The comments are interesting in that so many writers are saying that in this case Krugman is wrong, wrong, wrong! I don't think this is primarily due to trolls, though there is some of that attacking Krugman's "artical," but because so many people think of trade as a zero-sum game. Obviously Trump does--for him, life is zero-sum. But as Krugman has said, understanding why trade is NOT zero-sum is very, very hard for most people to grasp. He explained this problem well in his essay about "Richardo's Difficult Idea." (http://web.mit.edu/krugman/www/ricardo.htm) The concept of comparative advantage and how it relates to trade balances is difficult, and many people along with Trump don't realize that it's no problem if a country runs persistent trade deficits when it attracts sufficient foreign investment--as the US does.
Economics presents so many useful and powerful ideas--I just wish it often didn't run against "common sense" so often. If I have one criticism of Krugman and other economists it is they haven't found a way to present the economic ideas in a way that more people--and especially our leaders--can grasp them.
All wars even necessary wars result in casualties (unless you have bone spurs). This particular elective war will also have casualties and they will likely all be within Trump's dwindling base. People who can ill afford to be out of work may soon be as a result of Trump's ill-informed efforts to prop up one small segment of our economy.
Were it not for the fact that Americans will be harmed by Trump's arrogance we might be tempted to root his self-destructive instincts on.
I promise you, we are not hostile. We love you guys, and feel your pain. I guess if this continues we will feel our own pain as well.
About Congress and the Senate, if Milwaukee Harleys and Kentucky bourbon are smacked with tariffs, you betcha Ol' Paul and Mitch will get up on their hind legs and start pushing back. Smart move, EU.
1
Will (and can) the Republicans in Congress stop Trump? "Donald Trump was the dumbest goddamn student I ever had." — Wharton professor (U. of Penn. UNDERGRAD program).
9
trump expects the world to blink. That's his MO as a property developer: a take it or leave it deal. He is used to winning but not with his own money. Same here. He's gambling other people's money - their livelihood - to make a political point. Unfortunately, those whose lives he's gambling with are more than happy to take the hit because "he tells it like it is." The US is mad.
6
Krugman the expert on everything. You have been wrong on everything so far on our President. This trashy artical is no different. Respect the office of OUR President.
3
You meant respect OUR President like Rep. Joe Wilson?
4
Eric, Please spell-check your fourth-grade words before submitting. It's very difficult to "be wrong on everything" regarding Trump.
3
Beautifully, compellingly argued.
1
OMG! People are so stupid!
Krugman spells out tha America sells 9% of the world’s exports and buys 14% of the world’s imports - how can anyone not understand that America is always going to run a deficit?
What so many commentators miss completely is that American stockholders own a big share of the companies which manufacture American imports - like the iPhone, for example.
Trump doesn’t understand any of this because he doesn’t deal in trade, he’s just a walking brand name. Trump has never had any involvement in any manufacturing industry, he is completely ignorant of trade economics.
The point is that Trump is providing the perfect opportunity for collective world-wide action to punish America for inflicting Trump on the rest of the world.
My suggestion? A world-wide boycott on patent and copyright-based income. I say we keep all of Taylor Swift’s royalties to build infrastructure and feed the homeless.
I guess there’ll be some worthwhile coin in not forcing the locals to pay full price for their Office apps too... The list goes on.
Even better, let’s cancel all the orders for that made-in-america piece of junk, the Joint Strike Fighter.
That’s the point - America doesn’t sell much to the rest of the world that isn’t essentially some form of investment in the idea of America - and right now, the idea of America is pretty unpopular, so everybody else is going to be pretty relaxed about ripping off the Great Satan.
8
I'm astonished that the matter has gotten this far. If Paulie is right about the absurdity of the president's action, then either the White House is wrong or the nation's economists are. -Esteban Goolacki
1
Thank you very much Prof. Krugman for this insightful article. Thank you for having reminded us that economic decisions should be taken after having weighted in and accepted sound economic principles, tested over and over again, as recommended by experts. No one can either re-invent Economics 101, nor make decisions based on the feeling of the day. Unfortunately we will all pay the consequences of having messed up with the forces of the market and with supply and demand. The uneducated and the gullible will still think that this will eventually benefit them. At best this will benefit half of the 1% that it was intended to in the first place. The remaining 99% + 0.5% will get screwed.
5
Trump was an UNDERGRAD at U of Penn.
He transferred in from Fordham in this third year.
He has a BS, NOT an MBA.
http://www.pennlive.com/news/2017/02/what_is_trumps_real_record_at.html
A 1968 commencement program shared Friday by the Daily Pennsylvanian backs that up. It shows that Trump graduated from the undergraduate school of finance and commerce, but he did not graduate at the top of his class or with honors.
Link to the graduation brochure:
http://media.pennlive.com/news/photo/2017/02/19/trump-commencementpng-c8...
4
Let's see the transcript!
3
Utter nonsense - which is what we would only come to expect from Krugman as the mouthpiece, apologist and, most damning of all, a card carrying member of the global elite.
Yes, there is a great deal to be said for free trade when 1) the playing field is level, 2) the rules of engagement are followed by and applied to all and 3) all economic inputs are relatively equal.
the US and the rest of the developed world are not contending with level playing fields and transparent, evenhanded applications of WTO rules, most specifically with regard to China, but also with other developing nations such as India. This countries have been massively subsidizing and undermining the world economy in the pursuit of growth and expansion that will take decades, or a war, to work off. The US does not and should not be their patsy.
On the third point, US leaders in government, industry and finance have sold every American out as they have led a mercenary de-industrialization of our country over the past 30+ years. We as consumers, in search of cheap goods from China and elsewhere, have been just as complicit in this new age of economic upheaval. We haven't seen anything like this since the post-Civil War de-agriculturalization of America.
So, Mr Krugman, continue to spin your global elite fantasies from the ivory towers of Princeton, trying to some how blame it all on Trump. Your ilk have been betraying America since the mid-1980's, so for shame!
2
If you are right then America should be trying to level the playing field with China not Canada. China sells cheap steel to other countries that then sell products into the US. The US doesn't import a lot of raw steel from China.
If your argument is let's a craft a careful response to Chinese steel dumping that creates more of a balance, fine. But that is not what is happening. Trump is picking on a smaller, weaker player (Canada) in the American trade orbit to extract more concessions from and ignoring the actual problem.
This isn't being directed by logical, national considerations of the US. It is a political fight between various owners of capital - importers vs exporters, multinationals vs local businesses. If tax cuts had been delayed until some of the economic problems had been addressed then there would have been some kind of incentive to deal with these problems. But personal greed is the driver not the voter's considerations.
Gary Cohn has carried out his mission for the Goldman Sachs crowd, ( get tax cuts for the rich) and now he has no reason to stay. He didn't want to be caught up in the coming brawl between economic heavy hitters.
Trump doesn't care about steel states. He cares about being seen to be the big man. There is no policy. There is only his ego and the urge to stay in power now that he is there.
1
Owners of existing developed properties just got rewarded with billions in increased property valuation - in that nano-second that metal tariffs were announced. How?
New concrete and steel structures absolutely will cost more - this instant! It's called ADDITIONAL risk of material price increases. Construction companies are telling developers the ADDITIONAL risk costs - Monday!
The new properties absolutely will cost more; and so, their competition (the existing properties) are absolutely worth more.
Owners of existing properties ARE READY to refinance on the basis of their new valuations. Guaranteed! They will be sucking money from the lending market and causing more competition for new development projects.
Bottom line: interest rates will rise more quickly as credit sources tighten. New development suffers some stunting in its cradle, so Trump and existing property owners can instantly benefit from tariffs.
And, of course, everything will cost more for Joe Blow. Thanks President Run-It-Like-Your-Business ... or nothing!
4
Snaggle, there are many interest rate scenarios that can be run on effects of tariff increases. Yours is one. Another one, just as likely or even moreso I think is that rising interest rates make financing, and re-financing of real estate more expensive/difficult, therefore REDUCING property values. There's lots more mortgage on a typical Trump Tower than there is steel value. So the Tariffs will likely reduce the building's value (hello Jared)!
1
Thanks Klaus, there are "many interest rate scenarios". Admittedly, I don’t address overall picture. I give opinion of the incremental move from one aspect: tariffs on construction materials.
So, 10 months ago, Trump announced a 20% tariff on Canadian softwood. On 1 March 2018, the WSJ entitled its article: "With Lumber in Short Supply, Record Wood Costs Are Set to Juice Home Prices". Mr Kushner's asset valuations rise with new home prices. If interest rates rise again, his rentals should stay occupied and his rental rates can increase. (Those conditions help him, but others may not.)
I spoke of existing asset valuations "that nano-second" and "this instant". You can be sure that the steel tariff announcement put Trump (who gages his valuations on "how I feel") in a 3-scoops-of-ice-cream mood. Part of the BUMP in valuations occurred from the reality of public DISCLOSURE and the rest of the BUMP will occur upon tariff IMPLEMENTATION.
Debt kings, like Trump, his son-in-law, and the SPECULATIVE property crew ABSOLUTELY DEPEND on rising valuations and rising rental rates. They MUST REFINANCE their debt piles! So, I was not mistaken, lumber and steel tariffs are aligned to their interests.
How much of the credit market pie will be rerouted into refinancing existing assets DUE TO the steel tariff? I do not know, but it exists. When the steel tariff is implemented, I think the first wave of refinancing documents gets the final signatures.
Thanks for nothing, Trump!
In all due respect, Mr. Krugman's opinions spouted on almost every Trump decision have turned out to be wrong or at least not defendable as is this one. He needs to really sit down and evaluate what is happening instead of deciding that if our President proposes it that it is wrong. The NYT should look at it the same way. I have been following Mr. Krugman for over a year. If the administration makes a decision to do something Mr. Krugman states the opposite as his opinion. It should also be noted that if the Obama Administration had proposed the same thing, he would have either blessed it or said nothing. He is nothing but a political hack that will change his opinion based on politics and claim he has economic credentials. I have reached the point where I ignore his comments and his findings because they are politically driven.
2
If you’ve been reading Krugman for a little more than one year how would you know if he has agreed with or disagreed with Obama’s economic positions and policies?
7
Sadly, the same is true of Trump's opinions - uninformed, uneducated.
3
Every one of his opinions has turned out wrong or not defendable? Can you list at least, say, 3 or 4 of them, specifically? I have read Krugman for years, and have found him to be generally rright, or at least on sound footing. List, please?
Knowledge is power, ignorance is bliss? The President’s ignorance is nothing but disaster.
5
If Trump wants to MAGA he should take on Big Pharma. The economy will take a hit, for sure. But the American people will have a real champion, and not some fool wearing a dorky hat.
2
This trade war stuff... mighty good distraction, isn’t it?
5
Why is it with Krugman that he happens to be a Nobel Prize winner for economics, but you probably wouldn't want him balancing your family's checkbook? Krugman is overcome with anti-Trump politics to inject anything objective in his discussion. President Trump's impact on improving the economy is quite evident, but Krugman won't consider giving him even the benefit of the doubt.
2
Trump's impact - the same as Obama's. In fact, job creation was stronger under Obama. Don't be fooled by the stock market surge of the past year. It will tumble in the next, due entirely to reckless, erratic behavior from this president, rise in interest rates, an exploding federal debt, and indictments related to Vladimir.
3
Is it time to cash out of the market?
Definition of fascism
often capitalized : a political philosophy, movement, or regime (such as that of the Fascisti) that exalts nation and often race above the individual and that stands for a centralized autocratic government headed by a dictatorial leader, severe economic and social regimentation, and forcible suppression of opposition
1
In case no one remembers, we also slapped punitive tariffs on softwood lumber from Canada. Meanwhile, back in the USA, lumber inventories are sparse, the cost of lumber for residential construction has skyrocketed, and the price of new homes will increase substantially as a result.
Why then, cut more trees and mill more lumber in the U.S., you say? Well funny thing about that... we have had a number of devastating fire seasons in a row (couldn't be climate change, of course, since we all know that's a Chinese hoax). As a result, there is a dearth of harvestable, merchantable two by fours on the hoof - they're standing charcoal at the moment. And you don't build new lumber mills overnight either.
Good thing we've got over 300 million guns floating around over here. The better to shoot ourselves in both feet with.
9
I own and operate a business that relies heavily on steel and aluminum. These tariffs will undoubtedly affect my costs, and eventually my product pricing. However, I am also not so short-sighted and biased that I can't see how unfair foreign subsidies and currency manipulation negatively affect our steel and aluminum production, and ultimately our national security. Over the past 30 years of working directly with U.S. metals producers, many are now shut down, sold off, divested, gone. Trump is fulfilling his primary responsibility as POTUS to protect out nation. Yes, that means higher metals prices, prices back to where they should be: fair and competitive, not artificially low price gouging from foreign competitors bent on weakening our self-reliance and national defense.
1
Mark, as a consumer of iron and aluminum, as most consumers are, I'm all for "low-price" gouging; and don't need some capitalist buddies of Trump telling me I should pay more to raise their bottoms. The excuse used, that its for self-protection, is flaky. Our largest source is friendly Canada, for both metals; and we run a surplus on Exports with them. So Trump's tariffs are ignorant policies.
5
Again "smoke & mirrors" , all other subjects out the window. Week in week out.
1
I think this article is pretty narrow minded. There was a lot of opportunities to look at the possible benefits of the Tariffs which you completely ignored. Obviously the execution of his planned policies are not anywhere close to proper but, the guy has an agenda that he plans on pushing through. So, would it not be more worthwhile to look towards a future where things workout or dont workout instead of droning on about your underlying disdain for the person who is undeniably in charge of our situation for the time being. It is so frustrating to find any unbiased or unclouded information on any political move. Why can't writers put out articles that inform and educate instead of beating a dead horse. The president is obviously not liked so why are you wasting your own time and readers time with information that just feeds into the poor minded mentality that constantly hating someone creates. I've been through countless articles looking for possible actions and reactions and I can't find a single article that isn't caked full of time wasting barely clever lines, metaphors, and more about how inadequate the guy is that leads this country. We get it, he's not popular so get over it and just put out some actual research and actual hypothesis that aren't bludgeoned by your own biases.
1
"wasting your own time and readers time with information that just feeds into the poor minded mentality that constantly hating someone creates" You mean like the Republicans wasting time and resources doing nothing but blocking President Obama?
2
Economists are invariably dismissive of the disruption caused by lowering trade barriers, but in the rare case when barriers are raised, suddenly disruption is a catastrophe! And I wouldn't say tariffs are good for absolutely nuthin'; at least they raise some revenue, in a world that is increasingly immune to taxation of anything.
2
Fascinating how in evaluating the recent tax legislation Republicans insisted on
"dynamic scoring" that considered on-flow benefits (that are dubious because never shown in the past to have any or enough tickle down to overcome the revenue loss of tax cuts), but now are oblivious to the consequences of retaliation in a trade war (such as Wilbur Ross's defending the new tariffs by focusing only on the minor increase in cost of a can of beer or coke).
4
If you run perpetual trade deficits, it means the rest of the world is giving you stuff for free. Why would you want to put a stop to that?
When we buy something from a foreigner and they don't buy anything from us, they are saving up money that they can spend in the U.S. But, if they end up never buying anything...well, what is that money we gave them actually worth?
I thought you could have nailed this topic even harder, Dr. Krugman. What the U.S. is doing is almost purely self destructive. It's like the attempt to bring back the coal industry when advances are happening so fast on the frontier of solar and wind energy. Next thing, we are going to start rebuilding broom factories in the U.S., even though the only people who would work there are the immigrants that we are trying to kick out.
2
Some things the US prefers not to make like small passenger cars; profits in sports utility vehicles making big profits for Ford and Fiat-JEEP. US based car component companies rely on cheap raw materials in those big vehicles?
China helped US companies like APPLE transferring production of China. APPLE a company worth nearly one trillion dollars; thanks to a million Chinese workers on FOXCONN production lines. US wants its both ways?
I drove past a steel mill in Hamilton today. There were massive piles of coal and iron ore on the docks. They came by ship from Pennsylvania and Minnesota, I think....
5
So do we get paid for all the free protection or keeping the shipping lanes safe. The answers is no. Time for all these countries to start paying.
1
The employees of Harley Davidson, Levi Strauss and other likely targets of retaliatory tariffs will be pleased to hear that Trump's Commerce Secretary, Wilbur Ross, considers their jobs insignificant and expendable 'rounding error' in the grand scheme of things.
Odd thing, though... you didn't hear anyone say it was just 'rounding error' when Trump and Pence were beating their chests about retaining a few hundred jobs at a single Carrier plant - only after we handed Carrier millions in tax subsidies as an inducement, of course.
Nor do you hear talk of 'rounding error' when El Presidente repeats his 'we're bringing back coal' mantra, while delivering all of about 1,000 new coal mining jobs in a full year, against a backdrop of about 175,000 new jobs per month in all other industries, none of which entail the substantial downside of workplace injuries, occupational disease, environmental damage, air pollution and its deleterious effects on public health that directly result from mining and burning coal.
Tired of winning yet? Not me.
9
Go Canada, become the next United States, the next intelligent, empathetic country in North America since the US has diminished its role to zero. Europe and China will trade with Canada, immigrants will want to become Canadian, students will want a study visa for Canada, American athletes will want to play for Canadian teams, and yes, I will go there on vacation, not being far away, here in Maine. Why would I bother to spend my money here in the US when everything will become so expensive and where I will no longer be welcomed since I am an immigrant. In Canada, at least in Québec I can also speak French my mother language. Go Canada!
31
I live just across the border from Canada. From my roof I can see Canada to channel a recent Vice Presidential candidate. I sure hope it stays prosperous in case I must emigrate after Trump is done with us.
3
And your greenback buck will be worth $1.30 in Canada which has similar nominal prices so you really can be suddenly 30 per cent richer.
1
When all of the tariffs have been placed and the dust begins to settle, our predator trading partners will start to realize they lost a heck of a lot more than we did. We may get some inflation, but we will also see higher wages, more tax revenues, and stable domestic suppliers in (god forbid) times of war.
1
It's fairly simple to understand.
On the business side, we have allowed the American Globalists to abolish industries and jobs here in the U.S. with the flip retort millions can find something else to do with their time whilst they are provided cheap goods. Now combine that with the political side - we have entered multinational trade agreements we do not enforce due to geo-political priorities. Just think about what that has produced. Big Biz and the best government money can buy treats small business as Wal-Mart treated them - under-price and put them out of business. And today, it is like screaming across the vacuum of space to get a politician to pay attention. Join a Pac if you want their ear, right?
Hello Trump, for we have had enough. Small business employs the majority of Americans and us humans still vote. It appears these lopsided multi-national trade agreements are going to be renegotiated, then enforced.
Listen to us or go find a burger-flipping job yourselves.
5
It’s great for insider trading, short sellers, lawyers, lobbyists, and politicians on both sides, and they are not all “fine people”.
9
Trump's war is not about trade nor economics it is a war of conflicting values. I have said Canada and the other western democracies are the real existential threat to the Republican Party. It is Putin , Trump, Ryan and McConnell who share the same economic and social values. The only problem for the GOP is that there are too many Americans who think the Cold War is continuing and Russia is the enemy. Russia is a Christian Theocratic Kleptocracy which is what the GOP wants but uncomfortable advocating without the weasel words in Orwell's 1984.
For the GOP freedom, love, truth, democracy and equality are straight out of the Newspeak Dictionary.
9
Is a 10% European Union tariff on cars made in the USA "Free Trade"?
It's a moot point as there is only a minuscule demand for American cars in Europe which are designed for use in the USA, A V8 Ford mustang is pretty good value on paper in the UK, but similarly and even slightly more expensive BMW's, Audi's Mercedes run rings around it in handling, design and build quality. The Mustang is the only car that is officially imported to the UK in a RHD format to suit driving on the correct side of the road:).
2
Thr US doesnt have a free-trade agreement with Europe
Well, why doesn't Trump raise tariffs on EU cars then? Making steel more expensive means making US cars more expensive means making EU cars more attractive. Trump logic.
“This is, of course, nonsense. Trade isn’t a zero-sum game: it raises the productivity and wealth of the world economy”
I beg to disagree!!!
Can the esteemed economist explain to us, WHY can’t we strive for “Balanced Trade” or zero-sum game, in the long run, if not yearly, on a country by country basis?
Why is running a trade deficit of around $500B/ yearly for the last 40 years, a prudent policy for any country??
Of course, losing 10 million 50k/year jobs for the last 40 years is just nonsense???
Why can’t one conclude, apart from saving nickels and dimes for the average Joe, the current free trade policy ONLY helps the top .1% of the world to enrich themselves, and bring down the standard of living in the first world to that of third world!
1
Becasue all these US dollars that the foreigners are getting, they are reinvested in the US, and supporting your deficits and tax cuts, etc...those jobs, they are gone because of robots...
1
Nicolas is right here. Trump supporters seem to long for the 1950s where real men worked in factories and women stayed home and cooked and raised kids, and his single income could pay for two cars and a mortgage and college for the kids. They forget that there were no industrial robots that worked cheaper, that union membership was 30% of the workforce and helped negotiate those high wages, and that government really helped pay for public colleges.
Oh, please. If Obama had started one, Krugman would have loved the idea.
2
Am I the only person in the US (not to mention the world) who is getting sick and tired of "the base?"
Not to mention their head cheerleader; and the term "base" has never been more appropriate.
10
This has nothing to do with trade. Trump has found his phony ‘war’ we have been waiting for ever since he took office.
