Of course they’ve been in the Canadian press. If you’re a business owner and unaware, then you’re not paying attention. It featured in CETA discussions, the Conservative leadership race and naturally this current fuckaround by Trump.
And lets not be silly here. Agriculture, especially when framed as simple hard working <insert mythological national image here> people trying to survive the onslaught from <insert diabolical industrial/foreign farmer here> is the reason the US and EU and Canada and other countries have billions in subsidies. There’s a reason the Doha round of WTO negotiations is paused/taking so long - Agriculture is a key aspect being negotiated.
Another part of the problem is that Trump is just an inherently petty person, and gripes about small amounts where someone else might be making a profit, while ignoring the huge numbers that the US is taking in trade.
Take the Canadian dairy industry, for example, as discussed by others above. The entire industry is worth about $10.56 billion.
NAFTA has just about quadrupled total trade between Canada, the US and Mexico, and yet, Trump is talking about scrapping it, with his only discernible reason being Canada’s support for its dairy industry, which is maybe 1% of the value of the overall trade resulting from NAFTA.
Well, that’s probably not the reason. He made no mention of dairy quotas in this brouhaha until after his “national security” meme failed to take hold.
Indeed, it is difficult to ascertain precisely what he is doing at all, or why. The only really solid explanation is that he is trying to screw up American relations with its allies just because he is being told to by his Russian debtholders.
This wasn’t just a meme, though, it was the whole legal justification for the tariffs. If the reason isn’t “national security”, but retaliatory against Canadian dairy tariffs, then he has no legal basis for imposing these tariffs; that would be Congress’ job.
It sounds like he just gave up the ruse here, much as his tweets did regarding the “Muslim ban”.
I think you may be misunderstanding how dairy supply management works (or I might be misunderstanding your post, in which case, sorry.) We don’t pay subsidies to dairy farmers. Dairy farmers have to spend millions to purchase their quota - their license to produce milk, as it were. Those licenses are doled out so as to artificially restrict supply so that the equilibrium price of milk will be high enough that dairy farmers will turn a reliable profit. The “subsidy” is in the from of consumers paying more for milk and butter at the store, not in government payments to farmers.
Because this system relying on artificially constraining supply to increase the market equilibrium price of milk would simply destroy the industry if foreign milk were allowed to enter the country without having to purchase quota, we have the ridiculously high tariffs to prevent that from happening.
It’s true that dairy farmers will generally retire on the funds from the sale of their quota, but they spent similarly to obtain that quota to begin with. This is (part of) why it would be horrible to completely scrap the system. Any dairy farmer who has just started out is mortgaged to the hilt to afford the quota for his dairy. It made sense to take on that debt because having the quota is a license to squeeze money out of the teats of hundreds of Holsteins. If you just scrap the quota system, he’s still got that debt but his expected profits are going to be similar to other agricultural fields - enough to scrape by if you don’t have too much debt, and not much more. But he has way too much debt, because he spent millions on now-worthless dairy quota. Any dismantling of the system has to either provide some sort of compensation, or phase in over a long period of time, or both, or else a huge percentage of dairy farms will go bankrupt in very short order.
Not in this particular brouhaha, but he has been complaining about our dairy system for most of his term. This and softwood lumber were his main bugaboos WRT NAFTA prior to the whole National Security Steel* tantrum.
*Oh, damn, wouldn’t that be a good name for a new steel company? They wouldn’t even realize it was coming from Canada!
Pretty sure his dislike of NAFTA has something to do with “Meskins” and some kind of misguided idea of bringing back maquiladora jobs to the US, thereby driving prices through the roof on those things, putting Mexican workers out of jobs, and helping a very small number of US workers.
And probably also providing a powerful driver for further automation and roboticization of US factories in the bargain, because while it might be cheapest to hire Mexicans to do rote assembly work, it’s not economically feasible to hire Americans to do it, with the unions, minimum wages and all that. But robots don’t have to deal with any of that stuff…
A football match where we draw up the rules and choose the officials knowing that
1 - this isn’t A football match. It’s the first in a series 500 football matches that we’re going to have to play (you can’t quit the game).
2 - we’re not just playing against one team. We’re playing against several different teams with different strengths and weaknesses and the rules we make for this match are going to be watched closely by the other teams and influence the 500 games we have to play with their teams (we can’t quit those games, either)
3 - we’re not just playing football with these guys. We’re also playing basketball and hockey and (for “reasons”) handball and cricket and the rules we make for this match have an effect on the rules of all of those games, too. (must play these, too)
4 - all of us pump various players of the various sports different kinds of steroids (it’s allowed!) and we all know it. So we balance that into the rules as well.
In many ways it seems to me like Trump’s understanding of commerce is akin to that of the mercantilistsof the 16-18th century - he views trade deficits as grave crimes and international trade in general as a zero sum game that must be won, which means other nations must perforce lose. Of course, since it’s not in anyone’s interest to sign a losing deal there’s only two ways to make a “winning” trade : by force, or by scam.
