Retaliatory tariffs

Politics & Elections
81

Agreed.

According to the AP link in my last post, Colombia accepted 124 deportation flights last year. And there were no flight safety issues. Loosening of the criteria for deportation means deportees are now less likely to be criminals. And if some of the additional deportees are criminals, we are now talking about a single teenaged shoplifting conviction 20 years ago, not armed robbery.

That’s the reality. But Trump says they are violent criminals. So transporting the way it was done last year is an admission that they didn’t empty prisons as Donald claims. If this cannot be easily resolved, that may be why.

82

Why is Trump threatening everyone with a trade war? Because he wants a win. Winning for Trump means capitulation or perceived capitulation by the counter-party. Of course capitulation today means more bullying tomorrow.

Trump thinks conquest will make him popular. He is correct for a certain subset of voters, I’m not sure how broad.

Via Kevin Drum, the President of Colombia tweeted a response to Trump’s bullying:

Here’s the google translation:

Trump, I don’t really like traveling to the US, it’s a bit boring, but I confess that there are some commendable things. I like going to the black neighborhoods of Washington, where I saw an entire fight in the US capital between blacks and Latinos with barricades, which seemed like nonsense to me, because they should join together.

I confess that I like Walt Whitman and Paul Simon and Noam Chomsky and Miller

I confess that Sacco and Vanzetti, who have my blood, are memorable in the history of the USA and I follow them. They were murdered by labor leaders with the electric chair, the fascists who are within the USA as well as within my country

I don’t like your oil, Trump, you’re going to wipe out the human species because of greed. Maybe one day, over a glass of whiskey, which I accept, despite my gastritis, we can talk frankly about this, but it’s difficult because you consider me an inferior race and I’m not, nor is any Colombian.

So if you know someone who is stubborn, that’s me, period. You can try to carry out a coup with your economic strength and your arrogance, like they did with Allende. But I will die in my law, I resisted torture and I resist you. I don’t want slavers next to Colombia, we already had many and we freed ourselves. What I want next to Colombia are lovers of freedom. If you can’t accompany me, I’ll go elsewhere. Colombia is the heart of the world and you didn’t understand that, this is the land of the yellow butterflies, of the beauty of Remedios, but also of the colonels Aureliano Buendía, of which I am one, perhaps the last.

You will kill me, but I will survive in my people, which is before yours, in the Americas. We are peoples of the winds, the mountains, the Caribbean Sea and of freedom.

You don’t like our freedom, okay. I don’t shake hands with white slavers. I shake hands with the white libertarian heirs of Lincoln and the black and white farm boys of the USA, at whose graves I cried and prayed on a battlefield, which I reached after walking the mountains of Italian Tuscany and after being saved from Covid.
They are the United States and before them I kneel, before no one else.

Overthrow me, President, and the Americas and humanity will respond.

Colombia now stops looking north, looks at the world, our blood comes from the blood of the Caliphate of Cordoba, the civilization of that time, of the Roman Latins of the Mediterranean, the civilization of that time, who founded the republic, democracy in Athens; our blood has the black resistance fighters turned into slaves by you. In Colombia is the first free territory of America, before Washington, of all America, there I take refuge in its African songs.

My land is made up of goldsmiths who worked in the time of the Egyptian pharaohs and of the first artists in the world in Chiribiquete.

You will never rule us. The warrior who rode our lands, shouting freedom, who is called Bolívar, opposes us.

Our people are somewhat fearful, somewhat timid, they are naive and kind, loving, but they will know how to win the Panama Canal, which you took from us with violence. Two hundred heroes from all of Latin America lie in Bocas del Toro, today’s Panama, formerly Colombia, which you murdered.

I raise a flag and as Gaitán said, even if it remains alone, it will continue to be raised with the Latin American dignity that is the dignity of America, which your great-grandfather did not know, and mine did, Mr. President, an immigrant in the USA,
Your blockade does not scare me, because Colombia, besides being the country of beauty, is the heart of the world. I know that you love beauty as I do, do not disrespect it and you will give it your sweetness.

FROM TODAY ON, COLOMBIA IS OPEN TO THE ENTIRE WORLD, WITH OPEN ARMS, WE ARE BUILDERS OF FREEDOM, LIFE AND HUMANITY.

I am informed that you impose a 50% tariff on the fruits of our human labor to enter the United States, and I do the same.

Let our people plant corn that was discovered in Colombia and feed the world

Bravo to the Colombian people for electing a President willing to stand up the leading enemy of the US Constitution.

