Trade war?

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Trade war?

Post by Anaxagoras » Sat Mar 03, 2018 10:17 am

Trump Says Trade Wars Are ‘Good, and Easy to Win’
President Donald Trump invited a trade war after slapping tariffs on steel and aluminum imports, daring other countries to act on threats of retaliation.

“When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win,” Trump said in an early morning tweet on Friday.

Trump is facing anger from manufacturers and trade partners in China and Europe after announcing tariffs of 25 percent on imported steel and 10 percent on aluminum for “a long period of time.” The formal order is expected to be signed next week.

Republican Senator Ben Sasse of Nebraska cautioned “Trade wars are never won. Trade wars are lost by both sides,” in a statement. “If the President goes through with this, it will kill American jobs -- that’s what every trade war ultimately does. So much losing.”

Trump in a follow-up tweet Monday morning warned of more trade actions ahead, casting them as reciprocal taxes, a term he has used for imposing levies on imports from countries that charge higher duties on U.S. goods than the U.S. currently charges.

“We will soon be starting RECIPROCAL TAXES so that we will charge the same thing as they charge us. $800 Billion Trade Deficit-have no choice!” Trump said in the tweet.

The aggressive stance has stoked fears of trade retaliation and roiled global markets. The U.S. dollar weakened for a second day against a basket of currencies, while equity markets across the U.S., Asia and Europe have declined.
I think I mentioned this before, but Trump sees trade as a zero-sum game, and the country that has a trade deficit as "losing."

I honestly think this is the wrong way to look at it. When a person purchases something for money, generally according to economic theory both the seller and the buyer are better off as a result of the transaction: the purchased good or service is worth more to the buyer than the money, and seller would rather have the money than the thing they are selling. That's the micro-icon version, but the same principle applies to trade between countries. There's no particular reason why the trade has to be "balanced" to maximize the benefit. I think Milton Friedman explains it better than I can though:



A few people will benefit from these tariffs, but many people will lose. On aggregate, the harm to the many outweighs the benefit to the few.

But apparently to Trump, it's all zero-sum. One side "wins," while the other side "loses."

When we have a trade deficit it means that more dollars (or other currencies) are leaving the country than coming in. But those dollars will eventually come back in some form, and even if they never come back, it doesn't really hurt us because the dollar is nothing more than a fiat currency. We can "print" as much of it as we need to (most of it never actually gets printed as cash notes). The dollar is used as an unofficial second currency in many foreign countries that don't have strong currencies of their own. That's no harm to us. Because of inflation, those dollars will be worth a little bit less every year, but they still hold their value better than most third-world currencies and thus are more attractive to hold than most other currencies. Those dollars that leave, never to come back, don't actually harm anyone in the US. In fact, it's more of a benefit really, because it's like they have an IOU but they never actually use it. Every year they don't use it, it's worth a little bit less.
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Re: Trade war?

Post by ed » Sat Mar 03, 2018 11:46 am

Question is whether foreigners will create US operations to avoid or reduce the tariffs. Didn't this happen with the foreign automakers?

I think that you are honestly not giving Trump enough credit on this. He does understand how deals are constructed and that "zero sum" and "win or loose" are sort of meaningless and are used as attention getting devices.
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Re: Trade war?

Post by WildCat » Sat Mar 03, 2018 2:48 pm

ed wrote:Question is whether foreigners will create US operations to avoid or reduce the tariffs. Didn't this happen with the foreign automakers?
That's not possible to do with raw materials like steel.

This is election-year politics to pander to voters in the steel-producing swing state of Pennsylvania. Clinton did it, Bush did it, Obama did it and now Trump is doing it. The media is just freaking out over it now because it's Trump.
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Re: Trade war?

Post by ed » Sat Mar 03, 2018 2:53 pm

Dunno. Where there is a will etc.
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Re: Trade war?

Post by ed » Sat Mar 03, 2018 2:53 pm

Dunno. Where there is a will etc.
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Re: Trade war?

