Trump Repeats the Folly of Protectionism

Pricier goods aren't a minor side effect of President Trump's new tariffs; they're the central purpose.

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Sipa USA/Newscom

Next month, thanks to the tax bill signed by Donald Trump, many Americans will see more money showing up in their paychecks. They should contain their enthusiasm. It won't be long before his trade policy starts removing that money from their wallets.

On Monday, the president imposed hefty tariffs—taxes, that is—on imported washing machines and solar panels. They will be set at a minimum of 20 percent and a maximum of 50 percent on washers and at 30 percent on solar equipment. Rest assured, the duties will boost prices accordingly.

That's not a minor side effect; it's the central purpose. By pushing up prices, the Trump administration hopes to make it easier for companies in the United States to compete with overseas firms while also charging more than before.

The president, whose ignorance of economics is bottomless, has the idea that punishment of foreign producers is the key to our prosperity. His conviction is that when you protect an industry, you cause it to grow, reaping a bounty that will enrich the entire economy.

It's an old superstition that has been debunked in the real world over and over. A nation does not make itself richer by shutting out goods its people want. High tariffs fleece the broad public to benefit a small class of favored people.

Consumers will be saddled with higher costs, forcing them to pay more for new washers or solar panels—or buy less capable models or hang on to their old ones. Other businesses will find their costs rising, cutting their profits and making it harder for them to compete with foreign companies.

Another drawback, says Syracuse University economist Mary Lovely, is that "there will be less innovation in the long term."

The Solar Energy Industries Association does not welcome the administration's policy, which it says "will cause the loss of roughly 23,000 American jobs this year, including many in manufacturing" and "result in the delay or cancellation of billions of dollars in solar investments."

China has made a big push into the business, which may be hard on U.S. solar producers but has been a blessing to companies and residents who use electricity. Since 2001, notes Lovely, the Chinese share of the global market has soared—and the price of equipment has plummeted.

The effects of the tariffs on solar panels will be especially perverse. Most jobs in the U.S. solar sector are not in manufacturing, and the companies that stand to gain are not American-owned. "You're putting 85 percent of the jobs in the industry at risk primarily to benefit foreign owners of capital," says Lovely.

The washing machine duties will have similar consequences. Higher prices will curtail sales. Stores that sell washers, railroads and trucking companies that transport them, and mechanics who install them will find they have less business. Reduced hours, layoffs and closings will ensue—though the victims may not grasp that Trump is behind the damage.

Trying to save jobs by curbing imports is always a losing game. When George W. Bush imposed duties on foreign steel, experts concluded, he destroyed some 200,000 jobs in other sectors—exceeding the total employment of the American steel industry.

Barack Obama chose to ignore that unhappy example. In 2013, he took action against tires from China. But tire-makers in other countries stepped up to fill much of the gap, and the American economy paid a price. A study by the Peterson Institute for International Economics found that consumers paid $1.1 billion and no more than 1,200 jobs in the American tire industry were preserved.

That works out to $900,000 per year for each job saved—a job that typically paid about $40,000 per year. The trade-off made about as much sense as buying nickels for a dollar apiece.

Besides the self-inflicted wounds, the Trump administration invites payback by foreign governments. China could cancel orders for commercial aircraft or soybeans. (It answered Obama's tire tariffs by raising levies on U.S. chicken parts.) South Korea is challenging the tariffs before the World Trade Organization, which could authorize retaliatory tariffs against the U.S.

That's the thing about trading partners. They have the same arsenal of protectionist weapons that we do—and the same political pressures to use them. In a trade war, as in a shooting war, both sides can expect to incur heavy costs and numerous casualties.

We have accumulated a mountain of evidence that protectionism doesn't work. But it's never too late to get schooled in lessons we should already know.

NEXT: Mark E. Smith, Singer/Lyricist for the British Postpunk Band The Fall, R.I.P.

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  1. China has the biggest trade surplus in the world and massive non-tariff barriers and currency manipulation and capital controls. I understand the logic behind free trade even with nations with high tariffs, but the logic does not seem to be holding here. Are we to suppose China would have an even larger trade surplus if they did not engage in practices that limited market access for foreign products? They would be even richer? Or perhaps the argument is that the current trade practices of China are unsustainable, debt fueled, and will crash down on them? When is this then?

    If I am to be a believer that open and unlimited trade with all nations, even those that explicitly restrict market access and prop up their own export corporations with humongous state subsidies, someone has to explain how China engages in all of these practices and still ends up with a monstrous trade surplus and endless 6% GDP growth. Perhaps the argument is it will all even out and Africa/random other poor nation will be the next miracle nation like China when labor becomes too expensive?

    1. -continued-

      One of my parents was CFO of a Fortune 500 company, pretty high up there. They were a big believer in free trade. Then they got older and became less enamored, pointing out that when you stop making this you cannot become more productive at making them. Total factor productivity is not a thing when the only thing you can get more productive at is importing cheaper. The Chinese still own exports due to this exactly, increasing productivity. Meanwhile, our trade deficit increases.

      I know this is heresy on a libertarian webpage, but I do not think the orthodoxy is holding here.

      1. Yeah, so what? There’s nothing wrong with a trade deficit. I have a massive trade deficit with Amazon.com right now, and I benefit tremendously from it.

        1. No, you do not benefit. You are poorer as a result because Amazon has your money. What did Amazon send you in return for your money? Cheap Chinese junk, right? That makes you poorer, not richer. Money is wealth. Stuff is just stuff. Every time you buy something you become poorer, because you’re parting with money.

          1. I have a massive trade deficit with Amazon.com right now, and I benefit tremendously from it.

            He is wealthier in terms of happiness. Especially when that big smiley box shows up at the door.

          2. Hey….you don’t understand…..
            Sure…my cheap Chinese made shoes only last a month…but they are inexpensive !

