I am far from an expert on China. However, they have a long memory, and in this case the "Century of Humiliation," in which the US had a role in tearing China apart. Just as Israel says "Never Again," so does China, with the added bonus of not "losing face," so important in Asia. In sum, China will not buckle. If an amateur knows this how come the man in the Oval Office does not?
23
The China of today is far wealthier, militarily far stronger and technologically far more advanced than the impoverished, backward China that welcomed President Nixon. They have become a superpower dwarfing Russia and rivaling the United States. How do you end the status quo of ever increasing trade deficits and transfer of wealth?
10
Isn’t this The same genius who said that the stock market would collapse when Trump became president?
10
True. Any economist could have told you that before the trade wars began. The problem is, of course, Trump neither understand nor cares about this and guess what, neither do his non critical thinking and rather ignorant supporters who live in a land of self-delusion and intellectual vacuity impervious to analysis such as is offered in this article.
10
No Professor, Trump is not losing anything because of his Trade Wars, but we are.
Trump lost the moment he won the Presidency, mainly that cloak of hubris and propaganda that he had around him to make him look smart and a winner. Now we know he is neither, that he is dumber that his Secretary of State who is supposed to be dumb as a rock and that he is an eternal loser.
With all the exposure and tension he has also lost his mind, which explains his sudden trip to NK to ask for forgiveness for having walked out of the firs meeting and now for staging this pathetic 4th of July celebration in which he told us about the seizing of the airports by the Continental Army.
Like Nancy Pelosi recently said, he is in need of an intervention that only his immediate family can authorize.
As per our losses we are losing every day, we are paying tariffs, are losing credibility internationally and some of us are losing all vestiges of shame.
6
The solipsism that seems to plague Trump (and now all of America) certainly helps to explain the bizarre American military hardware demonstration and history lesson that was Trump's 4th of July extravaganza. Maybe he's thinking Xi Jingpin just doesn't know that our Daddy can beat up his Daddy.
But then again, like all good poker players, Xi Jingpin, with his lifetime contract, already knows he can stay in the game longer.
6
Good luck with this huckster posing as a president, I suspect that you will need it.
Everything in this life has a cost, including damage done to relations.
7
What is "solipsism"?
Nobody has provided a factual reason for invading Iraq so I will, higher gas prices. Saddam had always undercut any benchmark price of oil and with Saddam gone, a higher than an open market price resulted. That is Cheney knew the Iraq War would be a disaster. In fact for Cheney, disaster was the point.
Donald Trump being honest on national TV, 2/13/2016, "George W Bush lied America into a disastrous war in Iraq". Support of Trump from those liars to include Cheney, Bolton, Lindsey Graham, Mike Pompeo, who Trump's statement labels as the biggest war criminals since Hitler and the Nazis with over 1,000,000 dead from those lies, says the Iraq War worked for those liars. That is what warps our Iran policy is certain people, countries and corporations benefit from higher gas prices.
When "Halliburton" Cheney was V.P. and gas dropped below $4.00 Cheney would, so on cue as to make it predictable, shake his fist at Iran and gas prices would surge back over $4.00 a gallon.
Since Trump shook his fist at Iran gas prices by me have surged $.75 a gallon. Well this fist shaking benefits Vladimir Putin, big oil and Saudi Arabia, it transfers billions from America and Americans to these players.
So the goal of Trump's fist shaking at Iran when by Trump's own actions America is unprepared for war, (Trump's emergency declaration to build his wall takes money from military preparedness meaning spare parts vital to any war) was to raise gas price.
Mission Accomplished.
3
Tell you what. If you don't mind, let me point out what should be scaring us half to death in addition to the $23,000,000,000,000 we can't pay off, Huawei is preparing to be The Big Brother we all knew could never emerge. 5G is happening and China/Huawei will infiltrate every aspect of every life on the planet.
If you want to dwell on all the misery you think the U.S. generates, by all means, go ahead. But, you ain't seen nothing yet. We're small potatoes compared with the unthinkable the Chinese intend to unleash on the world.
Just one favor. Remember where you heard it. Mark my words.
4
Because Trump is a loser. Look at all the businesses that he destroyed. The whole trade war was from the seat of his pants, using America as his reality show pawn. Amazed at the number of voters who are totally blind from the truth.
5
What was that I thought Trump was a great negotiator. Just like he is a great businessman. ou know with how many bankruptcy's is it now.
1
He may be loosing the trade war but he's lost friends for the USA and it will never be the same after saying Canada is a threat to US national security. After Trudeau imposed reprisal tariffs similar in $ value he was called "weak and can't be trusted" by Trump and Kudlow said "there is a special place in hell for countries like Canada". Stuff comes to mind....The Iran crisis where Ottawa got US diplomats out disguised as Canadians, the 30,000+ frightened inbound fliers set down on safe Canadian strips who only knew their homeland had been attacked were bedded, fed, clothed and medicated for which no compensation would be accepted. Canada spent an estimated $18-billion fighting in Afghanistan and trying to reconstruct the country. The war took the lives of 158 Canadian soldiers and wounded more than 1,800 the largest ratio of any allied of the-US country. Je me souviens.....Yep a special place in hell for those "kind" of people.....eh?
11
And guess what? McKinley's tariffs exacerbated the Great Depression. If we end up with a recession or worse in the coming months, there is only one person to blame--Donald J. Trump. We can also blame the exceptionally ignorant Peter Navarro who seems to be Trump's amanuensis in the failing strategy of Tariff wars.
7
Mr Krugman you forgot one part of the tariff folly in regards to the Chicken tax, It was completely ineffective. The Germans found multiple ways to circumvent it like building cars here after importing body and engine separately, Not to mention buying not only an American car manufacturer (Chrysler) they also bought a heavy truck manufacturer (freightliner)!
5
Solipsism goes both ways. Trump may have started the trade war. But the wars are also supported by many congressional Democrats including Schumer and Pelosi especially the one against China. To Trump himself, in his alternative universe, he is winning the trade war every day on Twitter and in the mind of his supporters which might be enough to get him reelected giving the disarray and radicalization of the Democrats.
1
Trump needs to understand that he is dealing with a Dictator in China's Xi. He is not a typical not businessman, who will care of his company's profit losses in a trade war. He will dig in with no meaningful agreement until the 2020 Presidential Election is over. If Trump wins, Xi will start serous negotiation otherwise it will be a new ball game for him. Its time for Trump to increase tariff on all China's made goods to 100% to get Xi's attention.
2
@sKrishna
"Its time for Trump to increase tariff on all China's made goods to 100% to get Xi's attention."
It's a big but unfortunately common misconception in the US that tariff duties are paid by China. No, they are paid by the US importer (even Trump doesn't get this...)
So, a significant part of these "China's made goods" are American, in the sense that they are manufactured in China by US companies. So Trump will be hurting American businesses (who pay these duties when they import the goods in the US).
Also, Trump will drive out of business a lot of US farmers when the Chinese retaliate by imposing duties to American farm products.
5
I cannot help but note that a man of recognized substance as well as leader of the world's most populous nation, is left to patiently wait the arrival of another who, aside from his physical being, is no match.
It is a picture of patience and determination which Xi Jinping has clearly lived and our President will never approach. No wonder he and his successors are expected to control the world.
2
It's worth pointing out that international institutions really are worth something for this kind of problem.
China is still classified as a developing country for the WTO. Everyone expected that to change, with new rules to be negotiated.
Negotiating in that context is different. The US and EU each have 18% of Chinese exports, so the leverage is doubled. Moreover the negotiation becomes a matter of standards for international behavior, not a question of national honor.
That has two effects:
1. It requires us to separate what is a real matter of rules for commerce (open markets, intellectual property) from whatever barriers we might want to place in the way of Chinese technological development.
2. The negotiation itself can be more a matter of technical issues than face saving.
We didn't need the trade war, the collateral damage to both economies, and the hostility and national resentment that will remain.
We would be far better off with more results and less chest beating and domestic war propaganda.
4
We are at full employment and the S&P 500 keeps hitting new all-time highs. If anything, tariffs may have the the unintended benefit of preventing the next major bubble.
The cynic in me thinks that since the President can't directly control the fed rates, but he can turn tariffs on and off, he will declare victory, remove tariffs, and let a bubble fly at the most politically opportune time for re-election.
I know most liberal readers of the NYTimes want to believe Trump isn't smart enough to plan that far ahead, but he is either really lucky, or a lot smarter than he let's on.
6
Keep teaching us Mr. Krugman! So appreciated :). I see businesses hurt daily by this administrations decision making.
3
Why do you even think that Trump's goal is to win? As Putin's puppet Trump's job is to wreck as much as is possible and Trump is truly succeeding in that. Deficit and National Debt up; Social Security & Medicare threatened because there will be a need to cut entitlements; costs of necessary drugs, medications and health care - increasing at a rapid rate; increase growth rate of income inequality - check; NATO & other international alliances all in danger because the U.S. is now proved to be unreliable
Winners are: Putin & Unwanted Ivanka who gets to steal the show for whatever good that does for her
6
Next: How does the winning democrat talk to those who think they've suffered unfairly from our trade policies and voted for Trump for that reason?
3
The soul of Trumpism is government by publicity stunt. The tariffs are a first class publicity stunt, whether they accomplish anything or not. The key to their success is that they give the appearance of trying to accomplish something.
The rest is actual economics and foreign policy, neither of which is the long suit of this administration. One good indication of this is that neither Trump or his people have actually spelled out what winning this trade war actually entails. The usual goal of tariffs is to protect local production of goods, most notably those that are easily transported, but the complexities of bringing manufacturing back to the US involves more than trying to compensate for the willingness of the Chinese to work for lower wages and accept worse living conditions by artificially raising the price of their goods, at least to American consumers, as Dr. Krugman has frequently pointed out.
So how do we "win?" And if we can't win, what's really the point besides public relations and the appearance of supporting the working class?
5
The tariffs are in fact motivating foreign and U.S. companies to leave Communist China. Focus on the positive implications of an exodus out of China to benign states.
3
@Another Nobody...And then there was TPP. To bad Trump and his supporters were clueless.
1
Trump's tarrifs are a tax on the poor and middle class.
He has given corporations and wealthy individuals a trillion dollar tax subsidy. To make up for lost revenue he has introduced many arbitrary tarrifs against the EU and China, and these tarrifs are a burden on the poor and middle class; while they provide funds for extravagent shows and military spending.
Fortunately for Trump, his supporters appear to promote his economic policies regardless of the outcome.
5
The soul of Trumpism is government by publicity stunt. The tariffs are a first class publicity stunt, whether they accomplish anything or not. The key to their success is that they give the appearance of trying to accomplish something.
The rest is actual economics and foreign policy, neither of which is the long suit of this administration. One good indication of this is that neither Trump or his people have actually spelled out what winning this trade war actually entails. The usual goal of tariffs is to protect local production of goods, most notably those that are easily transported, but the complexities of bringing manufacturing back to the US involves more than trying to compensate for the willingness of the Chinese to work for lower wages and accept worse living conditions by artificially raising the price of their goods, at least to American consumers, as Dr. Krugman has frequently pointed out.
So how do we "win?" And if we can't win, what's really the point besides public relations and the appearance of supporting the working class?
1
Our political leaders are not playing with a full deck.
Their acceptance of church as equal or superior to state should bring pause to any person who accepts reason as a guide.
Clearly this assessment is not meant to cover Mr Trump who, in addition to missing a few cards, has no religious belief of any sort beyond himself.
3
I think Krugman is living too far forward the cerebral parts of his brain. He takes at face value that the tariffs are only about or primarily about trade policy. We all need to look deeper into other ulterior motives that actually have been fairly clearly signaled.
It is a mistake to think that Donal's pitching tariffs as painlessly filling up tax coffers means he is deeply ignorant regarding the nature of tariffs as taxes. He knows exactly what is doing as it directly contributes to his own personal bottom line, the one that counts.
In the beginning and largely up to the introduction of a universal income tax during WW1, excise taxes on goods, especially imports, and some services largely financed the American Federal government. While this was wildly inequitable it followed the practice of British Kings and their successor power centers in government.
Republicans have effectively eliminated income tax for the wealthy. Amazon pays nothing and that value flows straight through to the personal wealth and power of Jeff Bezos. Donald's family was never big on paying their rightful share of income. His sister had to resign her Federal judgeship under a severe taint of tax evasion.
These tariffs have the effect of shifting the income taxes not paid by the ultra rich and powerful back on the general population. They are a reversion. When Donald crows like a King about his revenues from tariffs, take him at his word. Despite distraction of "trade war" they are meant to last.
3
Another over the top article, Dr. Krugman !
And this one brought out a lot of those people who think they know more than anyone plus a lot of republicans who think they might go under (lose their money).
I am amazed by the tremendous swings in the stock market back and forth with every new here-they-come, oh-now-they-are-delayed announcement. 1-full-percent a day swings up and down.
Could it be that the entire trade war drama is really simply to make insiders with 6-hour advance warnings of these multiple back and forth swings hundreds of millions of dollars in insider trading profits each time? Real, real easy to do. Grifter government?
9
Another detail is that Chinese assembling factories are shipping their good first to Vietnam, where they are stamped 'Made in Vietnam', to get around the tariffs. I expect 'black markets' to flourish through this trade dispute with China.
6
In the last sentence of the first paragraph, please insert the word “American” before “policy decisions.”
"Trump agreed to a pause in the China trade war, holding off on new tariffs, in return, as far as we can tell, for some vaguely conciliatory language."
We can substitute "China trade war" with "N Korea nuclear program" and the sentence remains valid.
As to comparing McKinley to Hump, McKinley might know something but what does Hump know - other than grabbing money for himself, oh, yes, and women also?
2
What we forget is that all those English speaking white faces of the "sun never sets" days had the same effect on the rest of the globe that it did on Ireland. It didn’t make them happy.
The rest of the world isn’t full of white faces so they aren’t buying what we’re trying to sell politically. That alone should make it clear that trying to make the rest of the world sorry isn’t going to work anymore.
If we wish to win anything, we need to play nice with the other countries.
2
Another $16 billion bailout for farmers!!! So once again Blue States will have to bail out Red States for the decisions of a President elected by the Red States. Repeated bailouts like this are clear indicators that there's something amiss. It's enough that consumer prices are rising to pay for trump tariffs, but that taxpayers take a hit to pay for bailouts makes it a double-whammy
165
@John Townsend Ever consider that Donald is using these tariffs to bail out him and his rich buddies from have to pay their share of incomes taxes? Maybe these tariffs are not about trade wars except for flash and distraction. Maybe they are about making up lost tax revenue the he and the rest of the ultra wealthy and powerful have no intention to ever pay.
10
@John Townsend - I agree w/ your message, however, let's stop calling these people "farmers", like they're Ma and Pa Kettle.
These are huge privately-owned corporations and/or multi-billion $$, multi-national agribusinesses, like ADM and Del Monte. Just 4% of US Big Agribusinesses account of nearly 70% of US agriculture products. GoodBrain's Bailouts are nothing but more taxpayer-paid Pork for Big Ag.
MAGA!!
19
Coercion should be the last resort when trade agreements need to be updated, not the first, yet Trump has used tariffs almost exclusively. A " Great Negotiator," he is not.
1
Oh, you frighten me... as well as all my Trump- supporting friends. We sure wish we had listened to you when you predicted the collapse of the economy when he was elected.
1
@Cliffie. Yep, the economy is collupsing all around us, indeed. Oh, wait, it is the ITALIAN economy. The US one has reached new record highs.
1
Trump is still riding President Obama’s ecomomic coattails
2
Trump’s trade wars, are failing for whom?
Wilbur Ross who made his earlier fortune on INSIDER INFO of coming steel tariffs from George W's Commerce Secretary? Who, this time as Sec, was caught lying about his divestures?
The Koch brothers of Koch Industries of Georgia Pacific who benefitted from one of the first Trump tariffs, Canadian softwoods?
Robert Mercer, wealthy hedge fund owner, investor in Cambridge Analytica armed with our FB data, and Brexit backer?
Ivanka Trump who received her Chinese patents between beautiful chocolate cake and daddy bringing-on the "winning".
Mary Barra who cut Lordstown loose as soon as the ink dried on the US-Mexico-Canada Agreement, but before very stable genius changed his mind?
The law firms who specialize in submitting waivers for companies losing their supply chain?
The agro-corporations looking to expand on the corpses of the family farm?
9
Trump not only overlooks the global exchange of components or goods, he fails to see that America's percent of consumption of the world's resources and it's pollution on the global environment should mean that we also owe a responsibility to our global community. Being the biggest and most powerful should also come with ethical and moral responsibilities for those you take from, at home and abroad; unfortunately, narcissism and imperialism blind this administration.
5
So how is your forecast that the election of Trump would tank the stock market and it would never recover ?
3
It seems that the Republicans and Trump have so thoroughly debased our position in the world, that it will be difficult to regain our position even after we see the back of Trump.
Perhaps we really need an amended Constitution, one that replaces the undemocratic Electoral College and Senate with institutions more popularly based, such as the House of Representatives. That would change the national political climate in a way that might be less divisive.
But that is a real long-shot. It seems that things would have to get even worse than they are now for there to be sufficient popular support to make that happen.
4
@Democracy / Plutocracy
Just because something is undemocratic doesn't mean it'd be better if it were democratic. Shall we have ochlocracy? Repeal the Seventeenth Amendment and do this: https://www.foreignaffairs.com/articles/united-states/2019-04-16/dark-side-sunlight
The sprawling bureaucratic state, ancestor of the New Deal, has allowed regulatory capture and rent-seeking to run amok. It has -- has it not? -- allowed those with the best access to government to bend government to its desires?
Much as Krugman loathes George Will, I'm going to quote from his book: "Government constantly expands under the unending, intensifying pressures to correct what it and its many client groups disapprove: the distribution of wealth produced by consensual market activities. But as government ... presumes to dictate the correct distribution of social rewards, politics becomes a maelstrom of infinite appetites in competition for finite resources. The result is ... social strife, not solidarity."
Will also notes the obvious, which is that "redistributive fiscal policies have been minor factors in the egalitarian gains of modern society. ... Time was, the upper crust rode in carriages, the lower orders walked. No such dramatic difference distinguishes [a Mercedes from a Chevrolet]."
Of plutocracy, Will says that "America's problem is not that wealth is the primary determinant of political power but that political power is much too often the determinant of wealth." Much of this is correct.
1
Dr. K,
When I am driving around, I listen to C-Span and by chance heard President Trump hold an impromptu press conference on the South lawn of the White House with a waiting Presidential Helicopter screaming its turbine sound in the background. Clearly the President believes that his approach to trade policy is achieving spectacular results. He waxed on about how his trade policies were achieving "historic" results for the economy and cited the highest stock market valuation in history, the continued low unemployment numbers and the evidence of the "spectacular" job creation numbers. He also said that Obama and the Democrats had allowed countries to get away with murder but he had halted their taking advantage of the U.S. He also cited that we were making "Billions" off of tariffs.
I agree with your position on trade but I think the economics profession has not adequately made the a fortiori argument to refute the President's argument. The case needs to be made from data that this approach to trade will in the short term hurt our comparative advantage in agriculture and in the long term harm global markets for high technology goods like pharmaceutical products, medical instruments, and aircraft.
I also believe it is important to stimulate the invention of systems that will ease he transition to a non-fossil energy future. We are making progress but we have to amp up the development and application of technologies for generating very low-cost electricity,
4
In trade war, the winner is who lasts longer, not who is suffering more. It is too early to say who is loosing or winning.
The way Trump sees it this is finally making money for the US Treasury in the form of the billions in customs tariffs he is bringing into a 20 trillion debt. And he does not get that these get added to the price the US consumer pays. China is not paying these tariffs.
And since this began, has China flooded the market in anticipation of even higher tariffs? No.
Corporate America has flooded China with orders in anticipation of higher tariffs. Increasing the trade imbalance.
What a beautiful system.
3
Dear Paul,
Trade wars, whether real or imagined, are not supposed to be handled by the executive branch, but rather by Congress. Why are you not criticizing them for delegating that power?
2
Then how do we answer challenges from China? I would like to read professor Krugman's prescription. Will " good will and friendly trade relations " altitude work? Or we simply dismiss such kind of challenges.
3
@Wood
What works is what Trump destroyed -- the development of a massive alternative trading partnership that valued human rights, paid higher wages and respect for each other. It would have isolated China instead of isolating the United States, increasing the trade defect and imposing a tax on US consumers. It was called the TPP. Too bad.
6
But, but Trump told us we are "Winning!" He wouldn’t lie to us would he? Not more than a few thousand times anyway.
1
Trump can boost the economy during election season by declaring victory in his trade wars.
Weeks into his presidency, Trump called General Flynn at 3:00 AM to ask which would be better for our economy, a weak dollar or a strong one. Flynn demurred that he was only a general & the president should ask an economist. This is the president who brags all the time about his batchelor's degree in Economics from Penn's Wharton School.
Trump's core don't vote for Trump because it is in their own interest - his policies are almost always in their worst interest. They vote for Trump for two reasons. First is that they glory in Trump's willingness to poke a stick in the eye of the two-party establishment that they hate. Second is that Trump affects to hate all of the same groups they, themselves, hate. This gives them the ability to come out of the shadows & proclaim their hatreds from center stage, with the president to back them up. As long as Trump encourages this fear-based hatred & rage, they won't mind him sneaking into their house, emptying their wallets, & stealing their kids' piggy banks.
8
You’ve hit upon the strategy of making voters irrationally fear and distain others, and dissociate from our communities. Vested interests like the Trump admin, Bolton, the NRA and Fox News spread fear and uncertainty. So they say we can be safe if Daddy Donnie Trump protects us and if we buy a few more guns. This hate and fear mongering for profit and power must be stopped. Fear not my friends. Man up, wise up and fear not.
4
@Beartooth
Now that's a scary thought.
1
A common negotiating position with our allies, including the EU, Japan and the Nafta countries, to effectuate changes in Chinese practices which violate WTO and in the WTO rules themselves would also be preferable.
2
@James F. Clarity IV
Do you think the Chinese would go along with that?
I have my doubts just as I cannot see North Korea giving up nuclear weapons (the very thing that put them on the world stage). I also don't see North Korea changing its behavior from it's past behavior other American Presidents thought they could deal with North Korea and what happened?
I caught the BBC Hardtalk interview with Florida Senator Rick Scott yesterday I was gobsmacked by some of his talking points including that the International Deal with Iran regarding enriching uranium didn't stop their destabilizing efforts and their support of terrorism. That deal Mr Trump walked from had nothing to do with anything other than creating nuclear weapons. Mr Scott also said past Presidents had given them a lot of money as I recall the money given to Iran was their money that had been tied up by the sanctions.
I just shook my head in disbelief with the distorted spin I was hearing.
3
These policies appear to be enacted mostly for electoral reasons, to please the so called "base" which seems to love the mafia boss style and bully approach.
The actual effect of such policies does not appear to be of much concern at least in the short term. The base certainly does not seem to understand, or care, or both. The bullying just makes them feel good, in that it makes the powerless feel powerful by some form of bizarre proxy.
This crude populism and its devastating impact on issues like international relations, climate, biodiversity, security and peace is not limited to the US I am afraid.
We have our own share of growing problems right here in polite Canada.
Its hard to pinpoint the exact time, or the cause, but western world has really changed over the last couple of years.
Putin was bragging that liberal values are a thing of the past. he should know, he seems to have contributed to this in a major way.
I sure hope that this episode of collective insanity is temporary.
7
@CanadianDad
I have a sneaking suspicion that "liberal values" are not a thing of the past. They may be a little overshadowed but I truly believe they are still there.
I hope so...and that they may suddenly reappear.
2
Sanders was also trashing Nafta, TPP, and pushing for protectionism..even Clinton was caving although I am sure she was lying. But I have a funny feeling your response would be a gentle scold.
3
Trade wars are dangerous and we never know how will end.
5
Stable genius trump is abysmally oblivious of one underlying circumstance in the world economy. Mexico and China are low-cost producers competing against a high-cost producer, and the result is predictable ... a glaring trade imbalance. In due course high-priced US workers will find nobody's buying (including americans themselves) the stuff they make simply because there are lower priced alternatives. Trump’s essential isolationist trading policy only aggravates this situation.
6
China transports its goods subject to tariffs to other countries (Vietnam, Taiwan, Mexico, et al) where minor if any processing occurs, then new country of origin certificates are falsified to assert the intermediary country is the country of origin. The fraudulent certificate costs hundreds of USD$. Trivial. This rebranding is scamming the tariffs. So who will win the trade issue? The wily panda.
2
Chinese firms engaged in transshipping advertise openly in China. Different kinds of products are recommended to be shipped via different countries. Malaysia, Thailand, Taiwan, India, Bangladesh, Indonesia, Hong Kong, the Philippines, Sri Lanka, the Virgin Islands, Cayman Islands, and Bermuda are intermediary countries and territories that are usually listed by the companies. The Chinese products are laundered to appear to come from countries other than China, then exported to the US, escaping anti-dumping duties and tariffs. Big business. Transnational crime.
3
equally, your own utterances and predictions "illustrate the arrogance and ignorance that so often drives crucial... decisions" and why everyone got the 2016 wrong in the first place. Perhaps we need to stop predicting and extrapolating conclusions from old and outdated models. The world in doesn't work the same way as it did when various "policies" (including journalism, polls, communication, etc.) were established. Give the man (Trump) a break. Not everything that he does or says needs to be automatically put down and derided. Even if he is (I don't know) a "bad" president, not everything he touches is bad.
6
If the world doesn’t work the world worked ten or twenty years ago, why exactly are we spozed to “give a break,” to a President who talks and acts like it was somewhere between 1898 and Smoot-Hawley?
4
@Philip
I find Mr Trump offensive but I agree with the intent of your comment. You would think all this jumping to conclusions would have caused exhaustion.
Apparently not too many are having too much fun...
3
Yes. They will because the rest of us are paying them welfare so that they will continue to vote for Trump
2
@Joe
That's a harsh comment just as 30 years ago folk on welfare all lived in major cities and the rest of the country supported them.
I don't believe in harsh comments unless they are backed up by research and facts.
1
80% of our generic medications get produced in India, where the drug producers have the privilege of telling our hard pressed FDA inspectors when they can turn up, and how long they can stay. This includes medications taken by virtually all American baby boomers. Before we discuss our dire need for athletic shoes and cheap tee shirts, can we discuss globalization and medical supplies, including artificial joints? This has become a national security matter, so please include this in any conversation about global trade.
2
Wrong. Over 80 percent of medicinal drugs we take come from India AND China. Neither adhere to what were once called Good Manufacturing Practices (GMPs) in the USA before Big Pharma started moving production to those developing countries. None of the base chems and ingredients escape the ubiquitous heavy metal contamination in the environment, just like imported juices, spices, fish and produce like ginger and garlic. All contaminated.
2
Just read in my local paper that tariffs are killing the lobster industry. Only the lobsters will come out ahead here.
5
@Robin
That's probably a good thing.
2
@Robin
That could be a good thing!!!
1
China will win for a lot of reasons: no voters to placate; no lobbyists to placate; no political parties to balance things out or to cater to; no money donators to consider; no official scorekeepers to spread the bad news through a non existing independent press; and trillions in the bank to fund a long battle. Besides the fact that they don't have to satisfy voters or stakeholders. They don't have any.
7
@M.P. CrugnaleAre H
Have you ever heard of the "mandate of Heaven"? If Chinese rulers go too far astray, they lose it and the regime changes.
@Mitch Lyle
That was the emperors. The communist party controls China.
It probably would have been a better approach to adopt measures the WTO would be more likely to approve such as imposing tariffs and duties on subsidized goods and those made with stolen or coerced intellectual property, as well as imports which threaten an established definition of national security. A more focused approach would have been more likely to pass muster under established WTO rules, less likely to disrupt international trade relations and done less unnecessary damage to the world's economies and global commerce.
4
@James F. Clarity IV
Do you think most of our politicians can focus beyond the next 10 minutes?
Trump does what he knows ~ he will bankrupt this nation morally and financially, and he will then walk away and leave others to clean up his mess and pay his bills. It is the only scenario that Trump knows.
17
Of course higher tariffs will increase the cost of certain consumer goods.
But is having access to the cheapest possible consumer goods a worthy trade off for abolishing millions of American middle class jobs?
Because if that's so, then drop the hypocrisy and let the free market rule and open your borders to the world.
4
@Michael
The " middle class" in America has been under attack for a very long time. That's a part of the problem.
Most people I know want to pay as little as possible for as much as possible.
I find it interesting that so many well-educated business friends are happy that Trump is finally, "taking it to the Chinese." Then some of their deals are canceled because of the friction now incurred by previously free flowing Chinese investment capital.
I've met a lot of Chinese businesspeople now working in the US. They are not secret spies for the government. They are in the game to make money and have a good life. The best way for countries to break down fear and mistrust is to build relationships and trade. There will always be issues, but engagement is far better than this ham-handed nonsense.
8
No, Trump isn't losing, WE are.
6
After over two years of commentary and comments by "us" I still find that mostly all the conversation revolves around the idea that we are dealing with someone in the WH who can or will eventually change the trajectory.
There is a NYT video named "Slomo" that shows a doctor referring to a personal delusional system.
The DSM-IV describes delusional disorder has four sub-types. The one I refer to is "Grandiose"
Our president would be under a doctors care if times were normal.
https://en.wikipedia.org/wiki/Grandiose_delusions
5
That's because, like a Televangelist. Trump is promising his base, to keep waiting just a little longer, before they see GREAT benefits.
What a lying con-Man. His past business deals show the same. He's just now doing it at the NATIONAL level.
Disgusting.
7
Much like the racist ploy to assuage poor whites that no matter their hardship, they are at least still better than blacks, the "trade war" only needs to convince some people that no matter how it hurts them, it's hurting the target countries more. If the goal was mainly to lash out then it has been achieved. By this yardstick, "winning" is simply being content in the knowledge that others are suffering more that you. Are we great again yet?
7
@EPI
And that's truly frightening.
There is no doubt that Chinas trade practices are abusive and needs to change. The problem as I see it is that the issue is far more than financial to China. As they freely take our intellectual property in all fields, national security of both countries are substantially affected. As Chuck Shumer says, Trump should "hang tough". If there was ever a time for the US to push back its now when the economy is booming.
6
If Trump were not intellectually among the bottom 20% of the population - perhaps erring a little in his favour there - he might recognse the inferiority of his economic skills and allow Mr Krugman to advise him. But of course he would rather take the advice of other intellectual dwarfs (who may or may not have America's interests at heart -"my country wrong or wrong".)
Of course you would have trouble finding any reasonable economist to support the use of tariffs for whatever purpose, but among Trumpists the idea probably has a certain appeal because of its apparent simplicity. And that simplicity is again what appeals to poorly educated non-thinkers like Big Chief Donald.
Despairing Americns can console themselves with the prospect of the likely future Prime Minister of the United Kingdom, who is equally incapable of logical thought despite having obtained a degree from Oxford University - this may distract attention from American despair regarding their Great Leader.
7
At least a significant portion of the electorate voted Trump in. We are about to further humiliated by having Boris as PM after the Conservative party elect him leader with less than 160,000 white men over 60 as members. The frustration of knowing what is coming and being utterly helpless to stop it is agony. This is a man who, similarly to Trump, is incapable of speaking the truth (having been fired as a journalist for making up quotes and kicked out of alimentary for lying). A man who, again like Trump, does not act in anyone’s interest but his own, the leader of the Brexit campaign even though he is personally pro-EU and I fear, is potentially more dangerous than Trump. Although a fool, the man is significantly more intelligent than Trump.
1
Everyone has its value and the right of whom he//she likes; however we should embrace the democracy. Professor would like to witness the Communist Party of China to win the "Trade War". Behind the scene of this war, the rising economic superpower with totalitarian regime has ambitious strategy to manipulate or changed the order which has been established after WWII. Though many of Americans do not agree with Donald Trump, the world has to pick which is the less evil. One thousand dollar more cost is tough for many people but the rich can help. Looking at two million Hong Kong people fight for their rights with their hands, money for them is not the first priority. Please refer the article of " Bravery Hong Kong shames the west,
3
Of course the "trade war" is working. For the first time we are hearing companies reconsidering/ rearranging their supply chain "made in China". And that is an important step by itself. No one could imagine that few years ago.
Those who criticize president Trump's strategy have nothing better to offer or they just repeat the failed chants from the past. All they cry is the "consumer is going to pay the price".
They don't care about national security implications of this dependency of foreign manufacturing.
