Friday, 27 July 2018

"You are collateral damage only if you are a manufacturer, farmer or consumer, so just sit back and enjoy the trade wars..." [updated]

Yes, it's Friday; when, back in the day, I would often post a ramble full of weekend reading for you all So here's a mini-ramble around a topic that's increasingly topical and coming closer to home than you might think: Trump and his Trade Wars, especially the recent "deal" with the EU. Read on:

[UPDATE: "The president's longstanding obsession with trade deficits reveals mercantilist instincts he cannot escape, no matter how much he talks about zero tariffs...
    "Maybe Trump has been putting on a show all this time, so that when he was finally elected president he would be in a stronger bargaining position because foreign leaders would think he was crazy and confused enough to actually believe that "tariffs are the greatest" or that "trade wars are good and easy to win." But the evidence suggests Trump means what he says.
    "As Veronique de Rugy noted here a couple of weeks ago, "This is one policy area where he's been remarkably consistent over the years." Even when Trump pays lip service to free markets, she observed, it's with the aim of increasing exports and reducing imports so as to bring down the number he thinks crystallises [American] failure and lack of resolve. Trump is not talking like a mercantilist in service of free trade; he is talking like a free trader in service of mercantilism."
'If We Didn't Trade,' Trump Argues, 'We'd Save a Hell of a Lot of Money' - Jacob Sullum, REASON.COM]

“'On the bright side, there is a clear de-escalation of rhetoric and that's good, but the devil will be in the details,' Scott Lincicome, a trade lawyer and adjunct scholar at the libertarian Cato Institute, says [of the reported EU-US 'deal']. 'And this provides almost no details. Meanwhile, all the tariffs implemented so far remain in force.'
    "Lincicome walked through the joint statement and laid out what—if anything—of substance had been achieved by the meeting...
    "Lincicome summarises: 'They’re just talking'....
    "Overall, Lincicome says, Wednesday’s agreement represents 'a step backwards in terms of ambition' from the Transatlantic Trade and Investment Partnership, a bilateral effort that was largely abandoned when Trump took office.
    “'The president could have actually achieved far broader liberalisation had he just vigorously committed to picking up the T-TIP baton 18 months ago than what we have today,' Lincicome tells TWS. 'And it would have avoided all sorts of economic and diplomatic headaches caused by his own 'national security' tariffs.'”
A Show About Nothing - Haley Byrd, WEEKLY STANDARD

"Last night, the Trump Administration announced with maximum fanfare that the trade war with the European Union was over. 'This was a big day for free and fair trade!, tweeted an excited President Trump. For all the hype and surprisingly credulous press the announcement attracted, it amounts to little more than a face-saving truce. If you’re looking for any details as to how this will work, too bad, they don’t exist.
    "The trade 'deal' follows the script of the ballyhooed North Korean nuclear 'deal from last month. The cycle begins with bellicose Trumpian threats designed to increase American leverage. This leads to negotiations, which produce an impossibly ambitious and thoroughly vague 'solution' that allows Trump to boast that he has averted a crisis of his own making...
    "It is easy to see how Trump plans to turn this shambolic retreat into another famous victory. Begin with the assumption that the European Union has been screwing the Great Companies of the United States with one-sided and very, very unfair tariffs for decades. (This is not true.) Then proceed to the assumption that Trump has produced a deal to eliminate all these tariffs. (Completely unrealistic.) By stacking the two fantasies atop each other, you arrive at a reality in which Trump has made a Great Deal to make Americans win again."
Trump-Created European Trade Crisis Averted by Fake Deal - Jonathan Chait, NEW YORK MAGAZINE

