Tuesday, March 13, 2018

Critics say Trump’s tariffs will bring on a trade war, but will they?

President Donald Trump continues with his “America First” campaign, announcing a move that is aimed at the tilted playing field on international trade. Critics say Trump’s tariffs on steel and aluminum coming into the country will usher in a trade war, and it will harm America.

However, the fact is that we are already in a trade war; we have been it for many years; and we are losing it.

Most Americans probably don’t realize that we are in a trade war because, first, they don’t really follow such things, and neither do the major news media. Also, when a situation exists for a long enough time, it becomes “normal.” That is the case with the uneven tariff situation with other nations, and quite a few of them are our allies.

"We cannot have free and open trade if some countries exploit the system at the expense of others,” Trump told the World Economic Forum in Davos, Switzerland. “We support free trade, but it needs to be fair and it needs to be reciprocal. Because, in the end, unfair trade undermines us all."

 “We cannot get our product in [to the European Union], Trump said in a TV interview in late January. “It’s very, very tough. And yet they send their product to us - no taxes, very little taxes. It’s very unfair.” Germany was singled out as a particularly guilty nation.

Trump points out how this has created America’s huge trade gap with foreign countries. “In 2017, the U.S. trade gap leaped 12.1 percent to a nine-year high of $566 billion,” as reported by MarketWatch, which attributed the rise  “to high oil prices and also to a strengthening economy. When Americans are more prosperous, they tend to buy more imported goods.”

“The latest statistics released on March 18 [2017] by the BEA [Bureau of Economic Analysis] show that for every dollar that the United States bought from China in 2009, the Chinese government only let its people buy 28 cents of American products,” reports “Although the Chinese economy was growing by 8.7 percent, the Chinese government managed to shrink Chinese imports of American goods and services.”

The report states “China still maintains high duties on some products that compete with sensitive domestic industries. For example, the tariff on large motorcycles is 30 percent. Likewise, most video, digital video, and audio recorders and players still face duties of approximately 30 percent. Raisins face duties of 35 percent.” However, China did cut tariffs on a few minor items last November.

Trump has also criticized China's currency manipulations, which increase costs of American goods and services by 25 to 40 percent.

As The Washington Times reported last December, “India is still using high tariffs and other protectionist measures to keep U.S. manufacturing goods from entering its domestic market.” The result: America has a $32 billion trade deficit with India, the second largest country on Earth. The Times concludes, “It’s a problem that the Trump administration needs to address — and soon.”

Cars and electronics are largely the fuel for Japan’s $69 billion trade advantage, America’s second largest trade deficit, after China’s. All told, eleven nations impose tariffs on America’s Harley-Davidson motorcycles with engines over 800cc: India at 100 percent; China at 60 percent; and Thailand at 30 percent.  And the EU has had steep tariffs on U.S. imports for years.

To all of that, add in that the tariffs Trump wants to impose resulted from an investigation by the Department of Commerce that showed that imports of both steel and aluminum are sufficiently high that they pose a national security threat.

With those listed anti-American tariffs at work against us, what do we do? Do we merely leave things be, and continue to have our economy and Americans’ pocketbooks negatively affected? Or, do we try to fix the situation.

Trump is not one to merely look the other way under such conditions, and has proposed tariffs that at this point exclude only Canada and Mexico. This, of course, has attracted quite a lot of negative reaction.

So many people are obsessed with criticizing everything Trump does or doesn’t do that they repeated fail in these efforts, and then can’t resist advertising their failure. They don’t go the extra little bit. Instead of instantly denigrating and ridiculing Trump, do a little work and see what he is really doing below the surface.

Trump is a negotiator, and that is a major factor in how he does things. He can propose a 50 percent tariff on a country or some products, and then modify his terms if some accommodation is made, or maybe double down if no accommodation is offered. Ultimately, the conclusion of this exercise will usually be more moderate than the initial proposal, and actually will provide positive change for our country. This is the nature of negotiation, and Trump is a professional negotiator.

As for his many critics, why not just wait and see how the situation evolves, instead of jumping at his first words to try and create the most exciting and damaging comment about something that is just getting under way?

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