7
Yeah, they’re shifting it all right. To countries like Vietnam, where they were already moving because costs in China were rising. Or to China, like Apple just announced.
And if we’re so all-fired fussed about “national security,” maybe notice that Trump a) personally owes China a big chunk of change, b) annlunced that he was just kidding about Huawei.
National security, my back pocket.
12
@Aragon
I would recommend studying some stuff about supply chain management...and example:
https://www.businessinsider.com/boeing-787-dreamliner-structure-suppliers-2013-10
Trump disrupting supply chains will not work out well for manufacturing.
4
Scroll down and watch the NYT video of all of those unemployment auto workers in Ohio.
Can you hear my laughter?
1
Well Paul, Trump & his "Trumpists" live under the delusion that the US once bent the world to our will in every way we wanted to. Now they think it's time to do it again. Good luck with that! What is overlooked is that the globally interdependant economy has improved the lives of billions. It will never be easy to smooth out the inequities in that system, but bullying is the least likely path.
5
@Bob
I have to agree with your comment. That happened very fast and cannot be undone. Before this came about we were already consuming products not created locally.
That was an innocent start but look now. Just as we are all the same species we are more connected than ever.
What has been amazing to me to watch is someone I know who likes Trump's trade policies, and cheers, "Yeah, now we are really sticking it to China!"
And the same person refuses to consider, as the article pointed out, that this is costing our own consumers about $1000 each a year.
So, I wonder, Trump supporters, if a grand doesn't mean so much to you, how about giving me the $1000 a year and I'll write a nasty letter to the Chinese about their trade policies in general. It would do as much good toward moving them where we want them to go and make me a lot happier.
6
@mouseone
I like that!!
Wish I thought of it...
Oh well cannot win them all...
40% - 45% of the electorate isn't guided by reason, logic, or facts. Their north star is their "beliefs". They believe DJT is succeeding at all things, despite their eyes tell them otherwise. Thought based views can be debated and may evolve based on new information, while beliefs cannot be swayed.
5
@Basic
As any Critical Thinking can tell you about religious dogma.
This is not just about Trump however. As we focus on him we're allowing the GOP to get away with any number of things we aren't being told about. I really think that Paul Krugman and some of the other pundits need to start to hold the GOP more accountable for what they are letting Trump do and what they themselves are doing to Americans.
5
@hen3ry
Yeah they are dismantling any and all protections we have.
The tariff and foreign policy should be about more than trade and money. Its aim should be to constrain and change an evil Chinese Communist Party. It is a fascist atheist totalitarian anti-Western machine that kills and tortures its own citizens, covertly and overtly sabotages democracies from Canada to Australia to Taiwan, ignores international norms, ruins the environment wherever it goes (deforestation in Africa), forcibly extracts organs for prisoners of conscience for state profit, steals anyone’s intellectual property, reneges on treaties and agreements, kidnaps and jails citizens and foreigners, interns Muslims and forces Muslim children from their families, sinks Philippine fishing boats in the South China Sea and leaves the fisherman to drown, burns Christian churches and bans religion. It offends me that our leaders ignore these important matters and focus on money. It offends and sickens me that we are so morally bankrupt that the issue is about more equitable trade with a horrific government, and not about its crimes against humanity and the world community.
4
Nothing wrong with being atheist. In fact, the US government is supposed to be secular.
1
You should not be compelled to renounce all faith and promote atheism. Falun Gong practitioners by the hundreds of thousands have been imprisoned, tortured and killed for their organs in a transplant-for-profit state-owned enterprise over 20 years. Few atheists would condone that genocide of a religion.
1
Nobody should be surprised by this. It is how trump has always operated. He thinks he can strong arm CHINA because he's a mafia boss.
4
@Jenifer
I don't think Mafia Bosses could deal with China.
On my NYT page the top story on the right is the US gaining 225,000 new jobs in June and on the left it's this column about Trump losing the trade war. I guess there truly is a right-left spit in the USA.
2
That persistent 40% Trump supporters puzzled me too. How could people be so dumb?
Finally, I realized that Trump 'genius' has been his ability to touch the deeply held and long suppressed xenophobic, anti-elite, and tribalistic feelings within these Americans. I know this is not a pretty portrayal of the country.
In politics, emotion always trumps logic. Dems have to tract carefully to win back power. It will not be a cake walk. Trump's hold on the 40% is real.
5
You don't understand. The tariffs and trade wars have nothing to do with policy or economics. It's just about Trump being able to wield power and make people jump. This then generates news coverage. This coverage is his small minded way of feeling successful and powerful. If we could just ignore most of what he say's and does, he might shrivel up and blow away.
3
Good article. But Krugman forgot one important argument why China is not going to budge no matter what - they think to themselves: "We can ride this out for another 1.5 year, after which this clown will be gone anyway". Lets just make sure the Chinese will be right about that, when we stand in the voting booth come November next year.
3
Trump's version is so incredibly stupid, it blows my mind. Anyone who has lived in New York City for years knows what a bottomless pit of ignorance this wimp of a man has. It is also why over 90% of the people in Manhattan voted against him in 2016! A historian will have to show me a more staggering margin of defeat by the same people who know his schtick as a con man better than anyone else.
9
Krugman is measuring success based on benefits to the US
Nothing Trump does is for the benefit of anyone not named Trump.
His trade policy is aimed at one result - getting re-elected. He is doing what he promised and whether it is a good idea or has a good outcome for the country doesn’t matter.
All that matters to Trump is getting re-elected because there is no greater failure than a one term president.
There is always a loser in an election but for an incumbent to lose is historic and remembered forever.
It means that you were fired.
So policy, ideas, the future - none of that matters to Trump.
And god save us if he wins as he will have no interest in anything and leave everything to the hardliners like Bolton and Pompeo and his vapid family.
5
@Blue
But but he trotted out our Military like toy soldiers on July 4th 2019 to show how great we are!
To compare Trump's trade efforts to the Iraq invasion in any way is lunacy. They may not work, but no one's getting shot, bombed, terrorized or invaded; and we're not making a mistake that will take generations to repair. All we have to do is change the policy and no big harm is done. Mr. Krugman would help himself if he could stifle his hatred when he writes his columns. I couldn't get beyond the first sentence.
2
@rpe123
Uh huh so making folk pay more for items they feel they need is okay?
Right!
You got to be kidding if you think a farmer will stay loyal to trump if he/she is loosing the farm.
I appreciate this article’s calm discussion of the nationalist arrogance that links Trump’s goofy trade wars to our goofy policies in the Mideast.
It’s not just the denials of realities, such as the reality that the Big NAFTA Revamp didn’t really change much of anything and is just sitting around over at the Senate.
It’s the craziness of thinking that if we strut around and bellow at every country on earth, they’ll all meekly fall in line. That’s not just theoretically crazy, it ignores the way that China and others are simply maneuvering to build their own alliances and expand without us.
Or if you prefer, Hillary Clinton’s worst decision was to abandon TPP diring the campaign. Unlike Trump, unlike Sanders, she knew better. And she had a serious chance to stick up for reality.
2
That was the objective.
It is the new: "Mission Accomplished".
At the beginning of Mr. Krugman's excellent (as always) column, he 'compares' the stupidity of dick cheney's notion that, upon the U.S. of A.'s invasion of Iraq "we will, in fact, be welcomed as liberators" and the stupidity of donald j. trump's "trade wars are good, and easy to win."
Ironically (?), that occasions the occasion of my first-ever comment in trump's favor … and it is this:
At least trump has the excuse of actually being stupid.
5
@Thomas Murray
Are you saying Mr Chaney is smart? In comparison to who and what?? I remember that comment from Mr Chaney and how so many said he had to know what he was talking about. I kept my big mouth shut as I didn't agree with Mr Chaney as the middle east has a different world view from Americans and other western countries.
Can you imagine playing chess with trump? How many moves would the game even need? 10? 12?
I doubt he could even figure out most of the pictures in my son’s old “connect the dots” coloring book. Seriously.
To rely on this man to plot a policy course is stupid.
6
If trade wars reduce American consumption of plastic junk then good...good for the natural environment.
2
"Oh, and did I mention"
Fess up Mr Krugman. was that really an afterthought?
I seems like everyone and her brother has for the last year or two has to stick that in as if it wasn't planned from the beginning.
I'm so tired of seeing it, that I'm actually writing this.
2
We are not in this mess because of t rump's voters, or even the spineless members of his party sitting in Congress.
We are in this mess because a lot of democratic voters couldn't get excited about having a beer with Al Gore. So they voted for the most boring human being in America, Ralph Nader. Or the second most boring: George W. Bush. Or they didn't vote at all.
In 2010 democratic voters decided they had done enough by electing the first black president so they stayed home and allowed the koch bothers' tea party to bring progress at home to a grinding halt.
Then 2 1/2 years ago a bunch of democratic voters decided that they couldn't trust a woman who had offered the Nation a lifetime of service and commitment, despite the fact checkers who wrote she was more truthful that Bernie Sanders, and certainly more so that t rump.
Now, despite two stages full of smart and compassionate people running for the Democratic nomination; we are wringing our hands about some proposals to eliminate private health insurance premiums.
If We the People are too pure, or too stupid, to get out our votes in overwhelming numbers to take our Nation away from the autocrats and wanna be crime bosses currently flushing US down the sewer then we will deserve the tyranny that will be imposed on us.
7
>>Trump: “...trade wars are good, and easy to win” will ... alongside Dick Cheney’s prediction, on the eve of the Iraq war, that “we will, in fact, be welcomed as liberators.” That is, it will be used to illustrate the arrogance and ignorance..." of Republicans.
$1,000/month for the average family. Setting aside the trade war angle - isn’t this possibly a Trojan horse to raise taxes on Americans while blaming foreigners?
3
...and we know how it ended for McKinley.
Every single Trump supporter now gives Trump a free pass on the budget deficit and debt. It is growing faster than the ability to service the debt.
If one is old enough, no biggy.
1
@glennmr Don't worry. Republicans will be right back to campaigning for a Balanced Budget Amendment the second a Democrat is president.
5
Given the record that whatever this writer predicts, the opposite turns out to be correct, I now think Trump will "win" the trade war. Expect a resolution with China fairly soon.
2
I keep coming back to the LBJ quote: "If you can convince the lowest white man he's better than the best colored man, he won't notice you're picking his pocket. Hell, give him somebody to look down on, and he'll empty his pockets for you."
6
On target as usual ! The damage this president has done to the reputation and trust, which is built over decades, may never be rectified. Such is what happens when we allow a madman to lead the country.
2
Well , another trillion dollar tax cut for the 1% (including the Trump-Kushner crime family) maybe needed to fix the problem along with some contracts to help Mitch McConnell's wife Sec. of Transportation "earn" some more money.
6
The thesis of this article is that Trump will spin this trade war as a victory no matter how long it goes. His base of supporters will agree with him no matter the economic cost to them.
It may take years to truly assess the negative impact this trade war will have on Americans. Donald Trump will probably be out of the White House when that time comes. Rest assured, however, he will direct the blame at someone else.
8
Even if "the average household will end up paying more than $1,000 a year in higher prices" those same households will have saved thousands more over the past generation while millions have been put out of work as a result of our manufacturing capabilities moving overseas. We may soon be in a situation where we'll be depending on potential enemies to produce steel for our military hardware. Is this the legacy we want to leave for future generations of Americans, where they have to tiptoe around China in order to get basic necessities? Should we care only about the state of our personal pocketbooks or about our future potential as a manufacturing behemoth and leader of the free world? Polls have often been wrong and not reflecting the true mood of the country. Remember the shock the liberals got in 2016 when they realized their polls were wrong? Those living in cities are insulated from the realities faced by those in the other 98% of the US. Let the president do what's right for the US. 98% of America (that 'the deplorables' call home) can't be that wrong.
2
I didn’t get a shock about the 2016 polls being wrong, because they weren’t. The national polls gave Trump about a one in five chance of winning, and they nailed the popular vote. Maybe a dose of Nate Silver?
I mention this because you’re generally relying on phony numbers, and phony facts, and apparently refusing to look at real numbers and real facts you dislike.
One example: manufacturing jobs moving overseas. Should NAFTA and others have been written to protect our workers better? Sure. But a rock-bottom basic of capitalism is this: cut costs, maximize profits.
Those jobs went for the simple reason that a company could make stuff cheaper in China, and therefore make more dough for stockholders. And they went because here at home, a company could buy machines and produce stuff cheaper, and therefore make more dough for stockholders.
Trump’s trade wars, Krugman is pointing out, are crazy because that simple reality has led to a sitch in which our manufacturing is tangled up with their manufacturing, in ways we can’t just take apart. Supply chains, in other words.
Please try to stop getting played like this. The people who told you that you owed it to your country to give up wages, health care, a decent life, don’t care jack about you, and they absolutely do...not...care about this country’s future.
7
paul, have you considered, this administration is gaming the american people / business to control the timing of the next down turn. Riding to glory late this year with quick trade peace everywhere after forcing the fed to lower rates. Staying top of daily news cycle while the expansion prolongs until 2020 election is won.
2
The impact of these trade wars won't resonate with the GOP until we see a decline in the economy and the stock market. Today the job numbers are up, the market is at all time highs, and unemployment is low. Against that backdrop, the trade wars are just background noise.
2
Too bad the sentiments expressed here weren't said by Hannity, Limbaugh, Carlson or Coulter. Since Trump reverses his course if he hears their disapproval, a single word from them would lead to an end of the tariffs wars.
Perhaps soybean farmers can send a petition to Fox and Voila! problem solved.
5
@Tom Q
Looks like those soybean farmers have another choice for their livelihood:
Beyond Meat Fever Turns the Tiny Pea Into America’s Hot New Crop
https://www.bloomberg.com/news/articles/2019-07-03/beyond-meat-fever-turns-the-tiny-pea-into-america-s-hot-new-crop
Voila! Problem solved.
1
The last major farm crisis, in the 1980s, was a real tear jerker. The next one will more resemble the auto industry bailout, with CEOs from ADM and Monsanto arriving for congressional hearings in their private jets. Then too, Detroit, Flint, Toledo, and Lordstown were all represented by a total of four senators. Look at a map. There'll be many more than four senators representing Big Ag.
You can talk all you want about trade wars being harmful. You can bolster your case with facts and figures. But Trump voters still love Trump. Even the farmers in the Mid West who could lose their farms, homes, and families to the trade wars will stay loyal to their Redeemer Trump.
221
@Babel And the larger farms are using loopholes in the Ag Department's aid policy to bilk taxpayers out of 100's of millions of dollars to cover their losses.
82
I have heard anecdotes on CNN that farmers are no longer loyal Trump voters
20
@Babel - And this undying loyalty is based on one thing: Trump's embrace of the birther movement. That's all it took to earn him the "Redeemer" label.
25
If Trump really cared about China’s infringements on intellectual property rights, he would pursue solutions through multilateral trade arrangements, which have proved the most successful means for creating fairer international trading schemes — arrangements like the WTO, GATT, G8, etc. But Trump likely has no understanding of how these trade agreements have worked, much less how he could use them to create international pressure on China. And working through such channels actually takes time, work, and sustained attention...While this is a president who is always lazily looking for the quick and easy solution, even if it won’t actually work.
259
@Koyote China has openly flouted all those trade structures, which are totally unwilling and unable to reign its abuses. They don't just take time. They don't work at all.
3
@Chris Gray
Cutting to the chase. Diplomacy is slow complicated, and moving one piece affects others. Neither the big Trump nor the little Trumpettes care about or can understand such matters.
Put people in cages. Boast about it. That turns them on.
3
You nailed it!! He has not the skill because he came from a very small family-owned business where he muscled resolutions that all went his way.
3
Trump is either playing an extremely cynical game banking purely on the image of fighting for "America First" while irritating liberals as often as possible, or he is extremely bad at game theory. The answer might also be "both".
Farmers cannot play "spontaneous trade war" very well, and not nearly as well as those in most other industries. Even though China exports more to us than we do to them, much of what we export is seasonal, has long processing times and only so much demand around the world - people will not suddenly consume twice as much edamame if China stops buying our soybeans. The pain in immediate value of goods may be greater for China, but the longer term economic costs - such as forcing some farmers out of business - might make the results closer to even.
Another president who did not pick a fight with everyone over everything might have been able to keep Huawei properly quarantined or excluded not only in the USA, but among all of our key allies. As is, there seems to be real political risk for cooperating with Trump for any other democracy. Such cooperation might encourage his next "ask", and odds are that "ask" will be intolerable. It is much better to consistently tell the likes of Trump to buzz off even it means missing out on something useful once in a while, and this is probably obvious to everyone by now.
204
@Alan wrote: "The pain in immediate value of goods may be greater for China, but the longer term economic costs - such as forcing some farmers out of business - might make the results closer to even."
Beyond Meat Fever Turns the Tiny Pea Into America’s Hot New Crop
https://www.bloomberg.com/news/articles/2019-07-03/beyond-meat-fever-turns-the-tiny-pea-into-america-s-hot-new-crop
That's the funny thing about commerce, nothing stands still. Looks like the farmers aren't going out of business.
1
This gem sums up America extremely well, and it's not just those who are in power.
"...unable to grasp the reality that we’re not the only country with a distinctive culture, history and identity, proud of our independence and extremely unwilling to make concessions that feel like giving in to foreign bullies."
I'll never forget meeting an American in Europe who was completely floored to learn that Canadians and other nations don't all celebrate America's Independence Day. She was an educated adult.
267
@Rebel in Disguise
Learning that Canada does not have a Fourth of July she would wonder what comes after July 3rd. :>)
12
@Rebel in Disguise
We’re so culturally insular that it seems as if many of us have lived all our lives on a deserted island.
28
@Rebel in Disguise
So you think it's ok to judge the entire country on the basis of one person you met in Europe? She may have been partly educated but certainly not intelligent. Having a degree means that you can regurgitate information that's been fed in, just like a computer. Intelligence is different which is why scientists are having such a hard time with artificial intelligence.
11
Read the analysis in https://fivethirtyeight.com/ by Julia Malone. It breaks down the Jobs report in an understandable way
Idiocy. It should come to a purulent (pus) head just about the time of the next election. Better pop that baby, right now, and put some medicine on it. It's gonna take some time to heal. There will be a scar.
Perhaps Trump can win the trade wars he started by using the Sherman Tanks, which have not been used by the Army for over 40 years...
5
I agree that arrogance and ignorance are correlated, but which is cause and which is effect? Or is it sufficient to be a Con Rep, in which case they mutually cause and reinforce each other?
Now for a Lib Dem ... !
1
@San Ta
Wow are you commenting on our political system or the folk trying to get thing's done in it?
I learned many many years ago it's easier to criticize than it is to attempt to correct things.
Even if you are convinced you are right many others are convinced they are right so compromise is usually how things get done. Hopefully most folk will benefit from the compromise and thing's will improve.
Ho-hum. Another day, another anti-Trump opinion piece by Krugman. . .whose lost credibility except for his OWN base at the NYT. The reason? Mr. Krugman can't even bring himself to admit that something good has happened ("robust" monthly job growth) that Mr. Trump is credited for. And please don't tell me he wouldn't have credited Obama for it.
4
He is credited for doing nothing to kill the Obama job growth trend, but he's trying.
3
@Jonah Giacalone
I see the same as you.
Of course Trump is losing his trade wars.
Look at his personal life:
• 6 major bankruptcies.
• 20+ failed product lines.
• 4,000+ lawsuits for failure to pay.
• Trump University scam.
• 2 failed marriages.
• Cheating on his 3rd marriage.
• Massive staff turnover, with criminal overtones.
• Profound ignorance and lack of acumen.
Trump was destined to fail. It has been his life story.
17
Time to go back and read a few more books -- preferably up-to-date thought
krugman has been so wrong about almost any economic policy, whether obama or trump, that you gotta hand it to him that he keeps on preaching. acc to krugman, we were supposed to have a stocj market crash and worldwide economic holocaust by now, and the tariffs were supposed to have decimated the economy. when obama stimulus of almost 1 trillion didnt work, he claimed it should have been 2-3 trillion.
check out today's jobs numbers...
whatever...tell us more, mr. krugman.
4
Companies are drying up the stock markets with stock buybacks.
2
You know something? This well written, persuasive column is completely irrelevant to Trump and his seeming backers in Congress and across the nation.
They do not care about facts. In fact, facts are bad -- something for losers. Trump proudly lies about nearly everything, and while many object, just as many seem to revel in lying.
Americans cannot re-take control of this nation based solely on factual arguments. We must also burn with anger and become totally motivated to throw the bums out of office in 2020.
The time for blasé indifference is over. Trump's opponents need to expose him and his regime as a corrupt, lying, scandal-ridden perversion of responsible government.
8
Anything that harms the international economy helps the environment. This also will make internal companies less profitable which should lower CEO pay. It may even lower the wage gap since it will be less profitable to employee cheap labor overseas. Consumer products will cost more and discourage rampant consumption.
It will slightly lower our standard of living while strengthening our society. The real losers are marginal Chinese and Mexican workers. I'd rather help marginal American workers. Neither party supports my position.
1
The words “trade war” define themselves. No one wins in a war no matter what the war is about, creating enemies, causing pain, suffering, hardship and death. Fear and mistrust are the only positive outcome. The real enemy is climate change, unfortunately, Trump can’t threaten his way out of the ultimate consequences of his ignorance.
2
Big bullies with Big egos rarely lead to productive policy outcomes. The current US president has always led with outrageous proposals and has expected (based on his past business dealings) his opponents to cave in. Where the opponent is also a bully with a big ego, we see spiraling events leading to pain and anxiety (China and Iran). Dr. Krugman, you are absolutely right; there is no sensible pursuit of goals and objectives regarding how to deal with other nations....particularly our adversaries. We are on our way to economic fascism...politically, we are practically there.
3
Looks like the trump economic "plan" is the ultimate bankruptcy of America.
He's proven that he's good at that.
Picture negative rates as our future.
3
Keep in mind how terrible Trump is at business. He inherited a gazillion dollars from his father, and ran multiple businesses of his own into bankruptcy. He has so little credibility among American businesses that few are willing to do business with him. If it weren’t for Russia’s use of him for money laundering and grooming as an asset, he would be sleeping in a cardboard box.
2
Dear Prof. Krugman, but Trump IS winning the US election war.
Look at the new job numbers, for June, of 224,000. Hello!
------------------------------------------------------------------------
Let me suggest that we must use repetitive slogans and symbols.
For example, I keep suggesting the use of the "Democracy" song.
Leonard Cohen, sang, "Democracy is coming to the USA."
I suggest the use of symbols like the inverted, US DISTRESS flag.
Try mocking Trump, by showing his OK sign, on both hands.
Rambling on about Trump's mistakes only gives him more PR.
----------------------------------------------------------------------------
"Democracy is coming to the USA." (Please discuss this)
An excellent piece but also a total cop out. So how does Krugman want to slow China's drive forward political, military, and economic hegemony? To quote Barack Obama quoting Hillary. Clinton, "'I don't want my grandchildren to live in a world dominated by the Chinese. "
3
TPP.
Why is Nafta not NAFTA? Why not Nato instead of NATO? What's the governing rule?
any comments on todays employment numbers Dr. Krugman?
1
"...assembly doesn’t shift to America, it just moves to other Asian countries like Vietnam...". That is exactly the point, to keep China from killing all competition and thereby multiplying their own military power.
2
Whether he wins or loses is immaterial to Trump. He lives in his head where he declares himself the perpetual winner. As kids when we had our fingers in our nose my Dad used to ask us to, “pick a winner.”
Trump has his finger always up his nose: picking himself a winner.
1
Mr Krugman makes a lot of sense. But Fox News is State TV propaganda and it tells MAGA nation what to think. They are in love with Trump and therefore under a spell.
3
Paul, do you mean “Trump Is Losing His Trade Wars” or “Trump Is Losing His Tirade Wars”? Or maybe both?
2
It is difficult to understand how a nobel price in economy can engage in such behaviorist psychology of the economy.
Americans need real analysis, Mr Krugman, not these surface opinion columns.
You only add to the acculturation complaisance of this nation .
One might think that Trump's trade wars are meant to benefit Russia?!?! If as Krugman says these wars badly damage American credibility and weaken the international rule of law!?!?!
Prof. Krugman goes easy on Pres. Trump by saying "presumed," in "And there’s no hint that the tariffs are achieving Trump’s presumed goal, which is to pressure other countries into making significant policy changes."
One has to presume something, since there is no hint of what "significant policy changes" would be (the case of USMCA, pronounced you-smuck'-ah, doesn't suggest much) and since we know that Pres. Trump as an individual has no interest in policy per se. The natural presumption is that it's all for publicity, not policy.
Secondly, Prof. Krugman neglects to mention that the tariffs are illegal. The President has the power to implement the laws, not to contradict them. The latter is illegal, even when it's the President who does it. That the Republican Party is shielding him doesn't make it legal, either.
1
What must be realized is in a globalized economy if you declare war on another country you are declaring war on yourself. Nationalism no longer works when economies are pan-national. The genie has been released and there is no hope of returning to hegemonic yesterdays.
4
@JohnH
Nationalism has only existed for one single reason: to make people believe that they're fundamentally different from certain other people, and then use their hatred for those others to cover up ultra-elitist laws that hammer the middle class and exploit ordinary citizens, making only the wealthiest wealthier.
3
@Ana Luisa
You have just described Communist China, Chairman-For-Life Xi, and Jack Ma (Alibaba).
I watched manufacturing jobs leave the United States under the Bush, Cheney administration. If you want to bring manufacturing back to the United States, pass a law that states that you can not sell or import to the United States any part or product to the United States if you are an American company. An example is, GM shut down their plant in the US that makes Cadillac's and built a new plant in China that makes them. They will not be allowed to sell Cadillac's in the US. If they would keep the plant in the US and build a plant in China, then the plant in the US could sell cars in the US and export those cars, but they would not be allowed to import their cars from China to the US.
6
The US isolated itself with it own unique obsolete measurement system.
The bottom line will tell us if the Tariffs helped.
The next 2 years of data will tell us if the imbalances have improved. Meanwhile our economy is great least unemployment numbers across the board. The markets are doing phenomenal. If people will vote pocketbook Trump will most likely be reelected.
Improvement of the imbalance of trade is not a good measure of success in this case. Let’s watch the GDP. Let’s look at the farmers pocketbooks over the past four years. Your great economy is great for the richest of us, but for most there’s been no change. Many jobs, yes, many taken by someone doing two of them at once.
4
@NS My stock portfolio is doing great...for now.For that matter, it did great during the economic recovery under Obama.But....none of my 37 employees who are middle income people own stock....not one person.And to survive,most of them have to immediately withdraw the IRA funds I deposit for them each year.If they would only vote.....Trump would lose in a landslide.It's a question of whose "pocketbook you're talking about.
1
"Too many Americans in positions of power seem unable to grasp the reality that we’re not the only country with a distinctive culture, history and identity, proud of our independence and extremely unwilling to make concessions that feel like giving in to foreign bullies."
This was the precise reason that the "best and the brightest" kept trying for decades to "win" the Vietnam War, resulting in the loss of 58,000 American lives (and up to half-a-million Vietnamese lives), and over $140 billion in US treasure. Yet many US conservatives (some of whom have been given the opportunity to take up space in the pages of this paper) still proclaim that we could have "won" that war if only we'd fought hard (or "smart") enough. They do not explain what "winning" would have looked like. Arguably, all those US manufacturing jobs would have simply gone straight to Vietnam instead of passing through China first. Not much of a "win" at such a huge -- and tragic -- cost.
4
Once again, the American people are indebted to one of our great public servants--who holds no office. In the long run we will all be dead, as John Maynard Keynes said, but the life of the world now and in the future really does matter. Our country is run today by destroyers, destroyers of hope, of life, of other people's reputations--including their own. Tragically, they are blind to their own fate in this respect, as Mr. Krugman says.
5
Inflation has not increased since the tariffs were imposed. The numbers in this piece do not add up: if the average American was spending $500 more because of tariffs why has inflation remained stable?
2
"China is an economic superpower in its own right..."
No, China has prospered economically solely because the West has opened its markets to China while tolerating their unabashed theft of intellectual property, currency manipulation, high tariffs on foreign goods, one-sided domestic market, mass-incarceration, mass-murder, totalitarian oppression, and construction and militarization of bases on the territory of other countries in the South China Sea. China cannot hope to enjoy Western tolerance much longer.
However inelegant Trump's approach, the rest of the world is with us, not with the Chinese Communists and Dictator Xi.
4
I'll leave the intricacies of economic theory to Professor Krugman, but I note that there is a difference between having a tariff to protect an existing industry, another to induce a dead industry to spring back to life. Who would dedicate capital and make plans for the long term based on Trump's skittery policies?
1
The objective of the Trump/GOP is not what it seems. $ may seem like the intent but there is also the disassemble of democracy and defunding the public sector....which also be borne by the American people.
I've concluded that Trump does these things because he knows if he starts something, tells everyone that he did it - whether he actually did or not - it's a win. For instance. His meeting with Kim Jong-un last week. Call-ins to C-Span declare him a hero for getting his foot on N. Korean Soil. Ah, OK. He did. The result? Nothing I can see. Trump will use this as a big campaign plus. We can all name many more. As you mention his tariffs loom large on the campaign trail.
He will tout his tax cuts too. Another call-in praised the extra dollars she has and the fewer that went to the US Treasury. Recently, I've noticed that the cost of groceries is rising along with other consumer goods. My electricity has gone up although my usage is the same. Gas costs more that a year ago and this a.m. I read the employment and unemployment figures are flat.
Yet, we will hear the hype on the campaign trail with things suggested treated as if they were done and other things half-done or you could half-baked. Of course, no mention of our rising National Debt.
Then there are the children in cages for whom our government pays somebody over $700 per child to incarcerate and still can't seem to provide them with soap and water.
3
Mr Krugman! Don't you know that Trump is a successful businessman who knows more about the Economy than the economists? Certainly Trump's base of true believers think he knows what he is talking about. Isn't Trump a multi-billionaire? How could he have made all those "billions" if he didn't know what he was doing? He survived at least 4 bankruptcies. Surely he must know what he says he knows. And 90% of Republicans think Trump is doing a good job as POTUS. How could so many be so wrong about so much?
2
@RLW Donald: The rich man who won't show you his books, the genius who won't show you his grades, the business man who won't show you his tax returns, the playboy who pays for sex, the patriot who skirts the draft...
7
We have, as a nation put our fiscal responsibility and well being into the hands of a grifter, that went bankrupt while owning two casinos. You know, the place where "the house always wins". After inheriting his millions and never having to work for a living, what could possibly go wrong?
7
Excellent as always, from Mr. Krugman on this topic, but regrettably none of the white-supremacist or "fundamentalist Christians", who represent the so-called "core supporters" of Mr. Trump will pay attention.
Mr. Krugman's topic here is trade policy, but the behavior of Mr. Trump with regard to his ego-driven military show on July 4 and the embarrassment that Mr. Trump forced thereby on all top-level military officials, not to mention the utter bizarreness of it all, calls into question, as does every action every day, almost every hour of every day, why is Mr. Trump still in office?
8
The king in the ivory tower has spoken.
In the real world, all the dire warnings that we have been spoon fed have failed to crash the economy or cool buyer optimism.
The US, and China, are both making piles of cash on customs duties, prices have not raised to the level of Venezuela, and the people truly hurt by all this are the corporations that were paying near 0 duty on cargo that if made here would have resulted in taxes.
Yet the nobel prize winner, if he knows any of this, continues to claim that the sky is falling.
It is not. Life continues, spending is up, new jobs data is great, and the market is not in recession.
What is not to like? Oh right, that it happened under Trump.
3
@AutumnLeaf. You have forgotten that Trump has reversed so many policies that Obama put in place to preserve our planet. One has to look only at this reversal to understand that these reversals allow for so many catastrophes to happen -- but then, that doesn't affect us in the here and now; let our children and grandchildren figure out those problems -- if there is any planet left here!
2
WASHINGTON (Reuters) - U.S. import prices fell by the most in five months in May amid a broad decline in the cost of goods, the latest indication of muted inflation that strengthens the case for the Federal Reserve to cut interest rates this year.
2
Like the professional wrestling "bad guy" Trump has beaten up by all these "foreigners". He may have thought his version of a trade war is easy to win and maybe victory to him is just more chaos. He can claim to be victimized all around. His wrestling day fans will stand with him. People with an inability to judge character will see him as tough and a fighter for the U.S.A. He has associated himself positively with the political strongmen of the world and belittled the rest of the world in a way that some may think will put us on the wrong side of a major conflict. He fawns over Kim Jung Il and swoons over nationalists "liking" their stands for their countries. With Wall Street, the courts, his base, and continuous overtures to police and the military he might think he has won something. Now I see today that jobs were added at a good pace, that interest rates are down, business spending is down and projected growth is down, and consumer spending is up. This cannot be headed to a great place for the economy or at least most of us.
