Trump's policy is mostly words. The focus should be on eliminating inversions which rewards U.S. companies for taking jobs out of the country. Then cut a deal with U.S. corporations to bring back the $2 trillion in untaxed profits sitting overseas. Then genuinely help those who have lost their good livelihoods due to globalization. Then financially penalize companies that close up shop and move to other other countries, leaving local governments who supported them to deal with the damage to the social fabric. Then increase the support for our exporters and encourage them to export more. That's a policy worth debating.
2
Not holding your breath, I hope?
1
Kristof's column on Trump embarrassing America, which is excellent, garnered more than 800 comments in just a few days. Irwin's column on trade policy, which is equally excellent, barely crested 100 comments. I suspect readership of the two columns reveals similar discrepancies, which reveals the challenge in keeping disqualified people out of leaderships roles that affect billions of people.
1
Not all of NAFTA is about trade. It includes rules on many ancillary commercial and administrative practices that affect trade as well. The negotiation of such agreements is complex because provisions impact on each other, and it is the overall balance of advantage in the whole package of provisions that determines its acceptability to the negotiating parties. Therefore, experience indicates that a general re-opening of this agreement is bound to be a long drawn-out process that could over-reach Trump's first term in office.
The more practical approach to re-appraising the agreement would be for all sides to examine specific areas where they believe based on years of operating experience that up-dating or revision would be warranted, then renegotiate the package of those specifics, understanding there will be give and take on all issues. That's how such agreements get done, and there are too many domestic interests at play in the participant countries - with a say - for politicians to ignore this reality.
It is really premature to speculate about the impact on Canada of any changes to NAFTA until we see exactly what they would be; as well, there are countless other beneficial agreements between Canada and the USA that could be re-opened if NAFTA discussions get quagmired in one-sided positions. At the least, this will be fertile times for international trade lawyers and consultants; they will prosper regardless of the outcomes.
The more practical approach to re-appraising the agreement would be for all sides to examine specific areas where they believe based on years of operating experience that up-dating or revision would be warranted, then renegotiate the package of those specifics, understanding there will be give and take on all issues. That's how such agreements get done, and there are too many domestic interests at play in the participant countries - with a say - for politicians to ignore this reality.
It is really premature to speculate about the impact on Canada of any changes to NAFTA until we see exactly what they would be; as well, there are countless other beneficial agreements between Canada and the USA that could be re-opened if NAFTA discussions get quagmired in one-sided positions. At the least, this will be fertile times for international trade lawyers and consultants; they will prosper regardless of the outcomes.
1
Since NAFTA went ahead, trade between the US and Mexico has risen from a modest 10 billion dollars to 340 billion dollars anually, according to the US Department of Comerce. Mexico buys more American goods than Britain, France, and Germany combined. Most Mexican goods are partilly made in the US and viceversa.; in fact, all NAFTA exports share American, Canadian and Mexican manufacturing combined. Mexican workers in the US do most of the jobs Americans won't do, for salaries no American citizen would accept. And 14 million Mexican tourists visit the US anually. If Mr. Trump belives he can dispense all that, he's welcome to it, but I reckon any American with less money than him should seriously think twice those policies.
4
If Mr Trump makes good on his campaign promise regarding trade, I can pretty much guess that $6.00 T-shirts at Walmart will be a thing of the past.
I'm sure his base supporters will remember the all the foreign made, inexpensive goods that they once could afford with fondness.
I'm sure his base supporters will remember the all the foreign made, inexpensive goods that they once could afford with fondness.
2
The people who run the US financial and entertainment industries - and the Mafia - should be very worried. If Trump messes with Mexico, then Mexico could embargo exports of white powder!
Mr Trump will set deals favorable to Mr. Trump.
If he can get out of theTPP, and set individual deals that benefit him personally, and his cronies-- it will be a benign 8 years. If he feels slighted- or if he feels he is outmaneuvered, then he will wage some chaos, as any low to mid tier businessman would.
Mr. Trump is cro-magnon.
The infrastructure deals in the US will be gifts to cronies. The deals he makes with China will be indirect gifts to himself.
If China is nimble enough to hand him tens of billions through some back door-- surely a deal will be reached.
If he can get out of theTPP, and set individual deals that benefit him personally, and his cronies-- it will be a benign 8 years. If he feels slighted- or if he feels he is outmaneuvered, then he will wage some chaos, as any low to mid tier businessman would.
Mr. Trump is cro-magnon.
The infrastructure deals in the US will be gifts to cronies. The deals he makes with China will be indirect gifts to himself.
If China is nimble enough to hand him tens of billions through some back door-- surely a deal will be reached.
4
What is it about economists that they debate about every subject in a vacuum. They always discuss trade without also talking about geopolitics; domestic labor, industrial, tax and regulatory policy; fiscal policy; democratic processes.
The reality is that the U.S. leadership and academics just got a wake-up call. They are being told their theories are the emperor with no clothes. Instead of creating NEW wealth (remember some of that "wealth" was nothing more than inflation, debt leverage and the fact that the U.S. national debt has risen $17,000,000,000,000 since 1980), all the policies did was TRANSFER wealth between nations or between economic class domestically.
How long did you think this situation would persist before the whole thing blew up? Did you really expect that the situation would end peacefully? Monkey no see evil, monkey hear no evil, monkey no speak evil.
Maybe it is time Americans watched the (original) Planet of the Apes movies again.
The reality is that the U.S. leadership and academics just got a wake-up call. They are being told their theories are the emperor with no clothes. Instead of creating NEW wealth (remember some of that "wealth" was nothing more than inflation, debt leverage and the fact that the U.S. national debt has risen $17,000,000,000,000 since 1980), all the policies did was TRANSFER wealth between nations or between economic class domestically.
How long did you think this situation would persist before the whole thing blew up? Did you really expect that the situation would end peacefully? Monkey no see evil, monkey hear no evil, monkey no speak evil.
Maybe it is time Americans watched the (original) Planet of the Apes movies again.
4
[same as before, with a culling of a typo and extra words]
This is a useful survey, although the scenario 1 statement that $1.1 billion in increased costs from a tire tariff resulted in a cost of $900k for each of 1,200 tire-making jobs saved by the tariff does not clearly state the economic impact of tariffs. I think the more appropriate comparison would be to start with the average annual wages of the saved tire-workers (plus 20% or so for various health and other benefits) and then factor in multipliers for the effect of $1.1billion received by tire manufacturers on spending by their suppliers and for the consumer effect of employees spending their wages on food, consumer goods and various services. The results may be far less than $900K a saved employee, but at least it would give a clearer idea of the impact of saved manufacturing production and jobs.
This is a useful survey, although the scenario 1 statement that $1.1 billion in increased costs from a tire tariff resulted in a cost of $900k for each of 1,200 tire-making jobs saved by the tariff does not clearly state the economic impact of tariffs. I think the more appropriate comparison would be to start with the average annual wages of the saved tire-workers (plus 20% or so for various health and other benefits) and then factor in multipliers for the effect of $1.1billion received by tire manufacturers on spending by their suppliers and for the consumer effect of employees spending their wages on food, consumer goods and various services. The results may be far less than $900K a saved employee, but at least it would give a clearer idea of the impact of saved manufacturing production and jobs.
This is a useful survey, although that the scenario 1 statgement that $1.1 billion in increased costs from a tire tariff resulted in a cost of $900k for the saving of each of 1,200 tire-making jobs saved by the tariff does not clearly state the economic impact of tariffs. I think the more appropriate comparison would be to compare start with the average annual wages of the saved tire-workers (plus 20% or so for various health and other benefits) and then factor in multipliers for the effect of $1.1billion received by tire manufacturers on spending by their suppliers and for the effect of employees spending their wages on food, consumer goods and various services. The results may be far less than $900K a saved employee, but at least it would give a clearer idea of the impact of saved manufacturing production and jobs.
2
Agree plus you add the jobs of all the suppliers to those tire plants and the cost of the tariffs makes much more sense.
1
It would be a hard if not impossible, inefficient, and very contentious process to negotiate and legislate trade to reduce the trade deficit - as this artile points out. On the other hand if the dollar falls US exports will gain a comparitive advantage and the trade deficit will eventually decrease, as long as the increased cost of imported materials and consumables such as oil do not override the increase in exports. As it happens, the US is currently a net exporter of oil, which solves most of that problem.
"The economic conditions during the recession that began in 2007 forced the U.S. government ... to take up the slack by increasing government spending ... essentially printing money and by selling government bonds to foreign governments and investors - resulting in an increase in the supply of dollars. Hence the dollar depreciated as a result." [Investopedia]
Trump has promised many huge stimuli (military, infrastructure, health, tax cuts), to quote, "print the money". That should cause the dollar to depreciate, and the trade deficit to fall.
Of course there is no free lunch: "Another concern for countries that rapidly issue debt is that the interest burden will increase and, therefore, more tax dollars will be allocated just to cover the interest rate."
"The economic conditions during the recession that began in 2007 forced the U.S. government ... to take up the slack by increasing government spending ... essentially printing money and by selling government bonds to foreign governments and investors - resulting in an increase in the supply of dollars. Hence the dollar depreciated as a result." [Investopedia]
Trump has promised many huge stimuli (military, infrastructure, health, tax cuts), to quote, "print the money". That should cause the dollar to depreciate, and the trade deficit to fall.
