Consider two trade regimes. In Regime #1, the US charges 0% tariffs on German steel and Germany charges 0% tariffs on US steel. In Regime #2, the US is able to charge 10% tariffs on German steel while Germany still charges 0% tariffs on US steel. I would bet quite a bit of money that Trump would say that Regime #2 is a better deal for the US, while free traders like myself and most economists would say that Regime #1 is not only better for the world as a whole, it is better for the US. Zero tariffs allows the division of labor and comparative advantage to all work their magic to make sure capital and productive effort in this country are employed for the highest return. I believe from reading the comment section of this blog that there are many many people who call themselves a free trader but who would say that Regime #2 is a better deal for the US.I'm not sure what Our President has in mind when he says "renegotiate bad deals," the best outcome might be no tariffs, or if there are tariffs, they're of equal value among trading countries.
The fallout Stateside, as U.S. companies being affected by retaliatory tariffs respond, is giving columnist S. E. Cupp an opportunity to go all H. L. Mencken about elections giving people what they deserve to get, good and hard.
Bill Maher faced some searing scrutiny over his suggestion that only economic pain would save us from President Trump."Let them eat pain, she concludes." I wouldn't wish that on, oh, the United Auto Workers of the 1980s if somehow it was the industrial policy crowd calling for the tariffs. Harley, let the record show, benefitted from tariffs when they almost failed in the Eighties.
“I feel like the bottom has to fall out at some point. And by the way, I’m hoping for it. I think one (way) you get rid of Trump is a crashing economy.” He added, “So please, bring on the recession. Sorry if that hurts people, but it’s either root for a recession or you lose your democracy.”
Despite the fact that Maher would likely be spared the brunt of that pain, he doubled down last week, saying, “If a recession is what it takes to make Donald Trump not so cute anymore, then bring it on.”
I know him personally. Maher is smart and generous — but this was dumb and needlessly cruel. What he could have suggested, though, was that Trump voters should get what they’ve been asking for — a trade war — and all the economic pain that comes with it. And it looks like they might.
In a huge rebuke of Trump’s bone-headed tariffs, iconic American motorcycle manufacturer Harley-Davidson is picking up and moving the production of its European motorcycles overseas.
Our President, meanwhile, wants to continue with the persuasion, or show business, or credible commitment to his grim strategy.
President Donald Trump took to the stage in South Carolina to assure everyone that his trade policies were not to blame.And Power Line's Steven Hayward finds a column by Irwin M. Stelzer, the same economist who edited a series of Selected Antitrust Cases handbooks, including the one I used for years, raises the possibility that the leverage just might work. "If Trump is a cool enough player to ignore whining by some American firms, he has the chips with which to win." Tomorrow, Mr Trump will be in Wisconsin to help break ground for the Foxconn factory. We'll see if he hectors Harley again, or if he acknowledges the effects the tariffs are having in cranberry and ginseng country.
"It's all working out great," Trump told thousands of his supporters at a campaign rally for Gov. Henry McMaster (R).
That assessment is not widely shared. If the signals from the stock market were not strong enough, more than 200 state and local Chamber of Commerce chapters sent a letter to senators on Tuesday condemning the White House's anti-trade policies. Meanwhile, Republican lawmakers in Congress are signaling that they might be ready to limit Trump's ability to unilaterally impose new trade barriers.
None of that, though, seems to be giving Trump pause. On Monday, the president took the opportunity to threaten a further escalation of his trade dispute with the European Union. In response to the Trump administration's decision to hit steel and aluminum exports from the E.U. with tariffs, the European government slapped a number of iconic American products like motorcycles and whiskey with retaliatory tariffs. The consequences of these tit-for-tat tariffs are becoming obvious, with Harley-Davidson announcing on Monday that it would shift some manufacturing jobs to Europe.
On Monday, Trump suggested once again that his administration could slap tariffs on cars and trucks imported from Europe. The Commerce Department is already engaged in an investigation of such a policy.
"They send the Mercedes, they send BMWs, they send everything. We tax them practically nothing," Trump said. "I told them, 'here's what we're gonna do. We're gonna charge a tariff on steel until such time as you straighten out your act.'"
Someone should probably have told Trump that BMW's largest manufacturing facility in the world is right there in South Carolina. The automaker's Spartanburg plant employs more than 9,000 people and produces more than 40,000 vehicles every year.
Fact-checking aside, Trump's determination to press forward with an unnecessary, counter-productive trade dispute is now facing greater headwinds from the markets, special interests, and from Republican members of Congress.
If Congress needs another reason to act, Trump gave it to them last night. The president's promise to "charge a tariff on steel until such time as you straighten out your act" belies the White House's claim that steel and aluminum tariffs are a matter of national security. This isn't just semantics. Under the terms of the Trade Expansion Act of 1962—the federal law that Trump has invoked to impose steel and aluminum tariffs—the president has the authority to impose tariffs without congressional approval, but only for national security purposes.
Trump's comments on Monday night reveal (again) that the president clearly sees the tariffs not as a national security matter, but as a means of gaining leverage over America's trading partners.
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