"The resulting agreement was vague, but the two sides agreed to pursue a range of possibilities—including increased U.S. exports of natural gas and soybeans—that might address the trans-Atlantic trade imbalance...
    "Mr. Juncker grabbed the opportunity to argue that both sides need to refrain from further punitive tariffs or they would foolishly harm themselves.
    "'If you want to be stupid,' he told Mr. Trump, 'I can be stupid, as well.'
    "Backing up his points, Mr. Juncker flipped through more than a dozen colourful cue cards with simplified explainers, the senior EU official said. Each card had at most three figures about a specific topic, such as trade in cars or standards for medical devices.
    "'We knew this wasn’t an academic seminar,' the EU official said. 'It had to be very simple.' ... The main elements of the agreement that emerged had been floated by the Europeans, prodded by Germany, two months earlier in the hope that Mr. Trump would refrain from imposing tariffs on European steel and aluminum. Mr. Juncker said after the meeting that the agreement was significant because 'we were never in a position to agree on these main elements before.'"
Juncker’s Trade Pitch to Trump: ‘I Can Be Stupid, as Well’ - WALL STREET JOURNAL

"I keep hearing Trump apologists (Trump-splainers) argue that he loves free trade. That these tariffs are just a negotiating tactic to get tariffs lower all around. I might give that some credence if he didn't regular refer to any purchase of foreign goods as a 'loss' for America.
    "OK, if we actually get to zero tariffs across the board both ways I'll happily admit I was wrong and apologise! (though I still don't think he gets what a trade deficit is).
    "It's embarrassing to have to explain this but when you buy groceries you didn't 'lose' to the grocer. They got your money, but you got the groceries.
    "As a much smaller point, he also refers to the purchase price as the 'gain' to the foreign entity. No, that's revenue not profit."
I Keep Hearing Trump-splainers Argue That He Loves Free Trade - Clifford Asness, TWITTER

"For Republicans who voted for Trump because he said he’d cut taxes, tariffs pose a challenge to their intellectual consistency (to the extent they still care about that). Tariffs are taxes. They are the essence of picking winners and losers. To carry this out, Trump is compelled to spend more money and grow the size of government. Republicans have now become what they abhor — the party of big government, anti-market regulation and big deficits."
Protectionism and Big Government Used to Anger the Right. Enter Trump. - Jennifer Rubin, WASHINGTON POST

"The Trump administration is planning to spend as much as $12 billion in aid to help farmers hurt by the administration’s tariffs.
    "By acknowledging the need for aid to farmers, the Trump administration is admitting that its tariff strategy is hurting Americans.
    "There are multiple reasons why providing aid to farmers to offset the effects of tariffs is a bad idea. Here are five..."
Trump Could Give Aid Money to Farmers Hurt by Tariffs. Here Are 5 Reasons That’s a Bad Idea. - Daren Bakst & Tori Whiting, DAILY SIGNAL

"If you are not collateral damage in the escalating trade wars, the bulletins from the wars’ multiplying fronts are hilarious reading. You are collateral damage only if you are a manufacturer, farmer or consumer, so relax and enjoy the following reports."
Today’s Trade Warriors Don’t Care About the Evidence - George Will, WASHINGTON POST

"The separation between economy & state 
should be as complete as the separation 

between press & state, for the same moral 
reasons. The individual's right to create & 
trade freely is as sacredly inviolable as his 
right to freely think, speak, & believe."

[Hat tip Cafe Hayek]


  1. Re the EU 'deal' Juncker can make any agreement he wants with Trump, but the EU members have ratify if: Macron has already said French agriculture is not to be touched, and he doesn't want an EU/US wide agreement.

    Meanwhile EU and US stock markets go up on news of a 'deal'.

    1. Goodness ...' but the EU members have to ratify it ... [carry on].

    2. Indeed, the first two links cover that: autos and agriculture are both excluded.

  2. the drunken watchman27 Jul 2018, 16:15:00

    so pray tell, who DOES want free trade? (politicians, that is :)

    seems a little rich to just bag on Trump given he is the only one to suggest no tariffs at all? Or are there others 'just who dont get to be quoted, maybe....

    1. "Trump triumphant: 'We're going to go a lot higher' than 4.1% GDP growth"


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