It is beautiful watching america collapse and burn. But decent people do have to start preparing new countries from the wreckage of the old.
#calexit
Let alone the damage to the world economy and the resulting trade disputes adding to the burden of the WTO the tariff wars, like the one declared by Trump, end up in the economic disaster at the end sparing none from the consequences yet it is the workers and the consumers who suffer the most.
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China has been conducting a trade war with the US for many years and has clearly been winning at that. The criticism here should be directed at President Xi.
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Summarizing, simply put, President Trump is a high functioning illiterate, with no understanding of basic economics or history.
Smoot Hawley was a disaster. Today's markets are extended. Exposed for many reasons: monetization has elevated our debt and equity markets.
Protectionism stifles trade.
Addressing our trade imbalance will require surgery on our current capabilities in all areas where we can do better and better... and we may have to redraw the plans where we are hurting and cannot do better. The cost of labor is a factor. This will not improve... as the Fed and others wish to stimulate income - in the face of vastly lower costs overseas.
As other nations prosper, their costs will rise. China manipulates it's economy. It is a world unto itself. We are competing with China... and we opened the door to China under Richard Nixon. As things improve in China, costs will rise there. They are doing so now. But they have a long way to go. India the same.
Our balance of payments deficit has created 'reserves' for other nations, and they thirst for dollars. Gold is no longer used by most nations - as a reserve against which to lend.
Paper currency rules. Will this change? I doubt it. Only a massive crash could influence the basics of our world economy.
I put the chance of a massive crash at 25% today. I believe it will rise...
Unseen developments are brewing. If these come to pass, 25% will rise to 100%, and we will have to address issues presently unseen.
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The winner is Putin. Trump’s “America First” policy is the shrewdly disguised Putin’s strategy to divide the U.S. and the rest of the world as he has succeeded in the division of Americans during the 2016 election. Trump is obviously blackmailed by Putin, and Trump has been obediently follwing Putin’s order. Sadly a large number of Trump supporters are excited, saying “ He is our President. Look how patriotic he is.”
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The idea of Trump studying anything is beyond laughable.
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I thought everyone liked Hamilton?
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Economists and economic pundits like you are all singing the same song: trade good, protectionism bad. But you are all avoiding the central question: what if the main motivation for trade, the principal comparative advantage, is cheap labor. If it happens on a large scale, you know the consequence: Trump.
And yet Mr. Stewart, I believe you are smart. In the back of you mind, you know this is an issue which must be dealt with. The old cliches like job training or creative destruction haven't worked. So I would suggest you should think harder.
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6 of the 13 critical chemicals for making US military ammunition primers , which makes them fire, are imported from China. What National security is that?
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The Trump presidency seems to be proving two things: first that economists seem to know very little about economics and Mr. Trump knows even less. Why the economy continues to hum along in spite of every wacky thing he does makes no sense and when it finally decides to collapse will make even less sense except to those who say they understand what happened in hindsight.
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Calling 10% tariffs on aluminum punitive or toxic is absolutely ridiculous and laughable on its face. Historically, the US maintained NORMAL tariffs at 10-15% for natural resources and ~40% for finished goods. Vastly higher than the 10% proposed today. Even the pre-Smoot Hawley tariffs were in the 40% range.
Even the 35% tariffs are within "normal" range.
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Has Trump "studied" this? Has he studied anything?
He's delivering on his campaign promise. There was one and just one. It was nihilism: to break precedent, upset balances, humiliate his enemies, and validate for the Trumpist mob that contempt for people, process and prudence are achievements. Any way he can achieve that will delight the people who detest those things as the hallmarks of elitism.
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Don’t forget that the 30s also gave us the environmental disaster called the Dust Bowl. That’s another chapter in the book of history Trump failed to read.
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Smoot-Harley causing the depression is a mythology There were already high Tarriffs in the 1920’s. The Republican which held all three branches of government then, as now, use to brag about high Tarriffs as a means to protect American industry. Seemed to work quite well in the 20’s as it was one of the most prosperous eras on record.
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The article never said Smoot-Harley "caused" the Depression. Mr. Stewart actually states: "there is little disagreement that Smoot-Hawley and the ensuing trade war exacerbated and prolonged the hardships of the Great Depression." And, BTW you may want to reread the history and timeline of the 1920's.
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The German state-run TV station, “ARD”, reported last night that import taxes on American cars into the EU are 10%, while American import taxes on German cars into the US are only 2%.
While Europeans generally are not that enamored with American cars, and the 10% tax may not make that much of difference in their purchases, perhaps there are other imbalances like this one favoring foreign manufacturing.
