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Trump's Tariffs

Belz... said:
Creating jobs is one thing, but do you want to pay double the current price for your clothes?
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I suggest you check out Gaetan other threads dealing with economics,but be sure not to be drinking anything because you will laugh your head off.
Gaetan is one of the site's true crackpots when it comes to economics.
 
Protectionism is bad in the long run, no matter who advocates it. That was one reason I did not support Bernie Sanders;way too much of a protectionist. It's a foolish idea that has followers all across the political spectrum.
 
lupus_in_fabula said:
Either the firms trade with each other or they don't. There is nothing in the financial account, by itself, that makes them trade with each other.
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Trying to look at a part of an interconnected systems “by itself” is often a mistake.
 
dudalb said:
Protectionism is bad in the long run, no matter who advocates it.
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Unfortunately, the old notion that free trade is about each country manufacturing what it makes best has gone by the way side. It has become more of a euphemism for global corporations to exploit weaknesses in multiple countries - usually at the expense of the country that used to manufacture it best.

A return to protectionism probably won't address this problem but you can't blame people for wanting to give it a try.
 
lomiller said:
Trying to look at a part of an interconnected systems “by itself” is often a mistake.
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Yes. True. Also, we should not attribute causality to accounting identities.

So, for example: The US trade deficit grew while the dollar got stronger (1997-2002), and the trade decifit also grew while the dollar got weaker (2002-2007).
 
psionl0 said:
Unfortunately, the old notion that free trade is about each country manufacturing what it makes best has gone by the way side. It has become more of a euphemism for global corporations to exploit weaknesses in multiple countries - usually at the expense of the country that used to manufacture it best.

A return to protectionism probably won't address this problem but you can't blame people for wanting to give it a try.
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The standard parable about comparative advantage has always been confined to a fantasy scenario. The real context has, from the start, been about trade between N firms and M commodities where M far outweighs N in terms of numbers (not to mention the number of firms outweighing the countries for which the eventual balance of trade is recorded).

Should we enter an era of serious trade-war between major countries, there might be an opening for enforced and enhanced international coordination in trade, in order to alleviate tensions in an orderly fashion. That would be a start.

There's a point where import propensities tend to become path dependent as the industrial base becomes eroded in countries that have experienced losses in export capacity and shares – i.e., they become stuck in an "import trap". Protectionism alone might not work; as such policies only tend to affect the growth rates of domestic demand expenditures. In order to give protectionism a chance to work (at some level), it should be combined with strategic efforts to develop the complexity and capacity of the domestic industrial clusters … so as to also make positive expenditure switching possible.
 
lupus_in_fabula said:
Yes. True. Also, we should not attribute causality to accounting identities.

So, for example: The US trade deficit grew while the dollar got stronger (1997-2002), and the trade decifit also grew while the dollar got weaker (2002-2007).
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How is this an issue? Trade deficits create a natural downward pressure on the USD, which in turn promotes exports and discourages imports. This is consistent with what we see in the second example, suggesting trade is the driver.

A strong USD is going to encourage imports and discourage exports and therefor increase the trade deficit, but we only expect to see this if something else is pushing the USD upwards. This is consistent with capital flows pushing the USD upwards and this upwards movement creating a trade deficit in response.
 
lomiller said:
How is this an issue? Trade deficits create a natural downward pressure on the USD, which in turn promotes exports and discourages imports. This is consistent with what we see in the second example, suggesting trade is the driver.

A strong USD is going to encourage imports and discourage exports and therefor increase the trade deficit, but we only expect to see this if something else is pushing the USD upwards. This is consistent with capital flows pushing the USD upwards and this upwards movement creating a trade deficit in response.
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Well, the financial account is going to be consistent with all data (because it's part of an accounting identity). The point here is that a US trade deficit can grow wider regardless of the strengthening or weakening of the dollar. So there is no necessary causality to be drawn by looking at the financial account (or the dollar index) as such. Yet you seem to be attributing causality by doing exactly that—i.e., assuming a direction of how accounting identities relate to each other—when claiming it's the inflow of capital that's driving the trade deficit.

In short: you need evidence other than a mere accounting identity in order to show capital inflow is the cause, driving factor, of the evolution of the trade deficit.
 