Of course there is no free lunch: "Another concern for countries that rapidly issue debt is that the interest burden will increase and, therefore, more tax dollars will be allocated just to cover the interest rate."
In the recent election I loved when you guys used the x percent chance of winning the White House and the field goal odds analogy.
Well, here is a my strictly unscientific imitation of it based on my knowledge of history re Trump's trade policy in particular and his policies in general.
He have a 20% chance of being a good President, 40% change of being bad and a 40% chance of being a disaster.
For Trump to be good, a filed goal kicker would have to miss a 2 yr. field goal.
Well, here is a my strictly unscientific imitation of it based on my knowledge of history re Trump's trade policy in particular and his policies in general.
He have a 20% chance of being a good President, 40% change of being bad and a 40% chance of being a disaster.
For Trump to be good, a filed goal kicker would have to miss a 2 yr. field goal.
1
Can we please dispense with "policy predictions?" After this election, I for one have lost all faith in polls, predictions and probable outcomes. The 24-hour news cycle is killing us. America needs to take a collective deep breath be a bit patient. I was never a Trump supporter, but having the press micro-report his every move, his musings and his tweet habits just feels counterproductive.
If he is truly reversing many of his most outrageous and damaging campaign promises he should be encouraged to do so, not overtly criticized for changing his mind. Please!
If he is truly reversing many of his most outrageous and damaging campaign promises he should be encouraged to do so, not overtly criticized for changing his mind. Please!
5
The new order summarized - Make China great, send the US to the poorhouse.
1
Back to mercantilism.
1
As good as any analysis.
In the end, Trump has no policy. He will say anything to anybody at anytime to curry favor with the masses, excite them and get the adoration of them.
Just a matter of time when he self implodes....maybe a few months, maybe a few yrs but as you guys did with the election race...there is a 90% chance it will happen, like missing a field goal from the 2 yard line.
Never read about a demagogue in history that became a great leader.
In the end, Trump has no policy. He will say anything to anybody at anytime to curry favor with the masses, excite them and get the adoration of them.
Just a matter of time when he self implodes....maybe a few months, maybe a few yrs but as you guys did with the election race...there is a 90% chance it will happen, like missing a field goal from the 2 yard line.
Never read about a demagogue in history that became a great leader.
3
Even a stricter trade enforcement policy that stops unfair trade practices abroad would help. Added to this should be stopping outsourcing of service jobs abroad, such as call centers. The idea would be to increase wages in the U.S.
Is Trump really interested in boosting wages of domestic workers? He has fought the Las Vegas union at his casinos there, and they only want higher wages and benefits for Vegas employees. He imported Jamaican workers for his Florida casino even though there are plenty of willing Floridian workers (albeit at higher wages than unemployed Jamaicans.
Is Trump really interested in boosting wages of domestic workers? He has fought the Las Vegas union at his casinos there, and they only want higher wages and benefits for Vegas employees. He imported Jamaican workers for his Florida casino even though there are plenty of willing Floridian workers (albeit at higher wages than unemployed Jamaicans.
2
China's US$ reserve is about $3050 billion ($250 billion recently depleted to stabilize their currency). They also have $1300 billion worth of US treasury in their hands. It is not discussed if China withdraws this money that will send shivers in the world market by itself. Moreover, there are smarter ways of dealing with $550 billion of Chinese export surplus (as of last year).
This gap could be minimized by convincing them to do some assembly and some packaging work done (for their exports) in the so-called rust belt for job creation and to reduce trade balance to a maximum level of $100-125 billion range - one could set up a smart algorithm for this purpose, and this is also a smarter way of win-win negotiation...
This gap could be minimized by convincing them to do some assembly and some packaging work done (for their exports) in the so-called rust belt for job creation and to reduce trade balance to a maximum level of $100-125 billion range - one could set up a smart algorithm for this purpose, and this is also a smarter way of win-win negotiation...
3
Yet Mexico has no problem threatening the US with tariffs and our esteemed politicians caved, of course:
http://www.nytimes.com/2016/09/28/business/economy/what-can-mexico-do-ab...
"...Mexico slapped retaliatory tariffs, ranging from 5 percent to 25 percent, on a list of products that amounted to over $2 billion in American exports to Mexico..."
http://www.nytimes.com/2016/09/28/business/economy/what-can-mexico-do-ab...
"...Mexico slapped retaliatory tariffs, ranging from 5 percent to 25 percent, on a list of products that amounted to over $2 billion in American exports to Mexico..."
4
All tariffs do is encourage the protected companies to be less efficient and competitive. We can go back to slapping a giant tariff on imported cars and say Hey Ford, now you can build a 35% worse car for the money and still compete because all taxpayers are making up the difference. Bring back the Pintos, if we subsidize them enough you can still sell them!
2
Scenario 4: There is no Trump presidency. If it doesn't happen before then, let's make certain of it on January 20.
2
These types of article do a disservice to our country at this juncture. Let's get real about a few things. 1. no one is interested in "trade experts'" simulations. Isn't that how we got into this catastrophic mess, because of "Hillary has an 89% chance of winning" simulations? Please forget about simulations. 2. It's so ridiculous to use the phrase "Trump Trade Policy." He has not articulated any policies. He is not in a position to do so. He does not understand the complexities of the issues facing the president. All you're doing is fleshing out ideas for him in this article. Are you in his cabinet? If not, then don't help him. He needs to do his own homework. He's the president now.
5
The news is slowly getting better about Trump. Or maybe not. He doesn't quite appear to be the nutcase he seemed to be during the campaign. Or maybe not. And now a rather positive article about Trump's economic goals that truly make sense. Or maybe not. But I'm willing to bet that this guy is going to tack to the middle and get a lot of stuff done by bi-partisan efforts. Or maybe not.
2
Probably not.
Interesting choice of objectives to be pursued by the Trump administration in renegotiating existing trade agreements, according to the writer.
" It's possible that there will be only minimal disruptions to world economies and BETTER deals for American COMPANIES. Or not."
If Trump delivers, the objective of any trade agreement renegotiation is not to get a better deal for American corporations. They were/are big time winners.
The main goal of any renegotiation is to get a better deal for AMERICAN WORKERS, big time losers so far.
It will take time for the policy changes brought about by the Trump administration on trade to filter down among the business community, mass media and the diplomatic bureucracy involved in the negotiations.
New thinking in America on trade, economic integration and globalization, folks.
" It's possible that there will be only minimal disruptions to world economies and BETTER deals for American COMPANIES. Or not."
If Trump delivers, the objective of any trade agreement renegotiation is not to get a better deal for American corporations. They were/are big time winners.
The main goal of any renegotiation is to get a better deal for AMERICAN WORKERS, big time losers so far.
It will take time for the policy changes brought about by the Trump administration on trade to filter down among the business community, mass media and the diplomatic bureucracy involved in the negotiations.
New thinking in America on trade, economic integration and globalization, folks.
3
The realities of enacting some of Trumpery's apocalyptic threats such as tariffs, breaking up the ACA, arresting Hillary Clinton, building a wall on Mexico's border, degrading defense arrangements such as NATO, deporting millions of immigrants will curb his enthusiasm for turning this country upside down. Perhaps, sanity may be restored.
1
You don't get a better deal by ripping apart your agreements. China is now the largest economy. The world will simply trade without the US. You get a lot of broken promises, antagonize your allies and insult your friends.
You get conflict on many fronts and other countries willing to take the lead.
40 million US jobs depend on trade. Disrupting trade agreements puts those jobs in jeopardy.
Tariffs mean higher prices, inflation, higher interest rates and unemployment.
Eventually if you continue on this path you get civil unrest and foreign war.
You get conflict on many fronts and other countries willing to take the lead.
40 million US jobs depend on trade. Disrupting trade agreements puts those jobs in jeopardy.
Tariffs mean higher prices, inflation, higher interest rates and unemployment.
Eventually if you continue on this path you get civil unrest and foreign war.
3
Excerpt from Trans-Pacific Partnership via Wikipedia
(...)"According to the Office of the United States Trade Representative, signatories are required to join the United Nations Convention Against Corruption (UNCAC); criminalize bribery of public officials; have in place a code of conduct for public officials; take measures to decrease conflicts of interest; effectively enforce anti-corruption laws and regulations; and involve private organizations in the fight against corruption.[74]"
https://en.wikipedia.org/wiki/Trans-Pacific_Partnership
Perhaps *this* is what is really making the incoming administration and influential special interests so uncomfortable...
(...)"According to the Office of the United States Trade Representative, signatories are required to join the United Nations Convention Against Corruption (UNCAC); criminalize bribery of public officials; have in place a code of conduct for public officials; take measures to decrease conflicts of interest; effectively enforce anti-corruption laws and regulations; and involve private organizations in the fight against corruption.[74]"
https://en.wikipedia.org/wiki/Trans-Pacific_Partnership
Perhaps *this* is what is really making the incoming administration and influential special interests so uncomfortable...
4
No emphasis in this article here, and elsewhere on US trade relations specifically with Canada. It is not even mentioned. The number #1 destination of US exports is Canada, and Canada ranks third among total US imports.