2
The whole concept of a tariff war is ridiculous. What we need instead is common sense spending restraint. To wit: Do not spend more on imported goods and services than is earned via exported goods and services. Grant US exporters $ trade credits that importers must buy on a regulated exchange before releasing equivalent $ to pay for imports. It was all spelled out many years ago in an article by Warren Buffett in Fortune. It almost made it through Congress as well, until blocked by special interests -- oil barons in fact.
9
Why doesn’t PK love these tariffs, it’s s nice tax on the people that he always begs for.
2
Tariffs are regressive taxation.
3
Interesting WSJ article yesterday on soy bean farmers and how they are pleading with China and other markets to buy their products. There are reports that many of them are facing bankruptcy and losing their family farms because China has imposed a 25% tariff on soy beans.
If the farmers were able to, instead of losing long standing and good customers, they would simply cut their prices 25%. Their prices would remain at the same level, from the customers' point of view, as they had been before the tariffs, although their own incomes would decrease substantially. I'm assuming most of them could not survive that level of price cut. But the alternative is proving just as dire - they're losing customers and market share.
While other exporters will have different options, the experience of the soy farmers seems like a good example of how tariffs work. I have to think that Trump just doesn't care. Although we are all now spending our tax money to support the farmers to not produce soy beans, it's not a wise expense. Never vote Republican.
4
And the farmers who have lost their family farms will still vote for Trump
1
WE shouldn't be surprised!
About what is occurring.
When a person- and there are MANY- as a policy maker-breaker,
chooses to be personally unaccountable for the dynamic,
nonlinear,
interacting,
multidimensional processes and outcomes of their assessments and action's implications and
outcomes, in a known (understood?)
reality of uncertainties, unpredictabilities,
randomness, and
lack of TOTAL control,
whatever one's efforts.
Timely or not.
What is "awesome??" is
that so many of US
continue to enable
what is happening!
Daily. Complacent. Complicit.
In small and larger ways.
All over.
How can WE help each other to
learn, and integrate, to
FAIL better?
1
Free trade is advantageous to those countries with lower wages, lesser taxes and lax regulation hence Chinas' conversion to free trade.
And, in a global economy if Guadeloupe breaks wind the rest of the world gets diarrhoea.
In an unpredictable world of tension and instability it makes perfectly good sense for any country to have a bias to economic nationalism and self sufficiency.
Money is like water in that if flows downhill to the cheapest labor market.
All this talk about bringing jobs back to America is just talk. Jobs fled this market years ago, first to Japan, then Mexico, then Taiwan, then China and as soon as the Chinese labor market stabilizes it will flow to Vietnam, then India/Pakistan and finally Africa.
As long as cheap labor exists and low price drives consumer choices that trend will not change.
Them jobs ain't coming back, they are moving to the next low wage source.
7
True enough Paul, but that poll you linked shows Republicans with an 89% approval rating of Trump, matching a record high. Trump is hoping his base will bring home victory in 2020, and they seem to swallow anything he says. Democrats need to get their act together and field a strong opponent.
4
@tanstaafl Republicans are only a quarter of the voters. 89% of 25% is 22%. Paltry. The rest of Trump voters are Independents, the largest block. Trump still can’t break 45% approval. He has intentionally damaged the economy. Hopefully, the pain he has caused the other 55-60% will bring him down.
If there is anything good about this presidency it is that president Trump has thrown open the door for Democrats to reset trade policy on terms beneficial to both U.S. labor and to meaningful global environmental policy. Qualified access to U.S. consumer markets can provide the leverage to do both. It remains to be seen whether there is a Democrat who can capitalize on this golden opportunity to reconnect with the party's roots.
3
@Bud 1 It remains to be seen. But, the Democrats have 25 presidential candidates already and none of them show this capacity. Maybe they need 35 presidential candidates.
6
Why is it necessary to say this? Each story on the economic decisions of Trump's rule must always be prefaced by "the person who managed to lose $1Bn in ten years and has had multiple bankruptcies continues to tinker with the US economy."
Why does he always get a pass for this craziness?
13
@Sunrise250. "Why does he always get a pass for this craziness?" Because much of America believes the absurd myth, promulgated by an execrably cruel and silly TV show called 'The Apprentice,' that Donald Trump is a successful business tycoon, rather than the serial failure he is in reality.
2
@Sunrise250 Please try to read today's headlines again.
U.S. Added 224,000 Jobs in June; Here’s the Takeaway
The job market roared back to life last month, suggesting the economy was stronger than what some analysts had feared.
Unemployment was near a five-decade low.
And, again.
1
@Sunrise250 Um......then how come the economy is doing so much better than it did under Obama?
Back when Walmart began to expand beyond US borders, a phrase I heard at the local Timmies has stuck with me: "[They] want Cadillac wages and Volkswagen prices".
Who's "they"? Why, you and me and him and her, all of us who just want lots and lots of good cheap stuff but don't want to pay each other living wages to make it.
That's the fourth (or fifth) reason trade wars can't be won.
13
Thanks for this thoughtful piece. Protective tariffs are ultimately damaging and lead to trade wars and impede economic progress.
3
@Hugh McIsaac... a tariff is a customs duty on merchandise imports and gives a price advantage to locally produced goods over similarly imported goods, raises revenue for government and protects local jobs.
What, pray tell, is so wrong with that?
1
@Bruce Mullinger
I agree that raising revenue for the government is a good thing. Unfortunately in Trump's case it was to cut taxes for the wealthy, which isn't a good thing.
Yes it's a tax paid by Americans that makes their products look more reasonable however most products are still far higher to make in the USA than import.
As for good for American producers, who are the soybean farmers going to sell to? Americans don't eat soybeans.
1
@Rod Sheridan...then perhaps the soybean farmers should grow things that Americans eat.
Given current macroeconomic theory, we should be experiencing some level of increasing inflation due to the tariffs placed on imported goods. Can Mr. Krugman comment on this? where is the true economic impact on american consumers showing up? i'd love to see trends graphically that illustrate his point that the tariffs are having an impact on domestic spending.
2
"All the tariffs Trump imposed on Canada and Mexico in an attempt to force a renegotiation of the North American Free Trade Agreement led to a new agreement so similar to the old one that you need a magnifying glass to see the differences."
I guess you really should get your eyes checked, Mr. Krugman.
A couple of things from Wikipedia:
Automobile rules of origin (ROO) requirements mandate that a certain portion of an automobile's value must come from within the governed region. In NAFTA, the required portion was 62.5 percent. The USMCA increases this requirement by 12.5 percent, to 75 percent of the automobile's value.
The dairy provisions are similar, but slightly higher, to those Canada agreed to in the never-ratified Trans-Pacific Partnership (TPP), giving the U.S. tariff-free access to 3.6%, up from 3.25% under TPP, of the $15.2 billion (as of 2016) Canadian dairy market.
2
Unfortunately, dairy in Canada is so clearly marked about it's country of origin that our suppliers won't benifit much due to distrust of our supply and lack of regulations.
5
@Piper
Correct, we won't buy your dairy products due to your lack of controls over growth supplements and medication.
As you stated the country of origin information helps us do that.
You have the same issues with most food products for importation into the EU.
1
@Piper
Price matters, Piper. Bottom line: Canadian consumers will benefit BIGLY.
And American dairymen will too.
I agree that something had to be done about China, but Trump has not gone about this very well via making poorly thought out, ad hoc decisions. His ignorance of Chinese history with the West combined with a simplistic understanding of macroeconomics leaves us all vulnerable to the outcomes And, as always, Trump fails to see the long-term consequences of his actions. His transactional approach may appear as decisive at the moment, when if fact, much of it is half-baked.
4
@Birdygirl
Trumps ignorance knows no bounds. His attacks on Iran and our allies are proof of that.
It goes without saying that his base, the intellectuals included, are ignorant of the realities that exist. You can't understand the vagaries of daily life viewing them from an ivory tower or a penthouse on 5th Ave.
1
Trump can’t see beyond his “gut instinct”.
Let's see Paul, the Dow Jones and S&P 500 are setting at record highs, unemployment is at 3.8% and the economy added 224 thousand jobs in June. The US, Canada, Mexico Agreement was a win for the US and the China, US trade talks are scheduled to resume. You and prior administrations seem to overlook the fact that the United States is the worlds economic powerhouse. We have played the role of benevolent benefactor to emerging economies far too long. US demand and labor unions created the demand for offshore labor which fueled the economies of these nations. Left unchecked they developed into economic threats. As the United States has a right to protect its borders, so does it have a right to protect its economy despite what the liberals and Trump haters want us to believe.
7
@Kurt Pickard The economy was doing well when Trump took office. He can't claim this as a success--you can thank Obama for turning things around after inheriting W's mess.
11
@Birdygirl I think the only thing Obama can be thanked for is getting out of office.
2
Trump was elected in 2016... it’s 2019.
The EU’s economy is slowing down while the US is still going strong ( 224K jobs). Also Obama I suppose?
4
All of our trading partners know that there is a presidential election in 2020, and that the House and a significant portion of the Senate will also be up for grabs. The entire media is opposed to Trump, and his obnoxious personality does not help him. So, our trading partners hope to wait it out. Especially, the Chinese. Why give in? Meanwhile, there are many ways to skirt his actions. The European countries do not support the USA, because they are interested in money, money, money. So, they want to pick up the pieces. Their economies are suffering, and they are divided amongst themselves. The EU has just abandoned parliamentary democracy in favor of tried and true direction from an appointed leadership. So, it is possible to predict that he will lose the trade wars. If, on the other hand, he were to be re-elected, with a Republican Congress, our trading partners would face four more years of his efforts. They just might blink. Who knows?
Here's a thought to add to the mix, as this discussion of Trump, based on his untutored and unpredictable nature: he seems to be in a mental condition that will render--is rendering--him unable to generate or execute sane decisions. I say this clinically. His ideation, expressions, ability even to speak--the 4th of July speech was incredibly difficult for him to complete, for example--show deterioration of his condition, which is clearly progressive. I don't believe he is making decisions now, perhaps. And Pence's trip back to D.C. last week may be related. As to how a use of the 25th Amendment may affect markets, I don't know. But wise prognosticators might want to look
ahead.
16
The US have tried different approaches, unsuccessfully and for decades, to get China to trade fairly. The US have a good economy, we are in a position to try something different and see if it works. In other words, we can afford a trade war. Liberal economists advise heard and noted, we hope they missed something in their analysis, like internal politics in China, Xi’s strategic plans and internal pressures, the Chinese people reaction, the US people willingness to get fair trade with China, MAGA, the progressives anti-consumerism push, etc. etc. etc. The challenge for economists is predicting human behavior, and unfortunately, human beings are active actors in the economy. Look at Venezuela. The economy is in the dumps so you would expect they all push for a change of government. That would be the rational thing to do. But Venezuelans rather keep the socialist government. Pure ideology and emotion.
1
I agree with the professor’s points but remain concerned that he is not adequately addressing the job growth under Trump. Are these seasonal jobs or solid middle class jobs with a decent salary and benefits? Are these contract jobs like Google uses in Silicone Valley with a promise of future employment that never materialize? Exactly what are these Trump jobs made of?
118
@Mike Lynch
I'd like to know too.
My assumption is that they are either contract or part time jobs with low wages and do not provide any benefits for the employee.
34
@Mike Lynch: Precisely. Krugman talks about the "economy" and business," but has little to say about labour markets. Trump talks, but Krugman ignores other than to say if Korea loses a job it will migrate to Vietnam.
The problem caused by "free trade" and the construction of global supply chains is that cheap foreign labour can be teamed with modern technology and capital equipment to produce at lower cost than can an American worker. Neoclassical economist ignored this effect of globalization. To Krugman, as with most (neo)liberal economists, labour is just "L" in their models. The human dimension is missing.
12
@Mike Lynch--NOPE. Mostly part-time jobs (NO benefits,) where the workers either have such a lousy schedule that they can't work another job, OR they are working 2 jobs for 60 hours a week, and STILL not able to get ahead. But, of course, STILL paying taxes, usually a higher percentage than the filthy rich, like Amazon at ZERO%. For example, I pay a higher effective rate than Warren Buffett, one of the richest people in the world.
57
Sadly, we do not address real problems with China. They do steal out intellectual property, they may be planting spyware in their phones, they do manipulate their currency. If these problems exist, and they do, they should be directly addressed, not with partial tariffs, but with forceful actions. Instead we let all this slip away and ruin the soybean market.
2
It seems that there are mainly two kind of persons: those that never study anything so they stay ignorant and those that go through a college just to affirm their ignorance. Trump is one of the them.
The economic fabric of the world is so delicate, that it is better to leave it to the capitalist actors, with marginal adjustments to avoid financial cracks;nightmares that become "the phantoms that goes around the world, like the last "Great Recession", and yes, this one, "proudly" Made in America.
1
Trump destroying what United States of America built after World War II for international trade.
USA is 360 million people in 7300 million people world.
Gobal political actors trying appease Trump to access USA financial services.
World population will be after work around USA financial services, to point world economy discovery do not need USA and forget about USA.
1
The only thing Trump can handle is the unilateral move.Tariffs are his entire economic policy. How lame is that?
His entire foreign policy is to rip up negotiated agreements without regard to consequences. We will bear the consequences for a generation at least.
His entire domestic policy is to trash minorities and degrade healthcare.
If it cannot be contained in a tweet, he doesn't bother. Too complex.
6
Let us all agree that whoever is the last candidate standing to oppose Trump - that every Democrat, Independent and Green Party voter vote for them. If it's a black candidate - then the whites, Hispanics and Asians show up at the polls in huge numbers to vote for them. If it's a white candidate, then the blacks, Hispanics and Asians show up in huge numbers to support them. Otherwise, the Supreme Court will turn even more conservative than the majority it now has, state houses will be mostly awarded to Republicans via gerrymandering, the Senate will stay Republican - the Supreme Court will then be locked in as conservative for the next several decades and America will be controlled by the 'enemy from within' that the founding fathers most feared would be our nations end game.
7
@Ed Smith Sadly the democrats have NO candidate with a backbone to offer anything other than freebies. You can't get independents on your side when you show more concern for illegals than citizens
1
@Joe O'Malley So you think the Independents will be better served with a Trump second term, at least one liberal SCOTUS replaced with another conservative, more GOP gerrymandering etc. - all of which in my mind is far worse of an outcome for the Independents than a Democrat that will work to expand health care etc.? You do know that the current GOP conservative Senate and GOP conservative majority SCOTUS is plenty capable of blocking most of what any Democrat can do? Seems to me to be a pretty naive Independent that doesn't know or can't cognate these things.
Unfortunately the "friendly relations" involved in globalization have been largely between US corporations and the Chinese government and Chinese capitalists, for the purpose on this side of increasing profits and reducing wages. Any benefit to US workers has been assumed to come from trickle-down. But in fact there is no evidence that this kind of trade has increased overall US GDP, much less US real wages, although profits have certainly jumped up since 2002.
Lack of consideration of the interests of US workers was a major reason that some voters turned to Trump, who obviously has no understanding of the economic issues. But the US economists who do claim to have such understanding, even those who also claim to be liberal, seem to be more interested is preserving the "free-trade" status quo than in thinking about how trade could be conducted other than for maximizing profits and minimizing wages.
5
We're losing a lot more than just trade wars:
1. Tariffs hurt consumers about $830/year, offsetting the $900/year in tax cuts for the median (50th percentile) family, according to the Fed study linked in the article.
2. The regressive nature of the tariff tax worsens inequality, as the middle class pays the greatest share. Likewise, since corporations (i.e., the rich) receive higher prices, inequality is worsened.
Meanwhile, in the wider economy:
3. About 2 million more are uninsured since 2016, due mainly to ACA sabotage. This has also increased pre-subsidy prices on the exchanges, hurting those who don't receive the subsidies. Further, Trump has done nothing about the 4+ million who could get covered if red states would expand Medicaid.
4. The budget deficit was up 60% in 2018 and 40% for 2018-2027 vs. the CBO forecast when Trump was inaugurated. By 2027, every American family will be carrying about $34,000 more debt due to Trump's policies.
5. Job creation was faster in Obama's last 29 months than Trump's first 29 months.
6. Real wage growth was faster in the last two Obama years, while inflation and mortgage rates were lower.
Yes, the unemployment rate improved under Trump, continuing a trend since late 2009. And GDP growth in 2018 was 2.9%, the same as 2015.
In short, Trump should have not meddled with the Obama Boom!
11
As usual, you have hit the nail right on the head!!
3
Thanks for the reality check. Unfortunately Trump and his followers consider reality “fake news”. A sad state of affairs that diminishes our country daily,
2
No, you're wrong. Trumps trade war is helping. Just not in the way you care about.
3
Challenge to Trump -
Write a column that will counter the facts in this article. Please no tweeting. I would like to read one that reflects civil discourse and of course facts.
1
What do you expect? This is the president who thinks Washington crossed the Deleware River and occupied Trenton airport!
VOTE!
4
With some genius Trump has convinced those farmers that "Jaina" is actually oppressing us so their taking such economic hits calls upon them to lose "millions in defense and not pay a dime in tribute." This assumes they believe the orange conman that we are being ripped off by the Chinese. He "wins" by his lies EV-ERY-BODY else looses. D.A., J.D., N.Y.C.
2
The republicans and djt certainly do not exude good will and they are anything but friendly. Greedy, mean, untrustworthy dregs of society is the way the world now sees these americans. Are djt voters tired of winning yet?
4
HO HUM (yawn) ,,, this trade war business is yet another trump pointless stunt going nowhere. People can be patient with occasional stupidity but not with this guy. trump is someone who is always stupid and proud of it.
5
Right up there with Mr. Krugman's well-cited opening examples of misleading presidential "leadership" is George W. Bush's "Mission Accomplished," as glaring a falsehood as there ever was. Bush was only off by a decade or two, if not more or, even, altogether.
The reality is that Donald Trump, like Bush and Reagan before him, readily spews untruths with little regard for his falsehoods. Many prefer to believe that Reagan did it innocently and that Bush did it out of ignorance.
More people believe that Trump is far more callously manipulative in his blatant disregard for facts and worse, for the clearly malicious consequences of his actions.
Perhaps one of Trump's most shockingly ignorant claims came yesterday during his Fourth of July rant, when Trump claimed that during the Civil War, “Our Army manned the air, it rammed (or ‘rand’) the ramparts, it took over airports...." No matter that neither airports nor airplanes existed during the Civil War or for a long time thereafter. Were it only the case that Trump never "took over" the White House.
So, Trump now claims, trade wars are easy to win. Any day now, we can expect him to launch his bows, arrows and slingshots to fight them. It should be one hell of a fight. Man the torpedoes, full steam ahead.
3
Oh, but the trade war is working. More than half the companies who manufacture in China are actively working to move their supply chain out of there. They finally tired of the whole "you hand us your intellectual property" routine, as China aims to dominate the world with stolen technology and massive trade barriers to their market. It may not bring manufacturing home, but it will trim China's wings a bit. My hope is that, by losing so much business in such a short period of time, it will hopefully force China to reflect on their trade practices and become a better global citizen.
4
I imagine most Trump supporters see this as a real fight or war and therefore expect to suffer a certain amount of pain and suffering. So Trump only needs to prove that China and Mexico are suffering more than we are and that they concede something to us.
It' like the old joke where Steve Jobs and Bill Gates were strolling the woods and encountered a hungry bear. As they dashed away, Steve Jobs asked "How are we going to out run that bear?" and Gates replied "I don't have to outrun the bear, I only have to outrun you."
For Trump to win the trade war, he doesn't need whole economy numbers, he only needs a concession.
2
Not entering the Trans Pacific Partnership (TPP) was an enormous gift to China (and India) as it would have dramatically increased our leverage to negotiate better trade including intellectual property rights protection. Not doing TPP is our Brexit. This go it alone economic isolationism will be very bad for our country over time.
7
"Trade wars are good and easy to win" still sounds like a line that Dr. Seuss rejected from "The Cat in the Hat". Unfortunately, Donald Trump is a good deal less intellectually sophisticated than Dr. Seuss. It's telling that Donald Trump is addicted to all things out of date: trade wars, coal mines, tanks. No doubt during World War I he'd have been advocating for cavalry charges. If he actually has the stomach to continue his trade wars for a long time (questionable, which is what other countries are assuming), it'll be interesting to see what his supporters do with the cognitive dissonance between Trump's declarations of victory and their own experiences.
1
Oh, but the trade war is working. More than half the companies who manufacture in China are actively working to move their supply chain out of there. They finally tired of the whole "you hand us your intellectual property" routine, as China aims to dominate the world with stolen technology and massive trade barriers to their market. It may not bring manufacturing home, but it will trim China's wings a bit. Losing so much business in such a short period of time will hopefully force China to become a better global citizen.
3
So if a "trade war" is ineffectual, then what will reverse China's aim to dominate the world by stealing our technical superiority, our jobs which feed our middle class, closing its markets to foreign businesses, etc? What stops China from retaking Hong Kong and pirating the west Pacific trade routes?
And does Paul Krugman recognize that devaluing a currency below fair value in order to create a trade advantage has the same effect as a tariff? Does he understand the effect of a negative interest rate, such as with the Euro?
Trump is simply using the arsenal available to him to put the American economy back on a growth track, and has achieved a GDP in excess of 3% consistently, with another favorable payroll report today. Krugman didn't think that was possible.
8
Mexican avocados at my local Trader Joe's went .99 to 1.99, a 100% increase. I'm sure we all can identify a ready example of higher prices we're already paying because of Trump's tariffs.
3
There are avocado farms in California, Florida and Hawaï. It’s an opportunity for them.
1
Anyone that still thinks that you can run the Federal Government as a real estate developer is probably wearing a MAGA hat. The negotiation tactics that work with an amoral bunch, the lies, the threats, the walking away, the coming back after getting "love letters", the monetization of everything are small beans to nations with thousands of years of history. trump is a flash in the pan, easily swayed by flattery and costumes, a mark for the actual diplomatic pros that have met his type before. trump is only important because he was handed the levers of powers of a great nation. His self proclaimed greatness, his lies, his greed, his casual cruelty, are inadequate to meet our needs at this time in our own history.
15
@Zeke27
Thanks for putting it exactly as you did. What have we wrought? And who will beat the con from NYC?
Yes, China is stealing our intellectual property by contract or by cybertheft. A trade war will NOT change that behavior. You can enact legislation to make illegal the transfer of IP to China by American companies, and you can improve cyber-security, but China will never willingly give up the reason it has grown economically so quickly. If China continues its upward trend economically, it will need to protect its Intellectual Property. That is the great irony. Trump is a person whose only tool is a hammer, and every problem - to him - looks like a nail. The lack of sophistication in analysis and action can not lead to success. He is a bully, but one without the teeth needed to enforce his threats.
7
If trade wars are easy to win, then why won't it be China that finds this one "easy to win"? It's nonsense. Trump's view on trade wars shows him for the simpleton he is, living in a world that no longer exists. The fact is trade wars have no winners, just losers.
The US has successfully gone through a long term process of shifting from being a goods producer to being a service producer, i.e. it is very good at producing intangibles, not least of which is information services. Add health care, entertainment, higher education, product design, business organization, finance, and a host of others. Americans can command high incomes based on producing those services and the complex machines that support them; the remaining goods it produces profitably are those where it has an overwhelming natural advantage such as agriculture or where it can most readily apply those advantages, though automation for example. Places like China and Mexico are still in an earlier stage of that transition and produce cheap stuff cheaper than we can because their people cannot command the high incomes our people can.
Those Americans who don't shift to the industries where we have an advantage and try to stick with old industry jobs will inevitably suffer, blame it all on "furriners," and vote for a fool like Trump who tells them he has the magic tariff fix. And around we go in the trade war circle to nowhere.
4
And yet, as the recent interviews with trump supporters at the 'Red Square' moment in DC showed, many of those supporters think his trade wars are a good idea ("respecting America's might") and they don't understand that it is costing them a lot of money and will cost them jobs. The effect on them is too diffused.
People are dumb.
7
I don't see any concrete numbers or data to bolster this discussion.
I don't have data, not my job really, but anecdotally I can tell you the supply chain is in full shift. Low end Production is already on the move to Vietnam, Philippines, and the higher value work to Taiwan and S. Korea. IP work is coming back to the US. China production is for domestic use, not export. This leads to layoffs in a state which makes the USA look like Sweden or Denmark.
My colleagues in multiple verticals are seeing this every day.
Obama should have taken these actions instead of TPP, and Hillary would be president now. President Obama overestimated Communist China and underestimated the USA. A flaw that Trump's reptilian brain can focus on just like Reagan.
3
Trump presumes he is dealing in NY real estate and peddling goods in a world where he can cheat, bully and sue his way out of failures. Although I rarely agree with Krugman, he calls a spade a spade. Trump fails to appreciate that Chins is negotiating for goals to be achieved over a long time horizon, for example,e 100 years. It their culture. Trump can only thinks ten seconds ahead and has no appreciation for the unintended consequences of his transactional mindset.
Bullying our allies , and adversaries, with tariffs to try and force policy change will backfire. Although most of America despises Trump, we will pay the price of his failings.
4
Perhaps China will take a page from Putin's playbook and flood US social media with political spam. But this time anti-Trump. Taking a long view, it's only a year and a half until Trump and his trade wars are in the dustbin.
1
Trump is ignorant, vengeful and preening. He is surrounded by ignorant ideologues and venal opportunists. These are the people making policy.
What I honestly don’t get are the MAGA hat hordes. How is it possible to see this ugly, rambling, dissolute president as a great leader?
I conclude Trump’s support is actually a made-for-media illusion. It’s intended to make his re-election, which could only be accomplished through election fraud, seem plausible. We know he pays people to attend his rallies, where people are visibly bored. We know his ads are made out of stock footage of European models. We know half his Twitter followers are fake. I strongly suspect polls showing his strength are highly selective or otherwise massaged.
We play into Trump’s hands by buying his assertions of invinceable popularity or his power to dominate at debates. He didn’t actually win the last election, remember. I don’t just mean he lost the popular vote. There was penetration of voter databases in most states. This is what we should be focusing on — as Mueller reminded us
3
The follies of Donald Trump continue. What can we do with a man who is equally blessed of ego and ignorance? The answer is still a long way away and even then it is no sure thing, is it?
1
New job numbers out. Better than expected at 224,000. Wage growth at 3.1 percent. The economy is booming.
I guess that depresses Krugman and his cult followers. Most of the rest of us feel great!
8
While Trump promotes his trade wars and declares “We’ve never been stronger” American infrastructure is rotting away under our feet. American farmers of all types are going bankrupt at an accelerating rate, an enormous number of Americans are living paycheck to paycheck and rural healthcare is degrading quickly. With Trump and McConnell’s banana Republican Senators paying no attention.
While China races to modernize it’s infrastructure, focus on advanced technology and increase it’s global presence on all continents. And make most of the world’s goods. In 1960 China was making things in backyard forges. Today they dominate manufacturing.
Doesn’t look good for our side.
4
Since 2015 and the start of Trump's campaign and even before then, Trump has compulsively and feverishly been generating widespread hatred and anger against several ethnic groups, refugees, and other nations as a whole with his Trade Wars that are really victimizing us, not the nations. After all the hate and division, Trump has turned this nation into "HATEES".
2
Trump will do what Bush did by declaring victory, and without any noise from media , his base and the blood-red center of the nation will simply cheer and follow him as if he were FDR calling for the end of prohibition. His voters are so under his spell that they are not concerned about facts, but will support him publicly and perhaps privately, just as Bush's voters did. The result will be just as deadly for the US-Bush led us into a permanent and running set of wars in the ME which regularly kill and maim US soldiers , and Trump's "victory" will lead the US into a new world of permanent US weakness and instability where we cease to be the superpower we once were, becomeing instead another bit player among the many economies of the planet-no longer able to obtain our way by international reputation and humanitarianism. We are permanently diminished by the acts of this bad actor. Both major marties ought to make some kind of permanent promise or goal to ensure all candidates for President are fit both intellectually and able to have their reputations and personal records examined publicly . No one ever should be able to buy their way to the White House as Trump has-like some a post Julian Roman emperor buying the Praetorian gaurd and then distributing coin and bread to the ignorant, blood thirsty masses.
2
Dr. Paul is right of course but he and most of NYT readers are looking way past the end of their noses. Our government is a plutocracy owned by big money. Until we do something about PAC and K Street lobby money Washington will do what big money wants. Politicians will tell their voters what they want to hear but in the end K Street will end up the winner.
1
Correct analyses from an expert but it might not matter what he says because the people that form Trump's base and the fence sitters don't read these kinds of articles. And even if they do, they will take Trump's word over Krugmans.
And why would people take the word of an non-expert like Trump over an expert like Krugman, because they have the same mentality as people susceptible to snake oil salesmen, and the placebo effect.
The only way to defeat Trump and all his nonsense is to get every eligible democratic voter to vote.
2
I’m for it. The unions have been suffering a heck of a lot longer then the farmers it’s just nobody cared as we watched our high paying jobs go over seas. We lost our manufacturing might due to gutless politicians. At long last we have a champion for the workingman. Let’s see how this unfolds before you cast history.
5
@J Clark
As long as the working man is willing to work for $1.25 per hour, manufacturing jobs will come back to the USA.
I presume you're willing to work for that wage?
Trump is losing nothing. It's American farmers and shoppers who are losing his trade wars. But his base thinks he's a hero. And that's all that matters to Trump.
1
Trump's trade war is a disaster for Canada: China has imprisoned two innocent Canadians and is torturing them and has sentenced to death two other Canadians who have drug offenses. Canola and soybean and pig farmers have had their orders cut on manufactured claims all because we honored an extradition request from the US for a top executive of Huawei who happens to be the daughter of the President, Meng Wenzhou. Canada is collateral damage in this ridiculous trade war.
2
"Beijing is seeking to weaken the role of Western democratic norms within the global order."
This is a quote from an article on WaPo the other day called 'China Is Not An Enemy" which is actually a letter signed by a group of policy experts, business people, and academics.
Here's the first line:
"We are members of the scholarly, foreign policy, military and business communities, overwhelmingly from the United States, including many who have focused on Asia throughout our professional careers. We are deeply concerned about the growing deterioration in U.S. relations with China, which we believe does not serve American or global interests."
These people are not supporting tRump's trade war with China. Just the opposite. But their conclusion that China is seeking to weaken Democratic norms in the world order should shill all freedom-loving people to the bone.
https://www.washingtonpost.com/opinions/making-china-a-us-enemy-is-counterproductive/2019/07/02/647d49d0-9bfa-11e9-b27f-ed2942f73d70_story.html?utm_term=.34bfb4628dc1
2
as usual, he will put a spin and claim to have made progress, and discredit any news to the contrary as fake news.
1
Let’s face it, Tarrifs to most people, mean nothing as it is much too complicated an issue to put into simple words.
Perhaps two sentences would help.
It would be “citizens tarrifs will cost you more at the grocery store, at your favorite retail store and at your favorite electronic store. Can you afford to pay more because of Trump’s Tarrifs.”
2
I am no expert. But I think this losing tactic (certainly not strategy), is worse than just not winning, it could be a disaster for the future. (a Picket's Charge, a Pyrrhic victory)
Economics: we may be running a 2-3%GDP growth, because the 65% of the economy based on consumption has sidelined lower income consumption, for upper income consumption (Willie Horton rule). Upper income consumption is Financial services and Medical Care, (fourth house would need teleportation). So Domestic consumption may become clamped by income disparity. So growth would depend on foreign demand aka China, and they don't like us anymore, thank you Mr. T.
Politics: There are three things that have made us the Hegemon. First a big military, Second a growing economy, and third cultural acceptance and good will (USA is the Good Guys). That last is one that we can continue to nurture even when Military becomes more obsolete (because deterrence fails with too many fronts Iran, NK, Russia, China. Venezuela) and the rest of the world and China catch up to our economy. If we are not the Good Guys that the people of the world (and China) emulate and want to visit or study at our Universities, or listen to our music, poetry, plays, movies, we lose our spot as the leader and guide for the world. Who will take over? Begins with C ends with A, Rhymes with Mina. Easy to win!
