The further to the left or the right you move, the more your lens on life distorts.

Tuesday, March 06, 2018

Trade War?

The elites on both the right and the left got the vapors when Donald Trump announced that he intended to impose tariffs on steel and aluminum. His intent was to provide an incentive for rebuilding those industries in the United States with the added benefit of creating blue collar jobs. The react was immediate and overwhelmingly negative. The trained hamsters in the mainstream media piled on, and the amount of negative commentary was as predictable as it was astounding. Here's some examples of the 'concerns' raised by the usual suspects:

"The world is now a global economy and tariffs are so ... well, so 20th century."

"The tariffs target our allies and will anger them, resulting in trade retaliation or worse, a trade war."

The costs of more expensive steel and aluminum will trickle down into products of all kinds, representing a billion dollar 'tax' on consumers."

"Any jobs gained in steel and aluminum will be offset by jobs lost in other sectors impacted by retaliation."

In honesty its hard to sort out the truth in all of this. Suffice to say that the elites always opt for the status quo and our international trading partners enjoy a trade surplus with the USA, so they are, of course, upset.

But Donald Trump is a disruptor and a seasoned negotiator. It may be that he achieves benefits by disrupting the status quo in trade and gains a negotiating advantage by levying tariffs.

By disrupting the status quo Trump might very well provide a necessary catalyst for a rebirth of domestic steel and aluminum production, providing economic and national security benefits. By levying a tariff today on Canada and Mexico (among other allies), he just might establish a 'throwaway' for negotiation on a new version of NAFTA that is more beneficial for the United States.

Those who can't wrap their heads around applying tariffs to allies don't seem to realize that allies place tariffs and taxes on many different U.S exports with the express intent of protecting local industries. That's why a Chevy Corvette can cost twice what it does in the US in some EU countries. It reasonable to ask why Trump's tariffs are somehow wrong and provocative, but tariffs and taxes levied by EU allies on products made in the USA are perfectly acceptable.

In Trump's first year in office, he has, according to Heritage Foundation, accomplished over 60 percent of his campaign promises. One of those promises was to reform trade, to give the USA a better deal. For better or worse, that's what he's trying to do. The world will not come to an end if tariffs are imposed—they are never forever. In fact, it might be that the conventional wisdom is wrong and there will be a relatively minor downside and potentially big upside. Realistically, it's hard to tell, but when the trained hamsters in the mainstream media become hysterical and the elites frown and express concern, it's not always a bad thing to take an opposing position. You'll recall that Trump's efforts at tax reform caused the trained hamsters in the mainstream media to become hysterical and the elites to frown and express concern about wrecking the US economy and benefiting only the rich. They. Were. Wrong. As they so often are.

Kevin McCullough comments:
President Trump should not have surprised anyone with this announcement. He campaigned on the idea and it is keenly linked to why he won the rust belt and the nation. The tariffs are called “protectionist” by voices trying to scare the American people. But fear is unnecessary.

If the five preceding presidents all held the same position (which they did) but were unable to get it done due to economic stagnation, terrorism, etc. now is the perfect time to take it up and create a far more favorable playing field for our domestic metals industry as well as the workers who would love to show the world the pride they take in American Steel and Aluminum.

The tariffs are the right thing to do!
I'm not sure what the right thing is here, but I do know that the hysteria and fear-mongering are sure signs that something is afoot. We'll see how this plays out.