90 Miles From Tyranny : On Trade, Trump Is Acting in the Best Interest of the USA

Sunday, March 11, 2018

On Trade, Trump Is Acting in the Best Interest of the USA

On Thursday, President Trump, surrounded by steel workers in the Oval Office, signed a memo imposing tariffs on steel (25%) and aluminum (10%) that are imported to the United States.
He carved out two exceptions to the tariffs:
  1. Canada and Mexico would be temporarily exempted from the tariffs, pending the outcome of the ongoing renegotiation of NAFTA.  The U.S. will likely insist that products imported tariff-free into the U.S. use steel produced within NAFTA.
  2. He directed USTR (U.S. trade representative) Robert C. Lighthizer to negotiate with those military allies that want to be excluded from the tariffs, but such exclusions would require trade reciprocity.  The Trump administration is expert at using economic leverage to produce negotiated outcomes that benefit the United States.
This announcement marks a victory for the trade deficit hawks in President Trump's inner circle of economic advisers, including Wilbur Ross, Trump's secretary of commerce, and University of California at Irvine economics professor Peter Navarro, who was recently elevated to the ranks of the president's top-level advisers.
The economic recovery being produced by President Trump's tax cuts and deregulation is at stake.  During the fourth quarter of 2017, real GDP grew at a 2.5% clip, which is good compared to growth rates during the Obama years, but it could have been much better.  Here are the contributions to growth during the fourth quarter:

Contributor to GDP

Resulting Growth
Consumption
2.6%
Fixed Investment
1.3%
Change in Inventories
-0.7%
Government Purchases
0.5%
Net Exports
-1.3%
Total
2.5%
The reduction of inventories by 0.7% is not of concern.  It simply means that business inventories declined by 0.7% of our GDP, probably because businesses were selling more than they had anticipated.  The concerning factor is the worsening net exports (i.e., trade balance), which reduced GDP growth by 1.3% of our GDP.  If not for the worsening trade balance, GDP growth would have been an outstanding 3.8% during the fourth quarter. 
Critics point out that the tariffs will raise the price of products fabricated with steel or aluminum.  But the existing low prices of iron and steel and aluminum are at the expense of American producers in those industries.  American consumers should not be favored at the expense of American wage-earners.
The reality is that the same countries that produced the most steel in the world produced the largest trade deficits in the United States (deficits shown as negative trade balances):

Country
Steel Production millions of tonnes
U.S. Trade Balance millions of dollars
China
808.4
-316,273
Japan
104.8
-58,286
India
95.6
-19,455
United States
78.5
-----
Russia
70.8
*-10,016
South Korea
68.6
-18,977
Germany
42.1
-52,886
Turkey
33.2
*330
Brazil
31.3
6,322
Ukraine
24.2
*809
Italy
23.4
-27,061
Taiwan
21.8
-14,739
Mexico
18.8
-59,286
Iran
17.9
*75
France
14.4
-12,454
Spain
13.6
*-4,646
Canada
12.6
-13,765
Total
1629.6
-568,400
*goods only, does not include services


The biggest steel-producing country in the world in 2016 was China, which accounted for about half of the world's steel production and more than half of the U.S. trade deficit. Imposing tariffs on such products is a way to balance trade.

What of fears of a trade war? Most of the above countries are already participating in a trade war with the United States, except that the United States has not been fighting back. The governments of these countries have been manipulating the terms of trade to enhance their exports to the United States and keep out U.S. products. As a result, we get debt, and they get...


Read more: HERE 

1 comment:

  1. Truth is, because of all the government jiggery on many numbers, as well as the real numbers have yet to be created, it will take time to know if Trump's manipulations are good. That would be another thing I'd like to see him fix, make the government honest, transparent, and accountable again. Actually, if MAGA is complete, than MGHT&AA would do, perhaps with some work to it.

    For my part I am willing to give this president as much room as he is willing to take. I don't know if the economy can be saved. I am positive if it can be saved, he can and will go down trying. And... you know what I think of politicians, if like Reagan, he isn't really a politician. They were both worse! (If the best parts of the worst areas, albeit. :p ) Yeah, IF there is a way, he will find it.

    Just understand what he is working with is impossible and against is most of the world's elite AND turd worldery, including 2/3 of US political and big business classes. All he has is lower to upper middle class and small business... the peanut gallery as most Republicans (save Reagan) would tout it. Pray for him. Even a heathen can be shown the light.

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