But there’s a reason those guys got phased out. Mercantilism leads to protectionism which hurts everyone and leads to trade wars ; then war wars (in fact, the ur-mercantilist position is that economy is war pursued by other means). There’s a reason those centuries were so bloody. Then again y’all Merkins got a country out of it, so there’s that :).
Meanwhile free trade typically profits the majority because it allows every trade partner involved to specialize their productions according to their specific resources and know how instead of having to be inefficiently self-sufficient at everyting ; in turn every partner benefits from being given access to the best products from all over as opposed to sub-par national ones.
Free trade can appear “unfair”, in that one’s national products can be outshone by foreign ones that are cheaper, better, or both ; in time leading to that product’s industry suffering or even dying out. That’s a feature, not a bug : it just means your country’s not really good at that product ; or cannot produce its components efficiently enough. So find another niche you’re better than everyone else at.
Instead of trying to make coal happen again, you knob. It’s not happening again !
One day when The Nephew was three years old we went to the supermarket together. As we were leaving, he giggled and pointed out that the cashier and I had thanked each other. I said yes, we had. He asked, but why?
I’ve thanked her because, by selling us this food, she and her coworkers have made it possible for us and our family to eat today. And she’s thanked us because, by buying this food from them, you and I and every other customer make it possible for them and their families to eat tomorrow.
A fair trade means everybody gets to eat. Trump thinks he hasn’t won unless he sees the other party begging for food in a corner.
To be fair, Trump has said many, many times he doesn’t blame foreign countries for unfair deals, but previous US politicians. Then he often segue’s to sounding like he is blaming the foreign countries, and sometimes their leaders in a personal way. Just noting how often Trump has been quoted saying the problem is previous ‘weak and stupid’ US leaders’ fault. So just pointing out that previous agreements were signed by all with no coercion does not by itself demolish Trump’s argument.
If there was almost nearly free trade (not even purely 100%, but close) and trade agreements were basically just saying that: you can’t charge tariffs, your policies to support industries have to be entirely neutral to the home country of the company etc. it would be pretty simple to say there was no ‘unfairness’. As it is even agreements explicitly named ‘free trade’ are an extremely complex assortment of all the carve outs and exceptions by which the parties are allowed to continue protectionism on some scale. And in many major cases, US v EU or US v Japan there’s no pretense of a ‘free trade agreement’ governing the relationship. There’s GATT going way back and the WTO, there are rules, but less of a pretense it’s entirely free trade than NAFTA say.
Hence there are many cases where IMO if one tries as mightily as possible to put partisan politics (and feelings about Trump) aside (simply impossible for some, not easy for anyone) you have to say there might be a point sometimes in saying agreements are unfair to the US (which again is not vitiated by simply saying ‘well the US signed them, didn’t it?’). For example the EU has a general 10% tariff on US cars, the US 2.5% on EU. If a little kid asked how that’s fair, there isn’t really a simple explanation. You could somewhat change the subject and talk about (or claim at least) how the car makers wouldn’t make a lot more cars in the US for export to EU if both tariffs were zero, but that’s what it would be, somewhat changing the subject. And there are lots of examples like that, although many of them would be the other way around (ask Canadian lumber producers for example).
Also, putting aside often literally childishly simple Trumpian talking points, in this case the ‘weakness and stupidity’ of previous US leaders, his point there IMO doesn’t have zero merit. To some degree the US post WWII trade policy was in fact based on favoring trade partners in pursuit of the larger goal of a more prosperous and stable world economic system with the US as its de facto leader. Not 100% ridiculous and paranoid IMO to say that was sometimes at least semi-consciously done at the expense of particular US industries, therefore sometimes regions and or groups in US society. It was a trade off. The nub of a valid argument among anti-trade populists* is to say that trade off has to be shifted, in terms of the US goals in trade negotiation.
*who prior to Trump were nearly all Democrats when it came to elected officials, most anti-trade elected officials still are Democrats: Trump is a just a very big exception to that rule.
I think the talk about dairy is the closest that trump’s come to having a point.
To answer the OP; trump doesn’t understand the absolute basics of macroeconomics and trade, so much of his upset is based on simple misconceptions. For example, he thinks a trade deficit is inherently a bad thing; possibly confusing it with the government (budget) deficit.
And here’s the rub: it’s a popular kind of misconception. He has good support when he spouts this nonsense because many ordinary americans also see trade deficits as inherently a bad thing (for example).
That’s why the politics shows should do some educatin’ : not just bring two guys on to argue for and against, but cut away to a 1-minute thing of “This is what a trade deficit is”.
Oh, on dairy yes you can make an argument that Canada should drop that tariff. Generally most industrialized nations have gradually lowered agricultural subsidies and tariffs. Overall though, it’s small fry, and not reason enough for the US to consider themselves “abused”.
