Congress need to investigate if the on off on...announcements were shared with Trumps’ inner circle and family just before each change announcement and if it resulted in inside trading by any of them.
11
It is worth reminding ourselves that these trade wars are a result of Trump's belief that any country running a surplus with the U.S. must be cheating. This is false: trade imbalances are a result of currency rate imbalances, which may have many causes. This has surely been explained to Trump many times, but he seems to lack the intellectual capacity to understand such things. So this is where we are.
12
Tariffs in the pre-1930s era having "damaged the world as a whole" is certainly a legitimate issue. However, "undermin(ing) U.S. influence" is much less of a "shock!horror!" moment to, you know, the world, than it is to Americans. Many of us believe a world with much less U.S. influence (particularly economic) would be an improved world.
5
What I would like to know is who collects the tariff monies and where does it go?
3
One might hope Trump's political favoritism would backfire, but I doubt the Democrats will make it an issue. Even though Trump is a rich target in everything he does, they twiddle their thumbs.
Something's extremely wrong with the Democrat leadership. It's like they're closet Republicans.
7
The GOP go-it-alone philosophy, as well as a remarkable tolerance for depravity, were evidenced by GWB walking away from the Geneva Convention and the Convention Against Torture. If only the Republicans could in fact go it alone! (And just keep going until they fall off of the flat earth.) That would leave the sane ones of us to build a better world for ourselves and our progeny.
4
Remember the Muslim ban? the first presidential bully executive order. That was in the name of national security too. The bully has learned the magic word, and will use the same incantation on different doors to open. Unfortunately he has also mastered the memory charm, the next scandal obliviates the previous one, rinse and repeat.
8
Trump is using tariffs the way bullies use their fists. They have only one tool, the same as Trump.
Mr. Trump will not suffer due to these tariffs, but my neighbors and I will. So many everyday items we buy are made in China, from small tools to electronics.
Meanwhile, our farmers, factories and other industries will also suffer, as Trump effectively shuts off one of their main buyers.
Trump is a fool playing with the lives and incomes of others while he sits pretty.
6
We are completely off kilter! Congress, not POTUS is supposed to impose tariffs!
The POTUS is only involved in matters of national security.
Huge lies are being told and accepted carte blanc by Americans.
He is destroying us.
We seem helpless to resist.
Wait until you see what he does in the aftermath of 11/6/18.
It's going to make your head spin.
Get ready for the worst lame duck session of congress
in history.
2
China is often a bad actor in the international economy.
How's the US doing as a "bad actor" in the international economy? The gist of this column is, going from okay to not okay and then into really not okay really fast.
While the US just loves to lecture to everyone who will sit still long enough to endure the tirade, the US hasn't been the greatest actor either. Too much hubris, too much arrogance, too many wars, too much waste, too big a carbon footprint, too big to fail. Yuck. The swamp is getting swampier.
3
Not only were Trump's assertions that "trade wars are easy to win" fallacious, but the country that instigates a trade war is always by far the biggest loser. The retaliating nations always have a tremendous advantage over those instigating protectionism. This can be easily seen with the tariffs on steel and aluminum that increase the costs of every product made in the US that uses those metals. Thus, American consumers and producers are already net losers from these ill-advised protectionist tariffs, even before any retaliation. These tariffs increase consumer prices and make products produced in the US less competitive, relative to those manufactured goods made outside the country using steel and aluminum priced at the world market, rather than the artificially propped-up, protected US and aluminum steel markets.
As Trump discovered when a retaliatory tariff was put on US motorcycles by the EU, mostly impacting Harley-Davidson (HOG), which will not raise any costs on any EU producers or for anyone in the EU except for buyers of motorcycles, the cost to the retaliating nations is miniscule. HOG has announced it will have to shift production outside of the US as a result of the tariffs. Thus, on top of the harm to US consumers, producers and exporters of the steel and aluminum tariffs, before any retaliation, American workers at HOG lose jobs and shareholders of HOG suffer as well. .."
https://seekingalpha.com/article/4205253
2
Donald Trump suffers from a lack of understanding about the very nature and effects of tariffs. He believes these are being paid by foreign companies, not realizing that it is American manufacturers and consumers who are paying the tariffs. He doesn't see that he is putting American businesses out of business and creating a 10% to 25% sales tax on consumer products from abroad. The man lives in a vacuum.
See RevolutionOfReason.com
3
Not to mention the little fact that the president has no constitutional power to impose tariffs - only Congress does.
Unless you believe that the national security exception also applies to Barbie dolls:
https://silverberg-on-meltdown-economics.blogspot.com/2018/06/trump-trad...
1
Dr. K,
This morning, Majority Leader McConnell gave a speech at the Family Relations Council meeting on Values Voter Summit. It was carried on C-Span .@SenateMajLdr Mitch McConnell remarks at Values Voter Summit #VVS18, @FRCdc hosts – LIVE on C-SPAN2 https://cs.pn/2MSAtoS
He makes a lot of economic claims including how the "historic" tax cut has benefitted the working class Americans.
I recommend that you and your readers review these comments and those who have the facts on the economic history of the United States, take time to share them through your column.
Leader McConnell makes a strong case for the success of 20 years of GOP leadership out of the last 100 years.
My facts tell me that the trickle-down approach has never worked but Senator McConnell sees the country's economic history differently and I hope you will examine the case he makes and share the facts with your readers.
2
What is the difference between “made great again” by Donald Trump, and the last meal traditionally served to prisoners awaiting their hanging?
There ain’t any..
The pleasure derived from both of them is of a very temporary nature and ends suddenly with a terrific jolt.
https://en.wikipedia.org/wiki/Last_meal
3
Upon further thought, it now seems to me that besides offsetting the tax cuts harm to the federal budget with tariffs money, the tariffs have the additional benefit of luring foreign manufacturing plants back to our nation. It may not have been an intended consequence, but I like it.
Could it be a good thing? Perhaps in that it will punish the foreign manufacturing that Wall Street Global investors and American business owners exported trying to hit rock bottom prices without regard to patriotic duty to our nation. Now, the foreign manufacturing will certainly consider returning to our nation for the sake of economics. Perhaps Trump really is a very patriotic man deep down. I'll give him the benefit of the doubt on these tariffs.
@Waves of Brain
When Trump institutes tariffs on most of Apple products, made in China, I will believe it. Tim Cook promised to return MAC production, but that is a small percentage of Apple products.
2
This President’s actions will embed themselves into decades of future foreign, economic, social policies entered into by other countries with you. His legacy for us in Canada, will be twofold, first, after shaking hands when negotiating, count your fingers, and second, look elsewhere for alliances and deals.
13
Seems to me that the US is in the position of the European nations of the 1930s - it has high debts that need to be repaid, but it is dealing with trading counterparties who engage in mercantilist policies. Japan has been gaming the system for decades, developing countries do so of necessity and China has become too big to deal with on an uneven playing field. All well and good when the US SN keep borrowing, but it can longer afford to subsidize an unfair trading system to the tune of $500 billion per year.
Mr. Krugman, you are on the wrong side of history on this one.
1
@RAD61, how does it help the national debt if the U.S. dollar ceases to be the world's reserve currency, or if China sells its U.S. Treasury bonds?
I think you're comparing apples to oranges. Much of the trade imbalance simply means that U.S. corporations are moving plants offshore. You have to address the problem of capital flight through U.S. tax policy.
4
The mainstream US Model Railroad Industry, is now almost entirely dependent on Chinese cheap labor for both tooling and manufacturing of the incredibly minutely detailed and painted injection molded plastic bodies, motors and mechanisms. Retooling for USA based manufacturing will cost millions.
Already before the tariffs, a typical premium model of just a single locomotive with internal computer control and a realistic sound generator easily retails for $350.
With Tariffs, just imagine what it will cost to have a train set running under the Christmas tree from now on.
4
Trump may revert to quotas rather than tariffs. These would be easier to negotiate since business leaders in both countries typically use quotas to collude against consumers.
The worst form of protectionism comes in the form of quotas. Quotas are bilateral agreements, negotiated by governments which allocate shares of the market that thus restrict exports and imports. None of the higher prices on the restricted goods are remitted to governments as is the case with tariffs and border adjustment taxes. The losses to the consumers are allocated to the favored producers under a quota system. Prices are always higher and production is always lower under a quota regime than would be the case in a free market. Higher consumer prices leads to lower standards of living. Lower production always leads to less employment.
https://seekingalpha.com/article/4148256
The worst impact of quotas is that firms involved have little or no incentive to innovate. If the amount they sell is determined by quotas, then the most important and desired employees of the firm are no longer the scientists and engineers would can come up with the best innovations and inventions. Rather the most sought after and highest paid employees of the firm become the politically connected lawyers and lobbyists who can influence the quota allocations in such a way to most benefit the firm.."
https://seekingalpha.com/article/4148256
1
Thank you Paul Krugman for being the only one to question kavanaugh's finances. Why does no one look at his credit card debt??
2
It's hard to think that Mr. Trump's tariffs will have a "modest" economic impact on American consumers after surveying the amount of damage recently caused by Hurricane Florence and the fact that the rise in steel, aluminium and lumber prices is going to have a negative effect the overall costs of rebuilding.
This fact, coupled with this administration's persistent denial of climate change, is ultimately going to have long term consequences on the very people who voted for Trump in the first place.
And sooner or later they'll wake up to the reality that they aren't winning at all.
4
Tariffs for personal profit--we already have the example of Qatar, whose government was extorted for over $600 million to prop up Trump family real estate.
4
Republicans have always criticized Democrats of picking winners and losers with regard to the economy but who's doing that now. Their hypocrisy is immense.
2
Since we (or at least America's ever-shrinking middle-class and workers) have clearly lost the trade peace urged on us by ivory-tower academics like Lawrence Summers and Paul Krugman, among many others, it's definitely time for a trade war. America's default position on tariffs should be yes and highe ones. We are net importers by a tremendous margin. In countries that run large trade deficits, tariffs help domestic producers far more than they hurt export firms.
Sure Trump is probably imposing them willy-nilly without any analysis to determine where tariffs would do the most good and the least harm. But better more and higher tariffs, even when scattershot, than fewer and lower ones.
@Sam Rose
Amazing analysis and conclusion.
Any dictionary might use it to explain the old saying; "Cutting off your nose to spite your face"!
8
Trump... Corrupt... Ignorance... Great damage to the nation...
What else is new? The goal is to get Congress to give a darn - which they clearly don’t!
2
My overly simplistic take on the economics is that we buy more stuff than they do because we have more money; we have more money because we make more money, per capita, anyway.
Same thing with jobs. Jobs flow to countries with lower per capita income and lower standard of living because labor is cheaper.
Same thing with "dumping"--who cares if China wants to sell us steel really cheap? If we want to preserve our own steel-making capacity in case o national emergency, why not just subsidize steel plants here? It requires tax money, but if we put a tariff on cheap imported steel, stuff will be more expensive anyway.
In the long run, once everyone else's standard of living and income comes up to our own, trade and prices will balance out. The trick is to let that equilibrium be reached without our own standard of living dropping significantly. The ones in charge have not attended to that.
3
I would gladly sacrifice my tax cut if I knew that the money went to rebuilding the infrastructure.
4
Why not eliminate tariffs altogether and make "Free Trade" free? Isn't that what Republicans always wanted? Open markets?
3
Thanks for explaining how Trump has such autocratic power to change policy. Congress gave this power to the executive branch and, of course, he is abusing it.
5
The overarching problem for me is the inflationary pressures that all of Trump's economic decisions are creating. Well known that most of the funds repatriated (~50%) when to stock buybacks, not reinvestment in capacity and the required new workforce. The tax cut itself generates increasing (and alarming) federal debt during an economic boom, that will ultimately require higher interest rates on debt (unless this is walked back). The tariffs have their own effects but in ranking I'm not sure they are number one compared to the package of inflationary pressures.
3
Unfortunately the US is not losing credibility it's already gone. No one in the world has trusted us since Trump was elected and started playing fast and loose with our reputation for fairness, justice and reliability.
6
America does not deserve to be a world leader. It has an anachronistic 18th century political system ---the electoral college and a Senate--that gives vastly more power to conservative rural states than populous progressive states. Secondly, a significant percentage of the voting population (though admittedly not a majority) was stupid and venal enough to vote for Trump.
12
Tariff policy "went from being famously dirty to remarkably clean" under the World Trade Organization.
You mean remarkably impotent and pathetic. See softwood lumber.
3
Come on...how can there be so many qualified experts here able to make such categorical statements about what is an infinitely complex subject? The facile hubris and yet obvious inadequacies and delusions of the uneducated and unqualified are overwhelming some days. That's why Trump and Trumpism is so viscerally offensive...he and the cult pretend to abilities and knowledge they simply do not possess. "It's the pretense, stupid!"
4
Tariffs are a "tax" in only the loosest sense of the word. Yes, they increase consumer prices. But this "tax" doesn't go to government to pay for public services. Instead it goes to corporations, and lately corporations are investing less in R&D and equipment and facilities and much more in stock buy-backs, with the point being to increase stock prices and thereby bonuses for already overpaid executives. That tariff "tax" goes straight to stockholders and CEOs' pockets.
So it's the best of all worlds for corporations - a gigantic tax cut and higher prices - and the worst for anybody in the 90%, who will have to pay for trillions of dollars in Republican deficits. True to Republican principles, it's all yet another enormous transfer of wealth to the rich from everybody who isn't rich.
It's also another example of what happens when citizens vote against their own best interests.
7
@William LeGro : US Tariffs make corporations tax collectors for the US government.
2
The GOP has been frail, a minority party using every dirty trick in the book, since the Supreme Court threw the Presidency to GW Bush instead of Al Gore, the truly elected candidate.
It continues to use every dirty trick in the book to hold onto the illegitimate power it has treasonously wrested from the citizens of the United States, with extensive corporate backing.
Is there any real, long-term policy, thought, vision behind this political and economic wholesale theft?
Obviously not; everything the GOP has said to justify its grabs for power have proven to be lies, damned lies, and false statistics.
Trump remains the symptom, not the cause. He is merely the latest in a long line of shadow puppets who've stood in the media to generate as much and as varied a smokescreen as possible to cover for the constant, widespread, underhanded dealing that has gone on in the backrooms of plutocratic power.
The tariffs, as dramatic as they might sound, are just the latest round of smokescreen. One wonders what greater, more profound destruction is actually happening underneath the covers.
The GOP is a failed political power in the world, in America, increasingly a failed state.
The problem is no longer whether anyone else in the world will trust anything we say, but increasingly, why they would care to talk in the first place.
We will be a backwater banana republic soon enough. It's been in the cards since 1980.
9
Wow. Paul Krugman is writing better columns these days. Is that because the ball is in the court of international economics where his expertise is?
1
By the way, when is anybody in Washington point to a crucial feature you mentioned about freaking Kavanaugh, namely that he is drowning in debt?
Once he is a US supreme court justice and he´s got out of debt by the usual sweet ways Republicans are expert at?
Holy ... that 4 letter word.
4
Making America Grate Again! Pretty cheesy.
1
So, is Trump and the likes of Wilbur Ross getting a kick back? Sounds like their MO.
1
In plain old English, this is MAKING CHINA AND RUSSIA GREAT...at the expense of AMERICA’S FORGOTTEN MAN AND WOMAN’S ECONOMY...talk about trump being a stooge for putin and his steel oligarch...’ooops - a clerical error?’ What about his doormat subservience to XI of China, who by the way, it’s government backed Bank of China holds the largest lease in trump tower...off too the gallows with this CRIME FAMILY OF FIFTH AVENUE! MCCONNELL AND FRIENDS AS WELL.
8
China is not a threat to our national security. The biggest threat to our national security is the so called man pretending to be president. The second biggest threat are the oligarchs who hired his cabinet and the morons who voted for him, continue to support him, and would vote for him again.
David Koch: "We have achieved more in the last 5 years then the previous 50 years." What they are trying to achieve is that Birch society/fascist autocracy that will allow them to live their lavish lifestyles and promote their extraction industries while We the Taxpayers pick up the costs of their destruction.
We might have time to correct the course of this once great Nation; but we will have to do so this midterm election. Otherwise there might not be another one.
10
Sadly, he has made America GRATE on just about everyone...
4
Welcome to banana republic status.
9
The failure doesn’t stop with Trump. It points to a much larger problem of trust and respect that wealthy elites have destroyed to grab power and a citizenry that lacks the democratic education to recognize the symptoms
3
"Then came Trump." That is all that needs to be said for Trump does not know anything about governance. Trump thinks that China is paying the tariffs! I am surprised by the restraint of China! National security in regard to Canada, what? It is all chaos, lies, and confusion by Trump about everything. The U.S. has not only lost credibility regarding trade but across the board internationally. Yet, Republicans are obviously unconcerned as long as they can get massive tax cuts for the 1% donor class & corporations and satisfy the evangelicals and Roman Catholic Church with their Supreme Court nominee.
4
As Shakespeare said in King Lear: "It's time's plague, when madmen lead the blind."
5
One day readers will wake up and vote for their best interests and that of the country. t-Rump's plans sound more like "pay to play". Corruption at its peak. This seems to be the only thing he knows. And he knows little.
Vote folks. Our lives depend on it.
3
Making Government corrupt again.
4
Trump's negotiation style is the one-off type....meaning once he's negotiated a deal with you in which you are surely going to be the one getting the short end, you will never do business with him again. You are a one-off in an serialization of one-offs. Such is the risk in doing business with people like Trump. Who wants to look like a donkey behind twice and pay for the privelege?
Unilateralism in negotiations is not the key to nurturing and managing relationships; but it plays to the minions who believe that our country has been skewered by other countries in 'unfair' business dealings. We overlook the role of corporations who move resources around and simper that they do so because our local practices (taxes/regulations) are so unfair that corporations cannot make an honest nickel here. Well, they can make an honest nickel here, but that pales in comparison to the offshore dime that can be made.
Ultimately it is the stupid few like myself (e.g. those who pay taxes) who bear the brunt of shortfalls.
The entire thing is tiresome, dissappointing and utterly inexusable.
4
Where was the "adult in the room" when Trump, who knows absolutely nothing about trade policy, came up with these tariffs? Where are they now, as he continues to impose new tariffs whenever the urge strikes?
He surrounds himself with sycophants and insiders, giving us the swampiest swamp in decades, and Congress just stands idly by...it's truly sickening. How long will it take us to recover from this disaster?
3
@Dee S
I thought Peter Navarro was the adult who is using Trump to implement his own theories. Navarro wants nothing less than manufacturing to return to the USA. Apparently the whole world is dying to buy made in America socks for $50 a pair.
1
ITrump's lack of any knowledge or appreciation of negotiation means he is making America something quite other than "great."
2
Honest Uncle Sam has always been something of a facade for Uncle Sam Slick, the sharp Yankee trader. Thomas Halliburton amusingly unpacked that Mr. Dress Up show back in the 19th Century.
But, really, erstwhile American friends and allies — er, rubes and gulls — should be grateful to President Trump. He reminds everyone every day how naive it is to believe the U.S. can be counted upon for anything beyond the immediate self-interest of greed, corporate cronyism and cynical political expedience. In that, at least, Mr. Trump and his acolytes have been nakedly honest.
As Mr. Krugman points out, the visionary American ideal — and what a transcendent ideal it was — is revealed in pragmatic practice as a tawdry Wizard of Oz-like deception. This will have serious ramifications in a world shadowed by resurgent Russian nationalism fuelled by a sinister sense of grievance and by China’s ascendance riding a nationalist determination to avenge old humiliations. But that will be for others to deal with. The snake oil show and its strange steam calliope of exceptionalist flimflam will have moved on.
6
Bad as Trump is, he was a predictably bad trading partner. Its that the rest of the world has watched the entire Republican establishment enable him; let him do whatever he wants, that has destroyed any faith in the US to live up to its word.
It isn't Pres. Trump who destroyed US credibility as a reliable and trustworthy trading partner or any other kind of ally.
1
Trump's go to tactic is to put people unstable ground to make them vunerable and therefore more open to getting some kind of deal that brings back stability. It has worked with to some extent with Europe and Mexico but China is very unlikely to blink. And a lot of US idustry relies China which will lead to blow-back in the US.
International trade/relations is too complex for Trump head and he will dumb it down to a stalemate at best.
2
Huzzah! It took someone like Trump to get Krugman to support free markets. Save this opinion - we'll need it when the Democrats are in office.
Trump can seemingly do anything.
1
Let's hope nothing this Administration initiates will be lasting.
4
Donald Trump is a wealthy man with a young attractive wife, money and toys. He's also an old man who's health and mind is in hard decline. It's natural for him to look back on his youth as a healthy, silver spooned boy as a time when America was truly great.
This sad dying man is acting out on his dystopian view of his own future. It's up to the youth of this country to go to the polls and vote for an optimistic future where the young, strong, innovative men and women of the USA and the rest of the world aren't afraid to compete and drag us all forward.
4
We recently have gone through the process of researching and buying a new refrigerator. Over the days, we have seen prices rise and availability shrink. The price on the model we chose has risen 20% and the manufacturer and dealer both keep stalling when we ask why the merchandise has not already been delivered, as promised. We wonder if this is the same effect Trump’s trade war is having on washing machines.
3
In 2002, WHO OBTAINED insider information BEFORE his investment company bought a 3rd steel company, then negotiated down existing union benefits, only to immediately sell all 3 acquisitions to an Indian steel magnate for a huge windfall?
“(Wilbur Ross') team asked [then-Commerce Secretary] Donald Evans if there would be more protectionist measures and he said absolutely,” said the source of Ross and his colleagues.
https://www.google.com/amp/s/nypost.com/2016/11/19/possible-commerce-hea...
And here we are, with "Quick Buck" Ross, now as Commerce Secretary: side-stepping his ethics requirements, hiring contractors to perform the official review of the 30,000-plus requests for tariff waiver, AND the protocol for approvals is a mystery!
The public's faith in our government administrators demands that their processes be transparent and fair. Their systems must be FULLY in place, internally reviewed (IG), and externally audited (GAO, Congress).
Secretary Ross is accountable from Day 1, as is the Republican majority leadership with their capacity to schedule oversight hearings. A Secretary shouldn't need more than a few days to assemble and to present the agency's regular internal reviews.
If Secretary Ross is unprepared for questions, the oversight committee should render an immediate finding. Trump administrators PRETEND that cooperation is theirs to extend and that building responsive & transparent systems is a negotiation.
5
Italian companies have been trading with Iran. They have big deals negotiated. Trump unilaterally and without Congressional agreement sanctions Iran. The Italian companies, because of the USs dominance of international finance, forced Italy to harm its own economy to placate Trump. The US has paramount financial influence right but Trump's actions have forced gov'ts to look to alternatives of US dominance.
3
Krugman is wrong!
Krugman is angry that Trump has rejected the Trans Pacific Partnership, a trade debacle that even Hillary condemned as antithetical to American economic interests!
It is prima facie economic law that the hegemon should never enter into multilateral trade agreements. This is because the WORST bilateral trade agreement with the 2nd strongest nation will always be economically better than or equal to the BEST multilateral trade deal available. That is pure common sense. The economic advantage gained by the hegemon in bilateral trade deals becomes increasingly larger as the diminishing economic strength of the 3rd, 4th, 5th, trade partners is considered.
Trump has been exactly right on trade because he realizes that his responsibility is to advance American economic interests rather than global interests.
