The tests posed on July 6 for demonstrating "Chinese bad behavior on intellectual property" were perhaps to be addressed by a (solicited?) July 9 blog by CFR's Brad Setser. He points out that it's not his core expertise and relies instead on Prof. Jennifer Hillman, who in turn relies on the Commerce Department and Prof. Mark Wu.
Prof. Hillman's summary says that dispute resolution at the WTO has worked okay to date but has not yet been attempted in a couple cases: IP transfer as a performance requirement, and lack of national treatment on access to foreign IP by an established foreign investor.
There is a vagueness about why we have complaints about these things in the newspapers but not in the WTO. Prof. Wu notes several times that other countries have done (are doing) what China does. So is the indictment "making policy while Chinese"?
Prof. Hillman does describe some additional, specific policies that are bad, notably industrial espionage and development of non-ISO technical standards.
What I don't see, however, is an indication that China is pursuing any of the major destructive policy directions of the past. I'm thinking of:
- Risk of duplicative coal & steel capacity in Marshall-Plan Europe.
- Negative value-added and stunted growth in 1960s India.
- Brazen theft from installed FDI in 2000s Philippines.
In sum, I concur with Prof. Hillman that using the WTO's dispute resolution system seems indicated. Let's see how that turns out before saying any more.
The trade war is not about trade. Trump wants to inflict damage at all costs to slow down China's and Germany's economic and political importance on the worlds' arena and to keep the USA as the number one super power. His constant attacks on Angela Merkel and China confirm this.
Does anyone know why this administration does trade war with pretty much everyone all at the same time like this? Does that give us more advantage or something? Or it just invite the world to feel more confident to pressure America's economy to surrender? Even in carrying out a war, this admin is incompetent. But poor we consumers will pay the price for this policy.
2
If the USA the Neymar of nations? Rich, talented, able to control the game but ultimately a wimp, writhing on the field if nudged by an opponent. We watch, scratching our heads, as the world’s largest economy with unemployment at the lowest mark in a generation and stocks at record highs claims piteously that Canada treats it so unfairly. Spare us the drama. And the tariffs. And maybe try respecting the treaties you sign.
11
wooo-hooo! 3 dimensional chesasyer I'm action! watch out! Dr. Krugman, with all due respect to you education and experience, you hold nothing compared to the Grand wozzard who knows just about everything even remotely possible to know... how can we mere mortals ever keep up?
4
This all flows from a corrupt Republican Party. If Republicans actually stood for anything, they would not have let Donald Trump run as one. If Republicans cared about fairness and moral values, they would not have blocked Obama's ability to pick a Supreme Court justice and ignore all scientific evidence when forming policy.
5
Trump, who has never completed reading the first page of any briefing sheet, will shoot from the hip on trade issues, motivated by a childish and simplistic view of economics. On the other hand, very smart people in China, Europe and elsewhere are going to invest a great deal of effort on how to inflict maximum pain the US.
4
I am afraid China, Canada, The EU and the rest of the world not have to invest that much of an effort. The Trump cabinet seems quite able to shoot themselves in both feet without their interference.
Trump seems to be intent in isolating America from the rest of the world with the exception of the holder of his secrets, Putin. He can bloviate all he wants but at the end of the day America needs allies, I seriously doubt that Russia will fill that bill. He just may find himself standing alone in the dark corner at the party.
8
Quick Thoughts.....Back in 2007, house prices were booming hitting records while the economy was on fire with daily reports of record breaking wall street profits and then the crash came so quick, so suddenly catching everyone with their paints down. That’s when it happens, when you least expect it.
Suppose Trump does have a plan. Take the air out of rising home prices alittle ,keep oil prices low and keep wall street herd from creating another big bubble leaping in the air over the cliff causing many bankruptcys and suicides and great media news stories for journalists to cover.
Maybe the target is really only China as we begin shifting toward Mexico and India as well as all of our neighbors to the south of Mexico thus make China nervous enough to become free traders and never again full around with the Gangsters in the USA who can cause great civil wars in overthrowing tyrant wannabes who believe they can match us with their own form of gangstaism
1
Suppose Trump has a plan? Don't be silly.
