Steel is used in industry; your typical consumer doesn’t go and shop for nuggets of steel. So it’s not just a matter of the tariff affecting the price of goods directly but also making many other goods more expensive domestically, and less competitive abroad.
This is also why a trade war with china would be beyond disastrous: it won’t only affect the 8% of goods the US exports to China, it will basically hamstring all of US exports: everywhere but the US could take advantage of cheap Chinese raw materials and components.
It’s a fuckdumb plan, but once again, it’s popular fuckdumb. The logic of “Selling is good, therefore buying is bad, therefore we’re getting screwed by China” actually makes sense to a lot of people.
Fighting wars on multiple fronts are generally a bad idea. If the US starts a trade war, or to a lesser degree threatens to, the stability premium goes to competing nations. It may in fact be better to trade with Cihina than the US because China doesn’t threaten to lurch into this sort of brouhaha.
China doesn’t want to throw the first punch, but if we swing first, they have all kinds of leverage that can make the United States pay for a trade war. It’s doubtful we would have much sympathy from other countries as well, and there would probably be frustration that our moron in chief seems unresponsive to arguments of basic economic sense.
Exactly. If Trump is just thinking of the PRC, he has ignored the fact that steel is produced in a number of other countries, including India. If he imposes a selective tariff against the PRC, this might be illegal under WTO rules (which I am not familiar with), and if he puts a tariff on all imported steel, he will probably create a steel shortage in the USA, or at the very leqst, cause prices to go up. is he really expecting US industry to pick up the slack at once? Metal processing requires a lot of expensive infrastructure that takes time to build.
He might be expecting to use it as leverage in renegotiating NAFTA, which is the only way a set of tariffs even remotely make sense. And even if that’s the case, he’s begging for trouble later on down the road when Canada and Mexico retaliate against American businesses, in addition to the sanctions imposed by countries outside the NAFTA zone.
“Ross pushed back at Todd’s obvious conclusion but with a quote that is likely to go down in infamy as an example of the strange times we’re living in. “I didn’t say that. I just said what he has said he has said. If he says something different, it’ll be something different. I have no reason to think he’s going to change,” he said.”
As the old joke goes, the difference between a trade war and a real war is that in a trade war, your gun is pointed at your own feet.
A country would actually be better off not doing anything at all. If in fact Trump goes ahead with this - and if I had to bet ten bucks on it I’d bet it won’t happen - raising a retaliatory tariff would simply hurt that country’s economy. The only theoretical benefit would be to punish the original tariff-raising country and create a sense in any would-be tariff-raises in the future that they can’t benefit from such behavior. That will not work here, though, because Trump is the President. If the President were Obama, or Bush, or Clinton, it may work, because they would consider the ramification of what they had done. Trump is weak, temperamental, and cannot learn new things, so not only would he not respond rationally, but the deterrent effect on other countries wouldn’t even matter because they know Trump isn’t a normal thing and that a response to Trump is not how one would respond to a normal head of state.
*What’s particularly worrisome is the breadth of Trump’s trade action. The US would likely be justified in levying anti-dumping measures against China. Chinese government subsidies have allowed its companies to sell steel for less than their true production costs. Russia, India, Taiwan, Turkey, Brazil, Vietnam, South Korea, and Japan also unfairly prop up their steelmakers, argues Robert Scott, economist at the Economic Policy Institute.
However, instead of pursuing targeted measures, Trump is pursuing across-the-board steel and aluminum tariffs*
So, yes, in a way China started the trade war by underselling and dumping steel. Thus, a* limited* tariff would make sense.
Not necessarily even that. Part of the theory of dumping is that the dumper is indirectly giving away money. The degree to which the dumpee should resist this, or take advantage of it, depends upon how much leverage the dumper might have later when they try to jack up the prices.
How quickly can domestic production be ramped up? Are there still significant suppliers elsewhere? What would be the consequences of a shortage? These sorts of questions.
Right now, importantly, the answer the second question is “Yes, many” so being purely pragmatic, it basically makes sense to allow domestic production to wither and enjoy the cheap steel. I will say it’s not a simple decision however.
The only time it makes any sense to have tariffs is when you are punishing a specific country and trying to get it to change some activity that you find unacceptable enough to bring sanctions, but not so much it is worth actual military action.
If a country is using slave labor, or has truly horrendous environmental standards, then levying a tariff on their goods to remove the economic advantage that they are achieving by externalizing their costs.
If they have other advantages, those that do not have such negative effects, then those work out in everyone’s favor. We get cheaper goods than we can produce ourselves, and they get a market for goods that they do not have the ability to consume all of themselves.
No, I am not. An economic sanction is imposed, at least partly, through tariffs.
You will note that, in the post that you replied to, I said it only made sense in situations where what they are doing is unacceptable enough to bring sanctions.
It’s complicated - in a sense, yes, China might “cheat” with subsidizing their steel industry, but the reality is more complicated than accusing China of selling steel on the cheap.
For one thing, China’s cheap steel was done in large part to subsidize steel production for the steel that China itself consumes. In the process of its rapid modernization, China has had an insatiable thirst for steel - one that American steel cannot possibly satisfy. It would be foolish for a country like China to buy steel from the United States. An argument can be made about how to treat the excess steel it makes, but America doesn’t import much steel from China, and it doesn’t import that much steel from other Asian countries either.
There might be a stronger case for going after other countries, but another issue is that American companies who have purchased steel over the years began shopping around for steel in the 1960s and 70s. So we’ve been part of our own problem in a sense. And when the demand for steel production collapsed, much of the infrastructure to produce that extra steel died out along with it. You can’t just snap your fingers and demand that we start up steel factories up and down the Ohio River. Those factories are not only closed, but probably disassembled.
It’s as if Trump’s economic policies come out of the year 1978, or more like 1968 to be more accurate.
Sure.
But if, as in your example, the target country is using abhorrent practices such as slavery then saying you are whacking them with a 10% tariff on steel & aluminium to benefit your domestic producers shows a certain lack of moral conviction to the greater cause.
My thunking is that to apply an economic sanction then prohibiting exports from or supply of key raw materials to the target as say applied with Iraq and DPRNK would be a more appropriate punitive action, but YMMV.