility functions they maximize. IOW, the only ones for who “good for”, “benefits” etc., make any sense to talk about at all. “America” the arbitrary slab of soil doesn’t “benefit” nor “suffer” from anything. Only individuals happening to live there, do. The only people peddling in arbitrary aggregates like “we”, “the country”, “The Volk”, “us”, “the workers,” “companies,” “the women,” “Americans,” “our race” etc. are those who are either attempting to pull a rug over your head; or the ones dumb and economically illiterate enough, to have been suckered by those.
That is not the fault of corporations like Apple, but the fault of the centrally planned fiat money system, which allows and fosters the unfettered expansion of money and credit.
The problem is, all the bad policies Trump pursues – such as imposing tariffs – are policies the “Dems” like.
But’s it’s corporations like Apple that are killing capitalism (the neo-liberal version, anyway). By out sourcing to China the folks in the US and UK no longer have jobs or decent incomes to purchase $1000 iphones. To maintain their lifestyles they are encouraged to borrow and that leaves countries like the US with private sector debt at over 170% of GDP. It’s changes in private sector debt (ie credit) that lead to booms and busts.
“Trump should be promoting leading US companies to move America forward, rather than trying to protect industries of the past”
There are two problems with your statement: (1) Trump doesn’t have the intelligence to understand this and (2) The vast majority of Trump’s supporters don’t work for companies like Apple. They are manual laborers who don’t understand macro/micro economics, trade in the modern world or finance in general. Trump needs to play to his supporters, especially if he really does want to run for reelection in 2020.
And so many people, fearful or unhappy with the prospect of Hillary Clinton becoming president, shrugged their shoulders when they pulled their voting levers for Trump, thinking “What harm could one person do as president anyway?”. Hopefully no one of any intelligence will use a similar rationalization in the future, as Trump is on his way to leaving a long trail of crap behind him over the course of his four year term. It may take the Dems more than two terms to repair the mess Trump leaves behind!
The “bad ideas” part was from Mish. Yes, I say that Mish is wrong and the proof is in the devastation that the average Americans have undergone in the last 40 years of neoliberalism. Too bad that Warren campaigned for a neoliberal like Clinton instead of supporting Sanders before the MA primary…
Wrong! I quoted Mish as saying that. I don’t agree with that of course. We can’t have an open borders, zero tariff policy while our so-called trading partners protect themselves in so many ways, including tariffs. Trade ought to be a two-way street.
Absolutely. I would rather be able to pay $1300 cash for an iPhone than buy it using a credit card for $1000.
“Bad ideas and Elizabeth Warren go hand in hand… ”
Terrible consequences and trickle-down supply-siders go hand in hand, so don’t be surprised if people thought they would give Trump or Sanders or Warren a try.
Japanese cars are great! But I will never buy another german car. If you plan to maintain your BMW beyond the warranty period, hope you have plenty of cash. I’m not joking…you have been warned.
Excellent idea. The folks in places like Gary could do with a new factory when Apple no longer find it viable to out source to Foxconn.
So the big question in all of this is, what can Government do to incentivize corporations to domicile/move operations to the USA? This is what Trump wants. We already lowered the corporate tax rate. Especially the zero corp tax states like North Carolina must be looking attractive to companies in places like Australia and Europe. Now this tariff thing is advertised as causing some short term pain, but bring in jobs longer term by making it cheaper to build here. But unlike Chairman Xi JinPing, Trump will not be “President for Life”. What if most companies decide to just sit out this administration, expecting things to “go back to normal” in 2020. They don’t move operations, and we get lots of pain for no gain. Big gamble Trump is taking. Maybe Trump isn’t really serious about tariffs. It’s 2018 and he’s just appealing to his populist base for the midterms. Republicans will need all the help they can get to survive. I hope this is the case…
Trump should focus any “tariffs” on the likes of Apple who off shore their manufacturing and profits. Then again, we mustn’t upset the folks on Wall (Fraud) Street.