2
I still have no idea what a trade war is -- there seem to be myriad definitions -- I thought it had something to do with unfair advantage -- lots of that around... but frankly, IMO the USA should not be the soybean supplier to the world, we should mine our own rare metals, make our own steel, stop making so much plastic -- refill the glass bottle. Is there a reason nothing ecet T-shirts can be made in the USA?
I think NAFTA was great for Mexico... and for Walmart which which is a purveyor of Chinese goods) and for pharmaceuticalcompanies that make Metformin as there is way too much sugar based CocaCola drunk in MX..
If Americans weren't addicted to tghe stock market -- if people stopped over reproducing-- never discussed these days.
American credibility? White man speak with forked tongue. Vietnam War: weapons of mass destruction; Iraq responsible for the World Trade Center bombings.
Reading a fascinating history of OIL in the Caspian Sea -- what happened with various multinationals and who and how. Is the mess in Iran about something other than oil? and some annoyance with the anti-Capitalism (define that one) stance of the regime...
What is great about Trump is that he is pretty closely observed.. while other presidents have managed to practice bad policy and bit more secretly. The scandal du Jour IMO is Betsy De Vos -- enriching the banksters by allowing the For Profit College Mills ( Bill Clinton served as the provost of one BTW) to start up again.
2
Trump is a classic bully---he loves walking around the country and foreign playground pushing foreign leaders around and calling his critics middle school names. In classic bully style, when confronted with other bullies, he sends them love notes and lavishes praise on them. Sadly, we do have a percentage of American citizens who put on their red baseball caps showing they are top dog on the playground---
2
Underlying all of this is that Trump is psychotic. That is not hyperbole. On almost every issue Trump displays a mind that is highly delusional in the face of facts and reality. Trump once said “no one knew that healthcare was this complicated”. What he was really saying was “until just now I always believed healthcare was an easy issue to solve.” Trump believes every issue is easy to solve, it is all part of his severe psychosis and why he is so dangerous. It is why he feels that the Iran problem can be solved very easily by dropping a nuke on Tehran.
5
I will say this one last time....This country, we, need to take back our country from these corrupt, power hungry and selfish Washington insiders. The reason Trump doesn’t want his tax returns released is because he will be exposed as the ultimate loser he calls everyone else.
He’s conning half of the country and they are buying it. We are what we are....a country with uneducated, racist and vindictive people biting off their nose to spite their face.
2
Why he is the president? His record: business bankruptcies six times
2
Yeah, those amazing job numbers out today are just so painful.
6
" will surely go down in the history books as a classic utterance "
https://www.nytimes.com/2014/02/28/opinion/krugman-no-big-deal.html
"And you know what? That’s O.K. It’s far from clear that the T.P.P. is a good idea. It’s even less clear that it’s something on which President Obama should be spending political capital. I am in general a free trader, but I’ll be undismayed and even a bit relieved if the T.P.P. just fades away."
With the pivot by liberal and progressive minded folks at the NYT and the Democratic Party, now embracing globalism potential new public works programs come to mind. Perhaps they can propose a public works program to go about removing the "Buy American!" and "Out of a job yet? Keep buying foreign." regressive bumper stickers that remain on aging pickup trucks.
Who'd have thought that folks buying inexpensive Chinese imports at Walmart would herald the coming of Krugman's new world order.
And yes, tariffs like corporate taxes are passed on as additional costs to the consumers.
2
Paul, let us look at history. If any of the previous 5 administrations had addressed the trade imbalance that we have with China, and other countries in the World, Trump would not have had this issue. Unfortunately, just like rogue regimes like Iran and n. Korea, these previous presidents "passed the buck".
So, how about you deal with reality, and, not your own little fantasies.
How about, for a change, writing about the homelessness and sanctuary cities, or our veterans living on the streets.
Remember the old adage, "if you do not have anything good to say, say nothing at all".
How about you live by that motto?
4
Krugman is the master at harshly criticizing Republicans and especially Trump. But how does Krugman suggest we deal with China's cheating on trade, theft of technology, etc? How does Krugman suggest we contend with China's real concentration camps which hold millions of the own citizens? How does Krugman suggest we check a rising military power that threatens to completely take over the South China Sea? Answer - crickets.
5
Dr. Krugman has been so wrong, so often about Trump, it's now fun to read him (again) telling us how Trump is the loser.
Two days after the record DOW closing, Dr. Krugman tells us Trump is a loser.
6
And the stock market will crash and we’ll be in a depresssion forever if Trump wins the election in 2016
2
As non American but global Citizen it is difficult to imagine and accept that the voters, including the Republican tribe, could choose their president for 4 years who acts like villianous comedian, bringing laughter and pain at the same time, to the rest of us. Please tell us how he became a big businessman - with brain or just bellying?
@V.Muthuswami
Something like $400 million from his father, that's how.
It’s how we roll in Trump’s Amerika.
There is a fourth reason Trump is holding the trade wars now. The US economy can support them. You can even argue that trade wars are keeping the US economy from overheating. You can also argue that trade wars are wars of attrition, the one who can last longer wins. With a good US economy, Trump can go the distance before he gets pressured by the public. The media has been trying to create public pressure by featuring distressed soy bean farmers and telling people that we are paying for the trade wars. But the media is against the winds of a good economy and the believe that trade with China needs a correction.
4
1000$ is way overblown. It assumes a rigid basket of products with all tariffs are passed on to consumers 100%, no switching to alternatives, either local or from other countries.
And even if there are temporarily no alternatives for some products or semi-finished, it assumes the market gap will not be filled by new competitors. That in and of itself would not be a healthy situation for Americans in the first place. It’s always a losing argument.
2
I think there is a fourth reason...
Americans consume like crazed addicts. They buy from businesses that are behemoths that source their wares at the lowest global cost - providing ample work for anyone not American.
If the America First crowd was serious they would put more money into businesses owned by their local neighbors. Of course that would mean walking the walk...
283
@UH
...and paying $85 for the shirt that now costs $35.
While many of us could certainly do with fewer shirts, I doubt the anticipated increase in hiring would take place at the rate we would wish.
10
@UH
The fact that all that MAGA swag is made in China is a simultaneously hilarious and despicable illustration of Trump's hypocrisy.
I know, I know, it's almost impossible to get through to a Trumpist with facts that illustrate a pattern, but I giggle a bit when I imagine saying to one of them:
"Your hat is made in China. Why?"
13
@UH: Old Joke: A guy purchased made in China stuff from Walmart because it was cheaper than the products made in the firm in which he worked. The firm went out of business. Now he works for Walmart - a company that turns consumers into workers. Lol.
13
Sorry to nitpick an otherwise great article, but Mexico's economy is the 11th in the world by PPP and 15th in nominal terms. It is definitely dwarfed by the USA's, which is #2, but I don't think calling it a "small economy" is accurate or even necessary to make the broader point of the article.
And yes, I am Mexican, in case you were wondering...
4
This just screams for more civics and basic economics education in our schools which is clearly lacking.
Grades 6-12 would be prime years to introduce education on these fundamental policies that DJT is trying to sell.
Given a better understanding of the basics DJT’s plans make much less sense.
Maybe throw in a geography course too...
2
Trump's talk of tariffs as a weapon is not surprising given that his base believe that america is in a state of industrial decline. The number one cause that his base point to as the leading cause of this decline is ...China. Not long ago a similar sentiment broke out and the culprit was Japan, and Japan bashing was the flavor of the day.
There has been a tendency to declare the american economy to be in decline even when the evidence says otherwise. This claim of decline has been useful to republicans when it comes to confusing the americans with claims of job exportation while ignoring technologic evolution that has increased american productivity. Republicans feed this confusion by describing chinese -american trade as a win , lose proposition, with us as the losers. Republicans refuse to consider the win-win aspects of trade and prefer to paint America as a victim of external enemies that use trade to undermine our economy, thus Trump politicly needs to paint China as an enemy ... this resonates well with his largely misinformed base.
Celebrating the economic growth of america and its political dominance is not a Trump theme, his base is fed misinformation and it is important that in the coming elections Democrats set this record straight. Jobs are clearly an issue to be addressed however blaming our global trade partners is not the best approach when what we need to consider are education, health care and infrastructure !
2
Dear Democratic candidates - consider proposing clear alternatives to Trump's tariffs. Tell his supporters in swing states why your approach is superior. Critiques - "tariffs don't work; the consumer pays them" - are only one dimension of the story.
Offer positive alternatives, ones that cannot be summed up as "a return to the status quo ante."
7
It would be great if you suggested some alternatives. I don’t know any alternatives which would make China or Europe or Mexico or Canada change policies. Are there any other than negotiations.
2
@McDonald Walling
Well, since the tariffs are a tax paid by Americans, perhaps the Dems could simply say they'll cancel the tariffs and save each American $1,000 per year.
Tariffs won't bring manufacturing jobs back to the USA.
If anything it will move Chinese companies to Vietnam to produce goods for the US market.
If we have learned one thing in the last 3 years for sure it is that the US electorate can only handle information in small bursts.
Dems must take the “trade wars are easy to win” mantra spewed by DJT and attach it to him like an anchor.
He willingly and admittedly started them with Mexico and China and they have had terrible impacts on many Americans.
Dems do not need to do any name calling, just closely align DJT with his many failures and put HIS name on it
Trump trade wars
Trump trade wars
Trump trade wars
It will sink in...
5
If China never cuts a deal Trump will just put tariffs on the rest of their stuff eventually and it will accelerate manufacturers moving out of China so that concessions will be much less important because China will account for a much smaller portion of imports if the tariffs remain even just for Trump's likely 2nd term. Sad all you can do is try to sabotage good foreign policy instead of coming up with good ideas of your own...what's your solution? To continue letting China do whatever they want while they build up their economy on stolen tech and build up their military with all the money they are making so they can bully our allies in the region?
4
What could have been done was to stay in TPP. With the strength of united Pacific nations China would have more likely been reasonable in negotiating Shane’s which accomplished our goals. Trump is not a team player so his solution to everything is to go it alone. US citizens will suffer and our nation’s credibility has been irretrievably lost by Trump’s abandonment of the Paris Accords on Climate, the Iran JOAC and TPP.
2
By the same measures which applied to the Obama Administration, the economy is doing great (or continues to do great, if you like). Stocks are up big time from Trump's election (stock prices reflect the future - so election night, not inauguration day, is a valid baseline).
We're talking to North Korea, Iran's economy is terrible - which puts pressure on that country's funding terror, and Trump has stood up to Russia multiple times.
Yet if you go back to Krugman's columns from the election to the present, how many will you find saying a positive word about Trump? The obvious answer to that question suggests that Krugman's views ought not to be taken at face value. Any serious writer would discuss the good along with the bad.
7
I wish we would start calling the administration’s position on tariffs the “Trump Tax”. Let’s give Trump credit were it is due.
3
Krugman is on the wrong side of this argument.
First: Adding a low wage zone to one’s economy without any tariffs results in manufacturing moving there. It’s not hard to understand. That’s USMCA/Mexico. And if wages are so low (and/or sheer production economies of scale, like China) that they more than offset tariffs, same thing happens.
Do we want local manufacturing, or not? Serious question. Countries can thrive on mainly service businesses, like Ireland with its unattractive location.
Second: China is increasingly becoming a geopolitical threat, buying the world’s rare mineral mines and starting to expand e.g. South China seas. The current trend is for China to surpass the size of the US economy due to higher growth, eventually its military size will follow. The US is China’s main export market. Smart to actively pursue being at their mercy?
Third: The poor farmers. Or rather, mostly agricultural mega-corporations. There’s a list of crops/grains they can grow. I agree on some support to soften the shock of sudden change, but we should not forget that whenever there is change vested interests shout loudest. You hardly hear from businesses growing due to new opportunities. It creates a bias for leaving things as is.
8
Products and services are most definitely part of global supply chains now. However, the point highlights one of the problems with liberalism's legacy on globalization. We've created an international economic system too complex to unwind. Too big to fail so to speak. If we've learned anything from the banking sector, this situation involves moral hazard. The unattended risk doesn't fall on investors reaping windfalls. It goes to wage earners and tax payers.
Indeed, we see these forces playing out in labor and politics. Economic insecurity among average Americans helped elect Trump. And while tariffs certainly aren't helping, no one has suggested a truly viable alternative. The system is working as designed. The architects wanted a robust and relatively free international trade system. That's what they created. A system we are now relatively powerless to change even when we want to.
The irony is the movement started with a Democratic President. Where Reaganomics didn't work and still doesn't, Carter's transformation of liberal economic policy ultimately did. Perhaps a little too well.
Andy,
If the entire global system is all the fault of former President Jimmy Carter, why didn't GOP president Reagan fix everything back to the purer conservative model during his adminstration? You are implying that Saint Ronnie was not as strong as Carter! That his cabinet was wimpish when it came to economics! Just what kind of "conservative" are you?
Blue wave 2020 !
New Green Dealers want to build 500,000 charging stations. a neat subsidy for Tesla. Tesla promised an affordable electric car which turns out to be to expensive to produce here so he's going to gradually move production to China. Will a New Green Dealer make a deal with Tesla to keep production here? It's great for the planet, China and Tesla and it's shareholders but American workers are forgotten.
Wars have casualties and are often fought by incompetent leaders. Where are the competent leaders willing to protect American jobs?
2
JoeG,
The New Green Deal charging station could be used for other cars then Teslas, so it would be a good investment for our eventual transition to electric vehicles. As for the facory jobs, I agree we need them and encouraging Tesla to stay in the US is a good idea.
Blue Wave 2020!
2
@joe parrott
Those charging stations will cost billions. Are there better places to spend that money like other aging and obsolete infrastructure? Other companies build electric cars but they don't sell well (neither do Tesla's). It's not just charging stations that have to be built. Changes have to be made to the grid and there has to be a power source for those cars. Why should the taxpayer foot the bill? Take a closer look at California and Germany policies.
I agree with you there should be a Blue wave but not a Green one unless businesses are paying for it.
$1,000 per year per household in higher prices is really a tax increase brought to you by “Republicans” to partially offset their massive tax cuts enacted for their wealthy donors.
4
Lies are often hard to expose. Life can be kaleidoscopic, and shifting perspectives often can cause ambiguity.
However, here is an issue that can be expressed in numbers. How is it that those who would expose Trump's serial mendacity haven't showcased these numbers to the public?
Cheney growled that we would be greeted as liberators. I can imagine that on Fox News a video of three guys outside Basra shouting, "Welcome, Americans!" might be looped and play hourly, just as during Trump's inauguration Fox found footage of another inauguration that included spectators.
I read elsewhere today that instead of paying for ads featuring people demanding impeachment, Tom Steyer should fund what look like PSAs in which each count of obstruction in the Mueller Report is carefully explained. Similarly, some lefty of means might want to intercut Trump's hyperbole with the sad reality of trade war.
War. The name itself should remind anyone hearing it that nobody wins a war; everybody loses, although some lose all.
5
Mr. Krugman, tell us what you'd have Trump do in order to negotiate (or otherwise deal) with China. You are a Nobel Prize winner and intellect, so tell us.
To often you columns point out the many things wrong with administration policy, but do not propose alternatives. The China problem is real, and needs remediation.
6
Dr Krugman has explained that many times:
By bumbling into a trade war, Trump undermines our ability to do anything about the real issues. If you want to pressure China into respecting intellectual property, you need to assemble a coalition of nations hurt by Chinese ripoffs — that is, other advanced countries, like Japan, South Korea and European nations. Yet Trump is systematically alienating those countries, with things like his on-again-off-again steel tariff and his threat to put tariffs on goods that, while assembled in China, are mainly produced elsewhere.
4
@david
Attempts have been made, multilateral agreements regarding intellectual property rights have been attempted with success only taunted by China— it didn’t work. INertia in this area, I believe, is the genesis of the present approach by this administration— whether we all like it or not. If there is a better way, then people like Krugman need to present a better option than lip service regarding multilateral agreements which have not been successful.
3
@Tom
Just google "China Krugman", and you'll have all the answers you want.
1
No,Trump is not losing his trade war - the American people are losing the trade war.The only thing that's left to do is preparing the country for picking up the pieces after ruined trade relations and start anew after 2020,when Trump has gone.
4
I was struck by an earlier Times article I read this morning, about the next jobs report. It's supposed to be an improvement over last month's report. It made me think about how any superficial reporting of that report could feed into the lies of "the greatest job-provider in U.S. history."
trump's America will continue to fall in line, and the left will pick the report apart to find the fallacies and shortcomings. I expect that will be the subject of an upcoming column by Dr. Krugman.
But the decisive rest of the country, the ones we need to convince in the next 15 months, might look at the coverage, and then look at all the liberal candidates' proposals for upending the familiar and the comfortable. It made me think for the first time that Sanders, Warren, et al. might in fact be doing exactly what many pundits have warned against: Going too far outside the comfort zone of a huge slice of the electorate.
Here in Kentucky, a rather large coal mine recently went out of business. That might tear a hole in the fabric of trump's lies and failed promises in what's normally extreme GOP country. But how would those voters react to the liberal agenda as an alternative? It worries me, which seems pretty much a constant state of mind for Democrats.
7
@Steve. I hear you, friend. But deep breath...your comments sound like so many pundits (the ones who wanted to coronate Hillary). We have been beat down, beat back, beat up for a generation - ever since Reagan - that we have lost our spine, our vision, our hope. Liz and the others aren’t talking radically. They’re talking like brave FDR Democrats. The way we used to talk when we fought for families, students, farmers, workers. In a way, many of us (and the press in included) are suffering from Stockholm Syndrome. “Oh, please don’t upset our oppressors. They might hurt us. They might not like us anymore.” Come on, brother, grab my hand. Grab your neighbor’s hand. Stand up. Wipe your nose, pull up your socks. Let’s storm the Bastille! Let’s go get our country back! We can do this! Vote. Register as many people as you can. Vote. Fight! Don’t give up!
1
What should we expect when he leads international trade like he's playing monopoly, and doesn't listen to any of his advisors. No wonder he doesn't want to release his tax reports. He most likely conducted his businesses the same way, only then he was playing with his Father's money. Now he is he's tinkering with our money and impact world trade.
2
As long as we maintain the rule of law here, factories will eventually return - manned by robots.
But Trump is also doing his best to raise the question of whether the rule of law will hold. His latest - an attempt to undermine or ignore a Supreme Court decision. If you can’t count on rule of law, investment in the US appears much less attractive.
2
The crucial reason is the second because Trump's trade war is against the world economy evolution. We have come a long way. With its problems, of course. But going back to trade war instead of embracing globalization is like trying to go back to Mercantilism.
Who knows? There might be Federal Reserve wannabes who fantasize about the gold standard. And, then we will have Monarchs instead of presidents and the Civil Rights Bill will be abolished. We will all eat cake.
2
Do the Republicans actually care about American farmers? Or is this aimed at breaking American agriculture-- making sure our food is imported from Latin American farms, worked by poverty-stricken peasants, but owned by billionaires? Trump isn't smart enough to come up with that diabolical plot, but his donors sure are.
4
For a professor, you're not paying much attention to the Trump strategy:
1) Declare a trade war. Talk tough.
2) Cut some sort of a deal (including complete surrender) to end it.
3) Declare victory and start bragging.
4) Let the media present a "balanced" account of the story which includes Trump's stated point of view.
8
Dr. Krugman is "right on the money" once again in what he says, but I think it's fair to observe that the roots of this problem extend far deeper than the mind of Donald Trump.
There is a supporting chorus consisting of the choir he surrounded himself with, and that choir came from the interest groups and their proxy think-tanks pressing their interests by populating key influential positions reporting to him. Dangerous TV influencers or morally questionable has-beens such as Ross, Kudlow, Navarro, Lightheizer constitute the "brain trust" on international economic policy. These people didn't come from nowhere. They represent discredited, ancient mercantilist thinking in support of domestic interests trying to shelter themselves from international competition. The political economy of "Trump's" bankrupt trade policies and the wrecking ball he has brought against hard-bargained trade agreements of long-standing is as simple as this.
Nor is the cause of orderly international trade likely to fare much better under a Democratic administration because that party also caters to strong protectionist interests and urges. It takes a certain level and type of education to understand that no one wins trade wars, and a properly structured set of trade agreements will make more people better off than the chaos Trump & Co. have brought to bear in this matter.
5
Why would China capitulate to Trump's demands before the 2020 elections? Doing so could help Trump be re-elected. Ditto with all of the other countries that he has picked fights with, including our closest allies.
My European friends, many of whom are former officials, think Trump is borderline bonkers capable of doing something really dangerous to world security. I suspect their views mirror most of those currently in leadership position, who likely will do nothing to help him prior to the elections.
Internationally, that pretty much leaves Vladimir Putin, MBS, Netanyahu and Kim Jong Un on his side. What a truly sorry creature he has become, or perhaps always was.
8
There seem to be several low-grade 'wars by other means' going on.
The trade wars have been going on for awhile - Trump just ratcheted up our level of engagement. But nobody seems interested in tamping them down.
A cyber war is underway, just below the surface, though it occasionally breaches the surface and takes down a company, a politician, a city, or a hospital. The skirmishes now happening in cyberspace would be considered acts of war, if they involved tanks and planes.
Countries and private interests have been meddling in each other's elections - in all political matters actually - forever. And countries and private interests are taking sides in, and amping-up, insurrections and armed conflicts wherever they happen - as they always have.
The arms race shows no sign of letting up.
We are at a point where there need to be 'cooler heads', on all sides. I don't see cool heads. The global system of commerce and governance is very thin, and very fragile. It could blow up at any moment.
We need to save our energy to deal with climate change, poverty, other stuff.
2
Manufacturing has ALWAYS been about cheap labor. At the bottom, any capitalist economy needs an army of "little hands", willing to do utterly unfulfilling jobs that pay so badly that they can barely survive, and certainly not get their children a good education, are easy victims of government propaganda designed to make them blame anyone but the government and its capitalist laws for keeping them in such an inhumane place, etc.
The West has done this to its citizens in the 19th and part of the 20th century. Then it did it to the citizens of its colonies, once local citizens started to unionize and fight back.
And then, when colonies became independent, about half a century ago, Western capitalist governments decided to create laws that allowed our companies to move to Asia, where massive exploitation of human and natural resources was still possible, mainly thanks to cruel dictatorships.
Today, the West remains the wealthiest region on earth, but now, it's laws that artificially increase the income gap at home that keep many people into poverty and ignorant enough to fall for government propaganda, racism etc.
Trump's trade wars are merely part of that propaganda.
The only way to slow down the outsourcing (soon also of the digital economy) is to create conditions where China WANTS to join local unified markets because they allow it to export even more, but that the US has negotiated AND that impose better labor conditions in China itself.
Obama's TTP did exactly that.
4
That's got to be one of the most poorly argued and least convincing columns by Krugman. It starts with a fallacy and goes downhill from there. Krugman begins by inventing a definition of "trade war" - not only the tariffs must be imposed for coercion of a foreign adversary but they must be continuously increasing - according to Krugman Trump "paused" the trade war with China by not introducing new tariffs. None of that makes sense. Firstly, even if one stated goal - to coerce a change of policy by a trading partner - was not achieved yet, one cannot completely ignore other positive effects of trade tariffs and claim that they were completely useless. Among those positive effects are tens of billions of dollars added to the government coffers and increasing prices of imported goods and thusly giving competitive advantage to domestic manufacturers. Those advantages will continue to accrue whether China changes its policy or not. The renegotiated NAFTA may be not much different from the old one, but it is in fact different and that difference is in US' favour and it was achieved at nearly zero cost at that and will also continue to accrue as long as the new NAFTA remains in force. Krugman was supportive of the old NAFTA and seems to argue that little improvement in terms was not worth the trouble, but he does not explain why. $1000 per household is a small price to pay for bringing productive industries back to America. And that number is probably wrong too.
12
@David
What is false is the idea that "Among those positive effects are tens of billions of dollars added to the government coffers and increasing prices of imported goods and thusly giving competitive advantage to domestic manufacturers."
Which domestic manufacturers are you talking about? Most of the stuff that China sells us are no longer manufactured in the United States and the tariffs would have to be or at least permanent before anyone would make the capital investment necessary to manufacture the items here and even then, the tariffs would have to be high enough to make manufacturing these items profitable here. In the meantime, the goods manufactured would cost more for American consumers whether we manufactured the goods or consumers bought them from China at the tariff - inflated price.
And of course the third possibility would be that a third nation not subject to the tariff but with sufficiently low labor costs, would make the stuff and sell it to us.
Of course, none of this takes factors like supply chains into account. That would probably make things worse as when the Chinese manufactured product uses American manufactured components but the product produced in the third nation does not.
33
@David $1000 for the average American is not a small price to pay. You are also wrong that manufacturing will shift back to US. It will not. As Paul explains, and I see it happening already from the largest companies like Apple to apparel companies, they will simply shift the factories to other low-cost countries like Vietnam, Cambodia, Pakistan, etc, to get around the tariffs.
61
@David
You're completely mistaken on many points.
"old NAFTA and seems to argue that little improvement in terms was not worth the trouble, but he does not explain why."
Because it has destroyed good will between Canada and the US, for example. To the degree where many Canadian tourists shunned the US for their holidays, thereby hurting many US border states that depend on tourist dollars. As such the little/no gain is negatively offset by the big loss. Furthermore, it'll severely weaken future American trade negotiations - since most countries will seek to safeguard whatever deals are made, given the US's propensity for reneging on their commitments.
Krugman never said that the Fed wouldn't get added $'s. But he's saying that those dollars come from the pockets of US consumers and not foreign govt's as trump as said. That US consumers pay what amounts to more taxes, is hurtful to the typical US consumer. That's his point, which you clearly missed.
Don't know who you are, "David" given the lack of a last name or affiliation. One the one hand we have your, "and that number is probably wrong" baseless, sourceless, reference-less assertion. On the other we have the opinion of a Nobel laureate in Economics....
62
The trade wars are a response to failed treaties that were sold as trade treaties but were not really about creating and fostering international trade. It is worth taking a moment to put the treaties with Mexico and China into perspective.
Before the trade treaties with Mexico and Canada, US companies made consumer goods in US factories. The goods were produced from materials, parts and subassemblies made by US suppliers in US factories. As foreign economies recovered from the Great Depression and WWII, corporations in Japan, Germany, and other countries followed the US model and developed their own consumer goods and supplier corporations.
Japanese and European corporations earned and built a huge capital base that threatened not only US corporate competitors, but US domination of the world economy.
The US response was a series of treaties that were negotiated to enable US companies to compete with Japanese and European companies by building factories in Mexico and China. The goals were to maintain US economic power and to prevent Mexico and China from using trade to building capital as Japan and Europe had done.
Trade has flourished even though the treaties with Mexico and China have failed. China and Mexico are building capital and US dominance of the world economy is threatened even more than it was before the treaties with Mexico and China were negotiated.
The result is the Trump trade wars.
1
Vietnamese exports to the U.S. grew 27% on the year in the first half of 2019, as Chinese companies shifted production to Vietnam as Clueless Donald Makes Vietnam Great Again while soaking his own citizens with China import tariffs that jack up the prices of consumer goods.
Fortunately, Trump's 2017 Billionaire Tax Cuts softened the blow for the struggling rich while the non-rich have plenty of xenophobia, white supremacy, Christian Shariah law, military parades, photo ops and guns to chew on.
Trump has always been a lousy businessman, losing repeatedly with house money in his real estate and casinos.
He has no understanding at all about real businesses that involve research and development, manufacturing, supply chains, distribution and true grit.
He's a city slicker duping his rural, religious Mad Hatters with Extra Virgin Trump Snake Oil.
As his 2017 0.1% Tax Cut Strychnine Grand Old Poison takes full effect with an exploding national deficit and his Tariff Trade Wars collapse agricultural exports and international trade, his cultists will defend the Trump Titanic til the very end.
Trumpistan has slipped the surly bonds of reason and logic to touch the face of their Great Orange Messiah.
This is the Trump Rapture for 35% of Americans.
They're more than thrilled to ride to the bottom of the ocean with their fearless leader who has no idea what he is doing or where he is going.
This is what happens when citizens don't pay attention, don't register and don't vote.
136
@Socrates Your comment, "He's a city slicker duping his rural, religious Mad Hatters with Extra Virgin Trump Snake Oil" made my day!
4
@Socrates: "...as Chinese companies shifted production to Vietnam as Clueless Donald Makes Vietnam Great Again while soaking his own citizens..."
"This is what happens when citizens don't pay attention, don't register and don't vote."
So, what would be your trade policy with China or anyone else?
I appreciate a feverish partisan who writes well as much as the next person, but why would anyone listen to Paul Krugman for objective facts? Of course he is going to say Trump is losing trade wars; that doesn't mean Trump is losing trade wars. Mr. Krugman also said the stock markets would never recover from Trump's election.
7
@Ambrose Rivers you don't realise that might just be a bubble. Debts and deficits are not being paid, the government is spending more despite the economy is not in recession or need a stimulus, the crumbling infrastructure needs 5 trillion dollars to repair by 2025 and trump is ignoring that. Before trump was elected, people already knew unemployment levels were dropping and the economic boom was expected to start 2015. However trump is cutting taxes, increasing gov spending, ignoring bills to fix infrastructure or future green economy that is going to matter later. In the short term, the econony will ofc be boosted with corp tax cuts and not paying bills to fix infrastructure but in my view and logical outlook, eventualllly such bad planning will all catch up and hurt in the long run if he follows this path.
25
@Ambrose Rivers What exactly are "objective facts"? How about just plain facts? Trump supporters are much more likely to believe Kelly Ann Conway' and her "alternative facts" than the true statements and reasoned arguments of a Novel Prize economist. This is why Trump loves the poorly educated.
24
@Ambrose Rivers The Dow Jones Industrial Average, which many people refer to as "The Stock Market", is a poor indicator of the strength of the American economy. First, it is loaded with $ billions of 401k investment dollars, that will eventually be cashed out as generations born after 1980 don't generally participate in it at the levels their elders do. Secondly, there are a plethora of under-performing stocks from GE to the big banks, etc that aren't in the DJIA anymore at all - given a false reading of prosperity if one tries to use that as a measuring tool.
Third, China is our largest trading partner, but we need them far more than they need us. Soybean tariff? They get them elsewhere, and so on down the line. Using tariffs in this ham-fisted fashion to negotiate trade is like trying to fix your cellphone with a hammer...
14
so he hijacks the 4th of july to distract the base from the fact trump has passed only one legislative fraudulent bill in four years. No health plan, no infrastructure plan, no housing plan, no education plan, no allies, no nafta, no japan deal, no korea deal, no Russia deal, no china deal, wars in afghan Syria yemen and wants another in iran.
Trump’s greatest and most cynical skill, honed during the 1980s and 1990s, was learning how to win by silencing truth-tellers and suppressing the truth when it matters most.
5
Why is the dialogue on so-called trade wars so bereft of detail or depth of analysis?
All Paul Krugman does here is remind us once again that soy farmers in America are feeling the sting; that Vietnam benefits more than America; and that in 1900, President McKinley lamented before the federal income tax was enacted that tariffs,
without the aide of an income tax, hurt America?
Why does the discussion of America's so-called trade war render even the genius of Paul Krugman lame?
America needs an open in depth discussion about how America can reverse the loss of much of its productive capacity since the 1980s.
The problem is real, and the answers are elusive, yet the discussion remains fatuous.
15
Productive capacity of USA has improved tremendously over the last 30 years but a big portion of the production are now using machines and robots. Low skills or obsolete USA workers has no jobs do not meant factory stopped productions. Robots/Machines can work 24/7.
29
@wsheridan What sane businessman will run a factory in the US and hire high-cost workers when they can automate? The coal mining companies are replacing miners as fast as they can with robotic mining machines. Even Amazon is automating their enormous warehouses with robotic drones and moving shelves - all in the name of reducing the number of humans they need to hire. The future is not the past. Dinosaur dreams will not become reality, despite Jurassic Park. Workers need to up their skill levels and train for the future.
11
@wsheridan Um, but that wasn't the subject of the column. And it's a column, not a book or some other lengthy study that purports to be in depth. And it's certainly not fatuous. Yes, American productivity should be discussed, and discussed in a serious way. Just don't ask for it when a columnist is talking about one specific form of executive idiocy that mr. trump is currently promulgating.
4
Mr. Krugman does not understand United States history. The United States became rich -- from 1850 to 1950 -- by using tariffs to EXCLUDE cheap, high quality goods made by Britain from the United States market. As a result, the United States developed an economy that had the know-how to make anything. Ever since the United States lowered its tariff barriers, starting in 1950, America's gold and wealth have been flowing out the door.
Perhaps Mr. Krugman should visit some other countries -- such as China -- to see how America has fallen behind economically.