            And yes, my Chinese made paper shredder burned up the first time I used it….but it didn’t cost much…
            I just took it back and got another one….and yeah….that one burned up too…..but it was cheap!!!

            And sure… my cheap Chinese made T-shirt shrunk and doesn’t fit anymore after one washing….
            But….it only cost 7 bucks!!!!

            And yes….my…..ah…

            1. tgrondo|1.25.18 @ 9:55AM|#
              “Hey….you don’t understand…..
              Sure…my cheap Chinese made shoes only last a month…but they are inexpensive !”

              Hint: A tariff isn’t going to help your problem.

              1. Sevo….my problem is….I’m too much of a cheap SOB to buy better shoes…..

                But….we’re not look at a Chinese shoe tariff…..are we?

                1. I have found the best shoes in the world are currently made in Russia. I have several pair (including a pair of military dress “jack boots”) that I’ve had for over 10 years and they’re still in great shape. The boots cost me $79USD and have worn like iron. It would cost me more to get them re-soled than it would to buy new ones. I don’t know what they feed their cows over there, but the leather soles wear like iron!

                  1. Which Russian shoes are better than those produced by Allen-Edmonds?

                    I suppose there are people who prefer a Ford, Chevy, or Toyota to a German-made BMW. Different strokes . . .

              2. I won’t buy Clarks or Docs anymore since they moved production to China. They’re crap now. But somehow they still cost a lot.

                1. Wally-world has a great pair of $10 tennis shoes….they have a sole that wears like pencil erasers…
                  I’ve never seen anything like it!

                  But….They are Cheap!!!!

            2. I haven’t had any quality issues with the vast majority of Chinese-made goods that I’ve purchased. But if your characterization is right, then people will stop buying them and the problem will solve itself.

              1. I don’t know, Jordan….Walmart has shelves full of cheap Chinese junk and they don’t seem to lack for customers…..

                1. tgrondo|1.25.18 @ 10:56AM|#
                  “I don’t know, Jordan….Walmart has shelves full of cheap Chinese junk and they don’t seem to lack for customers…..”

                  So it seems there is no problem.

                  1. Did you read what Jordan wrote? I was answering his statement….

                    He said,
                    “if your characterization is right, then people will stop buying them and the problem will solve itself.” Meaning, if it’s cheap and it doesn’t last…people will quit buying it….

                    I say no, Walmart is proof that people will buy crap…over and over again.

                    1. tgrondo|1.25.18 @ 11:55AM|#
                      “Did you read what Jordan wrote? I was answering his statement….”
                      Yes, I did.

                      “I say no, Walmart is proof that people will buy crap…over and over again.”
                      Which sort of proves there’s no problem to be solved, except the one between your ears.

          3. This is why, when I purchase something using cash, I ask for my change to be all in pennies. This way I get the thing I wanted to buy, but still have as much money left as possible. The suckers don’t even know they’re being fleeced!!

          4. The argument that trade deficits do not matter is INSANE.

            Sure they don’t matter… If you don’t mind foreign investors buying up all of the assets in your nation, and effectively turning you into serfs working on their plantation.

            Trade deficits don’t matter when they’re small, or when they come and go… But shipping hundreds of billions of dollars a year abroad, which then either has to come back to buy our goods (which isn’t usually the case with China or other developing countries) or purchase assets here is suicide over the long haul. Do you think the US will be better off when China owns 20 trillion dollars in US based assets? 30 trillion? Keep in mind the profits from all of those assets will be still further dollars going to Chinese owners, to buy still more assets.

            We’re not in deadly territory yet, but over decades this can become a real problem.

            1. vek|1.25.18 @ 10:16AM|#
              “The argument that trade deficits do not matter is INSANE.”

              Your ‘argument’ is total paranoid bullshit. The exact same crap was claimed of the Saudis when oil price tripled; they ended up buying stuff with the money and didn’t carry off NYC as idiots like you would have it.
              Next it was the Japanese, and all of our golf courses were going to be hauled off to Japan.
              Learn some history before you open your yap and make a fool of yourself.

              1. You don’t seem to grasp what I am actually saying. I’m not terrified of where things are now. Or even where they’ll be in a few years. My point is merely that over a very long period of time it can become an actual issue. If it can’t go on forever, it has to stop sometime.

                You know how shithole countries complain about how Americans, Europeans, etc own all the shit in their countries and don’t give a fuck about what the locals have to say about anything? Well that’s not too far from the truth in some places. We DO own huge portions of their economy, AND we don’t give a fuck about them. Just like the Chinese are working on here.

                We’re a BIG economy, which is why we’ve been able to soak up many trillions in foreign owned assets without it being a huge deal. But if it keeps climbing year after year, ever higher, for 30 years… Well it’s not going to be an optimal situation. Japan is friendly, they don’t worry me, but an aggressive country like China is a different story IMO.

                The only reason we can even have these deficits is because we have a fiat currency. When people had to trade real money (like gold/silver) they were keenly aware of literally running out of money from trade imbalances. Our bunk Federal Reserve notes let us game the system a lot more than in those days, but there are upper limits. Especially given how little we save and invest ourselves. Chinese investors will not care about what American citizens want, and at a point that can be an issue.

                1. vek|1.25.18 @ 11:34AM|#
                  “You don’t seem to grasp what I am actually saying. I’m not terrified of where things are now. Or even where they’ll be in a few years. My point is merely that over a very long period of time it can become an actual issue. If it can’t go on forever, it has to stop sometime.”

                  You are too stupid to understand that we all know that.
                  Your ‘short term’ solution is a long term disaster.

                  1. LOL You’re the one who doesn’t get the “big picture” stuff. Dollars and cents are important, but that’s not the whole picture. People at the REAL top of the global power structure don’t care about money. Money is a means to an end, namely POWER.