These trade wars are soooooo easy to win :rolleyes:

US President Donald Trump has threatened to impose tariffs on an additional $200bn (£151bn) of Chinese goods in a growing trade row.
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https://www.bbc.co.uk/news/business-44529149

Doesn't President Trump realise that the Chinese government is very adept at retaliation and will make sure that the retaliatory measures cause maximum discomfort in the Trump heartland ?
 
There is something curious about this whole situation. China may retaliate with further tariffs, but considering the existing bilateral trade balance, the U.S. has far more leeway in this respect (the U.S. can put tariffs on $400-500bn worth of goods, while China must settle for around $100bn). Now, tariffs by China are not the only retaliatory measures of course, but many other possible strategies are already part of the Trump administrations' motive for engaging in this trade scuffle in the first place. This is what the Section 301 investigation (pdf) is all about.

The US administration is probably worried about China's Made in China 2025 initiative. Not only does China aim for a substantial upgrade in its domestic value-added chain of industrial production. The explicit goal is to subsequently become 70% self-sufficient in terms of core components and materials. This is, for example, why the Council of Foreign Relations has called the plan an "existential threat to U.S. technological leadership."
 
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Tariff's on Chinese-made products are going to hurt American companies just as much as they hurt China. Wal-Mart, for example; and the companies they have routinely forced to move production to China if they want WM to sell their products.
 
Fudbucker said:
If your argument is to create a moral equivalence between the working conditions in a given Chinese factory and those in an American one, you're not going to be very convincing. We have problems, but we also have much much tougher labor laws than China. I know where I'd rather live and work.
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But that's not really the comparison you're making. There's no course of action that allows people in china to have the equivalent of living and working in America, and moving manufacturing out of China certainly wouldn't do it. What would it do? Well, let's look at how things were here before manufacturing moved to China.

I doubt you'd rather live and work in China pre 1979 than live and work in China today.
 
EU tariffs in place:

The European Union (EU) has introduced retaliatory tariffs on US goods as a top official launched a fresh attack on President Donald Trump's trade policy.

The duties on €2.8bn (£2.4bn) worth of US goods came into force on Friday.

Tariffs have been imposed on products such as bourbon whiskey, motorcycles and orange juice.

European Commission president Jean-Claude Juncker said duties imposed by the US on the EU go against "all logic and history".
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https://www.bbc.co.uk/news/business-44567636

I think that the UK will be much easier to intimidate post-Brexit.

It isn't just the EU:

India, meanwhile, has said it will raise taxes on 29 products imported from the US - including some agricultural goods, steel and iron products - in retaliation for the wide-ranging US tariffs.

The new duties will come into effect from 4 August and will affect US almonds, walnuts and chick peas, among other products.

India is a top buyer of US almond exports and so the move is expected to hurt farmers in America.
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Remember, trade wars are really easy to win :rolleyes:
 
The governments, in the short term, will be glad to have all the new tariff revenue they collect. In the medium and long term their economies will suffer. As usual there will be bickering about 'who started it'. Canada doesn't like the USA tariffs on metals, but it does like its own 200% + tariff on USA milk that was imposed earlier.
 
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ceptimus said:
The governments, in the short term, will be glad to have all the new tariff revenue they collect. In the medium and long term their economies will suffer. As usual there will be bickering about 'who started it'. Canada doesn't like the USA tariffs on metals, but it does like its own 200% + tariff on USA milk that was imposed earlier.
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AIUI The USA heavily subsidises its dairy farmers, Canada does not. If there was no tariff to compensate for the difference that makes to the price at which milk is sold American tax payers would be subsidising Canadian consumers, whilst Canadian dairy farmers went bankrupt.
 
Pixel42 said:
AIUI The USA heavily subsidises its dairy farmers, Canada does not. If there was no tariff to compensate for the difference that makes to the price at which milk is sold American tax payers would be subsidising Canadian consumers, whilst Canadian dairy farmers went bankrupt.
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This, and there are large tariff-free quotas. The oft-quoted tariffs only apply to imports above those quotas.

https://www.milkbusiness.com/article/trumps-270-canadian-dairy-tariff-fact-or-fiction
 
If Trump impose tarifs on goods from foreign countries, these countries will impose tarif on US goods, this works both ways.
 
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