The Chinese have a phrase -- "rich country, strong army." Rich means money flowing INTO the country. It does not include countries that are dependent upon printing currency, to foster an artificial sense of wealth.
6
The US market expanded enormously in that period, plenty of domestic demand as population zoomed up (immigration!!) And raw matl exports were enormous. Then came the 1924 immigration cutoff and the Smoot-Hawley tariffs---both comparable to Trump's policies---and the Depression came a few years later. History may repeat, but it does rhyme.
34
@Elliott, so your suggestion is that we return to the mercantile economy of the nineteenth century? How does that work for the auto industry, with its complex international chain of suppliers? Generic drugs? Medical devices? How does that work for farmers and lobstermen?
Life was definitely easier when we were the only economic power standing after World War II. It could be easier again if we would adopt the kind of worker protections many European countries like Germany have. But tariffs won't do anything to slow the mechanization of production, which is why most workers lose their jobs, nor will it help the American economy. Tariffs always depress GDP, and these tariffs will place an additional burden on American households.
China isn't paying for anything. We are.
11
@Elliott" America has fallen behind WHOM economically? Despite our numerous problems, a great many of which have resulted from our feckless leader's ignorance and misplaced pugilism, we are still by far and away the wealthiest country on earth and our citizens still have by far and away the highest standard of living. If you're under the impression that China is eating our lunch, travel to another country (that one included) and you'll quickly learn that the U.S. dollar remains the most valued of currencies.
4
I'm not seeing it. I don't feel an ounce of pain- other than the pain of being told on a daily basis -hysterically- that "all is lost." I see importers who are terribly angry they are paying the tariff - but are prices going up? Where? I'm in the steel fabrication business and I buy everything domestic if at all possible. What I've seen is that the initial price surge due to panic buying and profiteering is over and prices are less than they were prior to the tariffs on steel and aluminum. Go look at Nucor's daily roll prices and you'll find there is no real increase other than they are at capacity and we have to wait for some items. What tariffs really impact are the importer's net profits. Tariffs are not automatically passed on to the consumer. To those who say they are, please tell us where, exactly, the consumer pays them and what, exactly, is the rate?
Frankly, Krugman has been sounding false alarms since the election. He continuously tells us that the supply chain can never be brought back. He acts like free trade agreements are as inviolate as the laws of thermodynamics. But they're not. They're just lines of type that some people with very specific clients and agendas agreed on.
Democracy in the West is rejecting the know-it-all economists precisely because they don't know it all Good riddance! We'll be just fine without either "free trade" or the economists who push it.
12
@Arthur Taylor It takes time for price increases to flow to the end consumer. You have claimed that suppliers will just forgoe profits and eat the tariffs. Doubt they will continue to accept a lower profit margin over time. This is math not economics.
17
@Arthur Taylor, You say that prices haven't risen for you personally. which leads you to conclude that U.S. steel tariffs have no negative effect. But China has been rerouting its steel through Viet Nam, which is why Nucor's prices haven't gone up. YESTERDAY the Trump administration imposed tariffs on all steel coming from Southeast Asia. That's a gamechanger for anyone in the steel industry.
You'll either have to absorb the cost of the tariffs yourself or pass them along to buyers. Nucor isn't going to absorb this price increase.
8
@Arthur Taylor
"Tariffs are not automatically passed on to the consumer."
This is a claim made by the same people who postulate that a 15$ an hour, is too, automatically passed on to the consumer.
5
Trump is not losing the Trade wars, the ordinary citizens, not the wealthy, of every country involved are losing these wars.
The one sentence in this editorial everyone should read says: "the actual result is to make everyone poorer."
2
The daily manipulation of the media and the public is an act of overwhelming militant "Shock and Awe" jamming of everyone's minds with the falsity of the Trade Wars which are meant to obscure the fact of Tariff taxes on American consumers. The tariffs are really a way of offsetting the federal deficit created by the tax cuts giveaway that rewarded the wealthy for their support in keeping them in power. The real war is by the Republican elite against the 99% as they are setting up their new digs and financial support outside the country. They have done something Earth shattering in the past, and later tried to cover it up with a scam case meant to earn them public sympathy despite what they did. Politics is extremely dangerous. I'm a witness. I was a witness at 7 and a scam victim at 30.
2
Let us also consider, regarding China, that while we may be able to frustrate China, the result will not be a return of American manufacturing. Yes, a few portions of manufacturing may expand, but our businessmen will look for another cheap labor market.
We don’t have the machine shops or the labor force trained to do modestly skilled and skilled jobs needed rebuild most manufacturing. We might get this back if the world stood still for a decade. But it never does.
1
Chinese workers are not unionized and will never be unionized. China -- and many other countries, for that matter -- does not have an OSHA that protects workers' safety or an EPA to regulate the environment.
Workers at Apple's Chinese subsidiary, the best-paid workers in China, make less than a dollar an hour, routinely put in more than 12 hour shifts, and must live in company-provided dormitories for weeks on end before being allowed to go home. Some U.S. prisons provide better working conditions for prisoners who make license plates than what existsin China, and the pay isn't much worse.
When you insist that U.S. workers be made to compete with Chinese workers, Dr. Krugman, you are being anti-worker, anti-environment, and pro-forced labor. Please give our workers a break, sir.
4
Paul,
It's a bad situation.
The reason Xi won't knuckle under no matter how much the trade war hurts China is that Xi realizes that Trump is up for re-election in one and a half years and he is not.
The reason Trump won't back down no matter how much the trade war hurts the US is that he is Donald Trump.
3
It's not so much the whole "trade war" thing, but rather a question of the callous and malign manner of it. Despite declaring Canadian steel and aluminium a "national security threat" and imposing tariffs that had no other effect than to permit U.S. producers to raise their prices and gouge the market, the end result was a NAFTA 2.0 barely distinguishable from the version that preceded it. And while Canadians know that Americans don't care (or even know) about anything outside their own borders, the opinion of the U.S. in Canada has fallen to historic lows, a shift in sentiment echoed rather broadly around the world. Trashing allies, praising despots, treating migrant children worse than cattle and lurching from one strange policy position to its opposite in the same day. American has truly become the loud, boorish, drunk neighbour you hope will just leave.
882
@Meusbellum - Not buying American produce has become the way of life of many in our neighbourhood. Our local grocery store carried a brand of mile that suddenly had an FDA sticker on it causing people to boycott it until the company explained that the milk was produced in Canada and did that to sell it in the U.S.. As for me I switched from eating greens from the U.S. at 3.99 a package to local ones at 5.99. They are more expensive but way fresher and I end up eating them all as they are not rotting after 3 days.
Trade wars have long term affects, small but additive.
106
@Meusbellum
I echo the sentiment. And to tack on to M. Hogan's reply, I look at every label and no matter the difference -- especially food -- I chose a product not from American farmers. I chose brands not from American producers. It is not easy -- yet the administration has touched a nerve when one declares a neighbor "a national security threat."
95
@Meusbellum. My mother was from Montreal. She married an American and settled in Boston. I wish now they had stayed in Canada. You are right about Americans being loud and boorish but not all of us. If the polls are to be believed, sixty percent of us do not approve of Trump. That, to me, is a shockingly low number given what a monster Trump is. If we can’t get rid of him in 2020 there is going to be a run on your border. If the Democrats win, we will have a lot of work to do to regain the world’s trust. Our democracy is on life support now. Arrogant bellicosity is not a rational foreign policy or trade strategy. America needs to solve its own problems here at home and get out of the Middle East and Afghanistan finally.
115
before trump, krugman had zero ideas about how to confront china. zero, even though obama and every other president complained about it. at least trump is trying.
2
@Ari Weitzner
My advice to you: maybe just google "Krugman China", and then start reading all his op-eds, clicking on the links and reading the studies that support his advice and conclusions, and then get back to us ... ?
As to Obama: his response has been the TTP.
That was a multilateral political agreement (and multilateral agreements are always much stronger than bilateral ones) between the US and most of China's neighbors, where the US and those neighboring countries would lower their tariffs, when doing business with us and each other, all while increasing their minimum wages and strengthening labor rights laws.
Where those countries might have been tempted to engage in trade with China, they would now have created an independent regional market, linked to the US. Not only would that have given us more political power over the region and as a consequence China, it would also have limited China's economic growth, ALL while inviting it to join this unified market, in order to be able to intensify its exports too. And of course, China would have ended up joining, as it has nothing to lose. And THAT's when we would have had the leverage to impose higher minimum wages and better labor protections - which in turn would have made outsourcing US jobs to those countries and then also to China less attractive, for US companies.
Trump instead abandoned the TTP, and engaged in trade wars that have been tried at the beginning of the 20th century, and have been proven to fail.
9
@Ana Luisa i read kruguman on a pretty regular basis, and i am pretty sure i never heard him criticize obama on an economic basis, no matter how lousy the economy was, and no matter how poorly his policies were, and every prediction he made about trump economics have been proven wrong. the man has zero credibility and has become a hack, not a real economist.
trump's threats of tariffs, remarkably, to my surprise, have actually been pretty productive as a negotiating tactic, and it definitely has gotten us better terms.
re the tpp- i happen to agree with you, that it probably would have been better to join it, but it would not have addressed any of the problems that china poses- the state subsidizing of her industries, the forcing of intellectual property, and the unfair closing of her borders to imports. but i agree that joining the tpp may have brought more pressure on china to change...but considering that china is resisting the tariffs that trump has imposed, which are very painful to china's economy, that pretty much proves the tpp would not have made a dent in this regard. china will only change if she is screaming and kicking all the way to the negotiating table to remove the tariffs. in this i think rump is right.
2
@Ari Weitzner Trump is not trying. He is posturing.
I assume when buying on Amazon everything is from China and it is always marked as such. But recently I bought a watering can made in China from another source the catalog said 19.89 but by phone I was told on line it would be 22.89 due to the tariffs. Trump lied when he said China pays and the rubes who voted for him believe every word of it. We pay thru the nose-he must go and sanity restored in the government.
6
Sure tariffs on Chinese goods increase the prices I pay for them, but I don't always buy the cheapest. I lived amidst a forest of big box companies; they have lower prices than the small neighborhood stores that they, like noxious weeds, are supplanting. But, of course, I like the convenience of my neighborhood store; I like my neighborhood hardware store where I can borrow a gigantic wrench to turn a radiator and not fill out a bunch of forms, nor have to sign a waiver or promise to pay that only a lawyer could understand. And I don't like it when a portion of the profits that big box company makes on my purchases goes to the political party that cares only for the wealthy. What to do ? Pay a little more and keep the neighborhood store.
10
@eclectico
I just went to repurchase a pair of sweat pants on Amazon, which I bought two months ago for $25.. it is now $35.
The problem with reality TV is it is not reality. Trump can convince his base to believe just like I cry at the movies, but the actors took lunch breaks, practiced numerous times and did it wrong a few times, and then the film was altered to make it appear perfect. Trump thought it was all real, just like on TV. People are beginning to see that Trump never practiced for the role and is doing poorly at it. His show will not be renewed for another season.
64
@Tom
“People are beginning to see…”
His voters aren’t seeing anything except that he’s as great as he always was. They only make up 28% of the electorate but they go to the polls. It won’t be so easy to cancel this show.
12
@Tom and @ADN
I hope Tom is correct, but I fear that ADN is correct. We can’t count on Trump losing voters; we must have a bigger Blue Wave than what we had in 2018.
16
@Tom One can only hope... Or scream in despair...
They're America's trade wars.
Trump is in charge, it's his fault, but we are all combatants.
Elections matter.
Remember that the next time you vote (or choose not to).
551
@Tom Meadowcroft
Exactly - but more to the point, to the Plains states so beloved to Trump, where soybeans, wheat etc.. are being subject to punitive counter tariffs by China, take note: do not believe Trump when he says he's doing this to make America 'great.' He does not know what he is doing, and he is making anyone who sells product to China very much poorer.
24
@Rick Morris
And yet even John Kasich who has never been labor friendly regardless of his pitch on CNN admits that he can't figure out why people in Ohio--above all the farmers--still stick up for Trump. It's almost like some self-destructive wish to hurt themselves rather than see Trump for the self-serving con man that he is. Go figure!
12
@Gert
With rural folks loyalty is an ancient and deep-seated virtue, more important than making money. Sticking with Trump is proving your loyalty. They have faith in him. That's just how it is--no need for logic nor reason.
5
Mr. Krugman leaves out two most important items.
One is that regardless of the success or failure of Trump’s tariffs, he’ll lie by claiming a huge success.
Two is that his supporters won’t care about number one.
677
@Bruce Stasiuk, i think if you read the article you will find Mr Krugman does mention both points, in particular the 'new' NAFTA and the need for a magnifying glass.
31
@Bruce Stasiuk Trump has already claimed success. At his news conference last week he claimed that "billions and billions of dollars are flowing into the Treasury" and "Americans aren't paying a dime in tariffs, China is paying all of it." Which makes you wonder why he had to strip $2.5 million out of the Park Service to pay for his birthday party yesterday...
What, you thought that was a celebration of the nation's birthday? Didn't you know Trump was born on the 4th of July?
31
@Bruce Stasiuk
Obviously, that is due to the fact that Trump has never done anything as President to help rebuild our economy into the potent, flourishing machine it is today.
2
Most people posting on this topic are probably not involved in domestic and international business. I own an international prevention science company, and we have extraordinary population-level results that prevent virtually every mental, emotional, behavioral, and psychiatric disorders at a public-health level—not by drugs. Some of our components come from China, which is the ONLY supplier. My company pays the tariffs, not China. That means customers pay more because of higher costs. It’s that simple. Or, families, schools, states, health care can pay for the increasing costs of drugs for mental illnesses and the cost for criminal justice. If you believe Trump’s economics, one must have failed basic math and business classes.
637
@Dennis Embry"" My company pays the tariffs, not China. That means customers pay more because of higher costs. It’s that simple."
Truer words were never spoken. Hopefully all of the forward thinkers remember this when they call for an increase on corporate taxes.
51
@Dennis Embry,
I'd sure like to hear more about how you prevent all behavioral, emotional and psychiatric disorders. Sounds too good to be true, but I'll withhold judgement for now. I spent 30 years counseling criminal delinquents who displayed all of those problems and our team only achieved around 60% success through intensive treatment in a residential setting.
31
@Jp
We don't need to raise corporate taxes. We need to raise the income tax on any CEO making over a million a yea, and no loop holes.
32
Approximately 40% of the US population believes China pays the Trump tariffs. There's no convincing them otherwise, what a dilemma.
1323
@Larry
I shopped at Harborfreight tools today, for a simple grease gun for my motorcycle collection. A year after last visit. I would guess that 100% of the product comes from China. Prices are up sharply for things blue collar people buy there. It might be hard for them not to notice this, on their budgets.
221
@johnny ro
Not the only place. I ordered on line and the prices were also up. I wish I hadn't waited....
84
@Larry My conservative contractor friend thinks that it's China that's raising his cost of materials and he believes that Trump is going to stop them.This is a smart guy.He just won't consider any other scenario.It's almost like the more he suspects he might be wrong, the more he clings to his beliefs.Rationality is simply not in play.
330
If only facts still mattered to the GOP this election would not be a make or break event for our collective future.
As long as Trump is perceived as hurting the people he was supposed to hurt -- THOSE people, the Trump base will happily wear their MAGA hats to bankruptcy court, farm auctions, and the unemployment office denying they've been conned to the end.
864
@LT
Facts may not matter to the GOP but that's not necessarily the case with all of its 2016 voters.
The 2020 campaign haiku for the Dems should be:
One reality
Naptime for Grandpa
We'll fix the potholes
(Or: truth, youth, couth and competence.)
46
@LT
I've been waiting for the deluge of post T supporters who begin to feel the horror of his political hateful policies when they and their family's medical care isn't covered until they meet their $10,000 deductible and then like a slap in the face also find they cannot afford their medication.
When is this devil's partnership between T and his supporters going to end? How far are we and the world going to be dragged through the mud? What are his supporters supposed to gain by going along with everything he says and does? It looks like the only thing they gain is to thumb their noses at all of T's enemies. That's what is really scary-- the entire Rep party platform is based on hate of the "other." The irony is that they will find that in the end they will be hurting only themselves while enriching the 1%.
82
@sheila
Actually, they won't be hurting only themselves; they are and will hurt all of us.
33
China has loudly turned to Brazil for soy beans. But it has quietly, strategically begun developing its own soy farms. In the short run, American farmers will lose billions of dollars in revenue from contracts and relationships that took 8 to 10 years to develop. In the long run, China will cease to be as big an importer of soy beans while boosting global production and creating greater downward pressure on prices.
Trump is ruining the American agricultural sector like he ruined Atlantic City, structurally and for the long term.
10
In the immortal words of Carol King: it's too late baby. Or should we use Cat Stevens: oh baby it's a wild world. Either way two early 70's songs that cover love gone bad or lost. Or maybe Harold Melvin and the Blue Notes: the love I lost. We lost it. Won't get it back. Jilted lovers usually remember the slight and pull it out at the worst time. Hey, we can reconnect with the Brits. They need us now. Oh well, find somebody to love. (Jeff Airplane)
6
all that Krugman says, but especially this way Trump shoots himself ( and us) in the foot:
"So Trump’s vision of an easy trade victory is turning into a political war of attrition that he, personally, is probably less able to sustain than China’s leadership, even though China’s economy is feeling the pain."
Thankfully for this instance we are a lot more politically sensitive than a real autocracy like China.
4
Does anyone benefit from tariffs? $1000 per family is $128 billion in new taxes paid by Americans. It’s a regressive tax paid primarily by the bottom 99%. Do American businesses make more money? Who wins and how? All we hear is Trump talking about the billions being paid by China, which clearly is false; we pay a tax increase.
Where does Trump get his ideas? From his gut? Even a Wharton undergrad ranked last in his class would know better.
As is everything he does, this is about re-election and retention of power, perhaps past 2024.
The easiest way to make America great again is don’t re-elect Trump.
62
@M.i. Estner actually American businesses will end up losing sales - when prices on "wants" go up, and folks are spending more on "needs" guess what happens? Less "wants" are bought because necessities are more expensive.
3
@M.i. Estner
We are most fond of regressive taxes. "Only the little people pay taxes."
Krugman never mentions the luxury tax that used to exist.
Did he comment on Warren's proposed tax on wealth?
Stopping mega-businesses?
"Too many Americans in positions of power seem unable to grasp the reality that we’re not the only country with a distinctive culture, history and identity, proud of our independence ....". Not just those in positions of power. My ultra-conservative acquaintances couldn't imagine that in a million years (and they have contempt and disdain for all other countries in the world).
22
I pose a question to ponder Dr. Krugman; aside from all the obvious personality facts about Trump choosing a foreign born wife, what are the financial implications of being able to legally move the family wealth to her home country evading constraints of law? Additionally; was the earlier planned "Trump Tower" in Moscow, a planned refuge for Trump under Russian protection? A man of Russian descent living in Kharkiv, Ukraine just over the border from Russia proposed the Moscow tower. Was it a Russian setup, or a planned escape to evade justice? What were the allowances or constraints between Moscow, Russia and Melania's former home in Europe? Was the Moscow Tower intended as a multi-person refuge? Was Trump scammed?
10
@SHAKINSPEAR
An interesting fact about Trump is he rarely makes any attempt at veiling his conduct. I'm thinking; was he planning on moving his wealth to Europe without constraints and living in a Trump Tower in Moscow leaving our nation behind? I have equal feelings that Trump may have been scammed by the Russians in this way? You know I have been writing my belief that our nation's wealthiest are in a mass exodus setting themselves up to live with financial support outside the country. Have we and you been made chumps maintaining a belief in "Globalization? I'd love to read your opinion on this.
1
the international pacts that Trump and his minions are assailing were built over generations to stop the silly trade battles that we now find ourselves enmeshed in. There is no win for the average American in these economic policies. Trump may make a few of his friends and supporters (both foreign and domestic) trillions on the markets and exchanges, but it is going to come out of the average wage earners pocket. If the rich get richer, the poor get poorer. There is nothing more to understand.
21
Let us recall some other predictions by this great man. On Trump’s win: "If the question is when markets will recover, a first-pass answer is never.” On technology: “By 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s.” And so on and so on…
8
@David Nelson
You're not being intellectually honest here.
Two quotes taken out of context and that have nothing to do with the conclusion of this op-ed, nor refute its main arguments, cannot possibly be used to reject that conclusion. That's just not how science and getting closer to the truth works.
What Trump made his followers believe is that knowledge is some kind of personal quality, which you either have or don't have. He declared that those who dare to criticize him, do not "have" any serious knowledge, and as a consequence, that it's best to systematically believe the very opposite of what they say, If you want to get closer to the truth.
Science, however, works with a method where truth is INDEPENDENT of the scientists who has proven a hypothesis, and doesn't add to his self-worth at all, and that's precisely why objectively proven truths are so solid.
Obviously, acknowledging this would mean for Trump to have to stop distracting his voters with personal insult tweets, and having to start engaging in real, respectful debates on substance - which he systematically is too afraid of doing. Why, you think?
As to the night of the 2016 election: what Krugman actually said was that IF he would implement his campaign agenda, THEN within a year we'd be in a recession again.
Fortunately for us, however, Trump didn't even implement 10% yet. So the Obama economy continues to hum along, and only certain sectors of the US industry are hurt by his trade wars...
18
the so called chicken tax had a material and negative impact on the US domestic auto industry. It protected a low tech sector of the industry which the domestic brands dominated and allowed foreign brands to penetrate the market in other categories and especially in luxury brands which globally esarn 50% of auto industry profits.. To day GM is a China/US Company , Ford is soon to become a subsidiary of VW and Chrysler is already a subsidiary of FIAT. Essentially we have liquidated a once dominant industry.
10
What you, professor Krugman, call "trade wars" is actually an effort by the president to change historical wrong between the USA and its trading partners and he is not loosing the "war". I will not dare arguing with a Nobel price economist but i do suggest that you should talk to real life American exporters and importers. I am sure that they will tell you that the USA situation visa-vi its trading partners (especially China) is very bad. Not only that but the president is also right about the fact that the contribution of the USA to the free world (and Russia and China as well) in economics as well as in security, since first World War, is not appreciated by those who were helped. President Trump is already successful by raising the awareness to the wrong situation. He does not have to "win" but improvement is necessary for the USA and he will get it.
2
@Shlomo Greenberg, only time will tell if: (1) Trump achieves improved trade with the world and (2) Trump is re-elected in 2020.
Consider that Trump heralds how unfair other nations are about trade, NATO, immigration etc., then he proposes that he can fix the problem he identifies in a day or week. No problem, he knows the problem(s) and he is the master problem solver! What Professor Krugman points out is that most problems are not easy to fix and that Trump will claim victory even though there is no improvement. Unfortunately, many followers, simply believe whatever Trump tweets and give him credit for "wins" when a battle was neither won nor necessary.
2
@Shlomo Greenberg
You might want to talk to American manufacturers and find out the damage these "trade wars" are doing to them. Especially the small and mid-size companies. They are hurting and hurting bad. Just like the US farmers are hurting and hurting bad. Try to understand the difference between rhetoric and reality.
trump=all hat, no cattle
1
@Shlomo Greenberg. I think you need to reread the history of petroleum.
The sole reason Trump does anything is to aid Trump and the Trump Family Brand.
He's a snake oil salesman, always has been, always will be, and there are millions in this country who daily buy his product.
Much of the rest of the world seems a bit smarter.
44
Trump runs the country like a business man. USA Co. is similar to Trump Co. He is a risk taker, he bluffs, he makes decision on how he feels without much planning or deep knowledge. If anything goes wrong, he is the boss, he can change his plans at any time. A country is like a company to him, if it goes down, the boss is almost always just fine, as for the rest, he doesn't seem to care much.
53
@SCH
If anything goes wrong, he will do what he has always done in the past: declare bankruptcy and let others clean up the mess he made.
32
@SCH Exactly!!’
@SCH. .....yes but Trump was NEVER a successful businessman....far from it, so he knows nothing about how to actually run a successful business much less the US government. Remember that Trump works for Putin and that is the force that drives him.
3
Pray tell, what difference does "popularity" make to our misguide leader? It all comes down to tanks on the Mall.
8
@Steve
Tanks on the Mall is a perfect metaphor for trump since the tanks were basically props hauled in for show.
11
Krugman is the voice of reason. You just have to bear it when fools come to power.
14
This is the greatest headline because Paul Krugman is notoriously always wrong. Fairly clear to anyone paying attention that the USA is crushing its trade war opponents.
4
In what ways is Trump crushing trade issues and imbalances? Still waiting for numbers and facts 2.5 years in.
15
@Truthbeknown Yep, all crushed, everywhere, the crushed, makes you feel better, all that crushing, and the crumblings
@Truthbeknown
Lol ... you seem to disagree with some arguments in this op-ed, and then cannot even give ONE argument that would refute them, but instead simply allow yourself to imagine that anybody who criticizes a president you support, must by definition be "always wrong" ... ?
How is such an un-critical attitude MAGA ... ?
pressure on China has to come from consumers waking up and buying as little as possible from them... tariffs will never be part of the equation. a better solution would be requiring all advertising and packaging to mention the country of origin in large type - but those are pesky regulatuons...
3
@anastasi. When it comes to automobiles, computers, major appliances, there is no one country of origin; it would be COUNTRIES of origin.
8
@anastasi
I supposed you missed the paragraph on value chain. Nowadays, supply chains mean that a product can have several countries of origin, i.e., raw materials from one, parts from another, assembly in still another.
Moreover, I don´t believe American consumers - other than Trump most fierce fans - have stopped buying Chinese, Mexican or Canadian goods. What about American companies or retailers who need products from different countries to run their businesses? It is not about pesky regulations, it is about ignorance of how the modern market works.
9
@anastasi - It is clearly stated in the article that since most goods are made from parts made is several countries, it is impossible to accurately state which single country the item was made in. Hence, it is impossible to state one single country of origin. (paragraph 12)
1
Professor Krugman, why should anyone listen to what you have to say?
You and all the free trade apostles of the church of globalism have been dead wrong about everything having to do with China for the past twenty years. Maybe it’s time to retire, or at least write about something else.
6
@Greg Care to name a few instances. I am sure there must be some mistakes by Krugman, just like every economist worth their salt, but by and large I have found him pretty reliable and willing to admit mistakes. Plus I trust his opinion a whole lot more than anyone around Trump.
21
@Greg
Just because you write something does not mean it is true:
15
@Greg
Maybe we should listen to him because he is very smart, has a Nobel prize, and writes with a clarity totally missing from trump and his minions? Pretty good reasons, I would think.
1
Republican presidents and war go together like peas and carrots. I'm actually quite thankful chickenhawk Trump is choosing to make his a bloodless one.
3
I don’t understand why they say journalists aren’t good at economics. Paul Krugman you are brilliant. Three reasons why a Trump tariff war is imbecile. The reasons are not technical economic jargon. They are more psychological rationale for presidential (mis)behavior. The scar that is etched into our global economy is hopefully motivation to end this insanity.
11
When the Brits joined the EU they dumped the Commonwealth which created years of ill-will. Many Commonwealth countries did not look kindly at the British & looked further afield to trade with others. Over a long time they found their feet but deep grievances remain today. Not forgotten.
Ironically the Brits are now stupidly leaving the EU and attempting to form individual trade alliances with many of the countries they threw to the wolves. History repeats itself back to front & front to back.
Most informed people realise Trumps trumped up trade wars are designed to divide people domestically & internationally but will actually unite disparate economies against the USA.
It'll end in tears like everything Trump touches. Suffer the little children
26
Mr. Trump, on multiple occasions, has expressed some variation of his contention that China sells more goods and services to the U.S. than they purchase from us, and, therefore that trade deficit means the U.S. "lost" that money, and we're being played for suckers.
My question is: How does one counter asinine, simplistic positions such as that? Perhaps tangible economic pain is the only thing that will finally register with Trump's supporters.
17
We will feel the effects of Mr. Trump overseas for a long time. People don't like bullies, especially when they are stupid.
It took a long time to earn the love and respect that we used to have around the world. Long after Trump is gone, people around the world will ask themselves what on earth got into Americans that caused us to elect this man.
Let's hope it doesn't take decades to earn that respect back. The next President could do so by acting seriously to combat climate change. If he does it properly, some fossil fuel, timber, banking, and weapons companies will go bankrupt. That would be a great start.
10
Hate to have to clue you in on this, Dr. Krugman, but Dick Cheney's daughter is one of the leading Republicans in the House. Seems as if nobody is listening to you. Or at least the entire Republican party believes the US was greeted as liberators in the second Gulf war and nobody on their side of the aisle realizes we have been in Afghanistan for more than 18 years, but Obama already captured and killed Osama bin Laden in Pakistan. Bush and Cheney said we were going to war in Afghanistan to capture the perpetrator of 9/11. The non-bin Laden perpetrators were Saudis, Trump's favorite country. No Republicans have any idea what is going on and your columns are not going to inform. You must figure a better way.
7
I find it difficult to understand why Krugman thinks it's a good thing for Americans to pay $1000 a year less so that foreigners can keep their exchange rates low relative to ours by buying up American assets such as prime real estate and American companies. Can anyone explain this?
3
@George H. Blackford
It's that paying $1,000 more a year and not seeing ANY effect that benefits the US at all means merely hurting the US, you see?
8
@George H. Blackford OK. I'll bite. First, I must say I admire your view that this is a sacrifice in this "war". If more American's actually did feel the sacrifice of wars, perhaps we'd be a little more careful about our saber rattling. But in direct response to your issue about it keeping foreign entities from buying American assets, the truth is that the last Tax Fiasco did nothing but encourage such behavior. (Not to mention some of the worse offenders in the area of real estate have not been impacted by this "war"). If a foreign currency looks weak, guess what the rich foreigners do - immediately invest in a stable currency. If foreign investment in American assets is your concern, fight for laws that directly impact foreign investment. Your idea that tariffs paid by American's fixes this problem really makes no sense.
5
@Maria S Re: "Your idea that tariffs paid by American's fixes this problem really makes no sense." My point is not that tariffs fix this problem. My point is that the problem is capital flows, not a lack of tariffs, and that Krugman ignores the real problem when he complains about tariffs and ignores capital flows. See: http://rweconomics.com/htm/WDCh_2.htm
1
Trump doesn't read, can't focus on a briefing and doesn't learn from most mistakes. But, that doesn't stop him from believing that he's an expert in everything. He's that shallow.
By virtue of being a TV personality, a liar and a racist, and with Russia's help, he became President.
That didn't make him any smarter and certainly not more humble.
The Trade policy is based on ideas that are elevated by the term "half-baked". His managers gave him the Wall, so that he'd remember to talk about immigration. Then, without real thought, he decides to push it. I mention that one, because his advisors admitted it, but there are new examples daily.
His trade views are no deeper. Since he believes himself to be an expert, he has to believe that anything he decides upon is brilliant, even if decided the opposite yesterday.
His policies are a combination of lies, unjustified notions, bad advice and arrogance. The underlying structure, if I can call it that, is for psychologists, not economists, to analyze.
So, of course he's losing. How can he be expected to win a game that he doesn't begin to understand?
16
I enjoy reading Krugman mostly because he’s been embarrassingly wrong on everything Trump When Xi sees Trump winning re-election next year, instead of a squishy leftist, he will capitulate.
2
@Mitchell myrin for the 99% of the voters that vote GOP what policies actually help them?
@Mitchell myrin Just ask the farmers....
@Mitchell myrin - Strangely familiar how the talking points against anything that dares criticize Trump consistently keep showing up in several different comments under several different names. It's almost like it's organized......
1
The fantasies of M.A.G.A. embodied in the person of Donald Trump are killing American democracy. Trump's trade wars against China, Mexico and Canada have put paid to American credibility all over the world. What is Trump's endgame?
We wait for President Trump's trade-war chickens to come home to roost. For his lies and boasts to be exposed in his impeachment. How will Donald Trump's popularity TV Reality show of America the Beautiful play out?
3
I am sure he is the laughingstock among world leaders. They know that his word means nothing. His childish Twitter language, his harshness and ridiculous threats only prove he's clueless as to world affairs. They will wait him out. Unfortunately he has learned that his words can manipulate world markets. However like everything else I see,that also is beginning to fail. His presidency is eroding in front of the entire world. Good luck to all of us!
10
Dear Paul, you made the mistake of stating that Donald Trump thinks.
10
Are you the same Paul Krugman who declared that the US economy would tank if Trump got elected?...of course you are.
Please Paul, enlighten us all, why should we believe anything you say, especially regarding economics? You have been proven wrong so often.