                    Just remember what I said in the future when we either finally have to do something to resolve the situation, or become China’s bitch.

            2. You are so correct. It’s just plain wrong that companies like Subaru and Honda are building factories and employing people. Those factories are not owned by Americans, and that’s just messed up. We would be better off without those factories, jobs, and cars, because foreign investment is bad.

              1. Again, moron, I’m not worried about every little thing. I’m talking macro scale over a long period of time. If you don’t understand the difference between being a renter and an owner in a situation… You’re an idiot.

                MUCH of the investment is going straight into buying real estate here. Which is fine at reasonable levels. But when we trade sky scrapers that will be bringing in billions of dollars of income for decades for tennis shoes that will wear out in 6 months, it’s not going to play out well in the long haul for the economic well being of people in this country.

                Most people spend every dime they make, and more. They never become rich. Those that defer gratification and invest in assets, which make them more money, do become rich. Our economy habits as a nation are essentially spending every dime we bring in, AND maxing out the credit card as fast as possible. China is glad to take our sky scrapers in return for bobbles that will quickly lose their value. And this is all fine on a small scale, but it is not the most prudent long term decision.

                1. vek|1.25.18 @ 11:38AM|#
                  “Again, moron, I’m not worried about every little thing. I’m talking macro scale over a long period of time. If you don’t understand the difference between being a renter and an owner in a situation… You’re an idiot.”

                  Again, imbecile, you are too stupid to post here.
                  STFU and get lost

                  1. Again, imbecile, you clearly have no knowledge about history or all the bajillions of times economic leverage has been used to achieve other political ends. If we don’t want to be beholden, we as a nation need to be more fiscally prudent. Again, I say remember these posts in the future if we don’t correct our course…

            3. Only people who live in your city should be allowed to purchase assets in that city. That’s the path to prosperity.

              1. There is a difference between people in the same nation state, paying taxes to the same government, being beholden to the same laws and cultural norms… Versus foreigners that happen to live in countries that are openly hostile to our interests.

                You don’t think so? Doesn’t make any difference at all right? Well how would you feel if 100% of all US real estate was owned by foreigners? Do you really think they would behave the same way American citizens would in operating them? Would they participate in civic duties that had to do with laws, taxes, etc in the same way as people that lived here?

                Ohhhh, so if they owned 100% it might be bad… Well somewhere between 0% and 100% it starts to exert pressure and have effects. You can argue that morally it should be permitted, which I would say is valid. But to argue it has no real world impact is foolish.

                1. Vek, stop trying to argue with Sarcasmic and Jordan, they are prog retards who only understand binary thinking of 1 or 0. They can’t understand nuanced arguments like you are making.

                  1. Leader Desslok|1.25.18 @ 2:11PM|#
                    “Vek, stop trying to argue with Sarcasmic and Jordan, they are prog retards who only understand binary thinking of 1 or 0. They can’t understand nuanced arguments like you are making.”

                    Oh, oh! A new econ ignoramus!
                    Funny how they tend to show up with brand new names when the econ ignos are heavy on the ground.
                    As to your claim re: progs, only a fucking ignoramus would ignore all the Austrian econ evidence *against* tariffs.
                    Idiot.

                    1. Sevo, as I have said elsewhere on this site, I would prefer REAL free trade to either the shit show system we have now, or any piece meal tariffs. But I am okay with threatening tariffs to get to that goal, and implementing them if need be to show we’re serious about forcing real free trade.

                      I don’t think you’re a prog. You’re an overzealous libertarian who can’t recognize that:

                      1. There is more to the world than dollars and cents.
                      2. Theories in books, GASP, don’t account for all real world scenarios, and sometimes have certain sub sections wrong, even if the overall theory is more or less right.

                      I agree that free trade is generally a good thing, but to deny that there could ever be a single instance where it DID in fact have negative repercussions on one of the participants is silly. The world is almost never black and white on any subject, it’s 99% shades of gray. Dogmatic people like you crack me up. I essentially 95% agree with you, and you’re freaking out because I can calmly explain actual math and how it can theoretically have negative economy repercussions. Even if there are times it is bad you can still argue for the moral right to be able to trade in situations where it hurts the economy. That’s a reasonable position to take. Just don’t pretend it’s 100% black and white with no gray.

                2. “Well how would you feel if 100% of all US real estate was owned by foreigners?”

                  Either like a Mohawk or a Sioux, depending on my mood.

                  1. mtrueman, yeah basically, right? LOL

              2. Why go so broad? I think it should be limited to zip code. Or, wait, even better, no trade at all between anyone! You have to make and grow everything yourself. That way – no deficits and no one gets hurt.

      2. I see Joe is here, trying to win Idiot of the Day once more.
        “If I am to be a believer that open and unlimited trade with all nations, even those that explicitly restrict market access and prop up their own export corporations with humongous state subsidies, someone has to explain how China engages in all of these practices and still ends up with a monstrous trade surplus and endless 6% GDP growth.”
        No, no one has to explain anything to you; that factoid it totally irrelevant. Please come back when you have something top add. Or, just STFU.

        1. Sevo, I asked once before, are their prizes for this award? Can I at least have a ribbon for participation?

          1. Your prize is a bronx cheer; you’ve already gotten three of them.

      3. Please explain why trade deficits are bad? I have yet to hear a coherent answer to this question. Hoping you will be the first.

        1. I honestly do not think they are if they are among friends. Things will even out over time if there are no geopolitical implications involved, reciprocity and trust and goodwill and all. Among frenemies or rivals, it is leverage of a creditor nation over a debtor nation.

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    2. The sad part is I am truly asking, I want to know how the free trade orthodoxy explains this.

