How Not to Score a Goal in the Global Trade War

President Donald Trump likes to keep score. Well, here's a score for him: America, zero; while the rest of the world keeps tallying up free trade points. That's right; while American consumers have been waiting for well over a year to see some resolution to the various trade disputes started by Trump, other countries have agreed to lower their tariffs against each other and signed free trade agreements with one another. Meanwhile, American consumers and exporters are drowning in a sea of high tariffs.

Let's recap. For the last year and a half, the president has unilaterally imposed tariffs on, among other things, imports of steel, aluminum and hundreds of billions of dollars of Chinese products. Many of these tariffs fall on intermediary goods that American and foreign companies use to produce things here in the United States. Despite being told by the administration that no one would dare retaliate against us, everyone has. Canada, Mexico, Japan, India, China and the European Union have all since then retaliated with their own duties against U.S. exports.

From manufacturers to farmers, the industries in the downstream of U.S. tariffs (and in the crosshairs of the foreign duties) have been hurting. They've been shouldering high production costs and less access to foreign markets, and U.S. manufacturing just fell to a 32-month low. While we were told that this pain was worth it because it would deliver magnificent trade deals, it hasn't. The United States-Mexico-Canada Agreement, or "new NAFTA," is far from becoming the law of the land, leaving companies in limbo. And we're still waiting for a comprehensive deal with China, as well as a reduction to zero of the subsidies and tariffs between the EU and the United States.

Rest assured, though, other countries have not let this crisis go to waste. Taking matters into their own hands, other governments have been actively signing free trade agreements with one another. Recently, the EU, Brazil, Argentina, Uruguay and Paraguay announced a free trade deal that covers 780 million people. This is a big deal because the South American trade bloc had relatively high tariffs against the EU. The EU and Japan have also completed a free trade agreement.

EU members updated their trade deal with Mexico as well and just signed a trade agreement with Vietnam to eliminate 99% of the tariffs on goods and services between European and Vietnamese markets. Meanwhile, the 12 Trans-Pacific Partnership nations, which includes Japan, have looked to finalize the deal with other potential partners after Trump rejected the deal on his first day in office.

Even protectionist China has been active. It has effectively been dropping its tariffs against U.S. competitors while it raised its duties against U.S. producers. Chad Bown of the Peterson Institute for International Economics calculated that China's tariffs against the United States rose from 8% on January 1, 2018, to 20.7% on June 1, 2019. Tariffs against all other countries, however, went down from 8% to 6.7% during that same period. As Bown writes, "Now, there is a 14 percentage point difference between the average Chinese tariff U.S. exporters face versus all other exporters."

None of this is to say that China and other countries aren't hurting as a result of this trade war. A growing number of global firms are shifting production out of China in response to the U.S.-China trade war. The world's top bicycle maker, Giant Manufacturing Co., acknowledged this fact loud and clear by announcing that the era of "Made in China" was over.

Does this fact mean the Trump strategy is working? No. The Trump plan was that companies would leave China and move back to the United States. But that's not what's happening. Instead, they're moving production to other Asian countries, including Vietnam. That is probably why the president is suddenly threatening to impose hefty tariffs against Vietnam. If he does, the Europeans, with their new free trade relationship with Vietnam, will be the winners.

Some of Trump's supporters have argued that the president is actually a free trader who wants lower tariffs all around. Well, if that's the case, he has succeeded in a way. Everyone is getting lower tariffs -- everyone except U.S. consumers, that is.

Neither did Engels, although he did say some very funny things in The Principles of Communism:

What will this new social order have to be like? Above all, it will have to take the control of industry and of all branches of production out of the hands of mutually competing individuals, and instead institute a system in which all these branches of production are operated by society as a whole — that is, for the common account, according to a common plan, and with the participation of all members of society. It will, in other words, abolish competition and replace it with association. […]

What will be the course of this revolution? Above all, it will establish a democratic constitution, and through this, the direct or indirect dominance of the proletariat. […]

Democracy would be wholly valueless to the proletariat if it were not immediately used as a means for putting through measures directed against private property and ensuring the livelihood of the proletariat. The main measures, emerging as the necessary result of existing relations, are the following:

Limitation of private property through progressive taxation, heavy inheritance taxes, abolition of inheritance through collateral lines (brothers, nephews, etc.) forced loans, etc.