3
My predictable response in the form of a question: WWVW? (What Would Vladimir Want?)
The destruction of the international trade system (developed by and for the West) is a good start!
6
The ambition of Putin is crystal clear on Chinese territories and annexation into Russian Federation. Another Yellow Fever would be lead by Putin the Great (the decedent of Genghis Khan).
1
Trade wars may be easy to wage but they are distinctly not easy to win unless "victory" is defined as a megalomaniac's obsessive psychological need for ego-stroking self-gratification.
8
Thank you for this elucidating (as always) analysis, pitting political wishful thinking against the practical world realities. I will surely share this with my Trump-voting "Americans are getting screwed" relatives.
The most important point was brought out in the report quoting the impact on capital spending being cut back or postponed,"as a result of uncertainty . . . . "
Taxes, interest rates, competition, regulations --- American businesses have the creativity to operate and even thrive under the most unfriendly conditions. But the one, above all others, that they cannot tolerate is uncertainty. It is the factor that adds the most risk and will cause businesses to lose confidence, pull back and cut jobs. This is how recessions are made.
It is truly sad that everyone in this country may pay a terrible price for the ignorance of a few, who, in the end, will still hang onto their uninformed righteousness and blame someone else. So I applaud the strategic thinking of Canada and, yes, even China, and take comfort that sound thinking will still best bravado and alt-truths, especially if, in such a price, it can help take down a tyrant before more damage can be done.
7
Mr Smoot-Hawley #2 show know this failed the first time around. ,... or does he ?
1
Trump is full of conspiracy theories and paranoid about everything.This makes everything he does destructive because he starts from the idea that whoever he is dealing with has it in for him personally and he has to attack. His first impulse is to destroy and if he was the last man standing he would destroy the ground he stands on.
Why does he do this? He is paranoid and he makes others catch his disease. This is very dangerous but this eventually will become recognized by nearly everyone, because it will be repeated endlessly. People expect him to lash out and prepare a defense and thus his paranoia becomes a self fulfilled prophecy.
3
Recipe for continual failure: One of the signs of narcissistic personality disorder is the need to inflate all events and actions by others as either the best or the worst. There is no balanced view of anything. And when it comes to themselves, they must frame their own actions and results as the best ever, no matter the real results. So strategies for improvement that can be derived through thoughtful, honest, and insightful debriefing are never applied. It helps even less if underlying assumptions, beliefs, values, opinions, etc are fact-free. Case study in hubris
4
Anyone who still believes this president is anything but a shill for for the billionaire class bought to bring about destruction to those who’ll not be able to withstand the next economic crash these policies are setting up are blind blind blind.
4
Are you ever going to get tired of blaming Trump for everything? Is there any pride, self-esteem and self-reliance in you? If you lost the elections it happened because of your imperfection and failures! Please stop blaming Putin for your own mistakes! That’s for the losers!
Do you have a problem with blaming Trump for starting this trade war? It is an undeniable fact that Trump was first to impose punishing tariffs. That was a deliberate act, taken without congressional approval, independent of any election results. The objective facts show that the Trump tariffs target our EU allies, Canada, Mexico, and China. Trump is driving a wedge between the allies who exist to protect each other from Russia. Why would he do that???
9
"The hard part about playing chicken is knowing when to flinch".
From the movie, "Hunt for Red October".
3
Trump’s supporters are going to be hurt for decades after this all plays out. I guess the old saying is true, you do mostly get what you ask for in life.
6
Authoritarian regimes are always more effective than democratic ones. Democracy is messy, protracted, complicated, wasteful, inefficient, divided, slow to react. Autocracy is the opposite.
No democracy can surpass or even reach an effective, enlightened autocrat with a ruling class to match. That was Hitler before he started invading countries, and by any measure he had been a major succes at home.
1
Trump is most successful on creation of bankruptcy to kill his counterparty. US has basically mastering the global production, and China treated as world factory, and Canada is best known of export raw resources, so the tariffs would not affect each other, and the final victims must be taxpayers instead of governments. Ostensibly, all the prices will hiking and pushing inflation to stimulate interest rate upward.
1
I’m wondering if damaging the American economy isn’t the desired goal. His posturing and blathering may simply be disguising intent.
