SocraticGadfly: Trump's tariff trip-ups (newly updated)

June 09, 2019

Trump's tariff trip-ups (newly updated)

President Donald Trump continues to shoot himself in the foot in his tariff war with China, and the Trump Train riders continue to sign blank checks, doubling down on motivated reasoning and going beyond cognitive dissonance. (That happens when you simply refuse to read news or otherwise ingest information you know will challenge your POV.)

After his announcement of his newest round of tariffs against Beijing, it has responded with its own plans for new tariffs starting June 1.

Update, June 1: Trump, never smart enough to accept a half-loaf on anything when he thinks he can get a full loaf on one of two issues — tariffs and immigration — has given real tariff new stupidity news with his 5 percent until you stop the migration threat to Mexico That's just after he cut some Mexican, and Canadian, tariffs to try to get the Senate to pass NAFTA 2.0, aka USMCA.

Update, June 4: And now, the Senate GOP is reportedly considering a formal vote of disapproval against these tariffs. Trump fired back that these tariffs are distinct from NAFTA 2.0.

Update, June 8: After announcing those planned new tariffs against Mexico, he has now removed those again, while lying that they forced Mexico to act. Most of the agreement announced Saturday was negotiated months ago and most of the add-ons Trump tried to get this last week were rejected. And the whole drama was created by the drama queen himself. And much of the GOP Washington establishment has refined the old IOKIYAR acronym to now read IOKIYAT.

Update, June 9: Trump is now an officially bigger idiot than ever, and wrecking the work to present an actually good case against free trade, when he says he still could impose new, "profitable" tariffs on Mexico. Tariffs are NOT — and not designed to be — "profitable." And, Trump is now also busted lying that Mexico had agreed to more U.S. ag imports. Anybody who knows what NAFTA did to the Mexican farm industry would know prima facie that was likely a lie.

Update, June 10: Never Trumper Rethugs are also pointing out Mexico "pantsed" Trump, and yes, that's in the headline. Bloomberg points out how these failures (and getting called out on them) may make Trump more dangerous.

Update, June 27: Xi just gave Trump a "go fuck yourself" laundry list of things he needs to do before he'll play ball with him.

Read on for how this relates to Trump having at least some good ideas, but incredibly stupid execution, vis-a-vis China.

Before I go into the weeds of Trump's stupidity here, a couple of caveats.

First, I'm not a member of either "duopoly" party.

Second, I'm not a free-trader, but I'm not an anti-free trader either. Per the likes of Adam Smith and other classical economists, I support free trade between countries that are on a relatively equal basis (and with the additional caveat of transparency needed in that trade).

That means countries that have roughly equal labor rights, environmental protections, intellectual property and copyright protections, etc.

In other words, free trade with Canada or the EU? Bring it on. Ditto with Japan.

In all of these countries, there might be some details to worry over, but ... the basic idea holds. Bring it on. Ditto with the new "tigers" of SE Asia, once they reached this level. For instance, free trade 25 years ago with South Korea or Taiwan? No. Today. If we think they're at "that level," bring it on.

And, of course, China is not at that level. Despite talk of it greening up, it has horrible pollution problems, and not just the smog of air pollution. Plus, we've imported our pollution over there, with dirty Chinese industries then redoubling it. China has little labor rights, etc., and little intellectual property protection — as they steal everything, how could they respect intellectual property. (Well, they don't steal all of it; in many cases, Western companies agree to surrender it in exchange for Chinese manufacturing entry.)

NOW we can get to Trump's problems.

First, anything with EU or Canadian steel was nothing other than a rounding error and we did worse. The tariffs on Canadian paper were a bailout request by a hedge fund company and ignore the way the US allows below-cost timbering in national forests. Other EU tariff issues generally fall into the same category.

And, while Mexico isn't on the same level as the US, it may be ahead of China's level, plus is not the same economic threat.

So ... IF Trump hadn't been so stupid to do these other tariffs, he might well have had allies.

The EU is the third heavyweight in global trade. (Japan is a distant fourth, and has no real regional allies in SE Asia beyond following the US lead — or such was the pre-Trump case.)

The EU, like the US, has had ongoing concerns about intellectual property as well as manufacturing issues with China.

But, no. Donald Duck had to go piss the EU off first.

That said, this leads to problem No. 2.

For Trump, trade is and remains all about traditional industrial manufacturing.

For a man who allegedly created alleged wealth in the FIRE sector, not manufacturing, his blindspot to trade in services — including but not limited to intellectual property — is baffling even by Trump's standards of inducing bafflement.

If his tariffs — and related actions — were broader than they actually are, he might get more US support. But, they're not.

Third is Trump's wishful thinking misreading of China.

It's a different wishful thinking than that of the majority of establishment R's and D's, that "engagement" would get China to liberalize its society politically. But it's wishful thinking of its own, and just as dangerous.

In his warning to China after it announced its latest countertariffs, he seems to think that he can bully a country with a long, long, proud history, that's entering a resurgence to get to near where China's economic status was on the global stage for the majority of the period 0-1600 CE.

Beyond that, the likes of Chinese President Xi Jinping laugh up their sleeves at Trump. All bark, no bite.  And, his personalizing this surely makes the Chinese leadership think that he is thin-skinned and feels like he's losing.

Westerners personalizing things with East Asians generally backfires, anyway. Based on a visit to South Vietnam when he was Veep, LBJ seemed to have personalized the Vietnam War as him against Uncle Ho. And we know how that ended.

Also, as I noted elsewhere, even if "state capitalism" and not communism, and not a "demand economy," China still has a central economic control, and has of course NOT liberalized due to engagement.

That leads to point the fourth. With state capitalism, plus Xi already being guaranteed a post-Deng precedent setting third term, he doesn't have to battle on Trump's terms. And both Western financial media and China-/oriented mass media have already indicated he isn't now and he won't be in the future.

Then there's the issue of Trump bailing out farmers — but not other industries affected by the tariffs. A nail factory that closes in a small town may be small. But, its 50 employees now out of work may be almost as many as the total number of farmers in that county if it's partly exurban and not totally rural.

Politico, in my "personalizing" link, rightly notes that he's got two directly conflicting impulses at play. Wall Street took a bath last Monday when Trump announced the new tariffs then did his usual boastful tweeting.

Politico, though — and the rest of the establishment to the degree Politico represents it — does get one thing wrong, though.

That's the claim that both Trump and Xi are maybe not rational actors.

Au contraire. Xi has not started a single round of tariff battles. He and other Chinese brass HAVE cultivated the EU since Trump started the tariff wars, and pointing at Trump's EU tariffs, have gotten it to stay out of the fray. When Xi has launched countertariffs, they've been on the farm products, and other things like Kentucky bourbon, clearly in red states. And, they've been done with greater flexibility.

No, Xi has been incredibly rational.

I'm not saying Wall Street, or small businesses that aren't farms, are going to jump in to support Bill Weld in the primaries. But, what if a few more people stay at home in November 2020?


More and more, I see Trump not as an idiot, but in THIS WAY (and ONLY this way, The Resistance, hence all caps) to be like a Hitler or Stalin. He seems to think that his believing something to be so makes it so.

No, he's not the only person in the world who occasionally indulges this, but he has a high capacity for it.

And, speaking of "the resistance," Trump's combination of stupidity and fake news on tariffs does NOT give the pustulence excuses for its own tariffs fake news.

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