And yet, there has been almost no indication from President Elect Trump as to what NAFTA concerns he has with Canada; clearly, his focus has been more on Mexico. One presumes that he will approve the Keystone Pipeline, but that is hardly trade policy or even relevant to the possible dissolution of NAFTA.
And yet, there has been almost no indication from President Elect Trump as to what NAFTA concerns he has with Canada; clearly, his focus has been more on Mexico. One presumes that he will approve the Keystone Pipeline, but that is hardly trade policy or even relevant to the possible dissolution of NAFTA.
3
One aspect that I did not see mentioned in any of the comments is that Trump himself is not going to negotiate any of these deals with the other countries. He wouldn't have the time to do it (while pursuing new wars on the military side) nor could he know all the details. This means that he will have to staff the U.S. Trade Commission with hundreds of mini-Trumps, or "Trumpets," possibly trained at Trump U., to pursue such negotiations. They would have to be steeped in the histories and details of the existing agreements, unlike Trump (who can hardly know any of the details). This will be a spectacle to behold.
One other point: no one has mentioned that, per a McKinsey study I read a couple of years ago, the value-added in Chinese manufactures runs only 15 to 35 percent. They are dependent on machinery, parts, and materials from lots of other countries. No one in the chain is going to be happy with renegotiations.
One other point: no one has mentioned that, per a McKinsey study I read a couple of years ago, the value-added in Chinese manufactures runs only 15 to 35 percent. They are dependent on machinery, parts, and materials from lots of other countries. No one in the chain is going to be happy with renegotiations.
1
H,
It is only one year since Justin Trudeau took office and he has made it clear to Canadians he and his cabinet ministers not corporate lawyer or political economists will negotiate trade deals. He has also made it clear that Canada's democracy and Canadian values are no longer negotiable.
I think I can say with reasonable certainty Canada would not be upset if NAFTA is either torn to shreds or renegotiated which for all intents and purposes is the same thing.
Looking at Trumps staff I think it is reasonable to assume that the USA's number one and two trading partners will be China and Russia. I suspect the Western Democracies like France, Japan, Germany and Canada will be told to take a hike. Military alliances like NATO and SEATO will give way to economic and political unions with USA, China, and Russia exercising command and control while the western alliance seeks to maintain some control over their individual and alliance economies and democratic institutions while not offending the alliance of the US, China and Russia.
It looks to me the return to the Imperialism of the 16th century may return.
It is only one year since Justin Trudeau took office and he has made it clear to Canadians he and his cabinet ministers not corporate lawyer or political economists will negotiate trade deals. He has also made it clear that Canada's democracy and Canadian values are no longer negotiable.
I think I can say with reasonable certainty Canada would not be upset if NAFTA is either torn to shreds or renegotiated which for all intents and purposes is the same thing.
Looking at Trumps staff I think it is reasonable to assume that the USA's number one and two trading partners will be China and Russia. I suspect the Western Democracies like France, Japan, Germany and Canada will be told to take a hike. Military alliances like NATO and SEATO will give way to economic and political unions with USA, China, and Russia exercising command and control while the western alliance seeks to maintain some control over their individual and alliance economies and democratic institutions while not offending the alliance of the US, China and Russia.
It looks to me the return to the Imperialism of the 16th century may return.
1
I'll take door number three. The other two mean business as usual, globalism, 25% unemployment/under employment, second class status for the people who make things and who work for a living, all the money for the deal makers and outsourcers. "Upending the world economy" is what it will take to make a national economy that puts the middle class first again, building an economy and not earning fees and bonuses for destroying it. That's what we voted for. Will it be tough? Will there be loses? Will there be upheaval? Sure. One step backward for two steps forward.
7
Don't forget that China still holds $1.2 trillion in U.S. treasury notes--considerable leverage in both directions.
Canada can certainly testify that the U.S. has never been a patsy in trade disputes or negotiations. Just ask our softwood lumber producers, for example.
Trade is one of many areas--from waterboarding to climate change--where factual reality may alter the "false news" that permeated Trump's campaign rhetoric. If he will listen.
Canada can certainly testify that the U.S. has never been a patsy in trade disputes or negotiations. Just ask our softwood lumber producers, for example.
Trade is one of many areas--from waterboarding to climate change--where factual reality may alter the "false news" that permeated Trump's campaign rhetoric. If he will listen.
3
But the problem is NOT with the trade agreements in themselves. That part is good, and worthwhile. The problem is the lack of utilization or actual distribution of the supposed BENEFITS of those agreements. Yes, product prices are less (Cheaper clothes for the kids!) but what good does it do if the unplanned for effect is to put many of our own workers out of a job? Who then can't afford to buy the cheaper products?
Sure the executives of the companies outsourcing the product, or buying it wholesale from the exporter are doing great, but what about the workers? Not so great, and that is where the problem is.
The US Government has its first duty to the public at large. The US Government has no obligation to help the people of China, or India, or anywhere else. (We should certainly try to avoid harm to them, but that is a different issue.) The most obvious way to see that: those people do not vote in the US elections. Those people have their own country, and elect (or at least have) their own government to protect them. Failing to recognize and deal with that reality cost the Democrats this election and might cost them the next one too. On the other hand, I doubt that Trump has chosen the right windmill to go after on his quest. So the opportunity to correct the problem is still there.
Sure the executives of the companies outsourcing the product, or buying it wholesale from the exporter are doing great, but what about the workers? Not so great, and that is where the problem is.
The US Government has its first duty to the public at large. The US Government has no obligation to help the people of China, or India, or anywhere else. (We should certainly try to avoid harm to them, but that is a different issue.) The most obvious way to see that: those people do not vote in the US elections. Those people have their own country, and elect (or at least have) their own government to protect them. Failing to recognize and deal with that reality cost the Democrats this election and might cost them the next one too. On the other hand, I doubt that Trump has chosen the right windmill to go after on his quest. So the opportunity to correct the problem is still there.
11
Free trade is ultimately something everyone benefits by. It would be good if things such as child labor and regard for the environment were respected as I understand (without having studied) the original pacts called for. That would benefit all.
There are some areas where China seems to be particularly delinquent. As a stock trader, I always worried when companies who relied on copyrights and patent technology got involved with China, lest the Chinese would simply steal the intellectual property eventually. I understand they are cracking down on it, but would like to know more. Could be a big plus for bio-pharma, if that market opened up.
The other way to better compete is to have greater business government cooperation in this country. Certainly building better infrastructure makes it easier and cheaper for goods to be manufactured and developed here.
And penalizing countries in some way whose citizens poor across our borders would be good for everyone. They are a huge expense never mind the PC formulations which overlook the incredible expense of education, medical and so forth that cripple our services by comparison to most developed countries. A zero sum immigration plan – we take in as many of their citizens as they take in of ours could work. It might help them to promote birth control - thus helping to save their environments.
There are some areas where China seems to be particularly delinquent. As a stock trader, I always worried when companies who relied on copyrights and patent technology got involved with China, lest the Chinese would simply steal the intellectual property eventually. I understand they are cracking down on it, but would like to know more. Could be a big plus for bio-pharma, if that market opened up.
The other way to better compete is to have greater business government cooperation in this country. Certainly building better infrastructure makes it easier and cheaper for goods to be manufactured and developed here.
And penalizing countries in some way whose citizens poor across our borders would be good for everyone. They are a huge expense never mind the PC formulations which overlook the incredible expense of education, medical and so forth that cripple our services by comparison to most developed countries. A zero sum immigration plan – we take in as many of their citizens as they take in of ours could work. It might help them to promote birth control - thus helping to save their environments.
3
The Trump revolution is the triumph of private equity over public equity.
Transparency in American business died on 11/9.
Whatever trade policy actually looks like, America won't actually see it.
Transparency in American business died on 11/9.
Whatever trade policy actually looks like, America won't actually see it.
2
I think this analysis on trade pretty much covers the waterfront. The problem I see is that Trump's hard core, about 30% of the electorate, almost certainly really expect him to keep his promises to them both on trade and jobs e.g. declare China a currency manipulator, put a 45% Tariff on Chinese goods, rip up Nafta, bring back coal and those good old industrial jobs etc. If he choses the 3rd path he risks world depression. If either of the first two scenarios he will be doing none or very few of the things he promised on trade. My impression is that these "true Believers" are not much into nuance. When you combine this with the very small probability that any of the job programs he espoused on the campaign trail, bring back coal, etc., are likely to be realized, these folks will feel duped and Trump will be seen as a con man. Bad things follow from this particularly for Republicans. I'm sure that Trump realizes this. It will be fascinating to see how or if Trump can avoid being hoist by his own petard.
17
China has been trying to move its currency the other way for several years. But facts are not Trump's friend. A country can't get rich making its currency less valuable., otherwise just printing dollars would be a miracle solution to everything.
5
This analysis doesn't "cover the waterfront." It (amusingly) takes for granted the utterly false assumption that other countries "cheat" but the U.S. does not. As the country with the largest economy, we have far more leverage to pressure other countries than they have to pressure us. We are not being taken advantage of. We are the ones who are taking advantage of others.
16
There seems to be a great deal of consternation about Mr. Trump's often changing position on many, many questions, issues, and policies. Consequently, it is argued, no one can possibly know what he has in mind. I beg to differ. I believe Mr. Trump has one and only one thought in mind every waking minute of every day, namely, what can he do as President of the United States to improve his position with respect to personal wealth and power. Everything else is incidental. He is an unapologetic opportunist who will use the office of President of the United States to expand his empire. Period.