4
@Back Up
Interesting post...though I suspect your should cite where Paul wrote the economy would fail if trump were elected. You may be mistaking his saying some policy would fail, not his election. And in that instance he would be correct.
8
@Back Up
He did say it but retracted this view 3 days later. He admitted he made that statement out of distress that Trump had been elected. You should use that same critical lens on Trump, who has been proven wrong so often. Trump knows how to use loopholes for his own benefit and he has now created more with his tax cuts.. again to his own benefit. There are too many articles to list of where he has stiffed his contractors.
Let's take a 5- 10 year view of Trump's actions. The lasting damage of the tariff war is already done. US/China relations are broken, even if we do resolve a "trade" deal. The reason he backtracked on the Huawei ban is because of corporate pressure. Google is afraid of losing access to all that data if Huawei has its own operating system. Huawei is now working 3 shifts.. 24 hours/day to develop areas where it is weak. The nation has been awakened to the racism of the US. They no longer look to the west as the Dream land. Trump has united China in their quest to become self sufficient.
This article from SCMP is interesting.. It's a reminder of what happened to Japan and a historic map of what China should avoid. Lighthizer is in both places. However China has 1.4 billion people. Japan has a little over 136 million.
https://www.wita.org/trade-news/lessons-from-an-old-trade-war-china-can-learn-from-the-japan-experience/
https://www.politico.com/magazine/story/2017/01/the-roots-of-trumps-trade-rage-214639
Next election, Trump can't just sell snake oil like he did last time. He has to defend his record. The Dems need someone who can take it apart surgically and ruthlessly. A good prosecutor like Kamala Harris.
2
Trump’s tariffs are the manifestation of this idea: for every complex problem there is a simple solution, and it’s wrong. It seems like Trump went to business school and took Econ 101, and then just quit there. He acts like it’s 1919, not 2019, that our economy is still based on our wealth in natural resources and a strong domestic industrial workforce that can be exploited by companies that are totally unregulated. Even an unstable genius usually will recognize that when everyone else’s beliefs don’t mirror their own that it may be their own beliefs that should be questioned. But not Trump’s genius: in his world everyone else must be wrong, especially economists that write for The New York Times. It is terrifying watching other world leaders finally figure him out and start using his ignorance against him. And against us. His tariffs on Chinese goods may worry Beijing for a while, but I’ll bet it won’t last long. It is, once again, the U.S. middle class that will get hammered - as they did after the housing market crisis - because they need inexpensive Chinese goods to maintain their standard of living more than China needs American goods and agriculture deals that we renege on. Some kind of economic protections would have been useful in the 1990s, when we were busy moving most of our manufacturing offshore (to China!). Now it is too late and Trump’s trade war is lost before it begins. He’s stuck with ideas of passed-by economic glory on the battlefield of trade.
8
Raise your hands if you think Trump actually had a strategy and a plan when he started his trade wars.
I'm waiting.
My best guess is that he started them because of his campaign rhetoric art the time. Make America Great Again, other countries steal from us, yadiyadiya.
And then he hired a bunch of economic nincompoops and started something he still doesn't grasp (Tariffs are taxes paid by Americans Mr Trump), without an endgame. I bet he is sitting in his oval office feeling great and having no clue that farmers and ordinary Americans are paying for his madness.
You want this crazy to stop? Then vote Trump and his GOP sycophants out of office. All of them.
17
So America should just submit to China as the new world economic power that got there by breaking the rules, stealing our technology, and treating their people as they do without any attempt by the U.S. to return some balance to the relationship? Clearly the path we were on was not leading to a more balanced relationship.
2
@DC Please look up the phrase "false dichotomy". Thank you.
Trump's motto is "Failure is our only option."
4
Here was the story this week in Canada:
"Statistics Canada reported Wednesday that exports jumped by 4.6 per cent to $53.1 billion in June, owing largely to a surge in shipments to the U.S., especially cars and car parts, which rose by 12.4 per cent to $8.4 billion. Overall Canadian exports to the U.S. rose to a monthly record of $39.3 billion."
I guess Trudeau won NAFTA.
11
Reposting
Trump entered office with this "policy": Anything but Obama. If Obama had done it, approved of it, or even mentioned it, he Trump, wasn't going to do it. Or he was going to undo it, disapprove of it, pull us out of it, or simply ignore it.
There are still people here in the NYC area who believe that Trump is the best thing to happen to the country since it was founded. They have no idea that what he's doing is damaging our country, our economy, and their lives. They see the stock market going up, a few more pennies in their pockets, and a man who says all the ugly things they want to hear. As far as they are concerned tariffs are great, all immigrants are threats, and Trump can do no wrong.
Trump has managed one thing quite well. He has revived the image of the ugly American. Singlehandedly he has undone decades of diplomacy with his attacks on our allies, his foolish overtures and statements to our enemies, and his vanity has been exploited by all. He has made America the laughingstock of the world. (And enough Americans voted for this which is even more unfortunate.)
If trade wars are so easy to win Trump shouldn't be bargaining with any country. Clearly trade wars backfire especially the all out ones that Trump is indulging in. China and some of the other countries don't need to put up with this. The world is big enough that they can take their bat and ball and play elsewhere.
7/4/2019 9:00pm
11
Trump's statement about trade wars being easy to win will be used "to illustrate the arrogance and ignorance" of policy makers. Arrogance and ignorance also will be used to describe the Trump administration in general and the man in particular. And it couldn't be more accurate!
4
A very prosaic piece by the laureate, and very unlike what I would have expected. If trade wars are a 'substitute, or camouflage for actual war, and the US wants to put 'restraints' on China's global ascent, this path is the least bloody, even if if it is unlikely to succeed. American corporations got rich on the China trade without be hampered by marginal revenue equal to marginal cost, but achieved gross margins, while US citizens , received their electronics, cloths at middling cost, and US and European banks found a reason for their existence. One is great full that the most labor intensive and polluting products are made else ware. Inversely higher prices would have created less pollution and damage to the planet. These are the true external costs to the planet. A world of desperate consumption will kill us. The debate of free trade vs tariffs is infantile and stupid at this point in civilizations life cycle. PK just sticks to the text.
5
Trump's foreign policy is that of a bully pretending to impose his erratic personal will on every other nation, but failing do to so and soon retreating - fortunately for all of us, so far.
2
Trump entered office with this "policy": Anything but Obama. If Obama had done it, approved of it, or even mentioned it, he Trump, wasn't going to do it. Or he was going to undo it, disapprove of it, pull us out of it, or simply ignore it.
There are still people here in the NYC area who believe that Trump is the best thing to happen to the country since it was founded. They have no idea that what he's doing is damaging our country, our economy, and their lives. They see the stock market going up, a few more pennies in their pockets, and a man who says all the ugly things they want to hear. As far as they are concerned tariffs are great, all immigrants are threats, and Trump can do no wrong.
Trump has managed one thing quite well. He has revived the image of the ugly American. Singlehandedly he has undone decades of diplomacy with his attacks on our allies, his foolish overtures and statements to our enemies, and his vanity has been exploited by all. He has made America the laughingstock of the world. (And enough Americans voted for this which is even more unfortunate.)
If trade wars are so easy to win Trump shouldn't be bargaining with any country. Clearly trade wars backfire especially the all out ones that Trump is indulging in. China and some of the other countries don't need to put up with this. The world is big enough that they can take their bat and ball and play elsewhere.
7/4/2019 9:00pm
1
As a professional negotiator (me), I'd say trump is a dismal failure as a negotiator. A good, effective one works behind the scenes, attracting as little attention as possible. trump is a carnival barker, attracting as much smoke & mirrors as possible, à la pyramid scheme. And his low information crowd is lapping it up with zero critical thinking.
12
In a war of any kind...
it always boils down to intelligent negotiations,
friendly outreach and
having allies to corner a bully (like China, Russia for example).
What has US done so far?
-Mr Trump writes beautiful letters to a ruthless dictator, and is chummy with a killer of journalists
- kills the Pan Pacific deal,
- ostracizes our closest trade partners and neighbors, Mexico and Canada
- imposes tariffs on China without calculating fully who will be impacted most (Americans)
- makes Europe doubt anything he says because of his persistent lying.
We are right on target to shoot ourselves in both feet.
But, who cares.... Trump supporters believe Divine has granted him superior authority.
When plain common sense dissolves, who is listening?
8
@Ash. 'In a war of any kind...
it always boils down to intelligent negotiations,
friendly outreach and having allies to corner a bully (like China, Russia for example).'
Quite right. Your next paragraph raises some doubts about who the bully is. Have the Russians and Chinese repudiated agreements they entered into? Have they attacked their allies business interests on the grounds of national security?
Look in the mirror from time to time.
One of my large manufacturing clients received the following from one of their biggest suppliers:
"In addition to the agreed upon sell price, your order will also include a line item of the President's import tariff from China. This is a 25% addition to the total net invoice which will be processed at the time of product being shipped."
Adding 25% in unforeseen costs will mean a significant increase in their price to consumers, and likely layoffs as demand slackens.
Not good, not easy to win, and all because we have an ignorant buffoon in the White House.
7
“Millions for defense, but not one cent for tribute”. Didn’t America just pay millions for a 4 July tribute to itself?
4
Come on Paul, you can’t make distinctions on tariffs. They are all consumption taxes imposed on their own citizens. They are all designed to make their own citizens stop buying from the designated country.
trump is playing with fire when he recklessly blacklists and imposes tariffs willy nilly. He is blind to the plain fact that pulling out of the TPP isolated the US and gave China an open field to play in. Any decline in China GDP due to trump ill-conceived shenanigans, they'll more than make up elsewhere.
3
You forget, but Trump remembers, that for reliably Republican farmers there are many matters more serious than crop prices.
Critical issues facing our country, like kneeling football players, transgender people in bathrooms and Mexican rapists. Like all successful demagogues, he understands his audience and knows how to get their unconditional support. Count on it.
14
@TJGM
All fake things. You can count on conservatives to vote against their economic interests because of racism and homophobia.
The Trump Derangement Syndrome has established itself as actual psychological disorder. Mr. Krugman’s this piece and others are proof of that fact. This condition should be considered a real disorder that influence your reasoning powers. And should be put into the Diagnostic and Statistical Manuel. All of Mr. Krugman's “the sky is falling” predictions are notoriously proven untrue for the past few years. Why would he continue to say things about Mr. Trump proven so vividly false, over and again, perhaps hoping for a different result, unless you are suffering from Trump Derangement Syndrome?
2
@ChandraPrince
Yes, the people who support trump are deranged and delusional but we try be kind to them and keep them from hurting themselves. Breath deep, Chandra, deep calming breaths.
1
You are saying the same things about President Trump that British Colonials said about George Washington and slave-owning -Democrats spewed about President Lincoln. (Democrats owned all the slaves all 3 million 980, 000 of them) Your slandering of President Trump actually places him among the pantheon of greatest American Presidents! Thank you very much sjs...
A small correction, Paul. America is losing the trade war, Trump is losing his mind.
5
Trump will win his trade wars because he will say he won and his half wit Republican supporters will believe him.
7
Although Trump, and his trade policies, are the proximate causes for the world’s loss of faith in the US and its institutions, the overarching cause is the political polarization of our country. This polarization, in combination with our form of democracy, raises the possibility that our government’s policies can change 180 degrees every 4 years (every 2 years, if you count the possibility of a change in the majority party in congress). As such, any commitment made by a US President can be undone in a matter of a few years by the next President. Ask Iran. Ask Canada and Mexico.
Our founding fathers, with all there brilliance, never anticipated a country so divided, nor an economy so reliant on global cooperation.
Until we can come together as a people, we will be living in a country that will be mistrusted by the rest of the world.
4
I find the idea that a country could win or defend technology leadership through “trade wars” bizarre but that is exactly what the Trump tariffs on China seems to be meant for. The idea that China’s progress is solely based on stealing intellectual property is outdated by a few decades and that appears to be one of the main issues here: the President and his advisers are simply living in the past and are in no way preparing the country for the challenges ahead. The number of patent applications is a good indicator for shifting technology landscapes: applications from China are rising - ours are stagnating and decreasing. I do not see any Trump push for innovation - just the opposite. That is a loosing strategy - with or without a trade war.
5
The hubris, corruption, malice, cruelty, sadism, and impotency of Trump and his administration are very impressive. Trump has already caused so much damage that it really doesn't matter what he does now. Sure, he'll cause more migrant and U.S. Citizen deaths (he's even conducted a mini genocide in Puerto Rico.) So, you broke it, you bought it. I hope Trump bankrupts America--especially the one-percenters.
3
"Too many Americans in positions of power seem unable to grasp the reality..."
Indeed, on foreign responses to childish trade policies to guns and massacres at your children's schools, to two year olds incapable of speaking or walking because they have been in American concentration camps for TWO YEARS (a crime against humanity far worse than Guantanamo, these are children and the American soul has been stained).
Why Nancy Pelosi and Republicans in power have refused to remove this monster from the head of the table defies reality and I have lost faith in American leadership as a result, like many others these last 2 years. What a difference between now and the Obama era.
Art often reflects life, and the number 1 song on various charts in America of late is unsurprisingly called "No Guidance", exactly how I feel about the US state of affairs.
America and the free world are leaderless. Not that we are powerless to do anything about it, its just that those in power refuse to take action.
3
@Reasonable
As far as I understand it, the Dems initiating impeachment proceedings far from guaranties Trump's removal from power.
First of all, impeachment has to be approved by both Houses by a large majority - majority that the Dems definitely don't have in the Senate - and then, even if by some miracle, they manage to get the votes to impeach, Trump can simply refuse to go! There is no precedent of a US President who was successfully impeached and left the office.
I think it probably fits in with #1, but I think far too many Americans perceive people from other nations, including other developed nations (European countries, China, Japan) as somehow far dumber than we are. Like they aren't smart enough to beat us at a trade war (or any other kind of war for that matter). To those folks I'd recommend a little refresher on where the United States stands compared to any of these other countries in terms of education. We might be mighty proud of ourselves, but you know what they say about pride and nasty falls.
2
We had already lost the Trade Wars long ago. what Trump is attempting to do is take back what once was ours. The Liberal Elites don't get it, Economic Patriotism. Sadly Senator Warren gets it, Professor Krugman does not.
American designs and invents the iPhone, takes production to China, employing tens of thousands of workers, lifting them out of poverty, and sells the phone back to America, at $1,000 each. That is corporate greed, Elizabeth Warren style. Trump agrees.
The difference is Trump wants to correct the things that drove Apple to do that, and Warren wants the Government to take control of Apple and squeeze them for more dollars
The Trade War is not lost. We are at a crossroads. We the next Apple do the same, or will it practice Economic Patriotism.
Krugman is clueless.
2
All this trade war activity shows is that we are a country of ignoramuses. (Yes. That’s the plural. I looked it up.)
The president is the big one since he believes trade wars are good and easy to win.
The others are everybody who believes and follows him.
There’s nowhere to go but down.
What about the rest of us? What can we do?
4
Manufacturing isn't coming back to the the US. Clean coal doesn't exist. Coal mining jobs aren't coming back. Selling racism and hatred to the American public will not get you re-elected. But this is your republican party. Remember that when you vote.
6
Sounds like McKinley could admit when he was wrong about something. Trump will never acquire that attribute.
Thanks Dr. Krugman for another educational read.
6
Trump has no idea how the world works. Everything he has was handed to him. When he got into financial trouble his father came to his rescue. For most of his life, he has lived above the crowd. Before he moved into the White House, he lived in Trump Tower and looked down on New York City. I doubt if he has ever walked on the streets with the crowd. The Trump organization is all flash and trash. If truth be told, Trump runs a Mom and Pop business. From day one, this is how he runs the country.
4
Mr. Krugman:
Then how do you you suggest that the US addres the many unfair Chinese trade prctices? Letting them into the WTO didn't help. You should suggest a solution instead of complaining about Trump actually trying to fix it.
1
Now if only Ivanka moved her production to the US!
3
The problem as with most things Trump is his supporters don't care about the truth. They make it up. In Trumpland his supporters think he's winning big.
Take Nafta. Even if it gets approved the key change is flawed. He demanded higher wages across the border but didn't index them to inflation so over time they will be meaningless.
On tariffs we encourage our farmers customers to find other more reliable sources of supply. Even after he declares victory our farmers will look around and see their customers don't come back to prior levels of purchase.
His fans don't care. Reality doesn't matter. Those same farmers will vote for the fool again.
3
For as crazy as Trump is, at least he's doing something to address the problem. People talk as though TPP was going to be a magic bullet that would get China to change its ways. Well, if it was that simple, why hasn't it already been done? What have people been waiting for?
Since China has shown that it has no intention of ever following the rules of the WTO, why would it be willing to follow the rules under TPP? Why wouldn't it just do the same thing it's done before--sign the agreement, then don't follow it?
I think people need to come to grips with the fact that China won't be opening its market to "foreigners" or agree to trade by rules written by foreigners. They'll be happy to play people for fools and string them along, but they won't actually do it. Some day, their attitude may change, but it won't happen anytime soon.
1
@John Chenango,
TPP did not include China. It could have been a tool to help the US and several nations present a unified front to China. It hasn't "already been done" because Trump pulled out of TPP negotiations. Trump is unlikely to succeed in this trade war, because he has chosen to go it alone instead of joining forces with the many other nations that want China's predatory behavior to change.
1
@John Chenango
"People talk as though TPP was going to be a magic bullet that would get China to change its ways. Well, if it was that simple, why hasn't it already been done? What have people been waiting for? Since China has shown that it has no intention of ever following the rules of the WTO, why would it be willing to follow the rules under TPP? Why wouldn't it just do the same thing it's done before--sign the agreement, then don't follow it?"
I find it remarkable how badly informed are Americans about international issues. But that doesn't stop them from being against, say, international trade agreements.
The TPP (stands for Trans-Pacific Partnership agreement) did NOT include China among the States-Parties.
1
@Elena M.
Part of the point of TPP was to rally countries together to create a block to confront China and convince it to change its ways. My point is that even if Trump joined TPP, China still isn't going to "surrender to the Imperialists" and follow an agreement drafted by "foreigners."
A) It is far too early to pronounce how the trade war with China will end, B) The trade war at its core is not about trade, but about technological leadership in the next two decades, C) Trade is a subset of strategic interest, and China has used the trade surplus to built the worlds largest Blue Water Navy and militarized the South China Sea.
The real winner in the Trade War, is not China, inor the US, but is Vietnam. Read "Someone is winning the trade war, and it’s not the US (or China)"
"Vietnam has gained most from the shift in supply chains triggered by a nearly year-long trade war between China and the United States, according to a report by Japanese investment bank Nomura."
"The majority of Vietnam’s gains came from additional imports of goods covered by US tariffs on China, mainly electronic apparatus for telephones, furniture, and automatic data process machines, likely because multinationals could swiftly relocate to other factories outside China, the analysis said
Do American companies suffer when their supply chain moves to Vietnam ? NO. Does China suffer when the supply chain moves to Vietnam . YES
==
Further reads
"Apple assembler Foxconn considering iPhone factory in Vietnam -state media"
https://www.reuters.com/article/us-foxconn-iphone-vietnam/apple-assembler-foxconn-considering-iphone-factory-in-vietnam-state-media-idUSKBN1O3128
4
@Woof Hmmmm, you don't count the net loss to so many Americans in your equation. China or Vietnam winning and they lose either way. Is Vietnam going to buy all those soy beans? Didn't think so. All the factories move quickly to Vietnam? Didn't think so.
1
Hah! Bookend statements by Trump and Cheney.
Better pay attention to what people do rather than what the postulate. Rough road ahead.
6
Trade wars are easy to win when you rack up 2 trillion dollars in the US national dept in two short years. Slap a tariff on China? Guess what, they stopped buying soybeans. Our great negostraitor will send billions of US tax dollars to the farmers who love him. US Steel just idled 2 blast furnaces in the mid-west due to farm equipment and vehicle sales. Lower the fed rate, belittle the fed chief that you appointed for the sane reason of lowering the interest rate to keep your shell game in play.
7
Unfortunately, most Americans do not understand, and are bored by, economic policy although they suffer the consequences of the grandstanding and foolish decisions of the con man and ignoramus who poses as the defender of American interests in the White House. But then Trump's trade wars are meant to show he stands true to his campaign pledges that he would renegotiate from strength, even if in reality the replacement for NAFTA is not very different and all he can get from China is some vague wording. In the world of Trump supporters, Obama was a weakling, possibly an alien, unfitted by his race to be in the White House, and everything his Administration achieved was bad and should be reversed. Trump went even further - all previous US administrations until his own had been rolled by other governments. Now the "stable genius", the master of the "art of the deal" would show the world American is still No. 1. Unfortunately, these are only lies and Trump and his family and cabinet are simply feathering their own nests and doing great harm to the country, lowering the quality of life of Americans.
9
Trump is not only losing his trade wars economically, he is losing the trust of America's trading partners - many of them long-time allies; trust which in many cases was won with blood, sweat and tears is being swept away with jingoistic slogans and short-sighted temper tantrums.
For Trump his only real win is riling up his base who will support him no matter how much he hurts them.
23
Banks would not loan money to Trump because he stiffed most folks he did biz with and he did lose over a billion$ in 10 years not exactly a biz genius. Trump pulls out of treaties on a whim and reverses himself constantly while lying about most things big and small. Who would want to do biz with someone you cannot trust of course as president Trump has power but after insulting and attacking most countries except those with dictators the world will be quite happy when he leaves the world stage the sooner the better.
13
It is clear from the beginning that Trump's Trade War against China will fail. China can take comfort in "what doesn't kill you makes you stronger." The same cannot be said about USA.
Huawei is such a case. With support from both Republicans & Democrats, USA goes all in trying to kill Huawei. Not just in 5G, the company. This effort is bound to fail. Chinese market alone can sustain the company. Aggressive American tactics will only accelerate effort by Chinese tech companies to become self-sufficient. Huawei's homegrown OS to replace Android is almost a sure thing. Say goodbye to American coercion. If China is successful, it will deprive USA of millions of tech sales. It might end up killing a few American tech companies and jobs.
Professor Krugman is correct: Donald Trump’s declaration that “trade wars are good, and easy to win” will surely go down in the history books as a classic utterance — but not in a good way.
20
Is it a single field upon which Trump has'nt badly damage the American credibility? Democrats should attack his failure and not disparage fellow candidates for presidency. There is a way to compete without damaging Democrat's credibility.
8
China tariff impositions by Trumputin demonstrate parochial outlook. Soybean growers about to get hit with another financial blow. Swine fever sweeping through China, Viet Nam, Cambodia and neighboring countries. Millions of hogs being slaughtered to try to control the spread of the disease. No known cure, no preventive vaccines. So, hog numbers taking a huge dive - imported soybean requirements also will take a huge dive. Political effect in the US mid-west predictable. Shhhh - don't tell Cadet Bone Spurs. Far too complicated for him to comprehend even if situation dumbed down to the Cat in the Hat level.
5
Yet again Paul Krugman is not saying anything on how to help the people of Flint, Michigan or anyone else whose job was offshored (it will get MUCH worse in the digital world/economy).
This is one-sided coverage which doesn't show the full picture.
4
One would think “off-shoring” was something unique to the US. It isn’t. An enormous number of non-US companies have industries in the US. The idea that all industries can be brought home in a world dependent on international trade is just self-deceit. The world has changed. The traditional industries that created so many jobs are declining in importance. We can’t go back to the past. We can only prepare ourselves for the future.
This article was about trade policy and not about replacing “lost” manufacturing jobs in the US. The author was pointing out that trade wars usually fail to deliver anything meaningful and beggar us all. Trade wars don’t help American jobs. Anywhere. The era of American hegemony was relatively brief and is now passing. All international trade involves compromise.
The US still retains enormous power but President Trump is busily wasting all of these advantages, acquired at great cost to the US, because he doesn’t understand the world and indulges in frivolous gestures masquerading as policy. More importantly he does not understand the unique value of soft power at which the US excels. Instead he is destroying long-standing alliances and partnerships in pursuit of momentary advantage and fleeting gains. He is the proverbial bull in the china shop. He acts without understanding or any concern for the medium to long-term. And he is causing long-term damage to a great country. What a tragedy.
Trade wars hurt everyone. Even if your product or purchase is not directly (even indirectly) targeted, there is a global loss of faith in open markets, "free trade," which dampens trust between trading partners, raises uncertainty in market futures, constricts the credit needed for markets to thrive and raises interest rates on borrowing. Everyone pays.
But, as with his other lies, Trump has proven that facts don't matter. Farmers in Iowa won't concede that they are some of Trump's big losers...instead they will take Trump's welfare handouts (diverted from budgeted needs such as disaster assistance helping Americans survive hurricanes, tornadoes and floods). Those farmers will remain staunch Trump supporters. They don't care that their welfare handouts come at a cost to all other Americans, especially those who will not get the aid they need when their homes are under next months thousand year flood.
So while Professor Krugman speaks plain painful truth, Trump's supporters tune into Fox for their latest dose of lies...the rest of America shrugs its shoulders, belches and goes back to sleep.
6
It strikes me as interesting that Trump's idea of making a deal usually tends toward punishment. Whether the problem is migrants or Democrats or transsexual soldiers or his own attorney general, it's always the fault of the other guy, and the other guy must suffer until he capitulates. I have to wonder what life was like for Trump's children--it's probably a good thing that he didn't seem to have much to do with their upbringing.
5
As a small business owner who has survived 25 years on his own, words cannot describe how utterly idiotic these trade wars are. This is 2019, and that we are even having this discussion is beyond belief. It's as if we are debating whether the earth or the sun is at the center of the solar system.
Capitalism works by always seeking out the lowest cost of production. In doing so, goods become cheaper and more plentiful and more people can afford them. This is and always has been a global mechanism.
I have customers from all over the world, some for twenty years now. The parts I get from China allow me to produce goods that are cheaper which allows me to sell them to customers from different countries. The value of the finished goods I sell overseas greatly exceeds the import cost of them from China. When Trump looks at the trade imbalance with China, these factors are omitted. He has no clue.
Trade builds commerce which builds economies. Trade is not a zero sum game of whack-a-mole. Free flowing trade increases everyone's GDP. The world is facing an economic slowdown and Trump's tariffs are making it worse.
If my input costs go up, there are two possible outcomes. I can eat the costs which decreases profits and my income is reduced. Or, I can increase my prices, which reduces the number of sales which reduces my income. I lose either way.
Everyone is losing. There is nothing to win. And Trump thinks HE is at the center of the solar system.
20
If I could give this post 1000 recommendations I would. Excellent post.
4
@John R
Same here. Excellent post, wish could give it 1000 recommendations.
1
@Bruce Rozenblit Bruce, let's hope that small business-owners who support the GOP wake up and realize that they are being royally taken to the cleaners by this ignoramus of a president sooner then later---like 2020. Thank you for your always articulate comments and insights.
Bullseye Dr. Krugman! Trumps trade wars are a thing of the past because he and his ilk are a thing of the past. Those few yes-men (and women) left who have not quit or been fired are in a parallel fantasy world of their own making - a defense mechanism and sign of mental illness.
Sadly, there are far too many uninformed and misguided followers who still cling to his MAGA fantasies which is an easier task than self reflection and course change. Besides, there are far more important pass times to occupy their day such as their FB profiles and target practice.
4
The stark reality is that Americans won't believe a word of this until we enter another recession. As others have pointed out 40% of the population believe everything Trump says. Another 40% sorta think something is wrong, but they have jobs so "what me worry?" And another 20% has no opinion.
The only thing that will affect the complexion of things is a serious recession. The proverbial 2 x 4 up the side of the recalcitrant mule's head is about all that gets his attention.
Only then will people start saying, " why didn't someone do something?" Well folks it is because the people who you elected to office didn't do anything except act as toadies for the 1%.
We need real economists planning our economy not a "marmalade mountain of a man" (a Dana Carvey image) taking plans from his gut, ignoring all advice, and bullying anyone who disagrees.
4
All predictable. Trump and his lackey's shoot from the hip without any strategy and ideas about unintended consequences. All the while mainstreet suffers. When will the electorate "see" this? I hope by November 2020.
4
Americans misunderstand the issue.
The issue is can the tired US capitalism system compete with the fresh Chinese Commie-Capitalism system, for future global dominance?
An example. If America wants to build a pipeline, they fight about it for 10 years, then maybe it gets built, maybe it doesn't. If China wants to build a pipeline, the excavators are on site at 0600.
My guess is that America will wallow, then complain, then fight, then roll over.
7
@Jamie Hill
You're claiming that dictatorships are better at creating a thriving economy and society for their own citizens than democracies.
There isn't any historic evidence out there to back up such a hypothesis though - quite on the contrary.
So what makes you believe that this might become the case anyhow, in the future ... ?
@Ana Luisa
No, the way I read Jamie Hill's comment is NOT that dictatorships are better at creating a thriving economy (they aren't,) but rather our political system has too much inertia and seems indecisive. Taking time to consider is good if for the right reasons, but political indecision and games do stifle economic activity.
7
@Jamie Hill Well - the “fresh Commie-Capitalisim” is based on ruthless exploitation of human and natural resources and that goes only so far. It would be easy for us to force fundamental changes China with very simple requirements for imported products that would match the rules and regulations for the production here in this country. But - that’s opposed by the real driving force here in the USA nobody is talking about: corporate greed. The focus has for quite a while been to offer the cheapest products and not necessarily the best. That approach is depending on exploitation somewhere in the world and is allowing political system like the one in China to survive. That could change in a heartbeat - if we would care.
"Too many Americans in positions of power seem unable to grasp the reality that we’re not the only country with a distinctive culture, history and identity, proud of our independence and extremely unwilling to make concessions that feel like giving in to foreign bullies."
This myopia is a much observed and really puzzling phenomenon. How does it persist? How did it survive the 50,000 American deaths in Vietnam? The Iraq debacle? Iran (1953? Bolton, Pompeo? hello-o...) The NAFTA countries, China? How does it come to dominate from time to time, like a bacterium whose mutations overcome the strongest antidotes? Sure beats me.
4
Trump lost 1.2 billion dollars in 10 years.
Him losing the trade wars is not difficult to imagine.
7
The fine print, 3 bucks a day, clear winners, American credibility, international rule of law, are irrelevant in M. Trump followers mindsets.
What is relevant is the well manufactured perception that 'we stop losing'. Basic human irrational behavior driven by fear.
On China and humiliation... I'm old enough to remember the Vietnam war outcome. The centennial of the Chinese communist revolution is only 30 years from now.
I may well be totally immuned from human distractions then, but surely would love to see who's the bully in Chief on the world stage in 2049.
My gut feeling is we are globally heading for more man made disasters of tremendous proportions. Trump won't trigger any of them, but i'm afraid the next minimus potus will.
Paul, perhaps you can write how we might successfully persuade China in particular to act differently regarding trade. We have created a global system, approved by economists, to promote trade which we have been told us is just what we should do. We have the WTO which hampers individual states from acting in what they believe is their own interests because these policies restrict trade which is considered the highest good. Now, the problems with that approach are becoming apparent. How do we deal with cheaters.
1
This is too glib for me. The globalization of trade that Trump railed against has had real, deleterious, if not disastrous consequences for working people in this country. Rather than exporting the products of our factories, we exported the factories and the jobs that went with them. Any macro-economic model that justifies this transformation of the US economy is a phony, modern day ephemeral Potemkin village. Accepting that the ham handed bullying of Trump and his coterie of Fox News TV economic geniuses aren't going to effectively deal with the problem, we need Prof. Krugman and other Nobel laureates to chart a responsible course, rather than, as Prof. Krugman did here, cite President McKinley's conversion to a free trader, having been convinced that a prostrate, backward, impoverished China would become a market for American manufactured goods for the indefinite future and thus a guarantor of high domestic employment and prosperity.
@Deja Vu
"Rather than exporting the products of our factories, we exported the factories and the jobs that went with them."
It's not that simple. There was a clear trend in the '90s in the Western economies to outsource farming and industry to poorer countries - who would do it for much less and also would shoulder the environmental costs - and become services economies instead with white collar workers, clean air and water, pristine forests and biodiversity.
“Trump almost certainly did think”
This just doesn’t sound quite right. It’s a bit jarring to read.
2
If Trump is the new level of our democracy, I see more leaders with funny hair and making young folks play hunger games to satisfy student loan debt.
1
The only kind of politics that Trump has ever known, is maffia politics. That's why he ended up running as a Republican, not a Democrat, as the GOP has been cultivating cynicism, a basic component of maffia politics, long before Trump became a candidate, whereas the most important thing that distinguishes both parties today is precisely the fact that Democratic politicians radically reject cynicism.