@vonmisianYou know not whence you speak. TPP would have given us leverage against China - now we have none and they hold a huge amount of our T Bills.
1
What I find fascinating are the price increases in steel, aluminum and other industries once the tariffs increased the cost of foreign competition. This was very common in the 19th and early 20th centuries. Higher profits for domestic producers - but no higher wages for workers. Just more goodies for the top 1% - the real Trump economic policy.
10
I have a better idea for tariffs. Calculate how many hours it takes to make a product, multiply that by the difference in labor costs, and let the governments keep the difference instead of the companies.
It's simplistic I know, but it's a template to prevent cheap labor from destroying America's industrial base, and might give American industry a way back. Besides, that way we'd know how much more it costs to make things here, so we could make informed decisions.
1
What was wrong with our trade policies was really a problem with our domestic policies. Our domestic policies tilted the playing field away from workers and toward the top ten percent, one percent, and one-tenth of a percent. All the gains from trade went to the top tiers. All the losses went to the middle. Because high taxes on the gains were regarded as "socialism" there was insufficient redistribution. Little was done to help communities hit hard by trade losses. We cannot stop globalization, but we could have (still can) do a lot better in helping Americans cope. The political system completely failed on that.
To those who fault NAFTA, bear in mind that the wage differential alone would have guaranteed virtually the same result. NAFTA made a marginal difference. Mexico had already put in place domestic policies (e.g. rule of law for investors along the border) that were attracting US investment. Tariffs were already so low relative to this wage differential that they made little difference. If not Mexico, much of this investment would have gone to China. The strategy at the time was to keep it close to home so that inputs could come from the US. This was a reasonable strategy.
124
I'm afraid this extends well beyond Trump, and well beyond only economics. Put yourself in the position of, say, Germany, or France. Trump will one day, in one way or another, be gone. But the American electorate that gave rise to Trump and today's GOP will not be. How do you deal with that, how do you accommodate the risk? As others have already commented, although it will take time the world will realign. However, our lost credibility may never be regained. As surely as night follows day, you live by the sword, you die by it.
189
@Michael By the self-inflicted wound of Trump and Trumpism, we will indeed die by the sword he swings so recklessly. And, given that our system allowed it, we deserve the consequences. Maybe we will learn to choose Good (it's not that complicated), but the costs we must absorb in the meantime are self-caused. One might as well call it Suicide by Trump.
1
I agree. The US has lost negotiating credibility because the US voters are unreliable.
1
Last year's big tax cut has to be paid for somehow. The rich, of course, don't want to pay for it (and of course if they paid for it, that would defeat its purpose). So that leaves the Middle Class and the poor. Now if you raise their taxes directly, they would be angry. So you raise their taxes indirectly with a hidden sales tax (tariffs) and do it slowly so they don't notice. It is really quite brilliant.
307
@Tony Mendoza
I also believe the main reason behind the tariff hike was to finance the tax cuts. Trump policies look like they came out of his backpart but mostly they have ulterior motives.
16
@Tony Mendoza
Its like when the magician says... Look closely at this hand!
1
@Tony Mendoza
A point that an American in 1900 would readily know.
Sadly, most today do not know that the tariff money goes to the government. It was our chief way to raise money before the income tax.
Even folks like Krugman don't discuss this.
A real estate developer who thinks he's an economist, a rich kid who thinks he knows money, a narcissist who can't leave his hall of mirrors. Put them together and what do you get?
11
He's RUINING this once great country.
9
I can see Dr. Krugman's having trouble with this again...so lemme repeat the list. Pay close attention this time..........Free Lunch, Free Beer, Free Ride, Free Love, and, of course....Free Trade. Anybody notice a common theme here?
1
The next time I hear some Repub. ideologue prattle on about 1. deficits; and 2. free trade; and 3. free market, I'm going to expectorate . . .
The gall . . . the hypocrisy . . . the mendacity . . .
12
I don't know Paul, you're going up against the president's (large) gut instinct and ego... and what do you bring to the argument? PHD in economics..? I don't know who to believe on this...
15
Speaking of “credibility.” Mr. Krugman, you famously predicted immediate gloom and doom for the stock market and economy if Trump were elected. Humm........
1
It took almost 8 years for Bush to crash the economy. Patients Ken.
5
I am a recent subscriber to NYT. Am I glad I took advantage of the 'deal' [ though by then I was stretched what with taking up 'deals' of Washington Post and The Times, and streaming video services, to boot ].
Where else can you open the edition and stare at an article authored by Paul Krugman ?!
2
Trump has not learned, nor does he care, that he is no longer operating a private business. He treats America's government, its policies, institutions and allies as his personal playthings, to be toyed with at his whim, and lumped into one, big anti-American stew. In many respects, his approach does not vary from the selfish manner in which he treated the small suppliers and contractors of the Trump Organization, not to mention the women in his life.
As is the case with so many of Trump's policies and actions, subtlety and nuance aren't involved. Trump approaches virtually all matters before him with a meat axe, never caring about collateral damage as he swings wildly at this or that. Consequences beyond the end of his nose be damned, he is all about glaring symbolism and throwing red meat at his base, rather than focused and considered judgment.
The damage that the Trump tariffs are doing to myriad Americans and industries is, to him, an acceptable byproduct of his emotionally motivated score-settling, the gist of which is to garner favorable publicity with his base while dominating his broadly defined opposition. To Trump, everything is a zero-sum game.
Trump's morals have long been recognized as corrupt. Why should we be surprised that his tariffs are as well.
10
Four-times bankrupt businessman ruins US economy? Who’d have though he wouldn’t be making the “best deals”?!
10
Just a few more moves by the so-called president on his way to becoming king.
2
@Thankfully there is a strong uprising underway.
2
With Trump's constant diatribes, insults and blabber to especially, his supporters, about information on trade with other countries that regularly bears little resemblance to reality, we see now NAFTA negotiations with Canada are still dragging on without much resolution, yet, for several very good reasons. It has now become VERY clear that unless very strict rules are put in place with all facets of these agreements(especially in regard to settling disputes independently ), even if a trade agreement was signed(in principle) today and even if Trump OK'd it, there is no guarantee that he and his "band of merry men" would continue to honor those agreements and therein lies the problem. The fact of the matter is, to others, America is no longer a "credible" partner in much of anything, let alone trade.
You can't have trade agreements without rules and Trump has, time and again, proven he is not interested in living by any rules. Regardless of what Trump thinks, in alienating America's "former allies" and important trade partners, it ultimately opens the door to alternatives and IF as such happened in the 1950's when "Britain"s Pound Sterling" was no longer the world's reserve currency, it's days as an Empire were over.
I guess that is what Trump wants.
12
“So what are the criteria for these exemptions? Nobody knows...”
I know one! If Trump, Inc. can make some money off an “exemption”, it’s granted. Sound amateurish and crude? Ha! Since when would that stop them? Sounds about right to me.
6
Paul K. fears corruption will start to loom large in these tariff practices? In THIS pristine administration? I'm shocked, SHOCKED, by the inference! The grifters have the keys to the National Vault folks. What else did you expect?
John~
American Net'Zen
3
I know this gets old...but...please try for a moment to remember the hue and cry from Republicans when Obama was “picking winners and losers” by promoting investment in renewable energy companies. I know... but please add this to the hypocrisy list anyway. What is National Socialism but cronyism?
6
If for nothing else, the U.S. needs to reclaim at least part of its manufacturing from China, S. Korea, Japan and the EU. We can not afford to lose more vital infrastructure and jobs. So what if the market declines and people pay more? It's for America. We have acted fairly (minimal tariffs) while the of the world has built their economies while having high tariffs on U.S. goods. Stupid, Mr. Krugman!
When you are brought up thinking you are better than everyone else in a household that has a corrupt head of the household (Fred) then of course you can understand that, " Trump has basically abrogated the rule of law and replaced it with his personal whims."
It is his nature. A man who runs a small family office for 50 years suddenly becomes president of the United States.
What did we think would really happen?
9
Well now. What more proof of 'criminal intent' on part of Trump and the GOP do we need?
4
Generational damage. Turn the clocks back 300 years.
4
For trump tariffs are power that he has as president, not a power he “earned”, his “business life” is little more than getting inverstors to put up money and stealing it. Like a failing business trump has no return customers and obviously no abiity to negotiate or make deals.
However trump can impose tariffs all by himself —power corrupts, absolute power corrupts absolutely— and he never has to defend his behaviour, there is no check on it. There is no US trade policy, using tariffs the trump “trade policy” is to get trump’s personal approval, trump will make tariffs and then give a personal exemption to those who “are nice .” Actually trump defends his policies by arguments ad hominem usually based on lies and conspirarcy theories.
This is in accordance with trump’s notion that society is a hiearchy of individual bullies, without these bullies “society” would be anarchy and its the bullies who enter the arena to “win” benefits for their subjects and to control their subjects..
For trump the tariffs are the end, not a means, giving him a personal power that he could never earn, he lacks management capabilities and leadership qualities, i.e. purpose and vision.
Tariffs are trump ends, he has no interest in “improving trade relations”, the new NAFTA is just the old NAFTA with a new name. Tariffs are just trump using a power of president which he could never earn if it were based on his abilities.
5
Hi Paul,
Thanks for putting the 'y' in dysfunctional.
Ennio
1
So what else is new? Clearly Trump should have been educated at Columbia instead of Wharton. The dangers of tariffs would have been drilled into his thick skull.
1
What an awful predicament, the loss of trust on these United States, as a wild and vulgar know-nothing bully in the White House is creating havoc be sheer spite. And by having made this farce the norm, it is being 'normaized', and considered just 'business as usual', a most dangerous proposition. Let's wake up folks, it's later than we think!
5
Really, professor, what's your problem with corruption? All the best people do it; indeed, our current President, beloved by nearly half our voters, seems to have made his fortune that way. And all the best countries are high on the corruption indices: think Nigeria, Zimbabwe, Mexico, Venezuela, Guatemala, Nicaragua, Brazil, the Philippines, Russia, other former Soviet Union members, and of course China. On the other hand, our greatest enemies, according to Beloved Leader, seem not to be very corrupt: Canada, Germany, France--indeed, virtually the entire European Union apart from Italy, Hungary and Poland. A corrupt country is a free country--everyone can do what they can afford to do. Corruption gets around all those hateful laws and rules that cost us so much. And best of all, corruption is not egalitarian; it's only for the privileged. Its motto is e pluribus mucho dinero.
10
Every day that US markets surge upwards, Trumps trade policies have the appearance of being the master stroke of a financial genius who flatly stated last year that trade wars are “easy to win”.
I’m raising cash as fast as I can.
4
Trump's "policies" are nothing more than an expression of his wretched, whiny, aggrieved existence.
This global nightmare has to end soon.
Please help register voters and get them to the polls in November so we can at last have a check on this madness. And forget impeachment. The solution is a different president.
2
Trump perverts everything he touches & undermines US credibility with every lie he utters, with every impulsive action he takes. Every single day he proves conclusively that he absolutely does not know what he is doing. Worse yet, he does not care.
2
Trump has two reasons for his tariff fights The first is his campaign promise to bring back American jobs. Whether this is successful or not it plays to his base Constant repitition of the same mantras that the US is being taken advantage of and foreigners are stealing American jobs is what his supporters want to hear
The second will be the increasing amount of cash coming into the US Treasury, due to the tariffs. will help decrease the Budget deficit This is a return to much older theories that the Federal Government should rely of direct taxation such as tariffs rather than indirect txes such as income tax .
Trump's main concern is and alwasy will be re-election in 2020. To him that will prove his critics wrong and confirm how great he is . As to long term fallouts I don't think he cares as Louis XV said ; " après moi le déluge "
6
Professor, you might as well attempt to teach Economics to my favorite Dog. And that particular dog is, at this time, DEAD.
Seriously.
2
Of course Donnie Boy would be the last one to ask for favors in exchange for granting those exceptions.
3
Truly there is nothing new under the sun. Ancient Rome saw the misrule of Claudius whose consort, the wanton Messalina, traded in imperial monopolies for key commodities to support her decadent lifestyle, unknown to the auditors. I work for the Federal agency that administers tariffs and have personally been sworn to collect and protect the revenues of the United States. And I can say only that my own agency has played a game of Twister at the behest of the mega multinationals and forwarders like Fedex, UPS and DHL and has bent over to accomodate their every request. A perversion already goes on atop the table of my agency, the oldest law enforcement entity in the USA, to which the adddition of arbitrary tariffs is merely a cloth adorned with pornographic venal scenes worthy of Caligula in ancient Rome...
3
"You could say that Trump is making tariffs corrupt again. And the damage will be lasting."
Insert any of the following words instead of tariffs-- public service, business deregulation, energy, education, taxation, environmental protection, etc-- and you get the full stench of this vile administration, filled from top to bottom with sycophants, liars, and racists.
5
Welcome to the Republican party's version of America. Bribery is legal...finally. The least and the worst among us run the show...finally. Truth isn't truth...finally. After countless tries they finally found the most corrupt and moronic man in America to get what they wanted-Everything.
1
Welcome to the Republican party's version of America. Bribery is legal...finally. Truth isn't truth...finally. Greed is good...finally.
After countless tries they finally found the most corrupt and moronic man in the world to do their bidding. And finally they got what they wanted...everything.
2
It’s so obvious Trump is for himself and the wealthy. Yet the Trumpiteers can’t see it. Sad.
5
Trump is corrupt so of course everything he does is corrupt.
the rubes bought the con. boo hoo
2
In a nut shell world trade is complex and Trump and his supporters do not handle complexity well, they just know what they know. This experiment in stupidity well not end well for any of us.
5
Putting aside Trump's treason in conspiracy with Russia, quite a difficult thing to do, its clear that Trump is criminal. Trump has no regard for others and the furthest thing from his supposed mind is loyalty to the country. Sorry but must write it: PROSECUTE RUSSIAGATE!
2
Just wondering; how will little Wilbur Ross look in an orange jumpsuit? Can you get custom tailoring in jail? This man is certainly among the most corrupt individuals to ever "serve" in public office. Hopefully he will "serve" time for his actions.
5
Can’t argue with success Krugman
I know it KILLS the libs that markets & real estate prices continue to go up and unemployment continues to go down but at some point, you’re going to have to admit success.
Obama never came close to this in 8 years!
@Crossing OverheadEconomy? In grand shape. But Obama was never, ever disrespected as much as Trump - who is dying in the grandest political scandal in the history of mankind. Has the world ever looked at the US with as much disgust as today? Including next door neighbors.
If the US business world and state governments strongly oppose Trump's trade maneuvers, why do he and his devout followers continue to have their heavy-heads deep in the sand?
Amazingly, things have changed so much on trade in the USA in the last thirty years. Republicans nowadays look with grand suspicion at it - just like Democrats did with the first agreement in 1988. Trump the great businessman is a protectionist. And Democrats are "free traders." American politics is swimming in circles. And this Presidency is drowning.
4
Krugman doesn't even understand the meaning of basic English words
Corrupt - "having or showing a willingness to act dishonestly in return for money or personal gain"
There no assertion here at all about dishonesty.
1
Trump is always wrong about everything, but at least he comes close to right about China. As much as I agree with Krugman in general, nothing good comes from trade with China, which is practically advertising its devotion to evil. An orderly turn away from trade with China is the best thing for everyone on this side of the Pacific at least, and while Trump will never offer that, it's time to lay aside tired arguments about the benefits of free trade when an enemy and wannabe hegemon is at the other end of the deal.
above the fold, indeed.
some say President Trump 's bluster and capriciousness show he is stupid and unhinged. to me, he is not at all dumb,and knows the value of an unrelenting campaign of noise and distraction while the foxes, his golfing cronies from the world of the ultra rich and politically influential, have their way with the henhouse of our US economy, with our basic rigts, and with the rule of law.
gypsies on the street distract passersby with a screaming baby, or by pouring a drink on a pedestrian, while an accomplis picks their pockets.
it's the same scam and the press plays right along.
we haven't suffered through a presidency like this in a long time and the act's getting old and tiresome.
time to draw the curtain.
6
What I fail to understand is why Trump's phony use of his executive powers is not being considered as violation of the Reciprocal Trade Agreements Act -- thus a violation of federal law.
4
"... America has thrown away its negotiating credibility. In the past, countries signing trade agreements with the United States believed that a deal was a deal. Now they know that whatever documents the U.S. may sign supposedly guaranteeing access to its market, the president will still feel free to block their exports, on specious grounds, whenever he feels like it."
This is one of the main reasons why Canada will not sign on to a new NAFTA (some here are referring to it as SHAFTA). Trump's reckless use of the Commerce Department's regulation 232 declaring everything a matter of national security has caused the world (the whole wide world) to view the US as bad faith traders and why would anyone sign a deal with no guarantee that the US won't do an end-run around the agreement? NO DEAL.
9
I just received an email from a fabric company I purchase from regarding pending increases in supplies due to the trump tariffs. Their China silk and fabric dyes will be increasing by 10% Sept. 24th and scheduled to go up by 25% on January 1, 2019. These tariffs will impact millions of US residents from manufactures, to small business owners like myself, to consumers. Businesses running on low margins and mark-ups will not be able to absorb these prohibitive, cost crippling increases in raw materials. Cottage industries, like those on Ebay, Etsy, Amazon and web-based will be hard hit when their supply costs rise this dramatically. Businesses have trouble competing now. How on earth will they compete with cost increases of an additional 25%. How many companies can afford to "eat" this dramatic an increase in raw material costs? It is enraging that not one republican has the brass to put forth the vote that tariffs can not be raised without approval of Congress. How will consumers afford an additional 25% increase in many everyday purchases?
I hope the voters/workers in states impacted the most by these crippling cost increases will realize (admit) just which political party is responsible for this latest economic damage and will vote accordingly. trump needs to be legislatively stopped or at least slowed down to minimize the damage he will cause to this country in the next two years. The only way to achieve this is to vote Democrat. Remember in November and vote Democrat.
7
Thank you for writing such a clear and concise article that explains the tariff situation so well. Without a background in economics it is hard to assess the full impact of the decisions being made here.
13
Excellent column!
It's worth noting that what makes cross-border economic affairs distinct from economics in general is two things.
(a) Discrimination -- which in domestic affairs we know is unethical, corrupt, and inefficient -- is not only legal when borders are crossed (that's sovereignty) but is also considered ethically okay (with our attitudes being shaped by a sense of ethnic rivalry with foreigners). Yes, the WTO etc. try to rein this in, but ...
(b) You may have to deal with more than on currency.
2
Of course Trump is waiting for Xi to set aside prime real estate spots in few big cities in China, and is wondering why it takes so long. As soon as this happens things will get smoothed out really quick.
9
It's your classic flip. Pretend to reduce taxes with an income tax cut, and then get the money back by means of a tariff. Nobody will notice. When our costs for everything go up, Trump can blame the democrats. A tariff is a tax.
16
US trade negotiations have long catered to financial interests with heavy emphasis on "opening" financial markets in developing and middle income nations. In addition they have almost always been directed toward recruiting more low cost labor for global supply chains.
While this may be an effective representation of an entire class and not a corrupt promotion of individual interests within this class, it is not fair and beneficial to all.
Dr Krugman,
This narrative "Making Tariffs Corrupt Again" is indeed enlightening and historical for the most part. It would also be interesting to see a projection of maximum tariffs on all China's imports and, its potential effects on world trade, wages and inflation. It would seem to me that the tariffs are being imposed both from the US and China not as a function of economic activity or cost of services, but as a whim without any end in sight, without any stated goal or objective from either country. It would also be useful to hear from the non-partisan budget office.
1
The crux of this is as Paul said, corruption, and what Trump is doing is (typically) talking out of both sides of his mouth. So he imposes tariffs on imported goods, but then grants exemptions based on political favoritism, not to mention he put tariffs on aluminum and steel and US producers immediately jumped their prices to just below this new level, which is making them windfall profits but also is hurting steel users (so the goal wasn't just bringing users to American producers, it also was in creating windfall profits for the steel and aluminum producers). The farmers are complaining because the price of soybeans and such have plummeted, so Trump is handing out billions to them, while ignoring the plight of others affected by this. The real problem is that what Trump is doing is so disjointed it likely won't help with real issues, like intellectual property and allowing tech sales into China, and will likely only penalize more the very people he is claiming to help. In the end the truth will come out, Wall Street may be happy, but the next quarters will tell the tale, if wages continue to grow sluggishly, if jobs created pay low wages, and prices soar, Trump nation may just see what Krugman is talking about.
6
It is astonishing that Trump has the power to impose tariffs in such a quixotic manner. Perhaps, as Krugman writes, no one expected a president to behave so capriciously. That said, it is time when the political stars realign to correct this anomaly by giving Congress more oversight power that it should have had all along.
8
Right to the point. Trump's blanket denunciation of multilateral trade agreements and trumpeting of one-on-one "deals" conducted by himself is a recipe for graft. Trump also vowed to "fix" government purchasing in similar fashion, replacing "red tape" requirements that ultimately protect taxpayers with his personal "Art of the Deal." This is the road to autocratic kleptocracy, where everything depends upon the whim of what Trump admires as "a strong leader" and everything, no matter how tangential or personal, is on the table to sweeten the pot; where benefits flow or don't flow to cronies in or out of favor.
12
Excellent article. Good examples of what Mr Krugman is describing can be found in the current NAFTA negotiations with Canada. Mr Trump has twittered that unless Canada comes to an agreement with the United States he will impose 25% tariffs on auto imports from Canada without bothering to say how this might be justified under WTO rules or indeed what the justification might be for this at all. Now he twitters that even if a free trade agreement with Canada is negotiated 25% tariffs on auto imports can be imposed at his pleasure. So what's the point of an agreement?
17
The Canadian steel manufactor who provided architectual work for the new World Trade Centre was put out of work...I read. A huge stumbling block to the revised NAFTA that his ugliness demanded is despite all the bullying going on on the US republican side is the huge concern that the next day his awfulness will impose a tariff for his amusement. It is too bad that he cannot feel the hatred he engenders around the world. Like the ban Sessions is going to put on Canadians who have anything to do with marijuana. I do not travel these days and do not use marijuana but this is such a huge insult although now Americans are buying and investing in our cannibis industries.
7
This Canadian will rant: I don't think most Americans realize that Trump's crew are stomping on the next-door neighbor's toe harder than the USA has since Canada's creation 151 years ago. And showing contempt. Canada buys more from the USA than vice versa - and the economies are intertwined. I think Trump and his crew truly believed that the sweet-minded northern neighbor would roll over and surrender - so that he could hold its head up high for his mindless hardcore supporters to see. And for the Chinese government to see too. The American business world and countless politicians oppose his treatment of their country's most important financial ally. Canadian officials have spent a long time in D.C. lately, talking to Republicans - especially those from border states.
I can understand the American view of the gigantic Chinese. Canada is not China.
1
"America has thrown away its negotiating credibility" and "turned us into an unreliable partner."
Truer words have not been spoken. Except, the damage is not limited to trade tariffs but also America's international agreements (i.e. the Kyoto Protocol to reduce greenhouse gases and Joint Comprehensive Plan of Action better known as the Iran nuclear deal) and standing as a steward of civility and common cause. America was not always perfect. But the underlying intentions were always to protect American ideals.
Sadly, the election of Donald Trump and the cowardice and complicity of the Republican Congress have undermined 242 years of American credibility, reliability and the ideals that supported our Nation.