28
Exactly the same thoughts I was having, Jim.
Don't anyone be surprised if he names himself President-for-Life before his first term ends. He's in love with himself.
Don't anyone be surprised if he names himself President-for-Life before his first term ends. He's in love with himself.
So America is getting a raw deal out of NAFTA? And just who negotiated NAFTA? I believe it was the U.S., Canada and Mexico, was it not? And I recall that the U.S. used a pretty big stick in its negotiations. Now, many Americans are crying foul.
On the whole, trade with other countries increases opportunities overall and provides a more level playing field where labour, environmental and intellectual considerations are brought to the fore. Where workers may get hurt as a result of free trade, it is incumbent on their respective governments to provide a soft landing through training, compensation or other means.
The U.S, Canada and Mexico all have grievances with NAFTA because a free trade arrangement is simply not going to make everyone happy in each country. The grievances surrounding job loss in each of these countries have far more to do with technology than wholesale job transfers. Rather than giving in to emotion to tear up agreements that have actually benefitted all three countries, would it not make more sense to review those agreements and see what has changed in the last two decades and arrive at a resolution that recognizes we are neighbours, our economies are integrated and we need each other? And in the case of Mexico, would not a thriving country be able to provide more opportunities for its own citizens than feel compelled to cross the border in search of work that criminalizes their very presence there?
On the whole, trade with other countries increases opportunities overall and provides a more level playing field where labour, environmental and intellectual considerations are brought to the fore. Where workers may get hurt as a result of free trade, it is incumbent on their respective governments to provide a soft landing through training, compensation or other means.
The U.S, Canada and Mexico all have grievances with NAFTA because a free trade arrangement is simply not going to make everyone happy in each country. The grievances surrounding job loss in each of these countries have far more to do with technology than wholesale job transfers. Rather than giving in to emotion to tear up agreements that have actually benefitted all three countries, would it not make more sense to review those agreements and see what has changed in the last two decades and arrive at a resolution that recognizes we are neighbours, our economies are integrated and we need each other? And in the case of Mexico, would not a thriving country be able to provide more opportunities for its own citizens than feel compelled to cross the border in search of work that criminalizes their very presence there?
4
Mexican workers are an asset to the American economy. American businesses use them for cheap labor in industry, agriculture (farm workers), food processing, slaughterhouses, construction, hospitality (hotels and restaurants) and janitorial work. Without their cheap labor, costs to American businesses and consumers would rise dramatically.
2
NAFTA was supported by Reagan, signed by Bush in all 3 countries, passed by a republican congress and then signed off by CLinton.
Very few economists are against it, unless you think Cuba is great with a closed economy.
Very few economists are against it, unless you think Cuba is great with a closed economy.
Sounds excellent. Salaries will rise as well.
This article is helpful from the standpoint that it begins to shed light on how a more aggressive America trade policy can may actually lead to reasonable outcomes and possible benefits. The author is also correct in his noting that the Chinese currency is likely close to true market value at present.
However, what is missed here is the trade policy question that actually goes to the heart of the goal of rebuilding American industrial employment. This is the question of free trade with low-wage countries. China has certainly worked to artificially depress the value of its currency at times, but this has only accounted for a small portion of the shift in industrial production from the US to China. It is deferential wage rates between the US, and China and others that has accounted for the vast majority to the shift of industrial production and the resultant reduction in good-paying blue collar jobs in the US.
How the Trump administration decides to take on or to ignore this question will determine the real impacts, good and bad, of any trade policy that purports to improve the economic lives of so many Trump supports.
However, what is missed here is the trade policy question that actually goes to the heart of the goal of rebuilding American industrial employment. This is the question of free trade with low-wage countries. China has certainly worked to artificially depress the value of its currency at times, but this has only accounted for a small portion of the shift in industrial production from the US to China. It is deferential wage rates between the US, and China and others that has accounted for the vast majority to the shift of industrial production and the resultant reduction in good-paying blue collar jobs in the US.
How the Trump administration decides to take on or to ignore this question will determine the real impacts, good and bad, of any trade policy that purports to improve the economic lives of so many Trump supports.
6
They'll propose paying US citizens the slave labor rates paid in China
I disagree with almost everything that comes out of Donald Trump's mouth but one thing that he is objectively correct about is that we have enormous trade deficits with these countries.
Is China really stupid enough to threaten an all out trade war with us when they're currently the beneficiary of our $500 billion annual deficit? I don't want a trade war but if Trump really does want to renegotiate these deals it stands to reason that he has a lot of wiggle room.
Is China really stupid enough to threaten an all out trade war with us when they're currently the beneficiary of our $500 billion annual deficit? I don't want a trade war but if Trump really does want to renegotiate these deals it stands to reason that he has a lot of wiggle room.
15
Isn't America also a beneficiary of China's buying American debt? If so it's a win-win, giving America less room to unilaterally manœuvre.
Maybe if Trump, the consummate salesman, can't sell this, maybe nobody can. Then where will be? Maybe the economic challenges we face are similar to that of global warming in that any meaningful control of it is beyond our reach because its origins have been so long in the making and Its scale so widespread, that we either learn to live with it the way things are, or not. If nothing changes he's not the only one to blame, but he has set himself up to be a greatest fall guy, whose demise will please a lot of people.
What we should be doing is looking for and supporting innovative technologies and new industries instead of trying to turn back the clock by manufacturing those things we used to build here and expecting that it will be profitable.
11
That word "innovation" sounds so seductive. You suppose that's the one Satan whispered into Eve's ear. (This is a metaphor.)
I sure hope so. If it wasn't for that whisper we would be a bunch of fat lazy people in a garden, feasting on stuff handed to us by our Gods, like Trump.
The current Trade deals are bad not because trade is bad, its because they were designed by the corporations and thus heavily lean on the side of multi national corporations at the expense of the people and their jobs.
For example there is a clause that if corporations feel their profits are hurt for any reason including increasing minimum wage or buyers protection etc they can sew the government of the country for the difference in their profits in private prisons arbitrated by closed door judges without the public to be informed.
American Tax payer is sewed because Obama rightly so cancelled KeyStone pipeline due to environmental damage.
This is what happens when donors are able to put large sums of money into the elections and then claim their candidates in the White House and on Capital Hill.
For example there is a clause that if corporations feel their profits are hurt for any reason including increasing minimum wage or buyers protection etc they can sew the government of the country for the difference in their profits in private prisons arbitrated by closed door judges without the public to be informed.
American Tax payer is sewed because Obama rightly so cancelled KeyStone pipeline due to environmental damage.
This is what happens when donors are able to put large sums of money into the elections and then claim their candidates in the White House and on Capital Hill.
3
This has to be one of the most amusing comments I've read today.
First time I've ever seen "sue" and "sued" spelled as "sew" and "sewed."
First time I've ever seen "sue" and "sued" spelled as "sew" and "sewed."
Gunboat diplomacy doesn't work anymore. Global enterprises that are majority American fund and investor owned and controlled will also find that US auto's no longer built in Canada by Canadian autoworkers will not find a robust market in Canada when there are more reasonable alternatives from other trade partners. If Mr. Trump wants to improve global trade to help Americans that lost their jobs he should consider settlement payments for retraining and living costs or early retirement funds for older workers not likely to find suitable jobs or skills training opportunities in demand. The settlement offers will likely harm US Global enterprises that are keen on exporting jobs to Mexico and China. Instead of lowering taxes across the board for corporate enterprises Trump adviser may negotiate amendments to trade deals to include settlement funds for workers harmed by job losses as direct and indirect result of offshoring. Those companies that re-shore jobs could be provided with Tax Code incentives - tax credits, to incentivize the return of good jobs to the US.
3
Global trade is here and it works and it will remain. It has bought trillions to the US companies. The problem is that these trillions are not fairly distributed . There is no way that US companies will pay $10-15 dollars per hour when they can get the job done at $2.00. This is a fact. So, our government needs to protect the workers, corporations are not going to, and this means taxing the profits so that they can be distributed. If workers had guaranteed health care, guaranteed education expenses, child care, a reasonable retirement then they would be sharing in the profits. Our Government must protect its citizens not the businesses. Its a obvious compromise tj hat alows free trade, good corporate profits and income distribution. A win win for all.
28
If you think you can get workers around the globe to work for $2 an hour anymore, you're living in the 1990s. Wages in foreign countries have gone up and ours have gone down. And better trade deals are the only way our wages will go up again.
People would prefer to be able to work.
If the U.S. wants to pursue trade policies to eliminate bilateral trade deficits, will it also turn a gimlet eye on those pesky bilateral surpluses? Why would anyone expect that our bilateral trade relationships should be balanced? Besides, no one minds those foreign (Chinese) capital inflows buying Treasury debt. Do we then want to make those go away with a balanced bilateral current account with China?
1
One thing that I see missing from this article is any mention of patent and trademark infringements that China is notoriously known for. The inexpensive products and labor that China offers US manufacturers is something that the US companies seek and not the other way around. US companies make a significant profit from Chinese labor, but there's always the risk that they will see a knock off of their patented products sold in the US or other parts of the world. While it may sound good a 45% tariff will hurt US companies as much if not more than China. There has to be economic incentives to grow US companies domestically and I haven't seen any of these initiative offered by Trump or any others from the Republican Party. In addition, the $20 trillion nation debt is a significant impediment to grown of the GNP, yet I haven't heard a feasible plan from any GOP politician. You can't give tax cuts to everyone and pay down the national debt. If the national debt is not immediately addressed all the talk about renegotiation trades deals will be moot.