And in maffia politics, the only way to deal with "others", is destruction.
Yes, there is some "loyalty" - but that simply means that as a member of a gang, you do no matter what your boss asks you, whereas as a boss, as soon as a member does something you don't like, you harm or kill him. Which is actually the opposite of real, moral loyalty, which is NOT based on self-interests at all.
And yes, of course maffia bosses are human beings too, so they do have a sense of morality. It's just that "good" and "bad" became completely distorted by the lawless, violent world they've grown up in, so their capacity to "do good" becomes very limited, because their "moral imagination" is so small.
Trump clearly functions in the same way. His "strategy" to try to make an opponent do what he wants, is essentially trying to humiliate that opponent as much as possible, all while trying to harm him materially.
It shows an utter lack of being able to envision a greater future, both for the US, and for global peace and collaboration.
And you can't get anywhere without a broader vision.
2
Global value chains main objective is to transfer value from a place that produces it to the one where it is pocketed after it is realized in the form of profits. That’s why tariffs don’t work for investors. They mostly reflect the stagnation after 2008 and the excess of production relative to markets capacity to consume it. GVC were designed to deal with the stagflation ( low profitability) of the 1970s; thus, the influx of FDI into China and now Vietnam.
In a perfect world we should neither have profits nor tariffs but free commerce between nations where boundaries gradually disappear as a product of equality and mutual respect and where we produce what is necessary.
If you look closely to who benefits most from Trump stuff it’s not America. I try and measure the motive by assessing the outcome. Surely some in trumps circle are benefiting here, if not even trump himself. He is certainly selling out America for his own gain based on what I’m surmising.
1
It really hasn't been noticeable here in China; prices for most American products haven't gone up much. The Yuan took a hit for a while, then kinda recovered. But hitting the Yuan isn't good, really, for America.
Really, looking at China from a purely American, nationalistic, economic view, you need to think longer term. Here you have a developed - but still developing - economy of 1.2 billion plus people. Why do you want to destroy the American brand? Even if you did lose some IPs from some companies, the longer term growth prospects are greater here than most anywhere.
There is an Apple store right next to my apartment building, a Burger King, Subway, and Pizza in walking distance. I see Chevrolets on the roads. American brands still have sway in China.
There's just no winners in trade wars, only disgruntled losers. And, no, of course China will not capitulate, whatever that means.
9
It's a mistake to look at this as a trade war problem - the real issue in America is that the country has always been controlled by a right wing, elitist element, regardless of the politics. You can see how this path will work out by watching the current progress in the UK towards Brexit where the political elites are busy driving the country off a cliff because it maintains their power and wealth - sounds familiar doesn't it?
5
@Edmund Cramp
Can you please explain what:
- getting the very first, global climate change agreement (with all countries accepting it) signed
- improving minority rights (including those of Native Americans, African-Americans, and of members of the LGTBQ community) and women's rights
- insuring 20 million more Americans, and thereby saving an additional half a million American lives a decade
- raising the minimum wage
- protecting voters' rights
- investing in science and the arts
- denuclearizing our worst enemies (Iran deal, 15 years without nuclear weapons)
- not starting a foreign war without the approval of the world community
- respecting "good governance" ethics, and respecting the separation of the three branches of power
- protecting social security and expanding Medicaid, and now having a serious debate about Medicare for all
... have to do with "right wing, elitist" control of American politics ... ?
They have all been achieved by Democrats, and Democrats alone. Today, the GOP stands for the exact opposite, on each and every item on this list.
Remember, cynicism never helped us move forward ...
10
“And there’s no hint that the tariffs are achieving Trump’s presumed goal, which is to pressure other countries into making significant policy changes.”
The key words here are “presumed goal”. But think of the Republican donor goal to make the rich richer and the poor poorer. Because the tariffs are at least partially paid for by end consumers, and poor people spend a larger portion of their income on these goods, they are actually collecting a regressive tax without calling it that.
In the meantime, as the obvious grifter that he is, foreign countries’ leaders understand that Trump is, once again, using OPM (Other People’s Money) to make money for himself. With the Senate leader’s wife using her post as Secretary of Transportation to line her family’s pockets, he is mum to all of this obvious corruption. Xi, for instance, gave Ivanka‘s brand key trademark rights around the first visit to China.
So a second goal that apparently escapes presumption is Trump’s personal goal of self enrichment. Every announced tariff, or delay of an announced tariff, sends the stock market in a predictable direction. With his myriad of shell companies set up by Michael Cohen, he has many avenues of being bribed to reduce tariffs, or perhaps as a kickback for advance notice of the next tariff announcement.
These allegations have not been proven and could easily be dismissed as paranoid delusions of a partisan conspiracy theorist. But given Trump’s history, are they really that far fetched?
5
@Scott Keller During Trumps first visit to the uk, I marched with this sign: Trump is a carpetbagger...investigat him and his friends for insider trading...
I completely agree with you. All it takes is one phone call to a buddy to say, hey! I am thinking about putting tafiffs on X, Y, and Z, like on next Thursday....
1
"No, it’s only a “trade war” if the goal of the tariffs is coercion — imposing pain on other countries to force them to change their policies in our favor."
The mindset and tools of a bully who occupies the most powerful position in the world.
2
Trump has an election in 2020; Xi does not, having changed the rules such that he is, essentially, president for as long as he wants to be. Therefore, as is usually the case with the Chinese, Xi will play a long game, while Trump has to face voters in 18 months. This is the single biggest reason why Trump will ultimately “lose” his self-induced trade war with China. Xi will just wait him out because he knows Trump will be desperate to declare victory at some point before the election.
13
It is much harder to create good trading partnerships with other countries than it is to destroy existing agreements by unfair exploitation of an existing partner. Once destroyed, a former trading arrangement may be nearly impossible to re-create in a timely fashion.
China got greedy in its trading relationship with the United States by refusing to respect intellectual property, by shipping goods made without respect for labor and environmental laws and by monetary manipulation.
Several years earlier, Japan got greedy by vigorously exploiting U.S. automobile markets, while artificially denying America similar access to Japanese markets.
The Japanese experience was partially solved by making or assembling cars in America by Americans. Addressing the Chinese problem is a work in progress – at least it was until Donald Trump came into office.
President Trump lacks the patience and the knowledge to deal with China effectively in matters of trade. For a man who fancies himself a builder or developer, Donald Trump exhibits only a talent for breaking things.
Trump can use the power of his office to inflict economic pain, but there is no rhyme or reason to his punitive tariffs.
9
@sdw
"by shipping goods made without respect for labor and environmental laws and by monetary manipulation."
All these things are done now by #TrumPlorable to ....Americans.
And moaning about "Japanese greed" implied that America is super duper noble and honest in such matters, while it took advantage of Europe's bombed out production capacity after the war. Not to mention all the ills it kééps doing to Latin America. At least China and Japan took on someone their own size, or actually, someone bigger. America took/takes advantage -greedily so- of weaker nations.
3
@sdw 'Several years earlier, Japan got greedy by vigorously exploiting U.S. automobile markets, while artificially denying America similar access to Japanese markets.'
This is wrong.
The Japanese have right-hand drive vehicles because they drive on the left. Their streets and bridges are narrower than in the US: it is an older and more crowded place.
The US companies did not, and do not, make right hand drive vehicles, and their cars are wider than many roads permit. There was nothing artificial about these barriers.
The Japanese also have their own safety requirements. These aren't artificial trade barriers either.
If trade is used as war by other means, America is going to suffer more defeats by misusing its might and power as force instead of as influence, example and persuasion. The long term effects of distrust of American in the agreements and treaties it makes will be long-lasting, including among its natural allies. Sadly, none of this makes any impression on Trump because he is only interested in immediate 'results' with which he can stir up his base, with their sad deluded refusal to see how his policies will be to their detriment.
7
There's not much point in talking about what Trump and his economic advisors are thinking.It's not really relevant to solving any problem.But...we do need to start thinking about how, as a country, we can regain all of the ground Trump has lost once we are rid of him.I'm a left leaning progressive....Sanders and Warren.....but Trump is causing so much damage that I will vote for anyone who can beat him...even a moderate.We have to stop the slide down this slippery slope first or there will be no future worth building on for our children and their children.
12
@Iamcynic1
The world thanks you!! :-)
All too often, progressives tend to confound freedom of expression and the right to vote.
An election is NOT about telling politicians whom their perfectly ideal candidate would be. That's what we have to do in-between elections, by paying attention to who does what in DC, calling representatives to let them know that we agree or disagree with X and Y, engaging in real, respectful debates with colleagues, friends, neighbors, family members etc. who disagree with us, writing op-eds (and NYT comments ... ), etc.
During an election, however, the debate is over, and now is the time to use our constitutional power to shift the country into the direction of our ideals, GIVEN the candidates on the ballot.
So then, the question becomes: who, among those (two) candidates, proposes POLICIES ("charisma" is nice, but that's about it) that are closest to what I want for my country and the world?
At that point, not voting because none of them embodies exactly what you want, means literally giving a vote to the person who is most in contradiction with your own ideals, in today's election calculus system.
And to hope that if you don't vote things will end up becoming so bad that candidates will all of a sudden miraculously start embracing your own ideals, is absurd. That never happened, in any democracy. It simply means actively contributing to making things worse.
4
Of course boycotting raises the cost of living of the average American family. Made in America means more expensive. In the lifetime of most adults manufacturing has been off-shored to cheaper locations and the resulting whole goods shipped back to the U.S. to sell at cheaper prices. That's why you can buy 8 pair of socks for $11 at Wal-Mart. It's also why no textile jobs in South Carolina. I don't think you can stop globalization. Seems like the answer has to be a more distributive U.S. economy so the profits of globalization get distributed down. 50 years from now maybe 2/3 of Americans will be daycare workers, teachers and shrinks. Hopefully they will earn a decent enough wage at least to buy those socks.
9
A final point on the McKinley era: that was before federal income taxes were imposed on a regular basis via the 16th Amendment, ratified in 1913. Tariffs were one of the few reliable sources of income for the federal government.
Now, with the ability to tax individuals and corporations (although apparently without the will or mechanism to enforce it) the federal government shouldn't need to rely on tariffs for income.
As a policy -- one of the few that this administration seems to have articulated, albeit with its usual incoherence and ignorance -- as Prof. Krugsman has pointed out, tariffs are really not effective in either wringing concessions from other countries, or finding a foreign source of funds.
It's just another way that the illegitimate resident of the WH is ruining the American economy and its international relations, all in one uneducated, impulsive effort to force others to concede something to him personally.
9
And a fourth reason - China's President Xi is leader for life. He knows he'll be in power long after Trump leaves office/goes to prison.
Relatedly, I think that in general, the Chinese are more willing than Americans to endure a little pain, if it means they can stick it to Goliath. Americans will much more quickly tire of higher prices at Walmart. I think Xi and the Chinese people are much more willing to wait it out.
7
It was all smoke and mirrors to begin with. The tariffs have had little affect that is positive. And he has nothing else in his empty arsenal because the only one he has is military.
5
Mr. Krugman forgot to mention one game changing reality. In the trade wars the shoe is on the other foot now. China, Mexico and other nations against which Trump began the trade wars know that Trump needs a “win” in the next before the election that will take place in mere 16 months from now. North Korea knows that too. So now all of them will extract steep concessions from Trump, and let him call that a “win” for his election campaign. We have seen the early sign of that as Trump is willing to let North Korea “freeze” it’s nuclear program rather than dismantling it; and is letting China agree to less onerous trade conditions than what Trump has been screaming for the last few months. This self-proclaimed ‘great deal maker” has painted himself in a corner. All we need now is the black paint on his face as a face saving measure.
13
40 percent of america is getting poorer every day. They are barely able to make ends meet. A thousand dollar trump tax every month in the form of higher prices due to tariffs will eventually break their backs. but trump is surrounded by the billonaire donors, living in rarified air and out of touch with america, who were the vips at the july 4 parading of the military to massage trump's ego today. the military were humiliated like never before. the end to all this is yet to be seen. the stock market is completely out of touch with reality. corporate profits are stagnating and stocks are responding to a fed that is cutting rates. the fed, yellen and bernanke along with obama and his 2009 stimulus have caused the economy to grow slowly and steadily for 11 years. it will not last forever. the 59.9 percent, along with the 40 percent, will feel the pain when the recession arrives in 2020.
9
@observerThere is no $1,000 Trump Tax. What there is is an incentive to waste $1,000 less a year on Chinese junk that none of us need but which we buy only because it is cheap.
1
John Bolton still claims that the Iraq invasion was a win and he is right, if the war was aimed to destroy a nation which did not obey to American dictates. That is the reason U.S. imposes sanctions on Cuba since 60 years, sanctions on North Korea for decades, sanctions on Venezuela, Iran, Syria, Russia, China and so on.
Sanctions and trade war is just a prolonging of U.S. foreign policy as an attempt to dominate the world.
Thus, if Trump is winning the trade war depends on how you measure a win.
8
@Dan I don't think Trump's trade wars are are prolonging American attempts at dominance. Quite the opposite; Trump's dismantling of longtime alliances and trade partnerships are eroding American standing in the world. Really, no one trusts us now, how can they? He unilaterally tears up long standing agreements, makes hand shake "deals" and then reverses it later and reneges. The United States will probably never really recover the trust we had if the rest of the world knows that with one election, we can revert to such an untrustworthy partner.
25
@Barry Fisher
Foreign Policy is not about trust, but power. The U.S. still has enormous power in foreign policy, which is due to hundreds of military bases abroad. But this power is declining, which is a process starting decades ago. The fall of USSR did not result in a crushed Russia. Tianmen Sqaure did not result in a disintegrated China. Quite the opposite. Those markets are not totally free for U.S. to exploid. Thus all the sanctions, thus the trade war.
The big picture is that the world facing stronger imperialist conflicts and Trump is just a tool in this game. Even democrats, like Sanders and Warren, are economic nationalists, which just indicates that this trade war will not end with Trump. It will eventually end the day when imperialism is gone (hundreds of years from now, is my guess).
2
Good analysis and comments...however, it misses the forest for the trees...Trump is not about effective policy decisions, he is about image creation in the eyes of his supporters. Repeatedly he has demonstrated his modus operandi of criticizing and dismantling existing policy, only to rebrand it as a Trump win.
24
An even deeper and malignant outcome of trade wars can be World Wars as evidenced by Japanese actions in 1941 when their "Co Prosperity Sphere" was threatened by denial of access to oil and other resources, an outcome which had its origins with the continual debasement of Japan by the British, Americans and the Europeans at Versailles in 1919.
8
Comments 07052019
Comments 07052019
TRUMP’S ACHILLES HEEL IRONICALLY IS FINANCE. He fancies himself a great deal maker, but his perceptions are distorted. He had so many business failures during one decade that his father bailed out Donald’s failures to the tune of $1 billion. It’s hardly surprising that he has struck such terrible, horrible, awful, no good, very bad deals for the US, since he flopped in his business ventures which were terrible, horrible, awful, no good and very bad also. But Trump’s legal exposures go well beyond his cockamamie “better deals for the US” that have so far been abysmal failures. According to the Solocitor General of the State of New York, Barbara Dale Underwood, has sued the Trump Foundation for violating the laws governing how its funds may be spent. Trump has, Ms. Underwood alleges, spent charitable funds illegally to pay personal debts. The answer to resolving Trump’s alleged violations of his oath of office, the best advice is, Follow the money! Forget about anything political, where he can muddy the waters. Nancy Pelosi is correct in waiting until papers have been filed in New York State for his alleged financial wrongdoing. According to Ms. Underwood, his presence is not required to bring her case to judgment. The evidence is clear and the verdict is virtually guaranteed. The same is most likely going to happen when Trump’s financial records for taxes owed in New York are, & on his federal income tax returns, are released.
34
Even while losing the trade wars Trump is waging against China and allies that is harming the US economy, he is cautious enough to save his family business and investments abroad.
12
China and Xi has figured out Trump very well. US had ZTE cornered and could have demolished it. Xi worked out that Trump so that could shake hands with Kim Jung Un and get a photo op. ZTE was let loose and is back in business. US got nothing else in return. The same story is unfolding with Huawei. Xi visits North Korea on his way to Japan and arranges for Trump to visit DMZ. Immediately, Trump's tone on Huawei and the China trade negotiations has completely changed. My predication is that Huawei will be let off the hook soon. I won't be surprised if Huawei is allowed to enter the US market.
I strongly support the notion that US should assert itself against China very strongly and reduce the trade-deficit. Trump is not going to get any results from the way he is approaching this issue. Don't forget that US helped develop this monster and now cannot control it.
22
@SC
The most cogent analysis I have read yet. Thank you.
@Sc "Don't forget that US helped develop this monster and now cannot control it."
Not unlike bin Laden!
3
"... economists at the New York Fed estimate that the average household will end up paying more than $1,000 a year in higher prices."
We've been paying for Trump ever since he was elected, and we'll be paying for him long after he's gone.
Are you tired of being on the Trump payment plan?
If so, then consider paying a visit to the ballot box next year to vote him down. It's really the only way out.
36
Tariffs as generally used to protect your own nation's products. Unfortunately, in the case of manufactured goods, too many of our factories have long since been shut down so Trump's tariffs work out to be nothing more than an additional tax on goods we buy. In the long view Corporate America might begin to think about opening factories here at home again, but more likely they will just look for another Asian country to move production to.
15
@Cowboy Bob Trump still lives in a 1950s world--tanks, steaks, coal, you name it. He is a throwback in a rapidly changing global economy. His only concession to modernity is Twitter. The man does not even use a computer.
1
Trump needs to understand that he is dealing with a Dictator in China's Xi. He is not a typical not businessman, who will care about his company's profit losses in a trade war. Xi will dig in with no meaningful agreement until the 2020 Presidential Election is over. If Trump wins, Xi will start serous negotiation otherwise it will be a new ball game for him. Its time for Trump to increase tariff on all China's made goods to 100% to get Xi's attention and also collect additional money.
2
@sKrishna ' Its time for Trump to increase tariff on all China's made goods to 100% to get Xi's attention and also collect additional money', who do you think will pay the additional money? You, if you buy anything whatsoever from Walmart, that's who.
15
Collect money from whom? I’m not sure you get how this works.....
Farming in some states will have had at least a bad year due to tariffs and a disastrous year due to flooding.And tariffs again.
2020's crop won't allow recovery of those losses especially those that lost equipment,livestock, and buildings because of flooding. If it's a just OK year they still owe money for the other years, who will they blame?
More than anything China desires a stable trading arena. Stable partners. Tariffs out of nowhere are not favorable to long term planning.
His attempts to humiliate China with tariffs will be considered in all decisions. A western power trying again to put it's foot on China's neck, an old tale.
China has 10x the economy of Russia. What do you think their cyber computing bureau is capable of, hiding behind a North Korean Mask during an election.
Chinese trolls will be graduates of our own universities.
They are thanking fortune for awarding then an opponent who knew his system could be breached, but assumed it would only be done by forces friendly.
15
I’d love to think that the poseurs responsible for today’s ill-conceived U.S. trade games might be held fully accountable for the harm they’re causing us. Starting with poseur no. 1.
I guess November 2020 will be the only real opportunity for that.
13
So far China has responded to Trump's tariffs largely defensibly. But, I suspect, it will not stay that way.
The Chinese have now witnessed that a country such as US can effectively violate multitude of international trade laws with complete immunity. At some point they will try to return the favor, using the same approach. But unlike the US, they will wait patiently for the right moment for maximum political advantage.
May be they will be making their move just a few weeks before the 2020 election. That would be the "October surprise," courtesy of China. And one can bet that the nature and the timing of the move will be carefully calibrated to ensure that Mr. Trump will not have a second term.
44
@Eddie B.
I'll drink to that. I certainly hope you're right and it couldn't come soon enough.
4
@Eddie -- From your lips to God's ears!
3
Why do you think the Chinese are interested in helping a competent person to be the next US President?
1
My neighbors used to feed the world. Now they're trying to get by on Soybean Welfare. When China doesn't buy our beans the resulting glut forces prices below the break-even point.
I sure hope the government doesn't impose mandatory drug testing for recipients of Soybean Welfare, like some places do for other components of the "safety net". I hope too that legislators from other parts of our country, who actually foot the bill for this new entitlement, don't decide that folks here in the Middle are just too mean-spirited, bigoted and fact-averse to be deserving of such unilateral unencumbered generosity. Maybe they're too busy dealing with rising seas, wildfires, and drought to pay sufficient attention.
85
@Cornstalk Bob
Thanks for the comment. Please let your neighbors know that European farmers have started switching to soybeans in a big way for the market opportunity and apparently the fact that soybeans are less effected by climate changes (saw this on German TV the other night). “Markets move” also has a geographical meaning.
7
@Cornstalk Bob. Careful with the word "entitlement".
The farmers are getting welfare, AKA handouts, like you say. Not paid for and earned defined benefits. We can't let the GOP conflate the two things, as they intentionally do, with their Orwellian term.
Every republican I have ever asked defined "entitlements" as "welfare". And so, when their own people seek "entitlement reform", they are behind it. They are shocked to learn (and almost refuse to accept) that entitlements turn out not to be handouts for "those people", but rather benefits they have been paying forward for all their working lives.
So no, the farmers are not getting "entitlements". They are strictly on the dole.
3
@Ben K Actually, I was careful with my choice of words. I regret that my attempt at irony fell short with you. Which is to say: I agree with your view of things. One view of "entitlements" is that they represent payment earned for past or present acts (e.g. Social Security). Some of my neighbors believe they've earned Soybean Welfare by virtue of their staunch patriotic support of our president, as he courageously and single-handedly re-shapes the world economy. I'm just hoping that the rest of you don't see the fallacy of that thinking anytime soon.
2
Value chains are a problem. They are globalization gone wrong. They depend on extremely cheap transport to enable labor arbitrage.
Our focus should be on making economies work for the all of the people who live in a place, for a whole community, not how to make single things a penny cheaper.
Tariffs today are not really being used that way, certainly not well. Tariffs in the past were generally not used that way, certainly not well.
However, the basic concept of tariffs could be used to build a healthy economy for each community. They would be used to discourage the excesses of value chain thinking.
Example: a fish caught in the Irish Sea is shipped to China to be cleaned, then the cleaned fish meat is shipped back to Ireland for sale. Why? Chinese will clean the fish for less pay, and live in worse conditions while doing it. That example comes from, Ninety Percent of Everything: Inside Shipping, by Rose George.
Tariffs are not set up to change that. They could be. The original legal requirements to set tariff rates early last century did some of that. In fact, early in our history the Embargo Act had the side effect of energizing American industry to replace imports, and while the first few years produced shoddy goods, it ultimately begat our Made in America traditions (now lost).
16
@Mark Thomason Actually value chains are have a secondary value that they actually, slowly, raise the standards of living in the country's in the chain. China, Vietnam and other Southeast asian countries are a prime example. There is business logic to such a set-up even if it sounds silly and that is only one anecdotal example. More telling is the supply chains that make the Chinese computer/electronic device industry so successful. Most of the sub-assemblies necessary for several makes of computers, phones etc. are all in one region. We have a situation now that has developed as it is, because it has been good for business, and good for the local economies. But of course it creates other massive social problems. Business does not want to revert back to the 30s or even the 50s that Trump and his ilk seem to think was somehow ideal.
4
@Mark Thomason -- Mark, the best single answer for preserving conditions for human life on Earth is also the best single answer to all that under-priced planet-contaminating shipping: CARBON TAX.
On the seas as well as the lands, make the burners of fossil fuels pay the cost of what they are doing to exterminate our civilization's and species' future.
Appalling that our 24 Democrat candidates are instead devoting most of their attention to other concerns, like rearranging our civilization's deck chairs as our ship of conditions for human life on Earth goes down.
3
@Barry Fisher, the beneficiaries and originators of these value chains are not doing this out of generosity for these countries' higher standard of living, except to profit from it. Multi-nationals are patriotic to no single place. Monaco and Switzerland, maybe New Zealand in the future will be their desired residence. One can travel to St Kitts/Nevis by yacht, but they'll be the beneficiaries of that service economy whose providers (laborers) live in shipping containers with no A/C, indoor plumbing, etc.
1
In the War of 1812 our frigates flew flags that read "Free Trade and Sailors Rights". We were willing to fight England and had already fought French ships over those principles. For 100 years America led the world in advancing free trade. Then from McKinley to Smoot-Hawley to Trump protectionists have advocated tariffs not for revenue generation like Jefferson, but for alleged job gains. That doesn't work.
Forcing people to sacrifice quality, low prices, or both to 'Buy American' may sound patriotic, but the real result is to foster businesses that cannot compete without such subsidies. Often, as with American cars in 1970-90, what was needed to save companies and thus jobs was to improve quality and price, i.e. to become more competitive. If you only offer a consumer 2 choices: higher cost, or lower quality, then the targets of the trade war are not China or Mexico, they are US consumers.
Full disclosure: the above dilema is why I have owned so many Japanese and German cars and electronics. Tariffs on imports do not make me rich enough to buy junk instead of quality. Quality levels the playing field.
55
I would not have that big of a problem going after China if we hadn't alienated all of our friends with concurrent trade wars. It's almost as if he was trying to please someone without our best interests at heart...Da?
70
@runaway -- Taken across all the actions, policies, and behavior Trump has exhibited since taking office, it is hard to come away with any conclusion that the consequences of his actions (even though he would certainly deny the intention) all appear to benefit our adversaries, particularly Russa. Trump's trade policies; his denigration of longtime allies, and treaty groups like NATO; his embrace and support for autocrats and dictators repressing their populations; his incendiary rhetoric about immigrants; his abandonment of carefully negotiated agreements; his environmental policies -- all seem designed to weaken the United States's international influence, 'soft' power, prestige, and economic influence. Whether knowingly or not, Trump has in fact behaved as if he were a foreign agent, out to wreak havoc on the United States's future standing in the world, while helping our adversaries. "Useful idiot" or willing agent, Trump is clearly on the wrong side of America's best interests.
6
If Trump wants to level the playing field, perhaps companies in the US may want to reconsider what products and services they make. For example, there’s a reason why Apple products and movies, music and overall entertainment industry are popular internationally. Because it’s innovative, the demand for these products are high. Perhaps American industry needs to go back to the drawing board and actually innovate for consumers in these markets.
Tariffs aren’t the answer. Compelling innovation is the answer but What does trump know about that?
27
@YC
Movies and music (I assume you mean American ones) are innovative? The big hits contradict that notion.
7
The farmers of Wisconsin understand both agriculture and trade policies better than Mr. Trump does. Their support for him, by no means monolithic in 2016, has been sloughing off since the tariffs started.
Soybean farmers, in particular, were alienated not just because it threw off the annual planning, financing, and purchase cycle this spring, but because the subsidy program and its administration were so ad hoc.
The tariffs and trade policy haven't just caused a lot of anxiety, they have retained the attention of farming-related news media ("The Daily Soybean Report"...), farmers. and people whose living depends on farmers.
In 2016, Mr. Trump won Wisconsin by only about 16,000 votes. It's hard to say how many of those were cast by people subsequently alienated by the tariffs, but it's unlikely that a heretofore-unsuspected group of new Trump voters could make up the difference.
51
So what exactly is the plan to level the playing field with China's labor abuses, environmental abuses, and intellectual property abuses, Dr. Krugman?
25
Do you think the US tariffs have anything to do with the first two topics you mentioned? Check again.
1
@Me
Do you think for a nanosecond Trump cares about labor abuses or environmental abuses or even understands what intellectual property is? Theft he is an expert in.
And do you think for one nanosecond the Trump tariffs have resolved any of these problems or even moved the ball on them?
1
@Me
There was a plan, called the Trans Pacific Partnership. Trump dumped it, and you probably applauded for no other reason than it was Obama's plan. Why do you even ask questions?
2
Everything about the Trump administration makes me wonder if someone else doesn't finally understand that the global economy is already way too big and needs to be shrunk until it approaches sustainability.
The whole Trump administration seems so repulsive that I wonder if this was a conspiracy to shrink the world economy and blame it on what is clearly a collection a rapscallions.
This can't be real the characters are too straight out of Batman.
15
@Montreal Moe
Canada is certainly doing its part to help shrink the world economy! China has refused to buy Canadian pork because of fraudulent labeling. Then there was the big International bribery scandal in your hometown!
Look first to cleaning your own house seems to be in order!
1
@Richard
SNC Lavalin is being taken care of. There was no International bribery scandal it was just business as usual for big business and politics. It was a disgrace and a failure of a government which had promised better and had fallen short.
In the twentieth century the promise of jobs kept corporations in control but in 2018 Quebec has far more jobs than people to fill them. I guess Trudeau was far too busy to pay attention to the fact he did the wrong thing for all the wrong reasons but we are trying to make amends. We have good reason to trust our courts to do the most ethical things.
The world marches on and supply and demand still functions and Huawei and 5G rules in Canada and pork will flow from Canada to China because of swine pestilence. Some would prefer Ericsson and Nokia to Huawei but we are partnered with the front runner in the race to the bottom.
We are a flawed nation but we do try not to justify the unjustifiable and in 2018 took in more refugees than anyone else.
3
@Montreal Moe
More than anyone except us!
1
"Too many Americans in positions of power seem unable to grasp the reality that we’re not the only country with a distinctive culture, history and identity, proud of our independence and extremely unwilling to make concessions that feel like giving in to foreign bullies."
This is classic American solipsism. For all our technological advances, public officials can be extremely dense. And when you factor in the oddball way Trump recruits and hires--more often than not, from FOX News---what you see is literally quite what you get. Larry Kudloow? Peter Navarro? John Bolton? Not exactly the creme of the economist or foreign policy crop.
But even if the stable genius surrounded himself with expert peers, if he doesn't listen to them and only goes with his gut, we're still left with Trump's uninformed thinking.
On tariffs especially, as Dr. Krugman and others have observed, Trump doesn't get the cost dilution across a multi-phase cycle, which means the sales or purchase price isn't the full cost; and companies don't every suffer from tariffs, they just pass the cost on to the consumer.
54
Yeah...but thanks to the tariffs and one of the biggest markets turning down the offerings from the struggling fishermen in Maine who can't get rid of their catches lobster prices are shockingly low in middle America.
Thanks Mr. President for hurting the people you swore you'd help so people who like lobster can snap it up like there's no tomorrow.
30
Actually lobster prices are currently high.
It is complicated. There is a bait shortage and we are having to import bait.
Loss of the Chinese market was most painful during Chinese New Year. That is a huge off season market for us and we lost most of it to Canada. Tariffs are hurting us but lobster prices are higher than usual right here in town.
Trump had a lot of support from these folks. Some are still sticking with him but not all. We'll see how the season ends up.
Tourism so far looks strong.
4
How a fourth factor: we have so-called president who thinks that tariffs are paid by foreign governments to the treasury of the United States. That sort of belief makes the solipsism and the living in the past seem positively scholarly by comparison.
91
"economists at the New York Fed estimate that the average household will end up paying more than $1,000 a year in higher prices."
The stable genius told America "trade wars are easy to win".
The con man and grifter couldn't even run a casino without going bankrupt and now he is bankrupting the American taxpayer with his policies.
201
@Jacquie - and looting the US treasury right under
our eyes.
8
@Jacquie ..and those of us on fixed incomes who don’t happen to have a spare $1,000 bill will have to do without making those purchases. I will replace necessary items that are broken, but will not spend on anything else until after 2020 election.
1
@jack Yes, everyone on SS deserves a raise that keeps up with the cost of living and 2.8% just isn't enough to keep up with the soaring costs of medicines, food, health insurance supplements, taxes etc.
The U.S. imposed high tariffs until about WWII to protect domestic industries. These were reversed when it was felt the U.S. was the dominant seller with the best products at the most economical prices. Protectionism has been true for every developing country until they become world competitive. While the economics profession has fairly absolute positions about the cost of tariffs we rarely see a quantitative discussion of the costs and benefits of particular tariffs on particular industries at a particular time. Without a thorough quantitative accounting of the costs and benefits of American and foreign tariffs, the economic discussion resembles more that of moral philosophy and religion than science. One should trust such opinions only when substantiated by quantitative facts. The economics discussion is not definitive for this reason. Its about time such studies were done or are shown to be empirically impossible to conduct.
4
@Michael Cohen, studies have been done about the effects of Trump's tariffs on every industry. Here's one study about the effects of tariffs on soybean farming:
https://farmdocdaily.illinois.edu/2018/09/evaluating-potential-long-run-impacts-of-chinese-tariff-on-us-soybeans.html
The study of economics--dismal science though it may be--is social science, not religion or philosophy.