A typical coward, he has picked what he believes to be the least risky way to act the bully in hopes of mitigating the dumpster fire of a presidency he has crafted, and get the people to rally around him.
Exploding deficits, rising prices, and a contempt for facts and data driven policy will destroy the most productive and innovative economy in the history of mankind.
Vote this clown and all the Republican enablers out of office at every level of government every chance you get.
13
The first thing popped into my head is what do real estate developers and their crony’s need? Steel and aluminum. What better way to get a kickback for life from steel companies.
8
If Mr.Trump would be serious about reducing the trading deficit...then he would negotiate with the trading partners before hitting them with tariffs. Well - he did not. Leaves the question what the real motivation for this move is: making good on campaign promises? Serving some special interests - just ask Wilbur Ross how he made money from some feel during the BUSH steel tariff - or is it plain stupidity? There is simply no plan attached to the announcement, no concrete request what has to be changed by the trading partners...simply nothing. That’s not how you can make any deal! In other words: stupidity seems to be at play here. The cure for that is simple: remove the source from the White House!
8
If he applies his notion of
trade surplus/deficit = winner/loser
to his own business where he profits from licensing the use of his name and not “exporting” any tangible goods at all, his entire life has been a huge “trade deficit” because of his purchases of goods such as golden toilets and buckets of KFC. By his own rule, he’d be the absolute, biggest and most tremendous LOSER-in-chief.
7
Something that the Left never addresses is the inequity that occurs by the movement of heavy industry, and therefor the pollution and usually, poor and dangerous working conditions to overseas locations.
A factory making steel in China could not be built in the US due to environmental, labor, and other regulatory restrictions. If we presume that these regulations are based on the morality of preventing environmental damage and human suffering due to the practices found in China and other locations, then the question has to be asked; should the US benefit from cheaper steel as the cost of additional pollution and human suffering merely because they happen on the other side of the world?
Why is it acceptable for these things happening in rural China but not in Ohio?
If one were to follow the professed morality of the Left, then you would be fully in support of tariffs and other actions designed to encourage steel being manufactured in a manner that best fits said morality.
So are we to surmise that Paul is FOR pollution and terrible working conditions in China, but not the US?
Pruitt is in charge of the EPA
1
Two words, Flint, Michigan.
1
Interesting, but I'd say incomplete. The U.S. and Europe have been polluting since the dawn of the industrial revolution. China has only really started contributing in the last 25 years, and isn't yet close on a carbon-per-capita output basis.
It'd be tough, under your logic, to punish China for performing the 'developing world' dirty jobs that the U.S. and Europe have somewhat left behind after a few centuries of profiting.
And then besides: would you rather 'designed in California, assembled in China', or the other way around? While we're talking about economics, importing cheaply-sold raw materials and turning them into something sophisticated is a great way to make money. The proposed tariffs threaten it all.
1
I am hesitant to agree with Krugman on this topic, given how wrong he has been in the past about benefits to the middle class that came from tax reform, but a trade war would definitely hurt everybody. However, given Trumpian patterns, this seems like an opening bid to get the other Countries (China) to play ball and stop dumping. It's a hell of gamble but it's also well past the time to signal to these other nations that we're not simply going to lie down and take it.
1
Chriva, take a look at the stats for steel imports to the United States over the past year or two. China ranks 11th on the list of steel entering the U.S. The top dogs are Canada, Mexico, Brazil, South Korea. China is well under 5% of steel imports.
Sound policy does not set up a straw man - a mythical problem - and then implement policies to solve the mythical problem. We may well want to lower our trade imbalance with China... but this ain't gonna do it, anymore than 'building the wall' is a rational approach to immigration policy and suffocating the ACA without providing a reasonable alternative is a rational approach to health care.
I have a better explanation. The Republican Party knows that Pennsylvania and Ohio are teetering on the brink between red and blue. Pandering to steel workers in those states, like pandering to coal miners, will buy a lot of votes. At end of the day, the Trump coal and steel policies likely will create few jobs, wage increases or capital expenditures in either industry; and more than likely will merely line owners' pockets with enhanced short term profits at the expense of other domestic manufacturing workers, consumers and the environment.
But in the fact free zone known as 'Trumpworld,' nobody is going to notice.
4
DT is great at bullying the small people, problem arises when he thinks that these tactic will work against a country that dwarfs the USA and that's just China, there's also India and the EU bloc to consider.
1
POTUS and the country is in desperate need of adult supervision..
20
Oh, Canada. You have broken my heart. Who knew you weren’t just the backdrop for singing Mountie movies. Who knew the evil, despicable threat that you have truly posed all these years to the security of the Republic for which we stand. With your fake politeness, your socialist medicine, your gun control legislation, your shirtless Prime Minister and God knows what other ways you have been trying to subvert our Christian family values. But now, at last, that the scales have fallen from our eyes (thank you President Trump) it is time to lay low with the meat axe. Under the New NAFTA, you’ll take our “pizza topping”, call it “cheese” like we do, and like it! And BTW, apparently the aluminum Ford F150 is all your fault too. And don’t get me started on Tim Horton’s – talk about a Fifth Column – and its full-frontal assault on poor Dunkin and Krispy. So take that, you nation of just 35 million. You’re not going to push us around any longer!
37
S
We know you are to busy thinking about your own country to read about what we Canadians think and how we revel in our own genius. We are smooth and brilliant and we know you will never real things like this op-ed in the Toronto Star confirming your beliefs.
https://www.thestar.com/opinion/star-columnists/2018/03/03/canada-is-ver...
3
Tim Horton's Donut Strategy a "Fifth Column"? It was really about 'roll-up-the-rim' to win marketing that back-fired. Besides, Trump is deep into Big Macs. On behalf of all Canadians, we are very very very sorry. Please forgive us. Take our shirts. We also offer our first born sons to fight your foreign wars. In God We Trust? Not Canadian enough: "We Aim To Please Americans." Sell us a swamp in Florida? SOLD! Eh, we'll even Pay you to Build a Wall along the longest undefended border on earth. Steel & Aluminum Tariffs, not a problem. Lost Canadian jobs, ok. But whatever you do, please don't confiscate the hundereds of thousands of properties owned by Canadians in Florida, Arizona and California.
2
Bob,
I wish they would confiscate all Canadian property in the US. They own all our steel and aluminum companies and most of our economy and a Canada owned by Canadians is a very wealthy country. The Canadian property owned in Florida , Arizona and California is worthless in an isolationist USA.
2
As Forrest Gump's Mama said to him, "Stupid is as stupid does." There you go.
26
The only question and thus the only question worth opining about now is how do we get rid of this guy.
15
Has anyone in Trump's administration given him a crash course in Economics? Mnuchin? Cohn? Somebody? ANYBODY?
13
Our President is a corrupt moron. He came from a business world in which he could bully his competition with the help of lawyers, refuse to pay contractors who did good work, stiff anyone he wanted, offer promises made manifest in Trump University he knew would never materialize. He hasn't the slightest idea how the global economy works and how the tariffs he is suggesting will create a chain reaction of financial woes that will result in higher prices for consumers and lost jobs, around the world. He talks incessantly about having the best administration, yet doesn't possess the ability to actually listen to what they are telling them. If Cohn had any self-respect he'd resign and write a take-down of why Trump's tariffs are a horrible idea.
41
"Surpassingly stupid" indeed. Best possible description of this latest bonehead move from Trump.
18
You can expect horrible results when you vote for a mentally unstable stupid person as president. And the Russians are thrilled beyond their wildest hopes.
And the Republicans do....nothing.
25
The Republican-controlled Congress will be described by history as Profiles in Cowardice. They'll never develop spine or patriotism and just continue to be Trump's enablers and sycophants.
8
Actually, it seems, Russia was backing Bernie Sanders.
Paul Krugman....Paul Krugman....Oh Ya...the Pulitzer winner that predicted the stock market would crash when President Trump assumed the Presidency.
Why is anything he has to say after that stupidity worth print?
I mean...come on...why?
4
Actually, he won the Noble Prize in Economics in 2008 for"his work associated with New Trade Theory and the New Economic Geography". Perhaps Krugman knows a few things about trade than the folks advising Trump don't know? The stock market is up because big business knows what Putin's men call a "Useful Idiot" when they listen to Trump: the manifestation of hypocracy that cut corporate taxes; ordered unfair tariffs on former friendly naitons using an obscure "national security" election; built his casino projects in Vegas with Chinese steel & aluminum over U.S. industries. At least the concrete came for America - even though it was controlled by New York Mafia families. http://www.newsweek.com/how-donald-trump-ditched-us-steel-workers-china-...
9
The market was down 1,100 points last week and is down 10% already in 2018.
3
Let me see now, The market is down.
When Trump office the Market was around 18000
today it's around 24-35 k
Yeah, sure. It's the end of the world.
ARe you one of those that predicted that if Trump were elected
the stock market would fall to 0 value and everyone would lose
every dollar they had put into the market?
as George Soros would say: MOVEON
Seething words for Donald Trump
methinks you protest too much
"So the idea that a trade war would be “good” and “easy to win” is surpassingly stupid.".......pretty much like everything else Donald Trump says or does.
12
It is hard to follow all of Prof. Krugman's arguments. I wish he would write a column about why trade deficits on the order of half-a-trillion dollars annually (stretching for decades with no end in sight) does not matter or if it matters what should be done about it.
We already have a number of columnists pointing out that Mr. Trump is remarkably stupid and his ideas are surpassingly stupid.
3
A good start is in today's paper:
https://www.nytimes.com/2018/03/03/opinion/the-macroeconomics-of-trade-w...
You may find it hard to follow however.
Money laundering. Your presumption, and that of most Americans, is that U.S. industries are failing because of trade deficits. Steve Jobs told Obama at a private dinner at theWH years before Jobs death he answered Obama's question as to why Apple doesnt bring jobs back home from China. Job's answer was 'those jobs are never coming back', Chinese graduate more engineers than the U.S. graduates of all disciplines in one year. The Chinese engineers, often hired and trained as production foremen in Chinese tech plants, earn less than half of their American counter-parts, many of whom (U.S. engineering grads) would not accept a production foreman role. The other unknown unknown in trade decisions is the extent of American direct investment in foreign industries that export product to U.S. supply chains. It was common knowledge that when the Big Three autmakers complained about Japanese car imports that Ford and GM, especially, held significant shares in Japanese automakers. The nature of U.S. jobs markets is changing from deep blue collar semi-skilled employment to light blue jeans technology jobs that are far fewer than the traditional blue collar jobs 25-50 years ago. Young men in particular are victims of American enterprises that have help develop foreign industries through investment and reduce the middle-class "union jobs" of yester-year that provided for a significant statistical stratum of American workers and their families lifestyle and retirement needs.
3
The trade deficit does matter because it measures how much we Americans are spending over and above what we are producing. When a country wants to consume more than it produces is has to borrow the difference from other countries, and thus you have a trade deficit. Since Trump's budget plan calls for trillion dollar budget deficits for the next 7 years, you can count on huge trade deficits to finance all that spending over and above what we are producing. That ballooning of the trade deficit will occur no matter how many tariffs the ignoramous in the White House wants to impose. Only putting our fiscal house in order can solve the trade deficit.
Krugman is belligerently ignorant on defense. This first step is way, way overdue.
1
Dear Mr, Mueller,
Please hurry, Sir. Orange sewer sludge is drowning our nation.
Thank you,
Pruney
5
I hate to think what stupid action President Trump will take next.
is there any way we can stop this abysmally ignorant person who is making terrible decisions for the US?
7
The 25th Amendment or impeachment, conviction, and removal from office. Unfortunately, the Republican-controlled Congress continues to enable Trump's incompetence.
3
Oh! We're having a trade war, a trumpical trade war
His temperature's rising, it isn't surprising,
He certainly can melt down
He started a trade war by making his phone tweet
In such a way that the world says
That he certainly can melt down.
5
Great hed.
2
THANKS for "surpassingly stupid" -- the evergreenest of descriptions of our surpassingly stupid hoax of a president*.
11
Finally, someone has used an appropriate term to describe the policy of the Trump administration. Usually terms like misguided are used but the reality is that it is as described in this commentary: stupid.
If in doubt, remember James Carville, "It's the economy, stupid!"
9
If Trumps purpose is to enrich a handful of corporate interests at the expense of the nation as a whole, then he is not actually being surpassingly stupid, he is simply making good on delivering a payback for their support or for some other undisclosed reason that will probably show up in the massive Mueller investigation.
Then again, he might be thinking he is contributing to the greater good of the nation in which case he is just being, like Krugman says, surpassingly stupid.
5
Nothing beats a picture of this buffoon with his hands flapping around trying to look intelligent.
7
Says the author who predicted a “global recession” with Trump’s election “with no end in sight.”
2
The Dow was down 1,100 point just last week and is already down 10% during the first 2 months of 2018.
2
Oh the depression is coming. 3-4 years.
"...is surpassingly stupid."
Has anything at all about Trump convinced you that he is otherwise?
4
Trump is dumb, what else needs to be said?
6
The truly scary part of this is Trump's immovable belief that trade wars are "good" and easy to win. He made the decision regarding metals tariffs in the face of adamant disagreement by his well qualified economics adviser, Gary Cohn. Mr. Cohn has threatened to quit if Trump really goes through with the tariffs.
What experience in trade wars does Trump have in his cloistered career, hidden in Trump tower, and working on real estate scams and cheating his labor forces and subcontractors? None! He held a discussion with metals manufacturers and made his decision that will benefit them and likely hurt a much larger number of workers in addition to initiating trade wars that will hurt other American workers.
This idiot/moron (depending on whether you talk to Gen. McMaster or Mr. Tillerson) needs to be isolated. Mr. Cohn should indeed quit and take as many other advisers that seem to be on the fence with him. If enough people quit, a message will be obvious to the Average American who gets news from Facebook or Twitter and refuses to read anything else. If voters in large enough numbers wake up surely our Republican Congress will come to its senses and have to admit that a catastrophe is afoot.
7
"Belligerently ignorant". Perfect.
And, stomach churning.
4
Best we gird our l loins for the back lash of t-Rump's great, easy trade deals. A man who knows nothing and has no desire to learn. This isn't democracy. We have a fool in the white house and must get him out asap.
7
They shoot horses, don't they.
1
First if it make sense what Mr. Krugman is saying than it must be "Fake Economics." Why bother to think rationally when you can use your vast experiences, unrelated to the issue at hand to solve your problems.
Secondly it only makes China great again.
People, we need to hope this clown doesn't destroy the economy or much worse. Second we need to place in power people willing to use the Powers of the constitution to check his powers and if need be remove him from power. If we don't then we will reap what we sow
5
But, but, but trump knows all!!!
1
He meets with Steel and Aluminum CEOs and he comes out and says he wants tariffs for their industry.
He meets with the NRA and says he loves the 2nd amendment and armed school teachers.
He meets with congress people who framed a gun control bill and he says he wants more gun control.
He wants to support Israel more than any other President but also defends people chanting "Jews will not replace us".
He'll talk to Cohn and some of the other Goldman boys and his opinion on trade will be the reverse again.
This is what happens when you elect someone who has no beliefs and no vision other than to promote and indulge himself and his every low impulse. The only true vision we have ever heard from him was that Access Hollywood tape.
13
We had enough of Trump already!
The ignorance, destructiveness, deceit, corruption, treason, nepotism, etc....
3
"Surpassingly stupid" from Krugman has got to be a badge of honor among Trumpists. Just as they are against whatever Obama was for, they oppose freedom of trade along with any other free-market policy that liberal economists advocate. If Krugman's for it, they're against it.
Come to think of it, "Make America Surpassingly Stupid Again" has quite a ring to it. I'll order my MASSA cap today!
1
Like all his "Make America Great" ideas, The "Stable Genius." views on trade appear to be pulled from where the sun doesn't shine.
2
Again logic, facts and reason don’t apply here.
You can keep trying, but we are stuck in this loop until 2018. And if 2018 doesn’t produce the promised blue wave, run for the hills.
And any Dem victory will be short lived since this country will elect some other incompetent GOP weirdo soon enough
For thousands of years it was well known amongst philosophers that to be born human was to be born out of joint and unwell, but Man still had the enlightenment, the fact that it was responsible for the holocaust, most optimists were willing to overlook, but even optimists have finally realized that there is something fundamentally wrong with the American people.
2
I like how Mr. Krugman always goes to the point and doesn't sugarcoat it . . . "surpassingly stupid". Now, if only Trump voters would listen . . . or, in this case, read.
4
For once, Krugman is right. Tariffs are always a bad idea.
Countries (or even states and regions) have various comparative advantages over others. It doesn't make sense to grow corn in the Arizona desert or make steel in Manhattan.
If the administration's policy is to expand the steel and aluminum industries, then we need to reduce the costs in those industries. How do we make electricity cheaper? (use coal power plants, not solar panels). How do we make steel cheaper? (gut the parasitic labor unions). And the answer to everything is to reduce taxes and the cost of regulations.
Raising costs, like tariffs do, is never the answer.
4
Steel and aluminum .....think ahead. Who will profit from his 70 billion dollar wall and the cost of maintenance?
2
Not the mouth in the picture, Mr. Krugman: wide open. Always with the open mouth.
The ears, plugged. Always. This jerk will bring the house down with governance by Tweet.
2
You believe in Santa Claus' surpassingly stupid idea if you believe that a trade war would be “good” and “easy to win.” POTUS needs to have a real economist explain to him the basics of Economics 101. Sad!
1
Did Trump Dunce sleep through all his Wharton classes and pay somebody to write his exams?
6
Yes!
1
I bet he stiffed that somebody!
A voice of reason...but go tell brutus ignoramus Trump, who seems convinced he knows more than the 'generals'; that's why he remains the "ugly American" for the rest of the world (arrogant, ignorant and stupid). It behooves his inner circle of plutocrats to hammer some common sense into his impervious skull. With any luck, some functioning neurons may wake up if the 'ringing' is loud enough. This is not to detract from the call for China to become a fair dealer. The issue is that 'tariffs' are more complicated than Trump could ever dream of understanding...without consulting with the likes of Paul Krugman.
2
The insane asylum inmates are running the Trump White House.
What else does anyone need to know?
4
Ok NY Times! When are you going to stop talking about "Collusion" and start to talk about the reason why Putin hand picked this man? Really! This puppet exists to bring the country down the toilet and Putin is doing it as revenge for the cold war that split USSR. You think that's a wild thought? I believe it was a NY times article that mentioned "100 ways Trump hurt American's in 2017" Are you going to have another 100 for 2018? Isn't the 1.5T tax cut for the wealthy not even a clue? The rich always go unscathed. But start connecting the dots and stop talking about "collusion" (the obvious) and start asking why. These Republicans are really doing damage to the country in multiple ways in the long run!!!
6
The only piece missing from Professor Krugman's column is the where-it-all-ends point, which is coming fully into focus. I refer to the point at which Trump has broken everything so comprehensively that the country is at war (you know, the real kind that hasn't happened in decades) or mired in an economic disaster; maybe both.
Why is this? Why will he be allowed to ruin everything when the Republican Party could take him out and install that stooge-with-a-pen Mike Pence? Because 40% of the American public is aggressively stupid, racist and deeply uninformed.
Think 40% doesn't matter? The NSDAP (Nazis) in Germany got 37.2% of the vote in 1932.
4
Just think of the day you have to mix your won dish detergent, assemble your own bicycle, not to mention car, get a coop to buy a plane you all can ride in, generate your own electricity, ......., etc.
Do we really want to go back to the stone age again ?
If imposing tariffs is such pointless self-destruction, and Trump is a special kind of idiot, then shouldn't we expect the wise and rational leaders in other countries to just ignore Trump's chest-thumping?
If you're going to argue that protectionism is self-destructive, then you're going to need a more convincing argument for why any other country would respond to Trump in kind.
2
Just to explain it to people like myself who are not economists, we now have Fredo running things instead of Michael Corleone.
4
For most people the biggest hurdle in understanding the orange one is how do you reconcile the petulant five year old with the racist , bigoted and misogynistic and to round it out ignorant man that petulant brat resides in him. It hurts the head trying to fathom it. Too bad you can't fast forward to November 2018 and begin the process of holding him accountable by voting out all of his enablers. Then when Mueller drops the hammer on him there will be a congress that will do something about it. If you patriotic Americans can engineer that thenyou can look back on his time in office akin to the forty years the Isrealites spent wandering the desert and be grateful you and your country survived.
5
What is Paul K good for ? NOTHING.
1
Trump keeps "winning," always at the expense of America and the rest of the world, and he'll keep doing so until we win by making him lose in November.
Why is he engaging in this trade war? Maybe he's upset with China. Maybe he's trying to help his Russian cronies. Maybe he's worried about Mueller and wants to take it out on everybody else. Maybe it's because he's inherently vengeful and spiteful. Maybe it's because of his innate narcissism. Maybe he really believes it's a good thing, because he's an idiot.
What does it matter anymore? He just needs to go.
5
Oh pish Mr Krugman!
As Mr Trump says “when the USA is losing many billions of dollars of trade with virtually every country......trade wars are good, and easy to win”. So when we have a trade war with a country that we have a huge deficit with and import most of our steel from, we will win. Big!
Wait...the biggest steel exporting country to the US is Canada......and we have a huge trade surplus with Canada. So wait....how will we win by putting our trade surplus in jeopardy with....Canada??
Oh fiddle-di-die I’ll think about that tomorrow. Tomorrow’s another day....
6
President Trump is ignorant and has shown no propensity to learn. The things that he does come from his emotions not from his intellect. The stock market has had a wonderful run and I started selling in January. All I can say is; I wish I had sold more in January.