Post by sparks » Sun Mar 04, 2018 12:48 am

Any rhino of the swamp thingy caught double-postin' spends a night in the box.
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Re: Trade war?

Post by Doctor X » Sun Mar 04, 2018 4:03 am

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Re: Trade war?

Post by Anaxagoras » Tue Mar 06, 2018 5:54 pm

What are the current tariff rates by country? Of course, there's a giant table with different rates for different categories of products, but the World Bank took the trouble to figure out a weighted average for each country:

https://data.worldbank.org/indicator/TM ... H.WM.AR.ZS

So just looking at a few of the more economically important countries:

U.S. is 1.6%
E.U. likewise is 1.6% (both as a whole and each individual member countries)
China is 3.5%
Japan is 1.4%
Canada is 0.8%
Australia is 1.2%

Poorer countries tend to have higher tariffs, like Brazil has 8% and India 6.3%.
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Re: Trade war?

Post by Abdul Alhazred » Tue Mar 06, 2018 6:41 pm

They've figured it out over by Democratic Underground :BigGrin3:

https://www.democraticunderground.com/100210324871
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Re: Trade war?

Post by Anaxagoras » Wed Mar 07, 2018 9:40 am

EU’s anti-Trump hit list: Everything including the kitchen sink
Well, not everything, but they will hit back.
The EU is set to hit a wide range of American products — ranging from yachts to peanut butter — with duties of 25 percent to retaliate against President Donald Trump’s tariffs on imports of steel and aluminum.

The products targeted, as shown in a list obtained by POLITICO, are chosen so as not to harm EU industries, which do not need these imports. Some targets clearly gun for politically sensitive Republican-run states.
. . .

In agriculture, the EU will go after kidney beans, bourbon whiskey, rice, cranberries, orange juice, peanut butter, tobacco and cheroots. The total value of the farm goods targeted, based on the EU’s 2017 imports, is €951 million, including €604 million worth of processed goods.

In the industrial sector, the EU is going after a broad range of tubes, pipes and rolled steels, as well as appliances such as grills, sinks, ventilators and ladders. The list also includes iron and steel containers for compressed and liquefied gas. The total value of iron and steel goods targeted is €854 million.

Motor boats are identified as a particularly high-value import.

Other miscellaneous items on the list include lipstick, bedlinen, motorcycles and trousers.
By "trousers" I heard they meant blue jeans (but how many of those are made in America these days anyway? I thought all the clothes were made by children in Bangladesh these days.)
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Re: Trade war?

Post by Doctor X » Wed Mar 07, 2018 9:48 am

They will cave, Anax, or they will not be able to Keep Up with the Kardashians.

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Re: Trade war?

Post by Anaxagoras » Wed Mar 07, 2018 10:03 am

Carl Ichan might have been tipped off (I'm not saying intentionally, but he is known to be one of the people who Trump calls for advice).

Ex-Trump adviser sold $31m in shares days before president announced steel tariffs
Carl Icahn, a former special adviser to Donald Trump, sold $31.3m of shares in a company heavily dependent on steel imports last week, shortly before Trump’s announcement of new tariffs sent its shares plummeting.

Icahn, a billionaire investor who was a major Trump supporter, started selling shares in the crane and lifting equipment supplier Manitowoc Company on 12 February, days before the commerce department first mooted plans to impose stiff tariffs on foreign steel imports.
According to a regulatory filing Icahn was able to sell his shares for $32 to $34. On Friday morning Manitowoc’s shares had fallen 5.48% to $26.37. The fall was in line with drops seen by other companies dependent on cheap steel imports, including Boeing and Caterpillar.

Trump has argued that the tariffs are necessary to protect US jobs. “We must protect our country and our workers. Our steel industry is in bad shape. IF YOU DON’T HAVE STEEL, YOU DON’T HAVE A COUNTRY!” Trump wrote on Twitter.
Good timing to sell if you're going to sell.
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Re: Trade war?

Post by Abdul Alhazred » Wed Mar 07, 2018 2:11 pm

Whether it "works" or not depends on what one is trying to accomplish.