3
Thank you NYT for some responsible reporting on this. My one issue is that there is no mention of the tariffs he suggested in his "100 day plan" that would punish American companies moving their operations overseas (see https://assets.donaldjtrump.com/_landings/contract/O-TRU-102316-Contract....
I would like to see NYT report on the possible ramifications of these ideas. I have always thought that we should impose strict restrictions and regulations on imports of companies that move their operations outside of the US, closing factories, killing communities, etc. But I do not understand the effects such a move would have on America's economy and if that would be an effective strategy.
I would like to see NYT report on the possible ramifications of these ideas. I have always thought that we should impose strict restrictions and regulations on imports of companies that move their operations outside of the US, closing factories, killing communities, etc. But I do not understand the effects such a move would have on America's economy and if that would be an effective strategy.
8
Imposing penalties on American corporations that move operations overseas would raise the cost of the goods they import. The reason corporations go overseas is that goods are cheaper to produce there and can be sold more cheaply and competitively here. Think Walmart. Insisting all goods be manufactured in America would raise prices here and the cost of living.
1
I agree, it's a catch-22. If we impose penalties for companies that move their operations overseas, many Americans will suffer the rising cost. But the people who lost their jobs due to those companies moving overseas in the first place wouldn't be able to purchase them at all if they're unemployed (or at least underemployed, having to take jobs in the lower-paying service sector). It's a lesser of two evils scenario I think.
Well, one thing we can count on:
Trump has not got a clue how world trade works, but he does have a very easily manipulated ego.
Trump has not got a clue how world trade works, but he does have a very easily manipulated ego.
7
Senator Reed Smoot and Representative Willis C. Hawley probably did many things in their careers, but history only remembers them for the Smoot-Hawley tariff of 1930 which remains today as the prime example of the damage that protectionism can do. Protectionism is the progressivism of fools. Gandhi was a great statesman but a horrible economist. Just as the ignorant in the USA argue that American workers who earn $15 per hour should not have to compete with Chinese workers who make $2 per hour, Gandhi thought that Indian workers should not have to compete with American and European workers who have the benefit of modern machines. As a result India adopted protectionism. In 1947 the per capita income of India was similar to countries such a South Korea. By 1977 the per capita income and standard of living in South Korea was many times that of India. India has since largely abandoned protectionism and has benefited immensely from free trade. Just as David Ricardo proved would be the case when he developed the concept of comparative advantage.
Protectionism can save jobs. In the USA the best measurement of the cost per job saved to the rest of the country is about $1 million per job saved. Saving one job might provide $100,000 in gains to the worker and the employer who benefit from the protectionism, but cost the rest of the country $1,000,000. Since the million dollars is just one third of one cent per person in the USA, no one not...."
http://seekingalpha.com/article/4025083
Protectionism can save jobs. In the USA the best measurement of the cost per job saved to the rest of the country is about $1 million per job saved. Saving one job might provide $100,000 in gains to the worker and the employer who benefit from the protectionism, but cost the rest of the country $1,000,000. Since the million dollars is just one third of one cent per person in the USA, no one not...."
http://seekingalpha.com/article/4025083
2
Scenario 4: A simpleton without a clue as to how international trade and international trade agreements actually work is elected president.
I wish it were just a bad dream.
I wish it were just a bad dream.
12
Ah, let's imagine Trump as a normal leader --option 1, maybe a bit of option 2. Alas, Trump will govern like he campaigned. It will be option 3 one morning, option 1 the afternoon --option 7 at 3 AM. Option 2.5 next morning... but 1 with the nice folks, 3 with the bad ones. Oops, the bad ones are nice, option 2, The nice ones are "a disaster" --option 4... 3AM... option 12...
When you are a billionaire developer, that might get you a reputation of being hard to work with, a bully, and an inveterate best deal searcher. If you are a nation's leader, you are going to break alliances, trap other world leaders into their own political calculus, make you a crazy nut that should be avoided like the plague, and will make you a boy-king that destroys economies by annihilating the predictability and smooth sailing that business prizes over everything else...
When you are a billionaire developer, that might get you a reputation of being hard to work with, a bully, and an inveterate best deal searcher. If you are a nation's leader, you are going to break alliances, trap other world leaders into their own political calculus, make you a crazy nut that should be avoided like the plague, and will make you a boy-king that destroys economies by annihilating the predictability and smooth sailing that business prizes over everything else...
4
Protectionist trade policy is mostly a red herring; the real issue is how to empower labor relative to capital so the gains of trade are more evenly distributed. Globalized free trade is the most gigantic wealth engine in the history of the world; U.S. household net worth overall has risen from $44 trillion in 2000 to $89 trillion in 2016, roughly $700,000 per household if divided evenly. Instead, the bottom 50% of households have $11,000 net worth on average; the bottom 40% have zero. The top 1% have 42% of the wealth, while the bottom 50% have 1% of the wealth.
If he acts on trade, Mr. Trump should simply tax/tariff/penalize U.S. companies that manufacture or assemble goods overseas for the U.S. market. For example, if Ford makes cars in Mexico that it ships to the U.S., it would pay the penalty.
Instead of attempting to change pre-tax/market outcomes via trade policy, let's focus instead on empowering labor unions in the service sector, a higher minimum wage; mandatory profit sharing at higher levels before stock buybacks and dividends, etc. And of course much higher taxes on the wealthy, both income and estate, to address after-tax inequality as well.
If he acts on trade, Mr. Trump should simply tax/tariff/penalize U.S. companies that manufacture or assemble goods overseas for the U.S. market. For example, if Ford makes cars in Mexico that it ships to the U.S., it would pay the penalty.
Instead of attempting to change pre-tax/market outcomes via trade policy, let's focus instead on empowering labor unions in the service sector, a higher minimum wage; mandatory profit sharing at higher levels before stock buybacks and dividends, etc. And of course much higher taxes on the wealthy, both income and estate, to address after-tax inequality as well.
41
Increasing taxes on the wealthy (which I agree with) seems only to precipitate loss of profit and, therefore, moving manufacturing overseas, ergo closing more manufacturing facilities in the same communities that voted Trump. Raising tariffs/taxes on companies that import their products means they simply increase the prices. We need to close loopholes that allow companies to game the system and leave the US for tax reasons.
Offset the increased prices associated with the new tariffs/taxes on US companies with overseas manufacturing with subsidies for the American people (i.e., if a company moves its manufacturing overseas, tax the company, and if they increase prices give that tax money to the consumer to offset the increase). The US economy is the strongest in the world. We can penalize these people because the American consumer always has the upperhand, no other country has that ability, they need us more than we need them.
Offset the increased prices associated with the new tariffs/taxes on US companies with overseas manufacturing with subsidies for the American people (i.e., if a company moves its manufacturing overseas, tax the company, and if they increase prices give that tax money to the consumer to offset the increase). The US economy is the strongest in the world. We can penalize these people because the American consumer always has the upperhand, no other country has that ability, they need us more than we need them.
The US imports more than four times what China imports from the US ($337 billion versus $79 billion). Eighteen percent of Chinese exports go to the US, whereas only approximately 3.5 percent of US exports go to China. Therefore, the US would win any trade war. The Chinese simply couldn't afford to lose the US market, while the US can easily shrug off the loss of the Chinese market.
Sources: http://www.census.gov/foreign-trade/balance/c5700.html
http://www.tradingeconomics.com/china/exports
http://data.worldbank.org/indicator/NE.EXP.GNFS.CD?end=2015&start=19...
Sources: http://www.census.gov/foreign-trade/balance/c5700.html
http://www.tradingeconomics.com/china/exports
http://data.worldbank.org/indicator/NE.EXP.GNFS.CD?end=2015&start=19...
11
Sorry Felix but your own data denies your conclusions. Since the U.S. apparently imports more than four times from China what they import from us, a trade war that jacked up all the prices on Chinese produced goods would harm the American consumers four times more than Chinese ones. The raised prices would decrease consumer spending, and that's what drives our economy, so we would have an economic downturn.
China can easily go with Airbus instead of Boeing, but we can't make iPhones in the U.S. at all, it's just not feasible, and our only source for them now is China. A trade war would wind up hurting our economy far more than theirs, especially as they have a fascist system where the government can force industries to do whatever they want.
China can easily go with Airbus instead of Boeing, but we can't make iPhones in the U.S. at all, it's just not feasible, and our only source for them now is China. A trade war would wind up hurting our economy far more than theirs, especially as they have a fascist system where the government can force industries to do whatever they want.
3
Sure, consumption would temporarily go down until other countries with cheap labor could take China's place. We can do without iPhones and other consumer electronics made in China for six months. But China would suffer a depression if we stopped importing their stuff. They could not replace US consumers, and the resulting mass unemployment would cause serious problems for the Communist Party.
