Wednesday, March 7, 2018

I Rise Again....To Criticize the President

© 2017 by "The State"
For a second time in a week I gladden the hearts of my liberal friends for a tiny fraction of a second by criticizing President Trump.  The good president it seems, is about to start an ill-advised trade war. His economic advisor, Gary Cohn, just quit over the president's threat to place heavy tariffs on foreign steel and aluminum.

Here's the problem. Tariff's are inevitably counter-productive. On this, both the left center and right center agree on.  Only fanatics on both fringes support tariffs as a tool of economic progress. Trump''s tariffs will focus initially on metals. The first impact tariffs on metals will have will be to raise the costs of cars, construction, airplanes, guns, and ammunition. Even soda and beer will go up because of the increase in the price of the cans they come in.

Trump seems intent on finding a way to lose the 2020 election. The inflation that tariffs will cause will effect most, his own base. Beer cars and guns are particularly popular products with Trump voters. This will gladden the hearts of Democrats and dismay conservatives.

Tariffs will manage to undo the positive effects of the tax cuts he accomplished in his first year in office. It's not hard to see why the President seems to like tariffs. Tariffs are punitive in nature and that is how Trump does business. He charges ahead like the proverbial bull in the proverbial China shop. He has always used the tactic of burying those who get in his way with lawsuits. It makes sense that Trump would attempt to make America great again by financially punishing his enemies.

What Trump doesn't understand that other countries do not necessarily play by the same rules as America. Sovereign nations may reciprocate the punishment and jack up tariffs on American goods being sold to them. Trade wars are inflationary. They punish the poor and middle class. A narrow class of industries and labor unions may benefit somewhat, but the flood of inflation and job loss in every other industry and community that is not in the narrow sector that will be blessed with rising profits due to tariffs.

Tariffs also place us at a disadvantage with the rest of the world. American goods will become more expensive not only due to the reciprocal tariffs being charged for them, but will also be more costly because of the increase in the cost of materials like steel and aluminum needed to make American goods like aircraft, cars and guns which we sell elsewhere. Thus, goods made in China, resources obtained in South America, Africa and the Middle East will still cost the same in Europe and Japan while American goods will become more costly. Only American goods will go up in price. Goods coming to the United States will go up in price. Not so in the rest of the world

The result of such tariffs will be that the United States alone will pay the price.  On the international stage, one cannot bully and punish your trade partners in the same way you can sue and run roughshod over your competition in business. There are no world governments you can bribe to give you preferential treatment. There are no world courts where you can file lawsuits against nations that want to compete for trade on a level international playing field with you internationally. Other nations can give as good as they get. They may be smaller, but they can live without you.

In trying to punish the Chinese, I fear Trump may well give the World Markets into the hands of China and win for ourselves another recession only this time with massive inflation as well. I can see negotiating with nations who charge punitive tariffs on American goods. Perhaps a quid pro quo might help there. Same tariff they charge, we charge. It would be a diplomatic tactic designed to achieve a level playing field for American goods. Tariffs should never be used to prop up an industry and labor force that's already in trouble and doesn't have the capacity to replace the goods and resources that we are targeting and making even more expensive with those tariffs.

This is one of the reasons I was reluctant to vote for Trump in the first place. Firmness with our allies and adversaries I do believe in, but we must not adopt all of Trump's business practices. Theodore Roosevelt called the presidency a "bully pulpit". He did not mean the term "bully" in quite the way it is used today. I hope Trump will remember that and courageously speak the truth from the bully pulpit. That, he has shown, to be a strength of his. I hope he will not also become an international bully. That, he has shown, to be a weakness of his.

Firm foreign policy such as protects American business from nations that force us to play on unfair playing fields is not what I'm talking about. Expecting fair treatment of our merchants is only right. Arbitrarily punishing all our trading partners is a mistake. Many nations depend on American markets to maintain often massive trade imbalances in their favor with us. A careful application of trade policies on a nation by nation basis could create for us trading partners who are partners indeed. Any nation that can be encouraged to trade with us on an equal footing, should be our fast friend. Any nation which seeks to take advantage of us, we should treat as they treat us.

Please, Mr. Trump, learn something from the brilliant men and women with whom you surround yourself. We need a new form of diplomacy; one that does not appease our enemies and ignore our friends, but rewards our friends and treats our enemies as the treat us. Americans would applaud the withdrawal of foreign aid from nations which commit human rights violations. Americans would cheer should Trump manage to create a fair trade agreement with nations that place prohibitive tariffs on American goods and yet expect favorable trade practices toward themselves.

Please Mr. Trump, negotiate with each nation individually on trade and then explain Americans what you have done. Don't just tell us China's trade practices are unfair.  Tell us in what way they are unfair and what you propose to do about it. Reward our friends. Refuse to bow to our enemies' wishes. If you tell us what you have done, your people are less likely to make an agreement simply for the sake of making an agreement.

That would certainly get Mr. Trump back into my good graces. Not that he cares about that, but he ought to. I'm not the only person who might have voted for him in 2020 who feels that way.

By Tom King © 2018

1 comment:

Mark Milliorn said...

Personally, if China wants to send foreign aid to our manufacturers in the form of cheap metal, I see no reason not to accept it. It doesn't ake nearly as long to restart steel production as it does to restart manufacturing, so if one of the two industries has to suffer a temporary setback, I choose steel production.

I suspect, however, that Trump is just posturing before trade negotiations. He tends to make outrageous claims, then slowly ease up. As a negotiating ploy, this won't continue to work for very long.