      Am I personally better off that I can buy some cheap shit, $20 dollar jeans made in Vietnam? Sure. What happens, however, when our entire economy is predicated on services because we do not know how to make anything or it is too expensive to make it here? Will we become someplace like Italy people come to eat at the nice restaurants? All the smart people gobble up the good jobs administering the corporations that make shit in other countries while everyone else waits a table?

      The sad part is I have read a lot on this, read World Bank reports, IMF reports, Asia Development Bank reports, scholarly articles, the Wealth of Nations, David Ricardo, books on the intellectual history of free trade… no one really tries to explain how China manages to break all the free trade rules and rack up massive, never ending trade surpluses if there is some orthodoxy that must be followed or your country turns into a socialist hellhole like Venezuela.

      Perhaps the argument is just that the were starting from virtually zero and had nowhere to go but up. Fine. I accept that. But when does traditional economic orthodoxy force them to liberalize their home markets?

      1. The truth is certain forms of collectivist action can in fact go on forever. Rome ALWAYS subsidized grain prices. It never stopped until the empire collapsed due to other reasons. China could do the same. It’s when you go too far that it must collapse. China was collapsing before they reversed and became more capitalistic.

        But yeah, I think a huge part of why it “works so well” there is they started from the bottom. It’s easy to improve on subsistence farming, even via shitty central planning. Would they have been better off totally laissez faire? Almost assuredly. But central planning some industries isn’t going to kill the whole country. Much of their economy outside of key industries is pretty free market in some respects.

        But that doesn’t mean they can’t tweak certain industries to have outcomes that wouldn’t have happened in a free market either. Their dominance in several industries probably wouldn’t be as great if they had been free market. It has cost them in other industries though… But to the Chinese the strategic value of controlling global steel production may be a higher value than 1% more GDP growth per year or whatever. That’s their thinking anyway.

        1. I am not utterly convinced they would have been better off lassiez faire. Open, no holes barred capitalism can create other social issues that may have been more disruptive than relatively poorer Chinese.

          Something no one really talks about either is… it always seems to be the guy on top who wants free trade. Britain, USA, now the Chinese. People with something to export want totally free trade. This does not always account for how/why their country became prosperous. The USA was not exactly lassiez faire, far from it, while we were modernizing. An argument could be made we would have been more wealthy if we were more open to trade with lower tariffs when we were modernizing in the 1800s but that is a couterfactual that does not exist in reality. When we became an economic powerhouse, however, of course we wanted free trade. The “Infant Industry” theory that young industries need protection from outside powerhouse industries has been practiced pretty routinely by the USA, South Korea, Taiwan, Japan, and China to name a few. It has also backfired tremendously, but it is hard to not argue these countries did not shield their fledgling exporters from international competition to their eventual benefit. Shit, China is still doing it today and they make money hand over fist.

          1. Yeah, that’s all factually correct. I think there is some validity in the “infant industry” thing, especially if you’re going up against an established industry in another country. It can be nearly impossible to get it off the ground if you’re being constantly undercut.

            I would say China would have made more cash overall going totally free market, but you may be right that there would have been more social problems along with that as well.

            I believe in markets, small government, all the stereotypical libertarian stuff… But I’m also one who believes in living in the real world, not a book espousing things that have never actually existed in reality. I think the world could be 99% more libertarian than it is now, and that would be a great thing! But I’m also not so stupid as to think that such a system would not have massive consequences. Many would be perceived as good by most people, but SOME of them would be perceived as very bad as well. That’s why some fucking around with things around the edges, and within a generally libertarian framework, is acceptable to me. At least in extreme situations.

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    4. Your problem is that you think the goal of trade is racking up as large a surplus as possible, and thus China disproves orthodox views of trade. You’re look at it entirely wrongly.

      Also, it’s much easier for emerging markets to have high GDP growth than developed nations. It doesn’t mean they have better or smarter economic policy.

      1. I have thought about this too and I know the argument goes that the trade surplus they gain is only useful to invest in something with their foreign currency so it recycles throughout the system. It has recycled into our system in the form of huge bond purchases by the Chinese and currency bybacks or selloffs to protect their exchange rate.

        More or less that money is only valuable to use it to purchase something. But still… there is a lot of money moving in one direction constantly, consistently. This relative transfer of wealth (everyone is probably in better off in absolute terms) is also relatively transferring power to a country if not openly hostile to the West then at least not friendly with it. They do not believe in liberalism, freedom of association, freedom of the press, any of the liberal rights that have made our world so successful. Perhaps one day they will, but they do not now.

        I guess I see things in more of a relative way vice an absolute way. The economic pie is getting bigger for everyone, as free trade orthodoxy proclaims it will, but it is making China’s slice relatively bigger. While we sit passively on the sidelines, China is manipulating economics to create a relatively bigger piece of pie. That is the reality I do not like and they are doing it pretty explicitly for geopolitical reasons.

        1. I remember having this exact same argument with a colleague about Japan in the 1980’s. He was a believer in government manipulation of exchange rates and capital investment. He held that METI (Ministry of economy trade and industry) disproved everything Adam Smith, Milton Friedman and, hell, even Paul Krugman every wrote. At the time Japan had an export driven economy that grew at about the same rate as China’s has. My colleague argued that the Japanese way was the way of the future and free trade and free markets were a thing of the past.

          What happened was that the Japanese economy, still recovering from the devastation of WWII, finally matured. As wages rose, Japanese manufacturing became less competitive internationally and export oriented manufacturers fled Japan for lower cost labor markets like Taiwan.

          Export manufacturing always chases the lowest cost labor market. The same thing that happened in Japan and then Taiwan is now happening in China – success brings higher wages and China’s comparative advantage of low cost labor is disappearing. You can see the effects of this in the “ghost factories and cities” in Guangdong province and the dozens (hundreds?) of shuttered state owned factories. The process will just take longer in China because there are more potential cheap factory workers but they are mostly in the interior where logistic costs eliminate any cost advantages.

