Donald Trump

Trump's Steel Tariffs Will Help, Not Hurt, China

The proposed tariffs are an exercise in ego, not economics.

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CHINA STRINGER NETWORK/REUTERS/Newscom

President Donald Trump apparently believes that "trade wars are good, and easy to win."

They are neither. And, in fact, Trump's plan to slap a 25 percent tariff on all steel imports—something the president is considering as a way to help American steel manufacturers by protecting them from international competition—might indirectly boost China's steel industry while punishing some of America's top allies and trading partners, along with the very American workers the president supposedly wants to help. If the tariffs trigger a trade war, something analysts say could happen, then China probably stands to gain further.

Trump loves to talk about how China has been "killing" U.S. manufacturing, and to blame China for dumping cheap steel into the American market. In reality, the U.S. imported $976 million worth of steel from China in 2017 (up from $906 million the year before), which means China accounted for barely more than 3 percent of all steel imports.

The United States imported far more steel from places like Japan ($1.65 billion), Brazil ($2.44 billion), and South Korea ($2.78 billion) last year. The largest exporter of steel to the United States is Canada, which sent more than 5.6 million metric tons of the stuff worth more than $5.1 billion across the border during 2017.

The new tariffs will be applied to all steel imports, which means close allies like Japan, Korea, and Canada will be hurt by the tariffs more than Trump's favored enemy of China.

"Hitting China and Canada with the same tariff doesn't penalize China relative to anyone else," says Dan Ikenson, director of the Center for Trade Policy Studies at the Cato Institute, a libertarian think tank. "That doesn't, and shouldn't, sit well with exporters from countries that have done nothing wrong."

Think about it like this. Trump's tariff will build a protectionist wall around American steel manufacturers, but it won't entirely stop the flow of foreign steel into the country. Because the wall will be the same height for all imports, the cheaper Chinese steel that Trump likes to vilify will still have an advantage over all other sources.

Meanwhile, American businesses that rely on steel imports will have to pay higher prices, which will be passed along to consumers. All steel-made products will be more expensive if the tariffs are imposed—and the same is true for aluminum products if Trump follows through with his threat to impose a 10 percent tariff on them. That's part of the reason why the stock market dropped 420 points immediately after Trump's surprise announcement of the tariff proposal last week. As Matt Welch explained on Friday, Barack Obama's tariffs on Chinese tires cost American consumers an estimated $1.1 billion in return for preserving 1,200 jobs in the domestic tire industry, while George W. Bush's duties on foreign steel destroyed some 200,000 jobs in other sectors, exceeding the total employment of the American steel industry.

Michael Froman, former United States trade representative during the Obama administration, tells Vox that there's little doubt China is engaged in some unfair trading when it comes to steel and aluminum. The problem, though, is that Trump's tariff proposal "does very little, if anything, to affect China."

"Instead, we're hitting our closest allies and partners with a set of tariffs under the justification of national security," he says.

Those same concerns are causing some Republicans in Congress to challenge the president's proposal. On Sunday, Sen. Lindsey Graham (R-S.C.) said "China wins" if tariffs increase prices for American consumers or create conflict between the United States and its major trading partners.

"You're punishing the American consumer and our allies. You're making a huge mistake," Graham said on CBS' Face The Nation. "Go after China—not the rest of the world."

That's really just the start. China could respond to the Trump tariffs by imposing their own import taxes on American-made products like soy beans, airplanes, or computer technology. If China doesn't respond directly, other countries might. A trade war that draws new protectionist tariffs from the European Union aimed at American exports would harm both trading partners, and indirectly boost China.

Already, European Commission President Jean-Claude Junker has promised to "not sit idly while our industry is hit with unfair measures that put thousands of European jobs at risk," and Chrystia Freeland, Canada's foreign minister, has threatened to take "responsive measures to defend its trade interests and workers."

If the trade war escalates to the extend that current trade agreements are jeopardized, it could drive a wedge between the United States and it's major allies. In that environment, Ikenson warns, China could get away with more rule violations due to the lack of "a coherent, unified response."