America under Trump is sickening.
Vote "D" on 11/6/18 to defend Democracy.
4
So why do we have lower tariffs for inbound cars and we get hit with larger tariffs when we export them. Is this a good thing? Have you read the book "Beijing Jeep"? Are you aware that we export empty shipping containers and import full loads? Trying to understand why getting shafted is better than not...
1
Which cars do we import from China? Oh yea, none
Half of America voted for Trump. Now they have to pay the piper.
Literally.
1
@Waves of Brain
Um. Less than half of America voted for Trump. He lost the popular vote by millions. Yet all of us are now his captives. If his corrupt & foolish decisions harmed only those who voted for him, it would be less terrifying. As it is, we all must suffer for his actions. Except of course for his big money donors & Russian oligarchs. Those folks are currently living in hog heaven.
4
America is beginning to don the narcissistic cloak of its leader. The lack of any vision beyond self-interest darkens both the world and the character of a country that has stood for so much to so many.
7
Trump likes the tariff tax. He can slap it on and take it off id and when he pleases. It suits a demagogue.
6
‘Trump has perverted the process and undermined U.S. credibility.’
That, in a nutshell, pretty much sums up everything Trump, his White House entourage and the Trumpublican dominated Congress have said and done going at least as far back as Trump’s ride down the escalator to kick off his candidacy with a racist, xenophobic, know-nothing tirade.
2
Am I the only person who finds it deliciously ironic that Chrystia Freeland is Canada's chief Nafta negotiator?
I will always remember the look on Dr Krugman's face when the author of Sale of the Century and Plutocrats: The Rise of the Global Super Rich and the Fall of Everybody Else telling Paul Krugman she read every Krugman Blog post at least twice.
Dairytales from Trumpland..the incredible dairytales by Mr Trump need some exposure.
Here's the history. Some big American dairy producers thought they'd cash in on the export market and ramped up production without doing
much market research.
Other much more intelligent producers with more market savvy increased production around the same time.
American producers couldn't export very much and
now Trumplanders are sitting on a 1,3 BILLION pound mountain of surplus mozarrella. Last year Trumpland
dairy farmers dumped over 100 million gallons of milk.
Last year Canada bought $792 million of U.S. dairy
products and the U.S. only bought $143 million of Canadian dairy products. That's a big trade surplus.
Mr.Trump...what's your problem?
google Brookings Canada dairy
Last year Mexico, bought $1.3 BILLION of U.S. dairy
products. Now there is a 25% tariff on U.S. cheese in retaliation for Trumps 25% tariff on Mexican steel.
I am very annoyed because Costco Mexico doesn't
sell Tillamook Oregon aged cheddar anymore. My Mexican grandchildren are annoyed because they really like Tillamook cheddar.
I've switched to Mexican goat cheese.
Tariffs can be deadly Mr Trump.
7
Poor Krugman. Still anxiously waiting for the economy to collapse. Maybe it’ll happen if Trump gets re-elected. Hope springs eternal.
1
Can you or any economist give us more detail on how the capricious tariffs are enhancing the economy? Without them the economy was growing under Obama.
12
Trump's policies are making America great again for his supporters. They think the US should be able to do what it wants, when it wants, without concern for or constraints from the rest of the world. That's what MAGA means to them, being the big dog in town and being feared, respect is for losers.
2
The stronger he is for something, the more self-serving it is.
Almost everything he does, children in cages, trade, sexual assault, Roy Mooreism, etc. smells like old fish.
An article that I have yet to see in the last 2 years is one extolling how Trump is doing something to benefit America as a country, as opposed to benefit the country club set.
2
“Now they know that whatever documents the U.S. may sign supposedly guaranteeing access to its market, the president will still feel free to block their exports, on specious grounds, whenever he feels like it.”. Mr. Krugman, I’m surprised you didn’t add the obvious very current NAFTA crisis - Canada is being accused of obstructionism because it doesn’t trust a serial liar who decides and reverses on a whim. Canada is therefore insisting Article 19 be included as well as a clause added regarding any future imposition of tariffs on cars which the child-man might impose if he gets up on the wrong side of the bed. With previous American presidents, maybe the word and impugned honour of a Lightzinger negotiator might have sufficed but with the liar in chief, who has no honour whatsoever, Canada cannot sign any agreemnebt without bullet proof guarantees. And let’s not forget that even without Trump, despite NAFTA America STILL imposed tariffs on softwood lumber multiple times and each time they were canceled by the arbitration of an Article 19. Americans may think Canadians are nice but we aren’t stupid - we know what will happen if Article 19 is eliminated, trade deal or no trade deal.
13
“What Trump did was instead to lash out based mainly on a vague sense of grievance, with no end game in sight.”
Congratulations, Mr. Krugman, in one sentence you’ve perfectly summarized the entire modus operandi of this destructive and short-sighted person.
11
China needs to be reigned in on a number of very specific things- dumping, protection of intellectual property and industrial espionage.
I do not see how Trump's broad brush shotgun approach targets those concerns.
And his failure to coordinate with our other major trading partners, who all have the same concerns as us, is strange.
As Krugman says, it appears its all up to Trump's whims.
Which is another telling sign that we are slipping into one man rule.
2
We are, in fact, an unreliable trade partner.
We are a democracy in which the people have no understanding of basic civics. The people feel free not to vote, or to vote without reflection, or to vote their frustrations. So, we are subject to government of the corrupt, by the corrupt, and for the corrupt.
Astute foreigners know this, and act accordingly.
Until we figure out how to responsibly form our government, we will be only a menace to the rest of the world.
5
Trump's actions are not only condoned but applauded by the vast Republican not-so-dark state. Let is now be said, Republicans do not believe in fiscal conservatism just how deficits are spent. They do not believe in morality. They do not believe in ethics. And of course, they do not believe in Truth. When you lie down with a dog with fleas you get fleas.
Hey do you think Orrin Hatch will bring his copy of The Exorcist to the judiciary meeting next week?
16
"... but some steel users — including the U.S. subsidiary of a sanctioned Russian company — were granted the right to import steel tariff-free".
Will somebody please, please find out what the Russians hold over Trump. Some government agency, some Congressional committee, some NGO, some foreign intelligence service, some private detective! Please. This man's subservience to Russia is a threat to our national security. What must happen before we take this threat seriously?
3
reposses his mortaged properties, outlaw country club membership fees, outlaw foreign purchase of expensive US real estate as a way to launder money, discontinue Big Macs... there are a lot of tools that could be brought to bear to reveal the hold Russians have over Trump and his sham real estate and branding empire.
1
Let me just pick up on the “negotiating credibility,” point.
Though my experience was on a far lower level, I am here to tell you that negotiations run on moral advantage, at least as much as they run on numbers and the like.
We squandered the last of our moral capital, piIed up in WW2, when we invaded Iraq based on lies and hallucinations. So now, when we should step in to protect the shamelessy destroyed in Syria and Myanmar, we can’t.
And these tariffs are the same last slugs at the bottle; next time we need to lead, it’ll be impossible.
8
Notwithstanding the “expert” advice proffered by “stellar” economists like Peter Navarro and Larry Kudlow, there is no logic or reason to Trump’s economic posturing and never will be.
As “Forbes” put it quite succinctly “...Donald Trump’s arguments are quite clearly founded in an an absolute ignorance of what trade is or how it works...”
Our ignorant, corrupt and bullying president will continue to throw his weight around in the most destructive manner in the economic sector, as elsewhere, as long Congress and the electorate let him. Vote for the road back to sanity in November!
1
Thus, there are now substantial tariffs on imported steel, but some steel users — including the U.S. subsidiary of a sanctioned Russian company — were granted the right to import steel tariff-free. (The Russian subsidiary’s exemption was reversed after it became public knowledge, with officials claiming that it was a “clerical error.”)
Has there been any follow-up to see if this reversal was changed back to benefit this Russian company?
7
how will we ever repair all the damage the Trump administration has done - on so many levels and in so many areas?
3
For some reason you object to our infantile president from playing with his shiny new toy. Next thing you'll say is that Congress should exercise it's sole power to regulate tariffs.
4
Ah cronyism, used by trump to benefit those he owes or wants something from. This is his trademark. He sells his brand, Trump, it should have a small c in a trademark circle to signify cronyism, or conman, or collusion, or complicit, or corruption, or crass, or cad, or etc etc etc.
7
With NAFTA talks on-going it seems incredible that Trump would think all of these arbitrary trade actions would make the US seem like a reliable party to any deal. No wonder Canada is iinsistent on maintain the dispute resolution panels Trump hates.
For me, personally, it has made me more aware than ever of where products are made —since I feel less and less comfortable buying products made in the US.
6
everything is about trump even his nomination of kavanaugh. trump couldn't care less about the country. he abolished the visitor log so corporates can come and do backroom deals with his organization. citing national security is code for 'it's all about me'.
2
The United States was founded with tariffs as a primary source of income for the federal government. Before the Civil War a major point of contention between the North and South were tariffs on imports from Europe. The Southern slave owners wanted to do away with tariffs. The abolitionist North wanted tariffs to protect American industry. Today people with servants and employees want low tariffs and cheap immigrant labor. I suspect no one in Mr. Krugman's family is dirtying their hands in a labor profession and I'm sure he has at least one maid cleaning his toilets. The United States government has a right and obligation to protect American workers from unbalanced trade and mass immigration. I disagree with Trumps method of using tariffs but not the idea of tariffs. I would impose a 15% tariff on all goods entering the United States. If that doesn't work to balance trade, I would increase it to 20% in two years. Keep it simple. The current system lacks predictability and is too complicated.
@Mike
Unfortunately we do not make enough of high-tech stuff for other countries to buy from us. By selling raw materials and agriculture products we are slowly turning into third country.
You plan would kill this country.
1
When Trump is no longer in office, the US will have its credibility back. That was my initial reaction to his insanity. Then I realized that we are a democracy that voted him into the Presidency and we can surely do that again. The economy runs on trust and the only credibility we've earned now is being capricious.
2
@Blue Moon As a Canadian and an Ontarian, I don't want to see auto workers here devastated. The production system between our 3 countries is deeply integrated, for better or for worse. I also don't want to see our dairy industry obliterated by US dumping of its over-production of dairy products, which occurs because of US subsidies. US negotiators won't agree to drop steel/aluminum tariffs if Canada signs, nor will they guarantee auto tariffs won't be added. Then add in Trump's musings about our "ruination". Why? Why would we sign when it seems the US is acting in such bad faith?
14
The theory seems to be: because we’ll beat you up if you don’t. Lazy, stupid, and short-sighted, but there it is.
2
How many American consumers realize that our addiction to having lots of cheap stuff has helped drive our trade deficits? Furthermore, how many Americans realize that the past 20 years of low inflation has been driven by importing stuff from low cost countries? How many Americans think of what's behind Walmart's "low prices always" slogan (hint: it isn't just volume purchasing!)?
It's very easy to say you want to see manufacturing jobs come back to America, but when faced with the choice of having one American-made shirt or three imported shirts for the same money, how many will opt for the American-made shirt?
In reality, the US economy is based on higher valued-added products and services (think Boeing jets, GE turbines as examples). Yes, this shift has left some people behind economically, but to believe we can fix that by bringing back manufacturing jobs that other countries do well for less is fantasy.
8
The term “trade war” is actually misleading in a dangerous way. Americans hear the term and analogize it to a shooting war: If you hurt the other side, then it’s good for you. If it’s good for you, then it necessarily hurts the other side. But that’s not how modern trade works. As Dr. Krugman pointed out, tariffs are fundamentally a tax that gets passed on to Americans. American companies that are part of a integrated global supply chain will be hurt. Furthermore, Trump supporters are already gloating about signs that China may be headed for an economic crash. What they don’t seem to realize is that if China’s economy crashes, the rest of the world - including the US - will be caught up in the storm as well.
205
@citybumpkin
Indeed.
Trade wars are like knife fights between conjoined twins.
2
Let's take a stroll down Memory Lane to the 1990s with then-Fed Chairman, Alan Greenspan — ever the libertarian economist and trickle-down acolyte. As Greenspan worked to deregulate every industry in America "to release the creativity of the free market," he also "released American job to China and other offshore locales.
And, (if my 73 year old brain could only remember), there were two fellows who co-wrote their MBA thesis at Wharton promoting the idea of maximizing profits by sending American jobs offshore to plump up shareholder value and thus, drive executive compensation higher than any CEO had ever imagined. After all, payroll is the largest expense for most companies and, if those companies could a) rid itself of employees before they could cash out their retirement plans, and b) eliminate manufacturing jobs with offshoring those jobs, Wall Street would reward those CEO's with bonuses.
Moving manufacturing to, say, China, would relieve American companies of any responsibility for worker fair wages, health and safety rules, healhcare insurance, and environmental regulations. This is drove stock prices ever higher on reports of higher profits made from those advantages of making stuff overseas.
Once trade rules were established, and let's use China for this, we saw frequent violations of US patent laws, along with defective food and drugs.
China is not our friend. But we need China to influence North Korea as a peaceful partner on the Korean peninsula.
3
Academics didn’t do this. Capitalism did. Are you unclear about how that works?
1
Well America, enjoy your status as the world's largest economy while you can. Krugman is right. If America can't be trusted countries will look at alternatives for trade.
Make America Great Again will end up being America's epitaph.
376
@Gord Lehmann. America can be trusted to do what helps Americans first. No more one sided trade deals that cost America manufacturing jobs, especially when currency value manipulation is the reason the foreign good appear to be less expensive.
4
@James
China is NOT manipulating their currency. The goods produced there are cheaper because they pay slave wages and have little or no environmental standards.
All America has to do is stop buying ANYTHING from any country that doesn't meet basic standards for labor and environmental protections. We Americans are the ones who decided to trade our labor and the planet's clean air and water so we could buy cheap trinkets from China and India.
4
@Ronny
Just like we are the ones buying illegal drugs creating ruthless criminal enterprises in Central and South America. The flood of immigrants across our borders is to escape the criminal environment created by our national drug habit.
6
World trade has made the world a safer place. I have been traveling the planet for 40 years for both business and pleasure and have spent 5 years living outside the US. As a full disclosure I earn my living from world trade (moving it around the planet).
The more humans interact with each other the better, we quickly discover that we have much more in common than we may have originally thought and that is a good thing. The US fought a Cold War for a good portion of my lifetime against an economic system called communism. This war was won in the nineties, I look at China and think well be careful what you wish for, we wanted them to join the world and embrace capitalism and they did they just did not embrace democracy at the same time. I remember a dinner conversation in the early 2000’s with a young Chinese person about the prospects of a capitalist but non- democratic China, have to say that is exactly how it has played out.
Now I see Trump essentially telling the Chinese and the rest of the world that the rules as they understood them are no longer in force but now it is the rule of the Donald and they may change daily depending upon how he feels you feel about him. This is insanity and won’t end well for any of us.
354
@Chris
He rules like a King. He thinks of himself as the proper center of all attention, and most scarily, thinks he knows all he needs to know about everything.
So, we get broad brush decrees designed to make Americans think complex issues have simple solutions.
2
@Chris: America has to do something to balance its trade deficits. Maybe Trump's method isn't the best way to do it, but no one else had a plan.
TPP might have been a step forward, and when Trump is gone, maybe the rest of the world will get it. We can't and won't keep running deficits.
The tariffs are Trump's bullying gone into world trade. Trump thinks that power and authority is all about throwing his weigh around, making demands & threats, and waiting for others (apparently 'friends' and enemies alike) to cry 'uncle.' He is playing a game of International King of the Hill. Since in his mind, life (the world) is divided into winners and losers; since his default goal is "Trump wins," the only way he can act is to try to make everyone else - everyone - lose. Therefore, agreements must be made only when he demands and others accede. Compromise is impossible (unless the opposition can handle his ego & the press so that Trump thinks that he 'won').
The other factor is the petulant two-year-old act. Trump is feeling put upon, resentful, and constrained. Imposing tariffs or giving pardons or issuing 'executive orders' are a variety of temper tantrum showing that he can too do what he wants.
544
Always, always, always, - Trump looks after his own affairs. His interests, his investments, his bank accounts. It's always about that. He is using the oval for his own end game, not the country's.
7
It will take some time for the world to react, but I expect that the dollar will soon no longer be the world’s reserve currency, and US banks will no longer be central to international finance. This will be done to safeguard against US unilateralism. Once US banks are no longer central to international finance, US sanctions lose much of their bite.
By the time this occurs, we’ll likely have a Democrat as President. The Republicans will then loudly blame the Democrats for the inevitable consequences of Trump’s actions. (Same way they successfully blamed Obama for the economic damage caused by George W Bush’s policies.). One hopes the voters will see through this ploy, but this seems unlikely based on historical data.
817
And then perhaps I will join my daughter who is living in Germany with her husband both serving our country at Ramstein Air Force Base, which is more than I can say for our so-called leader whose rent and lunches we pay for in the White House.
17
@John M
Indeed, John. It was during Bush43's administration when conservatives — led by trickle-down acolytes, including Alan Greenspan — ran roughshod thought the proverbial china shop, leaving the mess for newly minted president Obama to clean up.
But those bulls who destroyed the china shop then refused to help with the cleanup. Why? To help in cleaning up the mess would have required some mea culpa on their part and that is not in Republican DNA.
3
@John M
Most will see through his ploy of blaming the democrats, the only one that will believe him, believe that if you deported any and all people that take low end jobs. That will somehow make those high paying factory jobs come flowing back into the country, and make America white again. But this country will never be the way the trumplican party wants it to be (not permanently anyway)
1
An excellent analysis, but we need to remember that for Trump, the corruption is not a bug but a feature. It is part of his over-all pattern of undermining the rule of law. Cui bono?
2
The oligarchy goes along with this, because they think that a return to control of Congress or the Presidency to Democrats will be benign - that this corruption is temporary and that THEY THE OLIGARCHS will be able to co-opt the Democrats, so that these corrupt practices will not be turned against them. They are naive in this belief.
Once rent-seeking corruption has been established, only radical measures can root it out.
In other word, as far as corruption goes, you ain’t seen nothin yet!
1
We are not in the hands of a master economist. It had to be explained to him that the president cannot just order the Treasury to print more money.
This is a president who does not read, knows nothing about history and as we have seen negotiating a real estate deal is nothing like dealing with foreign powers.
Okay but every president hires experts to advise him but not Trump. What does Trump being to the table?
His business is a mom and pop shop. He has no corporate experience, no military experience and no political experience. Mainly Trump is a conman, a fraudster, a liar a money launderer and a scoff law, and a cheat.
He has a vision of America where he and his benefactor Putin will run a twin oligarchy and our immediate problem is that the GOP has the same vision otherwise, since the Congress, not the president controls tariffs and with regard to a threat to national security Congress can demand that the president explain in detail how national security is involved.
2
Mr. Krugman is ceding some significant ground in the war on truth when he says that Mr. Trump "obeyed the letter of the rules" when he imposed Canada tariffs on the stated ground of national security. Furnishing a false pretext is not literal compliance with a requirement; it is telling a lie.
We have "alternate reality" and "truth is not truth" already; it would be better if thought leaders like Krugman did not slip into saying that a violation of law is, "literally," compliance with law.
2
Trump is classically dealing in the unknown known or is it the known unknown. The Donald famously spurns facts and strategy for shooting from the hip, while listening to his gut.
What The Donald knows about international trade and economics can fit into a thimble and leave plenty of room for your finger.
My business is benefiting nicely from The Donald's misguided adventure into trade wars. I sell steel products manufactured in Europe. My main competition was an American manufacturer located in one of the states that turned the 2016 election for the red team. Resultant of the idiotic 25% steel tariffs, the US company can no longer buy raw material competitively enough to remain a factor in our market. Unintended consequences?
No, impetuous stupidity!
4
@bobbybow
Thank you for that. Trump's tactic, in just about
every area of policy, is bluster. He gets support
because it is human nature to want simple answers
to complex questions.
I was happy to see him bring these issues up, but
I never once thought he was the man to solve them.
1
It is not just about the economics of tariffs either. Imagine how many people in how many countries are starting to hate the US because of Mr. Trump. Many of these fine people will go out of their way to avoid buying products made in America out of principle. The Republican-enabled Mad King will continue to damage our country long after he is gone. November is the time to start repairing some of the damage.
2
Trump is everything he is and does everything he does with the help of complicit, culpable, corrupt Republicans in Congress, the Supreme Court, and nonstop propaganda of Fox News and Republican owned AM Hate Radio. Their combined and coordinated actions are enabled by the "Dark Money" few who lubricate every election and state with money to spread lies and "fool all the people some of the time, and fool some people all of the time." Let us hope that Lincoln was right when he said, "You can't fool all of the people all of the time."
Only one political party does this.
November 2018.
3
Even critics make the mistake that Trump, however clumsily and/or corruptly, is trying to "fix" a problem (in this case our bilateral trade deficit with China).
He is NOT trying to solve problems, he is trying to ruin this country at the behest of his master, Vladimir Putin!
When you accept that, all his actions make sense.
4
A 20% increase in imports is no joke. I’m no economist but my guess is that these tariffs will stall the economy as this is self-inflicted inflation that many consumers will not be able to afford and you know what happens when consumers pull back on purchasing good and services. Cutting off the nose to spite the face—In spades.
2
The Chinese Economy Was Built On Four Pillars:
1. Cheap labor
2. Currency manipulation
3. Counterfeiting
4. Intellectual property theft, including forced transfers of technology
The trade in counterfeit Chinese goods is nearly half a trillion dollars per year. That's bigger than global trade in illicit drugs. Knock off designer clothes, shoes, handbags, etc are sold in huge open bazaars in several Chinese cities.
The only way to deal with China was to get tough with them. The big mistake Trump made in this was to not partner with traditional allies like Europe and Canada.
Make no mistake about what China is seeking to do, which is to replace the dollar as the world's global reserve currency and U.S. hegemony in the world order.
1
@Chris Manjaro
How does imposing tariffs in a broad brush, shotgun approach get the Chinese to the table on these issues?
Could this not be accomplished in a way that is less disruptive to our own economy?
Shouldn't we be trying something a bit more subtle before we rely on one man rule , bluster and decrees?
2
@Chris Manjaro
Already done, with Donald’s assistance. But he has his patents/trademarks so all is good.
@Chris Manjaro
Excellent comment. Unfortunately your president is alienating all of America's allies with tariffs that are firstly haphazard (as in 'national security' (what a joke!)) and secondly used as threats (as in: "Sign the NAFTA deal, Canada, or I will tariff your automobile exports!)
7
If there is anything we're seeing out of the last 30-40 years, unenlightened self-interest now trumps rational behavior. And why not? Look at the behavior of those who have been rewarded the most in that time period? It's a cynical strategy that works very well in the short term.
Years of mutual cooperation and compromise build up wealth and social capital. Everybody benefits by supporting the system, not abusing it. There's room for everyone to win - if no one gets greedy.
But someone always does. This is just another aspect of vulture capitalism playing out. What takes generations to build can be looted fairly quickly. The immediate rewards can be tremendous.
The long term? Who cares about that? Not Donald Trump. The only long term interest he and others like him have is amassing wealth and power, and hanging on to it. They can't win unless others lose. That's how they see the world.
3
@Larry Roth
Hence, why Trump's memory of the 2008 collapse centers on making killings in real estate.