4
As a former Republican voter in NJ, I wish one of the talking heads on TV would explain why I should show the least respect toward to crowd of deplorables or gullible goobers who show up cheering for Trump at his rallies that are much more like comedy specials than anything else. I know Trump voters personally in the Republican county that Iive in. I avoid any political talk. They may be decent folks in their personal lives but their politics are uninformed.
7
"Trade wars are bad and easy to lose".
Because noone's winning.
Tired of so much winning?
2
If Putin had politically or legally incriminating documented (tapes, bank receipts, etc.) information on Trump and required Trump to act to destabilize the western alliance and the american economy and political system, could Trump do anything more harmful than what he has done ?
11
Professor Krugman,
I really agree with your position.
In a trade war, the nation that accumulates the most (taxable) wealth VIA FOREIGN TRADE wins, and the nations that go bankrupt by spending their existing wealth plus borrowed money to pay for their nation's government activities lose!
And the USA will probably lose Mr. Trump's trade war because the USA is no longer a taxable wealth creating nation, but is now a taxable wealth consuming (destroying) debtor nation.
US citizens are selling (or letting the government mortgage privately held US located assets as collateral for US treasury bonds) existing title to every privately owned national taxable wealth (businesses and real property) in the USA that was created by previous working generations of their citizens in order to pay for our government payrolls, entitlements, contracts and other government activities (plus our foreign made consumer products).
This creates a constant flow of title to US privately owned taxable wealth generating assets being transferring to individuals in the wealth creating industrialized nations.
The US government is now borrowing privately owned wealth (US Dollars) back from the wealth creators (mostly in Asia) to pay for US wealth consuming government activities that do not create any new taxable wealth to pay for US government activities and using title to our US located privately held assets as loan collateral!
1
The states want federal land handed over to them to sell off.
1
It really would make the most sense for foreign governments to place HUGE tariffs on all Trump businesses.
5
It just shows how little Krugman knows of the real application of non tariff and tariff barriers in the developing world. The war has been waged fir thirty years. Without exception Asia’s emerging Auto manufacturers located in Thailand, Indonesia, China and even South Korea insist on local content rules. It’s not just the assemblers who relocate there but all the parts suppliers too - they want all the jobs and dollars thank you. Why not go look for yourself Krugman.
During the Vietnam war, no one in the Whitehouse,the Pentagon or the state Department had more than an undergraduate knowledge of Vietnamese history or culture. The thinking was that knowing what to fight for (containing communism ) and American exceptionalism was enough. The adversary meanwhile had closely studied America, and prevailed. I see history repeating.
12
how to loose a trade war:
-fight a war over the wrong issues
-fight a war without a justifiable cause
- fight a war because one person and a vocal minority wants to go to war
-fight a war without superior weapons
-fight a war against an opponent who is not much weaker(for instance the russia vs crimea, or the US vs afghanistan)
Seems to me most of what China makes is stuff US companies have moved there due to lower labor cost and fewer regulation of pollution or worker safety. And then those savingst go to the owners pockets.
1
Republicans have spent the last several decades sabotaging government to convince the lower 99% that government does not work. Who benefited from this? The money class of course.
Now Republicans are sabotaging trade to convince the lower 99% that it does not work for them. And who would benefit from this? Well maybe the money class, if it eliminates foreign competition in the US domestic market.
Maybe Trump's Trade War (the TTR) is not so much incompetence but rather based on economics whereby the benefits of economic activities exclusively accrue to a few. Think of the Haiti model of economics.
7
China reacting never considered by the Trump band of warriors. However Germany taking different course of action with European Union preferring some type of fair resolution. If US imposes 20 per cent import tax on European made vehicles then under WTO rules that will also apply to Japan the biggest importer of vehicles to USA.
China may feel indignant they are being singled-out as a suitable candidate for high-stakes poker in the Trump casino. Once there was a way to handle such things but all that goodwill now lies in ruins. China offered to reduce their car import tax from 25 to 15 per cent to cool the hot-air. Maybe Trump wanted a scrap with China in order to cosy-up to Russia his old friend? Trump likes to make a show. But trade wars on this scale will go badly wrong as PAUL KRUGMAN warns in this review. Watch the US inflation rate. Perhaps the Chinese somewhat surprised Americans so hostile and determined to confront China in every way possible including US navy in South China Sea; to blockade Chinese shipping in the future? Europe expects the worst outcome with Trump.