In other words, Trump's tariffs and the trade wars they could initiate might indeed be "good and easy to win," but not for the United States.

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  1. Trump & his family built their empire on public largesse & cronyism, he is not a free market capitalist nor is he an adherent to classical liberalism so it shouldn’t be a surprise that he is willing to start a trade war. Facts do not mean shit to him, he’s throwing a bone to his base.

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  2. I’m confused. If steel imported from places other than Canada and Mexico are such a small percentage of the steel used in this country, how much of an effect will the tariffs actually have? On the one hand we’ve got people saying that that small amount of steel is costing Amerkin jerbs, and on the other hand we’ve got people saying the tariffs will triple the price of anything made out of metal. But if it’s such a small amount, why does it even matter?

    1. The fear in part is it’ll trigger a wider trade war which could derail the eight year bull market.

    2. It’s not a small amount and the purpose of any tariff is NOT to protect “Amurikan Jebz!” but to provide an undue advantage to well-connected cronies.

      1. I should have said small percentage, not small amount. A small percentage of a huge number can still be a huge number, but small relative to the total.

        And yes I know it’s all about cronyism. I’m talking about stated intentions, not actual ones.

    3. The long and the short of it is that, as usual, it’s being blown out of proportion. It will probably have minimal effects either positive or negative. I wonder why Trump can’t just make a targeted tariff that only hits China, since that’s clearly who he really wants to hose, and who is arguably “gaming” the system the most. I don’t think Japan is exactly doing state interventions into subsidizing their steel industry like China is etc.

  3. I’d honestly ask if any writer has any clue how to negotiate anything.

    The worst move one can make is to say “Well, we won’t do that”

    1. Libertarians For Government Protectionism!*

      *An affiliate of Libertarians For Immigration Walls, Libertarians for Government Micromanagement Of Abortion Clinics, Libertarians For The Drug War, Libertarians For Military Belligerence, Libertarians For Gay-Bashing, Libertarians For Torture, Libertarians For Government Secrecy And Surveillance; and Libertarians For Black Voter Suppression.

    2. I’d ask if you have any idea what trade is — voluntary — and why anything has to be negotiated by anyone not related to the trade itself.

      Maybe ButtPlug and Tony can negotiate over what you and Mikey discuss. How’d that be?

      1. Then why is Reason not cheering for NAFTA’s demise?

      2. Given that free trade doesn’t exist in the first place, this is a negotiation to change NAFTA — which “Libertarians” support — to a more beneficial agreement for the USA. Which, technically, is Trump’s main job.

        And when you’re negotiating, taking options off the table is idiotic. It’s like telling an adversary “No, we will never use nukes”. It simply limits your options and lets them know how serious or unserious you are (mainly, if you won’t use nukes for the issue, you’re not that serious about it as is).

        1. You are apparently not familiar with economics 101, not are you familiar with Britain’s unilateral free trade of the mid 1800s.

          Unilateral free trade is nothing like unilateral disarmament, which is what most people think of. Unilateral free trade is good fro the economy in every way.

          Just because your neighbor starves his family to sell you cheap tomatoes is no reason for you to do the same to your family. Just because your neighbor requires his family to make homespun clothes instead of buying ready-made from your store is no reason for your to do the same in retaliation.

          1. ‘not are you familiar with Britain’s unilateral free trade of the mid 1800s.’

            What’s a few million dead in the odd famine if not good for the economy and a sign of free trade?

  4. Sad that Adam Smith explained this shit some 250 years ago and thereby pretty much invented capitalism and the free market and yet everybody and their brother still insists a command economy with a central administration just has to be a superior economic arrangement to some magical invisible hand.

    1. Most of the opposition to capitalism is rooted in a desire for equality and hatred of the rich. So what if everyone is poor in countries with command and control economies? They’re equally poor, and that’s what matters.

      1. That has nothing to do with anyone’s ideas about economic policy, anywhere on earth. So you’ll have to figure out the actual motivations before you can be expected to have coherent beliefs of your own.