Exactly. It’s not just Canada that is protecting it’s dairy industry by propping up prices. The US subsidizes it’s dairy industry to keep costs down. If Canada dropped their tariffs on dairy, the US could then sell artificially lower-priced goods. Here is a good article on the subject:
Thanks Gorsnak. I should have said I was against paying the tariffs, not the subsidies. No wonder a small wedge of Italian Parmesan cheese costs $27.
I hear what you are saying about it being costly to quickly stop the dairy quota system (not that that is happening) and that it would cause farmers to go bankrupt. So phase it out over time. I know that generally farming is not very profitable, and many people see it as a lifestyle, rather than a chosen occupation. We have to have food, and may have to protect our domestic supply, so of course it is complicated.
I would also say I have spoken to a lot of farmers over the years, and increasing their subsidies never fails to come up in the discussion. In most other industries the topic would not come up, because there are no subsidies.
The situation seems similar to Taxi licenses that you had to purchase to drive a cab. The system put a limit on how many cabs were allowed and kept the price of a ride up. Naturally the licenses were very expensive, could be sold, and usually, the people driving the cabs worked for the person with the license. Then Uber came along which was not good for the cab industry but was arguably good for consumers.
This would be true if it weren’t for the fact that Trump blames previous leaders (and Obama specifically) for everything regardless of whether the leader in question was even remotely involved in whatever he is talking about, and he never (and I do mean never) appears to have more than a very superficial rationale for his statements. So while you have a good point - indeed, many good points - on a purely theoretical level, they fall apart at the slightest application of current practice. Trump’s assessment of trade agreements owes nothing to his understanding of the realities of them.
And the fact that trade policies, particularly those where political and economic goals are intermingled, are complicated is not a justification in itself for calling them “bad”. If making trade concessions in return for receiving political ones achieves a broader policy goal, that’s a success. If the priorities later change then certainly renegotiation may become something to work toward but that doesn’t come with the implication that the previous agreements were flawed or the result of incompetence. The complex nature of such deals also means that selecting one element of them for comparison without context misrepresents the totality of the deal - if the US are getting less favorable terms on auto exports than the EU, for example, this may well be balanced out by a similar mismatch in the other direction on a different product.
Much of the problem is the problem with protectionism in general - the benefits are focused and immediate and the costs are hidden and widely spread.
If I put together a deal whereby I take a penny from a million people and give the results to a hundred people, I have a hundred people who are deeply invested in voting for me and a million who don’t particularly care.
I think this basically amounts to a criticism of Trump, whereas the question was ‘are US trade relationships with its allies unfair to the US’. Again let’s labor mightily to put the specifics of Trump aside for a moment. All ‘practical application’ is not a matter of Trump either.
The word ‘unfair’ is put to very heavy use in (small ‘d’) democratic politics generally. So it might be reasonable in a political vacuum to pick at the use of the word ‘unfair’ wrt trade if the reality was more like ‘parts of the US body politic disagree with the relative weightings of favorable* and unfavorable implied by past US admin’s positions on trade deals’. But IMO the word isn’t any less an exaggeration in certain applications to the differing economic outcomes of different people and groups in society generally. A lot of times what’s called ‘unfair’ in that context is also self indulgent or (sometimes self-)infantalizing as I see it. But very common.
It’s a subjective judgment what’s ‘fair’ about public policy. Also the motives of past (US) leaders in reaching trade agreements seen as having ‘unfair’ effects. And again even back to Trump himself, he really has made a strong point of blaming past US leaders admins for the negative side effects of free trade on many Americans, which are not imaginary. Are opponents of Trump really going to be charitable to Trump in assessing negative effects of what he does, and be very careful to make clear they simply disagree on the various weights to give plus or minuses, or policies, or are they going to accuse him of incompetence and bad motives? The question answers itself I think.
The issue here as I see is whether there is an valid framework in which to see the trade agreements entered in by the US as unfavorable. I think there is, which isn’t to say I generally agree with that necessarily. And it’s not all about what Trump understands in a thought-through intellectual way. In various cases IMO he senses valid (though subjective) criticisms various people have of how things have been going in the US and this is one case. But the unpopularity of free trade with large segments of the US population is not going to disappear when Trump does (separate from really bad economic effects of ‘solutions’ he adopts, but it’s not clear his policies will ever get to that, still a lot of it is talk and the real measures pretty small).
*in which category before I mentioned implicit US leadership of a strong integrated world economic system, but it’s not necessarily quite that high minded in all cases. The populist riffs about globalist elites who only care about the welfare of other global elites and friendly domestic political constituents to the elites are not 100% bogus either IMO. I’m personally a fairly extreme free trader by practical standards, but I think it unfair and unwise to dismiss that argument as ‘just another cover for racist xeonophobia’ etc. It’s really not that simple IMO.