While I don’t understand all that is involved with the stalled negotiations with TTIP (Transatlantic Trade and Investment Partnership) between the US and the EU, and our withdrawal from TPP (Trans-Pacific Partnership), perhaps TTIP and TPP might have been better avenues for Mr. Trump to pursue his trade concerns. While both treaties seem to have elements that I find to adversely affect people like myself, perhaps he could have had input into both that would have precluded what we may have now: trade wars, which will definitely adversely affect people like me. (Apparently NAFTA with Canada and Mexico is being reworked. To what ends, I have no idea.)
How a nation views tariffs largely depends on where it is in its history. The early United States protected and helped along its fledgling industries with high tariffs (not to mention a bit of industrial espionage). Industrial Britain pushed free trade, in the interest of buying cheap raw materials from the Empire and selling manufactured goods abroad.
Imposing tariffs is the behavior of a developing nation - maybe for the US it's an admission of that very status.
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Historical analogies are more often wrong and rarely useful, e.g., Japan's invasion of Korea pre-WWII, Thucydides' "Peloponnesian Wars", but this doesn't stop historians and economists from continuing the debate.
Post-fact is helpful in the sense that "historians and economists" more often get it wrong.
It's an infinite universe and there's always a "surprise"--Trump to the White House. Go figure.
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There is no question that Trump will bumble his way into tanking the beautiful, productive, growing economy he inherited. A combination of inflation from excessive deficit financed tax cuts, a stronger dollar from higher interest rates and a trade war with key allies should do the trick very nicely.
It's just a question of how long it will take him and what will happen when he does it
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I think many are missing the point. The United States cannot continue to support the world by buying imported items with debt. How long can you live off your credit card and what is the final cost? Plus, how can any worker in the U.S. compete against someone making five dollars a day in China? Either the worker in the U.S. gets paid less or the Chinese worker gets paid more or most likely, both workers will lose out to a robot.
This never-ending quest that all products should be produced at the lowest possible price is very Wal-Mart/20th-century type thinking that leads to waste and needless consumption.
Simply: Large factories will soon return to the U.S. but they will only use a small fraction of the workers they once did. Think textile mills. Companies will invest in the U.S. mainly due to politics and to keep China off balanced.
Everyone wins?
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Oh please !
All your examples are pre-globailzation, with countries that had comparable wage levels
Not applicable to a global economy where people are willing to work for 1/10 of US wage levels
The past offers zero guidance to the future.
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Go no further than our own shores as to who is the loser. Actually, tariffs are shooting yourself in the foot handicapping you against the world.
Just take autos. I am old enough to remember how Detroit persuaded Congress to impose a numerical target on number of Japanese cars into United States.
What do the Japanese do??
They bring factories to America to bypass this ridiculous tariff and still beat our then incompetent auto industry.
Ditto with the oil industry.
Our Congress - fearful of not being "independent" forced Alaska oil to be brought to California even though selling to Japan would have been more profitable.
The oil industry shrinks with all these restrictions and production falling so rapidly that about now, all Americans were expected to commute on foot.
I spend winters in India. If there is ever a left over socialist tendency of protecting "domestic" industry - India leads the pack.
Until recently, Indians were forced to buy inferior domestically produced products - from autos, food, packaged goods to trivial consumer products.
Until recently, India was "proudly" producing a vehicle whose design was original in 1950's. Why modernize when you have no competition.
Even today, India's governments of all stripes and colors believe in this protectionism to support domestic industries. The POTUS has complained about Harleys. I know he is a teatotaller but India imposes a 150% tax on imported liquor - forcing you to drink substandard local brew.
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Expecting Trump to study anything besides his own reflection is an exercise in futility.
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Er, I'm pretty sure it was Hoot Smaley.
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As I noted recently, the dirty little secret is this country was BUILT on tariffs. Look it up. From its 1789 founding till 1914, the lion’s share of fed governmental income was from TARIFFS. Today, for crude oil mostly from Canada and the Gulf of Mexico, (which the enviro scolds don’t want us using anyway), a country of 300 million on the bulk of a continent, doesn’t need ANY imports, and that includes immigrants! If we’re still set on foreign trade, let’s get a complete trade credits system going. No “balancing” US exports to a foreign country? “No trade for you!”
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And once they eliminated tariffs we got the income tax instead!
Trade with other countries is essential for growth and innovation. North Korea has been foolish to sit on the sidelines for years. The future is not with countries that spend their treasure in money or armed forces in the military. The future is with science, technology, medicine, the environment, tourism, entertainment, sports, education - things that ultimately elevate individuals and encourage discovery and improvement in the quality of life. North Korea and countries that are ego-centric or ethnocentric will stagnate compared with others with diversification. Encouraging the talents of women's are a resource that can double our fortunes. We are one fabulous world and trade makes friends.