          China is currently losing manufacturing to Vietnam. So it goes.

          1. This very well might be true what you say. In fact it probably is. That being said, the geopolitical implications of us enriching a rival nation competing for friends and influence, by trading so intensively with them so that it make their relative slice of the world economic pie bigger as I earlier indicated, has its own set of issues.

            I do not think it is a particularly wise idea, especially as the Chinese seem intent on making their domestic market immune from integration to the world market at their current stage of development. They came through the 2008 economic crisis virtually unscathed, perhaps the only major world economy to do so, in part due to the wall they have built against integration to the world market. They do not seem intent on playing fair or open handed, why should any country accept their economic manipulations? In the past the USA has played the cards available economically to tell other nations to stop manipulating economics, abandoning the gold standard in 1973 when Nixon ditched Bretton Woods and later when Reagan negotiated the Plaza Accord to attempt to readjust world currency values in a more favorable way for the US.

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  2. Why don’t more people realize this is part of a negotiation tactic?

    Trump Vs. China: Is A Trade War On The Way?

    Trump seems indifferent to the possibility of a trade war. He told Reuters last week that he didn’t want one, “but if it there is, there is.” This was in the context of the administration’s considering a “big intellectual property fine” against China for requiring American companies that operate there to transfer proprietary data to the Chinese government as a cost of doing business there.


    “We’re talking about big damages,” he said. “We’re talking about numbers that you haven’t even thought about.”

    Add to this Mnuchin telling reporters “Obviously a weaker dollar is good for us as it relates to trade and opportunities. The currency’s short-term value is not a concern of ours at all,” and it’s pretty clear the Trump administration is going after China’s unfair currency and trade practices. Yes, I want “free trade” but doesn’t that mean EVERYONE has to play fair? Shouldn’t the US try to eliminate the non-free trade practices of our partners? If these steps are a means to an end, isn’t that a good thing?

    1. I’ve said the whole time along that I think that is Trumps game plan. The fact is the Chinese are the Emporer With No Clothes.

      All the normal politicians act as if they just can’t get them to drop barriers… That’s only because they’re idiots and pussies. All Trump has to do is say “Look, drop all barriers or we’re going to jack tariffs so high nobody is gonna be importing anything from China. It’ll all come from India, Vietnam, whatever. You don’t buy shit from us anyway, so whadda we care? Bring on the trade war commies, we’re gonna win.”

      Thing is anybody with any sense KNOWS China will cave. They can’t survive losing us as customers. Nobody can replace us. We can easily replace them. That means we have the upper hand, and in a game of chicken we win. Simple as that.

      1. I agree and on top of that, it’s not all “sticks.” His visit to China ingratiated him with Xi and the Chinese citizens.

        1. Yeah. I read an article awhile back about how a lot of Chinese people think Trump is fucking awesome! LOL It kind of cracked me up, but I got it after reading the article. They like his bluster, that he’s super rich, etc. Everywhere that ISN’T the Anglosphere or Europe isn’t a big bunch of politically correct whiny pussies like we are here. They can appreciate a loud mouth who speaks his mind more than we can. Not that they necessarily like all his policies, but they don’t freak out as much over his demeanor.

    2. Because if there’s anything Trump has been consistent about politically in his life, it’s having a strong protectionist streak and opposing foreign trade? It seems a much more likely explanation than he’s been playing 4D chess the whole time.

  3. Stupid libertarians just don’t get it. Money is wealth. The more stuff you sell, the more money you have, and the more wealth you have. Cheap Chinese junk isn’t wealth. Buying stuff makes you poorer, not richer. Ideally we should sell all of our possessions except a set of clothing and a suitcase, stuff that suitcase with money, and sleep on a park bench!

    1. We should all wear a common shoe to make things cheaper.

    2. The problem with your argument is the word “junk”. I can buy bearing assemblies direct from China via ebay for $1 when a comparable bearing assembly (slightly lower quality) purchased from a company in Chicago costs $22.

      The best thing that ever happened to US automobiles was Honda and Toyota. Restrictions on trade don’t help the general public.

      Oh wait, you’re sarcasmic…

      never mind

    3. Haha. Buying junk is fine and well. The thing is there are also things called “assets” and “investments.” Any prudent human being thinking beyond his next meal, shitting out that meal, and going to sleep that night should have these things.

      We in America have saved/invested far too little, and have been losing several hundred billion dollars a year in assets to China. They don’t import enough of our goods to use all their dollars, so they buy our real estate, stock market, etc. Not a big deal short term, but they’re going to end up owning 5-7 TRILLION in US denominated assets over the next decade at this rate, on top of the trillions they already have. Those assets produce still more dollars for them. It’s just not a good long term trajectory.

        1. Throughout history there has been a few maxims, one is that the lenders make the rules. You actually have to have foreign currency reserves or some kind of reserve to lend money.

          You could literally write a library full of books on the number of times a lender has coerced a borrower to give them what they want whether it is because the business community complained to secure their loans or the government acted unilaterally. It happens everyday, China recently used debt hanging over Sri Lanka to buy port access for 99 fucking years in Hambantota for a measly $1.3 billion, the USA used debt to bully the Banana Republics in Central America, it just happened to Greece where their bailout terms were dictated by their creditors, Britain engaged in SOOOO many wars over debt with the intervention in Egypt in 1882 being a notable example, Iran by the British, China by the British, India by the British, etc.

          To have money to invest, you must have money saved from somewhere. This is why a trade surplus is important, it gives you reserves to invest where an entity sees fit. On the flipside, now that someone else is a debtor, you have leverage over them as a creditor. If that creditor is a reliable partner who doesn’t want to geopolitically dominate the debtor, no harm. When the creditor is someone that has greater hegemonic designs, perhaps it is time to wonder if it is a good idea to give another creditor nation leverage over your nation even at the expense of higher priced jeans.