None of this is going to end well as long as President Trump is in office. I have nothing in common with Mike Pence but he would be stabilizing factor.
1
The beer can rebellion's a brewing.
2
So, whatever happened to DC Barrister awhile was so hot on trump? Haven’t heard from him since the election? Still happy with your fearless leader??
1
Tariffs make sense when foreign good are introduced to undermine an already thriving domestic market.
They make no sense as an effort to enlarge a domestic market that would mean higher prices.
1
"Belligerently Ignorant"! Your phrase concisely, and alarmingly, sums up the national and international threat this Fake President is, not only to economic stability but to world peace. I pray that the adults in the White House, if any still choose to remain there, will hammer some modern macroeconomic facts of life into that thick, near-impenetrable skull of his.
What "leader" talks about war, even a trade war, with a reckless, idiotic braggadocio? Congressional Republicans who have been AWOL on most provocative controversies initiated by their Chief Executive had better step up this time and act responsibly. The broad consequences of Trump's spectacular vacuity could quickly spiral downward.
2
Trump has the conviction of a flatworm. He says he's the DaVinci of deal-making but it just takes 15 minutes with anyone who feeds his ego and he'll change his position whether it's gun control, DACCA, or neo-nazis. His narcissism goes rogue when he's televised with a group of people who tell him he's a great leader. His ego muscle memory jerks him into SuperTrump mode and he's born-again whatever until the next group shows up with a cheeseburger and chocolate cake. Rinse, repeat and reversal.
But trade is like race for Trump. It triggers a gastric upwelling of bile followed by high-pitched spittle-spewing twit-rage. Trump is also the stable genius of distraction, diversion and dissembling so the surprise anti-trade fiat is no surprise an ideal smokescreen to hide the single worst week of his regime.
As the Krugman says, there's no evidence Trump has even an inkling about trade, treaties and tariffs. But he knows how he's selling himself come reelection: Kill Obamacare - check; Cut taxes - check; Cut regulations - check; Restored big US bully with bigger stick status - check; AND killed free trade - check. He needs "wins" to electrify his rallies.
It's a twofer: he shifts attention away from his bad very bad and worse week, and exhilarates his base with a promise kept. And he rattles Congress so Parkland and Russia are forgotten. Trade bashing is his new best friend. True North on Trump's compass points at chaos. It's his natural habitat.
5
"Absolutely nothing, say it again!"
Trump is no idiot. What happens is that his loyalties are not where most people think that they are.
He would have to be extremely dumb not to know that China does not export any significant amounts of steel to the US, and that these tariffs do not affect them one bit, but they do sell to us hundred of billions of dollars in manufactured products made of steel or aluminum.
After the tariffs the products manufactured in the US of either steel or aluminum will be more expensive, relatively, that the imported products.
So he is giving other countries , mainly China a competitive advantage over US manufactured products.
I do not think for a second that he is doing that because he is stupid but do think that he is using the steel workers as a cover to help China. Remember that Xi Jinping gave Ivanka exclusive rights and patents to sell her wares in China.
4
Peter Navarro is apparently in ascendance again and Dr. Krugman is too polite to point out that the guy, who has the President's ear because he is the only one one craven (or stupid) enough to say what Trump wants to hear, is a complete charlatan.
1
Trump has proven that a degree from Wharton is worthless.
2
Paul Krugman? Isn't this the fellow who assured us the economy would collapse if Trump were elected? Amazing his triple is still published.
As a Canadian I'm beginning to wonder if America is negotiating in good faith with us when comes to NAFTA. You are about to discover that the *vast* reservoir of good will that Trump has built up with his western allies in the last 13 months is not inexhaustible, and our patience is running thin.
Please America: get out in the streets, clog the phone lines and email in-boxes of your senators and congress people, do whatever you need to do to pressure them into removing this pathetic man and his cronies from office.
5
Is this really about the election in Pennsylvania? From a Canadian perspective, Trump seems to have very few gaps in his ignorance about North American trade. He’s convinced that Canada has a trade surplus with the US— wrong. And how on earth to use the fig leaf of security, given that Canada-US security is totally interwoven. Canada can provide cheaper aluminum because of plentiful hydro electric power. It’s also disturbing that, typically, this seems to have been a sudden, compulsive decision made with no legal preparation or planning. His aides said that the president was becoming unglued. He has lost Hope, could be losing Jared, and is steaming mad at Mr Magoo. Chaos as the new normal.
5
Could the president's sudden announcement about the imposition of tariffs on steel and aluminum be intended to generate votes for Republican Rick Saccone in the March 13 special election for the Pennsylvania US House seat? Leave it to DJT to use a nuclear bomb to kill a gopher.
1
What is so special about aluminum and steel? Did we ever file complaints in the WTO or with our trading partners in NAFTA? All we know is that Mr. Trump was in a bad mood so he decided to give the world a bloody nose. Sounds like the schoolyard bully could use a "time out," but the adults haven't been allowed in the room. And, just what are we do to do if Mr. Trump decides to take a swipe at North Korea?
3
Since we already know Trump is a "shoot from the hip" guy are we really surprised by this and whatever will be next? The answer should be no, not really. We should be concerned but not surprised and move to replace him with someone who is less of a sociopath.
2
I think he’s playing to his base: Steel workers and coal miners rejoice because Trump is fighting those evil globalists for you! Now if you guys can back me up in this Mueller thing, we can all get back to work or golf.
1
Ignorance is strength! Trump is strong! He's making America great again!
(And war is peace and freedom is slavery)
2
Prof. Krugman, we all know what an imbecile Trump is, especially your NATO allies who would have laughed him off the stage the second he announced his candidacy. Unfortunately, a huge number of your citizens are plain dumb, and they succeeded through the apathy of the relatively more intelligent.
The only important question is how to stop the bleeding: You now have record deficits exacerbated by global funding reluctance, record credit card debt, record subprime vehicle lending, historically low household savings, a flattening yield curve (wonkish!), a potential mortgage implosion and, not least, the highest stock market value relative to GDP in the nation's history, essentially, a gigantic bubble blown up by Trumpian gas fumes.
Most Americans, and the entire rest of the world, don't need any more hand-wringing. They need solutions. I don't have any, but I thought a certain Nobel Laureate might.
3
Hey, if Trumps trade war opens up a steel mill in West Virginia adding a hundred jobs in Trumpville, isn't that worth ten thousand jobs lost in a blue state like California? At least to Trumps base...and it's all about the base, isn't it?
1
The Trump Trade War is a lot like FDR responding to the attack on Pearl Harbor by declaring, "All right. This is it. No more iron & steel for those guys."
We've killed millions since the close of WWll to insure the Pax Americana & now the dollar is in jeopardy as the world's reserve currency? They just con't understand!
Don't forget aluminum. 60% of US aluminum imports come from Canada. Somebody please tell Trump before he shoots off his remaining foot.
3
Herr DT is undoubtedly the most ignorant leader of a major state or empire in world history. Ditto for unelected leaders. Nero studied poetry, music painting and sculpture. He was tutored by Seneca, the younger, a philosopher of note. Mussolini was a journalist before becoming Il Duce. Hitler studied art in Vienna , published a widely read book and as well as numerous articles. Stalin was well read, had Maxim Gorky as a confidant and was acutely sensitive to intellectual dissent. (He essentially assassinated the great Russian poet Osip Mandelstam for a poem he wrote.) What the aforementioned despots lacked was a system of government which could prevent them from establishing tyrannical regimes. We can only hope that our highly literate and thoughtful founders put in place a system of government that is sufficiently resilient to prevent a repetition of historical horror.
3
"A lumber shortage has pushed prices to record highs as builders stock up for what is expected to be one of the busiest construction seasons in years" was the first line of 1 March 2018, WSJ article "With Lumber in Short Supply, Record Wood Costs Are Set to Juice Home Prices".
So, inflation arrived 10 months after President Run-It-Like-A-Business announced a 20-percent tariff on Canadian softwood imports claiming unfair Canadian trade practice.
On 25 April 2017, at WH Daily Briefing, a reporter asked "And each time the case was brought to an international court, Canada won its case. What do you answer to this?"
The US Commerce Secretary responded "I had nothing to do with the prior cases. I'm confident that this case is a good case." Wilbur Ross also added "We do not think that the price of lumber will go up by anything like the 20 percent." STRIKE ONE!
If Canada prevails again, what did the US economy gain besides HIGHER softwood / home prices?
Hmm, one benefactor is Georgia Pacific (Koch Industries). On 21 Feb 2018, The Post and Courier reported that G-P begins construction on new GA lumber mill expected to hire 30-40 employees.
Learn to count, unions! Even if an existing G-P plant isn't ‘retired’ immediately, it is Net-Zero-Gain due to Automation. STRIKE TWO!
New metal tariffs were insider knowledge to a WH full of Goldman Sachs employees. Today, shill Wilbur Ross deflects inflation question with his 2.6 cents of steel in a can of soup. STRIKE THREE!
5
If these trade wars come to pass and US workers end up needing to move for new jobs as Paul Krugman states as a possibility, the new gop tax bill no longer allows workers to deduct job related moving expenses. Making this another blow to the US worker.
2
Guardian: 'Carl Icahn, former Trump Advisor, sold $31 M shares before Trump steel tariff announcement.' https://goo.gl/V3jKUc
3
Economic advice from Paul "Trump's election will crash the market" Krugman? lols
The Chinese know if they can destroy an industry in the USA and shut down plants they will then own the revenue stream.
1
The Bush 2002 steel tariff was a political issue in the United States regarding a tariff that President George W. Bush placed on imported steel on March 5, 2002 (took effect March 20). The tariffs were lifted by Bush on December 4, 2003. Research shows that the tariffs adversely affected US GDP and employment.
https://en.wikipedia.org/wiki/2002_United_States_steel_tariff
2
Possibly the BEST. HEADLINE. EVER!!
"Say it again."
1
Thanks for the overview Paul. But it's worthless as long as Trump is in the White House.
1
Brand new news from the tweeter-in-chief:
"If the E.U. wants to further increase their already massive tariffs and barriers on U.S. companies doing business there, we will simply apply a Tax on their Cars which freely pour into the U.S. They make it impossible for our cars (and more) to sell there. Big trade imbalance!"
https://twitter.com/realDonaldTrump/status/969994273121820672
This is "Trade war report special bulletin No.1" in fact. A showpiece of advanced Farage/BoJo "Brexit" post-truth-style. The truth has always been the first victim in war as you know.
Hey "Street Fighting Man" - actually prefering indoor street fight behind a well distanced keyboard or in wrestling areas - just listen:
American car companies make it impossible to sell "your cars here" deliberately because here they exclusivly sell their cars made in their European factories designed to meet EU and international standards from the start without senseless expensive additional rebuilding and retrofitting - as long as they don´t have to sell their whole non competitive European branch because of self inflicted long term management problems like GM had to do last year to be precise.
By the way: Do you know which machine tool manufacturers you will need for the whole mechanical high tech gear required for your giant defense upgrade? I don´t think so.
Please. I know He Who Shall not be Named
is easy to write about, but by doing so, you’re only encouraging him. Keep things in perspective. Ignoring him is the surest way of making him go away, and the sooner the better.
Like everything else these days, DJT's base permits him to say or do anything which is also abetted by the spineless GOP. If you were to discuss "free trade" with his base, they would say they wanted one because it's free.
Professor Krugman, it's 9 syllables too short to be a trenchant Haiku, but "surpassingly stupid" sums up the current occupant of the White House and the mess that we're forced to call his administration.
“He, who knows not, and knows not that he knows not, is a fool. Shun him.”
(Variously attributed to a Sanskrit proverb, to a Persian proverb, and to Confucius.)
How come our allies are most affected but Russia and China not so much. What has been the Russian reaction to the increase in tariffs? Would Putin be in favor of these tariffs?
1
Trump's simplistic, zero-sum economics resonates with the GOP. Paul Ryun has been faking it and he thinks everyone is still taking it. Paul, we know that you don't know. Eliminate the social safety net? It's that last bastion of our domestic economy. Who can live on the slave wages that various industries have gotten together to impose? How can our service economy function if no one can afford services? And we all know that putting money in the hands of the poor means those dollars are put right back into the money pool where the wealth helps everyone. So the Republicans do the opposite: tax cuts that companies simply use to buy back their own stock, hard-earned wealth lost to the economy. These are business people with an eye on the bottom line? Of course not. These are unhinged narcissists trying to make the world over in their own image. Maybe they have a belief that they are God's instruments-why else would they have been born rich? Some of them have glanced at the Bible and call themselves experts. They have all reached a level of self-righteousness that permits no compromise. And nothing that Trump does costs them personally. So like remora eels on a shark, the GOP is going along for the ride as Trump destabiizes reality.
3
Krugman on Trump election....If the question is when markets will recover, a first-pass answer is never....
I was wondering when someone was going to associate this with that Temptations song...
That fine song was recorded by Edwin Starr in 1970. The Temps' 1971 "Ball Of Confusion" could also be appropriate as regards this Administration.
His approval rating is in the 30's. He probably believes starting a trade war makes him a wartime president and will save his totally worthless presidency. Watch what happens when the numbers are in the 20's!
1
His approval rating is 49% and your point of view must be from under a rock/
49% would have to include a lot of Russians Try . instead of /
Russia attacks us in the largest cyberattack ever. All six intel chiefs unanimously state that Russia is currently attacking the 2018 election.
Trump ignores the actual threat and starts a trade war including with close allies like Canada. Wag the dog?
2
I quote:
My [bilateral] balance of payments with the local grocery store is catastrophic, especially since they expanded their cheese and prepared-food sections. Think of all the agricultural, dairy, and livestock jobs I could be doing! My ancestors were subsistence farmers, but now it all goes for the store's profits.
And the people behind the store may even be foreigners! I mean, not foreigners like the countries where our family members come from, but, you know, the bad ones. There oughta be a law.
This is all because someone let them sell me stuff. If I find that guy, I'm really going to give him a piece of my mind.
In the meantime, I should let the store know that I'm going to cut back purchases to no more than what they buy from me -- it's only fair. [Or, better yet, I won't trade with grocery stores anymore -- and win big!]
1
"Trump has always had a thing about trade, which he sees the way he sees everything: as a test of power and masculinity. It’s all about who sells more: if we run a trade surplus we win, if we run a trade deficit, we lose." This statement by Krugman sums it all up. The ignorance is overwhelming.
1
In addition to the threat from dimwit Trump, we have almost no protection coming from a "majority" party in both houses of Congress.
It is increasingly clear that the concern and will of constituents is of very little import to Republican lawmakers. The solution, sadly eight months away, lies in the ballot box.
2
It's not just any old trade war, it would be a trade war begun by one egomaniac on his own. When will the Republicans wake up?
1
Trump has made it his mission to destroy or get rid of anything that Obama created - ObamaCare, DACA, shrinking national parks, gun restrictions for severely mentally ill people, etc. Even trying to reverse the ban to restrict Zimbabwean elephant trophies. Is he going down a list of Obama's accomplishments and checking them off? So maybe he sees this growing economy as something that Obama created, and he needs to get rid of that too.
The hypothetical trade war is just that...a hypothetical. Humpty-trumpty will not follow thru on it any more than he followed thru on the gun control he wanted last week. He's nothing but a trouble-maker...a little brother stirring up the family to get mother's attention.
I was in the airport last April, waiting to fly to Italy, when he was first on t.v. threatening war with North Korea...all of us in line were wondering if we would have a homeland to which to return. Nothing happened. Granted, his administration is undoing as much as it can of his predecessors accomplishments. Other than the horrendous tax "overhaul," which will be unlikely to survive the legal challenges being brought already, trump himself has done nothing.
All he wants is to see his name in the news...if we could bring ourselves to deny him that, he would probably quit and go play golf every day.
1
Or is this just a way to 'juice' the market and make cronies of 45 some more money.
S.E.C. time to take a look!
Trump wants a strong, manly dollar. But he also wants to run big, masculine trade surpluses, which can only be accomplished with a weak, feminine dollar.
So Trump wants both a strong dollar and trade surpluses. Look for him to fire a few economic advisers who tell him this is contradictory nonsense, until the others get the message that they better tell him it IS possible.
Nobody knew global trade policy could be so complicated.
"In themselves, these tariffs aren't that big a deal."
Thus, Dr. K is part of the no good, very bad journalism going on about this.
Just because Trump came up with it, doesn't make it bad. He did make his uninformed, incurious, inept, rounded guestimate from what seems like sound analysis of where the tariff levels should be. Move on.
Let's see, so far Trump has heroically fought to restore the coal mining and steel manufacturing industries to their former glory. What could be the next high-tech and rapidly growing industry which has been treated very badly and unfairly in the past and needs only his brilliant deal-making talent to be restored?
My guess would be the clothing and textile industry, which previous administrations have been stupid enough not to protect with tariffs. A huge tariff on all clothing and textile imports should be enough to bring back the sweatshops and textile mills with their well-paying jobs and pleasant working conditions without increasing clothing prices or causing inflation. USA! USA! Make 19th century America great again!
1
Trump will as easily blunder into a nuclear war on the Korean Peninsula, if someone doesn't stop him. That would surely be good for absolutely nothin. Not even the undertaker.
God help us... and them.
Good analysis: "Trump has always had a thing about trade, which he sees the way he sees everything: as a test of power and masculinity."
Mr trump looks at everything as a real estate deal. In that context there is a winner and a loser. It's a one-off transaction. That's not how any other business works. You sell something, you have customers.
It's all about "repeat business". The cost to acquire a new customer is high. You want customers to be happy with your product or service, and part of that is the perception that it is the the customer is "fairly treated".
Mr trump is turning America into everybody's cable company. An industry so reviled that it ranks last in customer acceptance in any business poll.
I am no fan of Krugman, but in this case he gets it 100% right. Trump has demonstrated over and over just how totally ignorant he is about the world, international trade, and economics. The US has not had a president so poorly informed and downright inept in decades.. or centuries.
Krugman might simplify by noting that taking to its final extreme, if the US got steel free, doubtless some citizen is better off.
No brainer. Free stuff helps gdp.
Now, when steel hits a $ million per pound profit, some citizen is better off.
Look no further than the rules to discover winners and losers.
Who wins under Republicans the past century?
The Trump tax/loot transfer of $ 1 trillion to corporations [85% owned by top 10% of citizens] over the next decade who immediately doubled stock buy backs from 100 to 200 billion answered that.
15% might live to see more than a "trick"le, widely known by all.
Moral of story: fear and hate Trump money.
Trade wars, no. But what trade policy, then? What about some respect for American workers who have seen millions of jobs sent abroad to increase corporate profits?
On the international GINI Score ranking on economic equality and mobility, the US ranks below many other countries. This despite that it's the world’s richest nation, with a famous doctrine of opportunity & upward mobility for the masses. But that was yesterday. What do you think got Trump elected?
When a country legally turns over its election financing to corporations, sends millions of its jobs overseas, lets pay stagnate while profits soar, xxls pensions, raises college tuition, weakens unions---what’s the result? It’s a multi-pronged attack on the citizenry of a democracy. Then an authoritarian liar gets into power. What’s the surprise? The pattern is clear.
What are some of Krugman’s solutions besides making easy attacks on the big bad Trump/GOP week after week? He tells us what's "really, really, bad". But what would be really, really good? Plz give the Democrats a clue. The 2018 campaign is about to start. Rather a crucial one!
Trump has once again put his ignorance and unfitness for office on full display. Reading about the free world’s reaction to Trump’s tariff threat is absolutely terrifying, but not one bit surprising. Just when you think things can’t possibly get any worse, they do. This madman has to go before we reach the point of no return. Mr. Mueller, again, please hurry.
Billy Joel recorded "Allentown" 35 years ago. So it is a long time since steel was the main player in PA. From what I understand the song was dated even when it was a hit. DT lives in some type of 1950s fanstasyworld.
It strikes me as similar to Christie closing a lane on the GW Bridge to punish the mayor of Fort Lee. It demonstrates power and everyone loses.
It's weird how this policy, as with so many from this White House, benefits Russia's goals of hurting the US in the world and sewing division at home. Coincidental, no doubt.
In my heart I want to feel these guys are just Americans who have never really gotten their hands dirty at work, even once. Good natured guys with whom it might actually be OK to split a beer. Then I wake up and realize they really are different and haven't the vaguest idea of what it is to grow up on the brick.
I don't know Mr Trump and aside from images have never seen him, but I do know his manner is not conducive to my idea of friendship. Tough to think he knows the Red Cross, YMCA or Sally Ann.
The real misfortune is the rooms full of white men and women, who support him in Washington with thoughts bordering on misogyny. Next in that line are those back home who are dragging the next generation to rallies at the side of this less than understanding man.
If, after considering the act pictured here which he and all his "men" put on almost every day, there is any applause it is from those who must have missed the school trip to off-Broadway.
I wish I felt as fascetious as the words read.
His manner really is staged.
Oh America.
While Trump is starting a trade war the Northeast is getting creamed by a huge storm. Maybe Trump is starting to try to deflect the Mueller investigation or just hide that he is apparently totally incompetent. It doesn’t look like Mueller will fall for the diversions nor will he be bullied.
What is especially galling is the “Trade War” is lack of any process. This decision seems to be made by Trump without consulting anyone else. Just like Tax cuts and other major decisions.
This former steelworker (USW Local 1010) would be happy to take President Trump on a tour of the US steel industry as it exists today. It would take trillions of dollars to bring those brown fields back. And then what? Massive worldwide over capacity, massive losses, a race to the bottom, and foreigners will win again. Whoever treats their workers worst wins that kind of contest.