        1. It has everything to do with socialism and communism. Those beliefs put equality and fairness above all else, including liberty and justice. And the result is always shared poverty. Without exception.

          By the way, you are not in a position to lecture anyone, including my cat, on coherence.

          1. By the way, you are not in a position to lecture anyone, including my cat, on coherence.

            How do you know he’s not a credentialed, union-member, professional radio engineering lecturer?

    2. Reminds me of years back when heat pumps first started becoming popular around here and plenty of people just couldn’t grasp the idea that you could get heat out of the air when it’s freezing cold outside. They had no problem accepting that air conditioners could put out cold air when it’s hot as hell outside, but not the other way around. It did no good to explain to them that “freezing cold” is a relative term and that 20 degrees is literally boiling hot to Freon, they just knew this heat pump thing was some sort of scam because it couldn’t possibly work. Same thing with spontaneous order – if you’re going to have an economic arrangement, there just has to be somebody in charge to do the arranging. Shit just can’t happen all by itself.

      1. It isn’t even shit happening all by itself, it’s shit happening as the result of every individual person choosing their personal preferential cooperative balance of My Shit vs. Everybody Else’s Shit. Though i guess it does look like happening all by itself if you don’t see people as individuals.

        1. The Price System is an amazing thing.

        2. And economics moved on and discovered that economies don’t always work like a swiss clock, and we needed more complex theories and thus policies to deal with the reality of things.

          Then you guys veered off because that was too much work to think about, and you started claiming that any market outcome is by definition good, because it was the product of the market (with the occasional caveat that we don’t live in a free market, depending on whether the outcome is good). That’s called a religion.

          1. Thank you for this fine example of the misanthropic mindset inherent in postliberal “thought,” Tony.

          2. That’s funny. The guy who worships government as a god and bows to the alter of The Supreme Prophet Owlgor is accusing libertarians of religion.

          3. And economics moved on and discovered that economies don’t always work like a swiss clock

            You are so wrong, 180 degrees off. The idea that economics is about perfection is the excuse used by marxists to denigrate real free markets, by claiming that the slightest deviation from perfection justifies far more broken intervention by governments.

            If they ever put their minds to reforming physics, they’ll claim that the slightest deviation from the results modeling a spherical cow justify legislation to fix thermodynamics and gravity.

          4. Tony|3.5.18 @ 4:06PM|#
            “And economics moved on and discovered that economies don’t always work like a swiss clock, and we needed more complex theories and thus policies to deal with the reality of things.”
            Uh, no. Simply put, you are full of shit.

          5. Tony’s theory on economics = full of shit.

            It is not religion that libertarians are advocating. It is letting individuals decide where to allocate their hard earned income via innumerable signals that the marketplace sends out. In a proper free market this mechanism works splendidly, when governments intervene it creates malinvestments and bubbles.

    3. I think real free trade would work pretty darn well… However Adam Smith doesn’t account for many of the HUGE state interventions that manipulate the market in the modern world.

      His theory does not account for:

      1. Having a fiat currency. With gold/silver you were FORCED to balance trade to a point, or else you literally ran out of money. This happened to the UK back in the day, so they changed policy. This no longer happens with fiat, and is the only reason the US standard of living has not declined to help us balance our trade.

      2. The very concept of unemployment. It does not account for people not working period because they lost their jobs to trade, and now have no alternative. In his era if you couldn’t do something more productive you went back to being a subsistence farmer. There is no equivalent anymore. Throw in the welfare state support of such people, and it makes the math still worse.

      3. Perpetual deficits enabled by fiat currency also doesn’t account for selling off the assets of your nation to pay for current consumption. In the short term it doesn’t matter, but at enough scale and with enough time you are turning your country into a country of serfs who must pay all their land-rent to their foreign owners. Consuming less than you produce and investing that is what makes a person or a country prosperous long term, NOT consuming more than your productivity which is what we’re doing.

    4. 4. Sometimes trade is more than trade. Nations will sacrifice economic interests to gain strategic interests. China is clearly choosing to make bad financial decisions in the short term, because they believe it will serve their long term geopolitical interests. Frankly, I think they’re right on some fronts. When someone is engaging in this type of move should one not consider the strategic consequences at all?