83

It’s one thing if you ask first. It’s another when you just show up. I am sure Colombia will quietly back down - you make your point but then realpolitik kicks in. But if the tariffs persist, maybe not. And even if they do back down, that is not the same as forgetting. In a week Trump will forget. In a decade, Colombians will remember.

84

I can see Steven Miller standing over Trump’s shoulder giving him a Reader’s Digest breakdown because of course it’s longer than a sentence.
“I don’t lke your oil, Trump.”
“You will never rule us.”
“I am informed that you impose a 50% tariff on the fruits of our human labor to enter the United States, and I do the same.”

ok boom got it

85

I linked to almost all of this before. What Drum leaves out is the pitifully tiny remedy President Petro is asking for.

Petro’s style is Trumpy anti-Trumpism, but his policy is cautious.

Empty words.

Colombia’s biggest export to the U.S. is crude oil, and biggest import from the U.S. is refined oil. If tarriffs are big enough, that will force Colombia to find new sources and buyers – with, due to transportation costs, deals that are worse for everyday Colombians.

Note to progressives who think it only the Democrats talked like Petro, all would be well: Most of the time, an equally Trumpy right-winger wins the Colombian presidency.

86

Yes, the dispute has nothing to do with immigration, but whether Colombian citizens will be returned in civilian or military aircraft, the latter reportedly involving shackles. Kevin Drum:

There are two critically important points here. First, Colombia turned away the flights solely because they were military. The US normally uses civilian jets operated by ICE for deportation flights and Colombia has made it clear that those are fine. Trump is deliberately provoking a showdown for no reason.

If the Colombian President was smart he’d invite CNN to interview a hand selected subset of these Colombian returnees. In English. Trump uses military planes to make them look scarier, all to excite conservatives who are easily scared. This nonsense needs to be put to rest.

ETA: Apparently the Trump tariffs have been called off. Migrants will be shipped in military aircraft. Colombian Foreign Affairs Minister Luis Gilberto Murillo: “We will continue receiving the Colombians who return as deportees, guaranteeing them conditions of dignity.”

ETA2: Substantiation of shackle claim from WAPO:

video of shackled deportees being marched onto military aircraft was widely televised and posted on social media.

and

Regarding claims that deportees have been mistreated, former U.S. officials speaking on the condition of anonymity said that shackles have been traditionally used around the world to prevent deportees from kicking, biting or attacking accompanying security officials.

Also:

In Brazil, 88 Brazilian nationals were subject to what the country said was undignified treatment on a repatriation flight. The passengers were handcuffed at their hands and feet and the air-conditioning system was broken, among other problems, according to a statement from the Foreign Ministry posted Saturday.

87

I see I was unfair to Mr. Drum on that.

88

So taking Trump and US/Canada out of it to try and get a factual answer…

Country A decides to levy tariffs on Country B. So they charge taxes on Country B’s widgets. So now the price of Country B’s widgets are artificially inflated in Country A compared to domestic widgets.

So Country B will export less widgets to Country A. Yet Country A’s doodads are still untaxed in Country B so competing with domestic doodads on level ground. So politically it is hard to let that continue (regardless of the relative sizes of the widget and doodad markets in County A or B)

Practically you are trying to convince the other country to remove their tarriffs, by hurting your economy. So it’s a bit of a “dollar auction” game theory situation.

89

Here’s a simpler answer.

  1. If country Z had crushed its local interest groups, then it would have already lowered tariffs to a very small percentage and no trade negotiations would be necessary. But no country is like that. All countries perceive trade negotiations as occurring between countries, when they are really within-country maneuvers done for local political reasons. (Like the rest of foreign policy.)
  2. If somebody hits you in the face you … turn the other cheek. Or you should. Then wind up and deliver them a haymaker. Because otherwise the bullying will continue. All countries are susceptible to having the rug pulled out from them because most trade is business-to-business, and firms can’t instantaneously adjust their industrial and business processes. You don’t want to counter-attack, but sometimes a diplomatic knuckle sandwich is necessary. Tough love, if you will. It sets the right tone.

(Haymakers, incidentally, are terrible punches: you don’t see them in the ring. But they are showy and that’s what’s required here. This is professional wrestling, not hard power combat. Yet.)

90

One more thing to bear in mind:

Not a single country that I am aware of has ever industrialized along purely free trade principles. Don’t get me wrong: across the board high tariff policies generally fail. But export-oriented growth, backed by an artificially weakened currency, has a decent track record. For a book length treatment, read Joe Studwell’s How Asia Works. Or dive into this post by Noah Smith. It’s long but you can always stop reading when you want to. I did. Note that while export oriented strategies can vary a lot, they all have some aspect of industrial policy as opposed to, “Just get the prices right and get out of the way.”