Yes foreigners are dumping commodity steel here. But we do have a niche domestic steel industry here. Companies like Nucor make custom alloys to order. That is the cream of the market.
My steel mill job helped pay my way through college, and I left. I still feel bad about that.
Now that Trump has thoroughly alienated our southern neighbor, Mexico, it seems he's up for a good time alienating our northern neighbor, Canada. Trump is happy to trash our century of harmonious and productive relationships with these neighbors. Why? His desperate need to be seen as a "tough guy" who can one up Putin in authoritarian points. Domestically, he's going to tell Sessions how to run the justice department. Internationally, he's telling the world to bow and kiss the ring. Mexico will paayyyy!!
If Trump succeeds with these tariffs and factories close, we can be sure that the new factories will employ the latest in robotics & automation. So jobs will not only be disrupted, the result will be many jobs lost forever.
Why did Carl Icahn dump $31 million in steel stock before the announcement if this is going to be good for the US steel industry?
2
In the past the GOP could promise illogical and harmful policies to turn out their base and then ignore the promises or delay them in various ways. Now Trump has made a big deal of actually doing these destructive things and the GOP voters are going to demand action on all kinds of craziness in the future. They will be called conservatives only in an Orwellian sense. This is almost as scary as realizing that 30 to 40% of the populace is easily manipulated with the most absurd propaganda.
1
simplistic economic mantra "free markets are efficient (and lift all ships)" may be similar to disillusioned Orwell's mocking "four legs -- two legs bad" or "all markets are equal -- but some are more equal than others".
what are long-term relationships of US wages&benefits, unions, middle class standards of living and income inequality to an unencumbered Free Trade policy? Honest question to Nobel Laureate Krugman -- tells us long-term Trade Policy of best advantage for US Middle Class? Will Free Trade always and inevitably serve to lift our US Middle Class boats -- or sometimes lower them to parity with all boats everywhere (what Aussie's call the Tall Poppy Syndrome)? and please don't just give us another Hillaryesque neo-liberal defense -- go ahead and give us a nuanced answer and we'll try to grasp it.
1
Brilliant title - "Trade War, What is it Good For? Absolutely Nothing".
Trump - Absolutely ready to be Impeached.
1
"Trade War, What Is It Good For? Absolutely Nothing"
Just like Trump himself.
2
Trade pacts HAVE to include worker protections, workers rights up to our standards, AND, MORE IMPORTANTLY, environmental protections,up to our standards, otherwise no matter how advantageous trade may be economically, it is working towards the end of the world as we know it.
I forced myself to view a couple of episodes of "The Apprentice" and found myself wondering: How can anyone swallow this simplistic nonsense? The more I observe president Trump in office, I am compelled to conclude that he actually believed the tripe broadcast from his signature show. God help us.
2
Trump's war is not trade nor economics it is a test of values. I have said Canada and the other western democracies are the real existential threat to the Republican Party. It is Putin , Trump, Ryan and McConnell who share the same economic and social values. The only problem for the GOP is that there are too many Americans who think the Cold War is continuing and Russia is the enemy. Russia is a Christian Theocratic Kleptocracy which is what the GOP wants but uncomfortable advocating without the weasel words in Orwell's 1984.
For the GOP freedom, love, truth, democracy and equality are straight out of the Newspeak Dictionary.
2
any interference into the economics have never ended good. what mr trump simply does not understand, and this goes throughout his micro-cosmic world, is the boomerang effect. in his simple mind, there is only him and his helpers or enemies. thats how he sees the world, thats how he sees economics. the quality of a product he simply does not see - right, was never americas fortune to produce quality goods - no wonder he filed how many times chapter 7 or 11 ?! and ran away ? this will haunt america for a very long time. he is about to stumble down everything that obama had to build up again, after GWB obsessions with fighting ridiculous wars.
1
It's easier to raise war cries than to face the actual consequences, be it the fire and fury on North Korea or the current spate of the trade wars against China, Canada, Mexico, or the European Union. Since the cost of Trump's policy disasters is to borne by the nation, he can afford the luxury of mouthing war rhetoric against anyone and anything. Again, the imperatives of modern international trade like interdependence, global supply chain, leveraging competitive advantage, or the trade induced prosperity and productivity in the world economy are beyond Trump's grasp he wouldn't even hesitate to exposing his own working class base to new risks of joblessness and the price hikes involved in the stupid trade wars he has declared on many fronts.
7
Even though China is selling more than it is buying from us, American products and services are everywhere. American cultural production, both soft, hard, music, films, television bring the American lifestyle to the world and it cannot get enough of it. Everywhere I travel in the world I see America- the way we live and the products that make it so. I believe some- maybe much - is not included on the balance sheets. Companies hide income as phony expenses and obscure income down the line to avoid taxes and increase profit. Many countries have stricter laws, some do not. The comparisons of wealth are skewed I believe. GDP does not say it all. The trade gap is skewed.
6
It is true that American pop culture used to be followed by many Westeners, however, the internet has opened the world in ways not even the inventors could predict. My peer group identify much more with European culture, including films, books, news agencies and more. Hollywood is for teenagers, American TV programmes are aimed at the lowest denominator, Donald Trump is POTUS! The typical American is overweight (what a shock it is to see so many obese people riding around on mobility scooters) and uninformed. I agree there are too many loopholes for big business to hide their profits in overseas tax havens, thereby depriving the country of sorely needed things like infra structure and a simple, affordable healthcare system.
The imbalances in contstruction in US cars and or other devices are not so much the product of a foreign conspiracy, as the end result of incredibly stupid and shortsighted unions AND equally greedy and shortsighted manufacturers in the US. No one ever could have, or did seriously predict, the eventual emergence of CHina as the technological- manufacturing go to factory of the West-much as the USA once was for a time, in the war and immediate post war years, 'till about 1965. The impossible to eliminate difference is that US manufacturing and labor once wereable to set their own priorities, regardless of their effect on the nation and world or even prices, groth or employment here. In Europe and parts of Asia, governments and dictators ensure that all business first serves the state. In Germany and EU, most elected government ensures a level of service for a large portion of the people. The Nordics are a tale in themselves.
America has long since ceased to be the nation where one sneeze begets pneumonia in the rest of the world. Trump is too much a creature of post war us economic power and sway to understand that not all the world works like Manhattan and runs on a schedule like the crosstown buses through Central Park: "Don't panic! There'll always be another one."
2
It's not short-sighted of unions to demand better pay and working conditions.
All that working people have is their labor to sell.
It's management's job to keep the business running.
The conflict is built into capitalism, which at its late stage cannot benefit working people.
Trade wars good for nothing ? Not quite true: he thinks this one will be good for him. You have to learn to be aware of the political as well as economic dimensions of what Trump is doing. Economically useless or damaging measures can still have a political payoff for him. In this case, he has managed to split the Democratic coalition against him, in addition to again throwing red meat to his base.
5
Trade wars are a poor replacement for finding the ways to compete in international trade. Protectionism is the weak government’s way to trying to equalize trade opportunity. Tariffs mean we have lost our way.
3
I've read that even Republicans oppose a trade war. That means that Congress could prevent Trump from starting one. But I haven't seen mention of that. What's going on? That is not a rhetorical question; I'd like to be educated on this issue.
6
In this case Trump had his Commerce Dept declare the manufacturing of steel and aluminum overseas as a "security threat". Under present laws the President can enact tariffs in the case of a "security threat" without the approval of the Congress.
Congress is a dysfunctional beast, slow moving at best. They cannot keep up with a sociopath who spasm-Tweets as a way to govern.
The can, however, remove him from office. After Midterms, I hope they will.
I believe at this stage, the positive side of a Trump presidency, is that he make all possible stupidities, as long as they are reversible, so that people who voted for him may get a sense of the bad consequences of these stupidities and hopefully, vote more wisely the next time. At least enough of them, and for a sustained time.
If a trade war is reversible, then why not. Seems better than a nuclear war with North Korea.
7
The folks who voted for him in despite of the 15 months of his truly incredible willingness to publicly expose exactly how vile, unprepared, and un-American he is, are, frankly, beyond hope of learning anything. They voted for what he didn't say (ahem) literally, and now that the Repugnican noise machine keeps saying he's MAGA, they're stickin' with him, by gum. We either outvote them next election or we're doomed.
There is perhaps one thing the trade war is good for- lining the pockets of people who knew about the upcoming trade war in advance.
Let's take Carl Icahn for example. This lucky man unloaded millions of dollars worth of steel related stock after not trading in that stock for about 3 years. As a citizen I really don't care if Carl Icahn has a gazillion dollars or a gazillion and one dollars. What I do care about is the hard work I have put in as a tax paying citizen for the last 40 years only to watch our government run by a con man who is taking advantage of all the vulnerable citizens located by his marketing technology.
Where is the level playing field? A few months ago I suggested in a NYT comment that in the end Trump's presidency may be best explained by watching Pelham 123. At no other time in history has a president had such an ability to immediately affect world markets so quickly on such a large scale. A little digging just might reveal other 'coincidences'. Is there perhaps another Carl Icahn out there purchasing steel related stock in anticipation the trade war will be canceled in the next few days?
The real problem here is not so much whether I'm right. The real problem is that I distrust our government to the point where this and multiple other indiscretions are a real possibility.
(I submitted this earlier but it had multiple typing errors)
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It is obvious that Icahn is guilty of insider trading.
One should not be indifferent to the concentration of "gazillions" of dollars with the wealthy.
The wealth of society is finite: the more that goes up, the less that comes down.
The printing of more money lowers the value of that which already is in circulation. Value depends on productivity and consumption, both of which suffer when dollars are produced from nothing.
I agree with a lot of what Prof. Krugman says, particularly his emphasis that Trump's ham-fisted, bulldozer driven by a 7 year-old approach to dealing with trade issues is dangerous and counter-productive. However, when he asserts that "the case for worrying about trade deficits, like the case for running budget deficits, has largely evaporated now that unemployment is back to 4 percent." Economic prosperity is obviously not measured just by the single statistic of how many citizens are employed. A worker at a fast food chain and one at a unionized factory making multiple times more per hour both count as 1 person employed. Because of decades of administrations, Republican and Democrat, proving mostly feckless in addressing rampant unfair trade practices engaged in by nations running ever growing trade imbalances with us--with China being the worst offender--millions of good, well-paid jobs available to non-college educated workers disappeared. The backlash in 2016 against the obliviousness to this by politicians and economic pundits is a key reason we now have one of the worst presidents ever in the Oval Office.
Yes, Trump acted like a bull in a china shop (puns intended) with his bellicose blather about trade wars being good. But that doesn't mean that massive unfair trade conduct by nations like China don't constitute a present and future danger to the American economy.
2
China knows all this, and they wait, patiently.
When the Trump Presidency is a smoking ruin, and America continues its long decline, China will step up as the adult in the room. They are already doing so. I don't trust Xi any more than Trump, but Trump, a would-be autocrat, makes it so easy for an actual dictator who speaks softly to wield the global Big Stick in this century.
In short: the US is toast. We are done, in slo-mo.
Capitalism is about profit, not fairness.
And despite the name of its ruling party, China is a capitalist country.
An economic system based on success through greed can never benefit working people.
What sort of democratic country is it that allows a single person, even the president, to set tariffs at his whim?
15
I wonder how long it will take for the Ag Industry to realize how a tit for tat trade war will affect Ag exports. Most Ag persons I know are staunch Trump supporters and very conservative. I suppose they will blame Obama and Hillary for the negative impact. That's what you get when you buy Alt-Facts as true. and real facts as False.
6
"Trumped Up and Dumbed Down in the USA," is a new book out that discusses US trade.
Is it possible that this President doesn’t understand numbers? Does he not understand trade deficits or surpluses? He said the U.S. has “unbelievably bad” trade deals and that “everything’s a deficit.”He said the deals the U.S. has with other countries are unbelievably bad. He said that we don’t have any good deals. He could not find a country, he complained, where the U.S. has a surplus of trade. President Trump said he recently told his people to identify a country where we actually do well and so far, they couldn’t find that country. These comments contradict data available from the U.S. Census, which reports that year-to-date reporting in December, 2016, shows a number of trade surpluses with other countries. This information is summarized below.
U.S. Trade Surpluses
December, 2016
Country Trade Surplus (in Billions)
Hong Kong $27.5
Netherlands 24.2
United Arab Emirates 19.0
Belgium 15.3
Australia 12.7
Singapore 9.1
Panama 5.7
Chile 4.1
Brazil 4.1
Argentina 3.9
Qatar 3.8
Dominican Republic 3.1
Egypt 2.0
Guatemala 2.0
Bahamas 1.9
3
Trump was changing the topic at the end of a difficult week and acting out like child by announcing tariffs without any input from Congress. Also he is pandering to the voters in SW Pennsylvania who have an open House seat in a district the went for Trump. If this district flips for Democrats it's one more sign that Trumpism has a limited shelf life.
International trade is a Rubik's Cube not a game of checkers or with Trump a game of Candyland.
There was an old man from Queens
Who does whatever he deems
When he feels bitter
He turns to his Twitter
And in a moment he feels better it seems
12
I admire the effort. But "Queens" is not a rhyme.
But the trade war helps Trump solidify his base in his view - and that's all he cares. He runs the country for his campaign, not for the country. Trump's view of
"trade war is good and easy to win" is as good as his view that "exercise is not good for your body's health, because you use up your physical life sooner."
3
Dr. Krugman has nothing to worry about. By the time Mr. Trump gets around to actually implementing his tariff plan, someone else will whisper in his ear what a great man he is and how he should try a completely different approach. DACA, gun control, whatever. Trump is the gumby of politics; utterly pliable based on what he hears from the last person who talks to him. He has no real opinions about anything other than himself.
2
Mr Trump reflects those who voted for him to an uncanny degree which is why he is doing so well in office. If he runs again he may do even better as it is rumored one of them is born every minute.
1
It is always possible that someone will arrange for a new shiny thing to pop into Trump's field of view and distract him so he doesn't get around to authorizing the tariffs. His base will never be the wiser and will think he has followed through on his promises. Having Wilbur Ross able to sneak into the Oval Office when the gatekeepers are distracted with the latest arm wrestling contest is a much more serious threat.
1
What Professor K. fails to mention is that this off-the-cuff, sudden shift is meant to divert the media from the ongoing Russia probe which is getting uncomfortably close to Trump himself. Of course, no amount of evidence will change the minds of his fellow travelers in Congress. But he is so vain that he becomes enraged at even the suggestion that he is less than perfect. Notice, still not a hint of defending our upcoming elections from Russian interference. Mark my words, if the GOP loses the house & Senate in November, he will try to nullify the elections. That will be the defining moment in US history -- do we become Russia's fascist ally?
8
Trade war is NOT going to happen, because the US tariffs will NEVER be enacted.
An even bigger scandal will create cover to take attention away from the threatened trade wars. The threat of trade war succeeded in taking attention from anything happening on gun control. Trump said he is not afraid of the NRA but it is not the first time Trump has lied. The gun manufacturers can sleep easy at night. Trump was fooling everyone with idle threats of bipartisan cooperation reining gun profits.
So what will be the next tall tale to take attention from the threat of easily won trade wars? What Trump really meant is easily forgotten trade wars. Etc. etc....
This shepherd boy has cried Wolf! Wolf! too many times.
8
I can’t tell you how glad I am right now to be living in Australia as a dual citizen. And how glad I am that the rest of the coalition, including Oz, is going forward with the TPP.
Starting an overt trade war is alas completely in line with this administrations clueless xenophobia about the rest of the world. Meanwhile, China is moving forward with its “One Belt, One Road” trade and infrastructure strategy.
I wonder which one of those approaches is going to look prescient in a decade or two? Hmm, let me think...
6
It seems like Wilbur Ross pushed these tariffs but why?
Ross bought a steel business in 2002, got help from two years of W Bush tariffs and turned it around and sold it in 2004.
But what would be his motive today?
2
Could it be good for Saccone? Prepare for the whiplash, just in case.
Professor Krugman's lessons for the day are #1 "these tariffs aren't that big a deal" and #2 "America...accounts for nine percent of world exports and 14 percent of world imports".
The Doctor goes on to tell us that these inconsequential tariffs would lead to a trade war that would be a "huge mess" for the US. In this trade war hundreds if not thousands of factories would close and millions of workers would be forced to change jobs, move to new places, and more. Many would suffer irreparable losses.
Which brings us full circle to Lesson #2. The US has been in a global Trade War in which we have been - to use Mr. Krugman's word - HUGE losers. His description of the impending catastrophe of Trump's no-big-deal-tariffs is the description of exactly what has happened to the US manufacturing economy in the last forty years as our foreign trade policies have gutted a vital segment of the national economy.
The vital signs of the US economy - trade deficit, national debt, deficits, NHE, etc...- indicate a very sick economy with a terrible long term prognosis.
You would think a guy with a Clark and a Nobel on his mantle could grasp the serious implications of our macro-economy.
In your haste to be mean-spirited and condescending towards Paul Krugman, you took some of his words out of context and twisted them to suit your agenda. And you have failed to grasp his main point. That tariffs are indeed a big deal because they have consequences beyond just the industries involved.
I am impressed that you are familiar with the names of the prizes awarded to economists.
Your reading comprehension skills could use a little work, though.
Anyone else noticing a strange, very fake omission from this weird argument? America does very nicely out of imported manufactures like electronics made in China, but that's not an issue? "Goods" are no longer the defining element in trade, to start with.
What about finance, services, IP, and other things? American IP alone is worth billions, every year. What about all the big US money generating income parked offshore, which never gets any sort of mention, except a wistful, Disney-like desire that it should come home?
This trade tantrum is focusing on arguably the least relevant (what a surprise) elements of US trade, can achieve nothing good, and it's doing damage already. There's only one outcome for trade protectionism, and it's the inevitable removal of trade protectionism.
Free trade isn't a buzzword. It's a necessity. Economies just don't work like this Down Home in the Cliches vision any more. They haven't worked like that for decades,either, and the US has been a major beneficiary from free trade in countless ways. You might as well be raising tariffs on stone axes.
It's getting very hard to take anything this administration does seriously, let alone as if it was being done by competent people. You can be lectured and ranted at by a two year old for only so long. NOW does everyone see why dumbing down America was such a bad idea? Just get the matches out of this bloody infant's hands before he burns the joint down.
1
Protectionism is the progressivism of fools. Just as the ignorant in the USA argue that American workers who earn $15 per hour should not have to compete with Chinese workers who make $2 per hour, Gandhi thought that Indian workers should not have to compete with American and European workers who have the benefit of modern machines. As a result India adopted protectionism. In 1947 the per capita income of India was similar to countries such a South Korea. By 1977 the per capita income and standard of living in South Korea was many times that of India.
Protectionism can save jobs. In the USA the best measurement of the cost per job saved to the rest of the country is about $1 million per job saved. Saving one job might provide $100,000 in gains to the worker and the employer who benefit from the protectionism, but cost the rest of the country $1,000,000. Since the million dollars is just one third of one cent per person in the USA, no one notices it.
To save a million jobs via protectionism would cost the country a S1 trillion which would be about the same impact as a very severe recession. To save 10 million jobs via protectionism would cost the country a S10 trillion. That would make the USA a poorer country than Mexico. That would mean that Americans would be going to Mexico to work. The degree of impoverishment that would result from that much protectionism is usually only associated with severe natural disasters or wars..."
https://seekingalpha.com/article/4148256
2
We all kind of knew that Trump, given time, would eventually get around to seriously meddling in things he knows absolutely nothing about, be it global economics, geopolitics, or the projection of US military might. And now for the reason why the words "trade war" are on everyone's lips? He had a bad week in the White House and needed to take a swing at something that made him feel better vis-a-vis his base. Should we wait around for when the words "half a million dead" are on everyone's lips and a re-evaluation of what led to that means absolutely nothing?
3
but, i hate to say it, but what if . . .? what if we effectively are in a war (with china) but simply aren't responding? what do we do then?
if china is subsidizing many of its exports to us (solar panels) it can destroy our industries. so, aren't there times to "respond" in some fashion to put an end to a war someone else has started? (maybe not with tariffs; maybe with equal subsidization).
Robert Scott, senior economist at the Economic Policy Institute, said tariffs that failed to distinguish between America's trade allies and countries like China, which the U.S. has accused of illegal trade practices, could make it more difficult resolve trade disputes.
"The best option is higher tariffs on steel from unfair traders and quotas on everyone else," Scott said. "The advantage to that approach is that it would allow us to work with other countries to impose similar tariffs on unfair traders."
[NBC News]
I guess a lecture on the down-side of trade wars is topical. But the audience will not include Trump nor the GOP.
1
These tariffs are a big deal for Canada. The steps taken by Trump will influence further the NAFTA-discussions on a very negative way. Who could have thaught of this, that not Mexico nor China would be the first vicitims of the Trump foly, but Canada!
1
I'm 100% behind Trump here. It's about time his low-information voters see some consequences. Same for the Republicans that ignored everything as long as he signed their tax-cut giveaway.
1
Not so fast everyone...I'm no Trump supporter, but I do recognize the cost of "free trade". Millions and millions of good-paying, middle class jobs have been shipped overseas during the past 30 years, AND HAVE NEVER BEEN REPLACED!
Given the absence of a stronger safety net and a survivable minimum wage, millions of Americans are worse off because of "free trade". Although the rest of us benefit from the cheaper goods that arise from a more efficient global economy, I for one would gladly pay more for consumer products if it meant my fellow Americans could live a better life (even if they don't read the New York Times).