      And others. But those are a few biggies. True bi-directional free trade would probably largely eliminate the above issues, but that ain’t what we’re dealing with IRL anyway. So there are issues with trade as it exists in the real world today, as this is no longer the world of Adam Smith.

  5. Donald Trump and Bernie Sanders have the same retarded trade policies, and each has dragged the idiots in both parties to what were previously relatively fringe positions.

  6. I hope our trading partners are strategic, and deftly, openly target American interests in Ryan (Harleys?) and McConnell (bourbon?) country; in ardent Trump communities (non-union factory products from the rust belt and the south?); and in industries dominated by Trump donors (coal?).

    I would prefer that no protectionism occur, but if Pres. Trumps start it, his supporters should do the bleeding.

    1. It’d be easier to just nail entertainment to the wall with tariffs. We should remove our tax breaks for movies as well. They’ve had them since World War II and I think it’s time Hollywood did without. Since they want to pay their “fair share” and all…

  7. Trade War – when governments compete over how much they can impoverish their own citizens by forcing them to pay excessive taxes on imports.

    1. Very good definition.
      Private citizens & businesses should be able to trade voluntarily with whomever they choose without fear of arbitrary government interventions with taxes and sanctions.

  8. George W. Bush’s duties on foreign steel destroyed some 200,000 jobs in other sectors, exceeding the total employment of the American steel industry.

    This is the second time Reason has cited this figure without citation. Since they are too lazy to give a citation, here it is.

    http://www.tradepartnership.co…..bstudy.pdf

    The problem with the study is that it looked at the relationship between steel prices and employment. That sounds good but there no evidence of how much of the increase in price were the result of tariffs and how much was due to other factors. Indeed, when Bush got rid of the tariff in 2003 the consensus was

    Others note that the tariffs, which were riddled with exceptions, had little real impact except in isolated cases, but did some symbolic harm to the U.S.’s usual position as a champion of open markets. “People looked to the U.S for leadership and it wasn’t a good thing within developing countries for people who promote free trade to suddenly change positions,” Ken Rogoff Ken Rogoff , a Harvard professor and formerly chief economist for the International Monetary Fund, told Reuters.

    http://www.forbes.com/2003/12/…..45f3e22ab1

    Hard to square that with the claim made in the study that is getting repeated without any contradiction or analysis.

  9. How does Canada send us 5.6 million metric tons of steel when they do not even produce that much?

    They produce somewhere around a million tons of steel. Here.

    So what is really going on? This article does not paint the full picture.

    1. Could it be that Canada is importing Chinese steel and other steel and exporting it to us under NAFTA?

      Well, what would that mean?

      Do your research and give us the real story, Reason. Not “But, but, muh “Free Trade”.

      1. Apologies, that is a monthly number. So they do produce enough.

        /foot in mouth

  10. If these things won’t hurt China, then why is China going to start a TRADE WAR!! over them? it would be nice if reason thought about these issues and developed a coherent position rather than just throwing up whatever talking points the various hacks feed them.

    1. It is about NAFTA, and the problem with NAFTA is that Canada and Mexico take advantage of certain loopholes, which I tried to allude to above but fucked up the numbers and probably ruined my point, which is that China and others team with Canada to take advantage of these loopholes.

      If anyone can’t see the writing on the wall, NAFTA is dead in its current form. The auto industry understands this and that is why they are moving back to the US.

    2. Because most politicians are stupid about trade and know they can scare voters. Why would you expect any Marxist country to be smarter about trade than anybody else, especially Trump?

  11. “The new tariffs will be applied to all steel imports, which means close allies like Japan, Korea, and Canada will be hurt by the tariffs more than Trump’s favored enemy of China.”

    You seem to have missed the memo from Trump this morning about how the tariffs go away when Canada agrees to his terms on renegotiating NAFTA.

