Posted on 03/04/2018 5:26:09 AM PST by Kaslin
There was a simple reason why Donald Trump won the 2016 election. It wasn’t because Vladimir Putin was changing votes (though he didn’t.) It wasn’t because evangelicals voted for him in necessary numbers (though they did.)
The reason I felt strong enough about it the week of the election that I drew a map predicting how he would win—which states—and was correct, was far simpler than the wildest conspiracies you’ve heard.
He connected with working people, and they trusted him. Particularly they trusted him in states with a lot of empty production plants. Like making a solemn vow, they trusted him to keep his word.
Last week the Heritage Foundation calculated that the Trump administration has fulfilled close to 64% of his campaign agenda. This week he took one more enormous step to completion: tariffs on steel and aluminum.
The blowback came immediately. From the Wall Street Journal to The New York Times, CNN’s Jeffrey Sachs to Townhall’s Guy Benson the cries were all reflective of the same ominous warning.
For the day job in talk media I began engaging people on all sides of the issue and there are six points that the fearful trade-war-mongers I believe are wrong about. At the very least I believe they may be overstating the case.
1. Trade war is not a given - The most repeated statement in the collective analysis thus far asserts that an all out trade war will soon follow the implementation of the tariffs. Certainly in theory a nation that faces import tariffs to the United States could retaliate. But variables on a combination of factors would be a more probable cause for such. With steel we are looking specifically at China-whose steel industry is in part supported by government subsidies and a labor market that can be paid pennies on the dollar for the work necessary. This alone prevents the discussion of “free trade” being in any way “fair,” because China is cheating. China is also dependent for the USA to be a recipient of up to 20% of their total export volume. Our steel production suffers as they cheat. But they do not have the total upper hand.
2. Products may not cost more - The assumption that our products will go up significantly in price is a realistic concern. But it is not an absolute given. In the immediate period of implementation according to some of the best estimates the tariffs may raise the purchase price of a new car something close to $45, and a twenty-four pack of beer by .05 cents. But what happens if steel & aluminum production begins to match volume wise the amount we import from other world sources? Economics 101 teaches us that prices drop as inventory surges. If our steel production grows enough we could wipe out the gains mix-minused in our dependence on China.
3. The world doesn’t like it - Of all the pushback this reasoning is among some of the most inane. When the United States does what we have to do to shore up our markets, jobs, workers, and life we have less and less need to care what the world thinks about it. This isn’t hubris, this is independence. To be tied to China’s cheap steel, Saudi Arabia’s oil reserves, and the good graces of the global community fundamentally puts us at a more vulnerable position from an economic & national security standpoint. Like much of the rest of the Trump focus, America needs to shore up America’s capacity for whatever faces us, and being utterly dependent upon others doesn’t move us in that direction.
4. We shouldn’t pick winners & losers - This is an argument normally made when discussing competition between domestic companies here in the USA. Jonathan Hoenig, appearing on Neil Cavuto on Friday, repeatedly invoked this as some sort of determining factor as to why the tariffs should be prevented. But it’s an illegitimate argument. This isn’t picking one steel factory over another and using tax-payer incentives to cause one or the other to succeed. This is a fight for survival between a metal industry that has suffered enormous loss for the better part of multiple decades, and the slave labor of China. The winners in the near term are steel and aluminum workers.
5. The national security consideration - Those that have argued that a trade war is inevitable, seem to also forget the increasingly perilous hair trigger of real war that the globe is constantly on the edge of. If America were to find itself drawn into a conflict with North Korea or Iran, it is likely whatever degree of imports we get from China and Russia would immediately be frozen. Fifteen years ago more than a dozen aluminum smelters were in operation. Today there are only three and the entire capacity of one of those three is necessary just for the military and related technologies. We are more vulnerable than necessary, and increasing domestic production solves this vulnerability.
6. Had to be (as it was) done in the correct sequence - Because of the rapid growth of the economy by rolling back some 2000+ regulations coupled with the very real impact that Trump tax reform is having now is the absolute right time to push for this “leveling of the playing field.” Most Americans will be more likely to accept an increase in the price of their next car by $45 if they know that Americans are benefitting. They are even more so if they have on average $90 more per week appearing in their pay check.
President Trump should not have surprised anyone with this announcement. He campaigned on the idea and it is keenly linked to why he won the rust belt and the nation. The tariffs are called “protectionist” by voices trying to scare the American people. But fear is unnecessary.
If the five preceding presidents all held the same position (which they did) but were unable to get it done due to economic stagnation, terrorism, etc. now is the perfect time to take it up and create a far more favorable playing field for our domestic metals industry as well as the workers who would love to show the world the pride they take in American Steel and Aluminum.
The tariffs are the right thing to do!
Good post.
Go Donald. :D
Free trade has to include fair trade and mirrored taxes. We must have reciprocal taxes and fees with anyone who wants to trade with the USA.
7. USA has been getting screwed as all the other countries are doing it to our manufactured goods.
Very good read.
A friend of mine owned a steel cable manufacturing facility, making steel cables for the elevator and many other industries. He had several hundred employees and made a top quality product.
He closed his factory and terminated all employees as he could not compete against the foreign products.
China came in and offered to purchase all of his manufacturing equipment and pay a premium price, to remove it and ship it to China. He turned them down.
We need to win this trade war as if we are at war with China, we are screwed.