6
Walmart is the number one employer in US. A trade war would likely send hundred of thousands to the unemployment rolls including workers who handle goods from the time ships hit the docks in west coast to the retail shelves. China can withstand a trade better than US because it has very nationalist, patriotic and united country than US. It is also an authoritarian state. In US, people would go to the streets if their savings and 401k vanish as the stock market crashes. A trade war will harm both sides.
The option to living in a global economy where work flows to the highest skilled, or the most efficient, or the lowest paid labor is to retreat from it, walk away from trade pacts into isolationism, and to be a Luddite: break all the microchips, return to an economy driven by low-paid manual labor, and make no products which most cannot afford to buy. Billions of non-US consumers will purchase products labeled "Not Made In The USA," and the US economy will skyrocket downward. On the other hand, The Trump Organization is betting on a global economy with new projects in Scotland, India, and elsewhere. Perhaps what's good for TTO is good for the country.
2
Good article. Given that Trump is a loyal reader of the Times, perhaps this is one way to subtly educate him on some issues. Who knows? He might even listen.
We already know that Trump didn't mean half the things he spouted off on in his rallies. Even his base didn't take him literally. Since his victory, Trump has scaled back the fiery rhetoric that got him elected. Contact with important people who do the serious work of running a country as powerful as the United States are convincing. He simply can't upset the whole apple cart. Doing so will harm the people who voted for him first and hardest.
Our prime minister has given notice he is eager to renegotiate NAFTA because it needs to be renegotiated anyway. Trudeau knows how much the US benefits from it and is well prepared to show him how and why. Trump will get it. He probably already does.
Trump will pivot wherever he has to and begin as soon as he can to throw a whole bunch of money into infrastructure spending into the beltway. Hopefully the bridges he builds are not to nowhere. If he is smart, he will follow that with investment in future industries and make sure the people who voted for him are targeted for those jobs.
These are tumultuous times. Trump's election is but one sign of them. No one should waste this moment. Be vigilant, but open to the possibilities such a sea change affords. Much can be done in such an environment.
We already know that Trump didn't mean half the things he spouted off on in his rallies. Even his base didn't take him literally. Since his victory, Trump has scaled back the fiery rhetoric that got him elected. Contact with important people who do the serious work of running a country as powerful as the United States are convincing. He simply can't upset the whole apple cart. Doing so will harm the people who voted for him first and hardest.
Our prime minister has given notice he is eager to renegotiate NAFTA because it needs to be renegotiated anyway. Trudeau knows how much the US benefits from it and is well prepared to show him how and why. Trump will get it. He probably already does.
Trump will pivot wherever he has to and begin as soon as he can to throw a whole bunch of money into infrastructure spending into the beltway. Hopefully the bridges he builds are not to nowhere. If he is smart, he will follow that with investment in future industries and make sure the people who voted for him are targeted for those jobs.
These are tumultuous times. Trump's election is but one sign of them. No one should waste this moment. Be vigilant, but open to the possibilities such a sea change affords. Much can be done in such an environment.
6
Too much stuff, and not enough places to put it. Too bad we can't just downsize and put all these troubles behind us. Life would be made so much more simple that maybe we could begin to see what it was really all about without all the clutter.
2
In 2015 The US trade deficit to China amounted to $481.9 billion or $1.32 Billion every single DAY! China's threat to cancel Boeing's sales should the US increase tariffs on Chinese Goods is an empty bluff.
The average Boeing jet costs between $150 Million and $200 million. Boeing would have to sell 7.4 airplanes every day for 365 days to equal the US Trade Deficit to China. Somehow I don't think China will buy 2,754 Boeing airliners in 2017!
Make China pay sufficient tariffs on their imports to eliminate the US trade deficit. China needs the US market to keep its economy stable, there are many alternate sources ready and willing to replace Chinese products in the US market.
The average Boeing jet costs between $150 Million and $200 million. Boeing would have to sell 7.4 airplanes every day for 365 days to equal the US Trade Deficit to China. Somehow I don't think China will buy 2,754 Boeing airliners in 2017!
Make China pay sufficient tariffs on their imports to eliminate the US trade deficit. China needs the US market to keep its economy stable, there are many alternate sources ready and willing to replace Chinese products in the US market.
15
I can't imagine Boeing would happily lose those contracts. Tarifs on Chinese goods will raise America's cost of living. Unhappy American consumers.
Thank you for the 1,2,3, scenario on the trade issue, it made a complex issue easy to understand. Who knows how Trump will proceed, he has been inconsistent, bellicose, unintelligible on just about everything in the campaign and now post campaign. He might throw a temper tantrum and go after the Chinese or try to make a mess of Nafta, it seems he has no coherent plan except, he will make better deals. I think Congress will play a big part in this, the republicans are free traders, they don't want to go to war with the rest of the world.
3
It is simple economics. The only way to protect American jobs is by accepting higher prices for all consumers. Saving hundreds of jobs while raising prices for millions of people does not seem to be a good way to increase growth. It is doubtful that trump will allow that to happen. So we are two weeks from the election and we already can figure there will be no wall with Mexico, twelve million people will not be deported, Hillary will not be investigated, and there is little he can do about trade without the American people, particularly the people who supported trump. suffering. Promises were made to be broken.
7
Excellent piece on the scenarios. I particularly appreciated the mention of the tire tariff. It is time for people to become more knowledgeable about trade, and what it means to them on a daily basis.
Globalization is a reality. It would be healthier for us to acknowledge the reality of a modern world, and then focus on what we can do to help the people of this country thrive in this world.
Pretending canceling a trade agreement will make everything better is so foolish. But no one on either side of the aisle is willing to to have this talk with the public.
We're already going to lose our last chance to be a power in Asia because of the reactionary rejection of TPP. And that includes our ability to push for compliance with environmental and labor laws. There was a reason Obama pushed for it. It's too bad the people that supposedly love him, didn't take the time to understand why.
Globalization is a reality. It would be healthier for us to acknowledge the reality of a modern world, and then focus on what we can do to help the people of this country thrive in this world.
Pretending canceling a trade agreement will make everything better is so foolish. But no one on either side of the aisle is willing to to have this talk with the public.
We're already going to lose our last chance to be a power in Asia because of the reactionary rejection of TPP. And that includes our ability to push for compliance with environmental and labor laws. There was a reason Obama pushed for it. It's too bad the people that supposedly love him, didn't take the time to understand why.
Renegotiating a trade agreement is trickier than it looks. Now that the trading partners are well versed in what the agreements mean to them, I would hardly think that any novice could come up with something better, even if he was the best businessman in the world. The threat of cancelling a trade deal is a non-starter as you have the EU and China waiting to pick up the slack. Any way you look at it, playing with free trade agreements just to get jobs back is stupid.
3
How credible is a threat to cut off imports when much if not most of the stuff we buy is made in foreign countries. We don't have the factories and know-how to replicate things we now import, and if we try to do it, the labor costs will be drive up consumer prices to untenable levels. Just check your drawers and closets to see how many things are made in the USA.
2
Take Apple for instance, the larget cap business in the history of the world. They are anticipating trouble with immigartion and tariffs. So they are opening research labs in China, France, Japan, India and Italy so far. They are also trying to manufacture in India so the Chinese can't blackmail them - which is already happening - in case of a trade war. In the long run America will benefit some but will lose valuable markets for what little manufacturing we do. Not good.
1
Unfortunately Trump and his followers have no idea about the current world we live in. Free trade is the engine of the future. American multinationals understand this and are benefitting from the trade deals that are currently in place. If not, they would be the first to complain that such agreements need to be scrapped. Also, any new US made consumer goods or high tech products like aircraft or other sophisticated equipment will be met with tariffs and other restrictions if these trade agreements are scrapped. Without such deals, Walmart would go out of business and cheap consumer goods would not be available or would be way overpriced for middle class consumption. As for bringing manufacturing jobs back, that's a non-starter. Whatever jobs come back will be for robots or will be so low in wage and benefits they wouldn't be worth it. Just keep in mind that a manufacturer overseas is not going to shut it's doors and move all equipment back to the US. They will stay in business where they are as they have customers in countries other than the US. As for the Pacific trade agreement, without it China will be the main trading partner for many Asian countries. This means China will gain economic power within the region thus reducing US economic influence. Finally, it is trade that keeps us at peace with the world, without it, war is more likely. Not one of the three scenarios mentioned paints a rosy picture for the future, neither in economically, nor in jobs.
22
Some of this is accurate but there are many many products where a US manufacturer unbolted machines from the floor of a factory, put them in containers, shipped them to China, and bolted them to the floor of a new building, sending 100% of production back to the US. It happened in my industry in the last 10 years. Construction materials. When I built a house in 2004, 95% of items I bought were made in USA. 10 years later, remodeling a bathroom, it might have been 5%. Including power tools. This is a real thing.
This is another one of those 2 for 1 solutions: make goods locally for local use and reduce greenhouse gas emissions from shipping.
This is another one of those 2 for 1 solutions: make goods locally for local use and reduce greenhouse gas emissions from shipping.
6
It is a very real thing, but what the other commenters are saying is that it is real for important structural reasons. Labor is cheaper in China and shipping is incredibly cheap by historical standards. Global communications make supply-chain management cheap and efficient. And finally automation and regularization have made manufacturing simpler and less skilled work. You used to have to have real craftsmen build houses from raw wood. Now it's all pre-fab from computer-assisted designs, which can be made anywhere by anyone (and more often than not, by machines).