2
Yes they have been replaced, and Americans are much better due to the economic booms that free trade allowed, due the cheap goods that we can buy from China.
Free trade has been causing a huge wealth increase in USA, now trump voters want to give that wealth all the the 1%, or alternatively they want to destroy it with a trade war. Talk about stupid...
oh, everybody, calm down. it's not going to happen. this is trump, remember? he's already forgotten he said it.
1
I am all for free trade theory that Prof.Krugman advocates. I do believe trade among countries with distinct advantages will benefit everyone. But the issue is theory breaks down when large economies engage in unfair trade policies.
Let us take China. When we started losing manufacturing jobs all economists said US should move up the value chain and hence We did. But China has prevented through censorship and outright bans top 4 companies in market value from doing business. Google was kicked out, Amazon never allowed, Apple forced to give encryption keys and curtail iOS and payments, Facebook banned. Similarly many upstarts like Uber, Netflix are banned as well and Microsoft was harassed constantly. In the resulting protected market and by using IP theft they created competitors like Tencent, Baidu, Alibaba etc and they are completely free to do business in USA. This is not sustainable and this is why theory breaks down as trade is no longer fair.
South Korea, Taiwan, Singapore all played unfair trade with USA but they were not large enough to break down the system but China is and hence we are where we are.
Let us ensure American companies are not prevented from doing business freely when we trade with other countries for a start.
4
What most ppl complain about, is trump retaliating unilaterally against our allies and doing nothing against China. So what is your point?
In fact Trump has a hatred of Europe/Canada/Mexico trade, and wants to curtail nafta.
Right! So Trump doesn't touch China (or Russia) and punishes Canada.
Look at what Wilbur Ross mentioned. China has already been targeted through lot of penalties as they were found dumping steel. The issue is they found a way through Mexico, Canada and other countries to supply steel. Remember just recently the biggest Aluminium hoard was found in Mexico by a drone and once found it was immediately shipped to Vietnam by a Chinese conglomerate. This solves the whackamole game Chinese have been winning. Please read more before saying allies are targeted.
Whenever Trump says "its easy", he is most assuredly wrong. But Trump has spent most of his adult life living high in a remote tower or driving on the manicured greens of his golf resorts in his golf cart, always surrounded by sycophants. Occasionally he enjoys a good partisan rally with a carefully selected crowd of 20,000 or being feted by anti-democratic monarchs and heads of state.
"Yes, Mr. Trump, trade wars are easy, especially for someone as brilliant and, if I dare say so, as dangerous as you" a young aide whispers.
Trumps turns out to be a wall specialist, he wants to "Build a Wall" against Mexico, raise protectionist tariff barriers, incite partisan politics that divide the country, and alienate our international allies.
Oddly enough, the only walls he doesn't seek to build are cyber walls to protect against Russian interference in our political process. But we are still waiting for that story to be told.
6
Paul, there's an old saying in the computer services industry, "garbage in, garbage out".
"Garbage in" is Trump's mind, especially at this late stage in his devolution; "garbage out" is what Americans are going to end up with unless Trump is removed from office sooner rather than later.
And they can't that we didn't try to warn them.
8
"A cycle of retaliation would shrink overall world trade, making the world as a whole, America very much included, poorer."
The emphasis on harm to overall world trade, relative to harm to the United States, may be reversed. If, as seems likely, other countries are increasingly drawn together in a multilateral trade war directed at the United States, it may be more accurate to say that while other countries would be also be harmed, a cycle of retaliation would primarily shrink United States trade, leaving us very much poorer.
3
I have always, at least the last 20 years or so, realized that actions have consequences. There are always unanticipated consequences. The, wow, I never thought of that, factor. This will be one of them. When you have a leader that doesn’t really think beyond today’s Tweet, this is where we wind up.
4
"So the idea that a trade war would be “good” and “easy to win” is surpassingly stupid. And the way Trump seems to be starting his war is also remarkably stupid: start by protecting goods that are inputs to industries that employ far more people than those being protected? "
Never underestimate the president's ability to oversimplify something complex while fixating on only one side of the equation.
The disruption in the supply chain would hobble all non-steel, non-aluminum industries that still need these products at a fair price and reasonable assurance they'd be available when needed.
How can a real estate mogul understand the production of goods and services, supply and demand, and the impact of tariffs, which over centuries, has usually been associated with great damage to economies both local and global.
Wasn't one of the main arguments for deregulation to help businesses prepare better long-term budgets, forecasts, and purchasing?
And with a few angry tweets, Donald Trump pulls this old chestnut out of his hat and pours burning oil on his tax legislation and the future of the world economy?
A man who doesn't read, who made his billions using bankruptcy as a "strategy" is the last person who should be making decisions of this magnitude.
Isn't that what his economic advisers are for?
15
In the Cary Grant/Tony Curtis movie, "Operation Petticoat," Curtis' character is quoted as saying "In confusion there is profit."
We all know that neither Trump nor the Republicans in Congress have any clue about governing a complex society and economy as the US. They might be able to handle a small island away from shipping lanes, perhaps in the So. Atlantic . . . I digress.
I'm not a conspiracy theorist, but there is profit to be made in confused economic and political times. One 'profit' to be made is in the form of distraction. In Trump's case, consider: his tariff announcement absolutely blew away the media and its consideration of the Mueller investigation, including the fallout from Porter, Hicks, and Kushner. Because the investigation is going on, this distraction is temporary. What will be Trump's next distraction for us?
I've cited this movie quote before: Bette Davis, in "All About Eve": 'Hang on boys, it's going to be a bumpy ride."
16
It's "Fasten your seat belts," not "Hang on, boys."
But point taken.
Generally speaking you are right but there are at least two exceptions and one of them is major.
1-By and large we don't have issues with western democracies like Japan, Canada, Western Europe etc. When issues do come up, they can be dealt with arbitration and only in rare cases tariffs.
2-The big problem is with de facto slave labor countries like China, Vietnam, Mexico. We cannot compete with slave labor, they always win. We had the same argument with the South during the Civil War, ie if we give up our slaves, our economy will be ruined.
Well we are both wrong in 1860 and today. What good is importing slave labor goods to America at cheap prices if Americans don't have the jobs to buy them?
The idea is to bring these slave labor countries up to our level instead of us going down to their level.
The way to do it is with selective, fair, non onerous tariffs on jobs that are leaving this country because of foreign de facto slave labor coupled with gov't tax breaks and increase American worker productivity.
Trump successfully demagogued this issue on his way to the WH. If you think he is gonna bring back his and Ivanka's products from slave labor countries like India, I have a bridge I want to sell you up here.
7
Can you offer proof for slave labor in Mexico? According to this most of world is worse than Mexico on this point. https://www.globalslaveryindex.org/index/
I don't see trade deficit is a problem as long as they accept US dollars. But I do see inequality is a problem in US. If tariff can balance trade deficit and also reduce inequality, then definitely it is a plus. But if not, it doesn't matter. There is always winners and losers in every policy. On the other hand, it was a great move by Trump to win voters in 2018 mid-term election.
2
The Rust Belt wasn't always rusty. Not that long ago it was the most industrialized region in the world. I used to buy electric pencil sharpeners made in Boston for $20, I sharpened a hundred pencils a day to a nit point but then the factory closed and the product at the office store came from China and was cheaper and from the first pencil I sharpened I saw I had been ripped off. I got blunt nubs instead of pin-pointed pencils. We did it too ourselves. Why I'll never know. China wouldn't allow us to dump any product in China. But everything from paper notebooks to pens come from China now - but not twenty years ago. I think Trump will somehow make a mess out of this, but protectionism of our market, once the largest and most self-sufficient in the world, was an idea that was a chance that was lost under our post-war presidents. No one in JFK or Nixon's day could have foreseen what this would mean for the Rust Belt, I mean the Ohio Valley, or the eastern Midwest. The older terms for what is now old Rusty. Has everyone who writes for this paper given a thought to which states pushed Trump over the top in the electoral college?
7
You make a good point.
How does increase or decrease in GDP affect the 99% if their share of total GDP is only 1%? People who are given no stake in the society cannot be expected to care for the society.
6
This is perhaps on thing the trade war is good for- lining the pockets of people who knew about the upcoming trade war in advance.
Let's take Carl Icahn for example. This lucky man unloaded millions of dollars worth of steel related stock after not trading in that stock for about 3 years. As a citizen I really don't care if Carl Icahn has a gazillion dollars or a gazillion and one dollars. What I do care about is the hard work I have put in as a tax paying citizen for the last 40 years only to watch our government run by a con man who is taking advantage of all the vulnerable citizens located by his marketing technology.
Where is the level playing field? A few months ago I suggested in a NYT comment that in the end Trump's presidency may be best explained by watching Pelham 123. At no other time in history has a president had such an ability to immediately affect world markets so quickly on such a large scale.
A little digging just might reveal other 'coincidences'.
Is there perhaps another Carl Icahn out there purchasing steel related stock in anticipation the stock was will be canceled? The real problem here is no so much whether I'm right. The real problem is that I distrust our government to the point where this and multiple other indiscretions are a real possibility.
7
Regarding Richard Luettgen's suggestion that Trump's brinksmanship might actually enable us to negotiate more favorable trade agreements, consider that the White House is in a perpetual state of turmoil, The Donald doesn't have the attention span of a nat, he has already angered Mexico and Canada, and his senior advisor on such negotiations is Jared Kushner whom Jeffrey Toobin described as barely qualified to be an intern.
To expect coherent policy to emerge from such chaos is wishful thinking.
22
Richard also asserted that Donnie was correct about steel and aluminium tariffs in particular being justified in terms of national security. The Pentagon doesn't agree and I certainly don't.
For Defense Secretary's Mattis' viewpoint you might read this
https://www.cnn.com/2018/03/02/politics/steel-tariff-pentagon-risks/inde...
Far more important is staying on good terms with our allies.
3
He has had a year plus. What trade deals has DT accomplished? Did I miss something? Maybe the First Lady has a trade deal or two to report?
Another way of looking at this then: Trump has changed - or at least tried to change - the news cycle. Focus is off Kushner, chaos in WH and Russia and on trade. He's also appealed to his base, and can say he met his campaign promise. And - if it isn't a 'sign of what future policy is going to look like - and really isnt' 'that big a deal', it's politically positive if economically negative.
4
Agreed, absolutely; however, next week will likely bring a noticeably different statement from Trump. Virtually nothing he says is meaningful until he actually does something.
3
Trump’s trade policy is the epitome of economic theory, if it’s the 17th Century. That’s when mercantilism dominated economic thought. Since that time, a number of notable thinkers have advanced our understanding of business cycles and the interdependence of national economies, but sadly not Donald Trump’s.
His economic atavism belongs to a time when the cutting edge of communications technology was the handwritten letter. His military strategies are best suited to uniforms made of animal skins and weapons made with stones. His personal beliefs about the dignity of human beings belong to a time when we lived in trees.
Trump’s personal failings, fears, and ignorance propel our politics and now are moving aggressively into our economics. His ignorance is the stuff of legend. He is not a slow learner, he is a no-learner.
The bigger question is: Have we learned our lesson?
9
I am sure that Trump would relent if the European Union and the rest of the world were to drop the considerable unilateral tariffs and barriers for sales of US automobiles, and many other goods and services.
4
Quid pro quo
The Republican controlled Congress has the means to keep this loose cannon from destroying the country. If they continue to choose their own power over the good of the nation, whatever havoc Trump wreaks is really on them. Hopefully voters will remember this in November, though the vulnerability of our electoral system raises worries about that, too.
9
George Washington would be proud. The U.S. needs to be more independent and less interdependent. Bethlehem Steel no longer fabricates steel and repairs ships in Brooklyn or Hoboken. The government did nothing as it slowly went out of business. The U.S. steel industry has needed protection for decades and, with our emerging energy independence, will make us less reliant on foreign powers. Putting America first may turn out to be just what George Washington intended.
4
In the U.S. the modern path to a globalized economy was executed without any consideration for U.S. industrial workers. That's why we have a devastated rust belt and a justifiably angry working class. While all countries have been affected, some countries like Germany appear to have handled this much more effectively. Also, protectionism was probably quite effective for some of the Asian Tiger countries like South Korea as they were transitioning from peasant economies to industrial giants, just as it was when the U.S. built its industrial power during the 19th century. It is not enough for liberals to decry a trade war. Serious solutions for the devastation of the U.S. working class must also be proposed.
5
Germany protects its workers with high quality education, training and health care.. Apprenticeships here would help many workers gain employment stability however, companies are unwilling to make the investment, The tax give away would improve our economy if used for more than stock buybacks.
5
Paul it cost no more to generate hydro electric power in the United States than it does anywhere else in the world, so Canada's "abundant hydropower" dog don't hunt. Furthermore since the electrical cost of producing aluminum is around 30 percent, many smelters are on variable power cost contracts with their electricity suppliers such that the power generators are paid a fixed percentage of the world ingot price. So by Canada subsidizing it's aluminum exports to the United States it's the Canadian people who ultimately end up paying for it through higher taxes and lower exchange rates. I think every American would be OK with that. On the other hand Canada may one day say, "No aluminum for you!" and then our industrial base is compromised and becomes vulnerable. Come the end of the day the United States is strongest when it utilizes it's labor and natural resources to support itself.
4
Canada supplies 60% of hydroelectric power to new England and New York...enough said.
1
Taking a long view, it's worth noting that in the period from 1790 to 1860, during which the U.S. grew from a small mostly agricultural country to a very large industrial one the balance of trade was negative ("unfavorable") in 56 of 71 years, the total negative balance was $120 Billion, a vast sum for the time. If only we could do it again. Numbers are from http://www.econdataus.com/tradeall.html
3
Ooops. Big calculation error.
The total negative balance is only $1.1 Billion. Way smaller, but still large for the time, about $30 billion after correction for inflation.
The world and production are constantly changing, moving ever towards higher productivity (admittedly, not immune to job loss). Even if we wanted it to stop changing, it's not going to, because profit seeking businesses are always seeking cheaper or better ways.
Trump and his followers want us to go back to the old days, but our way of life is not going to go back to the way it was. It's not going to make sense to steel executives to restore old closed steel mills, when they know they will do better with highly automated steel factories.
It's better for us to constantly educate and retrain our workforce in newer, advanced skills to be at the top of the new economic order. I'm a baby boomer, and as much as I miss the good ole days, I recognize that it's best for us to grow new skills and move forward, and help those whose disabilities limit their possibilities.
6
In other word trade policy would have helped about 8 years ago but at the time Obama was working to negotiate the TPP and needed to ignore the decline of US industry. And now it is way too late to do anything about our gutted industries because supply chains.
A larger, understated issue is what to do about the large numbers of Americans who can't make a living with the skills they currently possess. Those who lose their decently paying factory jobs to cheaper foreign labor need training in something else. Societal investment in giving people these new skills will pay off. How about reversing the corporate tax cut and investing in American brains?
7
Let's see how President Bonespur feels next week.
His motive for the announcement could be just that he likes chaos and all the attention he gets from it.
We haven't seen any real commitment on a lot of things like the Wall, DACA, guns, China, Iran, etc.
Most of the real damage being done is being done by his cabinet picks and Ryan and McConnell tax plan.
4
Tariffs will result in economic disruption, meaning chaos. What else should we have expected when we elected the King of Chaos. JEB! was right when he said Trump would be chaos. Well folks, this is what Presidential chaos looks like.
But, don't tell the Bernie Babies who refused to vote, because in their opinion there was really no difference between Trump and Clinton, and in their minds the 2016 was not going to have consequences either way.
Thanks Bernie Babies, thanks a lot.
7
The imaginary targets of your vitriol did not refuse to vote -- the vast, 90 % voted for HC *as Bernie asked them to do* and they were perceptive enough of the stakes to do so despite their distaste for the propogation of a royal, entitled Clinton dynasty. I was one of them. And in what was clearly a *change* election, Sanders was simply better-suited to the moment and had demonstrated a more accurate reading of what was a populist political wave. To scapegoat the surpassingly few who didn't do as he asked is, especially at this point, a grevious waste of bandwidth. Better to spend your energy pointing out the anti-democratic activities of Republicans at all levels, the vulnerability of our electoral system to hacking and manipulation, the absurdity of a slave-era Electoral College that failed it's most fundamental mandate, and, yes, the abject stupidity and nihilist madness of a large part of the electorate who fell for -- or welcomed -- a malignant, maliciously cruel, gleefully immoral, willfully ignorant con-man puppet of Putin.
Given the current catastrophe, get you priorities straight.
Democrats must take care not to fall into the trap of merely opposing Trump on trade.
Trump promised the return of factory jobs. Everyone was dismissive, but import tariffs on manufactured goods such as steel would have the effect of spurring domestic steel production. Trump for once is acting on his promise.
So, are Democrats opposed to better jobs? What, besides reindustrialization, do they offer to the economically dislocated whose 12 million jobs were sent offshore? If nothing, then the charge that they’re elitist consumers lining plutocrats’ pockets is objectively correct. Because free trade, so called, is fueling income inequality: the winners from globalization are the top 20% of earners, especially the top 0.1%.
Democrats must say, free trade yes, and redistribution yes. The proceeds from globalization must be shared, both to compensate the dispossessed and to underwrite their children’s future. It starts with Medicare for All and tuition free college. It should also include universal broadband.
It’s easy to pooh-pooh protectionism as revanchist economic policy. But globalization is unpopular in some circles for the good and simple reason that it has destroyed a way of life in many communities. Defending it, with no compensation or just the thin excuse of job training, only shows Trump’s voters how little Democrats care about them.
5
We're hearing a lot about Trump implementing tariffs but it's also been reported that he met, in the White House, with some steel and aluminum company executives before he decided to follow this course. Why are we not hearing more about who these people were and what their inputs to the conversation were?
This sounds very much like another case of Rand's heroic capitalists attempting to enhance their bottom line through rent seeking by having changes made in public policy. Maybe they should try being real capitalists and develop a better, cheaper way to provide their products.
2
"Oh, and companies on the losing end would lose trillions in stock value."
For example, take a look at what has happened to the share prices of Cummins Engine and Caterpillar, two companies that have a lot of overseas sales and are easy targets for retaliation.
There are Chinese, Japanese and Korean manufacturers ready to step into the market opportunities created by Trump's proposed action.
2
The economic thinking ( if there IS thinking) ) of this president is that of an old man without economic background, vision or wisdom .
He made so many mistakes in his own little economic empire , he went bankrupt several times , his economic status appears to be deriving from the use of his popular name and some obscure money input from somewhere ( according to his son ) .
How can the US government allow this president to act without strict supervision and preemptive deterrence?
3
History shows that trade wars are often the predecessors to Actual War. Let us hope that doesn't happen here. Canada I don't think we have to worry about. But China? That would be a whole different ball of wax.
1
If Donald J Trump worked for a corporation, large , medium, or small, he not only would never make it to the executive ranks, I doubt, with his personality, he would even last a couple of years. Yet he proved the saying that anyone in America can become President. And that is exactly the problem. That, unfortunately, anyone in America, CAN become President.
1
A cynical person would say: "Trade wars are good for keeping Trump in the headlines". That seems to be Trump's goal. The contary strategy is to: (1) ignore Trump, and (2) vote out the Trump/GOP on Nov. 6.
2
This column is missing some vital facts. Trade wars can be destructive but we didn't start this one China did. Beijing is openly & explicitly waging an ideological global war against the “rules based” global economic order, democracy, the rule of law, free speech, everything. Even worse, you can look back over the past 40 years, & all of the shiny forecasts about trade with China, every premise of every policy, all of it, has been wrong. The U.S. trade deficit with China was $375 billion in 2017. Between 2001-15, around 3.4 million U.S. jobs, 75% of which were in the manufacturing sector, were lost as a result of the trade deficit with China. From the time China joined the World Trade Organization to 2015, the U.S. trade deficit expanded from $83 billion to $367.2 billion. Jobs were lost in all 50 states. Rising American dependence on Chinese products coupled with unfair Chinese trading practices have hollowed out the US manufacturing sector. China violates every rule there is on normal trading relationships. We have a trading system that does not work. China owns more than a $1 trillion of US debt. It has threatened to sell US Treasuries before & many have worried that this level of debt could mean that Beijing has leverage over the US economy. Beijing knows its trade practices are unfair & tilted towards protecting its domestic industries. The surprise is only that it has been able to get away with it for so long. Not responding & accepting the status quo isn't the answer.
3
The problem is, the Red State working class (correctly) perceives their jobs as having been exported to China, etc. After all, a lot of them their last job was to box up the machinery and put it on the truck.
That the real perpetrators are the Plutocrats and their pursuit of ever greater margins is just a bit too complicated for them (Red State Voters).
1
Dr Krugman asks and answers: "Could we produce cars without all those imported components? Yes, given time. "
But not without losing efficiency and flexibility. Competition now is at the component level, not the finished product. By insisting that all components be created in the US you become massively un-competitive, lose exports and penalize the American consumer. That kind of nonsense is what destroyed their economy and brought down the Soviet Union, not Reagan's chest thumping.
The TPP would have been one way for the US to marshal a counter-block to push back against China. Using institutions of international trade law enforcement would have been another. But Trump lives in a fantasy world where raw force determines outcomes. You can't threaten to nuke everyone who bargains with you. The world just doesn't work that way.
3
Donald Trump's 'unfair!' comments about trade with Canada don't stand up well to the facts.