    “Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed,” Mr. Trump said in a morning tweet, as top Mexican, Canadian and U.S. officials gathered in Mexico City to discuss the 1994 pact”

    —-Donald Trump March 5, 2018

    https://www.wsj.com/articles/ trump-links-planned-steel-tariffs- to-nafta-renegotiation-effort-1520255435

    So, let’s review a few facts:

    1) The U.S., Canada, and Mexico were already in Mexico City to discuss a renegotiation of NAFTA.

    2) AFAIK, the tariffs haven’t been applied yet.

    3) Trump knows this will hurt Canada more than China–which is why he “tweeted” about (rather than implemented) the tariffs.

    If we run around like Chicken Littles every time Trump tweets something awful like the sky is falling, people might start treating us like the proverbial boy who cried wolf.

    In fact, if this really is a wolf, don’t be surprised if the villagers don’t come running since you guys have been shouting “wolf” every time Trump tweets something for the past year.

    1. How many times did the Republicans (correctly) refer to the market distorting uncertainty of Obama’s proposed actions on healthcare? Why is this any different?

      I’d hate to be a materials planner for an automotive company, for example, given the uncertainty being stirred up by the President’s words.

      1. If the result of Trump’s negotiating tactics are a freer and fairer trading agreement, then the short term pain might be worth it.

        Did Obama’s meddling in healthcare EVER promise to make markets freer or fairer?

        1. “freer and fairer trading agreement”

          FACT: Free and fair trade doesn’t need a government agreement.

          1. NAFTA is a trade agreement. By definition it’s a bad thing, no?

          2. Yeah it does.

            There’s no way Canada or Mexico would keep their markets as open as they are without an agreement.

      2. Because Obama’s intent was a massive redistribution scheme, and Trump’s intent seems to be to make our trade agreements into a more even playing field?

        Which is a point I think is lost on most people. I don’t think Trump is a “protectionist”, I think he is simply using the threat of protectionism to negotiate.

        1. Only time will tell. This negotiating tactic (if that’s all it is) will only work as long as nobody is willing to call his bluff. When they do, then all the “winning” will likely come to an end unless Trump actually follows through on his threats. What do you think he’ll do in that case?

          I don’t trust that he’ll take the principled approach, because I don’t think he has any principles. But, like I said, only time will tell.

          1. The thing is, it is not a bluff in the truest sense of the word.

            A bluff would mean we have nothing, but that is not true, as almost any other country would be hurt far worse than we would. We are bigger, more agile, and more self-contained than almost any other country.

            Trump sees this and that is why he campaigned on it. It is an easy win.

            As far as his principles. Who knows. His principles are winning and looking good doing it, as far as I can tell. Conservative Populism defines what he tries to win at. The good thing is that conservative populism is far more liberal in the classic sense than what we’ve had the past 20 years.

          2. I think he should follow through. If he does go nuclear, so to speak, with one situation, it will make everybody else think he’ll do it on them. Politics is not a single issue or a single deal. Sometimes you have to grand stand to make people fear/respect you. If he has to blow up one trade deal to get 10 others negotiated to better terms, is that not worth it? Especially since the one that tried to call your bluff will probably come running back willing to sign off after they know you’re serious?

            Half the problem in US politics for many years has been our government being afraid of looking “mean” or being stern in pursuing our interests. We’ve tried sooooo hard to be nice guys we’ve let ourselves get bent over 6 ways from Sunday. We’re the worlds biggest economy, there’s no reason we shouldn’t use that leverage to do reasonable and fair deals with other nations, instead of allowing ourselves to be bent over so we don’t look “mean.” If getting tough gets tariffs dropped on US goods in other countries that is a good thing for the USA and for trade in general.

        2. “Because Obama’s intent was a massive redistribution scheme”

          Where do you think the money raised by tariffs goes? It’s a redistribution from manufacturing and consumers of steel and aluminum products directly into the treasury. Even if it’s not the intent, tariffs (just like taxes or Obamacare) will prove to be redistribution schemes from one part of the economy to the government.

          1. I don’t disagree with that. I understand the economics behind it fairly well.

            Tariffs for the sake of tariffs and protectionism is bad. Whole-heartedly agree.