Higher employment despite lower general standard of living, maybe?

And it really is *not* like a war.
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Re: Trade war?

Post by ed » Wed Mar 07, 2018 2:32 pm

Anaxagoras wrote:Carl Ichan might have been tipped off (I'm not saying intentionally, but he is known to be one of the people who Trump calls for advice).

Ex-Trump adviser sold $31m in shares days before president announced steel tariffs
Carl Icahn, a former special adviser to Donald Trump, sold $31.3m of shares in a company heavily dependent on steel imports last week, shortly before Trump’s announcement of new tariffs sent its shares plummeting.

Icahn, a billionaire investor who was a major Trump supporter, started selling shares in the crane and lifting equipment supplier Manitowoc Company on 12 February, days before the commerce department first mooted plans to impose stiff tariffs on foreign steel imports.
According to a regulatory filing Icahn was able to sell his shares for $32 to $34. On Friday morning Manitowoc’s shares had fallen 5.48% to $26.37. The fall was in line with drops seen by other companies dependent on cheap steel imports, including Boeing and Caterpillar.

Trump has argued that the tariffs are necessary to protect US jobs. “We must protect our country and our workers. Our steel industry is in bad shape. IF YOU DON’T HAVE STEEL, YOU DON’T HAVE A COUNTRY!” Trump wrote on Twitter.
Good timing to sell if you're going to sell.
"intentionally" has nothing to do with it.

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Re: Trade war?

Post by Rob Lister » Thu Mar 08, 2018 12:24 pm

Domestic steel and aluminum plants firing up to meet new demand.

https://www.wsj.com/articles/u-s-steel- ... 1520430223

I think it might be a little premature. If Trump says he wants a 25% tariff, he'll settle for 2.5%. But maybe they know that already.

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Re: Trade war?

Post by ed » Thu Mar 08, 2018 12:30 pm

I think that Trump has the rudiments of negotiation down pretty well.
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Re: Trade war?

Post by Anaxagoras » Thu Mar 08, 2018 5:26 pm

What's there to negotiate? Isn't it his decision to make?
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Re: Trade war?

Post by ed » Thu Mar 08, 2018 5:27 pm

The level of the tariff and the terms I think are in the province of congress, no?
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Re: Trade war?

Post by Anaxagoras » Thu Mar 08, 2018 11:02 pm

Maybe according to the constitution they are, just like the constitution gives congress the power to declare war.

Apparently this is another one of congress's powers that they gave to the president a long time ago.

https://www.vox.com/2018/3/8/17097206/t ... s-congress
There are many ways the president can impose tariffs without congressional approval. To name a few:

Through the Trading With the Enemy Act of 1917, the president can impose a tariff during a time of war. But the country doesn’t need to be at war with a specific country — just generally somewhere where the tariffs would apply. (This is how Richard Nixon imposed a 10 percent tariff in 1971, citing the Korean War.)
The Trade Act of 1974 allows the president to implement a 15 percent tariff for 150 days if there is “an adverse impact on national security from imports.” After 150 days, the trade policy would need congressional approval.
There’s the International Emergency Economic Powers Act of 1977, which would allow the president to implement tariffs during a national emergency.
Trump’s White House cited Section 232 of the Trade Expansion Act of 1962, a provision that gives the secretary of commerce the authority to investigate and determine the impacts of any import on the national security of the United States — and the president the power to adjust tariffs accordingly.

In this case, Wilbur Ross, Trump’s commerce secretary, conducted an investigation, which Trump called for last April, into the impacts of steel and aluminum imports. That report was enough legal justification for Trump to bypass both Congress and the independent US International Trade Commission (USITC), which is typically called on to weigh in on proposed tariffs. (When President George W. Bush imposed steel tariffs in 2002 as temporary safeguards, it required USITC oversight.)
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Re: Trade war?

Post by corplinx » Fri Mar 09, 2018 12:26 am

We seem to be winning, China is coming up with a proposal to make us less unhappy.

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