          1. More claptrap.

            1. It is not pretty but geopolitics do exist. To pretend they do not seems rather irresponsible.

            2. Sevo, are you really as fucking retarded as you’re making yourself out to be?????

              You can’t grasp that historically the debtor nation is always at the mercy of the creditor? You’re so fucking stupid you don’t understand that??? I’m not saying China has us by the balls just yet, but again, if the situation continues as it has been, which is to say getting ever worse, then they will before too long.

              If you really are so ignorant of history and politics as to believe being beholden to other, hostile, nations is a bad idea… You need to read more history my friend. Also, remember by posts if we never fix our shit, and the Chinese decide to blow up our entire economy 25 years from now so they can finally fully displace us as the worlds sole super power…

              1. So China may soon have us by the balls because of the American desire for cheaply made Chinese products. Doesn’t that also mean that we may soon have China by the balls because the aforementioned American desire employs shitloads of Chinese people who might otherwise become unemployed resentful revolutionaries if they didn’t have a job making cheap shit for Americans?

                1. Get To Da Chippah|1.25.18 @ 12:26PM|#
                  “So China may soon have us by the balls because of the American desire for cheaply made Chinese products.”
                  Good luck explaining that to idiots like vek and joe.

                2. “Doesn’t that also mean that we may soon have China by the balls because the aforementioned American desire employs shitloads of Chinese people who might otherwise become unemployed resentful revolutionaries if they didn’t have a job making cheap shit for Americans?”

                  For now we’re the ones with them by the balls. That’s my point. As their own domestic consumption grows, and as other third world markets become wealthier and importing/exporting more goods, our “use” to them will be smaller. Countries historically have done all kinds of things that were bad for their economies in order to achieve other ends. If our significance to their economy is reduce by 10 fold in 25 years due to the factors above, they may well be willing to suffer a 2 year modest depression to completely wipe out their number one geopolitical rival.

                  You guys keep getting caught up in this idea that economics dictates ALL interactions. It doesn’t. They only reason there haven’t been 100 more hot wars in the last few decades is because we have nukes nowadays. But shit like the above is still a viable way to achieve political ends. Read more history, see countries fucking their economies to screw an enemy even harder over and over. It happens. A LOT. It happens NOW. North Korea, Cuba, Iran, others. Economics is warfare.

              2. I don’t dispute your premise, but I think ‘always’ is too absolute. If we the borrower uses the money to build an unstoppable military force, the borrower really isn’t at the mercy of the creditor.

                We had the same issue with Japan at one point, and look how that turned out both for Japan and the USA. Watch the movie Rising Sun to get some perspective on the fear at the time…

                1. I am the 0.000000013%|1.25.18 @ 4:03PM|#
                  “I don’t dispute your premise,”

                  Why not? Idiots SHOULD be corrected.

                2. I am the 0.000000013% “I don’t dispute your premise, but I think ‘always’ is too absolute. If we the borrower uses the money to build an unstoppable military force, the borrower really isn’t at the mercy of the creditor.”

                  No it doesn’t ALWAYS happen. But it’s something to be mindful of, that’s all I’m saying Sevo is sitting there pretending that economic leverage has never been used in the entire history of man kind to force competitors to bend to your will.

                  Militarily we’re just not going to war with another nuclear power. That’s my belief. I don’t think anyone is nuts enough to do that, except maybe these countries that only have a handful, but not the USA/Russia/China etc that would destroy the whole world.

                  Far less likely than them trying to completely destroy us economically, they’ll just bring up “Ohhh, well maybe we need to sell 2 trillion in treasuries… It’ll only cause a minor recession, but it’ll be cool after a few years. Buuut if you do this thing we want maybe we’ll keep them.”

                  That’s the most likely kind of stuff. Look now. Even now we’re having to pussy foot around with them because our economy is so dependent. We don’t have to pussy foot around with Nigeria or whatever. If we want something we can negotiate from strength, which we are hobbled in doing with China now.

              3. vek|1.25.18 @ 11:56AM|#
                “Sevo, are you really as fucking retarded as you’re making yourself out to be?????”

                No you fucking ignoramus, I’m not nearly as misinformed as you or that idiot Joe blow.
                Fuck off, we have enough econ igno here already.

                1. I thought on open mind is one that is supposed to question everything? I do not dispute that I might be 100% wrong about everything, but why am I supposed to mindlessly believe the gospel of Adam Smith and David Ricardo especially when the data is not exactly neat? Can you honestly claim to understand the intricacies of international trade, economics, and finance because Rothbard and Mises wrote some shit you liked?

                  You sound more like a zealot than a free thinker hombre.

                  1. That’s exactly what he is. He is ignoring perfectly logically consistent information that is contrary to the beliefs he wants to continue believing in. I’m actually open minded, and I don’t believe in black and white. Most of everything in the world is gray. People that can only see black and white, or just block out entire areas of inquiry because they don’t like the idea… It’s just stupid. Even if you just want to be better at winning arguments, studying your opponents point of view, and learning how to logically refute it is the better way to go.

                    I have never read a study, seen a mathematical model, etc that has debunked some of the aspects of free trade theory that seem to not jive with the real world in the 21st century. Never once have I seen something that showed how completely ignoring unemployment or welfare actually alters the math.

                    As I’ve said before, you can argue free trade with anybody as a moral imperative. I SHOULD be able to do it, so you can’t stop me slaver! But that’s not the same thing as having PRAGMATIC support. The Left are the ones who usually make illogical arguments based on morals, not libertarians or the right.

  4. We should be able to buy all of the cheap crap that other countries want to sell us. let them operate on the erroneous system of protectionism by subsidizing their processes. They will eventually go bankrupt doing so.