91

Not to mention cocaine… that might be a bit of price increase that, though not specified in the tariffs, could affect the Trump family.

92

This is a good idea.

President Petro isn’t going to want to have them say how bad life is back in Colombia, nor should he. His message is that any country would be lucky to have such hard-working good people. And he should pick people who were doing work American citizens won’t do, like milking cows at 5 AM. What would be the kicker is if the CNN report also showed rising U.S. milk prices. But I’m not sure how soon that will happen. It could take years.

P.S. What will probably happen faster than inflation is Americans losing their jobs because of ties to migrant labor. Think of U.S. citizens who do office work in large dairy operations, or owner-operators of lunch-oriented restaurants near the farms. Interview them.

93

It’s not so much “by” hurting your economy. Why would the other country care about that? The hurting your own economy is a side effect of you trying to hurt the other country’s economy. You’re gambling that they will hurt more, or the hurt will affect them more, so that they reverse their original tariffs, so you can go back to the original trade position.

See, the thing is, there are some legitimate reasons for things like tariffs, and other means of supporting your local economy vs. the import economy. They key is, you have to admit to yourself, and everyone else, that there are costs associated with these actions, but that you think the costs are worth the benefits you receive elsewhere.

The most common reason is to maintain a local capacity to produce critical materials for when there’s a war. Steel, aluminum, oil, and gas are usually the big ones there. You acknowledge that this will raise your domestic prices, and that other countries may impose their own tariffs, but you accept that as the cost of having a secure supply when a war breaks out.

Trump’s problem is that he doesn’t admit (or even understand) the costs associated with his tariffs. He thinks it’s all gain, with no loss, being paid by someone else. He also has the bully mindset that he thinks it’s wrong for others to apply their own tariffs on him. And he’s not focussing the tariffs on a few key products, for national security reasons. He’s hitting the entire economy, simply because people are disagreeing with him, and he wants to bend them to his will. That’s what makes this insane.

94

40% of Colombian exports to the USA are oil and oil products. Good luck imposing tariffs on those.
Then flowers, it seems, and coffee.
And cocaine and illegal immigrants, yeah.

Lula, Brazil’s president, has also complained about the deportation flights to Brazil. He has kindly asked that the men and women being deported not be handcuffed and tied to their seats.

Next some bishop will ask for mercy and humanity, go figure. As if the cruelty was not the point.

Thinking of bilingual Canada I cannot help but notice that both in English and in French the word “con” fits tanTrump like a glove: confidence man, convicted felon, connard.

95

And just to add: it is not only about tariffs, there are also other measures, like restricting access to essential goods to countries that are not your friends. And Swizzerland, those treacherous neutralists, are not among the only 18 countries the USA considers trutworthy.

OTOH, considering what a hallucinatiing fad AI is turning out to be, and considering that China can do the same at a fraction of the cost, this may be good news in disguise for Swizzerland.

96

Part of the reason the US does have a current trade deficit is that the US dollar is very strong.

The Fed could try to loosen the strings, bnut there’s negatives to that, too.

97

There is that, and I wonder, if we follow the money, who are the contractors that are getting paid, wasting money every time Trump sends the military planes.

98

The trade deficit is equal to the country’s gap between savings and investment. That’s not an equilibrium thing: it is true all the time. It’s an accounting identity. It’s driven by the foreign exchange market. In simple terms, if foreigners are selling more goods to you than they are buying goods from you (trade deficit), they have to be buying something in greater amounts on net. That something is US bonds (or other US investment products like bank deposits, stock purchases, or FDI). So US investment is thereby funded by foreign savings rather than domestic savings, to an exact amount equal to the trade deficit. Huh.

You could boost US savings by crushing US consumption suddenly. That would bring the trade deficit in line. Fast drops in consumption are otherwise known as recession.

(This is intermediate economics, btw. Those who struggle with the above are in good company. Wikipedia has formulas for the mathematically inclined. It is middle school algebra with a surprise result. No division, just addition and subtraction. You can get a link to a 2000 paper that walks through the formulas at a more leisurely pace here.)

99

You are living in a world where people don’t know who pays tariffs, or what sunk costs are, and who - I have seen MANY examples of this lately - think that the “trade deficit” is the US federal budget deficit.

100

…and where a lot of those who do know the difference, think that the trade deficit means the US is just giving money away for nothing.