16
The issue for the next election is how to get people to understand the real costs of tariffs and so many other damaging economic policies, like the massive tax cuts... I teach econ and one of my best students asked a few years ago, what if facts don't matter. That's where we are. Economics can be hard for people to grasp and Fox/Pravda is all too willing to bridge the gap... How to combat that is the question...
49
@sue denim " How to combat that is the question..."
Answer ; Invest in education instead of more military toys.
"Trump’s declaration that “trade wars are good, and easy to win” will surely go down in the history books as a classic utterance — but not in a good way. Instead it will go alongside Dick Cheney’s prediction, on the eve of the Iraq war, that “we will, in fact, be welcomed as liberators.”
and in each case the person that uttered these words did not care one tiny bit if they were true.
78
@coale johnson
And in the end they didn't seem to suffer much from having been so obviously and disastrously wrong.
2
Trump has many American convinced that China pays the Tariffs.
He's convinced himself that the extra tax is good for the Treasury.
Oy Vey.
65
Dr. K,
Wrapping up this essay with McKinley's quote was perfect. Trumpism has not served U.S. interests and it has not served the interests of the global economic system.
It seems to me Trump's dysfunction approach to trade should be more in play in political policy debates. I was surprised during the first round of primary debates that no one brought the subject of trade, trade agreements, and tariffs to the debate.
Tariffs act as a regressive tax on Americans. We do not need taxes on consumers that worsen already depressingly stagnant wages of the lower 80%.
It would seem that the President and his economic advisers could see that any apparent political gain will be replaced by a resentment of consumers who will feel a shrinkage in their purchasing power and exporters who will seek prices fall.
Many policymakers have problems with China's use of intellectual property and with government condoned barriers to their markets. These can be resolved by multilateral institutions like the W.T.O.
I am encouraged by China's efforts to improve their people's standard of living. I can remember when living in China was abysmal and thanks to their opening to global trade with the U.S. being a primary market, they are prospering and creating a market for goods where the U.S. has a distinct comparative advantage.
America's challenge will be to work with the advanced economies on the planet to evolve away from fossil energy with investment and inventions.
22
@james jordan
Correction, "Trump's dysfunctional approach to trade should be more in play in political policy debates."
4
As an Australian, I am concerned that if Trump wins a trade war against China, he will be emboldened to use Americas economic power and military might to unjustly bully other countries into submission. He has already made subtle threats to Australia at the G20 about our aluminium exports to the US, and similar threats to European countries.
If there is clear unfairness in a trade relationship, then some sort of renegotiation is appropriate. But just because one nation has a comparative advantage in a particular commodity or product, does not mean that there is any unfairness. And fairness can't be judged by considering the political desires of one party only.
Supporters of Trump's trade wars seem to think that the US has some special moral entitlement to dominate world trade and diminish other countries in the process.
As much as I fear China's might and global intentions, I am glad they are standing up to Trump on trade even though some of their trade practices are questionable. Otherwise, Trump would truly believe that trade wars are easy to win and do great harm to countries like Australia. Trump's America needs competition in trade, military and economically to prevent if from riding roughshod over the rest of us.
69
@Barry Long
Barry , maybe it is time for Australia to renegotiate having a US naval base including nuclear submarines in Queensland.
Krugman advances rational, sound, and real arguments. Alas, Trump doesn't deal in the rational, sound reasoning, and reality. He makes up "alternate truths" that appear good to American workers. He sells hyperbolic slogans. And while we are all paying for these tariffs, the payments comes in small increments that are hard to aggregate every day on individual items. Sure, washing machines and dryers cost 16% more, but how often does a given household buy these items?
The shock will come during the next slowdown, when everybody will find out the true cost of Trump's tariffs and the Republican program of welfare for the wealthy.
39
Human civilization is built on trust whether it comes in the form of fiat money, trade agreements, national boundaries, or basic individual relationships. Even our battlefields depend on a certain amount of trust we call the Geneva convention.
Donald Trump has managed to single handedly destroy trust in everything.
55
And, trade wars with Trump never really end. Mexico signs off on a new trade agreement and Trump still threatens new tariffs if they don’t comply with his immigration policy. Why would any country trust him?
115
Professor Krugman is correct in stating that much damage has been done to America’s credibility because of these tariff shenanigans and much more - like reneging on the Iran nuclear deal. My hope is that our allies and the majority of our citizens fully recognize this as an aberrant moment in U.S. history that the country will correct by bouncing Trump and many of his elected enablers from office next year so that work can commence in cleaning up this very massive and very embarrassing mess.
67
As a citizen of one of your allies I can only hope you are right, the damage done is already hard to fathom. I believe America is better than that, even one day after the scariest 4h of July of my entire lifetime.
15
We should just bow to the inevitable and give the Trump family a 2% commission on all foreign trade. (Saddam Hussein reportedly also took 2% of Iraq's oil trade, so it seems only fair).
Once Trump's personal financial interests are aligned with trade, he'll do what he can to help.
16
Canada's suffering as a result of Trump's caveman negotiating style is the furthest thing from theoretical. First the uncalled for tariffs on our steel and aluminum, then his transparent bear baiting of the Chinese which has so redounded to the serious undermining of what had been a highly congenial China Canada trading relationship - even with the best will in the world and immediate action to correct its obnoxious course it will be a long time before the damage Trump has wrought in America's name is repaired.
109
@Leigh It is an embarrassment to many US citizens that Trump has chosen to pick trade fights with some of our longest and most reliable friends. Hopefully you don't think too badly of us while the process to get him out of office in the next election is underway, and things return to normal times. Once that is over and Trump leaves the scene, the optimum scenario that many of us would like to see is that he moves onto the next phase of his life as a full time defendant.
37
@Leigh You are being subtle. President Trump has alienated Canadians: calling our Prime Minister weak and dishonest, placing tariffs on our steel and aluminium by claiming we are a threat to US national security, and to using an extradition treaty to place Canada in a precarious position with China. And Trump's claims of tariffs on diary farmers during NAFTA negotiations were distorted and unfair. As a result, I will not step foot into the USA and will avoid purchasing products from the USA. It is a shame that most Canadians no longer think of the USA as an ally, but a threat. On the plus side, Trump has done more for Canadian unity than any other politician before him. I have many American friends and sure wish our countries could we go back to being friends and allies. Maybe after the 2020 election?
13
Canada's suffering as a result of Trump's caveman negotiating style is the furthest thing from theoretical. First the uncalled for tariffs on our steel and aluminum, then his transparent bear baiting of the Chinese which has so redounded to the serious undermining of what had been a highly congenial China Canada trading relationship - even with the best will in the world and immediate action to correct its obnoxious course it will be a long time before the damage Trump has wrought in America's name is repaired.
13
Dr. Krugman as you write this, elsewhere it's reported that as many as 12,000 stores will close this year. So there's already an economic dislocation occurring in retail which can be traced to the tariffs, I believe, as well as to Amazon's goliath footprint. A company that also has the competitive advantage of paying no federal taxes and actually received a $137 million government handout.
https://www.yahoo.com/finance/news/more-store-closings-coming-estimated-100014142.html
32
@Ann
You might look to the reasons businesses are closing in California that have nothing to do with tariffs! High Taxes, bad roads in the face of high fuel taxes and 3rd world diseases just to name 3. All of which have nothing to do with tariffs!
1
@Ann
The stock market is booming with publicly-traded companies engaged in real estate.
These companies are fanning the process of flipping and inflating the prices of homes and business locations, effectively removing access from individuals and funneling opportunity into large corporations and conglomerates.
We are being squeezed out of our communities.
Paying for these tariffs on top of this is one more straw.
2
The economy is doing great.
What is being overlooked is that Trump is being allowed to unilaterally impose tariffs on dubious, to say the least, national security grounds. Congress could step in and regain control but for the Republican enablers in the Senate who will not cross Trump even to protect their own conservative free trade principles. Sad.
125
@George S.
Thank you ! The first letter so far that states it's not just Trump.
2
@George S., exactly. Mitch McConnell and other Trump enablers have effectively neutered Article 1 of the Constitution. We have an all-powerful executive and a lapdog Senate. If the House were in GOP hands, Trump would be signing more tax cuts for his friends.
4
Now that a nation holiday has been taken over by a tv show host all we can do is pray that the people will vote trump out of office.
People are suffering all over the world and Trump has ensured that no good can come from his being in office.
Tariffs are a death toll to small farmers and all Americans. Trump is no friend to democracy or the American people.
117
Intimidating and pushing some contractors around is very different than trying to impose the same tactic on a modern power like china or any other country with whom we are intimately economically involved. Action based on one man's whim is bound to fail without the support of strong allies. All of this is obvious and was so before Trump's election and even Moscow saw it thus their Trump support which weakened us all.
But the cult following based on personality and rumor mongering prevailed and here we are stuck in an unwinnable trade war with that same crowd unwilling or unable to see their mistake. Mistakes have always been Trump's stock in trade and being con is hard to admit.
43
A "trade war" might be possible to win, though like all wars, even the victors suffer. But trying to fight a trade war by just raising tariffs is like waging a real war with just M16's.
In fact, the problem is a multi-faceted one, built over decades, and involving far more than tariffs. The policies that were established to encourage off-shoring to enable companies to greatly increase their profit margin are the real root cause. Until we address this, raising tariffs is going to mostly ineffective.
Raising tariffs, import taxes, and perhaps new taxes on goods and services produced outside the U.S., while lowering taxes on companies that produce goods and services domestically - tied to the number of full time jobs that pay a living wage a company creates - would do much more than the single-weapon approach of Trump.
We need to make the United States the preferred home of manufacturing and production, the way other countries do - notably China - by using a combination of incentives and punishments to get the results we wan. But that's way to complicated for our reality television President apparently.
10
@Kingfish52 Sorry, I think you need to study the working environment in China and some other countries that call themselves the communist supporters of the working class. China has not helped its farmers or workers for decades. Its leadership, with its complete corruption, has decided that they need to join the capitalist society in order to maximize profits, which in return will require the utter subjucation of workers. In that effort, they have ignored workers' right and conditions, and the US manufactorers are happily going along.
5
@Merete Cunningham I never said that China is a worker's paradise. I said that they protect their manufacturing and production by erecting barriers to foreign competition. Instead of favoring multinational corporations and Wall St. profiteering, America needs to protect its workers, and part of that solution means using incentives and punishments to get companies to locate here and create good jobs.
1
@Kingfish52
Out-of-town companies arrive, vacuum up the cash incentives - and then they leave once their profit sheets start to drop.
As illustrated by our current occupant in the white house, negotiated agreements don't matter to these guys.
2
The fact that the world is attempting to replace the US dollar as the international currency in trade is what is going to do to the US what happened to Great Britain. We will be a used to be world influencer, all thanks to donnie.
14
As with the Tariffs as his own bad behavior, Trump has created the perception that the United States is not longer a reliable partner around the World. It will be that alone that, I think, it will have long term repercussions on many areas of our lives.
Unfortunately, as Trump and his "deplorable" supporters have insisted on every occasion, Trump name is now "synonymous" to the United States. Try to come back from that....
55
@C.R I don't think that it's a perception, it's reality. Trump placed tariffs on Canadian products under the guise of "national security". You are correct that it will have long term repercussions at least from my perspective. Our families yearly vacations ended in 2017. Our group of 12 golfer's yearly trips to Florida or Myrtle Beach ended in 2017. At the end of the day, Trump and his cohorts in the House and Senate are the main reason for our choices.
15
@C.R. It seems that for you we shouldn’t confuse Trump and USA. The problem is that Trump represents a big part of your population and elites. He is doing exactly what he said he would do and he has been elected to do exactly that. Trump isn’t the problem. He is just a symptom of your society. So I think that it’s legitimate that we consider USA as an unreliable partner.
6
@C.R.
"Trump has created the perception that the United States is not longer a reliable partner around the World. It will be that alone that, I think, it will have long term repercussions on many areas of our lives. "
Count on it. The problem is not Trump. He is a symptom of the real problem: your political system is easily hijacked my moneyed interests and demagoguery. The same know-nothings who elected Trump can always inflict another wowser on the world, and once a wowser is in power, your system doesn't allow for his removal.
So the world will increasingly not count America as a reliable factor in their calculations.
We will find ways to work around you. That means your power and influence will decline. America will speak, but no one will be listening.
That's what you've done to yourselves by becoming 300 million consumers who want nothing more than to be entertained, while having your taxes cut.
8
While I am not a big fan of Paul Krugman I must say that this time around he has hit it spot on. His arguments are lucid and make a lot of sense and in fact that is exactly the way that the trade war is unraveling. I am sure that the Prez's intentions were good but that by itself does not a good negotiator make - it is finally a knowledge of other countries, their cultures and a rational understanding of economics which makes a president successful.
13
Dr. Krugman famously predicted some years ago that "By 2005 or so, it will become clear that the Internet's impact on the economy has been no greater than the fax machine's."
With that kind of predictive skill, it's clear that Dr. Krugman is a voice to be listened to.
5
@Maurice Gatien, and your point is....what? That Trump’s “trade war” will ultimately benefit the U.S.? How so? Exporting more goods? I don’t think so. Exporting more services? Maybe, maybe not. Moreover, Professor Krugman has more often been right than wrong.
35
@Maurice Gatien maybe however when it comes to forecasting economics in a complex world, not any one is correct all the time. That applies strongly more so to trump who is the king in bankruptcies and failed business deals.
3
@Maurice Gatien: OK but which of the assertions he makes here are incorrect?
1
These trade wars are nothing more than taxpayer funded theater to mask global economic contraction while also leaving the door open to rally on poor news in anticipation of stimulus. There is no real value left in these markets. Instead of organic price discovery, we have absurd analyst valuations that are met by (taxpayer funded) share buybacks and unrealized dovish statements (predicated on trade wars). The beginning, middle, and end of this economic expansion has been placed on the backs of a working class that will never truly benefit from it. Trade wars today, calls for (taxpayer) austerity tomorrow.
18
Trump isn't losing his trade wars. We are losing Trump's trade wars, along with the citizens of every other country with whom we trade.
232
Dear @John LeBaron
I think we are probably going to hurt more but I agree that it will not affect the Prez one bit.
2
Very interesting. Yet, there's not a peep out of the House Democrats about retaking their Constitutional control over tariffs that they've foolishly surrendered to Trump and other presidents. Nor are any of the Democratic candidates mentioning trade unlike the debate over the TPP in 2016. So, one is left asking: What's going on? The markets are up setting new record highs, Democrats are silent, and Trump is left, as you note, "to spin some trivial foreign concessions as a great victory." Like the government shutdown it may be a political "nothing burger" where Trump escapes unscathed.
21
@Paul Wortman, it would be interesting if it were true. Democratic candidates were slamming Trump's trade wars in Iowa last week, and Democratic senators and House members have consistently denounced his tariffs and his usurpation of Congress' role.
Most Democrats agree that we need to address our trade imbalance with China, a fact everyone agrees on. The problem lies with the entire idea of an extended unilateral trade war, a nineteenth century idea in a twenty-first century world.
5
@Paul Wortman, I think the democrats are trying to win back the Obama voters from Trump. They don't dare discuss trade, as many of them are more worried about how globalization has affected their livelihoods and aren't doing that much shopping. However, health care, education, insurance expense is increasingly unattainable....those are local--not global issues. Self-employed business types are more concerned about trade issues.
Good historical perspective and analysis.
It is up to the Democrats to point out to Trump's base that they are the one's being hurt. When it cuts into their beer, food and gasoline money they'll feel the pain and know who to blame.
China isn't being hurt. They are being hurt. That's the awakening to show them in 2020 ad infinitum.
34
@1blueheron
Trump's base will never believe one word that comes from a Democrat speaker, no matter who that might be. To do so would be to acknowledge that Trump is wrong, and that is anathema to a Trump supporter.
25
@LauraF You underestimate the power of beer.
1
As of now a trade win is a 50-50 proposition. China has a lot more to lose than we do. As American tech companies begin to move production away from China the vast and growing population not having jobs will be a huge political problem for China. Now if US citizens, including all the so called pundits and experts got behind Trump the Chinese would be far more willing to negotiate in good faith. As it is now, with people like the author opposing the President the Chinese believe that Americas quest for short term gains will cause us to weaken and cave in. China needs to know that the people are truly behind the President even if we are greatly dissatisfied with much of what he does.
4
@Al Galli Trade wars cut both ways. The soy bean market is lost to Brazil and won’t be back. Farmers gained the market share because they talked about the US being a stable partner that could and would deliver. So much for the Midwest farmer backing Trump. The trade war was a bad idea that is hurting the US. Don’t disregard this important element in your lust to justify bad trade policy and very weak President. If I were China I’d hold tight through the election and wait for sanity to return to trade policy.
136
@Al Galli,
You said: "China needs to know ... " Please believe me, China knows.
US society is open, brashly gregarious and makes itself available. All other countries have professional US watchers who pay close attention to every US detail. For all you and I know, foreign researchers are interviewing US voters right now in fast-food joints, check-out lines at markets and in desultory chats in parks all over the country.
Many foreign professional US watchers show an admirable understanding of the US and make accurate predictions about events long before they happen.
If the people are dissatisfied, they know it already.
4
The people of this country are no more behind this president that this president is behind the people of this country. He’s flubbing up just about everything and while I hate to see how he’s dragging us down, I want no part of supporting him or making it seem like, to the world, that are all behind him for the USA. Being against him is the most patriotic, diplomatic and productive position possible.
20
All that you write here, Dr. Krugman, is true. There is one "flaw in the plan," however. The Republican Senate does not care. MAGA nation does not care. Donald Trump is the president of the United States. Both entities mean to keep him there.
They do not care about the tariffs coming back to bite American farmers, a crucial bloc of his support in 2016 and after. They simply do not read the fine print of democracy; that you have to pay attention and be a good citizen and obey the laws and help your fellow if you can.
They (I'm still on the Republican in the Senate and MAGA) do not care about other Americans, either those living well or those living poorly. They see the living, breathing reality of what and who they are and were. If the president says that a trade war is "easy" and "winnable," that's all they need. The actual policies and the ideas that the production chain is international and not simply "made in America" is of no consequence to them. They see, in the president, the very validation of their worldview. They see his enemies as their enemies and as long as he is the president, they are certain that he can conquer any foe. And if he fails, he simply moves along to something else. They never look back. They never take stock.
If the president's tariffs and trade war tantrum runs up a $1,000 bill for the average American family in a single year, they'll shrug. Like their president, they see enemies everywhere. They are driven by self-righteousness.
And anger.
835
@Red Sox, ‘04, ‘07, ‘13, ‘18-Trump supporters believe that China has #1-unfairly taken advantage of the U.S. and long gotten away with it; #2-forced U.S. companies to give up intellectual property or stolen it outright; #3-manufacturing needs to come back to the U.S.; #4-China deserves to be punished and Trump's tariffs are the answer. Farming supporters believe this despite watching their incomes, markets collapse, and having to accept government handouts. These simplistic perceptions, wrapped in patriotism, need to be addressed. Trump's tariffs and other ideologically-fueled policies are putting all sectors of our economy at risk and the coming GOP-enabled recession is going to hurt millions already stretched by increased food, gas, medical, housing and education costs, etc.
64
@Red Sox, ‘04, ‘07, ‘13, ‘18 The big donors care about their bottom line. Republicans need the big donors. Your analysis is oversimplified.
5
And the millions will still vote for him.
9
This is a well crafted critique of Trumponomics, such as it is.
What I am more concerned about is that Trumpism has an inverse effect on what I had hoped of, a steady liberalisation of the Chinese markets and a laissez-faire approach where industries will not be subsidised by the government.
Because of Trump's ill-conceived trade-war, the Chinese government will now surely pump billions into state-of-the-art chip foundries and architecture, AI, aerospace, into just about everything. Exactly the opposite of what I had hoped for.
And another thing that Trump didn't know about, it's difficult to land a new customer, it's almost impossible to get the customer back after you have pushed him away. I don't think the Chinese will ever buy Soybeans in the volume that they had in the past.
I dread to think what exists only in Trump's mind!
285
@Arthur Y Chan
China’s pumping in of billions into the industries you list far predates trump (ad much as I disagree with the use of tariffs).
6
@trblmkr
There's truth to that but not completely. What I expect is a crash program in China to create a domestic supply of the chips Huawei needs and they can't produce at present -- and they buy from us (some of them).
12
@Arthur Y Chan
China's "Made in China 2025" is proposed in 2015. Which aiming for self-sufficiency in AI, semiconductor, aerospace, biotech, etc. Just name a few.
China's leading the world in AI by 2030 plan is proposed in 2017. The plan is not just wide-spread integration with society but also setting the standard. Much like U.S. built and set the standard for the internet.
When they plan something they plan far ahead. U.S. needs to plan ahead like they do in order to stay ahead of them. Which is a difficult thing to do due to this 4 year election circle.
7
Paul, a fourth reason that trump will fail in his “easy to win” trade war is that he, for some reason, made no effort to enlist the aid of our democracy allies. Many share legitimate grievances vis a vis China in particular.
Instead, he treated them pretty much the same as China.
A united front would have obviated the need for tariffs in my opinion.
392
@trblmkr,
The lesson we've learned is that the only need Trump has is for headlines -- he wants to be the universal centre of attention.
56
@Harold (Mexico)
You refer to Donald "Tank" Trump, I presume.
3
@Thomas Zaslavsky,
Yes. Tanqs for asking :-)
3
The only thing Trump has proved is his lack of understanding of supply chain management and the culture of China.
The long term economic effect of disrupting world trade is becoming the biggest unknown. Unknowns always seem to follow the law of unintended consequences.
41
@glennmr-It was only a few decades ago when the U.S. government's policy was to urge companies to open up and source supplies internationally. It was good for business to source components and goods from lower-cost counties--which actually helped raise the quality of life for the middle class and lower classes here and there, and it was also touted as a good way to promote democratic values and goodwill.
11
@Ann
And prosperity with rising personal income, in poor countries -- this has happened in places like China, India, Bangladesh, Mexico, etc.
I hope it is true, for the pain of turning away from the world, turns us away from our better selves. The numbers are hurting more Americans every day. We shall remember.
21
20-20 hindsight would tell you Trumps trade war with China might well have seen better results had he signed onto the Trans Pacific Partnership (TPP). Had he done so, countries that were signatory could have helped tge U.S. to leverage China.
But then Isolationists like Trump can't seem to come to grips with working with other countries in a cooperative venture.
668
@cherrylog754
I think not many Americans (and certainly not Trump) understood that the TPP was formed (at least in part) to try to balance China's growing power in Asia and the world.
All Trump understands is, Obama did it, must be bad.
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Don't forget that the TPP is associated with President Obama and, therefore, it's bad to political myopics like Trump and McConnell.
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@cherrylog754
"But then Isolationists like Trump can't seem to come to grips with working with other countries in a cooperative venture."
Oh it's worse than that. He doesn't just not not cooperate with them, he is openly hostile towards them. Witness the way he treats Canada and Europe. And we don't even have to mention the "rapist" in Mexico. What Trump has done is give China leverage in the other direction.
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"The light-truck tariffs America imposed in 1964 in an unsuccessful effort to force Europe to buy our frozen chickens are still in place, 55 years later."
this tariff just escapes me. Light Truck vs. Frozen Chicken?
Is that because our frozen chicken were bad and their light trucks were good? It's more like a chicken fight...
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@paul, here is an interesting article on ‘tariff engineering’- removing parts from vehicles after import to beat the light truck tariff. https://www.washingtonpost.com/business/economy/the-strange-case-of-fords-attempt-to-avoid-thechicken-tax/2018/07/06/643624fa-796a-11e8-8df3-007495a78738_story.html?utm_term=.709512c4286d
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@paul
I believe Europe objects to chicken that has been washed in chlorine, which is the chicken the U.S. produces. That's a controversial issue right now amongst the Brexiteers who promise glorious trade agreements with the U.S., after Brexit, such as allowing the U.S. to sell chorinated chicken in the U.K. and take over part of their National Health Service (I'm not making this up).
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@Paul. It's because chicken from the US are rinsed in chlorine as a sanitizer. That doesn't happen in the EU. The connection between light trucks is beyond my ken.
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Having been tangentially involved with the US-China trade tensions in the mid 1990s and how that played out when the US threatened trade sanctions, China's current stance to stand tough should not be surprising to anyone who recalls that episode of bilateral trade. China was far less developed 20+ years ago, yet was able to hold their own and the threatened sanctions were not imposed due to threats to specific sectors of the US economy. China is much more atune to international trade issues now than in the 1990s. Thus far, I have not been surprised by China's reactions.
The sad part about the current trade tensions is that we supposedly have a team in place that has trade experience. What they exhibit is a very elementary and dated view of trade and how to deal with complex issues. Given this Administration, no surprise that there is a problem in confronting complex issues.
Even sadder is Wall Street and how it reacts to something as basic is an announcement that the two governments are talking again, causing the market to go up, not based on anything other than the US and Chinese MIGHT talk to each other again.
We are all, sadly, the audience to a show that this Administration is orchestrating and there's no one really in charge that has the integrity to stand up to absurd and dated policy decisions.
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Yes, these trade negotiations are not just about money and the balance of trade, they are about history and culture as well which one would not learn in an MBA program, but rather in the liberal arts. Businessmen like Trump have no appreciation for the fact that foreign relations have so many facets that could be helpful and fruitful and mutually beneficial.
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@Moronic Observer
“China was far less developed 20+ years ago, yet was able to hold their own and the threatened sanctions were not imposed due to threats to specific sectors of the US economy. ”
As someone who was far more than tangentially involved in the China trade tensions I can confidently assert that it was a half-hearted effort at best.
Our vaunted “job creators” were 100% focused on getting access to Chinese labor and effectively used their influence($$$) to make it happen. Chinese “strength” had little to do with it.
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@trblmkr
Chinese "strength" will have a lot to do with this one though. Just watch.
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Of course - as Dr. K. has so often reminded - any tariffs are nothing but tax increases on Americans, since importers merely pass through to American consumers the extra costs.
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Anyone watching CNBC interviews knows that importers are not worried about consumers paying more. Instead they are complaining because tariffs are forcing them to seek other sources of supply, both in the US and in other countries. Although they would prefer to do nothing and relax, they fear that their competition may take action and get a price advantage with new suppliers.
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@Richard - Not all importers can shift their supply chain, facing disaster if they can't raise product prices:
https://money.cnn.com/2018/06/26/news/companies/steel-tariffs-job-losses/index.html
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We shall see. It is better to have tried and lost than not tried at all. If anything China has been put on notice. If you want to do business with the USA it has to be free and fair trade.
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@Girish Kotwal Ideally you are correct. But, Chinese Mercantilism has a long and successful history. Work arounds by the "Yellow Peril" will be the order of the day. Investments in farming in Brazil and Argentina just one that has been underway for some time.
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@Girish Kotwal
Except for U.S. protective tarriffs and domestic subsidies and rules that force the government to buy U.S. products (whatever that means in practice) and ....
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@Girish Kotwal
“It is better to have tried and lost than not tried at all.”
Why? This is just an empty slogan, nothing more. Failed efforts are just that — failed efforts. As Trump might say, I prefer winners, not losers. And that’s what Trump has been the last two years—a loser, on North Korea, China, Iran, you name it. Sad that some people are so invested in him they turn a blind eye to reality and buy into the hype.
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The recidivist is at it again. Three months ago Paul Krugman's column announced that Trump had reached a trade deal with China -- and it was a nothing burger.
He was wrong. There was no deal. China had backtracked on many of its promises, and Trump pulled the plug.
Well, if at first you don't succeed, try again. So Krugman is trying again.
And once again, Krugman has shied away from stating what he believes. All we hear is that trade wars hurt and are hard to win. Krugman still hasn't leveled with us about his view of China's trade practices and what response is appropriate.
So let's skip the endless and mindless Trump bashing and get some answers. What would you have done? And why? You owe us at least that.
I am willing to pay more for my shopping for many years to come if it leads to an eventual reform of China's predatory practices.
True, I have never believed that China could afford to lose face by buckling to Trump's pressure. But let's look beyond tomorrow. I think most of the tariffs will remain in place for several years. But I also believe that after a decent interval China will prove more flexible -- not least because of domestic discontent. Over to you.
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@Ian Maitland I guess you are a true patriot. So if you’re willing to pay more to correct an economic policy problem would you be willing as a patriot to pay a little bit more to solve our own economic health care problem? Doubt it. Just what are your priorities?
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@Ed
It's got nothing to do with patriotism. I believe the world trading system is broken, largely because of China's abuses, and I believe that everyone -- yes, including China -- will win if it is mended.
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@Ian Maitland, Oh stop. All nations become predatory when it comes to trade. Blaming China for protecting its own interests by selling stuff, started when businesses realized they could pay nothing for labor and shift environmental and regulatory costs somewhere else. No one "forced" them to do so. They do it because of the "maximize shareholder value" mantra. And sure, they cheat. But Walmart was recently fined for cheating and I'm sure a lot of other U.S. (and other) businesses engage in naughty things.
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"And there’s no hint that the tariffs are achieving Trump’s presumed goal, which is to pressure other countries into making significant policy changes." And let's not forget his campaign pledge that "millions of high-paying jobs would come flooding back to the U.S."
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@Gery KatonaHow about those coal mining jobs. Gee, more mines have closed and there are 2,000 less, but since Trump and his followers live in 1984 it does fit. Jim Trautman
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"The light-truck tariffs America imposed in 1964 in an unsuccessful effort to force Europe to buy our frozen chickens are still in place, 55 years later." And this is a "scar"? The truck tariff is the only thing keeping US automakers above water.
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@Larry
US automakers got in trouble because they got complacent and their products were not very good. Competition from Japanese companies forced them to up their game; as a result, cars today are much better than they were in the 80s.
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Partially. Detroit will soon not make cars, only trucks (incl SUVs). Cars will be imports, or Teslas.
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@Aoy Not so with trucks. Because of the truck tariffs, the production of trucks in America remains a vibrant business.
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"The light-truck tariffs America imposed in 1964 in an unsuccessful effort to force Europe to buy our frozen chickens are still in place, 55 years late" yes, and interesting enough Ford makes his successful small van in Turkey and assemble it in Spain. To bypass the tariffs it just puts seats in it to make it a little passenger van and then removes the seats in Ohio. Of course we pay for all this operations but I guess it is still better for Ford than building it here.
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@Mur
Isn't that a crime? Why isn't it prosecuted
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@wsheridan, Mur clicked on the link and landed on a Business Insider article. There are always loopholes to get around language in trade treaties legally.
@wsheridan
No, perfectly legal practice.
"No doubt Trump will try to spin some trivial foreign concessions as a great victory, but the actual result will just be to make everyone poorer."
The first part of this compound sentence is undeniable; the second part, though, seems overstated: Since money doesn't disappear into thin air -- does it? -- it will go to someone, right? So not "everyone" will be poorer as a result.
Maybe Dr. K should have written "many people will be poorer"?
(But don't follow me: I'm lost. I made a D in economics 101, my one and only foray into that slough of despond.)
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@Jim Muncy
If businesses produce less or produce less efficiently due to tariffs, it can result in less wealth being created and a smaller pie for everyone. It’d be like if someone decided to work less because of a higher income tax—the money that person would have earned would disappear into thin air.
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@Aoy
Thank for responding.
I agree with your example, but money, real cash, is changing hands with tariffs. Where does that real money go?
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@Jim Muncy
The moneys go to the fed gov as taxes, but because prices are high, people buy less. Thus the makers are less well off (sold fewer items), the buy public is less well off (bought fewer things or paid more than needed--no judgment on need or utility of the product). So I would say that both parts are true.
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Considering this is from the same guy who predicted a market collapse and deep recession if Trump was elected, I'm encouraged. Keep those predictions coming, Paul.
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@JW Patience, my young Padewan. Economic forces are starting to align. And the coming collapse will fall hardest on those it always falls on; the poor.
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@Mainer; I'm mot sure whether or not the economy will collapse, but if does it's right to say it will, as ever, fall hardest on the poor. Of course, this time around it'll also cause spectacular shrinkage in some spectacular market fortunes built of over the last 10 years or so. We may not hear much from the poor, but you can bet we'll hear plenty from people who lose, oh, I don't know, 20 or 30 billions in a few months.
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@JW
Considering this is from the same guy who after 2 or 3 days' panic immediately realized he was wrong and admitted it publicly, I would say you should pay more attention than to "Tank" Donald and his positions that vary daily. But maybe that's too hard.
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