1
We only have Dr. Krugman's word that the Trump tariffs violate the spirit of the law, while all of the observable evidence suggests that Trump's trade policy is not dragging down the economy or weakening confidence in the economic system. The economy is booming. Incomes are beginning to rise in real terms for the first time in at least a decade. It is China, not the US, that finds itself up against the wall in the "trade war." Our global trade remains robust. None of our allies have abandoned us. I know, just wait, it will all fall apart soon, right? I will file that with the prediction that the stock market would never recover and we could not achieve three percent growth. Frankly, I think Trump himself is a buffoon. So it is all the more revealing when his economic predictions consistently prove more accurate than those of a Nobel Prize laureate.
1
@Charles
No you don't. Did you know that laws are published, in books? And have case law dealing with parts of them? And entire areas of study dealing with such laws? You know, like economics?
Krugman is a professor of economics. So, absent my doing the research and taking some classes, I will defer to him on these issues until someone like you comes along and writes a piece that does the research, states the facts, and proves him wrong.
You have not done that.
Your post consists mainly of a very optimistic nationalism.
For example, the tariffs have just started. Did you expect negative effects in just a week or two?
2
Trump was bailed out with the help from the Russian mob back when his inherited money was running out. He has learned power through corrupting trade policies is what he is good at but as Paul points out there is no end game. Tough times ahead for the working man and the entire nation even after he is gone.
1
Any international company would have to think twice about including the US in their supply chain. Given how ling it takes to rearrange supply chains they would be foolish to include the US unless the majority of their product was sold in US.
2
It seems that Trump and his GOP lackys are elevating both 'nasty and stupid' to the level of performance art. Add the word corruption and we have a trifecta.
Cancelling deals made in previous administrations makes any new deal suspect as Krugman points out. What's the point? That includes the Paris Accord, the Iran deal, the TPP, and ignoring the trade agreements already in place.
The headlines cover this ignominy and now we can add the SC debacle. Trump wants his vote on SCOTUS to protect him when the time comes.
Is there no end? Got my hopes up for the mid terms.
4
The big mystery in all this is the support of around 35% of the voters. They seem to swallow whole any assurances given by Trump that this is for them. Clearly, it is not. Just like the Carrier jobs he supposedly saved early on, closer scrutiny always reveals a different story.
We all want to believe in all the starry-eyed stuff about the US being full of ideals. I regularly talk to people of how corrupt the political system is due to campaign finance, private propaganda machines and Super-PACs. Just like Trump supporters, adults of all persuasions turn into believers of what America is supposed to be rather than seeing democracy down for the count. I guess like with Trump supporters and alcoholics, damaging delusions are more comforting.
Since both parties participate in corruption at some level, the democratic relief will not come from them. It should come from us if we, as voters, can get past the childish notions that derive from hyperpartisanship: my party is good, yours is evil. Until we see that the system gives preferences to those who purchased influence, too many will believe an election will rid us of corruption.
Trump has no desire to hide his despicable nature and donors love it. They will pay. But we must ask, will the Dems give the GOP the same ammunition at a later time (think Hillary and Chuck and Wall Street) or will we they do like FDR did and clean up the system?
Trump clearly needs to go. We need to ask: will that be enough for democracy to function?
1
@Tom
The journey of a thousand miles begins with the first step.
Get rid of Trump.
Vote out the GOP.
Then primary DLC-style Dems.
It will not be a short process. History shows that any progressive change can take years, decades, even centuries.
Mr. Trump is a performer and his Presidency is all about producing political theatre for his 'base'; the core group of people who see (somewhat ironically) themselves as disadvantaged and victimized by immigrants, minorities, other countries; basically, anyone who does not look or act like they do. So... The game here is to present America as a 'victim' of the big bad world that surrounds it. Even countries that were once allies are presented as having taken advantage of 'poor America'. All of this is presented in a thoroughly obnoxious, bellicose manner that suggests 'power', but to those who are not under the spell of Mr. Trump's celebrity the whole production is just ridiculous. This is not 'making America great', it's making America a parody of itself.
10
Tax reform, trade reform and soon our social safety net. Trumped. Trumped and Trumped again. Or should that be Koched. Koched and Koched again?
2
If Democrats can take back both the House and the Senate in this November’s election (admittedly a long shot), they can easily override, with GOP support, Trump’s illegal tariffs. The remaining Republicans will have no reason to fear Trump since he caused a blue wave election. The rest of the world will see that Trump is a horrible aberration.
Vote November 6
"Now they know that whatever documents the U.S. may sign supposedly guaranteeing access to its market, the president will still feel free to block their exports, on specious grounds, whenever he feels like it."
Try to explain how that is a bad thing to a Trump voter who thinks giving the finger to furriners for stealing his job is called "a good start."
Go ahead. Try it.
"A deal is NOT a deal with Trump": hundreds of contractors can attest to this: the made the contracted work and were not paid by Trump in his hotels; his allegations were always the same: an excuse for no paying "bad quality, it does not look good, national security, er, not safe, etc."
Did we expect better on an international theater?
5
In the game of capitalism, big fish eats small fish. US has been the biggest fish until China came on the stage, as a national capitalist.
The big one is growing and the rest are shrinking...
In this line of thinking, the tariffs make sense...
Under Trump, no trade deal is binding because he can undo any part of it, anytime, with tariffs "justified" on fake national security issues.
The broader picture is even gloomier. Trump has brought his mob-boss type of deal making (flouting all rules, thousands of lawsuits and multiple bankruptcies) to the American Government. The rest of the world was not used to this nor were we prepared. But now we all know this administration cannot be trusted. It's word and even it's signature are now worthless.
10
One of the problems to handle Mr. Trump is the gutless and selfish congressional delegates. It seems there is no opposition to Trump's unreasonable demands and threats. They just want to be re-elected as their first priority. They are silent. I hope some Republicans can rise to the occasion to repeal and rebel against many Trump's decisions not just for the party but for the country as a whole. The consequence of trade wars with so many countries will eventually reach our shoreline that hurting our live quality for sure.
2
Ahhh, yes....Krugman, the pied piper of fake economics is at it again--continuing his cheerleading for the Democrat party and support Progressive policies.
Our trade deals need to be improved, to make them fairer and more reciprocal--but no previous presidents have had the guts to address them.
One may make the argument that we should take it easy on our neighbors closer to home--specifically Canada and Mexico, but China is a dictatorship and serial trade cheater--using its wealth gained from such, to beef up its military--and is already threatening its neighbors in the region.
What should we do, Mr. Krugman--just put up with it forever? Should we keep allow China to:
--Manipulate its currency to make its products cheaper?
--Impose tariffs on our products while we impose none?
--Pressure our firms to locate factories in China, while ripping off our intellectual property?
--Continue to counterfeit products?
--Steal our software, and use it for free?
--Hack our computers, and steal our military secrets?
The Chinese have been engaging in a decades-long game of "bait 'n switch". They dangle a carrot--access to their market, in exchange for access to ours. Trump realizes access to OUR MARKET is the more valuable asset. He knows China needs access-and without it, their export-driven economy collapses.
Trump knows we are in the drivers' seat--and dares to grab the wheel. Partisans like Krugman can only snipe from the sidelines--and pray for failure.
1
@Jesse The Conservative
By supporting Trump, you have abandoned any notion that you are Conservative. Your name should be
"Jesse the Trumpist".
Yet, I agree that other Presidents did not have the courage to confront this issue. But must we hail one who has no plan, no knowledge and no experience in this area, just because he has hutzpah?
1
I think the most hilarious part of this appears in the yelling about how nobody’s ever tried to fix this stuff before, coupled with the loud lecture to the economist who’s written about this repeatedly about how nobody ever noticed this before.
Must be nifty to be a bold, wise pioneer, marching bravely ‘neath the banner of the only heroic President in ‘Murrican History.
2
@Jesse The Conservative
Yes, Trump is in the driver's seat, he has grabbed the wheel and is driving us right over a cliff. It's one thing to try to correct China's trade steals with smart moves, like staying in the TPP and WTO and getting help from our other trading partners to pressure the Chinese to change their ways. It's crass stupidity to tear up trade treaties, tariff our closest allies and start trade wars that may destroy both China's economy and ours. Trump is a moron when it comes to trade and world affairs, as his his chief economic adviser, former secretary of state and others who have since left his ship of fools have repeatedly pointed out.
1
It seems that Trump and his GOP lackys are elevating both 'nasty and stupid' to the level of performance art. Add the word corruption and we have a trifecta.
Cancelling deals made in previous administrations makes any new deal suspect as Krugman points out. What's the point? That includes the Paris Accord, the Iran deal, the TPP, and ignoring the trade agreements already in place.
The headlines cover this ignominy and now we can add the SC debacle. Trump wants his vote on SCOTUS to protect him when the time comes.
Is there no end? Got my hopes up for the mid terms.
2
Trump has done to world trade what he does to anything he touches. He tries to take it over and put his block label brand name on it. And to use it for only for himself for his own economic gain, or to do what his handlers tell him to do for their economic gain, or maybe Sean Hannity.
For one man to willy nilly futz with trade policy that affects the entire country and not even to hear Congress discuss it is depressing beyond any description I can provide.
Trump does NOT understand world trade. Trump is not competent to talk about world trade. Trump is destroying our economy while wall street acts like drunken sailors.
CONGRESS WAKE UP! DO SOMETHING.
4
Dr. Krugman’s point is well taken, and a consequence of Trump’s tariffs I hadn’t considered. The phrase that Trump is turning the US into a banana republic feels like it has become tired hyperbole, but I think it’s apt in this case. Tiny dictatorships are unreliable trade partners because they’re subject to the whims of a single, often irrational leader. Trump has managed to single-handedly give the US the same reputation.
4
Herein lies the difference between an academic and a real world businessman.
Trump is exercising leverage on China to make China give in on their unfair trade practices.
In case you haven’t noticed the China stock markets are down 25-30% while ours are at all time highs.
True, Trump is gambling on this but he’s still playing with house money.
1
@Tuco
I would not bring up gambling when discussing Trump.
Note that the USA cannot go into Chapter 11.
2
So your argument is, “Hooray for Trump, he’s gambling with our economy and our money.”
Remarkable.
By the way, did you happen at any time to notice that there are other ways to handle this? Like meeting, cutting deals? Going to the WTO, where we win about 85% of the time? Organizing other countries behind fixing this?
Of course not. That would be how an adult would handle problems.
1
Trump, as a candidate, said he would respect the outcome of the election if he won, implying that he might not if he lost. This is his attitude to the rule of law and the respect of convention; his subsequent lawlessness should not be a big surprise.
The real goal of Trump's tariff scam is the exemption process. Exemptions allow Trump to pick winners and losers depending on how nice they are to him and what he will get in return. Mar logo is the court of exchange where Trump plays King and his subjects preen for favors.
3
@Bruce Pippin
One of the big things that Congress should address is getting back power over trade. They gave it away, bit by bit, over decades.
Trump illustrates that our trade policies should never be subject to one man rule.
2
How much longer will it take for the US to awaken to the fact that its richest people are raking off its wealth by front-running manufactured news in financial markets?
5
@Steve Bolger sounds like you're jealous. Isn't that what you so often do with other people's posts in this publication?
Everything this president does is done "seemingly on whim". Why should his imposition of tariffs be any different? Don't expect logical reasoning to come from the mind of this very stable genius.
1
A necessary caveat. While Trump, and other stakeholders are responsible for planning and implementing these tariffs, and will not be personally accountable for any of the unexpected as well as planned outcomes, we, average citizens, are enabling all of this too go on. Trump's et all shameless, harmful behaviors can match, measurable or not, our own complacencies and complicity. Where do any of us, as individuals, in a range of daily roles, situations, systems, networks, and environments go from here to begin to plan, carry out, and assess the outcomes of needed changes.?
Trump operates strictly on the basis of cronyism. No sane person has anything to do with him.
1
When Trump is gone and the US has weathered the worst and most visible consequences, you really need to have a truth and reconciliation process.
Countries do this when one part of the polity has grossly abused the other. Whether it was the majority abusing a minority (e.g. Canada and our First Nations people) or vice-versa (South Africa and apartheid) you need to do this because if you don't, both sides build their own story about what happened, who did what to whom, who really suffered, and who is exaggerating whose actions and the consequences thereof.
It's hard because once the worst of the horror is past, in the moment it feels easier to just move on.
If, after the Civil War, slaveowners and southern whites had been made to look their former slaves in the eye and genuinely listen to what it was like to be a slave.... it would have been painful but maybe the great American divide you face today would be less. There would be much less mythologizing about Southern gallantry and the Lost Cause that romanticized a centuries-long atrocity.
I don't know exactly how hot the American fire to come will be, but whoever is left will have to be ready look with clear eyes and open hearts at the other side's burns. Otherwise it will come back again and again.
1
"Trumpian trade policy has, almost casually, torn up rules America itself created - rules intended to ensure that tariffs reflected national priorities, not the power of special interests."
What kind of fantasy world does Krugman inhabit? Trade rules in the US have always been formulated by politicians with their wealthy corporate backers looking over their shoulders.
Was it a "national priority" that Thailand's cigarette market should be open to US brands - while the Thai government was engaged in, up until then, a highly successful anti-smoking campaign?
"Then, in March 1989, Prakit learned to his surprise that after three years of secret talks, the Thai Finance Ministry was on the verge of approving a deal with the U.S. Trade Representative's Office that would open the country's markets to American brands. American tobacco was poised to enter a new and thriving market." https://www.washingtonpost.com/wp-srv/national/longterm/tobacco/stories/...
The success of the Thai government's anti-smoking campaign was reversed by the intrusion of US brands.
Trump is no less evil than the rest of corporate America - he's just not as bright. And Krugman would be wise to ponder these words:
"It is only in folk tales, children's stories, and the journals of intellectual opinion that power is used wisely and well to destroy evil. The real world teaches very different lessons, and it takes willful and dedicated ignorance to fail to perceive them."
Noam Chomsky
4
@Ed Watters His point was that there were rules. They could be bent but were often followed. Now everything is done by the personal whims of the president, an unstable president and no one can trust us at all anymore.
10
@Bill
Ed is a ranting anarchist (see his icon). He is the left wing equivalent of Bannon. He too would like to break things and create a new order. An enemy of the good, in search of perfection.
@Bill I have no problem with Krugman's criticism of Trump's trade actions. My point was that a Nobel Prize winning mind should understand that "special interests" are the only interests that count in Washington, and that they become the de facto "national interests" due to the inordinate level of advocacy the rich and their corporations receive.
Krugman displays the "willful and dedicated ignorance" that Chomsky decries.
The big mystery is why Republicans are willing to underwrite policies that are diametrically opposed to their previously stated principles. The even bigger mystery is why Trump and his “policies” still receive the support of the business community.
12
@WmC "...why Trump and his “policies” still receive the support of the business community."
The business community isn't a homogenous entity. Some are pleased by Trump's actions, no doubt.
Krugman is wrong here. I usually agree, or somewhat agree with him but he is dead wrong here. The US having 2% or no tariff on imports is why there are no jobs here, and china having a 25% or 50% tariff on imports there, is one major reason their industries do so well. They are protected from foreign competition. In the US we let the Japanese and Korean, German, etc companies come in here and dump product, hollow out our industries in exchange for our military bases in those countries, and to help those countries become rich. Doesn't seem fair to me. We should protect our industries
3
@Prede
Yeah good comment. Except for the fact that its completely and utterly wrong.
This part: "he US having 2% or no tariff on imports is why there are no jobs here, and china having a 25% or 50% tariff on imports there, is one major reason their industries do so well."
Its patently false. Really, where do people get this stuff.
It is known that the US puts a tariff on goods from the EU, which are reciprocal. They are small in the range of single digits. And Krugman did write that China is a bit of an outlier on international trade.
Perhaps you should have read the article first, and commented second.
1
@Prede- Setting aside the Nobel Prize winner's being "dead wrong" and your assertion that more jobs will ensue from these tariffs:
Ask yourself 2 questions: 1) Where is the tariff money- who is handling it and what makes you think it will make its way to the Treasury?
2) Why has Trump given exceptions? "... there are now substantial tariffs on imported steel, but some steel users — including the U.S. subsidiary of a sanctioned Russian company — were granted the right to import steel tariff-free. (The Russian subsidiary’s exemption was reversed after it became public knowledge, with officials claiming that it was a “clerical error.”)
Do you see the corruption or should it be overlooked to get some more "jobs"?
1
@Prede
The Japanese and German cars are produced in the U.S. for the U.S. ; their manufacturing is in the Southern States(you know the "gimme" states that rake in more Federal dollars then they pay in, sucking the wealthy states dry.)
Why are the American markets continuing to rise as Trump imposes all these tariffs?
2
@RLW Because he and his Republican friends pushed through a massive tax cut even though the economy was growing steadily long before he got to the White House. George W. Did the same tax and give away and how did that end for Wall Street, never mind the working man’s suffering. Tariffs are a strong man ploy and the markets will crumble sooner or later. Be patient.
3
@Dave
Absolutely agree. No wage increases anywhere but the very top. They also get bonuses/stock. Not so much down here.
Because Trump has the Calvin Coolidge "Drive America to Economic Ruin and Oblivion" strategy that worked so well in the run up to our Great Depression.
Lucky for us, Trump has the foresight to gratuitously create untenable political conditions around the globe so we, too, stand a good chance of having our bacon saved in a world-wide orgy of violence, hatred, and death.
And they say the man is a fool...
Some specifics:
When you say "the markets" you're really saying "the sensitive feelings of the most wealthy and self-obsessed people in the country".
Hmmm...how to make these guys who have too much of everything and want a lot more happy?
I know! Let's abandon worry about those nasty deficits, steal money from social and infrastructure programs, raise taxes on the middle, eliminate support for the most desperate, and give it to rich guys! How great is that?
See...this is why you're a loser, like the rest of us. Because its not great at all, duh.
What's great is to do the same thing again, this time with no debate; run up more debt and raise the risk of implosion to near certainty.
Now we need this to settle in, to look permanent. So, how? Another idea! We can borrow our butts off! We can can Do Like Don and get massive loans from our biggest enemies.
It'll keep things humming until after the election and then, well, if we're gonna have World War III I seriously doubt we'll be paying back any loans.
That's why markets continue to rise. Its textbook.
Yes. Donald Trump's latest round of tariffs on China is a bad idea for many reasons.
But the real crime is that he's so totally oblivious to the financial hardships it will place on both American farmers and consumers.
Of course, when they finally wake up to the fact that this is an expensive proposition, and it's not really making America great again -- Mr. Trump will have more to worry about than the Robert Mueller investigation.
12
I appreciate this pespective and explanation. So many stories about the tariffs/import taxes in the media right now make it sound as if they are going to destroy the economy. So the fact that Krugman, who is not a fan of DJT, quickly dispenses with that idea shows his integrity.
Let's tone down the economic doomsday scenarios folks. Tariffs are not good, but they're not going to destroy our economy.
5
@Paul
True.
But tariffs, plus lack of investment in research and infrastructure, plus alienating every single major trading partner, plus destroying natural resources at a prodigious rate, plus failure to encourage quality labor practices and productivity, plus policies leading to a massive and untenable surplus of product and money with nowhere to go but overseas is probably not the best combination in the world.
As in we could be pretty dead, pretty soon.
Tariffs are a foundation stone of that malign progress.
Under such a heedless administration, feckless and corrupt agencies, we have not escaped economic doom yet. Far from it.
1
@Paul- The soybean costs went from break-even to $2 less /bushel at a terrible time for US crop producers.
It doesn't take much research to see how bad the situation is throughout the Midwest. Crop prices threaten whole operations, while machinery is jumping in price. John Deere will attest, as will any farmer you ask.
Many of these producers have already borrowed into their farm equity and will not survive a prolonged period of crop prices below production cost.
Dear Mr. Krugman - Please make an appearance on CNBC to explain this to the celebrity business reporters. I just heard Jim Cramer speaking to the tariffs not harming the robust economy we currently enjoy because retailers will absorb the added cost, consumers will continue to buy, among other reasons. David Faber spoke up to remind him of the consequences of later earnings seasons being lowered. But I believe they’re ignoring the complexity of the global economy in their rush to support a flawed decision by a deeply flawed president.
15
@Marilyn Pineda
In the manic narcissism of Donald Trump, he needs to create chaos and fear by destroying SOMETHING. Then, he declares he is the only one who can fix the problem [he created]. So he portends to renegotiate the terms of a new agreement.
And whatever was taking place during the Obama administration, DJT is committed to destroying it in revenge for the stinging, and very funny, rebuke Obama made of him at the White House Correspondents Dinner.
In other words, the Trump administration is alienating trade partners and mucking up America's foreign policy. At least V. Putin is happy.
15
Here's my question - when the US imposed tariffs on Chinese tires, the Chinese built factories here and kept right on selling tires, so why can't American manufacturers compete with the Chinese in our own country?
5
@Mark Hughes
I agree and along those lines what's the problem with foreign companies making their cars in factories in the US such as BMW, Honda, Toyota, etc. American workers are employed while these companies are investing in the US. US auto makers can compete with these foreign car makers in our own country.
5
@P Lock
Yes, Honda has been manufacturing engines and building cars in the US since the 1980's - and there is no difference in the quality, so American workers can do the job. Similarly, BMW assembles X3s in the US for both the US and export markets.
American corporations are "shareholder value" driven and look for the cheapest source for their products, including the cheapest labor. While this is great for the shareholder, it's not necessarily so great for the country, especially since more than half of American households have no stock holdings at all.
@Quinn
While I am a supporter of organized labor, Honda's US plants do not keep a worker in one spot (unless that is what the worker prefers). Instead, Honda moves assembly line workers around the plant to give them more experience and responsibility and, surprise(!), they earn promotions up the ladder with the more they learn.
American auto manufacturers should be paying attention to this. Labor and management must be partners in the business, not opponents. But the pressure by Wall Street and their investors prefer the status quo in order to "keep unions in their place."
Donald Trump made a solemn sworn oath to preserve, protect and defend whatever he is hiding from the American people in his family and personal income tax returns and business records.
Tariffs are a trifling distraction from what really motivates Trump to MAGA.
11
Trump is doing his best to dissolve Pax Americana and all its rules, institutions and relationships. And with this guy, no one should be surprised that there is more than a little element of corruption and chaos in the process. But we clearly are transitioning to a new phase of global capitalism, where state capitalism and highly mobile capital are colliding with the ancient regime. Surely, we must reexamine and reform American foreign economic policy to take into account the interests of all Americans, not just the interests of global capitalism and its beneficiaries. The question is what institutions can we fashion that have equity as a core value without compromising the benefits of openness when our adversaries have something else in mind. This is the very complicated problem that I wish our macro economist would spend more time thinking and writing about.
16
@KM
Starting in the 1980's, American corporations were pushed to focus solely on "shareholder value". Corporate raiders like Carl Icahn (yes, that guy who was an advisor to Donald Trump) held companies hostage until managements capitulated. Often this meant merging or breaking up companies, moving manufacturing offshore where labor costs were lower, gutting R&D spending, retrenchment from involvement in local communities, etc.
This benefitted shareholders, but usually at the expense of other "stakeholders". Other countries like Japan, Germany and South Korea did not rush headlong into "shareholder value" capitalism like we did.
Undoing what has happened in the last 40 years will be darn near impossible. Elizabeth Warren proposed a very modest effort at restoring "stakeholder capitalism" and the Republicans went off the rails, calling it a move toward socialism! If modest reforms get that reaction, there is no chance we'll make any change.