What all this means is that it's just way cheaper to make those construction materials in China, and the only way to bring those jobs back here is to jack up the cost - either by charging tariffs on imports or by paying American workers much more than Chinese workers would demand. That's what that tire example shows. You can force companies to build here, but at ridiculously inflated prices. That's that part of all this that one fears Trump and Bannon, who have no real expertise in manufacturing, don't get.
What all this means is that it's just way cheaper to make those construction materials in China, and the only way to bring those jobs back here is to jack up the cost - either by charging tariffs on imports or by paying American workers much more than Chinese workers would demand. That's what that tire example shows. You can force companies to build here, but at ridiculously inflated prices. That's that part of all this that one fears Trump and Bannon, who have no real expertise in manufacturing, don't get.
2
Brooklynite, I don't think the price difference is very big. Home Depot buys things for half the cost for which they sell it. The manufacturer produces them for half the cost at which Home Depot buys them. So the impact will be muted quite a bit.
During that 10 year shift, prices didn't go down or remain the same, as one might have expected if manufacturing costs declined significantly. The money went to another pocket - not the consumer's.
During that 10 year shift, prices didn't go down or remain the same, as one might have expected if manufacturing costs declined significantly. The money went to another pocket - not the consumer's.
I think if we know anything about Trump it is the following:
1) He is perfectly willing to take advantage of those less powerful--he is a classic bully. So if you want to know what he will do in a specific situation, look at who is on the other side of the table.
2) He is generally full of it. This may work in the world of small contractors but at the international level, his stupid negotiating tricks are likely to be met with a yawn.
This man is a huckster and a small time tv personality and the world knows it.
1) He is perfectly willing to take advantage of those less powerful--he is a classic bully. So if you want to know what he will do in a specific situation, look at who is on the other side of the table.
2) He is generally full of it. This may work in the world of small contractors but at the international level, his stupid negotiating tricks are likely to be met with a yawn.
This man is a huckster and a small time tv personality and the world knows it.
77
Except he is POTUS of the world's economic and military superpower. The leverage you have is dependent on who is backing you.
As OPEC found out, when you push on the U.S., you should be prepared to be hurt. Their efforts to force American energy industries out of business failed because they did not understand that they were MORE dependent on us than we were dependent on them.
The U.S. energy industry makes up less than 10% of the U.S. economy but 85% of Saudi Arabia's. The U.S. economy is also 15 TIMES the size of Saudi Arabia's economy.
The current situation is dependent on the U.S. not using its leverage. The U.S. is the LARGEST consumer market (yes, it's bigger than the EU or China) and it is one that is still growing. The reality is that this is a form of leverage. And, any retaliation can have the blow-back of destroying the value of Treasuries of which TRILLIONS OF DOLLARS is sitting in the sovereign funds and currency funds of our trading partners.
The discussions up to this point have been puerile because they indicate how little most people know how the international financial and trade system really functions.
As OPEC found out, when you push on the U.S., you should be prepared to be hurt. Their efforts to force American energy industries out of business failed because they did not understand that they were MORE dependent on us than we were dependent on them.
The U.S. energy industry makes up less than 10% of the U.S. economy but 85% of Saudi Arabia's. The U.S. economy is also 15 TIMES the size of Saudi Arabia's economy.
The current situation is dependent on the U.S. not using its leverage. The U.S. is the LARGEST consumer market (yes, it's bigger than the EU or China) and it is one that is still growing. The reality is that this is a form of leverage. And, any retaliation can have the blow-back of destroying the value of Treasuries of which TRILLIONS OF DOLLARS is sitting in the sovereign funds and currency funds of our trading partners.
The discussions up to this point have been puerile because they indicate how little most people know how the international financial and trade system really functions.
"Was iy all just words?" His transition team is full of hard-liners, but Trump is pulling back on a couple of things, even allowing today that climate change might be influenced somewhat by human activity.
Situation normal: pretty cloudy.
Situation normal: pretty cloudy.
1
Some problems are connected. A trade war with China that eliminated almond imports from the US would solve California's water problem basically forever.
6
I may not agree with a lot he says but on the trade thing he is right we have gotten taken advantage of by China. Look at China they are buying us right out of our own country while it is almost impossible to even get into the Chinese markets. Maybe we need to revamp our trade deals and not keep on doing the same old stuff which has gotten us no where at all.
14
Odd, from reading your posts it appears you agree with everything Trump says, including when he contradicts himself.
1
The reason we got into NAFTA and other trade deals was because American firms wanted access to other markets to sell our products, and access to cheap labor. It did not help that low wage countries started adopting, or stealing technology to catch up based on a cost advantage.
Trump says he will renegotiate. Okay! Usually, this involves getting something by giving something up in return. Assume that Trump insists that manufacturing should remain here, it can be done with tariffs and non-tariff barriers, tax laws, and regulation. But we either agree to buy American products that are more expensive than imports, or we close our markets too. If markets are to stay free, then American firms will increase investment in automation and robotics. If low skilled workers have a problem now, wait until the era of automation and robotics is upon us.
Bringing back manufacturing jobs for people with skills suitable for 1980 is easier said. Because, quite a bit of corporate America has become used to socializing risks and privatizing profits. Too may big firms have too much cash, they do not want to take risks, invest in new capacity.
Now imagine a closed market, a protected market, in which firms do not want to take risks. The only people making more money will be those that can aid the churn, not those that can create new wealth through innovation.
This is a bigger challenge than it is currently made out to be.
Kalidan
Trump says he will renegotiate. Okay! Usually, this involves getting something by giving something up in return. Assume that Trump insists that manufacturing should remain here, it can be done with tariffs and non-tariff barriers, tax laws, and regulation. But we either agree to buy American products that are more expensive than imports, or we close our markets too. If markets are to stay free, then American firms will increase investment in automation and robotics. If low skilled workers have a problem now, wait until the era of automation and robotics is upon us.
Bringing back manufacturing jobs for people with skills suitable for 1980 is easier said. Because, quite a bit of corporate America has become used to socializing risks and privatizing profits. Too may big firms have too much cash, they do not want to take risks, invest in new capacity.
Now imagine a closed market, a protected market, in which firms do not want to take risks. The only people making more money will be those that can aid the churn, not those that can create new wealth through innovation.
This is a bigger challenge than it is currently made out to be.
Kalidan
3
Here's how it works in the real world: My industry, textiles/apparel, was the first victim of globalization. We had a successful business, selling components to a vibrant domestic manufacturing industry. By the late 90's, most of this production was outsourced offshore, and we practically went out of business.
Fortunately, we were able to reinvent our company as retailers of sewing supplies. We survived, by selling to home sewers, schools, dry cleaners, bridal shops, etc. We found domestic outlets for our wares.
But today, 95% of the sewing supplies we sell are made and in China. Any tariff or protectionist gambit resulting in higher prices would be devastating to our customers in the heartland, who either make or repair their clothing.
I've spoken to many of these customers over the last 6 months, and the great majority of this particular demographic are Trump voters. Ironic, to say the least.
Fortunately, we were able to reinvent our company as retailers of sewing supplies. We survived, by selling to home sewers, schools, dry cleaners, bridal shops, etc. We found domestic outlets for our wares.
But today, 95% of the sewing supplies we sell are made and in China. Any tariff or protectionist gambit resulting in higher prices would be devastating to our customers in the heartland, who either make or repair their clothing.
I've spoken to many of these customers over the last 6 months, and the great majority of this particular demographic are Trump voters. Ironic, to say the least.
67
If the Trump administration raises tariffs against Chinese imports, the bilateral trade affect would strengthen the dollar. A stronger dollar would make other nations goods cheaper. We will purchase fewer Chinese goods, but more Indian, Vietnamese and other nation's goods. The trade deficit will not close.
7
It will also make the purchase of American made goods less likely.
1
If Ivanka tells him, "Daddy, lets do trade option number one" that's what will happen. If she keeps quiet and Breitbart Bannon has his way, I'm going to start hoarding non-perishables and wait for the apocalypse.
So let us all hope that estrogen beats out testosterone for the sake of the world. Ivanka might be our best hope.
So let us all hope that estrogen beats out testosterone for the sake of the world. Ivanka might be our best hope.
29
The NY Times has reported H1B Visa program abuses particularly in the IT field. It is no secret that this program is being abused by foreign corporations who are replacing qualified US citizens with foreign contract labor at substandard wages.
Let's begin by enforcing the checks and balances that are on the books but ignored by our own government which has been either too corrupt or too scattered brained to respond effectively to the abuses.
This matters. We have millions of under-employed but highly qualified IT personnel that have been shut out of the job market by blatant and rampant age discrimination.
Enforce this principal:
"The U.S. Department of Labor (DOL) is responsible for ensuring that foreign workers do not displace or adversely affect wages or working conditions of U.S. workers."
We have to stand up for these rights of our citizens
Let's begin by enforcing the checks and balances that are on the books but ignored by our own government which has been either too corrupt or too scattered brained to respond effectively to the abuses.
This matters. We have millions of under-employed but highly qualified IT personnel that have been shut out of the job market by blatant and rampant age discrimination.
Enforce this principal:
"The U.S. Department of Labor (DOL) is responsible for ensuring that foreign workers do not displace or adversely affect wages or working conditions of U.S. workers."