Just look at Europe’s VAT tax on all our goods. We should have an equal tax, with an offset for state sales taxes.
The day I see an Asian in America driving a Ford or a Dodgis the day I’ll unsubscribe to American economic nationalism.
Nice to finally have someone living in 1600 Pennsylvania Ave, that actually cares about the people, more than the CEOs, Wall St, and the major shareholders.
On a side note, does DACA DIE TOMORROW? Asking for a friend.
Very well said.
“We must have reciprocal taxes and fees with anyone who wants to trade with the USA”
Seems like common sense (more Trumpian logic), but how did it get to such an unbalanced state, and who is responsible?
Every country needs to be self sufficient in its ability to.produce goods.
——We must have reciprocal taxes and fees with anyone who wants to trade with the USA——
That is precisely the concept being tested. Rather than general tariffs, there will be specific tariffis on products from specific nations thet impose specific tariffis on American products.
On the subject of steel, a broad subject, the actual tariffs will be by nation on specific steel products as defined by the Harmonized Tariff classificaations.
I was suprised by the tariff imposed on Korean washing machines when Korean owned factory to manufaacture them is in process in South Carolina. There aapparently far more to this than meets the eye .From experience, my policy is to never trust the Koreans.
Regarding #5 above (the national security consideration) -
We cannot be dependent on a large proportion of our steel and aluminum coming from abroad. Because of technological advances (missiles, submarines, underwater nuclear-powered drones, data transmitted from space), the US doesn’t have the complete dominance of ocean-based trade routes it had a little while ago.
During the Second World War, the US had a big problem finding the location of Japanese air-craft carriers (in order to bomb them) - we had to send out scouter planes to prowl the Pacific to try to locate them. Nowadays, enemies can use satellites in space to pin-point the location of our air-craft carriers and they can become sitting ducks.
Steel imported from Canada could be an exception, as it can be transported by land.
The “American school of economics” seemed to work well when we had it (according to Wikipedia 1860s-1970s). Though that being said, economics isn’t exactly science so who knows how repeatable that is.
>>> Products may not cost more - The assumption that our products will go up significantly in price is a realistic concern. But it is not an absolute given.
It may not be an absolute given, but that is certainly what happened after the President imposed lumber tariffs on Canada last fall. Prices went from $350 to $500 per 1000 board feet.
“Just look at Europe’s VAT tax on all our goods. We should have an equal tax, with an offset for state sales taxes.”
Call it an eye for an eye, or we will do to you what you do to us.
Point one, wrong. China is not that important as far as imports of steel or aluminum. Others, including Canada export a hell of a lot more in steel and aluminum to the U.S. than does China, and they will be hit with those tariffs as well. Clearly "China" is among the least that will be hit with the tariffs; therefore it cannot be a key that makes them "right".
"2. Products may not cost more - The assumption that our products will go up significantly in price is a realistic concern."
Yes it is. The history of U.S. tariffs on metals (metal products) is not one that has made the U.S. steel and aluminum industries world competitors. Minor improvements; not major exporters and production never enough for American manufacturers needing metals products for their production. The negative expectation have history on their side. Not wishful thinking and high hopes.
"3. The world doesn’t like it - Of all the pushback this reasoning is among some of the most inane. When the United States does what we have to do to shore up our markets, jobs, workers, and life we have less and less need to care what the world thinks about it. This isn’t hubris, this is independence. To be tied to China’s cheap steel"
Again this point fails because THE ARGUMENT is "tied" to China, yet Apple imports from China are probably many times greater than the metals imported from China, and that is nearly all the Apples sold in the U.S. whereas China is not even the largest import supply of metals in the U.S.; some of our allies are.
"5. The national security consideration":
is DESTROYED by the fact that the tariffs will hit our military ally and neighbor Canada, far, far more than China - yet the stupid argument remains fixated on China.
"6. Had to be (as it was) done in the correct sequence - Because of the rapid growth of the economy by rolling back some 2000+ regulations coupled with the very real impact that Trump tax reform is having now is the absolute right time to push for this “leveling of the playing field.” Most Americans will be more likely to accept an increase in the price of their next car by $45 if they know that Americans are benefitting. They are even more so if they have on average $90 more per week appearing in their pay check."
Nonsense. Most likely more jobs and working Americans will be hurt, than helped by the tariffs. It will be a multiplier affect that hits hundreds of smaller manufacturers most - those least able to absorb raw-materials cost increases. When GWBush did this Ohio lost more small manufacturing jobs than all the steel jobs saved. One small manufacturer I remember reading about got up moved all his production OUT of the U.S., closer to the metals supplies he needed. He was not alone.
CHINA is not "destroying" the U.S. steel and aluminum industry. Many factors, including the domestic industry itself can be blamed.
If Trump really wanted to "hit" China and our trade balance with them, he'd put tariffs on cell-phones and other electronics goods from China - directly, forcing Apple and others to bring production to the U.S.
I would expect some political grandstanding and Harumphing but as far as I can tell, YES, no more Deferred Action For Criminal Aliens.
No, I don't think so. Some goofy judge ruled that (paraphrased) Obama could make Executive Orders but Trump can't. Last week the Supreme Court declined to accept the appeal on an emergency basis, so it'll first have to go through another goofy ruling from the 9th Circuit before it can be heard by the Supreme Court.
Goofy judge #1 ruled that DACA applications must still be accepted but, as far as I know, they don't have to be approved.
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