Canada is the largest single foreign buyer of US goods, at $266 billion - 18% of total US exports. And while Canada does indeed run a $12 billion goods trade surplus with the US, when the $25 billion services trade deficit is added, the US runs an overall trade surplus with Canada of $13 billion.
https://ustr.gov/countries-regions/americas/canada
As it happens, Canada is also the largest single foreign buyer of US steel, taking 50% of all US steel exports, but does run a modest trade surplus in that area (5.2 mmt sales to US, vs. 4.4 mmt imports from US).
https://www.trade.gov/steel/countries/pdfs/2016/annual/imports-us.pdf
https://www.trade.gov/steel/countries/pdfs/2016/annual/exports-us.pdf
2
Given the obviously negative implications of the announcement, not least for our economy and relations with Canada, one can only guess at his motivation for the announcement. My guess is that he announced it to look tough, which he repeatedly says is necessary in everything from law enforcement conduct, the elimination of due process and a military parade to his shameful comments about his cabinet members.
Perhaps Melania should tell him that he does not look tough when he brags and makes ill conceived and outrageous policy announcements. She should tell him that he actually looks weak with his boasts and destructive, ill conceived announcements. Of course, that assume that she even speaks with him.
I doubt that he knew that China was not even in the top ten exporters of steel to the US or that Canada is the largest, but it happens that China had a delegation in Washington DC when he announced the tariffs. Of course, he may not sign the order next week as he will probably flip once again as he has recently done with DACA and gun control measures. I would also guess that he backs down from the tariffs this week. Let us hope that he does.
I'll be surprised if these tariffs ever arrive in any meaningful way, except maybe to punish some small industry segment in a Democrat-leaning region. Trump isn't really interested in them. Every action of his Presidency is built on two objectives: (1) enriching himself and his family (going nicely, thank you) and (2) keeping his base of low-information voters engaged and obedient (easy, but requires constant tending, kind of like emptying the cat box.) He'll bluster, and tweet, and posture a bit, but since tariff policy has very little influence on Eire (1) or (2), he'll soon lose interest and move on to distracting his idolaters with something else.
1
As haphazard as President Trump's approach on this matter has been, it is increasingly difficult to see how the race to buy more, cheaper will serve nations, including our own, well. Perhaps, we should welcome any opportunity, however ineptly advanced, to discuss a Version x.0 of global trade that better advances our unavoidably shared mission of thoughtful resource allocation and use.
1
Just as a very general proposition, isn't likely that a country that is a net importer, year after year, by huge margins (i.e., the US), is likely to get hurt in a trade war based on higher tariffs?
I know there would be considerable variation across sectors of the economy, but it's hard to see how we are dealing from the sort of position of strength that 45 seems to think we hold...
2
I look at this and all I can think is that Trump may well end up being President for life. The resentment his voters feel is directly the result of the coastal elites shrugging their shoulders and saying that's just the way it is, it's the market. We have been in a trade war for decades, and the US lost. As in annihilated. Since 1990 the US has imported $10 trillion more in goods and services than it exported. Where's the efficiency in that? The pile of dollars countries amassed to recycle their surpluses has served only to fuel asset bubbles and enrich the top 1%.
If the self-destructing Dems have any chance at all it will be to acknowledge the failure of the system and offer up a rational alternative for balanced trade. It's either that or scatter-shot random actions that make everyone worse off.
(Am I the only person who sees no coincidence in a steel tariff and a special election in Pittsburgh?) The option of sticking to centuries-old Ricardian principles under the name of mythical "efficiency" is off the table. Get with the agenda Paul, or get off the stage.
4
The nature of modern capitalism and the creation of the contemporary economic system is predicated on the integration of nations, resources, and supply chains in order to decrease overall world poverty, increase overall standards of living, and, most critically, decrease wars.
It's an imperfect system, no doubt. It is why regulations and safety nets that favor workers over corporations are needed to ensure that it is as fair as possible.
The clock can't be turned back; the system can only modified or replaced when a better process is developed.
1
If you think the “Steel City” of the past will return and become the “Steel City” of the future, you live in Trump’s world of delusion.
US raw aluminum imports are mostly from Canada (52%), followed by Russia (16%) and UAE (14%). The link below has a visualization.
https://atlas.media.mit.edu/en/visualize/tree_map/hs92/import/usa/show/7...
Steel is complicated because it is divided into all sorts of different sub-products.
1
How many more instances of Trump's sheer incompetence -- allied to a refusal to learn anything at all -- do we need before it's 25th amendment time?
13
Stop deluding yourself. It is never going to happen. Try reading the 25th. Incompetence is not justification for removal from office. If it was then it would have been implemented under the regime of George W. Bush.
But you knew that. You just wanted to take a public cheap shot at Trump. It is getting boring.
"Free markets are efficient"
Its been ingrained into us. But there are three problems with that statement. The first is that there is no mention of time. Free markets may tend toward efficient, but they are neither fast, nor kind. It takes time for a market economy to shift investment, retool, retrain and relocate. Change is very disruptive.
The second is the word 'Free.' Tax policy, government regulation (and no, regulation is not always bad) outlook, purity of consumer choice and stability all combine to distort the effect of free. Medical care is not dictated by the free market as the life or death choice tends to seriously skew elasticity.
The third problem us that markets tend to be driven by players maximizing their own benefits. A free market tends NOT to maximize total benefit. Econ 101 illustrations like the 'Tragety of the Commons" and the group interest rate excercise, show the fallacy of believing markets maximize the group good.
So in the case of Steel, we have just removed some freedom from the market. In the long term an efficient market would pull investment from less attractive sources. Wages and jobs would in crease in the steel industry. Workers would migrate to the jobs, aquiring the training as needed. Investors, who were discouraged by the previous ROI proposition would build efficient factories to compete at the now skewed price point.
SERIOUSLY?
4
No markets are completely free and no markets are completely efficient. However, in the context of politically pluralistic what I'll call Western economies they are fairly efficient.
1
It seems to me that even if tariffs did increase domestic jobs, that would take a year or more to happen, while the losses will be immediate. So Trump's move seems bad politics as well as bad economics.
4
Pam, who is a better Politian, you or Trump ? Yes, its Trump. Now go back and think about how Trump will win the trade war that Trump started !!
Why the surprise? Name a policy that is specifically designed to help those among us who most need our compassion and assistance.
3
An economist on NPR yesterday explained how the economy is benefitting from dumping because of the low-cost aluminium being utilized in many products, driving down costs and inflation.
That's true as far as it goes. But not responding to dumping means our aluminium producers will go out of business, and we will lose those jobs, replaced by imports. When they're done with the aluminium industry, they will move on to the next product. Remember Rare Earths?
Mr. Krugman has said in the past that if the yuan were properly valued, the US would have 600,000 more jobs. If we replaced Chinese imports with American produced products, we would probably have 10-15 million more jobs, more tax revenues, less income support payments, and we would no longer be underwriting the Chinese and North Korean military build-ups, saving us on defense expenditures as well. The annual benefit to the American economy would probably be close to 2 trillion dollars annually.
6
Satyendranath, which economist on NPR are you claiming spoke yesterday of the "benefits of dumping"? I had not heard this yesterday, and when I googled for NPR programming the closest I found was a description of how aluminum from Canada was cheaper than if it had been produced in the United States. As Krugman explains in this very column, that's not dumping. It results the most expensive input of making aluminum, electric power, being cheaper there because of hydroelectric dams.
And there's no denying that Krugman in 2010 said that the Chinese artificial yuan exchange rate cost the US many jobs. You act as if we could gain 10-15 million jobs and save money on defense if we NOW cracked down on the yuan exchange rate. As it happens, the yuan exchange rate is no longer artificial and disadvantageous, so this will not work at all today. I am reminded of the crackpots who today fault Krugman for no longer advising the same economic policies as he did when interest rates were at the lower bound. It didn't matter that he had repeatedly explained why this unusual situation called for policies that would have been inappropriate today. When the situation changes, what works also may change.
3
It's only dumping if it is being sold below cost of production. If productions costs are actually lower because of resource availability and efficiencies, then it just the market at work.
3
Perhaps you missed the rather essential FACTS that Chinese steel and aluminum account for a very small fraction of US imports. Trump is mostly sticking it to Canada and other long-time US allies. Tariffs also don't make US goods any more competitive in the global marketplace. Let's say the US stick a 25% tariff on those rare earths you are talking about. The rest of the world is still going to buy Chinese magnets, while US companies and manufacturers will simply pay more than everyone else for magnets. Congratulations, you have successfully robbed Peter to pay Paul.
1
It does seem as if, unlike Trump's all over the place statements on gun control and immigration, this will be hard to walk back to where we typically stand with him -- government paralysis due to incoherent leadership. How this plays out presumably depend on how other actors respond -- do nothing and encourage even bolder protectionism by Trump if he thinks he has won, or do something that provokes an unpredictable meltdown when Trump is at risk of looking bad by backing off. I am sure a lot of difficult discussions are taking place behind the scenes in Washington. This may be the one time it is actually helpful to have a business executive in charge of the State Department. Tillerson will probably know how foreign businesses will respond better than anyone.
I suspect we will see more in coming days about the rationale for this. Why is it more expensive to produce steel in the US? Materials (iron, fuel)? Higher taxes? Labor costs? Management costs (multimillion dollar executive salaries)? If it's labor, is it because of higher standard of living, higher medical expenses, some other thing or many things. Is this one of the impacts of the US having extraordinarily higher health care costs that price employers paying for it out of competitive international markets? Also, in regions dependent on the steel industry, is employment full, or just on the coasts? Is it full because people who used to work in steel mills now work at Walmart and McDonalds?
4
Re healthcare costs, the US is one of very few industrial countries that doesn't have some sort of socialized medicine and relies instead on employer-funded insurance. As many employers quit or never have started health insurance, that leaves more and more American families uninsured, sticking hospitals with the bills and driving up the costs to health customers who have insurance. Ever hear the proverb, "A stitch in time saves nine"? Timely treatment of health problems generally reduces the later expenses incurred by not treating on a timely basis.
6
But the congressional district in Pennsylvania with an election on March 13 might contain steelworkers worried about their jobs. Isn't that more important than the health of the world economy and the overall job picture in America?
41
In the mean time, Trump Buddy, Carl Ichan, seems to have made millions by selling his steel stock in a company that requires steel as an input, before the tariff was announced. One wonders if he got a heads-up from you know who, and if so is it an example of insider trading?
2
Professor K,
Your analysis is spot on but it would be better if you could discuss the affect on jobs in America and how we can improve trade while maintaining good, American jobs. The standard economic ideas of mutual, reciprocal trade is meaningless when your factory is closed and your best option is working at a job that pays much less and with fewer benefits. The issue is more political than economic. The American public needs to be schooled in basic economic ideas and influencers like yourself and others in the Democratic Party need to demand better trade deals instead of simply throwing out economic ideas that don't resonate with the working class. The President grabs the high ground when he claims that trade is simple to fix and progressives repeat the same old standard Econ 101 replies.
14
"The American public needs to be schooled in basic economic ideas." Get real. Stupid America doesn't learn anything.
1
Trump seems incapable of looking ahead to any real-life consequences of his simplistic ideas. The future is invisible, out there in the fog, but it's shining bright in his imagination. "National security" is his reason for a wall to keep out Mexicans, travel bans to keep out Muslims, guns for teachers to keep bad guys out of schools, and various other sweeping suggestions, but keeping Russians out of our computer systems and our elections isn't a priority. Putin's our friend, whatever those Fake News guys may tell you.
23
Dr Krugman and other economists promised that free trade was going to make everybody wealthier. They have completely failed to deliver on that promise. The past 40 years has seem a huge expansion in America's trade, and that has been coupled with a stagnation in US middle class incomes. Despite the clever theories of the economists, the benefits they promised have not shown up in US wages.This stands in contrast to the period from 1945-1970, when US middle class wages soared at a time when trade was severely restricted by tariffs.
The only industry that has clearly benefited from free trade is Wall Street, which has grown fat off of the activities needed to finance our ever growing trade deficit. It is not surprising therefore that Manhattan based media is supportive of free trade, and the rising trade deficits it creates.
What Trump should do is target those countries who persistently run large deficits with the US and which also are US strategic adversaries. Those lists tend to overlap. Top of that list would be China, but Russia also features prominently. In 2017 we imported $2.43 of Russian goods for every $1 the Russians bought from us. Russia has run a trade surplus on the US every year since 1994.
We should avoid imposing tariffs on allied nations which don't have a history of running large trade surpluses with us. For example, Canada buys 94 cents worth of US goods for every $1 we buy, while, the UK buys $1.06 of US products for every $1 we sell to them.
18
The reason why middle class incomes have stagnated in US is due to US domestic and corporate policy, not trade.
57
Cause and effect is a very good area to explore. The thing is, though, that you've got to connect the correct cause with the correct resultant effect.
You're well off the mark on saying that "trade" caused the stagnation of American wages.
8
After those golden years of 1945 to 1970, union membership substantially declined. Unions were the equalizer that made sure working Americans including the middle class got their share of the nation's economic growth. It's grown, but with the weakening of unions, it is the bosses and owners that got the lion's share, while workers got crumbs.
I don't begrudge workers in other countries getting some of the action, but it seems like workers everywhere are getting squeezed to make the rich richer.
7
In the 1970s U.S. steel industry management was still managing like they did in the late 1800s, early 1900s.
The ore mines were being worked out, new mills were not being built, a few improvements were made to the rolling mills, but rebar and pipe were already coming from mills in Japan and Korea.
Japan had the most modern mills using continuous casting that removed several steps from the process, and they were making quality steel. As an example, remember how the 1870s Chevys rusted out, and the little Honda CCVCs just kept going.
The huge mill at Buffalo has been torn down, the Johnstown mills are gone, only a few specialty mills are left. Companies like Mesta that made rolling mill machines are gone. A few workers will get some jobs back maybe, and some may get a raise. It is folly to believe the steel industry is coming back to the post WWII era. The old Kaiser steel plant in Fontana CA gets its slabs from south America, only the rolling mills are left.
It is hard to believe the USW supports tRump, in my day, they hated Republicans, the mill owners were hard core right wing, but they had to sign contracts that gave pensions, medical, vacations, and even profit sharing. Now steel workers, what do you have for benefits?
The more efficient foreign steel mills will still undercut the price, and the public will pay more for everything with steel in it.
I don't care about the beer drinkers, I buy the ones in bottles or on tap anyway.
25
Thanks for all the detail on steel! Re: Beer. If aluminum cans start to cost more, why would you imagine brewing companies would only raise the price of beer in cans? I'm guessing an overall beer price increase, regardless of what it's packaged in. And I, too, prefer bottles and regularly lug them down to the recycling bin.
1
While Trump is not the guy to do it, the US desperately needs to revise its trade policies. Presently our trade policy is crafted by the 1% and by global corporations, who end up with most all the benefits. Trade policy is not something that should crafted in the ivory towers of economic theorists, who fudge when asked about the benefits to the middle classes and look the other way when faced with the environmental impacts of cheap, unregulated manufacturing in places like China. The fact that Chinese goods might be cheaper doesn't help much to workers with less money to spend.
12
"The fact that Chinese goods might be cheaper doesn't help much to workers with less money to spend."
It actually does. It makes a huge difference. There are very few working Americans who cannot eat, or cannot get basic household goods. What many US workers have limited access to are a few extremely expensive but very important services like higher education and quality education, healthcare, and some form of meaningful retirement safety net. An extra $5/hour won't make these very expensive but essential things affordable for most people, and who says employers will even give that much in the era of automation? Therefore, in most industrialized countries, the government provides these safety nets. There, those who benefited from global trade, contribute by providing tax revenue.
The US is towards the bottom in terms of providing such social safety next, and has a historical unwillingness to get tax revenue from those corporations and individuals who benefited the most from trade. Therein lies the problem. Don't blame economists and trade policy. Blame America's cultural fetish for low taxes and even lower standard for social services.
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And Trump is not of the 1%?How can anyone argue that he cares for the working and middle classes after the tax bill he signed? The object of his affections are people that love dining in faux gold restaurant chairs and being invited to dinners with each other.
3
"Don't blame economists and trade policy. Blame America's cultural fetish for low taxes and even lower standard for social services." Both are to blame, and a lot of the zeal for low taxes is from people who are squeezed financially by low paying jobs.
Tariffs create an atmosphere of ill will between nations particularly when there is no real reason for them to be in place. This is part of Trump's America First campaign. He's taking the easy way out. It's harder to request that businesses invest in employees, pay their taxes so we can improve our infrastructure, point out to corporations that every tax dollar they avoid paying lands on the public who is, due to the way salaries have not increased and the upswing in contingent jobs, unable to support the entire cost. The more our infrastructure breaks down, the more our social safety net vanishes, and the more people that are in the "gig" economy without permanent jobs, the less desirable a place America will be for corporations.
If Trump and the GOP were serious about making America a better place for all Americans they'd be creating a budget that spends money on roads, railways, cleaning up our air, soil, and water, education, basic research to lay the foundation for more advanced research in the commercial sector. Since Trump and the GOP are serious about making the rich richer they will do no such thing. Tariffs are their answer to the problem, not investing in Americans.
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"If Trump and the GOP were serious about making America a better place for all Americans they'd be creating a budget that spends money on roads, railways, cleaning up our air, soil, and water, education, basic research to lay the foundation for more advanced research in the commercial sector."
And if they "were serious about making America a better place for all Americans," they'd revise our tax policy to make it progressive not just in name but in reality. We'd have far more brackets. Post-war until the late 1970s we had 25-26 brackets when the number began dropping, reaching a nadir for the years 1988-1990 when we had only two. In 1991 and 1992, there were three.
I don't think most people actually understand the HUGE--and I do mean HUGE--difference in income and wealth between the top .1% and the rest of us. Even much of the top 1% falls well behind those at the very top, and we have done nothing to stop the growth in that differential. Americans are routinely seduced by the siren song of "tax cuts, tax cuts" which ALWAYS benefits the rich more than the not-rich. Combine tax cuts with a mythology of rugged individualism and the social safety net is as minimal as the wealthy can get away with determining.
Not all super wealthy are super greedy and never happy with "enough," but those who fall into that group do an incredible amount of damage. It isn't trade policy that's the culprit but our failure to come to grips with the inequities of our income and tax systems.
4
A cable news station pundit last night made an interesting note - there is almost no record at all from the past 20 years that Trump has commented on anything technical - which is where the vast majority of our jobs come from. He has zero clue about the impact of AI, robotics, bio research, or any other field that did not exist in his blurred version of the 1950's.
4
The best course that other countries can pursue is to do nothing! These tariffs, if ever they are put in place will disrupt broad sectors of American industry, but will have a minimal effect on other countries. Prices may drop fractionally, and destination of these materials will change.
May be, we should not have Aluminium or Steel at the low prices that we get currently. An increase in price of these raw materials will favor more efficient manufacturing practices, which will in turn be more energy efficient, making it a bit easier to reduce our total energy consumption. Outside of USA, these tariffs will have the effect of lowering prices of Steel and Aluminium, making it a bit easier for developing countries to build infrastructure.
Moreover these tariffs will disproportionately hurt precisely those segments of population which are Trump supporters, like construction workers. They need to be given the opportunity to enjoy in full the benefits of Trump policy.
The only concern is that like his recent pronouncement on gun control, he will chicken out of raising tariffs and the Trump supporters will be denied the benefit of experiencing job losses due to a shortage of Al and Steel.
10
As far as I know, Trump took the White House comment line off the wall and put it back in the supply room, so he will not have to put up with calls from the disapproving public. He also replaced the "Contact the White House" link on the White House page with one that says Search. So unless a relative or friend works there and can give you an unlisted number, you don't even have a way to express your concerns or ask Mr. Trump if he has lost his mind. The only demonstration that would really catch his eye is one that goes parading through the West Wing and Oval Office. Comfort yourself in the thought that a trade war would gobsmack many a Red State and many GOP voters, as well as businesses contemplating expansion, real estate markets and bankers in factory towns.
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perhaps the NRA would be willing to add one of us malcontents to the dinner dates with Trump. Or we could apply for membership at mar a lago
While I agree with the economics, I think we should also acknowledge that there are lots of externalities, like biodiversity loss and climate change, that are not being emphasized enough in this discussion. I see trade as good but we are not paying the full costs, which will accrue in the future.
19
As Mr. Krugman pointed out, however, refining Al is very energy intensive. Its makes sense to do it in a place where there is abundant non-fossil fuel energy - hydropower in Canada or geothermal in Iceland, rather that the US.
At least in principle, trade allows us to grow, harvest, or create products in places where the environmental costs are minimized. (But I'd agree it often doesn't work out that way in practice).
18
In one sense, good for Paul. If there’s anything that will avoid a trade war, it’s the faith that builds in our trading partners that what Trump is after IS a trade war – when what he’s really after are bilateral trade agreements that are GENERALLY fair to American workers; and Paul’s attention to the horrors of a trade war likely will aid in securing that objective. One way or another, Trump should get what he’s after.
The concern that is building globally over Trump’s recent tariff announcements likely will cause a line to form outside the Oval Office of furriners seeking ways to make those tariffs less painful for THEM. The solution is easy: let’s talk about the ENTIRETY of our bilateral trading framework with each of those partners, and adjust agreements to be more balanced with respect to the interests of U.S. workers.
Obama didn’t even try brinkmanship, and what resulted was a TPP that sought to inveigle partners into becoming more like us culturally and place us more centrally in the position of global arbiter of political correctness – at the expense of American jobs and general prosperity. Our intended involvement with TPP was a popular means among elites of accomplishing that purpose by many administrations, and over decades – cede the leverage we have over our internal markets, in which the entire WORLD wishes to participate, to answer Rex Harrison’s eternal plaint: “Why can’t the entire world be more like … ME?” And to heck with American middle-class jobs.