@Quinn
Agreed, for the most part. The question is: who will be prepared for the next crisis- which I believe/hope will discredit our elites and conventional wisdom? And who will capitalize on the next crisis, left or right? As the infamous Tim Geithner was/is fond of saying: "plan beats no plan", which is why our best minds need to do more than criticizing POTUS. We need a new foreign economic policy paradigm that reflects Warren type values (which are both pro market and social justice, btw) and is capable defending us against the predations of adversarial state capitalism.
These tariffs, in addition to punishing both the exporting nation and the US consumer of these goods, are also a nifty way of concealing the additional deficit incurred by the most recent tax cuts and unpaid military spending. One might remember Paul Ryan trying to ram through import taxes at the beginning of this administration - well, tariffs are the same thing, except for being more focused on revenge.
We should expect more R's to propose VAT sales taxes to replace more of the income tax based upon the success (or failure) of tariffs. You don't see the R's trying to rein in Trump's tariffs, do you?
10
And unfortunately this remains exactly what trump voters were promised and wanted. He does not play by the rules, but for many trump voters the "rules" had left them behind through multiple administrations of both parties. What to a non-trump voters seems, well, untenable, is precisely what trump voters want to hear. More columns like this, and we may just be dealing with him for an additional 4 years.
4
@PJM
Hmmm. The logic is like this? Do not criticize inane and untenable Trumpian policy because The Base will get awfully angry and vote in even larger numbers for The Leader? If so, there goes democracy. Which, by the way, is in a rather sorry state as it is.
1
@PJM "What Trump voters want to hear" is pandering lies and blood-lust invective on a grand, entertaining scale...they are a WWF audience screaming for mayhem and blood. Trump delivers in spades, which is his genius as a con-man. A two-year old is similarly selfish -- "I want candy and I will scream and kick my legs make life miserable for everyone in earshot if you don't give me candy right now" -- but that doesn't usually command adult surrender to the absolute blind selfishness to what is inchoate sociopathic behavior. Adults who, at least, have the good of the child and the future of the family in mind. And, unlike Trump and his WWF screaming cult, two-year olds usually outgrow it.
@PJM: Trumpism is nihilism: the ludicrous belief that burning something down always produces something better.
Tariffs are taxes, and Trump's taxes will not only wipe out the paltry tax cuts he gave us working stiffs but will also wipe out the much bigger corporate tax cuts he gave to the business class. Where is Grover Norquist, the Republican's anti-tax hero, when we need him?
11
"Trump has obeyed the letter of these rules, "
I disagree. The, already constitutionally suspect, security exception to the commerce clause has been clearly violated in the case of Canada. If we had an honest Supreme Court this would be an easy call. (I wonder how Justice Kavanaugh will rule.)
16
@Thucydides: Kavanaugh would deny certiorari. This guy is the sort who treats litigants as bugs.
I don't buy much beyond life's necessities, which I suppose makes me something of an oddity in this society of the West. I claim it as no virtue, only as a circumstance due partly to my own choices and partly due to the choices of a majority? of citizens in our purported democracy. More heed needs to be paid to the desirable outcomes, vis-a-vis our planet, resulting from lifestyles similar to my own across the world. Perhaps a carbon tax along with a reward to those who utilize finite resources within a range that constitutes an agreeable life for all humankind. In the meantime, I find it amusing to see the haggling over the prices of "stuff" by the Masters of the Universe who know much about cost but little about value.
5
@Habbit
I do very well so I but a lot of stuff.....nothing wrong with that either. Buy what you can afford.
But having little is nothing to brag about
Trumps foreign policies, including trade, military and environmental all seem to be based on the childhood game, "King of the Hill." More sophistication would be beneficial, yet the psychological dynamics of that game are deeply embedded in our national culture.
9
In his business career, Trump was the sole ruler, answerable to no one.
Now that he has won the presidency, he aims to re-form the office to suit what he finds comfortable and rewarding: inflow of personal wealth, adoration of his couriers, and boisterous public acclaim.
24
Trump’s tariff and trade tantrums are based on his personal sense of aggrievement, willful misunderstanding of trade deficits and hostility to changing any of his views based on new information.
I wonder if his personal sense of aggrievement is the result of his bad business deals with foreigners.
20
Soon, with increasingly imposed tariffs, the USA will find it exponentially much harder to mitigate the lies capitalism's requisite "liar's poker" ain't already without. Imagine Barron Trump's lemonade stand limited to just the penthouse of a Trump Tower bent on blockading preferred markets to which his more innovative reach could otherwise aspire.
First of all, lets stop calling them Tariffs - since it implies they are paid by the people selling stuff to America. Lets call them Trumps Import Taxes . And lets make it clear that these TAXES are paid by USA buyers of foreign goods.
If Trump is putting (lets say average) 20% tariffs on $250 billion worth of imports - who is collecting that money and where is it going? The arithmetic tells us it must be about $50 billion, right.Lets make it clear that this money is tax revenue and it is going into the coffers of the US Government somewhere. Not sure where it goes - does anyone out there know.
So why aren't all these Grover Norquist sycophant types walking lockstep against Dear Leader's new taxes on the great american public?
Trumps Import Taxes are actually more akin to a European style Value Added Tax - the increased costs will generally be passed along by everyone dealing in the affected goods, and being finally absorbed (paid) by the US consumer.
Get the terminology correct please. Its all in the name.
41
@MrC
We are not FORCED to buy them
Don’t buy them, don’t pay the tax
Simple.
Trade agreements started to get corrupt when the US steadily increased its use of them as a tool to punish countries with sanctions.
They got even more corrupt when the US demands in trade negotiations increasingly focused on dubious "intellectual property".
And then we have America's huge trade and budget deficits that are not sustainable in the long term.
To summarize: the system was already broken. And that made that when Trump arrived with his sledgehammer the defense was only weak.
3
Wrong, absolutely.
Sustainability of deficits is beside the point, not about corruption, and nothing says the deficits are important or need sustaining.
Sanctions are used against countries, not businesses, in consequence for national policy. Nothing corrupt about it. Far from weakness, effective economic sanctions, as with Iran, require as prerequisite international trade cooperation.
Refusing or taxing trade with countries whose policies we oppose is rational. The United States can and should do more to use trade policy to reform governments and encourage democracy and human rights. Why do we trade with China but not Cuba? Why, after September 11, do we still buy oil from Saudi Arabia?
A 100% tariff on imports from any nondemocratic country seems like a good start to me. It would mean something in places like Poland and Hungary and Turkey, where democratic rule is besieged. It would give China something besides currency manipulation to think about.
4
@Wim Roffel ok let's also punish all the American expats who deal drugs in the Netherlands and stash their profits in Bitcoin. Maybe that will help put a dent in America's yuge trade deficit.
1
I'm a student in economic geography doing research on business communities across the Midwest. Overall, I have been surprised by the appetite for protectionism among business leaders here. The CEO who wants to compete on value added through innovation and efficiencies is nearly impossible to find. Even leaders who self-identify as Democrats demand protectionist policies. When we talk about special interest groups, this class of folks springs to my mind (they usually have the politician's ears). The sad thing is the inevitable outcome of this cultural attitude is to hamstring any possible growth in areas like Youngstown, Mansfield, Cleveland, etc. Paints a bleak picture for the future.
40
The global trade system as developed over the past 50 years is utterly and completely broken. All the talk about tariffs ignores the massive currency manipulation that has gone unchecked, largely, but not limited to, the buildup of huge dollar reserves on the part of many countries. The failure of the trade system to encompass finance was a fatal flaw in its design. The failure of academic economics to consider the interaction of currency policy to trade is simply unforgivable.
Trump thinks in terms of deals and not rules, which is self-defeating in this case. But tariff reduction in exchange for dollar reserve reduction is a path worth serious consideration. In the case of Germany, which keeps its currency massively overvalued by tying it to the weak members of the euro zone, tariffs could actually help by forcing a move in production to countries that need it.
Besides all this, Paul by going down your path you are ensuring the continuation of the Trump Presidency or its equivalent into the indefinite future. We are in the mess we are in because, in great measure, of the application of flawed trade theory to support the formation of a global trading system that labels itself "free trade" but is nothing of the sort. Your world view needs a complete reconsideration. It pains me to say this: Ross Perot was right, and you are wrong.
4
Fine sounding words, but utter bunk.
First, evidence, please. Massive currency manipulation? Doesn’t exist. Huge dollar reserves? Against what denominator?
Democracies don’t run giant trade surpluses based on underpriced currencies for long. An underpriced currency, by definition, underprices the country’s wealth, i.e., each person’s wealth. Large dollar reserves can be sold, thereby raising the value of the local currency, making everyone richer. If you don’t think wealth is popular in politics, you’re not paying attention.
China is the perfect example. The yawning trade deficit and multi-trillion dollar account represents wealth stolen from its people in furtherance of national goals and the enrichment of the party elites who run the favored export industries. Democratic rule would upend that policy, as it does everywhere else, because it would increase the purchasing power of the ordinary worker.
4
And to add, Ross Perot, an eotrump, was as wrong as they come. Government cannot be run by capitalist business principles.
1
Everyone knows that tariffs raise the prices for the country imposing the tax. Consumers pay. But in all of US trade, we import more than we export, how much depends on the country. Actually our import/export with Canada is not the worst at all, in fact. Unlike most people commenting here, I would not be opposed to reviewing old trade agreements and in this digital day and age, a 1990s treaty like NAFTA can become dated fast. Plus, we should never have an agreement that exports good jobs. Reviewing agreements should be done with some basis for imposing tariffs, not just retaliation and anger. The Trump administration needs to work out more favorable trade agreements and do so with a lot of countries. There is nothing wrong with working out more favorable deals for the US.
There’s no such thing as a better deal for the US. How about them apples?
Trade policy is about producers and consumers, not countries. Low import tariffs mean low prices for consumers and competition for producers. Low export tariffs (to maintain one country’s perspective) mean greater sales to a larger market, as foreign consumers enjoy lower prices.
When we raise or lower tariffs, or another country does, we can’t say if America is better or worse off. We can say there is more or less trade, higher or lower prices in one country or the other. Economics says lower tariffs lead to greater efficiency, so there’s that. But is efficiency the lone measure of “better off”?
In case you’re defending Trump, Krugman is explaining how the consumer-producer divide plays out in the Trumpian world where the president decides who is taxed: political favoritism. Trade deals take years to negotiate because there are so many vested interests. Trump is making himself the vortex of all those interests. You know that cannot end well.
4
Trump is all about making big business bigger, even at the expense of all the other people living in the country, and at the expense of the survival of life on the planet.
So not to have seen these shenanigans coming was to have not been paying attention. Trump sees it all as a game.
5
Restated as a simple idea - TRUMP is borrowing from the future to enhance his success now. He will be dead when the problems he is creating now will impose pain on the living of that time.
The harvest season of politics opens and its fundraising begins, but let us not forget the massive storehouses of money raised are built on binary structures. These structures play ugly in politics.
Forward progress--economic and social progress--the ancients knew depended, nay demanded, unity of ideas and acts. Prosperity follows where unity is both firm and flexible and loyal to the whole.
That's why Democrats believe merit brings success, not birth name or zip code or partisan affiliation.
The New Politics: puts Grassroots organizing / fundraising. And partisanship fades! Issues: policy, budgets, education, government affairs, shared goals come front.
That's why Republican candidates and office holders constantly appear awkward to us, as liars and bullies, mean spirited and vicious. Their politics bloodies the binary tendon, crippling dissenters.
Those bloodied: families and children, students survivors of mass killings, our gender diversity, women, anybody in the way of their bunce and flash.
No matter how swiftly it rises or how high it climbs, devices blame and shame will fail. Oneness is progress! The ancients understood this law.
You feel it when you see Ocasio playing with children, sliding down a park hill. When Georgia bluehairs hug Stacey Abrams. When Minnesota and Michigan send Muslim women to Congress. It's the power of values! a unity strengthened by diversity, not division.
16
President Trump’s tariffs on China could and should in fact be based on national security.
China’s is using its trade surplus to greatly expand its military, which it in turn uses to control the vital South China Sea. Their unilateral control over a vital sea lane is a threat not only to the U.S. and its Pacific allies, but the whole global trading system.
Would the U.S. have run large trade deficits with Japan and Germany before and during WWII? Would the U.S. have run large trade deficits with the USSR during the Cold War?
Of course not. There was a time when we understood that it is unwise to fund and be dependent on an adversary. Thankfully, we are beginning to understand this once again with China.
3
@John
Maybe.
But explain the national security interest with Canada and Europe.
12
@Rita
The U.S. has recently reached trade agreements in principle with Mexico and Europe, and soon will with Canada.
You are correct that we must resolve our trade situation with allies like the EU, Canada, Mexico, South Korea, and Japan in order to build an even stronger front against China.
2
Japan went to war to obtain oil and steel, which it had been "sanctioned" out of by internet law. Maybe some trade agreements them would have helped.
1
Trump thinks we are "losing" when we run trade deficits but it is not clear that they have a negative effect on the economy. US growth has been good relative to other developed countries while running a trade deficit. Also as professor Krugman has pointed out, the trade deficit goes along with the budget deficit. China buys a lot of our debt and invests in the US because it has to do something with all the dollars it has accumulated. It also can't crash the dollar because it would be devaluing all its dollar assets
5
"...in the U.S. the power to impose these special-case tariffs was vested in the executive branch, on the understanding that this power would be used sparingly and judiciously."
Judicious is not an idea found in Trump's world. Shoot first and ask questions later. Or, better yet, don't ask questions at all.
11
Trump has abused executive power to impose tariffs on
national security grounds. These excuses are specious at best and harm our democracy in which Congress and trade experts carefully evaluate trade policies.
We have trade relationships with the world that are vital to our prosperity and economy and Trump’s tax increases threaten to harm many Americans. He must not understand the global nature of today’s prosperity and the many years it takes to restore manufacturing in America. The goal will only be valuable if the jobs created pay well and are rewarding and offset the benefits of global trade with lower prices and a peaceful interconnected world of shared prosperity.
4
Why is Trump imposing tariffs on almost every country? It seems like it is his idea, not anything he has been convinced is a good policy. It could be to keep a promise to his base or to show that he is the biggest, meanest kid in the playground. Since it is such a foolish idea, where is anonymous in the White House to save us from his worst instincts? Where is are the brave retiring Republicans or those still serving, to stand up to protect our nation’s interests? I guess they are the same ones now going after Dr. Ford to insure employment after their terms are up.
18
Yes, the new tariffs are corrupt, but which aspect of the Trump administration is not corrupt? Not Emoluments Don. Not Don Jr and Eric, running the business to max dad's profits. Not Jared. Not the EPA. Not Commerce or The Ed Dept. or Ben Carson or ... (The list is too long for 1500 characters). Oops, apparently Sessions at Justice is not entirely corrupt, but that was a mistake.
Tariffs are taxes on us. Protectionism is just a way of playing favorites. This is the greatest swindle in American history, and they do not even pretend to keep much of it secret.
You can fool some of the people all of the time, and there's a sucker born every 10 seconds. Enjoy the show, folks. We are all paying for it.
November is coming.
25
The short term damage that trump is causing is bad. The long term damage (climate deal, Iran deal, trade, FBI, press, etc.) are really troubling.
21
What makes America great again reminds us it takes a lot of hard work to make that happen, and when it does the answer always is the result of the world community respecting and envying the U.S. And the POTUS makes it happen. Today, our president has done the opposite: he directly, purposely, has harmed not only our nation, but the international community. Trust is a forgotten word, replaced by greed, power, and lies. Trump has turned our nation from a democracy into as close as it comes into a plutocracy. It is no fun anymore to think about what our nation use to be, nor is it any fun to live under the whims of the GOP, a party totally responsible for the state of our nation today. The government is corrupt, that simple.
8
If Tesla goes under will it begin a market sell off, and, if so, how far will it slide, and, does Trump have the smarts to halt a precipitous sell off?
@Goodman Peter
Won't happen regardless of the bears and naysayers, they have been predicting that for over 10 years.
In the meantime in August the Model 3 was No5 in sales of ALL mid size sedans, not just EV's and value for m3 was just under $1Bill, next closest was Camry with $700 Mill.
M3 was 18th in Aug out of ALL vehicles including SUV's and Crossovers and the production is continuing to ramp up rapidly as production and the production line is evolving and developing.
Their remaining issues are sorting deliveries to handle the increasing volumes and handle 500,000 vehicles per year from the one factory, also a dedicated qualified and approved service and repair network is going to also have to grow rapidly. But end Q3 they should be cash flow positive and should be able to handle the Nov and March repayments. The China factory is being planned and it will be quick to build and equip as they have learned so much and funding will be from Chinese banks.
You hear about all these Tesla Killers, but the Automakers are finding out their ICE production lines don't cut it for EV's and they are finding it harder than they and the Wall St Guru's thought, plus they don't have Battery supply.
That really great Audi (Teslka Killer) announced will be built in factory in Brussels that they have had to redesign the whole production line and it is limited to a max of 200 vehicles per week, for the whole world and they will be going to existing Audi fans and loyalists so no threat to Tesla
It's even worse than Mr. Krugman describes. China has imposed reciprocal tariffs on US company exports into China of 25%. Meanwhile the EU and Asian competitors of these companies have no such tariff to pay. So, Trump has just put US based manufacturers at a huge, insurmountable price disadvantage when selling to China. The EU wants China to behave better just as much as we do, and they are thrilled that US manufacturers and farmers are taking the entire brunt of the economic price for the fight. Some companies even talk about it in their investor calls. Instead of convincing the EU and our Asian partners to go along with confronting China, we insulted them and went alone into this fight. We gave them all a huge competitive edge for as long as this fight lasts. Plus, we have taught China never to trust us as a trading partner. US manufacturers have only one choice: make more stuff abroad and cut back expenses in the US. That is what Harley Davidson decided. What a terrible, stupid and unnecessary outcome. If we had all stood together and negotiated behind the scenes, China would have changed it's behavior quietly but effectively for all of us. Now, they cannot change without losing face, something the Chinese Communist party will fight doing.
16
Dirty coal advocate Trump's trade war may be motivated by the ultimate corrupt treasonous act, of simply trying to hurt the world economy in a futile attempt to slow down investment in renewable energies, that are fast replacing the fossil fuel economy.
Think about it only the Koch brothers, killer of journalists Putin, Salman of Saudi Arabia and Trump's friend, and their ilk can benefit from a ruined world economy decelerating the inevitable destruction of the network supplying daily oil, coal, and natural gas. But not to worry fossil fuel market share is being lost continuously at an ever increasing rat and the inflection point of dynamic collapse should not be far off.
4
Unfortunately most of Trump’s follies, mistakes and errors won’t have a measurable effect until after the midterm elections. If Republican’s save their majority through lies and “legal” manipulations of the electoral system we will witness a full blown meltdown of the American democracy and economy. Trump is just warming up like in an uncontrolled nuclear chain.
13
So I have stated before and will state again, greed is the problem. We as a nation can have all the planets align, and the middle would be were it is wright now, poorer. The proof is in the pooding corporations have had record profits in this past recovery and they still do not pay a living wage. We still have a minimum wage that has not gone up for over twenty years. We The People are subsidizing all who do not pay a living wage. Even if we win this trade war what would make corporations pay more. Nothing! The system as we know it does not seem to be able to handle people who are just saying no to higher wages. We can make corporations wealthier but we can't make them pay more. The only thing in the countries toolbox is taxes. We need to take the word tax off the dirty word list, because it our only weapon to create a level playing field. When you file your taxes this year think about this, if you earned $129,000.00 you and Warren Buffet will pay the same amount in FICA taxes. BRILLIANT! We The People allow multibillionaires to pay as much as a middle class citizen. That is just plain dumb.
21
Prof K is selective in the facts he chooses to bring to bear in his rebuttal of the Trump Tariffs. He neglects to mention China's blatant disregard for copyrights and patents. What we are seeing is China finally being called to account for its trade practices. If the WTO did its job, this would all be unnecessary.
@George
Sure George, China needs to be called to account for patent infringement etc. but is this the way to do it? I think not. The American consumer will ultimately foot the bill with the US Oligarchs not caring one iota.
And tell me, what has Canada done to deserve tariffs due to national security? They protect their dairy but the US protects many industries as well, like it or not.
19
What exactly has Trump demanded in return for rescinding the tariffs? What patient negotiation did he undertake? What impasse was reached? What threshold of copyright and patent protection needs be met, and by when?
Art of the Deal?
Trump imposed these tariffs in precisely the worst possible way: abruptly, without warning or cause. He didn’t present a list of goals and a timeline, with tariffs looming if they weren’t met. Just, Boom, tariffs, ha!
The only thing he achieved was approval from his (negatively affected) base for acting like a strongman. Like everything with him, it’s about him, not the country or reality.
@George
A complete furphy.
First when China opened it's doors it's conditions were known which included technology transfer. No one held a gun to companies heads, instead they were tripping over their own feet in the rush to sign on dotted line. Now crying butt hurt as the Chinese have invested in education, technology skills and research and in fact have filed many more patents per year than the US.
Due to pressure China and Chinese companies are paying licencing fees for IP and patent use and China is in process of becoming a good citizen, not perfect, but industrial espionage and IP theft have been major Industries worldwide since year dot and the US is one of the worst offenders.
China has been where Japan was in the 50's and 60's, cheap throwaway products, Now a mark of excellence.
This half baked rush to drag employment and manufacturing back to the US is doomed to fail due to lack of skills due to poor education and a distrust of education and science in the US.
Also lack of Supply chains and inadequate infrastructure, it takes years to build and equip factories
If the systems created by FDR and WTO had been efficient, there would have been no room for Trump and his corruption machine to operate. Trump can make these moves because world trade rules weigh heavily against the American worker. Free trade as best for business is a myth. Trump gets to use the argument that he's helping workers - even though it is false - because people want to see places like China held to account for their malevolence. Frustrating...
8
You say, “if they were efficient”, but they are efficient, economically speaking. What you mean is, if they were democratic.
I took note of the supposedly necessary secrecy of the TPP negotiation under our putatively democratic President Obama. Why were the “details” — the whole text, actually — kept secret? What other laws do we draft in secret?
Trade policy that included protections for workers, including compensation for job loss and obsolescence, would have greater popular support. So would stronger environmental protection.
Lower prices at Walmart are not enough. The WTO would be popular if people connected stories about cleaner air and better working conditions in China, and 100% wage compensation checks at home.
@WJL
How do the WTO rules weigh heavily against the American worker? In my limited knowledge,
American Companes are doing very, very well. These Companies are growing by swallowing up smaller businesses, monopolies. They have also learned how to hide monies off shore, to avoid those pesky taxes. American Companies know how to earn profit and maintain those profits for themselves. Finally, the Lobbyist’s for these companies convinced Congress to lower their taxes and castrate Unions, with the “right to work”.
This circles back to the American worker, their efforts that enrich their employer, never reaches them. Why, because these American Companies have crippled Unions. It was the creation of Unions in the early twentieth century who created the middle class.
1
@WJL The American worker is so hard done by, with that low unemployment and high standard of living. Try talking to your business class about not being so greedy as to not give better wages when receiving corporate tax cuts, or doing all they can to outlaw unions, or imploding the economy like in 2008, or polluting at will, or knowingly laundering money, or ...etc. You get the idea. PS: If the beef is with China, go after China. No nothing Trump goes after Canada because he thinks they are a pushover.