We have to stand up for these rights of our citizens
76
I agree and there could be simple tweaks to the H1B program that will stop this abuse -
1. Set minimum wage requirement for these visas that is above prevailing market wages set by DOL. After all, a company that seeks to employ foreign workers must be doing so for a "skills shortage" and willing to pay more.
2. Issue the visas using based on wage ranking. Highest wages go to the top of the queue.
3. Instead of issuing all 65k visas in single shot annually, make these available in monthly quotas. This way, companies that really need these skills don't have to wait for a year or more.
4. Increase application fees to say $10k. So if INFY or TCS apply every month and try to flood the system, they lose this money if their applications don't make the cut as in bullet#2.
5. Require that a company employing an H1B worker automatically apply for their green card
6. Make H1B transferrable and not tied to job. These would allow workers to demand higher wages and prevent abuse.
Companies that genuinely need these visas (MSFT, GOOG) won't have any problem meeting these requirements.
1. Set minimum wage requirement for these visas that is above prevailing market wages set by DOL. After all, a company that seeks to employ foreign workers must be doing so for a "skills shortage" and willing to pay more.
2. Issue the visas using based on wage ranking. Highest wages go to the top of the queue.
3. Instead of issuing all 65k visas in single shot annually, make these available in monthly quotas. This way, companies that really need these skills don't have to wait for a year or more.
4. Increase application fees to say $10k. So if INFY or TCS apply every month and try to flood the system, they lose this money if their applications don't make the cut as in bullet#2.
5. Require that a company employing an H1B worker automatically apply for their green card
6. Make H1B transferrable and not tied to job. These would allow workers to demand higher wages and prevent abuse.
Companies that genuinely need these visas (MSFT, GOOG) won't have any problem meeting these requirements.
6
This is actually something that Mr. Trump and the Democrats --and the American worker-- should agree on. The H1-B program is for hiring foreigners of "extraordinary ability, skills, etc" for which there are no American counterparts. It follows, logically then, that any such persons would be great hires --which mean that an employer would grab them and make them FTEs right away at seriously above average wages.
Which means that no employer would ever have such a valuable employee *nowhere but in they payroll* --not as a subcontractor or consultant. No subcontractor or consultant of any kind should ever be in an H1B. The entire business model of consulting firms hiring H1Bs (to replace American workers) is against the spirit, intent, and letter of the law.
Mr. Trump should have the Labor department immediately fine and abrogate the H1B visas of Tata, Infosys, and Wipro --these firms alone have cornered the H1B slots for over 40K under-paid consultants. Companies really needing them should sponsor them directly and pay above average wages.
Check out http://www.myvisajobs.com/Reports/2015-H1B-Visa-Sponsor.aspx
Which means that no employer would ever have such a valuable employee *nowhere but in they payroll* --not as a subcontractor or consultant. No subcontractor or consultant of any kind should ever be in an H1B. The entire business model of consulting firms hiring H1Bs (to replace American workers) is against the spirit, intent, and letter of the law.
Mr. Trump should have the Labor department immediately fine and abrogate the H1B visas of Tata, Infosys, and Wipro --these firms alone have cornered the H1B slots for over 40K under-paid consultants. Companies really needing them should sponsor them directly and pay above average wages.
Check out http://www.myvisajobs.com/Reports/2015-H1B-Visa-Sponsor.aspx
4
I do not think that's going to happen. America just elected a corporatist who does business around the world including India where most of the H1Bs come from. I don't believe corporations will stop hiring H1B's even if Trump stops them in US and I do not believe that he will do that either. They will simply move the outfits to other places like London, Mumbai, Toronto, Costa Rica or anywhere in the globe. Corporations always get want they want regardless of who is in the white house. Trump is already walking back his outrageous promises one step back at a time.
I doubt Trump wants to start a trade war off the bat, but the danger is a potential toxic interaction between his "Can't take criticism from a musical without Tweeting about it" temperament and Xi's hard-line, nationalist attitude, resulting in hostilities that neither initially wanted.
11
I'm not sure why Trump harped on this issue of trade deals except to get votes (and some Sanders' followers) when it seems to me to be ONLY global trade that actually funds the financiers in NY, London, Paris, Hong Kong, et al. They cream off their cut of the global flowing of capital that must accompany trade transactions. Yet Wall Street seems, as one of the Times' headlines recently put it, "giddy" about Trump.
So does Wall Street know he doesn't mean it? What gives?
So does Wall Street know he doesn't mean it? What gives?
1
To reiterate, Trump will do whatever benefits him and his heirs, even if it is at the expense of the rest of us.
Why bother to even ask the question, when he has done so much already to prove the answer?
Why bother to even ask the question, when he has done so much already to prove the answer?
46
I think you are right...his only true metric for any policy is how it affects him. Estate tax impacts him - so abolish it. Corporate tax - impacts him (potentially) - so reduce that to 15%. Roads and airports - he'd like to have better infrastructure as a compliment to his development business - so green light that. The rest, absent a directly personal source of gain: no real interest at all.
3
This is about leveling the international playing field, but in any event, we can assume that there will be competition in America: there wouldn’t be just one company that makes clothing or consumer electronics.
Luckily, I think it's pretty clear that Trump lies nearly all the time, and nothing he said during the campaign is a likely course of action. Of course, this means we really have no idea what he'll do until he does it.
So I don't think any of these three scenarios is too likely, because there is no reason to believe anything Trump said so far. What seems likely to me is that Trump will fumble about, make a lot of noise, and not really accomplish much of anything. He'll be prevented from doing major damage, hopefully, by Congress, which is more sane than he is on average.
The more important question is probably how other countries will react to Trump. His statements are certain to prove bigotry and ignorance, as they always have, and I think a lot of nations will pull away from us. The South Pacific will turn more toward China, Africa more toward South Africa, Europe more toward Germany. That will probably be good for the world but bad for our economy.
My main hope is that the Trump voters suffer the most from these effects, and go through hardship that is excruciating enough to prove to them what a major mistake they made in believing Trump.
So I don't think any of these three scenarios is too likely, because there is no reason to believe anything Trump said so far. What seems likely to me is that Trump will fumble about, make a lot of noise, and not really accomplish much of anything. He'll be prevented from doing major damage, hopefully, by Congress, which is more sane than he is on average.
The more important question is probably how other countries will react to Trump. His statements are certain to prove bigotry and ignorance, as they always have, and I think a lot of nations will pull away from us. The South Pacific will turn more toward China, Africa more toward South Africa, Europe more toward Germany. That will probably be good for the world but bad for our economy.
My main hope is that the Trump voters suffer the most from these effects, and go through hardship that is excruciating enough to prove to them what a major mistake they made in believing Trump.
26
I don't think a lot of Trump voters would notice hardships that didn't kill them. lol
1
Your attitude toward those who have had declining wages for the past thirty years is hard to believe. What kind of person wants any of our citizens to suffer. I hope you will examine your views.
What I see is that China walks through the door we opened -- a giant trade structure across the Pacific Rim run by China and displacing the American Century.
What I see is that China walks through the door we opened -- a giant trade structure across the Pacific Rim run by China and displacing the American Century.
4
Good point Bill, but in that case, them taking a dirt nap as a result of Trump's efforts will work out well too.
I'm betting (and hoping) that the Trump administration will choose option #1. But he won many Midwestern voters over with a promise of tariffs on imported goods. If he doesn't follow though, will these voters vote different in 2020?
I'm sure they can be manipulated by propaganda. That seems to be the main source of news these days. I have completely lost faith in many people's abilities to make rational decisions, to check the validity of their news sources, or to entertain any opinion or fact that doesn't already sound good to them. Same on the left, unfortunately. I wonder how many of my rabid Bernie-supporting friends actually understood anything this article has just mentioned about trade, and its benefits and complexities? My guess is that most of them didn't understand a thing. But that didn't stop them from ranting endlessly on facebook about trade, something they never seemed to know about, or care about, before. It's been a sad election cycle, that's for sure.
5
Since technology is accelerating, the world we are accustomed to is moving too fast for all but the lucky to thrive. Robots and automation will increasingly decimate factory work. Instant, cheap high bandwidth communication, via globally connected networks will allow us all to have our own reassuring bubble, as more and more jobs become redundant. Economic rewards will continue to tilt towards capital and away from labor. Winners will increasing self segregate from "losers" and "those people". Perhaps we will try all alternatives until we finally arrive at the redistribution of resources that will eventually occur. Just a matter of do you want to do this the hard way, or the easy way. Have you had enough, or are you thirsty for more?
9
Ultimately, maybe robots will take over enough of the economy that everything they, and we, need will be almost free for the asking. If nobody but robots are working, and they don't need to be paid, and they make everything including their own spare parts and replacements, of what use would money and ownership be?
1
Wait and see. Speculation doesn't help much with the final T-rump decisions. They will be what ever suits him best. Hopefully we won't all suffer his decisions.
1
The key metric will be: " What policy is best for Trump, Inc. ? "
64
Couldn't agree more! What is good for Trump Inc. is what is good for America. Hope this will continue to make his supporters to "feel good".
4
Trump is in luxury real estate, not manufacturing. He doesn't have a dog in this fight.
2
Jonathan - How did you miss the ties etc. that Trump has made offshore?
26
Not.