3
Further friction on world trade of course will complicate the already stagnant economy. Despite recent uptick in economic indicators in developed economies, the emerging economies are not doing well. They have outstanding levels of debt, which will increase with interest rates going up. Household, government, and productive companies in those countries are now more indebted than in 2008. The possibility of defaults becomes more real, which willl cascade to other parts of the globe. Trade has slowed down since 2008 especially for “emerging” countries that depend on it more so than developed ones.
Again, Trump only sees one side of everything through his impulsive management style. Unfortunately for us, there are two sides to everything. He runs the country in the only way he knows how, a system he perfected in private business that brought him several bankruptcies. Is the US next?
15
Trump's strategy to win all wars, including trade wars, is to:Declare Victory, then brag about what a great leader he is to have such a decisive victory.
Sure there was some suffering during the trade war, but it isn't like any of the Deplorables know how to even spell economics, much less assess the damage foreign nations suffered and compare that with America's losses.
Declaring Victory will be enough. FOX news will call it a win too, and all other media outlets are fake news.
Democrats, and sane people keep thinking facts matter to "The Base" No.They.Don't. We have until November to burst that GOP bubble.
15
"In trade wars there are no winners" I've heard. With everything costing more for everybody, people losing jobs and international economic structures collapsing, it is easy to think this. It is my understanding that Trump's trade war is nonsensical from a mainstream economist's perspective, but I think it has a silver lining for the environmentalist. Unless you think (see World War I to World War II in Germany for example) that peoples' economic hardship creates momentum for real wars, which surely don't benefit the environment.
I don't think environmentalists are Trump's base of voters (considering he and his cabinet have taken so many anti-environmentalist stances) so for Trump personally the trade war is probably not a good thing. Also, people probably care more about having jobs than having less pollution and a better environment. I would rather be jobless, breathe clean air and have dreams at night than have a job and be forced to wear a gas mask, but that's just my personal preference.
6
The world admired America and American people never realizing US empire comes with time-limit. Chinese tourists enjoyed American hospitality. Suddenly the US got a leader declaring the end of time. Time now to circle the wagons as if under attack from China and "bad Germany". Run for the hills may be best advice at this point. Our fragile planet dying but of little interest at Trump towers with their taste for extravagance and opulence. Breathing clean air never considered on his balance sheet; the profit motive?
1
That might change when your cupboards empty.
Maybe I'm such a romantic and an idealist that I would forgo work even if it looked like I wouldn't get food, shelter or warmth. I might gamble with my life, throw the dice, in the hopes that some others would be gambling with their lives as well and behaving as I do. We would form a collective and with our collective power we would demand basic necessities from the less organized (outside our group). If the alternative was to live with severe health issues and having to wear a gas mask 24/7, I might just do that. What is life without risks, eh?
Paul says: "In fact, the structure of his tariffs so far is designed to inflict maximum damage on the U.S. economy, for minimal gain."
Everything Trump has done in and before he took office accomplishes the same thing: more trouble for the US and its populace.
As Paul points out, prices in the US will rise. Many businesses will hold or cut back. Many beneficial policy goals will loose ground.
The installation of solar panels will slow because of tariffs on cheaper Chinese panels. China is going gangbusters on renewables and US policy is fossil fuels first.
Who but the Kremlin could have designed a scheme that sets back the US on every front.
Domestically and internationally Russia has been supporting right-wing groups; to include bank rolling the NRA. Encouraging this kind of political fighting could lead to civil wars. Guess who is leading the charge to "incivility"? Do you really think this is just a coincidence?
10
Patrick rebuilds the simple overarching narrative: the celebrity cosmopolitan “boss” now playing a new “tough guy” role as US President has to sabotage his public role in order placate his foreign creditors and wielders of major embarrassment and image compromise.