4
China plays the long game for world domination. If America wants to slit its own throat, so be it.
Canada doesn't want our dairy. It's poisoned with rBGH. They're not stupid.
When Americans elected Trump, we proved to the world that we cannot be trusted to make rational decisions. Trump's zero-sum philosophy, that for America to win everyone else must lose, proves it once again. Except that for Trump, it's only about Trump winning – that's the story of his life. So you can put America in the loss column as well.
Other countries should stay away from us, because we have poisoned ourselves. We have contracted a self-inflicted contagious disease. Put us under quarantine until we can come to our senses, assuming it's not already too late for that.
34
This is absolutely 100% accurate. Here in Canada, we have been on the receiving end of Trump's corrupt, irrational tariffs, which are being used entirely as a negotiating tool to blackmail and coerce Canada into accepting a bad trade deal. Trump has come right out and said he intends to get a deal from Canada that is so bad for Canadian interests that Canada would be unable to sign it if his intentions were made public- which, of course, they were. In the current NAFTA negotiations, Canada has been standing firm on the need for an independent disputes settlement mechanism as part of NAFTA because we know that Trump and the Americans simply cannot be trusted - this has been demonstrated time and time again. The Trump administration is also doing all it can to undermine and cripple the WTO. In this environment, the Americans' charge that China is "cheating" and "breaking the rules" of the system is grotesquely hypocritical. The US is doing far more cheating on a much bigger scale to much greater consequence than anything China has done. I can guarantee that, whoever follows Trump, Canadians will never trust the US again - not without a lot of iron-clad guarantees that put our trade relationship beyond political whims. That seems unlikely to happen.
47
The tariffs are not about corrupt special interests, they are about a corrupt president. They will disappear when the appropriate deals are made with the Trump organization. Look what happened with Chinese trademarks for Trump recently.
All Trudeau needs to do is arrange for special deals for Trump properties in Vancouver and Toronto.
3
@Shaun Narine
They would have to bring back Obama before we'd trust them again - and we know that's not going to happen.
The temporary middle-class tax cut will soon close and the dupes of Trumpolini will realize what it means when they are saddled with servicing the debt for the permanent corporate tax cuts; by that time they will realize that the tariffs are nothing but an additional tax on them for all their consumer goods. By that time, the flight of capital out of the USA to countries where manufacturing materials are cheaper and not subject to inane, dictatorial tariffs will be in full swing. The USA's biggest export may then very well be economic refugees seeking work in Chinese factories in countries where China has been ramping up cultivation of trade agreements while Americans were drunk and snoring into their greasy MAGA caps.
19
Under Trump, America hasn't just become an unreliable trading partner; it has become a rogue nation. That's what we always should have expected when a known crook (think Trump University, and his long association with gangsters, not to mention a personal life that has always been drenched in scandal) became president. But he couldn't have done it without the support of his fellow unindicted co-conspirators in the Republican congress who are only too eager to dismantle the institutions and procedures that ensure that the country observes the rule of law. It is now clear that Trump is utterly incapable of doing anything constructive. It should be equally clear that this is exactly what the GOP wants, as well.
39
Trump threatens, and then offers to withdraw the threat for a fee. In criminal parlance that’s extortion and racketeering. In international trade it’s tariffs.
21
I'm not used to doing this math .... but isn't 25% on $3B roughly $500 per American?
Wasn't the "big beautiful tax cut" supposed to save the average household about $1,000/year
Hasn't this scam basically wiped out any tax cut to American homes while still adding a couple $TRILLION to the national debt
Only a conman could come up with this scheme
44
The Iranians have declined a US offer to meet to discuss nuclear issues.
Why? Because the US cannot be trusted to implement any agreement reached.
The US has no credibility. None.
26
Having a bunch of people in other countries supplying you with goods while they work for slave wages was the way the roman empire was run. It was not bad for the romans. The chinese are working to supply americans with things they cannot afford to buy themselves. Why aren't Americans happy about that? How about: it's how the profit is distributed.
4
@Andreas
How about: how do Trump's tariffs help anyone, anywhere? Including South Africa?
1
Krugman is making the mistake that Krugman warned us not to do. Trump did not make the US an unreliable partner, the Republican party, cheerfully did so. Who needs to worry about Russia. when Russia is just stoking the enemy within? The best thing a libertarian can do today is to vote for a democrat.
17
The best thing a Libertarian can do today is grow up, stop thinking money is all the matters, and get some empathy.
2
The only identifiable corruption I have seen at this point was Trump imposing tariffs that resulted in reciprocal tariffs from China on soybeans, which Trump then used 12 billion dollars of additional deficit spending to bail out the farmers. Farmers, by the way, who didn't want a bailout, who just wanted to sell their crops.
I hate to point out something to Trump's benefit, but he has stated repeatedly that he wants China to stop spying on the U.S. business partners it admits into their market, and to stop demanding that technology companies turn over all of their technology for China to steal. That is certainly a worthy goal for trade negotiation, but not the way Trump is doing it with a sledgehammer. That won't work.
3
@Clearheaded
The term Industrial Espionage was around long before China opened up, in fact the US have been world leaders in that.
When China opened it's doors it set certain conditions and technology transfer was a key one. So not spying or theft. Companies were tripping over their own feet in the rush to sign on dotted line accepting all the terms and conditions, and now crying butt hurt.
China has responded to complaints and pressure and Chinese companies are now paying the royalties and licence fees on Patents and IP - always some roguies but you have them in the US as well but that has been in process, the US's problem is China is now pulling ahead in research , technology and patents as they have focused on education and developing skills and expertise for decades, while the US has let those areas slip, home schooling, religious and charter schools just don't produce the required skills , in fact have become anti education and science, so how can technology skills be produced out of thin air i a world where manufacturing is increasingly automated and low skill jobs are becoming rare regardless of tariffs and inane ranting and raving
Nobody trusts a cheater, nobody trusts an agreement that will be broken. Without trusts everything is short term, 'one deal only', money on the table, all of which makes it impossible to plan or have long term goals. We are heading for some bad times if this doesn't end.
14
What may be more troubling is the over 1000 exemptions to the various tariffs. Trump is picking winners and losers through executive fiat and one wonders who is benefiting from the exemptions and how much lobbyists are now running government.
16
For many of us without PhDs in economics it's difficulty to grasp the overall effects of policy changes, to wit, the latest round of tariffs.
So at the microscopic level; consider the effects on a 180 year-old, privately held company (Hussey Seating Co.) with 2 or 3 major competitors in the U.S.
When the 25% on steel and aluminum were imposed (and the prices from US suppliers immediately rose 25%) the overall costs to Hussey increased by 35-40%. Like many companies, Hussey in now building seating for contracts negotiated months or years ago. Can the costs be passed along?
Hussey and, I assume its competitors, have little political clout so they have been waiting months to hear from the Trumpistas about a possible exemption. Meanwhile the increased costs will be passed along to the schools and colleges who are major buyers of Hussey's seating. Ultimately, tax payers will bear the costs of price increases forced on Hussey.
And sadly, Dr. K's point about political clout or the lack thereof becomes real.
https://bangordailynews.com/2018/09/12/business/maine-seat-maker-braces-...
12
If there is money to be made, Trump will find a way to make it; not for the American people, but for himself and the "Friends of Trump". Corruption is not the exception in this administration. it is the standard. If Trump is allowed to continue with free reign, with little response from Congress or the courts, our influence in the world on its downward slide, and the American people will suffer. Vote accordingly.
19
@Patrick Stevens Trump's Budget Director Mick Mulvaney is member of the Friends. Element Electronics, located in the former Congressman's South Carolina district got a big time waiver just this week. Yes, it kept the company from shutting its doors and 130 folks losing their jobs, but will firms in bluer locales get similar consideration. Or perhaps the Trump attitude more like the old Chicago Machine: "We don't nobody that nobody sent."
Couple this with Trump's other financial weapon - sanctions - and we really end up with a mess. Amnong other things, the EU is looking into alternatives to get around the US financial systems as he looks to punish them for doing business with Iran. Having the most powerful economy in the world is a privilege and should be maintained - not squandered on easy short-term punitive actions. But then again, this is Trump we're talking about.
11
@FJR
In Venezuela with its hyper Inflation, people especially business'es are starting to depend on popular crypto currencies as the transaction is instantaneous. A credit card or bank payment takes up to 3 days to clear through, in that time it has devalued appreciably. Already crypto's based on physical gold are being planned and implemented (Perth Mint in Aust is planning one) so the US's brutal crushing boot tactics are forcing other countries to look to alternatives
Dear Dr. Krugman,
Great history review for most of your readers, but one that will never reach Trump’s rallies. Many of Trump’s supporters, Oligarchs, their vassals, and henchmen are aligned with Trump’s economic base: Hydrocarbons, energy distribution infrastructure, defense, some banking let’s just say those industries tied to Saudi Arabia and Imperialists in Britain (probrexit), and Russia (think oil, corrupt banking, defense). What of the retail, tech and high tech, renewable resource industries, and banking? Trump pretends to be at “trade war” with China and Canada? No he works for oligarchs around the world against the fastest growing industries in the world and in America. Trump is not waging a trade war but a war against economic interests.
Economists, market analysts, business leaders are “feeling” the results. They love the tax cuts, but have noticed that their costs are escalating, market will decline, and stock prices will tumble.
They are the audience for this message. While some can continue with lower profit margins, and others are hanging in for the last buck in tax breaks and deregulation, others can sense the coming tide of bankruptcies. Can Krugman and his fellow Nobel Laureates and other prestigious Economists deliver this message to industries under attack: Trump is after your lunch! He considers nations obsolete. His allies are transparent and vulnerable. Stop this before it is too late. Please.
14
@Joseph Huben
Exactly World Government by the Oligarchs for the Oligarchs.
I note recent medical research is showing how ageing can be reversed and life span extended close to indefinitely, very expensive at this time but peanuts for oligarchs (All in the blood - transfusions from youth (plasma) has a major effect @$8000 per treatment, and there are factors in the rest of the blood as well that they are in the process of identifying and synthesizing)
So a couple of years and a good time for them to do a major Global Cull of humanity
I have always believed that Trump's preference for unilateral trade deals was just so he could negotiate sweat heart deals for himself and his family with every country in the world.
I certainly hope there is someone looking into every deal to see if Trump is selling Americans out to line his own pocket.
36
@Ronny
If anyone is looking into the backroom benefits he & his family & his Russian pals are reaping from his policies, it sure as heck is not anyone in our current Congress.
1
I almost always agree with Prof. K’s columns, especially the ones dealing with economic issues. And I agree with this column’s criticisms and warnings about Trump making tariffs corrupt and undermining WTO and the rule-based international trading system that the US led and built over 80 years - and the long-term negative consequences for US in Trump weakening/breaking this international trading system, which will accelerate America’s decline as the dominant global power and hasten Asia’s/China’s rise.
However, Prof. K needs to provide alternative solutions for checking China’s persistent cheating within WTO and rule based international trading system. Every country, including US, cheats to some extent, but China cheats at a level that cannot be tolerated from the world’s second largest (soon largest) economy in the world. Democrats need to have a simple, clear message on how to deal with China.
If Trump’s playing chicken on trade war with China leads to China buckling and accepting rules that checks China’s cheating, Trump can legitimately declare victory. Of course, Trump will lie about the extent of his victory - the lying and hyperbolic exaggerations are default Trump. But it would be a huge political victory for Trump - the simple, short message will be that Trump is fighting for America and America’s workers while the professional class - Democrats and Republicans - and academics like Prof. K are not. That you may not like Trump’s style, but that he delivers results.
5
@MC
Evidence of current cheating please. Technology transfers from companies operating in China were a known requirement and were agreed to, so not cheating.
China has been addressing those concerns and Chinese firms have increasingly been paying licencing fees and royalties, but the problems are the US has been unreasonably extending the life of US patents.
Plus China has been producing more research and patents than the US for a few years now and US interests want to crash the Chinese economy so they can steal those patents in a fire sale of bankrupt Chinese companies.
Don't kid yourself, the US are the Biggest Industrial Espionage experts in the World
@MC
TPP for starters?
@MC No. One would have to inconceivably myopic, so narrow-focused as to be practically hypnotized or autistic to somehow find and celebrate "results" in the chaos and pervasive harm Trump has inflicted on the world. Of course, that's exactly what makes his followers a cult, credulous and cognitively moronic.
This article tries to make a case that free trade is the best answer, that the global system works best under free trade.
I would argue that there has never been free trade, it is an illusion. Before Mr. Trump, the so called "free trade agreements" simply enforced intellectual property rights.
All of the utopian ideas of cooperation crumble in the face of power.
5
Pro, Krugman notes that Trump's tariff policy opens the door to old fashioned corruption.
What has Trump done that hasn't been a result of old fashioned corruption? What has he done that has been in the interest of the nation, or that has been in the interest of the majority of citizens?
Trump has sought to enrich himself, and anyone who signs on to the enrichment program, He has ceded all other policy to conservative Christians and Steven Miller.
He is looking to China for social policy and Russia for lessons in kleptocracy. He runs with only the best authoritarians.
The question of how to best protect America's interests in the face of 7 billion other people on the planet is complicated. But bullying probably won't work. By time we figure that out, Aemrica's vast wealth will be sitting in a few accounts in the Caymans.
53
@Cathy Agreed. Trump and his gang treat America as an 'all you can eat' buffet. We are being devoured by the crooks.
1
In my life time I have been all over the map on tariffs. As a defense against the invading hoards via cheap foreign goods tariffs have been pretty lame. For one they represent a regressive tax on the consumer. Second they stand in the way of technological progress because the protected industry can avoid making investments in new plant and equipment and most important their workers. The one thing that was not tried 30 years ago was being honest with the citizenry. NAFTA was sold as win-win. No such thing. As usual industry got the mine (the win), but labor got the shaft. A company doesn't care if it is domiciled in Dayton or Tijuana. A worker does. As a nation we bought into the theory capital is more important than labor. That's when we sealed our fate. I might suggest one read Winners Take All. Probably $25 online or $27 at the store. If won't make you any money like the latest Dow 4 million or whatever is on the shelf, nor will it offer bromides like "eating rice and beans" to get out of debt. However it does offer a cogent argument on how we arrived where we are.
13
NAFTA wasn't perfect, but it isn't fully to blame for the outcomes.
People forget that NAFTA was not negotiated in a vacuum. Discussions included Union representatives and Environmental groups as well as industrialists, academics and politicians.
What NAFTA got wrong is by the time of it's implementation the US had already shifted it's focus from an industrial economy to a financial based one. The financial industry proved there were significantly higher and easier profits to be made by buying, selling and merging corporate assets. Many companies at that time were struggling with retiree costs and high debt due to years of high interest rates. Wall Street swooped in and started buying off the worst off. They laid off workers, unloaded health and pension obligations, and kept or sold off profitable assets.
Soon legitimate competitors were forced to cut costs to assuage their own investors demands for similar returns or face being swallowed up themselves wholly or in part by these corporate raiders. A race to the bottom was underway.
It only appeared to stabilize with the emergence of the internet economy, which quickly replaced corporate raiding in it's ability to generate quick and easy profits.
Until we find a way to regulate greed, there will never truly be a system of free economy that works for everyone.
8
@Wesley Brooks
Well said however I would rephrase
"Until we find a way to regulate greed, there will never truly be a system that works for everyone."
The problem of our chronic trade deficit is ongoing. I fault our economic advisors, Paul Krugman included, for not proposing solutions to it. Trump's proposals are simplistic and not the solution. That I realize. The only solution proposed, that rang true to me, was that by Warren Buffett many years ago in an article published in Fortune. It was narrowly defeated in Congress -- I always have believed -- solely to cater to the personal interests of the international oil barons. Buffett's proposal was to grant US exporters trade credits that would-be importers must buy before releasing equivalent $ to pay for imports. Other proposals have been to substitute some flexible international currency (against which the US dollar would fluctuate in response to trade imbalance) for use of the US dollar as the medium of exchange in international trade. Why do Krugman and others of his stature chose to ignore this problem? Why do they not acknowledge it as a problem begging for solution. Why do they not chose and openly recommend a solution?
3
@Penseur
Why do you perceive a chronic trade deficit as a problem? The US receives a lot of goods every year. Would we be better off without these goods? Would we be better off if, in an economy that is at full employment, we re-deploy people to less productive jobs to make goods to replace these imports?
In the long-run, if you run a perpetual trade deficit it means that you are getting goods for free. It seems to be happening. Why complain?
15
Good post.
How crazy is it, when those advocating balanced trade, and jobs which pay a living wage, are considered extremists? When a candidate responsive to voters, is considered "beyond the pale"?
I am an economic critic of the Democrats, from the left - which makes me a centrist from the Nixon era. My liberal friends back then, thought me right wing. My views haven't changed - and are still very popular among voters. But these New Deal economic views were rejected by all mainstream candidates - including Hillary.
Wikileaks showed that Citigroup had already chosen Obama's cabinet in mid 2008, long before the general election - the cabinet that represented the interest of the banks over all else. I voted for Obama, and was devastated at his failure to prosecute fraud, unaware that the fix was already in.
I have no doubt that Hillary's planned cabinet was also chosen by Citigroup before November 2016 - a cabinet that would have *zero* credibility for raising a financial transaction tax, regulating derivatives, or any other action that would reduce the profits of the big banks - such as a lower dollar, smaller financial sector, stronger economy, balanced trade, or higher wages.
Whether balancing trade with Warren Buffett's scheme, or just stimulating and protecting our nation's key industries and insisting on sufficient domestic demand, and living wages - our government has failed to represent the economic interests of our citizens, and our national economic security.
8
Except that the failure to have a living wage is due to US economic and social policies that have nothing to do with trade. Workers are getting the shaft even in industries which have nothing to do with trade.
US imports, particularly $500 billion from China, are crucial as materials and subcomponents of US exports, $5.2 trillion in 2017.
US companies have repatriated less than a quarter of foreign earnings in spite of tax incentives, in order to invest in foreign plants to avoid the problem with US tariffs on imported supplies.
The stock market is rising because investors understand that multinationals have the ability to adapt to changing tariff regimes by adding production in the most favorable countries, ie, those like Mexico with multiple regional free trade agreements.
The end result of Trump's ill-conceived tariffs over time will be higher prices for US consumers and fewer manufacturing jobs in the US.
25
I personally think that it is a very big mistake to confront China in such issues in many ways. First of all China's per capita GDP still is very very low. When we had a China with a per capita GDP as high as Germany or say Japan, there would be a significantly larger Chinese internal market being able to import in much larger quantities from the US or from any other country in significantly higher amounts. On the other hand it is generally a big mistake to look for solutions in international affairs for a domestic balance sheet issue. 84, 85, 87, that's your problem. Where service industries are not accounted here. America has a very big service sector surplus. As far as I remember it's not software, it's tourism having the biggest stake. So if America is sort of specialized in tourism, and such very important for the current account, there should have been a tourism agenda priority or something, at least to expect. Is there such?
1
Telecommunications, financial services, motion picture services, IT services, logistical/distribution services, building and construction services, professional and business services (lawyers, accountants, architects, etc.), educational services, tourism, etc. etc etc— the U.S. services sector is large, vibrant and strong, unlike Trump.
6
"Most notably, in the years after World War I, America demanded that European nations repay their war debts, which meant that they had to earn dollars through exports" the situation looks very much that way that this "repayment" organization sort of specialized in repayment. So can we expect that those countries who lost WWII, Germany and Japan, now dominate the capital market? - Probably, yes. The thing is, what is America trying to do? Positive changes in current account deficits, which contribute to growth are expected to be temporary. Since this is a liability-repayment issue. It was assumed that a big trade volume would contribute to growth. America's trade volume was significantly lower than that of Europe compared to the GDP since growth in the US was tremendously higher than that in the EU for at least in the last decade. Whether the current account is positive or negative affects on the other hand the composition of national origin for capital. Did the share of American capital in America erode, fell below a critical level so that a political reaction came? It is to expect that such politics is trying to fix the current account imbalance. But maybe not necessarily for the sake of growth, maybe for making American capital, American again.
Someone in the white house may know when tariffs are about to be imposed. They may know beforehand when a tariff exception is about to be granted. This is a tremendous opportunity for insider trading and gigantic short term profit. It would be good if the SEC is alert.
47
This is a very fair judgement of what the Trump administration is doing. It seems what Trump likes is imagine himself standing tall on a world stage where only strongmen survive.
23
@Aki Indeed... but he forgets he is out of the white house by 2020....
Those Trump supporters who believe his bullying tactics will ultimately prove beneficial to their country or to themselves personally ought to try imagining how they'd react if the shoe was on the other foot - if their livelihoods were being so blithely threatened and not only their own futures but also those of their nearest and dearest were being put so at risk. Such a thought experiment, if conducted honestly, will leave no doubt in anyone's mind that the fear and uncertainty Trump is currently creating for others in their daily lives in countries near and far and all around the world will one day be returned to US shores with compound interest.
65
@Leigh
Your points are well taken. Furthermore, even those not directly affected will *know* businesses or individuals who have been afflicted with the fear and uncertainty, or simply punished for entering into business relationships with US companies.
This will seriously impact on their capacity to trust America and Americans, and trust is the cornerstone of, not just economic activity, but the social fabric of nations and the planet.
I was in a meeting with a highly awarded business on the other side of the world from the US, one which unstintingly (and with great sacrifice) supported the US throughout the wars of the 20th century despite those wars posing them no threat whatsoever.
The company had spent five years and devoted substantial expertise and resources to gaining the necessary aerospace quality accreditation to supply Boeing with plastic moldings, for interior fitout of passenger aircraft.
The possibility of being a supplier lapsed within months of Trump's election, directly because of his policies, forcing them to drastically downsize. There must be millions of people around the world in similar situations, whose lives are being jerked around by the caprices of an unhinged narcissist whose only qualification is that he played a businessman on a reality TV show, who neither understands how the world works, nor cares.
44
Dr Krugman,
October 1st is our Provincial election in Quebec. We speak a different language so are a bit isolated from American economics and its politics.
Our Liberal Party of Quebec has been in power for fifteen years and has grown detached and a little corrupt and when an election was announced two weeks ago our conservative were a shoe in for election.
Many assumed fewer immigrants, lower taxes and fewer small business regulations would be a winning strategy.
The mayors of our cities and towns made it clear we need workers, lots of them and recruiting immigrants not expelling them is what is needed. We have high taxes but because of our safety net we allow entrepreneurs to know they and their families will not be destroyed as the numbers never fail: ten out of eleven new businesses fail. We are developing more new businesses by rejected your model. We have gone from high unemployment to a critical worker shortage.
We are thriving economically and our public utility is a model for corporate governance and consumer support. Our public financial institution is rated by Forbes as the best run pension fund, insurance, banking and investment institution. Our family farms are thriving and our future is bright.
The Liberals seem ready to form a strong majority government. Your economy fails too many of your citizens and tariffs are just the beginning of blaming others for the failure of neoliberalism.
Conservatism is a failure.
America is as strong as its weakest link.
69
In his remarks about the negative Impact of tariffs on Soy Beans that farmers in the US are experiencing, Trump stated that the farmers will continue to support him on his tariffs policy, because they are "patriots".
"patriots"....that's the key word to watch out for whenever the ruling class wants the rest of the citizens to bear the cost of anything. If a war has to be waged,...."patriots" the word for the individuals who will fight it.