6
Trump, however, is the global AVATAR of brinkmanship. Not surprisingly, his methods differ from Paul’s – they differ enough that they might even be effective in protecting American jobs … for a change.
We won’t have a trade war. That is, we won’t if the process starts soon to re-balance our bilateral trade agreements. However, like the Fonz, who when explaining how to maintain the “tough guy” image admitted that once in a while it required that you actually beat someone up, it’s possible that Trump may need to beat some partners up a bit. If a global cabal is formed to resist our insistence that our internal markets don’t exist for the SOLE purpose of enriching THEIR workers at the expense of ours, then a trade war we’ll have; which we will win, with precisely the same end-result. Far better to do this sensibly and without a gutted Berlin and a fire-bombed Beijing.
Paul ends by expressing his fear that similar policy in future will be “really, really bad”. Quite the contrary: everyone has interests, they’re always opposed, and to be balanced sometimes requires a brinkman who controls the goodies.
5
Almost none of these business watchers and economy watchers agree with the top post and followup above my reply here. The writer is intelligent, so how can he be so "hyugely" stupendously mistaken? The theoretical analysis of trade and restrictions has already been done, generations ago.
22
Garlic Toast:
Don't look now, but you've charred your toast, and an intense smell of garlic is wafting throughout your abode.
I agree with all, Paul. With his tariffs, Trump is playing to his devoted, heartland constituency; were he to effect a crash in the economy, they'd still love him. After all, Trump did admonish us that he could shoot someone on Fifth Avenue and his followers would still vote for him.
I have a relative who said that she voted for Trump because of "the bank stocks". The silly irony is that Hillary was criticized for her relationship to the financial industry; bank stocks under Clinton would have done just fine. And continuing the irony, if Trump causes a trade war, all of my relative's purported gains under Trump would be for naught.
The irrational anger of the Trump voter that is supported by Fox News and other Right Wing media for their financial gain has, once again, put us on the precipice of financial collapse.
As some pundits write, it won't go that far, but who knows? I certainly don't want to be left with the rationale, "Well, it can't be *that* bad."
Wilbur Ross has typical Trumpist non-reasoning when he attempts to argue that the few extra cents on a beer can due to Trump's tariff is meaningless. If there is retaliation on the beer exported by this country, then workers will lose their jobs because they will be selling less beer... even if Ross's few cents increase on a can of beer appears to him to be meaningless.
I'm really worried. We've come along way in managing global relations, although not perfectly. Trump is a monkey wrench stuck in that work.
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"The irrational anger of the Trump voter that is supported by Fox News and other Right Wing media"
It is not just "supported" but nourished, encouraged, and, in many cases, actually driven by them.
3
Trump and protectionists are dead wrong. But that does not mean nothing is wrong.
No system survives a model used by Japan, and emulated by every third world country: "we only export, we don't import." France imports from outside of EU starting with bananas - go figure.
Trade imbalances have very expensive externalities; not limited to American joblessness alone. Cash in the hands of Arabs has produced today's mess in the middle east. Cash in the hands of Chinese has not led to spread of literacy, health, and democracy; it has led to overseas military bases, loans to corrupt poor countries that China will eventually own, and a vast criminal empire overseen by the government. About all Europe did with its colonial model of trade was to engage in wars and kill as many people as they could, including their own - twice in the previous 100 years. We have no model to follow except our own.
Trump (and politicians) lack the nuanced approach that calls for opening of all markets, sharing of technology through market mechanisms so that no one remains poor for ever, spread of education, openness, and democratic institutions. US succeeded spectacularly in western Europe, a region given to authoritarianism, fascism, monarchies, wars, and savagery - and foster a post-patriotic society disinterested in warfare. This model deserves replication.
While I agree all this is lost on Trump, it is also lost on most of our elected leaders.
Kalidan
77
Wow. The US is principally responsible for peace and freedom in Western Europe? And somehow ‘cash’ is principally responsible for issues in the Middle East (and not, say, past and current colonialism as well as deliberate decisions made in the wake of both World Wars by both Europe and the United States)?
Someone has a very inflated idea of the US as a force for good in the world, and a great talent for turning a blind eye to the opposite.
GO CANADA GO!
China isn't even in the top ten of exporters of steel and aluminium to the U.S.A.. America's "best and most important friend and next-door neighbor" is being slammed in the head by this mindless and desperate President. If there's one country that could "hammer" the U.S.A. in trade war, it is Canada. The average American doesn't know that without its northern neighbor for the last 150 years, the U.S.A.'s economy would be a fraction of what it is now. One reason there has been no armed conflict since the War of 1812, is because businesses have liked each other and trusted each other. The closer Americans lived to that northern border, the more they know about the neighbor. Lots of border towns will be hurt by this move - if it actually happens. Buffalo, Detroit, Cleveland, Pittsburgh, Duluth, Seattle... . And Canadians will have the world loudly cheering them on. No two countries in history have ever traded as much as the U.S.A. and Canada. More than $1 billion PER DAY crosses the border.
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Canadian economy 1.6 trillion. USA economy 19.4 trillion.
Which do you think would survive if they each slammed their doors shut? Which economy do you think would suffer the most? And your numbers look a little off:
Canada is currently our 2nd largest goods trading partner with $544.0 billion in total (two way) goods trade during 2016. Goods exports totaled $266.0 billion; goods imports totaled $278.1 billion.
Maybe the Remedial POTUS should build a wall on the northern border, too...?
Trump despises Canada (weak), but loves Russia and China (strong). Pretty straight forward.
"[a trade war] would be highly disruptive" -- isn't that the point, Dr Krugman?
There is an entire class of investor / CEO that yearns for disruption. Money can be made on the growth and failure of companies and industries, as long as you are savvy enough to look for it and wired-in enough to get the info before everybody else. Trump is a classic type of this class, pressing buttons and breaking rules just to see where a new "main chance" might arise, and loudly trumpeting his brilliance.
Unfortunately us little guys can get clobbered by all this disruption, getting trickled on or just plain tricked -- isn't it always the sign of the end of a bull market when the little investors start joining in?
Disruption can be a good thing, especially when combined with real technological improvements. However disruption can also be a pointless shifting of seats, just to see if some smart player can get a better chair.
30
Your analysis is more or less correct, except! While we're changing seats
the overall level of our global economy goes down, AND can collapse
if it goes on too long.
The same "manly" perspective that thinks a "strong" dollar is unequivocally good and a "weak" dollar is something of which to be ashamed.
18
Once agin the "little kittens" in the press are running into the wall chasing the point of the red laser that Trump is waving around. This has been going on for almost three years and it seems they have learned nothing...
22
A lot of people blame Herbert Hoover for the Great Depression. I suppose this is partially correct, as Barack Obama responded differently in 2008 and the result was a gradual recovery.
But I fear the Great Depression is going to be repeated albeit with much worse consequences. Trump and his blind followers will enact laws that will cripple our economy and thus the world's.
When your children are starving remember it was Trump and the mindless fools that followed him.
77
The 2008 bank (and insurance) crisis to which the President responded "kind of" effectively was the result of a long build up of a combination of misguided regulation in some areas and lack of regulation in others. The response could have been better, and to be effective in the long term should have included a large number of prosecutions. Anything Obama may have done was under the plans passed by his predecessor. The President in 2008 was George Bush.
4
"the plans passed by his predecessor"
You've conveniently forgotten that the Republican Party took a blood oath to oppose anything and everything that Obama proposed, even when his proposals were good for the country. That Obama was able to save the country by repurposing Republican ideology merely speaks to his great intelligence.
4
This Remedial POTUS has been so desperate to be seen, heard, and quoted in the press and the airwaves it must be as great or greater a need that most addictions are.
This Remedial POTUS is a sorcerer's apprentice who longs to fill the shoes of the absent master, who only wants to have his hands on the captains wheel so he can show what he can do by "giving it a good spin."
This Remedial POTUS just maybe thinks George W. FAILED to fulfill his GoPee donors wishes to sink the economy faster, so that every oligarch-wanna-be could scoop up entire sectors of the economy at fire-sale prices?
Our entire US and North American auto industry came close to being sold for SCRAP, while banking and lending froze up and worldwide stock markets either SANK or C-O-L-L-A-P-S-E-D...!
If everything had failed completely the last time (2008-10) would the Tea party led GoPee demanded ripping up the social safety net and sharply cutting back ENTITLEMENTS?
They have already claimed, after voting in Tax Cuts for their donor base, that there isn't enough for SNAP!
However, there seems to be and endless fountain for funding the defense department and far flung undeclared wars.
Cheeto's NRA play in front of cameras "to seized guns, then due process" seemed to echo his call to "seize control of the oil fields" of some yet un-named country he wants to invade...!
The question is how the the EU will react to those tariffs. If they are clever they stay sane and do nothing. As Mr. Krugman points out this is going to be a very bad self-foot-shot. Any (eligible) hostile answer means feeding Mr. Trump's ego. Thats all he wants. The most successful punishment is doing nothing and let the economy do the self-whipping.
As an answer to impose tariffs on Harley-Davidson motorcycles is as silly as the bikes are. Don't feed the troll.
37
Thank you, Hans, for this sensible observation. I wish I believed it would be listened to by the "deciders".
12
Yes, knee-jerk EU response is even more ridiculous than Mr. Trump's action, as it invites immediate in-kind retaliation:
- Levi's products (actually not sewn in the U.S. so the hurt jobs are in Mexico or Bangladesh) --> Armani suits and Gucci shoes
- Harley bikes --> Germany-assembled BMW and Mercedes cars
- Bourbon from KY - cognac and champagne, obviously
It's a shame that the retail lobby was able to quash the idea of a border-adjusted tax which had been the only smart thing in the original Rep tax proposal, and which would medium to long term have done wonders for the trade balance. Instead we have this lose-lose nonsensical spats.
They chose Harley Davidson because it is in Paul Ryan's state of Wisconsin.
They chose Kentucky bourban because it is in the state of Mitch McConnell.
And they chose blue jeans because it is Nancy Pelosi's state of California.
How long will we allow ourselves to be held hostage to the deranged, malignant, and plainly unstable mind of Donald J. Trump? Today it is a trade war, tomorrow it could be nuclear war. It absolutely could happen.
Every day which passes without our pursuing all legal remedies to his Presidency represents a failure of all of us, and a renewed threat to our children and grandchildren.
196
Well, we could trade Trump. Then again who would we trade him for and with? Other countries might consider that an act of war.
24
The Republican controlled senate and congress have not yet seen fit to take any action. Until and unless they do, we'll just have to wait and see whether Mr Mueller finds anything.
2
At the rate the petulant brat is going it is unclear what state the economy will be in when Americans can send the message to all of his craven supporters, your'e fired. Will there be anything left or will it be a smoking ruin?
Maybe now the Republicans will seriously start to consider impeachment.
54
Maybe one day democrats will stop being delusional. I say that as a democrat---a realistic democrat. Impeachment of Trump is a pipe dream. It is not going to happen. Ever.
I have a bridge you may be interested in. The advertising banners for it are attached to the flying pigs overhead just now. Don't look up!
Actually might be possible. We all know that the ONLY way you can get a Republican's attention is to target his/her wallet. Gunning down his/her children; grabbing him/her by the genitals, no problem, but mess with their money, and you have an instant response. We'll see.
1
Paul, Any chance you can get booked on Fox and Friends so you could explain this to the presidenT?
You could bring props, like a toy car to help explain it to the child living at 1600 Pennsylvania.
161
Mr. Krugman does deserve a TV forum. However, I heard the ethically challenged Commerce Secretary Wilbur Ross talk about Trump's tariffs and he echoed the conservative dogma that U.S. trade policies are behind the rise of the national debt and hurt U.S. businesses. He of all people as head of the Bank of Cypress should understand we're now in a global economy. Certainly the U.S. corporations that have moved manufacturing overseas and to Mexico, paid little to no taxes, and parked billions of profits offshore--understand that.
2
Hand puppets would work, too.
Trump won in part by promising he would get tough on trade. He promised the 44% of Americans who voted for him that just having him, a master negotiator, as president, would change America's future. He, and the "tough" negotiators appointed by him, would jaw-bone foreign adversaries (China, Mexico, Canada, the EU) to give America a better deal. All previous trade agreements were bad for Trump, and had given away the store. Obama and Hillary were just more of the same. But Trump would bring back American manufacturing with a roar. That, and restricting immigration and keeping out colored and Muslim immigrants, would make America great again. There is one thing in all this thread of argument and bogus logic: it's pure rubbish. Trump is a pathological liar, con man, ignoramus, and cheat. He scammed America. Not only is he ignorant of every policy area including trade and immigration, he doesn't care that he doesn't know, but believes he knows more than any expert. That's the definition of the dangerous fool. America is heading for rough times, but the world also, thanks to America's choice (helped by Putin) in 2016.
263
46.1% of voters voted for Trump, but only 55.7% of Americans voted, so only 26% of Americans actually voted for him. People always over estimate his support. Of course, Hillary didn't do much better: 48.2% of voters, but only 27% of Americans voted for her.
2
The question is why such low turnout, much lower than in other democracies?
These stats ---26% of Americans voted for Trump, and 27% for Clinton--- means there are many millions of possible voters who would vote if good candidates were presented to them that actually represented their interests---for real.
Many voters either didn't trust the Dems this time, or were so desperate for change, they fell for a lying authoritarian of dubious mental stability.
A democracy should have remedies for this deplorable situation. But can obvious remedies go forward if both parties must hustle big money from the wealthy and corporations and listen to their demands? That's what may really affect turnout.
1
Sad, isn't it, that the Americans you describe don't seem to realize that even if you could waive a magic wand and bring steel plants back to Bessemer, Alabama they wouldn't look like those of old. Much of a new plant would be automated. Those jobs aren't coming back and technology -- not trade -- is the bigger reason why.
5
I would be willing to bet that someone in Trump's orbit stands to make out bigly by this intended disruption. But like many things this will lead to many unintended problems that the moron will not know what to do with. This will also lead to many ruffled feathers for years to come. Many countries will have long memories over this no matter ow it plays out.
34
Carl Icahn already has! He dumped shares like crazy the day before Trump made his remarks. Tell me that he hadn't hear from Trump!
Does this fall in the category of insider trading?
Can the president be charged and convicted for aiding inside trading?!
What about Stolper-Samuelson? And BTW, we are still waiting for the flour and sugar you liberals promised us 35 years ago....
1
That has nothing to do with tariffs on steel and aluminum. And Trump with his attention span of a gnat, surely never considered it. And what are you talking about flour and sugar? Do we have a scarcity there? More of an overabundance...
1
"What about Stolper-Samuelson?"
What about the Stolper-Samuelson theorem, Warren? Is it your claim that The Donald understands it? He probably hasn't even heard of it.
And are you suggesting that there has been a shortage of flour and sugar over the past 35 years for which liberals are responsible?
1
Trump couldn't make money running a casino of all things! Four times!!!
Can we get people who understand and are experienced in economics and trade into this administration? Despite DJT's 'degree' (I need to see transcripts) from Wharton (how much and to whom did Fred's money go to), the guy is simply way too ignorant to make any decisions in this domain.
113
I'm wondering how Trump even earned a high school diploma, never mind a degree from Wharton. He can't write, he can barely speak, he knows nothing of history, nothing of science and he doesn't read books. I doubt he understands mathematics and he certainly doesn't understand economics. The leaks claim that he can't even read a balance sheet. IMO, Wharton should either take back the degree or admit they gave Trump a lousy education.
Trump was an UNDERGRAD at U of Penn.
He transferred in from Fordham in this third year.
He has a BS, NOT an MBA.
http://www.pennlive.com/news/2017/02/what_is_trumps_real_record_at.html
A 1968 commencement program shared Friday by the Daily Pennsylvanian backs that up. It shows that Trump graduated from the undergraduate school of finance and commerce, but he did not graduate at the top of his class or with honors.
Link to the graduation brochure:
http://media.pennlive.com/news/photo/2017/02/19/trump-commencementpng-c8...
Advocatus Diaboli:
Was 45 then supposed to tell these American CEOs that it's just too bad that they can't compete with other countries that produce cheaper steel and aluminum? He, 45, can't change the fact that China's government, for example, helps fund their industries or dumps their steel here. Therefore, you guys are just going to have to shut your doors and look for other gainful employment. Look, it's for the good of everybody -- we're in a global economy now. I knew you'd understand.
Hey, Kellyanne, get these guys some MAGA hats -- on the house!
7
We already have import tariffs on China.
And China isn't a major source of steel for the US anyway.
But why does Canada make steel cheaper than the US?
I'll trade you a MAGA hat for a MASA hat (Make America Smart Again).
Krugman is right: it's all about stupid machismo, and Trump's suggestibility, which is made even worse by the accelerating unravelling of his corrupt administration.
32
Trump has started this tit-for-tat war in every area of governance. Trump could very well go down in History for being the most ignorant, selfish and lying Leader ever.
I hope his demise is imminent
43
Mobilize to ensure the beginning process in November 2018.
Stupid, yes. Surprising, no.
It won't be long before Trump says, "Nobody knew trade could be so difficult."
115
The stock market lost about $300b on the heels of this announcement. We’ve lost about 45,000 steel jobs since 2000. That makes the cost to pension plans and retirement accounts more tha $6,000,000/job. He could have just written them all a fat check instead. Trump touts the stock market as a measure of his policies. It just gave him an F.
88
Please run for office, Maggie.
One wonders who, amongst the Washington insiders, gets advance notice of Trump's trade war threats, so that they can order short sales on the market using their secret offshore accounts. Then, if he switches direction, one supposes that they too switch directions in their derivative trades.
Ah me! Missed the boat again. I should have wormed my way in as a DC insider. It must be the next best thing to becoming a TV evangelist. Missed that boat too!
73
You don't suppose Carl Icahn got advance notice? Nah, that's still conspiracy thinking.
Thirty years later (for me) I can't get the bullet point list of "causes of the Great Depression" from AP US History out of my head - and one of the bullet points being "Pres. Hoover's Trade Tariffs". I don't understand how the government can let this happen.
35
I don't agree with Trump's actions, which are counterproductive and will end up hurting the US, but he has a point.
Why is the US playing more fair and provides open markets when the rest of the world is rigging the game? and how long can this go on while the US accumulates ever greater trade deficits?
5
You make an assumption that's false. We talk like we are fair, but
the fine print shows that our 1% are making out like bunnies. WE're not
really holier than they.
"The rest of the world", Michael? I don't think so. A few countries, yes, but why hammer Canada? We're not that diabolical.
"Trump has always had a thing about trade, which he sees the way he sees everything: as a test of power and masculinity."
Yes, and it is a simple and dangerous as this Mr. Krugman.
The truth be told regarding the information you shared in the opening statement of your article, I guarantee you if asked to explain or even elaborate, Trump would fail miserably.
"In themselves, these tariffs aren’t that big a deal. But if they’re a sign of what future policy is going to look like, they’re really, really bad."
Yes, it's bad and continues to get worse. The GOP will continue to remain silent as Speaker of the House Paul Ryan, and Senate Majority leader Mitch McConnell continue to run our government.
14
Manitowoc describes itself as “a leading global manufacturer of cranes and lifting solutions” and is a company heavily dependent on steel imports to manufacture goods for export. How many jobs will be lost there?
A better question might be why did longtime Trump confidant Carl Icahn dump $31.3m of Manitowoc stock (which lost 19.3% of its value last week) just before the tariff announcement?
31
Isn't this a likely case of insider trading? The kind that landed Martha Stewart in jail?
1
An American steel trade war is simply wonderful for Vladimir Putin's Russia and Xi Jinping's China.
While Trump's target is China, America primarily buys steel from Canada, Mexico, Germany and South Korea. And while there are about 200,000 American steel workers who are supposed to benefit from this trade war there are about 8 million workers in industries who buy steel who will be harmed. Russia luxuriates in any trade war conflict between America and it's allies particularly Europe.
Perhaps Trump got spooked by Putin's animated nuclear war head missile attack on Florida unveiled during Vladimir's state of the Russian union speech. Since Putin's foes end up in prisons, hospitals, mental institution, urns and coffins Trump's fear and silence is based in reality. Moreover, Putin knows what Trump is hiding from the American people in his income tax returns and business records.
28
Absolutely. And the dominant narrative is that Trump is arrogant, or stupid, or whatever. The scarier possibility - and one that is seeming increasingly likely to me - is that the mess is absolutely intentional. It's what he was paid for, and told to do.
The benefits of comparative advantage have been well-known for nearly 200 years. Yet, ignorance persists, apparently centered in the Oval Office. We stand at the brink of repeating a completely avoidable policy error. I shudder at those economists who, whistling past the graveyard, suggest that this time “it won’t be too bad.” Yes, it can be just as bad. Given the speed with which modern technology can transmit policy error from economy to economy the predictable downward spiral that hallmarks a trade war might be faster and deeper than historical precedent suggests.
Trump’s stunning ignorance of theory and inability to take advice from better-educated people places the world at risk of recession or even depression, either of which will ruin lives, destroy asset values, and further poison politics. (We may be exporting our political dysfunctionality just as exports of goods and services decline. There is some irony in there, but I’m not in the mood.)
The Republican Party used to be the party of free trade. Where are those people now? They are more needed now than in at least a generation.