    Free market capitalism will always bankrupt socialism. Socialism is built upon central planning and unicorn fantasies. It will always break down because it requires idiot central planners to try and manipulate people/economies.

    Trump is a fool with this rhetoric and even stupider to think he can make it work.

    Douchebags like Tony think economies can function with some utopian mix of socialism and capitalism to protect pussies like him from not being successful.

    1. “Free market capitalism will always bankrupt socialism. ”

      What would you call a patent? How would our economy function without them? Free market capitalism would encourage no patents, just a race to the bottom of the price cut bin. And in so doing, it would stifle invention and innovation which move our civilization forward.
      Simple free market capitalism has already been tried. It ended with sweat shops and child labor and the wealthiest men having an iron lock on all government function. Try some history. As George Santayana said, “those who can’t not remember history as doomed to repeat it.”

      1. “What would you call a patent? How would our economy function without them? Free market capitalism would encourage no patents, just a race to the bottom of the price cut bin. And in so doing, it would stifle invention and innovation which move our civilization forward.”

        Been saving this for some argument where it might be mistaken for a point, have you?
        It isn’t.

        1. utter nonsense. but then again, rich people are evil so f*ck off.

          Amiright comrade, eh?

    2. timbo, why should we not force open foreign markets as a precondition of no tariffs into the USA? Doesn’t make sense. Real free trade is what we should be going after, not this cluster fuck we have now. Also, subsidizing production in China can still be VERY profitable for them. If they can turn a subsistence farmer who creates the equivalent of $1,000 a year in productivity into a $10,000 a year generating factory worker, by ONLY subsidizing $2,000 dollars of that… Well that’s still a huge come up. That’s why it has in fact worked pretty decently.

      Trade is more than just dollars to China. It is geo political power. That’s why they’re doing it as much as anything else. They’re going after market dominance in key industries 5, 10, 20 years into the future instead of being short sighted and worrying about quarterly profits. Long term thinking isn’t always bad, and can sometimes make up for short term losses. Plus much of their economy essentially is free market, they only meddle in key major industries. So I don’t think they’re going to be outright tanking anytime soon.

      People that don’t get the big picture blow my mind.

      1. vek|1.25.18 @ 10:32AM|#
        “timbo, why should we not force open foreign markets as a precondition of no tariffs into the USA?”

        Because, you fucking idiot, it harms the US population.

        1. How would having better access to the Chinese market HARM the US population? My entire point is that they would CAVE. They can’t afford to lose us. That’s my whole point.

          So now you’re arguing that one way trade is better than actual free trade??? LOLOLOLOLOLOL

          If there were some reason we knew we couldn’t force open their market, THEN your argument would hold up. The thing is we never even tried to push them to drop all barriers. That to me is some serious fucking up on the part of our politicians. Real free trade is the goal, not crony shit like we have now where it specifically disadvantages our industries unnecessarily.

  5. Before income Tax, The United States used to fund itself mostly with tariffs.

    Seems like we muddled along pretty well.

    I can’t see how protecting American businesses from predatory practices by foreign owned and foreign-government-backed businesses is a bad thing. Unless you’re saying that foreign countries should have more influence on our manufacturing infrastructure than we do?
    Really, I think this author just took a couple Econ classes and now thinks he’s a great economist who needs to tell everyone what to do.
    Typical for the elitist way of thought.

    1. Protecting American businesses is paramount. The way you do this is by taxing American consumers who dare to buy foreign goods. Those traitors must be forced to pay more. For God and Country. Nobody should be free to buy foreign goods. That’s just unpatriotic. Buy American! Or else!

      1. Freedom of choice remains. You can still buy Samsung or Whirlpool, but now you’ll pay about the same for both. Which may encourage you to make a wiser decision rather than buy just in price. So many people buy these new washing machines and they’re junk in three years.

        1. “Freedom of choice remains. You can still buy Samsung or Whirlpool, but now you’ll pay about the same for both. Which may encourage you to make a wiser decision rather than buy just in price.”

          Gee, cranedoc, maybe we would all be better off if all or our purchases were distorted by the government.
          Fuck off, slaver. I do NOT need the government supposedly aiding me in my choices.

          1. Gee, cranedoc, maybe we would all be better off if all or our purchases were distorted by the government.

            They already are. So are wages, earnings, and taxes, and the balance between consumption and savings.

            Fuck off, slaver.

            You’re just a different kind of slaver, one who says “the statist b.s. we currently live under serves my interests just fine”.

        2. So many people buy these new washing machines and they’re junk in three years.

          Ok, so then the problem should sort itself out, no? But instead, your solution is to make people pay more for “junk”?

        3. Or you can buy a simple 3-knob Roper washing machine and still have it working hard 19 years later. Where the heck are those even made?

        4. Freedom of choice remains.

          And if we don’t want to pay our taxes, why, we’re free to spend a weekend with the Pain Monster!

      2. You morons forget that IF we were to ever go about a major change in trade policy, and jack tariffs, that we could… GASP… Offset other taxes! If tariffs raise 100 billion a year in taxes, cut income taxes 100 billion. It’s restructuring the way we pay taxes, not necessarily increasing the total amount, depending on how it is done of course.

        I would prefer to force foreign countries to actually open up their markets so we can have real free trade, but for those that won’t play ball I wouldn’t might bludgeoning them with tariffs and then offsetting the income from that by cutting other taxes.

        1. Gee, this particular moron thought tariffs were intended to discourage consumers from purchasing imported goods in favor of domestically produced ones, which will discourage importers from bringing them to the U.S. in the first place, which would lead to the tariffs not bringing in any revenue at all. If so, then how in the hell would you be able to cut other taxes because of the revenue tariffs generate?