88
@James
indeed.
Particularly rich, coming (as it does) from the least patriotic leader the US has produced in the lifetimes of anybody now alive.
1
@James Kind of hard to put patriotism on the table for supper, and pay your bills, though.
1
There have been a bunch of reports about how the Chinese are out of options once they retaliate with tariffs on the remaining $60 billion in US products.
But trade isn't the only leverage China has.
The US Center for Disease Control has several labs in China for surveillance of annual flu viruses. Early isolation of seasonal flu virus allows the CDC enough time to develop a vaccine to prevent epidemics, which can be deadly if preparations are too late.
Already the Chinese health authorities have been unresponsive to CDC requests for viral samples of a lethal type of bird flu called H7N9, that kills 40% of those affected. WHO has projected the next pandemic will likely be caused by H7N9.
If China ceases to cooperate millions will be at risk next flu season.
Despite his Trumplike tantrums, Kim Jung-un is on China's leash. With souring relations, don't count on China to curb PRNK.
China supplies 90% of rare earth minerals, key ingredients in smartphones, lasers, microwaves, missiles, headphones, radiation filters, nuclear reactors, MRI machines, TVs, hard drives and heavy magnets. They produce it as a byproduct of iron ore mining.
And China remains one of America's biggest lenders, holding well over $1 trillion in US Treasury debt. Also, the Institute of International Education says foreign Chinese students at US colleges spend $21 billion annually, which is critical income for public colleges getting less state funding.
Who said trade wars are easy to win?
137
@Yuri Asian
Oh, the rare earth mining has another, well hidden problem for the US: energy. The US requires energy to be bought and traded in US dollars to prevent its current level of borrowing having the consequences it deserves in a stable economy. China has two problems it can solve in one stroke: pollution and energy needs.
A byproduct of rare earth mining is thorium, which can be used to create safe, much smaller nuclear reactors - ironically, using a design developed by the US (but discarded by the US as managing pile of eternal nuclear waste was far more profitable for some). Not only does a thorium reactor work safer (with molten salt it can basically completely lose power without the core going above about 700ºC), it also helps cleaning up some of the mess we made. So, cheap power (after the initial development investment, which is not an issue with its model of governance), no need for US dollars, less pollution in both power production and transport (electric cars are cheaper to develop in China as all the raw material is locally mined) - can you hear the ticking clock?
This, by the way, also explains why China now only ships finished extraction of rare earth minerals and not the raw ore - they're sitting on enough thorium now to power the country for some centuries to come.
Meanwhile, with Trump, it's back to coal fired power stations...
12
@Emblem
The more likely reason for dropping the Thorium reactor option in the 1940s was that the Uranium reactor produces Plutonium which is used in nuclear weapons, and also requires enrichment of U-235 used in nuclear weapons. Unfortunately, there is no evidence that China is making Thorium reactors.
1
@Emblem
China has funded the Russian LNG Plants on the Yamal Peninsular (Arctic Siberia) and the wells both on land and in the Arctic Ocean, Korea is building 15 Ice breaker LNG tankers (Can be used during winter sea ice cover).
Why Putin wants a melted Arctic, plus boom in Soiberian Agriculture and development There are massive gas and oil reserves under the South China Sea and The Russia to China gas pipeline is nearly completed
Trump, the self proclaimed 'king of debt' and multiple bankruptcies is hardly the person to make these enormous decisions. He disdains reading and even daily briefings, unless Cliff noted to a one page summary.
One interviewer asked Trump why he had the opinions that he does about the 'good' of trade tariffs, and he proclaimed that he has had these views for 30 years ... as if that explains everything.
We can only hope that our allies and trading partners realize that Trump is an aberration, certainly many Americans hope that is true, that his reign of error will end.
But as Professor Krugman notes, in the meantime he is damaging our reputation for being straight forward and honest in our dealings with other nations around the world, a reputation our future leaders will have to fight very hard to improve.
34
@Tim B
30 years is a very long time to cling to ideas which are so demonstrably wrong
@Tim B
The problem is that Trump is not an aberration.
He is intentionally causing us very real and possibly permanent damage.
It will not be forgotten.
No mention here of jobs, but that is the elephant in the room. Unless we solve our jobs problem, we’re unlikely to solve our political problems. Yet there’s nary a mention of jobs in Krugman's column, nor in any of the reader comments.
In response to Trumps tariffs, the Chinese may have no choice but to build factories here, as the Japanese did, and as a few Chinese companies already have done. That will mean jobs for American workers. http://tinyurl.com/y8ut4yhz
But many Democrats, it appears, are more interested in their stock portfolios, or career opps, than in jobs for the working class. This unconcern about jobs explains why the Democrats have been so long banished to the political wilderness, and why, for all the talk of a "blue wave," they may yet find themselves remaining there after the midterms.
No doubt, joint action with Europe and Japan against China may have been preferable. But at least Trump—I’m no fan, believe me—is doing SOMETHING. When they had the opportunity, the Democrats did nothing about jobs. Instead, they made lame free-market excuses—"those jobs are gone, and they’re not coming back"—branding themselves as a self-serving elite among a vast swathe of the American public.
5
@Ron Cohen -> The U.S. economy has been growing for almost 7 years now. As of the latest report there are now more job openings waiting to be filled than there are workers to fill them.
Please explain to us how the magic of China and other countries creating more jobs in America will help us economically?
You may want to consider auditing a course or two in economics. My college professors (and Dr. Krugman again here) did a pretty good job of explaining tariffs
31
@Ron Cohen
I am happy to talk about jobs. On October 1st we will have an election in Quebec. The last party leader debate was this evening and all the leaders want DentalCare in addition our medicare the only question being how universal it should be under 18 and over 65 or universal. We talk about jobs because we need workers lots of workers. Our election was thought to be about immigrants and how to keep them out has turned out to be about immigrants and getting them to stay.
Our perceptions have been so distorted by American media it took a six week election campaign to understand how well our economy was doing and how well our liberal democracy was doing. We were so fixated on perpetually high unemployment we didn't understand our problem was a huge shortage of workers.
We have healthcare, high taxes, lots of regulations and an excellent social safety net. We have however huge numbers of new business startups, high social mobility, Montreal after decades of decline is again a growing and dynamic city and everywhere in Quebec signs saying We're hiring.
19
@Gregory Howard
As writer after writer in The Times, and in the blogosphere broadly, has written, those numbers don’t tell the whole story—a story of a gig economy where people work part time at low wages and without benefits, where older males can’t find work because employers will only hire younger workers whom they can pay less, where millions are not counted because they are no longer looking for work...and on an on.
Your comment reflects the smug, know-it-all, uncaring attitude of many liberal Democrats, an attitude that has driven millions of former Democrats into the arms of Trump.
I was a youngster when FDR was President. My parents were New Deal Democrats; they cared about working people. I grew up with those values. I don’t recognize the Democratic Party today, filled as it is with privileged liberals who scorn anyone who does not share their politically correct values.
1
All trade involves corruption. Be it trade under TPA or RTAA; or now.
Mr Krugman is being naive in this regard.
Even without feeling the need to make any substantial charges, it would be absurd to assume that with China having a one way advantage over US in trade, US trade officials or concerned policy makers were above corruption by Chinese companies, so far.
But now comes Trump. His tariffs are impacting both the countries and economies far beyond simple corruption practices in the favour of certain cronies. Cronyism does not seek attention and publicity on such a scale.
And Mr Krugman's naivette goes on to imagine a China which would be amenable if given an offer to clear way for U S demands. China obviously is in no mood to offer concessions and clear the way when the basic policy is so strongly in its favour. For China to heed, it has to bleed. Trump is going by the realities of doing business in any market.
At long last, Trump is asking America to practice the old dictum, that the 'business of America is business'.
Trump's way may not be ideal or wise but at least its a beginning. Critics should seek to enhance on his basic premise instead of fighting it in the name of 'ideal politics' that has landed the US in such an absurd position vis a vis its trading 'partners'.
4
@Nirmal Patel
If it is China that needs to be influenced, why put tariffs on all our allies, such as Europe, Mexico, Canada? This would seem to only strengthen China's position.
8
It is Mr Krugman who focuses on China as an example. : "Even the big China announcement, supposedly a response to unfair Chinese trade practices, was basically a put-up job. China is often a bad actor in the international economy. But this kind of retaliatory tariff is supposed to be a response to specific policies, and offer the targeted government a clear way to satisfy U.S. demands."
But you have a point. Why target others ? Maybe it shows that Trump uses same thumb rule for all ?
I have not really studied each case separately but it might be Trump is really applying his singular focus of 'balance of trade' as he thinks it is applicable to each case as it comes along.
Just as Clausewitz derived his principles of On War based on Napoleon's campaigns irrespective of how Napoleon approached each battle so we need to analyze Trump's approach to basic fundamentals before we can analyse each case individually.
@seattle expatIt is Mr Krugman who focuses on China as an example. : "Even the big China announcement, supposedly a response to unfair Chinese trade practices, was basically a put-up job. China is often a bad actor in the international economy. But this kind of retaliatory tariff is supposed to be a response to specific policies, and offer the targeted government a clear way to satisfy U.S. demands."
But you have a point. Why target others ? Maybe it shows that Trump uses same thumb rule for all ?
I have not really studied each case separately but it might be Trump is really applying his singular focus of 'balance of trade' as he thinks it is applicable to each case as it comes along.
Just as Clausewitz derived his principles of On War based on Napoleon's campaigns irrespective of how Napoleon approached each battle so we need to analyze Trump's approach to basic fundamentals before we can analyse each case individually.
U.S credibility is wonderful, but I suspect that is the least of our problrms. The complexity of whatever you want to call it that keeps the world working is extraordinary. It probably can be broken with quite spectacularly bad results for everyone. I suspect that the people voting, especially in democracies which allow everyone to vote, are basically unaware of how precarious their world is and how little it will take to upend it. So we get mob rule, and please tell me when, in the history of the world, has that turned out well????
Makes one want to believe in a benevolent god, doesn't it
4
China has been playing the cheating game for decades and now feels it's entitled to land grabs around Asia and economic land grabs via the BRI. High time they are put back in their place, most of Asia is rooting for this, if not overtly.
3
"...tariffs reflected national priorities, not the power of special interests."
Gee,maybe China needs to join our army of Congressional lobbyists. Oh wait..
4
A great commentary but the US corrupted the tariff process decades ago when you enacted tariffs on imports of Canadian lumber for home building. This has happened 3 or 4 times and each time Canada has had to go all the way to the WTO to get relief. With Canada winning each time. The process each time took years which is what US negotiators (and inefficient US lumber interests) were banking on.
Who lost there? Home owners in the US who had to pay up to $5000 more for their house. Who won? US timber barons who no doubt gave donations to favored politicians. And their political friends from places like Montana. Time after time, the US has abrogated this lumber treaty and hurt their own consumers in the process.
So, Paul, the tariffs have been corrupt for decades. You just haven't been paying close attention. And if people ask why Canada doesn't trust US negotiators the lumber issue is one big reason why. As Reagan said, trust but verify. All that Trump has done is convince Canadians that more than ever, the US is not worthy of trust.
As one commenter said here: what good is a trade treaty with the US if you will quit out of it whenever you get a new president? Not worth the paper they're written on. That's the emerging long-term damage from Trump and his GOP enablers.
149
@SMC
Well stated.
The Lumber barons have a name Koch. Georgia Pacific the largest soft wood lumber producer in the USA and integrated vertically from forest ownership to finished lumber was purchased by Koch Industries shortly before the tariffs were added.
33
@SMC
In the unlikely event that the Trump Administration relents on its extortionist demands that currently are the barrier to a renegotiated 3 country NAFTA (or NAFTA is replaced by a US/Mexico agreement), Canada/US (& Mexico/US) trade relations going forward will have many similarities to the decades-long softwood lumber chaos you describe so well.
1
Way to call a spade a spade and reveal the ugly truth, Dr. K.
Everything Trump touches -- which is virtually everything -- becomes Trumpian.
We are all becoming Trumpian in ways large (huge?) and small, and that is a terrible terrible thing (sad?).
9
"Those that forget the past are doomed to repeat it"
George Santayana
In 1773 the small business men of Boston boarded ships flying the flag of the East India Company and dumped untaxed tea belonging to the East India Company overboard. They had the support of the shop owners all over the world. The East India owned and operated colonies all over the world.The East India Company owned over half the globe.
Tariffs are a tax imposed by business to better their bottom line. The taxes are paid by consumers and when they pick winners and losers as did the tax on tea small businesses in places like Boston and Montreal are sorely aggrieved.
The oligarchs of Russia, the plutocrats of Davos and Mavens of Wall Street are far richer than the owners of the East India Company in 1773.
Chrystia Freeland published the Sale of the Century of the Century in 2000. It is the story of how democracy was cut short in Russia and the oligarchs took ownership of Russia. The massive transfer of wealth and power to the .01% over the last 40 years makes the statement we are all Russians now brings us back to 1773. The imposition of tariffs brings us back to the reality of the battle cry of 1773 "No Taxation Without Representation." The "investors" who own GM are the same investors who own Ford and it is we who pay the taxes that make them richer and makes us poorer.
7
Keep in mind that this is all being orchestrated by one man who, under the guise of national security, has hijacked this process from America's Congress where, in the past, these tariffs were set. This meant that these tariffs had to make sense to economists and constituents and negotiations had to be transparent. Now we have a single man, who disregards the emoluments clause of the constitution, who doesn't answer to professionals, trade partners or Americans in general, making decisions that will effect the stocks of individual companies both positively and negatively, both of which can make a profit for anyone who is willing to trade on these stocks using this insider information. But that someone would have to have no ethics in business and no moral compass in life. Who does that remind you of?
16
There is also no real reasoning behind it. I would love to know who around him is shorting stocks and making money in the process, because am sure it's happening. All these attacks on Amazon that drove the stock price down are pretty sketchy. Also when your commerce secretary is connected to a Bank in Cyprus that launders money for Russian entities, you know a lot of other stuff is going on.
60
You give too much kindness in calling Trump vindictive in a way. I call him a crook from New York much like other "Dons". I don't think he is simply fighting foreign nations primarily, but using his confrontations as a veil for the real reason; last years Congressional "Duties" are this year's "Tariffs" which is to say, the Republicans needed to hide a new tax on everyone to pay for the Tax Cuts that go mostly to the wealthy and Corporations. The idea of changing the name of unpopular goals to new labels has the effect of duping Americans. Last year when Congressional leaders and Trump proposed the Duties, the public revolted as they knew it was a new tax. So what happened? They changed the name this year to "Tariffs", but they are still taxes on all Americans, most of which rank economically such that they will be affected deeply and this will all lead to reduced consumer spending. I did already.
Trump has very effectively veiled his new taxes on all Americans by calling it a trade war, the effect of repetition every day sets this in everyone's gullible minds. The Republicans are attempting to reduce the extraordinary deficits they created with the tax cuts by creating a new tax under another name to fool you all.
41
This is a great trade war, one of the tradiest we've ever seen from the standpoint of trade.
- Donald J. Trump
OK, I might be paraphrasing, but nothing of substance was lost in translation.
25
@LT, its a great trade war, its probably the biggest ever, and we are going to win, we are winning the trade war and its easy, its an easy great trade war to win, the biggest trade war that we are ever going to win, easy to win, and do you know what, its easy. Its probably, i am winning war trade easily and its big, probably bigger than anything we have won ever....no collusion, id date my daughter if i could....trade, Hillary.
3
Whether after 4 years or after impeachment I look forward to hearing a new chant: “jail him, jail him” with an added refrain of “jail them, jail them.” (The Trump family!). His corrupt business practices, dishonesty, international disruption deserves cell time to reflect and develop some humility. A first for democracy to place a former president in jail.
22
Well, I heard Jamie Dimon on CNN this morning saying the tariffs on China were no big deal in America’s multi-trillion economy.
For a moment, the image of the well-coiffed and power-suited Dimon was supplanted in my mind by a familiar face from my youth: Alfred E. Neuman.
25
Post-war investment in internationalism and free-trade was a very conscious decision in light of the carnage of WW2. We were willing to share our prosperity because that was less expensive than the millions of lives lost in that global conflict. We (i.e. policymakers in administrations of both parties) believed that the militarism we had to fight was largely the product of economic distress, brought on, at least in part, by a xenophobic attitude towards the rest of the world. Just listen to Eisenhower speak on his foreign policy approach, as one example. So yes, there might be a cost to acting as a global economic leader, but if we are going to make a different choice, we ought at least to understand what got us here, and what we are giving up with "America First" policy-making. And President Bozo had the audacity to cite "the greatest generation" in his "America First" campaign speech. What a dope! There is more than economic pain at stake.
16
The "global" trade rules invented by Democrats 80 years ago are not in the United States' best interests anymore. Trump should be commended for trashing the current world trade system.
2
@Warren
Instead of re-investing "some" of the profits in the companies to innovate, invent, make production more efficient and environmentally sound, the owners (stockholders) bleeded the companies dry for what they were worth and now find themselves lagging behind in performance to the rest of the world. So what do they do? they put tariffs on companies and countries that do perform well and say we have been treated unfair...
7
Mr. Krugman, you absolutely are correct when you state that Trump has thrown away our negotiating credibility. The problem is that Trump wants to look tough in the eyes of the world, but his lack of understanding of all the factors that enter into global trade and tariffs creates unnecessary antagonisms. I suspect that Trump thinks the Chinese will come crawling back to him for "a deal." Fat chance--the Chinese and other countries will get the last laugh.
15
All the consequence of essentialy having a child
In the White House, and I'm not referring to Barron.
19
Dr. K,
Recalling your previous column that the next economic downturn will be caused by multiple factors: certainly the nascent trade war will be a factor. I think anyone with a sense of economic history, which a few of the economic advisors with a decent level of experience should know, is not a rational approach for improving the economy or an orderly trust-building approach to the global trading system. You nailed it when described the new U.S. position in World commerce has labeled the U.S. an unreliable crony driven government.
Today, there were two announcements which further stresses U.S. standing:
President Trump intends to nominate Rep. Darrell Issa, R-Calif., as director of the U.S. Trade and Development Agency.
Once confirmed, he will support USTDA in its mission to help companies export American-made goods and services to partner countries to generate more jobs in the U.S.
https://www.executivegov.com/2018/09/trump-nominates-rep-darrell-issa-as...
The 2nd statement even disturbed my Republican friends, The Hill news exclusive, "Trump says exposing ‘corrupt’ FBI probe could be ‘crowning achievement’ of his Presidency."
https://thehill.com/hilltv/rising/407335-exclusive-trump-says-exposing-c...
Note that he has dropped his litany that the tax cuts for the hyper-rich, has juiced the economy and will increase revenues with the addition of the tariffs to bend the deficit curve down.
7
Who will buy his usa made goods now that drumpf has made enemies out of the entire planet. For example I do not purchase apple anything. I know it is Chinese made but it is american.
And Dr Krugman didn't even need to go into the agreements that Trump has just torn up and declared ended...
3
Hopefully, the US is not trying to get Canadian water and that is why the negotiations are taking so long. If he gives up our water, Trudeau would lose the 2019 election.
10
@SMC: What kind of water? More information would be appreciated.
@Miriam Bulk water shipments south to the US are exempted from the NAFTA rule which basically say Canada has to treat US markets the same as Canadian ones. I think this rule was put in originally when US oil was scarce and the US wanted to make sure in a crisis that we wouldn't keep Canadian oil in Canada and stop contracted oil shipments to the US.
As climate change may cause water to be a very strategic commodity, the US may want Canada to allow bulk water shipments. Currently, once Canada exports bulk water to the US, they begin being covered by trade rules regarding fairness. Canada won't be allowed to stop sending water south even if Canada needs it for domestic uses and "national security purposes." We would have to treat American markets as if they were Canadian.
As a result, Canada does not allow bulk water shipments and the fairness rule does not apply. The US may want this changed so that they can buy our water.
Think this won't happen? Google the NAWAPA plan which was a cockamamie scheme in the 1960s to construct a giant dam in Canada, build an enormous lake and start shipping that water south.
@SMC: Thank you for the information; it is very useful.
Standing over the global wreckage of WWII, a relatively unscathed America said "Come on, guys! If we all just give a little here and get a little there, it can be a win-win for everyone." And for 70 great years it was. Now comes Trump and he basically says that those Nationalists who built WWII out of the Great Depression were right all along...
20
@Phil
I agree:
The New Deal created years of stability , social cohesion, and prosperity. It was conceived of not as a series of handouts. Along with the Bretton Woods agreement, the New Deal served as a bulwark against fascism; they were created explicitly to prevent the kind of income inequality which gave rise to the fascistic populism of the 1930's. Was Roosevelt was a "socialist" for saving the West from Fascism?
"Entitlement" is used pejoratively, but there is no reason to consider entitlements as anything other than tangible expressions of the social contract. Current attacks on them serve only the wealthy - the home-grown plutocrats who most benefit from the Republican's current agenda. Trump is their endgame.
31
It's scary to see someone who knows nothing about the issue making critical decisions about trade and tariffs- and who has the authority to do so.
Trump is almost right about one issue, however. China eviscerated the American steel industry in the 1990's by undercutting US producers via cheap labor and a mysterious exchange rate. Result: US steel mills closed all over the country. Recently, China has done the opposite, by buying all the steel they can on the market, raising prices to end users.
Dan DiMicco, Trump's friend and former Nucor CEO, is probably the one who persuaded Trump to take those actions. Nucor is actually in good shape in the global market, due to much lower production costs. They make steel from scrap, not iron ore, and melt it down with electric arc furnaces, not coal.
It's a complex issue, but Trump is not completely wrong about everything. More like a clock that is correct twice a day.
5
Spot on that this is about extorting US business, for the political and personal benefit of the President. Worst thing is when your competitor gets an exemption and you don't--you may be out of business. Nobody can take that kind threat lightly.
Not all that different from threatening pharmaceutical manufacturers with price controls, who then decide they have to pay $1 million to Michael Cohen for "insights". Or supporting the blockade of Qatar after they failed to "invest" in Jarod's bankrupt real estate.
38
Yes, "... the pure economic impact is only part of the story". And "their direct economic impact will be modest, although hardly trivial". I would disagree and contend that, like so many things, the impact will be life-altering for the poor. The economic impact will be the whole story for the large part of America that depends on cheap necessities of life from Walmart and the like. There is a big difference between a 25% increase in the price of a BMW and a 10% increase in the price of clothes and food. When necessities are 1% of someone's income, a 10% or even 25% increase is trivial. When they constitute 75% of your family's expenses, it is an entirely different matter. The inequity here parallels everything being done to our nation: taxes, food, education, transportation, the effect of natural disasters - in short, the cost of survival: life, liberty and the pursuit of happiness. For many people, happiness depends on being able to take care of their family, not a Hermes scarf.
99
Trump has made the US an unreliable and undesirable negotiating partner in all circumstances. Recall his actions to withdraw from the Paris Climate Accord, TPP and the Iran nuclear deal. The US will never be trusted by another country as long as Trump is president and maybe for much longer than that. If Congress and the courts cannot or will not stop Trump why should another country accept the word of a subsequent president.
144
@James Ricciardi
It's not just during Trump's tenure. Now that the American people have shown what kind of president they are capable of electing, no one can count on a deal being good for more than four years – and maybe even less than that if we continue to elect presidents of Trump's quality.