            Protectionism benefits the corrupt political class of the country that imposes it. What is a common theme to most every government in the world?

            My question is, besides the military, what other negotiating tool do you have other than the trade weapons used against you and for the corrupt?

      3. “How many times did the Republicans (correctly) refer to the market distorting uncertainty of Obama’s proposed actions on healthcare? Why is this any different?

        People keep referring to this as if Trump has already imposed a tariff.

        He hasn’t.

        The difference is that Obama’s actions on healthcare were put into the form of a bill and put up for a vote in congress.

        So far, what we’ve got from Trump is a tweet that may amount to brinkmanship against the backdrop of a NAFTA update. Surely, you see the difference between one president proposing legislation with sponsorship in congress and the other president tweeting something.

        I remember when they were going apeshit over Trump violating the First Amendment when he actually only tweeted something about NFL players. At some point treating Trump’s tweets as if they were proposed legislation becomes ridiculous–and just because the press treats Trump tweeting about something as if he were actually doing something doesn’t make it so.

        Last week, you’d have thought Trump were abolishing the Second Amendment. He walked that back over the weekend, and now it’s like that never happened. Excuse me if I don’t run around screaming that the sky is falling until he actually does something–rather than every time a journalist condemns his tweets as if they were actions.

        P.S. “Never mistake activity for achievement”

        —-John Wooden

    2. When Trump advances a potentially damaging argument consistently, as he has with trade policy, I think it’s good to point out its problems in an effort to try and prevent it from becoming law.

      What you’ve written (Trump only tweeted about it, Trump is using a negotiating tactic, etc.) are non-sequiturs, Ken.

      1. One is a fact, and the other is reasonable speculation.

        The fact that Trump merely tweeted something isn’t even an argument–how can it be a non-sequitur?

        The fact is that Trump has rolled the steel tariff into the NAFTA negotiations that have been going on in Mexico City between the U.S., Canada, and Mexico for the last week.

        These are not non-sequiturs. These are facts, and we need to take them into consideration in order to be reasonable.

        How can you make any claims to understand what Trump is talking about if you aren’t even willing to account for the fact that he said the steel tariff would go away if Canada signs on to his update of NAFTA?

        It isn’t my opinion that Trump has tied to the tariffs to Canada signing off on his NAFTA update. It’s a fact.

  12. What I gather from this whole episode is that the foreign conception of Americans is denim-wearing drunks who ride motorcycles. And that’s like totally just a niche subculture.

    1. I thought that was hilarious when I heard that was going to be the EU’s response.

      Even their economists base their decisions on feelz.

      1. I think it’s unfair that Europeans get reputations as being extra-sophisticated, when in reality even in Merry Olde England most people are stupid as shit and do not in fact talk like the queen.

        Meanwhile everyone thinks Americans are bimbos.

        1. They only have that reputation because of people who have never actually been there. They see movies and the occasional European that is well-off enough to holiday in the US.

        2. I’ve been to Europe, they ain’t so fancy. Even if they were all the smug Europeans of our dreams it still wouldn’t matter, because us brash, stupid, uncouth Americans still make about 50% more money per capita than in most countries in Europe, invent more products and services, are freer people, dominate the world culturally, and militarily, and on and on… So who is really winning that game?

    2. Great. So they’re getting us mixed up with Australians now?

      1. Yup, It’s quite easy to get hillbillies & bogans mixed up.

    3. Tony|3.5.18 @ 4:02PM|#
      “What I gather from this whole episode is that the foreign conception of Americans is denim-wearing drunks who ride motorcycles.”

      Shame it’s not cardigan-wearing lefty ignoramuses.

  13. Michael Froman, former United States trade representative during the Obama administration, tells Vox that there’s little doubt China is engaged in some unfair trading when it comes to steel and aluminum.

    Bullshit. Trade is voluntary, and if the other guy wants to cut his price, how is that exactly unfair to me? It’s unfair to Chinese taxpayers, but that’s their problem.