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Tariffs didn't cause the Great Depression. International trade flows was a tiny percent of U.S. GDP (around 1%), far to low to account for the high 20%+ drop in GDP that the Depression caused. Actually, if you read the history, it shows the U.S. was the strongest supporter of tariffs from the early 1800s until after 1945. From 1871 to 1913, the average U.S. tariff on imports never fell below 38 percent and the economy grew 4.3 percent annually, twice the pace of free trade Britain and well above the U.S. average in the 20th century. That's how America went from a frontier economy to a superpower. Maybe our forebearers were a little smarter than the free traders of today.
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"What trade wars does Mr. Trump have in mind" that have "winners"?
Perhaps it was the one that China has been waging for the past 25 years, particularly since its unfettered entry into the WTO in 2001.
And which it won in a rather convincing fashion, as even the fanatical free-market-capitalist zealots at the Economist Magazine pretty much conceded this very week.
“Trump must be thinking that the large size of the U.S. domestic market gives it a lot of bargaining power in any trade dispute."
Seemed to work pretty well for China.
Seriously, you're talking about obscure meaningless events from the 19th century and comparing them to the complexity of the global economy of the 21st century?
And "chicken wars"?
And talking to "historians and economists" about "economic orthodoxy" who are willing to be quoted saying absurd things like "“the easy answer is to say that no one wins a trade war,” when it is becoming more and more abundantly clear with each passing day that China just won the most important trade war in history?
Try reading the newspaper or reading up on the wave of anger expressed in elections across the developed world as people express their rage at being losers in the trade war of the past 25 years.
The coverage of trade and globalization in this newspaper is embarrassing.
I expect more, in particular, from James Stewart.
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The McKinley tariff’s ended the depressions of 1896 and 1898. The US ended up the wealthiest nation on earth. Remember, before that tariff, 10 million American’s starved to death in the Ohio River Valley. That tariff provably ended those depressions. Smoot Hawley is more problematical. A lot of experts say it had no effect whatsoever, because it was not enforced, except against certain nations. Other claim that it exasorbated the Great Depression. However, Smoot Hawley essentially ended in 1934 with Roosevelt’s Recipricol Trade Agreement and THAT seems to have worstened the Depression. In fact, the Great Depression didn’t end until the WWII. Today, most voters will tell you that the Depression Of 2008 has not ended. Free trade, globalization, have made it far worse. Maybe Trump’s tariff’s will end it. The mere proposal has resulted in reopening steel mills and the return of several industries and jobs.
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No steel mills have been re-opened. No industries and jobs have returned.
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Whatever past history might teach us wrt to tariffs, there is no history for a country like China that has gone from de minimis production of both steel and aluminum to over 50% of world's production in roughly 18 years while subsidizing the production of both. Such "dumping" on such a large scale is simply unprecedented in world trade history. It certainly cannot be used as model to predict what might happen going forward with the U.S. tariffs on Chinese-origin steel and aluminum. BTW, Chinese steel and aluminum is a problem for the EU too.
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We just got work that the approval process for what we hoped would be a new US customer of an aluminum product we manufacture here in the USA has been shelved. The official explanation was there are too many other new projects that require resources, but we know they will now stick with the less expensive Asian producer. Since the product is not raw material which is covered by the new tariffs but an item made from such raw material, our offshore competitor just gained competitive advantage. Thanks, Mr. President. Thanks GOP. I will be sure to let anyone we lay off know who made it happen.
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While steel and aluminum producers are expecting an uptick in production, the huge manufacturing sector with millions of employees already know what will happen, Now add in EU and other retaliation and this will with no doubt blow up in our faces. But for now fewer people at looking at Miss Stormy or Mr. Mueller,
Those who fail to learn history are doomed to repeat it, And Trump wasn't much of a student as his professors etc. have told us,
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My money is that this has to do with 1) advance information about the tariffs being shared by 45 or with select members of the .01%, who then benefited 'bigly' by shorting stock ahead of time; and 2) an attempt to push Stormy Daniels et al out of the headlines.
But yes, consumers will lose. Nothing new there.
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History Smistory, who cares, we have the author of "the art of the deal" What could possibly go wrong. Who in their right mind would jeopardize almost 10 years of economic growth...just before a mid term too.
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As if Trump has ever "studied" anything!!
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"The act is widely considered by historians to have been a disaster that led to higher consumer prices and inflation and provoked a voter backlash. Republicans lost their House majority in 1890 and lost the White House and both houses of Congress in 1892. The act was repealed in 1894."
One can hope!
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