The Lunacy of Trump's Trade War: Podcast

Reason editors dispute presidential notion that "trade wars are good, and easy to win," and also argue over the Oscars.

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The Lunacy of Trump's Trade War: Podcast

CNBC

President Donald Trump last Thursday abruptly announced that he intended to impose a 25 percent tariff on all imported steel, and a 10 percent tariff on aluminum. On Friday Trump tweeted that "trade wars are good, and easy to win." Fellow administration protectionists Peter Navarro (director of the White House National Trade Council) and Wilbur Ross (Commerce secretary, pictured), have fanned out to the cable networks to argue that across-the-board levies amount to pennies on the dollar and are nonetheless worth it for the urgent task of reducing bilateral and overall trade deficits.

Ah, but trade deficits are not remotely bad things, Reason Editor in Chief Katherine Mangu-Ward argues on today's Reason Podcast, which also features Nick Gillespie, Peter Suderman, and Matt Welch talking news of the week. The group also takes up last night's Oscars, this past weekend's LibertyCon, and the awful "Allow States and Victims to Fight Online Sex Trafficking Act" that overwhelmingly passed the House last week.

Audio production by Ian Keyser.

Relevant links from the show:

"Trump's Impulsive Trade War Is Lousy Economics and Worrisome Politics," by Matt Welch

"Trump Has Exposed the GOP's Shallowness on Fiscal Restraint and Free Markets," by Shikha Dalmia

"Trump's Tariffs Will Crush the Beer Industry," by Eric Boehm

"Inside the Bitter Oval Office tariff fight," Axios

"Are 'Inclusion Riders' a Libertarian Solution to Workplace Inequality or P.C. Run Amok?" by Nick Gillespie

"In the Market, Get Out and Dunkirk Won the Race for Best Picture," by Eric Boehm

"Kurt Loder on Why the Oscars Always Suck but Movies Are Great: Podcast," by Nick Gillespie and Mark McDaniel

"House Passes 'Anti Sex-Trafficking' Bill Opposed by Both DOJ and Trafficking Survivors," by Elizabeth Nolan Brown

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Comments

[John]

Trade wars are the end of civilization. That is why even thinking about a tariff will cause the other side to push the button and end civilization. Or something. Bush did these tariffs in 2002, did we have a TRADE WAR!! then? Or when Ronald Reagan did much more in the early 80s?

[Mark22]

Or when Obama imposed steel tariffs, for that matter.

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[Francisco d'Anconia]

Trade deficit!

What exactly is a trade deficit?

Let's say China is subsidizing the steel industry. Let's say this subsidy allows the Chinese to sell their steel at half, what would otherwise be, the market value. We buy the steel. We have steel whose actual market value is twice what we paid. China has half the money they otherwise would. Who, exactly, is getting screwed here?

[Hugh Akston]

America!

[Mark22]

Who, exactly, is getting screwed here?

US tax payers are getting screwed. The US has a high minimum wage, high labor costs, and high welfare payments. China has low labor costs and subsidies. In the presence of free trade, low skill jobs will move from the US to China, labor participation rate in the US drops, and US tax payers foot the bill for the out-of-work Americans. In effect, welfare and other government payments to low skill workers in the US subsidize cheap imports from China.

It's fine for the US to have free trade and open borders with other countries that have equally lavish welfare systems and similar subsidies to the US. But free trade with nations like China is quite harmful. The solution is, of course, to get rid of our welfare state. However, as long as our welfare state exists, we need some limits on both trade and on migration.

[I can't even]

That's a whole lot of pants-shitting!

[Ken Shultz]

"President Donald Trump last Thursday abruptly announced that he intended to impose a 25 percent tariff on all imported steel, and a 10 percent tariff on aluminum. On Friday Trump tweeted that "trade wars are good, and easy to win."

The word "abruptly" makes it sound like the U.S., Canada, and Mexico haven't been meeting for days in Mexico City to discuss negotiating revisions to NAFTA

"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

[Ken Shultz]

How dare Trump interrupt the media narrative about how our gun rights should be violated, sexual harassment, and how soon he should be impeached--with his silly tweets on trade policy! That's one of the hardest parts of being a progressive in Trump's America--how are they supposed to get a strong hold on the Overton window when the president isn't on board with the progressive program?

I repeat: Trump hasn't done anything yet. He's in negotiations with Canada and Mexico on NAFTA and has been for days.

[Mark22]

I suspect this whole "steel tariff" thing is a negotiating tactic anyway.

[Michael Cook]

I asked the rhetorical question of how much Chinese steel and aluminum goes into a Mercedes. Actually, it is a practical question because some nations that pat themselves on the back for their free trade ideals somehow magically still have a protected steel industry.

I've learned that the Mercedes metal content is a lot more complicated. Poland and Czechoslovakia are upset with Merkel because she hates coal and nuclear power, which means that smelting any metal is extremely costly. Iceland is stepping up with green geo-thermal power to smelt bauxite but it still won't be exactly cheap. Cost really doesn't matter much for what goes into a Mercedes, Porsche, Audi, BMW, etc, but it sure does for a VW.

China can pretend to be sacred green energy king real easy. Anyone can put up windmills. The high cost comes in the maintenance to keep them turning under load. Much smarter to just let them free spin for the propaganda value while you smelt aluminum from cheap coal.

[Michael Cook]

Now, what Trump is up to is not so much anti-free trade, as imperialism in classic form. He wants better deals and will bully up to get them.

Had Hillary won, we would have a world crony socialist system replete with hidden payoff schemes. Politicos would have to acid wash their hard drives, smash hand held devices with hammers, and infiltrate law enforcement ranks with brazen partisans, like the ones pestering Netanyahu in Israel.

Classic imperialism was on display in the Russo-Japanese war of 1903 over resource-rich Manchuria and the prize warm deep-water Port Arthur, which Russia leased from China. This was a battleship contest but neither Russia nor Japan could build battleships fast or cheaply enough, so they bought them from Britain and the USA (proudly built in Brooklyn!)

This was the first 20th century war of land and sea mines, big guns, machine guns, barbed wire, lots of combat engineers from Poland, Germany, Croatia, and war correspondents.news reel teams, and espionage agents from
everywhere from Shanghai to Seattle.

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