    Repeat: trade is voluntary is fair.

    1. Over-simplification.

      Let’s say you run a hardware store. I come in with my multi-national hardware corporation. I drop my prices until you are out of business, then raise them as soon as you are out. Someone else sees the high price, thinks they can make a profit. I drop my price again, they never even get off the ground, but they wasted a bunch of money.

      Yes, this is illegal within the US, but our trade agreements are what stops this type of thing from happening on larger scales.

      1. You mean like Walmart doubles its prices as soon as the local mom and pops close down?

        1. Right. Illegal in the US, and from a libertarian perspective it is a no-no, too.

          Thing is, other countries do not follow our laws, they follow our trade agreements.

      2. “Let’s say you run a hardware store. I come in with my multi-national hardware corporation. I drop my prices until you are out of business, then raise them as soon as you are out. Someone else sees the high price, thinks they can make a profit. I drop my price again, they never even get off the ground, but they wasted a bunch of money.”

        Let’s say buillshit.
        Cite ONCE when this has ever happened. It’s the wet-dream of every price-fixing asshole who ever asked the government for help, slaver.

      3. There are no real-life examples of that at any significant scale. The most common is gas stations being very price sensitive, but I know of no such cases whete the intent or effect was to drive competitors out of business. The overall finances just do not work out, because the rebound high prices have to be real high to recoup losses, which not only discourages sales, it also entices fresh competitors. And the old dead competitor’s assets will be sold at bankruptcy, mening those fresh competitors start with lower equipment costs and canstay inthe price war a lot longer.

        Your strawman doesn’t have enough straw to even fool Dorothy.

        1. Jesus Christ if you two are so stupid as to believe that price fixing doesn’t exist nor it ever has, I’m not wasting my time on you. Fucking retarded.

          1. Price fixing sure. Driving competitors out of business then jack up the monopoly prices, no. Name once. Don’t mention Standard Oil unless you want to double down on your ignorance.

            Here’s a hypothetical. Joe opens a furniture store with his life savings, a second mortgage, and a bank loan, $500,000 total. He buys chairs for $50 and tables for $500, and sells them for twice that. He’s got $300K in inventory, $200K in the store and other overhead.

            MegaFurn drops their prices for equivalent brands to $50 and $500, and Joe matches. Neither makes any profit, let alone overhead. People stock up on cheap furniture; MegaFurn’s other brands don’t sell because they aren’t as good a deal.

            Joe sells his entire inventory, takes a bath, owes a pile of money, sells his house. MegaFurn can’t just return prices to normal; they’ve lost just as much and have to make it back. So they sell that cheap brand for twice its original price. No one buys. Not only have people stocked up during the price war, they can get better quality for the same price. MegaFurn raises all their prices, slowing sales even more.

            Jack buys Joe’s assets at bankruptcy for pennies on the dollar, buys $300K inventory, now he’s in business for $400K and can sell the $50 chairs for $90 and the $500 tables for $900.

            How many times is MegaFurn going to keep beating themselves over the head?

          2. TLBD|3.5.18 @ 6:44PM|#
            “Jesus Christ if you two are so stupid as to believe that price fixing doesn’t exist nor it ever has, I’m not wasting my time on you. Fucking retarded.”

            So, you fucking ignoramus, you admit you have zero cites to back your idiotic claim?
            Why am I not surprised? Might it be that assholes like you have been peddling that bullshit forever?
            Fuck off, slaver.

      4. If you want to know how this plays out in a real world scenario it’s more like this:

        China has peasant farmers that produce the equivalent productivity of $2,000 USD a year being farmers. “Market” conditions in China mean that such a person would produce $10,000 a year in productivity as a steel worker. The peasants actual wages working in steel might be $5,000 of that, the rest going to overhead and profit of the steel company.