          1. Ugh. Obviously volumes will go down, but insanely high cigarette taxes still bring in plenty of money overall don’t they genius? One can roughly figure out the math, and adjust once the real numbers come through too. The founding fathers weren’t total dunces, and they had arguments about this subject too. At least tariffs are an avoidable tax, unlike income taxes. It’s a mixed bag for sure, but it’s not 110% evil if you’re cutting other taxes IMO.

            1. Ugh. Can you cite an example, genius, of government lowering taxes as a result of the income generated by sin taxes or tariffs? Seems to me that they just find new dumb shit to spend the money on.

              1. I’m not saying it WOULD happen, merely that it could. The government shifts tax burdens around all the time. We’ll raise this thing here, in exchange for lowering that thing there. They just killed deductions to reduce rates like 2 seconds ago if you recall???

                We have no income tax in Washington. Some of the attempts to pass one have explicitly included reducing sales and property taxes.

                Not saying it would happen, but it’s a thing that is entirely possible.

        2. “You morons forget that IF we were to ever go about a major change in trade policy, and jack tariffs, that we could… GASP… Offset other taxes!”

          This fucking idiot thinks we’d be better off if we let the government pick out our purchases at my higher costs and then (maybe) the government (might) cut taxes.
          There is a special sort of idiocy here.

          1. You’re the fucking idiot. At least I know history and can accept that trade is SOMETIMES (not always) about more than just dollars to some players. Oil embargo, remember that? Egypt cutting off Rome’s grain supply? Trade as a weapon. It’s a thing dip shit. Just because it’s not OUR main focus in the west nowadays doesn’t mean it suddenly doesn’t exist as a concept.

            I’m not even saying this is what I want either you dip shit! I want to use the THREAT of this to force open foreign markets so we can have ACTUAL free trade. That’s just tough negotiating for an end you presumably support.

            I’m just saying it’s not the end of the fucking world, and especially not if we use the revenue to cut taxes. You could pass a fucking law that proportionally refunded every taxpayer at the end of every year based on what the tariff revenue was for the year.

            I’m not saying our dysfunctional system would do any of this, but it is all possible.

            1. “I’m not saying our dysfunctional system would do any of this, but it is all possible.”

              I’m saying you’re a fucking idiot.
              Buzz off; we already have a huge helping of econ ignoramuses and we need no more.

              1. I’m talking right past you apparently… This isn’t ALL economics dude. It’s politics, which includes much more than economics.

          2. This fucking idiot thinks we’d be better off if we let the government pick out our purchases at my higher costs and then (maybe) the government (might) cut taxes.

            Consumption taxes are certainly better than income taxes, because we should discourage consumption and encourage earnings, and tariffs function like a consumption tax.

            Furthermore, bringing low skill jobs back to the US via tariffs and protectionism would result in less social welfare spending; given our current deficits, that wouldn’t reduce taxation, but it would make people a lot happier and it would reduce deficits.

            Of course, if you don’t earn much but spend a lot relative to your income, you disagree. It’s understandable that you would, but don’t confuse your self interest with what’s good for other people.

  6. Ya, washing machines manufactured in the U.S.? Some, Samsung opened plant in South Carolina, not subjected to import tariff. We could do as EU and raise taxes to subsidize LG. We can do the same as India and subsidize oceanic transportation. Raise taxes on everyone to subsidize or raise prices to consumers. So what’s the difference? LG announced it will raise price in response to Trump’s tariffs. So, if rising price is of such a big concern why would LG do it? Because the EU will eat it, raise taxes thus lowering the standard of living of all EU people. Or will they hire Muslims at EU minimum wage? Mexicans get paid less than $2/hour to make these machines. Maybe when LG’s market share drops they will build a plant in the U.S. to avoid the tariff. After all we need jobs for all the immigrants Reason wants around!

  7. Globalization is a process of interaction and integration among the people, companies, and governments of different nations, a process driven by international agreements and regulation i.e. “Dollar Diplomacy”. Free speech and the free press often called the forth estate have conscripted the surge in grassroots progressive activism to become the fifth column to lead activists to dismantle American sovereignty. The most objectionable provision of TPP that progressives promote places American industry under the jurisdiction of international courts. These not subtle type agreements will eventually dismantle this country without firing a shot. I am convinced the establishment corporate MSM Globalists and currant Democrat party want to surrender our U.S. sovereignty for reasons I absolutely oppose.
    I hope that anyone who favors Globalism over U.S. sovereignty will run on that platform and patriots that run on our nations right of sovereign self determination will make that issue perfectly clear. We the people need that debate to be open and public from “the horses mouth”, not MSM’s Madison Avenue spin. If we find ourselves in a civil war it will be to keep U.S. sovereignty vs. surrendering to Globalism.
    Just say we will not be a “vassal state”.

  8. It’s an old superstition that has been debunked in the real world over and over. A nation does not make itself richer by shutting out goods its people want. High tariffs fleece the broad public to benefit a small class of favored people. Consumers will be saddled with higher costs, forcing them to pay more for new washers or solar panels?or buy less capable models or hang on to their old ones

    These kinds of arguments only work if the two trading nations are themselves free market economies; if they are not, all bets are off, In particular, neither the US nor China are free market economies, and the trade between them is already not free.

    In the US, there is a massive, forced redistribution via the government of earnings from high productivity workers to low productivity workers for the political purpose of ensuring everybody a minimum standard of living. It might well be better politically and economically to replace those transfers with tariffs.

    In China (and Europe), governments use redistribution and economic policy to gain geopolitical power. That is, they artificially limit consumption and use government subsidies and investments to acquire land and assets abroad, and the political power that goes along with it. It might well be better politically and economically for the US to limit the ability of foreign governments to do that.

  9. The president, whose ignorance of economics is bottomless

    This assessment comes from a man that translated all the advantages and privileges of a Harvard education into a career as a second rate journalist, with no discernible skills or expertise other than spelling and grammar.

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