14
At 4% unemployement, a trade deficit is not necessarily a bad thing. In effect, the USA is enjoying the cheap labour of foreign countries in the form of cheaper intermediate goods like plates and beams. Let's use these cheaper goods to build some usefull and exportable stuff: cars, machines, planes...
Furthermore, by having job, the workers from these countries start to be potential customers. You want to sell them something? Make something they would buy.
Also, the industries Trump wants to bring back are some of the most polluting ones, and some of the most energy-intensive. Why on earth would you have these industries in your neigbourhood, and have to produce the power they need from dirty coal?
If trade is a win-win situation, then trade wars are a loose-loose situation.
17
A tariff on Canadian, South Korean, and European steel and aluminum would be counter productive: we ought to not harm our allies' economies, if we can, even if they might be taking some advantage of us. That's the price we must pay in order to have a robust alliance. At the very least, if indeed our steel and aluminum sectors are in trouble, we could find a way to try to work something out with the EU, Canada, and South Korea.
I am all for punishing China with very high tariffs, though. China is no friend of the United States.
8
Since he's obviously clueless about trade and way out of his league, who is advising him on taking these actions?
It's hard to believe he's come up with this plan for world domination on his own.
14
Not to mention the effects of broader trade on international political stability.
10
There's been a lot of bad economics displayed in the media about the Trump tariffs including:
1. They will cause a recession or even a depression just as the Smoot–Hawley Tariff Act caused the Great Depression! The Smoot-Hawley act did not cause the Depression yet this is a very popular view among conservatives today. Recessions are caused by a fall in final demand which the tariffs are not going to affect. They will possibly lower potential GDP.
2. They will cause inflation. Not so unless you think tax increases cause inflation. The tariffs are taxes paid by US importers and US businesses. They will not be paid by consumers unless passed on which is not very likely. More likely they will reduce pre-tax profits in industries that use lots of steel and aluminium while raising profits for steel producers. These effects explain the stock market reaction.
What's not often mentioned is that Trump tariffs are in violation of the WTO rules as well as NAFTA, which of course includes Canada. In other words, they show Trump's contempt for the rule of law in this case international law that was in large part created by US policy over many decades. The WTO was created to avoid trade wars by resolving trade issues through a legal process which the Trump tariffs will surely undermine if they actually go into effect.
26
"...if they actually go into effect." is a telling point.
Given that there will be winners and losers in the US economy (and internationally) were they to "go into effect", one might imagine very intense lobbying to be occurring, culminating in "impressions being formed" on Capitol Hill. If the "net impression", amongst congress-persons, is that tariffs on aluminium and steel is a crazy idea, might that net impression serve to sway an irrational president into offering, not a backdown (bad, bad word), a face-saving piece of restorative rhetorical bluster that culminates in a somewhat more rational policy on trade? Might then Trump be able to trumpet the wisdom of his ways in achieving a "better — much, much better deal for America" on the way to its renewed apotheosis?
Sigh! ...from abroad. America's resilience in the face of systemic internal chaos is quite fascinating — not a new thing: it's been going on since before Franklin was living in Paris... Unfortunately the glory has never been equitably distributed.
The trade deficit is exactly equal to the amount of money the U.S. takes in from other economies. As Trump raises the budget deficit to over a trillion dollars with his tax cuts for the rich the trade deficit will follow.
11
Been trying to argue something like that here for years. Trump's tax cuts should hammer the job market if the math works as advertised.
Trump doesn't really want a trade war, nor does he really want to place tariffs on aluminum and steel.
He simply wants to temporarily distract the public and the press from his recent troubles: Hope, Jared, Ivanka and the rest.
I predict that next week, Mr. Trump will back off and rescind the tariffs. And the stock market will bounce up, everyone will make some money and all will be normal in Trumpland.
That's what Trump does: creates a new controversy to mask the latest controversy. It's worked so far, so why not continue?
131
Another possibility is Trump just wanted to pay back Carl Icahn, who still profits, even if (when) Trump changes his mind.
2
Yours is the most cogent and concise assessment I have read yet, and I believe, is the correct one.
Hmmm, ya think these stock market bounces are GOP inspired so fat cats can keep selling high and buying lower. It's not a wash if you buy something different. Ya think this is going on?
1
4 percent of the shrunken employment pool maybe unemployed, but wages have been stagnant for 45 years. Guess there is a reason to change the status quo.
10
Instead of arguing about the theoretical benefits of free trade, which are undeniable, how about we look at how things are working out in the real world.
Chinese manufactured products have relatively free access to the U.S. market, mostly through U.S. multinationals' supply chains, but often as finished goods. The U.S. enjoys a higher standard of living because of these cheap products, but at the expense of concentrated disruption in some industries (see the textile or furniture industry in the 90's; now look toward more advance manufacturing sectors).
Meanwhile in China, U.S. companies have difficulty operating in China due to all sorts of restrictions, from tariffs -- which are legal under the skewed WTO regime that deems China a developing country -- to more indirect restraints, like the manner in which China has kept out the large American tech companies like Facebook and Google through its censorship policies.
On top of that, whatever competitive advantage Western firms have built up over a generation of expensive R&D is being nullified, if not by outright theft by hacking (which poses a national security threat when the target is a Lockheed Martin) or reverse engineering, but also through policies by which the Chinese only permit Western firms to operate through JVs with local producers who gain permanent access to valuable IP and know how.
That's why people are calling for not only free trade, but fair trade.
24
An intelligently-applied strategy of carrots and sticks might move us closer to that ideal. Trump's flailing about is anything but.
18
How does imposing a tariff on industries where Canada is the main US import source fix any of the things you are talking about?
1
There is some truth in Trump's comment about being "down" with other countries. The countries that run the trade surpluses, especially China, are the ones who should fear a trade war the most as they have more to lose. In order to get concessions - for example to get China and other countries to quit dumping, which is still common - it may be necessary to threaten a trade war. When the other countries are threatened, they will reply in kind, but such counterthreats may be largely empty. But the US has power in these things which it has not been using, or which it has been using in the primary interests of corporate profits rather than those of American workers.
Winning even a war of bluffs will not be simple or easy, and Canada is not the country to even threaten a war with. But there is no reason to let China get away with things like its obvious currency manipulation, as Krugman has said before.
6
Only 2% of the steel the US imported in 2017 came from China so how does a tariff on steel help with our China trade deficit? Steel imported from four of our strongest allies (Canada, S. Korea, Japan, Germany) accounts for 34% of the US imports in 2017. It appears the Trump tariff is intended to most affect our most important allies - is that smart?
32
And, as the NYT editorial today pointed out, the US has a $2 billion dollar trade SURPLUS in steel with Canada. It's hard to avoid the conclusion that Trump's real goal is to undermine and destroy rule based international trade. And there is no reason to think other countries would accept as an alternative bilateral trade agreements with the US, as some commenters suggest, since they would have no reason for believing that the US would actually abide by any bilateral agreement. In fact, they would have excellent reason for believing the US wouldn't abide by any bilateral agreement if, for whatever, domestic political reason or sheer whim, it decided it didn't want to abide by some part of it.
13
No, but, well, TRUMP.
The all-surpassing ignorance of His Unhinged Unraveling Unfitness has been of concern ever since he located a hot mic and a camera light - but the fact he could do so much damage whilst 'adults were in the room' is a giant Red Flag Event.
That the decision was taken at the reported urging of Wilbur Ross/Peter Navarro, with the Orange Jabberwock in an 'unglued' state:
https://www.nbcnews.com/politics/white-house/trump-was-angry-unglued-whe...
on Wed. after Ross walked in to announce to the unawares John Kelly that there was to be a meeting on Thurs. with a bunch of steel/aluminum CEOs, is indicative of how a suggestible POTUS can be easily manipulated.
Of course, Carl Icahn amazingly already made out well, by dumping at least 1 million shares, saving himself at least $31 million$:
https://www.cbsnews.com/news/icahn-sold-millions-in-steel-related-stock-...
in a textbook case of amazingly coincidental timing.
And the new Koch Bros. Inc. steel plant in Ark. will benefit nicely, helping an environment where steel plants have only been running at 70-75% capacity for years:
(See link below)
But on top of it all, Agent Orange from KAOS needs to tell us how the trade deficit he bemoans will be affected if Boeing's steel/aluminum expenses increase.
72
Promised link:
https://www.nytimes.com/2015/10/11/opinion/sunday/corporate-welfare-for-...
Hopefully, sanity will raise its head, and these threatened tariffs won't actually be implemented next week - hope, hope, hope.
Oh wait, we're Hope-less now; now what ?
The point is, no one watching should ever forget this object example of the real dangers and breath-taking damage that can be done by putting a serial bankruptee - who passed a Trump Tower Tax Cut plan (that also doesn't add up) through Congress because of Complicit GOP'ers, and who has never had to deal with 'stakeholders' in his private business except by fiat - in such a position.
What is happening is because of Complicit GOP'ers who deluded themselves that chaos could be managed as along as their agenda was being prosecuted; GOPers' craven delusions lead in straight line fashion to our current episodic 'Disruption' reality show on steroids, indicting each of them individually just as surely as the daily Mueller charges that minions of the Putin-Trump-NRA-GOP'er Axis are plea agreeing with.
Moreover, a 2-party Democracy in charge of Pax Americana is in very serious trouble indeed when 1 of those parties persists in delusions and dysfunction.
"If conservatives become convinced that they cannot win democratically, they will not abandon conservatism. They will reject democracy." - David Frum
35
"Of course, Carl Icahn amazingly already made out well, by dumping at least 1 million shares, saving himself at least $31 million$: in a textbook case of amazingly coincidental timing."
What a coincidence that Icahn who stood on the stage with djt on election night 2016, then roamed the WH as a regulatory advisor until The New Yorker Magazine article exposed the huge conflict of interest, sold off stock that was about to lose value due to tariffs on steel!!
https://www.newyorker.com/magazine/2017/08/28/carl-icahns-failed-raid-on...
And we are supposed to believe that he is innocent of insider knowledge? "Lock him up."
35
That is some rejection of conservatives coming from some one who has been a conservative toady for years. Could you supply the source of your quote? Thanks.
1
I'm no economist, but even a dummy could read this column and get the point.
But the president, with his amazing negative I.Q., would never even make the attempt. For one thing, he'd have to read something more challenging than a dirty limerick. And for a man who hasn't even read the books his ghost writers have written, that would be a challenge.
He could listen to his advisers, but they're either more stupid than he is, or they're moving so quickly through the revolving door that it's hard to have a conversation.
Our class-challenged Mafia-boss wanna-be president is trying to outmaneuver real hard guys with toothless threats and provocations. Putin has already played him for a sap, and God only knows what China could do if they were provoked.
But the president wants to undo Barack Obama's legacy, and to do that he'll have to negate the significant economic gains that a real, intelligent and thoughtful leader has bequeathed us.
And he's just the man who can do it.
365
Trump did listen to one advisor: Carl Icahn. Perhaps he owed Carl money from when they were in the casino business together.
2
@ Gemli---- I miss Obama in many ways. But let's face reality---Obama pushed TPP---good for corporate wealth and bad for workers, as many experts have testified. See Lori Wallach's many interviews, for one.
Obama was a saint compared to the present shameful mess in the WH. But let's not over idealize his 'legacy'.
Democrat Obama passed GOP-designed ACA, which covered more people, but subsidized increased insurance profits with our taxes, and is the world's most profitable system, but still leaves out millions.
He could've made series of speeches across the country explaining the public option, or regulations on insurance/drug costs that most other democracies have as centrist policy. But that was deemed “ off the table”.
Yeah, he said he wanted all this, he’s a good guy, but so what?
Obama could have found cabinet/financial advisors from outside, not inside the Wall St big banks that had caused the 08 crash.
Similarly, Democrat Bill Clinton passed GOP approved laws like Nafta. And repealed sensible bank regulations, setting the stage for the ultimate 08 Cash. And repealed long standing anti monopoly laws for the media---leading to the huge Fox News growth and dominance. The GOP triumphed.
Of course I miss Obama’s demeanor, his decency---the contrast with Trump is painful. But under our big money system that creates norms, the party of 'opposition' can't oppose too, too much.
3
Just one problem with DT listening to his advisors (recall DT was the one who gave them their jobs): most are Trump wannabes, so they are as ignorant and self-serving as their boss. Those smarter than DT twist him around their little fingers, and all they have to do is blow complimentary smoke up his you know what--until someone else even more manipulative comes along (e.g., Icahn).
There is a major underlying assumption behind the defense of "free trade" as it has been carried out, and that is that it has improved things overall for the US. This is not in evidence. Economists would not be talking about "secular stagnation" if trade had produced the benefits that were claimed for it. The current relatively good state of the economy does not mean that this stagnation has been eliminated - the economy (and wages) should be doing much better at this stage of a recovery. It has only been a matter of a few weeks since Krugman was calling for more stimulation (of course tax cuts for the rich are definitely not a beneficial kind of stimulation, while true infrastructure improvement is required regardless of the current point in the cycle).
9
Mostly agreed, except: Paul called for "stimulation" during the global recession/financial collapse, 2009-10, more than a "few" weeks ago! Secondly, wages cannot be blamed on the "economy" in abstract; their stagnation is the result of deliberate decisions by executives and boards to appropriate labor's value for profit and capital shares.
To examine trade, examine its properties: cheap steel benefits industries, as Paul points out, many times bigger than producers; tariffs will not grow domestic capacity and contribute to producers inefficiency. (China says we are 10 years behind!)
Lastly, a hit or miss, fix-and-patch/tear down-rebuild approach to infrastructure is counter to best practices. Witness Spain, Poland, and China--with its 3 continent, 65 country/65% global GDP, trillion dollar infrastructure project focused on roads, rails, and ports to create new markets, higher efficiencies, and global security--in time for the doubling of the global middle class (centered in Asia) to roughly 6 billion people by 2025, with incomes between 14.5K and 145K dollars--as the US middle class declines!
Infrastructure (say development economists) must be tied to long range plans for growth. That plan includes 4 pillars: housing, transportation, and social needs; business clusters, shipping; education and innovation centers; financing, regulation, security. West Virginia has achieved this in its chemical alliance zone; good jobs, exporting a billion dollars of products annually!
19
I am at the mercy of our woeful infrastructure, every day as a Californian. however, if we were to undertake large scale, stimulative projects there would be nobody to work on them. long term unemployed fat while guys from redding prefer not to work. young disaffected men of all ethnicities prefer to participate in the gig economy, minimally productive. only another wave of illegal Latinos would do the dirty work.
2
I am really impressed by the ease with which the uneducated un-poor, like karen, attribute poverty to the fact that life is so good for the poor that the poor simply _choose_ to live a life of poverty, "to participate in the gig economy, minimally productive," rather than to "do the dirty work," which they leave to "illegal Latinos."
I agree with Krugman that imposition of tariffs may prove counterproductive as it will not only prove disruptive but end up increasing the cost of production of many items. The most affected would be the auto sector, which is the largest importer of steel and aluminum. Moreover, the has come at a time when the auto industry is seeing a revival, after remaining dormant for a long time.
However, I don't agree for singling out Trump for making imports of steel and aluminum costlier. many countries practice many forms of trade restrictions in more subtler ways. For instance, China, which has always advocated global free date, makes it virtually impossible for other countries to export their products. India, which specializes in manufacture of bulk drugs, has virtually hit the wall in trying to export to China because of its protectionist policies. China has also been accused for not providing a leveling field by arbitrarily bringing the cost of production by granting various subsidies to the manufacturers. They have been known to grant subsidy in electricity to exporters. What about EU? It is so difficult to export chemicals to Europe because of the high cost of obtaining export license for each product.
I think Trump is only attempting to teach China a lesson. I strongly feel that once he achieves by forcing China to review its protectionist policies, he will withdraw the tariffs on steel and aluminum.
4
K.S., if he wants to deal with China then why doesn't he put a tariff on a Chinese product? I know they make and dump a lot of steel worldwide. However, as far as countries the U.S. imports steel from China is not even in the top 10. Those 10 countries are allies like Canada and S. Korea.These tariffs have not even been applied yet but most of the developed world is ready to sock it to U.S.
11
"The point instead is that the gross job losses would be huge, as millions of workers would be forced to change jobs, move to new places, and more. "
And the cost of that disruption I know well, as I have been forced to move twice because of job losses. Luckily I have the resources to do so without losing too much of my savings. Most do not. A typical relocation, even one where the new employer picks up the tab for the movers which they may do at the manager level, can cost $20K or so easily.
27
I'm not an economist but i work in optimization. President Trump seems to think that in order to win the US needs to run a trade benefit, i.e sell more than they buy, with most if not all countries. This is not the optimum. Like Dr. Krugman says, it makes sense to produce goods where they are the cheapest and import them, this way the US can make more expensive items like cars more cheaply, and the export those. More profit is made that way. It doesn't matter if the US runs a huge trade deficit with any one country as long as overall the US economy is doing well, which is the case right now.
108
Last time I checked the "current account" (an indicator of overall trade balances) it was running about $40 Billion/month in the red. This has existed for many, many years. I often wondered just how long this can continue? Our largest export seems to be cash.
6
"Our largest export seems to be cash."
And yet, somehow, the rich continue to get richer!
2
Trade policy must be based on principles. What is Trump's principles other than pandering to the last CEO complaint and/or threats to stop donations? If we clearly stated that our trade policy will focus on exploitation of labor, environment and government subsidies/currency manipulation, we would do the right thing. We know how to do this. Trump should check with Dana Rodrik or similar trade economists to shape a coherent policy.
16
Trump continually thinks stupid is clever! He has evolved a language of excuses to shed responsibility, words that make him both victim and victor (election/immigration/gun control), a logic that frames every loss as a win (healthcare, trade). His winning formula? Protest, punch, and punish.
Wilbur Ross' aluminum cans pretend tariffs have minuscule effect. He should display Caterpillar's hydraulic mining shovel or a GE diesel turbine, better demonstrations of the costs of Trump's latest “win.”
In fact, every Trump “win” is expensive! Each burdens the public. Healthcare pays for corporate tax cuts which buy back billions in private stock--the public treasury is transferred to private entities. Private costs become public deficits. People are scattered statistics in a tilted balance sheet that shows how easy it is to deregulate by fiat and kill for profit.
Flint still lives with the pallor of poison in its water. The waters of the Dan River (NC) still turn up dead fish from a coal ash spill, as Pruitt removes regulations that protect people living along its streams. Blow out regulations on oil rigs are more lax than before the Gulf spill. Now tariffs: Is raising taxes and raising prices really winning? Republicans once called it socialism, this corruption of free markets which increase profits and costs by handicapping competition. To Trump, this is America winning. We can't afford many more of his victories.
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In order to take free trade to its extremes one only needs to look at the health of economies that are more protectionist or have less international trade than we do. It is not a pretty picture.
Freedom is the basis of American prosperity and society. The melting pot of various cultures has led to more creativity and innovation here than anywhere else. Free trade allows our markets to concentrate on what we do best. It also increases our standard of living dramatically. Sure there are arguments one can make about industries that are destroyed by foreign competition but all industries need to adapt and change (and sometimes close) for an economy to optimally succeed. Perhaps we go backwards to become the finest maker of covered wagons?
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Krugman keeps arguing that nothing major should be done about the huge trade deficit and other problems of international trade because it would be disruptive. Why wouldn't the majority of people in the US want to disrupt the way things are run now, since it has resulted in stagnant wages and increasing inequality? If the rich are to be prevented from appropriating most of economic growth, the status quo will have to be drastically changed.
Too bad that trade reform has been left up to Trump - as Krugman and others say, he will probably bungle it. The politicians and economists who call themselves liberals continue to propose no alternative that those on the lower end of the income spectrum can see.
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Not a correct summary of Krugman's writing. He was arguing that due to Trump's predecessor, the economy had recovered and was again expanding, with positive interest rates (and employment, by the way, going up).
So why introduce a crisis when things are finally going in the right direction?
The other, also correct point he was making was that trade overall adds to productive efficiency: the production of aluminum requires enormous reserves in electrical power, and Canada has large quantites of hydroelectric power, hence it makes sense to produce aluminum there.
If we introduce barriers to trade, we introduce "friction" (or anothr term: a "tax") into the system that in many cases (not all, though) hurts everybody. Why risk this when things are really on the mend?
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Really, you're going to blame "liberals" for the trade deficit?
The U.S. has run trade deficits for the last 41 years. I think it's fair to say that this was a point in history when globalization, new technologies and other factors began to have a substantive impact on the ability of the U.S. to compete globally. Also note that working class wages have been stagnant starting in the 70's.
It's not as if the "majority of people" you refer to had much power in keeping businesses from sending their operations overseas or maintaining strong labor unions. American businesses (which I would argue are predominantly run by conservatives) made the choice to serve their shareholders rather than the U.S..
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Answer: Because a trade war will not significantly change stagnant wages. Stagnant wages are due to several factors including computerization, automation and robotics replacing workers and the steady decline of union power. Workers require employer paid expenses like health care and FICA taxes that automation does not.
Companies will not go back to hiring workers into high paying jobs with benefits when they can produce their goods and services more cheaply without them. And the Democrats have proposed a solution. It would be for government to invest in the technologies of the future like alternative clean energy sources so America can be a leader in those industries. These fields can create those high paying jobs. Democrats have also proposed investing in training workers for those jobs of the future. And Democrats have proposed Medicare for All which would lessen the burden of unskilled workers not being able to make the high salaries of the past. With Trump as president, however, the world will move ahead without the United States. While Trump is focusing on the declining jobs of the past like in the coal industry America will lose its strategic edge.
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