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Wrath of Trump Tariffs Still Bites but Both Parties Happy to Continue

Trump used USA first and China bashing to promote tariffs. Both parties are now on board.
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Image Chad P. Bown Tweet, Caption by Mish

Image Chad P. Bown Tweet, Caption by Mish

Tariffs Continue No Matter How Bad the Consequences

Please note that last Friday, Eighteen GOP Senators Vote Against a Waiver Process for Tariffs.

With prices rising fast, you’d think Republicans would want to find ways to cut prices. But on Wednesday 18 Senate Republicans, including many purported free-traders, voted to keep higher tariffs on U.S. businesses.

The Trump Administration imposed tariffs up to 25% on Chinese goods as a punishment for unfair trade practices. U.S. businesses have been punished instead. Chinese suppliers are the only source of some materials and goods. So the tariffs are a de facto tax that is passed on to customers and makes U.S. manufacturers less competitive. They also disrupt supply chains as businesses try to avoid tariffs by sourcing goods from countries with less capacity to produce them.

For example, Tesla and SK Innovation have pushed for tariff waivers for artificial graphite, which is needed to make lithium-ion batteries. Tesla last year noted that “no company in the United States is currently capable of producing artificial graphite to the required specifications and capacity needed for Tesla’s production.”

Tariff Waiver Process In Practice

Trump's Trade Representative Robert Lighthizer let American businesses petition for tariff exclusions. But Lighthizer rejected 87% of requests. Most of the other 13% have since expired.

Senators Ron Wyden (Ore.) and Mike Crapo (Idaho) would re-establish Section 301 tariff waivers. 

The House didn’t include any petition process in its bill, so Pennsylvania Sen. Pat Toomey this week offered a motion to instruct the conference committee to keep it.

Only 53 Senators and a mere 29 Republicans voted in favor of Toomey's motion. Not even Crapo voted for the motion.

About Face

What explains this about-face? Our sources say Mr. Lighthizer warned that the wrath of Donald Trump would descend on Republicans who voted to reinstate the tariff exclusions—no matter that American businesses and customers would benefit.

Pretend Free Traders

Why even bother with a waiver process with 13% acceptance rate bound to be even lower under the Biden administration?

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What Now?

Both parties are happy to continue tariffs, Democrats openly so. Many Republicans pretend to support free trade knowing there will be few if any exceptions.

The trade policies of Trump and Biden are in effect nearly identical and harmful. Biden's come at a worse time with massive supply chain disruptions everywhere.

Higher prices result and no jobs have returned. Rah Rah USA First!

This post originated at MishTalk.Com.

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