Gradual expropriation of landowners, industrialists, railroad magnates and shipowners, partly through competition by state industry, partly directly through compensation in the form of bonds.

Confiscation of the possessions of all emigrants and rebels against the majority of the people.

Organization of labor or employment of proletarians on publicly owned land, in factories and workshops, with competition among the workers being abolished and with the factory owners, in so far as they still exist, being obliged to pay the same high wages as those paid by the state.

An equal obligation on all members of society to work until such time as private property has been completely abolished. Formation of industrial armies, especially for agriculture.

Centralization of money and credit in the hands of the state through a national bank with state capital, and the suppression of all private banks and bankers.

Increase in the number of national factories, workshops, railroads, ships; bringing new lands into cultivation and improvement of land already under cultivation — all in proportion to the growth of the capital and labor force at the disposal of the nation.

Education of all children, from the moment they can leave their mother’s care, in national establishments at national cost. Education and production together.

Construction, on public lands, of great palaces as communal dwellings for associated groups of citizens engaged in both industry and agriculture and combining in their way of life the advantages of urban and rural conditions while avoiding the one-sidedness and drawbacks of each.

Destruction of all unhealthy and jerry-built dwellings in urban districts.

Equal inheritance rights for children born in and out of wedlock.

Concentration of all means of transportation in the hands of the nation.
It is impossible, of course, to carry out all these measures at once. But one will always bring others in its wake. Once the first radical attack on private property has been launched, the proletariat will find itself forced to go ever further, to concentrate increasingly in the hands of the state all capital, all agriculture, all transport, all trade. All the foregoing measures are directed to this end; and they will become practicable and feasible, capable of producing their centralizing effects to precisely the degree that the proletariat, through its labor, multiplies the country’s productive forces.

Finally, when all capital, all production, all exchange have been brought together in the hands of the nation, private property will disappear of its own accord, money will become superfluous, and production will so expand, and man so change, that society will be able to slough off whatever of its old economic habits may remain. …

A total and complete misunderstanding and ignorance of the human condition is on display here.

I’m telling you what Free Republic policy has been for over two decades now.

Double postings have been discouraged and even removed.

Articles appearing from two sources or even more, especially with two different titles are always allowed.

No, a person doing you the favor of posting articles to the forum may not always read the full article before posting it.

We want as many articles as we can get here, so we don’t miss out on topics.

Kaslin does a fantastic job posting things to this forum, and I’m not going to sit by and watch her attacked for not doing it exactly the way that satisfies you.

If she spends her time reading all the articles, it will mean she will be limited to how many topics she can bring here.

Sources, Titles...

If they’re different, it’s going to get posted here again.

BFD

I have to disagree with you, but it isn't because what you said about economies of scale because what you said is true enough. (By the way, I just used Los Angeles to New York as an off the cuff example...I have never checked that out...I was generalizing for shipping within the USA)

Check out this link: Withdrawal from the Universal Postal Union: A Guide for the Perplexed

Trump said he was going to withdraw from this "treaty" because this "Universal Postal Union" (which predates the formation of the UN, but has been under the auspices of the UN I think dating back to the early Sixties) is so one sided and unfair.

I understand the goal of this, which was to even out postage rates so that one country couldn't gouge other countries for handling inbound mail and small packages, but as always happens, it turned into a wealth redistribution scheme giving a break to 'underdeveloped' countries, that break paid for by 'wealthier' countries.

In this case, guess who is a 'wealthy' country...no surprise, that is US. But China is still an 'undeveloped' country.

This means that we are subsidizing shipping from China at the rate of now $170 million a year, every year, and it is increasing every year. (This is for small shipping, not large shipping, so that small items of 2 kg or less cost far less to ship from China.

I found this out when I bought a $15 dollar item from a company in China...free shipping. But when I wanted to return it, shipping was $25! In that case, the only thing to do is eat the item if it is defective or broken.

In the USA, you could send it back to a US company, and they would have to maintain customer services, replacing or refunding the item, etc. Chinese companies often don't have to worry about that. That is an enormous competitive advantage.

Trump is right on to withdraw from this United Nations run wealth redistribution scheme. If they want to renegotiate, fine. If not, we should just withdraw.

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