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Some Trade Links

Tweet [1]

Colin Grabow argues that Trump’s tariffs are a wanton act of economic self-destruction [2].  A slice:

On the steel front, domestic production is little changed [3] from that of 20 or 30 years ago, and the U.S. military requires a mere 3 percent of this to meet its needs. Of the top 10 foreign suppliers [4] of steel, meanwhile, China does not feature and six are countries with whom the United States has mutual defense arrangements [5].

Regarding aluminum, the Commerce Department admits [6] that “defense-related products” require only 10 percent of U.S. domestic production. The No. 1 source of imports in 2016, meanwhile, was NATO-ally Canada, which accounted for more aluminum imports than the next 11 biggest sources combined.

Little wonder that Secretary of Defense James Mattis [7] is said to be among [8] those in the administration opposed to these tariffs and recently authored a memo [9] expressing concern about the impact of their broad use on key allies.

Mark Perry offers a history lesson on trade [10].

The editors at the Wall Street Journal are correct that Trump has no comparative advantage at understanding trade [11].  A slice:

Some of our more sanguine friends see the tariffs and tweets as Mr. Trump’s familiar negotiating bluster, but we wouldn’t be too sure. Protectionism may be his only real policy conviction, and his tweet confirms he doesn’t know what he’s talking about. This is what the equity markets are saying as they discount trade-dependent companies.

GMU Econ alum Roy Cordato rightly laments the zombie-like nature of the pack of economic errors that constitute protectionism [12].

Jonah Goldberg blasts economic nationalism [13].

Tyler Cowen explains that the existence of a welfare state does not weaken the case for free trade [14].

Simon Lester argues – correctly – that protectionism scarcityism fills rather than drains the swamp [15].

David Henderson helpfully picks apart a recent, and especially absurd, Trump tweet on trade [16].

Pierre Lemieux parses the presentation of trade in the latest annual report of the Council of Economic advisors [17].  A slice:

More generally, the ideal of a “level playing field,” often invoked in the CEA’s report, not only makes the current administration ideologically similar to the previous one, but it also negates the reason for the existence of comparative advantage and the benefits of trade [18]–that is, the fact that relative costs differ between countries. This is quite clear and uncontroversial in the case of labor: the poor country’s relatively inexpensive labor allows them to surmount their low productivity and still be able to compete by offering better prices to American consumers. If everybody had the same relative costs, nobody would trade with anybody.

Matt Welch reveals how Trump’s trade policy is lousy economics and worrisome politics [19].  A slice:

It is not new for a modern U.S. president to impose protectionist tariffs. Barack Obama did it with Chinese tires, costing American consumers an estimated $1.1 billion in return for preserving 1,200 jobs in the domestic tire industry. And as Steve Chapman has noted in these pages [20], “When George W. Bush imposed duties on foreign steel, experts concluded, he destroyed some 200,000 jobs in other sectors—exceeding the total employment of the American steel industry.”

Trump’s moves, coming on the heels of his recent tariffs on Chinese solar panels [21] and imported washing machines [22], threaten to be far more ruinous, “the most significant set of U.S. import restrictions in nearly half a century,” Edward Alden concluded [23] over at the Council on Foreign Relations. That’s in part due to the centrality of protectionism to both Trump’s presidential campaign and his lifelong economic worldview [24]. He really, truly believes that “trade wars are good, and easy to win,” and that his commitment to this belief is part of why he won the presidency. That’s a potent combination.

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