111
@Howard Stambor
I need to point out that we did not elect Trump. The states that threw out 3 million votes for Hillary Clinton when they sent their delegates to the Electoral College did so. Also the outrageous Supreme Court that in 2000 said that this kind of disenfranchisement was perfectly constitutional.
The economics here can not improve while the politics remains this dirty.
@James Ricciardi @James Ricciardi Post Trump, the investigation of the Russian cyberwar and conspiracy with “special interests” ie: Kochs, Mercers, Waltons, Defense Ind., ....to subvert the electoral process and preserve white male supremacy must continue. Restoring our national integrity demands full accountability.
In the meantime, powerful monied interests behind Trump must be identified as co-conspirators that threaten America and western democracies. It is not “rocket science”to deduce that the hydrocarbon industries see the writing on the wall and are mustering all their strength to deny climate change, deny the health costs of pollution, obscure the military costs of preserving Oil Hegemony and then blame liberals, scientists, and healthcare specialists, and China for any and all our ills. The “trade war” is really a thinly veiled war of oil against the world and Trump’s allies are oil states: Saudi Arabia and other gulf monarchies, Russia, and oligarchs in Canada, and Venezuela.
There's no rhyme or reason to Trump's trade policies. He started from the idea of balanced trade. Well, it's balanced with Canada, but he wants more. He wants balance sector by sector. But even when the US has a surplus, such as with dairy, he still wants more. He claims American loss of sovereignty with independent dispute mechanisms, but he demands Canada completely surrenders sovereignty to US courts?? He threatens 'ruination of Canada' through imposition of punitive tariffs on those sectors that we have successfully developed under previous agreement?? Way to undermine everybody's confidence in the very notion of 'fairness' he pretends to uphold. Canada was a prosperous and advanced economy before NAFTA, now it is, of course more dependent on trade. Trusting America as a partner is proving to be a costly mistake.
189
@Dan Duran hard for me to believe that Trump came up with this. Could the “invisible hand”, not of the market but of Russia, be guiding this?
11
@Dan Duran
Well said. Canada has considered the USA to be a great neighbour for as long as I can remember, but not now. Most Canadians believe we should face his threatened "ruination" rather than cave to his misleading and unfair positions. Donald Trump has done more for Canadian than unity than anyone ever. I guess he gets a consolation prize for that.
6
... And the treatment of our allies has been atrocious. The use of trade disputes to bully Canada, Mexico, and Western Europe weakens our ability to promote peace, democracy, free speech, and the rule of law abroad, and will convince our allies to look for other trading partners. Take Canada for example: if we crush the Canadian auto industry -- which is really American auto companies operating in Canada -- to whom will Canada look with its oil reserves? (Spoiler: China will be a more than willing buyer.)
One of the inviolate characteristics of a bully is someone who, unable to make headway on real problems, turns his cruelty against his friends.
73
Crushing new republican taxes (tariffs) are one thing, (but as you pointed out) there are now ''carve outs'' for certain sectors or businesses. (that may or may not be tied into the ongoing conspiracy to have won a national election and to hold onto power through a cover up)
Having said all that, there are already bail outs (12 billion to farmers ? ) and who knows more - until we find ''clerical errors)
Then on top of all of that (which I have commented many a time) is the ongoing shorting/tearing down of certain sectors of the global economy (inclusive of trillions in tax theft /inversions) so that certain factors can then swoop in and by things up for pennies on the dollar again .
This is all of course putting pressure on certain states (international) that cannot cope with the massive influx of refugees and pressures on their social systems - giving rise to nationalism - and again those money forces.
But PLEASE ... keep buying those imported Chinese goods at the big box store bypassing your local economies and jobs.
Rant off.
21
Trump, egged on by his cohorts, loves pulling the levers of power. If it's something he can pull all my his own Presidential self, he gonna' take a yank on it. Tariffs are full of all the ingredients he needs to feed his bloated ego. Donnie gets to start a war all by himself. He'll say something like, "I alone saved steel." Then have his ego assuaged by their C.E.O. Off to the special interests races we go. Step up to the plate and ask for an import tariff that benefits you. Ask for an exclusion from tariffs that harm you.
Various businesses, agriculture and consumers without sufficient lobbying power become pawns in his war. If you're Apple, you'll probably find a way to get around tariffs and keep the cost of those i-phones down. Next out for Apple, edible i-phones, in case you get hungry.
It matters not to The Donald that he is speedily squandering the credibility of the United States in all forms of negotiations on a global scale. Getting back that trust he callously throws away will take years or may never be recouped.
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Trump is a crook, always has been. In due course, that will be his undoing. In the meantime, Friends of Trump are raking in huge windfalls, while opponents of Trump are left twisting in the same wind.
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@Pete
Thanks, Pete. Trump is a tragic combination of the fictional Tony Soprano and the all-too-real Roy Cohn.
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The only good thing I see about Trump's 'trade wars' is that it satisfies his ego in the same way that a 'real war' might.
With trade wars, he is more or less only damaging our economy. With real wars, people will die.
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@Mark
True. Unfortunately trade wars lead to real wars.
I have very anti-statist friends who despise government bureaucracies running policy, yet they were stalwart supporters of the Common Market / European Union. Why? Because they saw the alternative as a replay of World Wars I and II, but with nuclear weapons.
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@Mark
Oh, rest assured that people WILL die as a result of Trump economic 'policies' (and aren't they already - see Puerto Rico, illegal detention, etc.).
And there is no good that comes from assuaging that ego - NONE.
The soybean scandal best exposes the weakness in logic and hypocrisy of the President. China's tariff on US soybeans cut sales to China by our farmers in half. Soybean prices dropped 20%. The farmers large and small screamed foul.
Trump found 12 billion dollars in bailout money for the farmers to finance his tariffs. Longer term if China or other countries find alternative suppliers will they ever come back to the US for a host of products, not just soybeans. As a last resort China could sell off US treasury notes and bonds or not show up for the next auction to finance the deficit.
Trump by analogy has made his last stand but time remains to avoid a disaster.
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@texsun
We grow soybeans in Canada, too - and I think our market has just increased markedly.
Aren’t the greatest fortunes on Earth the result of corruption?
Special interests - there is no such thing, only selfish interests. And the only selfish interest that counts is trump’s. And trump will always be trump again and again.
What is next - there’s no collusion - it was a “clerical error”?
At what point is the Wharton school of “business” embarrassed enough by their protégé that they finally revoke his diploma? Or is trump economics what they teach?
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@PAN
Trump's rich father bought that "degree" with a huge donation to Wharton. Trump does not even have a H.S. diploma; he was expelled from a military academy middle school, because he could not pay attention or learn anything. He has no patience to listen to his important daily briefings; he has the attention span of a gnat, unless it is something which might affect his constant need for money. He has an outstanding 250M loan from Russians laundered through The Bank of Cyprus and deposited in Deutsche Bank, the lender. An additional 95M was recently flown into FL on an unmarked plane and given to The Trump Organization. That is the President of the U.S., a man in debt to a foreign adversary. I don't recall ever reading that FDR was in debt to Krupp Industries; or that Truman was in debt to China. This is unprecedented. As is Trump's chaotic foreign policy. As is Trump himself.
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@Linda Miilu An interesting tidbit if true. Are not all flights followed by our air traffic system? What would trump do with that much money? Aren’t banks required to report large deposits? Who puts that amount in a mattress? Corroboration of your story may be up to Mr Mueller.
Peter Navarro the creator of the tariff war was on the radio saying that the lost Chinese production capacity can ge picked up by South Korea and Vietnam...NOT by the American worker. So the point of the tariff war is NOT to in anyway help the American worker but it is to protect billionaires monopoly rights to intellectual property. The American worker will suffer job loss and higher prices for Trump and his billionare buddies. Of course Trump has his base who deliberately ignore Trump’s continuous bad acts.
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@SW It is also part of a war on China. Trump and Navarro, in particular, want to destroy China to stop its rise as a power that can supplant the US. Their demand that China abandon its industrial policy is a clear effort to keep China subservient to Western technological power and interests and a remarkable assault on another country's sovereignty.
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@Shaun Narine
I wish you were joking! That horse was let out of the barn by none other than Ronnie Reagan, GOP patron saint...who went senile begging the question: who is really running the country? And guess what? We are asking the same question again...
It isn't just trade where a deal signed with America can no longer be considered reliable.
Trump has torn up the Iran nuclear deal, withdrawn the US from the Paris Climate Agreement, threatened to pull the US out of NAFTA, trash-talked NATO, and did not join the Trans-Pacific Partnership.
On all these things foreign countries will conclude that if an agreement signed with one administration is ripped up by the next administration, a deal with America is only temporary.
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Why is it that Trump believes that the Chinese government is paying these tariffs? Individuals and companies in the US and China are paying these duties to their respective governments, to say nothing of the fees they pay to shippers and forwarders for handling such duties. In the case of companies, they either absorb the additional costs and therefore have a lower bottom line, or they pass the costs along to their customers, possibly losing business.
Perfect lose-lose-lose situation.
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It is ironic that the trade imbalance with China was correcting itself before Trump decided to start a trade war.
China wants their yuan to become one of the world's great currencies, like the dollar, the euro, etc. They have endured considerable pain to stabilize and support the yuan in currency markets, even as their domestic economy is dealing with mal investment, particularly in real estate, and capital flight.
A strong stable yuan means that the price advantage enjoyed by Chinese producers is no longer growing. In fact, China is being undercut by lower-cost competitors.
In light of this, all we had to do was, wait. And then along came Trump.
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@Prairie Pop
Brilliant comment. I would only add that they (China) have such an incredible long game going, that they know that the American administrations are essentially 8 year cycles or so. China is investing heavily in what you describe, as well as burgeoning markets in Africa and even in India.
Meanwhile we keep sailing our boats in circles in the South China Sea. You know ...
20
To your last point, it is another example of the Bad Faith described in your column earlier this week. There is much to criticize in all past Presidents, including some bad faith with the American people, but I can't think of any previous President negotiating and agreeing with foreign governments in Bad Faith.
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@TOM
And yet his officials are coming out every day now and saying CANADA is the one acting in bad faith.
Worse yet, it's drawing out uninformed posters even here at the NY Times, also blaming Canada.
Get real!
So after transgressing WTO rules for some of his tariffs, what is next? Lets look at today's tweet: “We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember. The OPEC monopoly must get prices down now!” Would not an easy step for Mr. Trump be to charge OPEC (et.al.) protection ?
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@AwlDwg
Trump is on shaky ground with the Saudis who produce the sweet crude our manufacturers use, and the petroleum we buy at the gas station. Our crude is heavy and in need of a refining capacity the Gulf States cannot handle in quantity, so we export it to China, the country Trump is now attacking. Trump is not just a former many time bankrupt; he is also an incompetent "deplorable", as Clinton so aptly described him. In short, he is an uneducated 71 yr. old stunted adolescent.
1
Really? After Trump imposes tariffs on $200 billion worth of additional Chinese imports, how will the Chinese respond? How many goods that WE export to China are LEFT un-taxed by them? The Chinese might consider that if they allowed more of our goods and services into their market, as we allow theirs into ours, they’d be in an immensely better position to counter Trump and even to argue that he’s biting his nose to spite his face. As it is, they don’t have a lot of options. Maybe one outcome of all this is that they open their markets more generally to Western trade, in order to create interdependencies that future U.S. presidents – even Trump – would need to think twice about damaging.
They could always hack us – an act of war that Obama never recognized. But I suspect that these days we could hack them right back, and we could always sink their aircraft carrier (1).
Trump campaigned on what he regarded as the “corruption” of then-current trade policy; and he won. It shouldn’t surprise anyone that he wouldn’t stop at merely nixing our involvement with the TPP in his efforts to make ALL of our bilateral arrangements fairer to us.
Besides, I’ve been arguing here for some time that his primary objectives aren’t really trade related, but that he has little leverage to force discussion on other bilateral bones of contention (such as hacking and the theft of Western intellectual capital by China) OTHER than through the trade keyhole. I suspect that all China needs …
7
… to do to avoid the tariffs is not merely signal a willingness to discuss these disagreements but actually to send a team to Washington to negotiate broad-based agreements.
If Dr. Krugman wants to argue that Chinese trade policy with regard to the U.S. already is “fair” to us, then he should do so by citing examples. Simply calling Trump’s attempts to shake loose a plainly corrupt partner by calling those attempts “corrupt” in turn … doesn’t cut it.
7
@Richard Luettgen China has more arrows in their quiver than you might think. The biggest concerns intellectual property. While there are issues with this already, they could simply stop recognizing our patents and copyrights altogether. They could flood the global market with Windows computers, iPhones and generic drugs all without paying the US companies a dime. This probably won't affect US consumers that much but it will be a massive pain to many corporations and they are going to go right to the politicians to complain and complain loudly. They can also lock us out of the biggest market in the world. That's not going to please some folks in the C-suites I can tell you.
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@Richard Luettgen The thing is, when Chinese imports are subject to tariffs, Americans will likely end up paying a biy more, but will still buy them as there's no alternative for the price. When American products are subject to Chinese tariffs, they can be just sourced from somewhere else at lower price even.
12
So after transgressing WTO rules for some of his tariffs what is next? Lets look at today's tweet: “We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember. The OPEC monopoly must get prices down now!” An easy step for Mr. Trump would be to charge OPEC (et.al.) protection.
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@AwlDwg
Why should we care about OPEC, we can pump our own oil. We don't need the Saudis, why this country buys one drop of oil from them is lost on me.
4
@AwlDwg
Good observations but it has been the failure of the Democrats to never brand the Republicans as the nihilistic enablers of capital that they have been for thirty years. They and their friends have been rigging the system for the wealthy, often with the tacit help of Neo Liberal Dems, since Reagan. Reagan triples the deficit, Clinton reduces it, then W runs up the bill again and Obama fixes his mess and noe The R’s have blasted the biggest hole yet into our long term fiscal outlook. They are looting our country.
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@James Young
Probably something to do with who, exactly, profits from importing Saudi oil, no?
It goes far beyond trade or costs or who pays. Trust has been destroyed, and not just by Trump. The American people and voting system put this chaotic force into office, the Congress refuses to rein him in, and he has approval from a large swath of the public.
It's not what he's doing, but also that our allies in the world must feel like they can no longer trust the American public to be what it once was - a stabilizing and reasonable force for order and fact-based decision-making.
The only thing I can bank on is that Trump will lie, Congress won't act, and more of the American public than I am comfortable with seem to think this is all OK. How can our former friends even consider us as reliable and rational?
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@Fredd R The big disappointment is the American system of "checks and balances" is now proven totally ineffective in containing an outlier and the fallout can be quite significant. It seems that parliamentary democracies have been more effective in preventing such distortion of widely held values in a society.
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@Dan Duran
There are unfortunately examples of parliamentary democracies going down worse paths. There were
several examples in the 1930's.
2
@Fredd R
In response to your rhetorical question: we in Canada certainly don't, not in the least.
1
"Beyond that, America has thrown away its negotiating credibility. " Trump has thrown away our credibility period. From the moment he took office and decided to block legal and cleared immigrants from coming here to pulling us out of the deal with Iran on nuclear weapons, and outright lying about everything he tossed our credibility on the trash heap.
Whatever Trump and his administration touch becomes corrupted. He's Nixon without any restraints, external or internal. The only question is when other nations completely ignore us because of Trump's actions on tariffs, Iran, climate change, etc. It's much harder to regain trust than it is to lose it. Trump is doing what W did after 9/11/2001: wasting any good will that was out there for us. Fear is not conducive to honesty or to cooperation.
However, there is one saying that does apply here: what goes around comes around. It's beginning to with Kavanaugh, Manafort making a deal, the op-ed piece by Anonymous. Trump and his supporters may find that they regret his ever having become president once the whole story does come out about his tangled finances, deals, etc.
Trump and the GOP, making America great again for the wealthiest. Until they can't because they are poisoned by their own corruption.
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He’s also Nixon without the intelligence.
3
@hen3ry
Trump is nowhere near as smart as Nixon. That makes it worse. Nixon at least saw the value of cleaner air and skies, etc.
3
@hen3ry-Excellent points. In addition, what leverage will the U.S. have with North Korea if Trump continues to level threats and insults at China and hurt them with tariffs?
2
The dumbest kid in the class
Has started the Tariff morass,
No insight or learning
For conflict he's yearning
Chaos he's given the gas.
He mutters his Trump mumbo jumbo
Which is far more suited to Dumbo,
The failure he's venting
Knowledge circumventing
Thinking he's clever as Columbo.
354
Love it! Well said!
@Larry Eisenberg
You are amazing ! Please publish a book of your poems which you have contributed to the NYT .
Dishonest Don the Mad is abysmally ignorant of economics, and the advantages and disadvantages of foreign trade.
He wants to legislate the laws of economics to fit his distorted view of it. He has some believers following him. For instance they believe a trade surplus benefits the country with the surplus, like Korea. This kind of pomposity carries well with those who believe his rhetoric, who think it will benefit them, and it may for a bit of time.
The majority of the populations knowledge of economics, is personal checkbook economics. They do no understand how profits are made, or how international trade is conducted.
No country can trust America to engage in ration trade policy as long as he is in office. His record is one of lying, double dealing, making threats that he can not carry through on, no one trusts him, or his deputies to keep their word, or even remember it.
The way around the tariffs is bribery, a technique to get special treatment for your product at the expense of others. History shows this to ultimately fail, and cause even more economic uncertainty. We are seeing an uptick in economic activity, ;but it is transitory, it will not take long for other countries to catch up. He thinks China has no options to counter his irrational whims, we have seen the Chinese are not the world's doormat, they resent how the Caucasian world treated them and will not accept such again.
106
When you equate tariffs to taxes you are contradicting your Jan 27 2017 column. These tariffs really are a Value Added Tax and should have the mostly beneficial effects on America’s over-consumption and poor savings habits. They are progressive in nature as the wealthy tend to be the heaviest consumers. It might even reduce carbon emissions if Chinese manufacturing goes down.
4
@G Good point about carbon emissions. Much ballyhoo is made of US carbon reductions, but probably around 1/6 to 1/3 of those reductions is due to offshoring our industrial production to places like China.
10
This is not a VAT because it is reducing the purchasing power of consumers to choose. Since many of these products are not made in the US tariffs only reduce consumption which is the majority of the economy. Reduction in carbon is a byproduct of this then extending the life of US coal fired plants will offset it.@G
18
@G, "the wealthy tend to be the heaviest consumers" is only true if you look at dollar amounts. If you look at the percentage of disposable income, it's very strongly the opposite. If you look at the effect of a price rise (e.g., due to tariffs) on the ability of the consumer to afford them, the poorest people are hurt the most because they have no disposable income, and the wealthy just laugh off a price increase since they have income to spare. I'm not thinking here of doubling the price of luxury yachts; that might get a protest but doubling is not what we face.
12
Trump has taken charge of two particular areas: trade and foreign policy. He has destroyed longstanding relationships and forged new understandings with nations in which his family does business on corrupt bases. Congress could put a stop to some of what Trump does. It hasn't. Some, in Congress derive personal benefit directly from pushing Trump policy.
But oligarchies are a collaborative effort in much the same way crime families parcel out territories to those they do business with. The rest of government is under the control of Pence-picked and Koch-approved officials. They are implementing David Koch's agenda. Most of the congressional GOP is a Koch owned and operated subsidiary.
That's not to say that there aren't Democrats whose agenda runs parallel to the Kochs'. The roll back of Dodd-Frank was a centrist bill. The Kochs publicly thanked Heidi Heitkamp.
As we move towards another election cycle, in our zeal to clean house, we must not lose sight of the fact that corruption this bad splatters onto the "good guys." To believe otherwise or that it's harmless is how we get to Trump.
Prices are about to rise. Walmart won't absorb the tariffs. Neither will other corporations. The GOP won't lift a finger. They, under Koch orders, will ransack the safety net instead.
---
My Notes on Paul Krugman’s ‘Capitalism, Socialism, and Unfreedom’
https://www.rimaregas.com/2018/08/26/my-notes-on-paul-krugmans-capitalis...
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Walmart's owners are apparently not a part of a clique of Trump friends. Unlike Apple, they weren't able to do a deal and get their goods off the list of tariff victims.Neither we're a lot of sellers of consumer goods, foods, agricultural products most of us use daily.
"Walmart is where the trade war comes home
Two weeks ago, Walmart asked the Trump administration to walk back its plan to put tariffs on Christmas lights, shampoo, dog food, luggage, mattresses, handbags, backpacks, vacuum cleaners, bicycles, cooking grills, cable cords and air conditioners."
https://www.rimaregas.com/2018/08/07/greed-malfeasance-never-sleep-blog4...
39
Here's another example of how oligarchy works:
"Trump taps Darrell Issa to lead trade agency
President Donald Trump on Wednesday named retiring Rep. Darrell Issa to head the U.S. Trade and Development Agency, setting up what could be a contentious confirmation battle in the Senate."
https://wp.me/p2KJ3H-2ZW
Nice work, if you get confirmed for it...
12
@Rima Regas Bernie Sanders?
It has been better and worse, and this is worse, but US credibility has too often been a matter of "protests too much." The louder we proclaim our own credibility, the more one should question the substance behind it.
22
The idiocy of POTUS 46 minus 1 (hat tip Pete Souza) is boundless - everything Mayhem touches dies.
120
@R. Law - Adding insult to injury is of course the fact that consumers will be paying these new taxes (they're not tariffs) on almost everything they buy:
https://www.usatoday.com/story/money/economy/2018/08/28/retail-associati...
along with the bald-faced lying from His Unhinged Unraveling Unfitness that his 'tariffs' will pay down the national debt:
http://nymag.com/daily/intelligencer/2018/08/trump-plan-to-pay-down-nati...
But only the part of the nation not watching Faux Noise Machina knows these actual facts.
41
@R. Law
Wait until the tax heist passed by Congress Republicans in the middle of the night produces the trillion dollar revenue shortfall. The chump change $600 tax gift to the 99% will sunset in 2027; then we will be stuck with the permanent 1% tax gift to continue to fund our complex infrastructure. Either personal and property taxes go up, or another attempt to steal from SS will happen.
1
@R. Law, no, no, it's adding injury and more insult to insult.
Well said, Prof. Krugman. Trump's approach to trade is: If we have a trade agreement, it is automatically 'the worst deal in history' unless America wins and the other guy loses and I made it.
A case in point - one of the sticking points in the current NAFTA renegotiations is that Canada wants a guarantee that we won't be subject to the 232 (national security) tariffs that Trump has so cavalierly applied to our steel and aluminium and threatens to apply to our autos. Personally, I don't think such a guarantee will be forthcoming - and if it does, will it actually mean anything?
There's no point in having an agreement on trade with America if they cannot be trusted to follow it.
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@David S
Also, negotiations with Canada on trade are coming down to the date-line in the sand that Trump has drawn. How many more lies, threats and tantrums will the US side throw, in order to bully a deal on its time line?
And, more important, the tactics , and past history of Trumpian negotiations, suggest that the Trump administration and its supporters just can't be trusted.
When the snow comes, how about building an Ice Wall across our border? The material for it will be free!
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@David S Absolutely right.
@David S
In order to quench Trump's narcissism, he must rail against whatever came before him — even it is running fairly smoothly — destroy it and "fix it" to distract the people and the media from examining his crimes and flaws.
3