        If China decides to subsidize the steel industry to the tune of $5,000 a year per head, this allows the steel company to essentially sell at the cost of the peasants salary, or half of what their market costs should be, while still being nominally profitable

        This doesn’t happen in the western world because it’s a “bad deal” to us. However in this situation China is essentially cutting the price of steel in half, while STILL increasing the economic value of that peasant by 2.5X after subsidies. Of course foreign competitors can’t/won’t subsidize so heavily, so they go out of business. Even if China has to subsidize forever, they’re still coming out ahead versus that guy being a peasant farmer.

        This is essentially how they’re doing it. We don’t play cronyism THAT hard anywhere in the west, so they’ve taken out a lot of our industries via this method. It’s easy to come out ahead when the baseline is being a subsistence farmer, not so much in a developed country.

  14. It’s time for Congress to get back much of the power it has ceded to the Executive related to tariffs and trade.

    Article I, Section 8:
    3: To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

    Ever wonder why Trump can implement tariffs without consulting Congress? Much like other forms of expansive executive power, Congress has ceded it’s powers over this matter to the President.

  15. Is everybody clear on what’s going on here?

    “Negotiators from the three countries are scheduled to meet later on Monday in Mexico City to wrap up the latest round of talks aimed at modernizing the 1994 North American Free Trade Agreement.

    Trump, who has repeatedly said he will walk away from the trade deal unless major changes are made, had tweeted a few hours earlier that “Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed.”

    The U.S. president has proposed a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports, arguing they are needed to protect U.S. industries and jobs. He is expected to reveal more details later this week.

    Talks on the $1.2 trillion NAFTA pact are moving slowly, in part because Canada and Mexico are resisting U.S. demands for major changes such as adding a sunset clause and boosting the North American content of autos produced inside NAFTA.

    https://in.mobile.reuters.com/ article/amp/idINKBN1GH0LQ

    1. There was an ongoing meeting with Mexico and Canada about updating Nafta happening over the past ten days, it was, I believe.

      Trump is putting extra pressure on them to open up further to auto imports from the U.S.

      IF IF IF putting pressure on them to open up their markets further works (sans the sunset clause), I won’t be condemning Trump’s silly anti-free trade tweets, that’s for sure.

      And Iif you didn’t know about what was going on in the background with this, blame Reason. They seem to be buried so deep in the bubble, they don’t know what’s going on themselves.

  16. What’s with the chicken?

  17. I didn’t vote for Trump — though if I’d lived in a state where a vote for him might have decreased the chance of Clinton becoming president, I would have had to do it — and I don’t like him, and I don’t go along with the notion that he’s a mad genius playing three-dimensional chess with his opponents. But the fact remains that lots of technically smart people, like REASON editors, continue to evince hysterical stupidity when confronted with Trump’s little ploys. Surely by this time, anyone with a three-digit IQ ought to realize that a Trump press release about tariffs and trade wars doesn’t mean even a fifty-percent chance there will actually be a tariff or a trade war, and that opposing with your last breath something that probably even the wildman himself has no intention of doing is a ludicrous waste of energy.

    1. Oh, and by the way, why are purer-than-everyone-especially-nationalists libertarians trying to appeal to our anti-Chinese feelings in the headline? How pure is that?

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  19. Trump is no genius, but it amazes me how so few of you understand how negotiations work. I guess it’s because most of your are cubicle working employEES, not employERS who actually have to deal with real shit.

    Trump talks specifically about his negotiating tactics in some of his books, of which I have read one in full, and chunks of another. He’s throwing a lot of this stuff out there like he would do in a normal business deal, but in politics, because most politicians are such fucking pussies, these tactics are often not used, or at least not to extremes. Cue everybody freaking out.

    He’s throwing out crazy ideas so he can negotiate back to something in the middle, which is where he wanted to be in the first place. He’s using the threat of crazy actions to make the other side agree to sane actions. This is all negotiation 101 shit. My dad, a business owner, done learnt me this kind of shit when I was still a teenager. Apparently some people never learned these things.

    You people are such n00bs for not getting some of this stuff… But I guess that’s what comes from an entire life of being told what to do by bosses who actually know how shit really works. Trump does not impress me much, but there are legitimate things to gripe about, and stupid stuff to gripe about. His negotiation methods are stupid to gripe about IMO.

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