1
From Thomas Piketty I just read this:
"[Economists have] learned in school that it's more efficient, in the first instance, to try to produce as much wealth as possible by relying on free trade and competitive markets to maximize everyone's comparative advantage. Even if that means, in the second instance, equitably redistributing the gains, through transparent taxes and transfers within each country."
And therein is revealed the problem: As Piketty goes on to observe: the second instance -- greater redistribution -- never came.
This allows us to understand the rage of the MAGA crowd. They voted for Trump precisely because they expect him to blow everything up. They enjoy seeing institutions collapse. I suspect that even in Iowa, the citizens less harmed by the soybean tariffs will express considerable schadenfreude at the misery of their neighbors.
The really depressing fact is that even if Clinton or Obama had tried to enact the "second instance" during their terms in office, they would have pilloried by the likes of the WSJ, the AEI and of course the very toxic FOX "news". (Neither Bush the Younger nor Trump have considered that.)
10
This quote seems apt: "Never was so much owed by so many to so few" with apologies, (from Winston Churchill).
As the President targets trade disputes with a bevy of wars, he continues to dismember the fledgling health care programme.
Thus, it is evident that it is, and will be increasingly dangerous to get sick in the US, especially if the less fortunate are chronically sick, unemployed or without increasingly scarce or expensive insurance.
Meanwhile, those who legislate are afforded the best of all worlds or are independently wealthy or both.
More thought might go into this matter if the fortunate recipients were to be offered the median of all plans, as the US enters into (economic) wars on many fronts.
9
Today, never was so much OWNED by so few, may descibe the reason for the next time we need Churchill's line.
1
I wish we could get to the heart of the matter and figure out WW2 ended 73 years ago, and over the past 50 years American dominance had gradually eroded.
This is not a bad thing, as other nations have improved their positions relative to the U.S. Of course they would, many countries were almost completely destroyed! Our "exceptionalism" is rooted in the luck of our geography. We were not bombed, we sold weapons to other belligerents, and were gifted many of the finest minds of the era that fled war and persecution.
We should have faced this reality and effectively managed the transition long ago. This foolish trade war, and it's author, are yet another manifestation of our national delusion.
We need to make peace with ourselves in order to deal with the challenges and dangers that we are faced with, but we are currently headed in the opposite direction.
The U.S. should have a bright, secure future but we seem bent on facilitating our own downfall.
14
It's so surprising that this warning for months from many not only Krugman is not being heeded. Trump and his advisors must either really be living in a bubble or have something very destructive in mind. From the beginning Trump has been about destruction ( principally of government and foreign relations) and building nothing other than his wall, also destructive.
12
These tariffs are totally insane. Our allies are furious with 45. Prices on consumables will begin to skyrocket. Sadly, recent articles on farmers bemoan the fact tariffs will significantly hurt them and likely cause their family businesses to fail after numerous generations but they still stand with 45.
7
If the public looked at aggregate tariff rates, the people would see that all members of the World Trade Organization (WTO) had tariffs within 1% of each other.
Over the past 30 years, China dropped tariffs from double digit levels after joining the WTO in 2001, to tariffs that are within the same narrow band as all other WTO nations.
The upside to winning this trade war is very low, while the downside is enormous.
The US has only about 300 million consumers, while there are 7 billion consumers around the world. Isolating American businesses from 95% of global consumers is not smart.
If the US businesses lose their place in the supply chain, lose their long-standing global customers, and are no longer seen as competitive and stable, the damage wrought will not be undone easily.
Trump wants to claim a victory to his dwindling supporters, whether or not facts support his absurd claims.
Much like claiming victory regarding North Korean denuclearization while North Korea ramps up nuclear activity, he spins a tale to his easily duped followers, taking them for fools.
But when his supporters see the canceled orders, the lost customers, the higher prices and the hit to profits, all the loud concerted propaganda from Fox state television and the administration won’t persuade anyone that trade wars and tariffs are sensible economic policies and tactics.
23
Right, tariffs will worsen the situation of stagnation which the world lives after 2008. Indeed trade slowed down after that year. The 1% average reflects the world perceptions of unlimited growth and forgetting of the crises before 2008, in which profits were also distributed according to the law of averages. So now instead of a fraternity we have sibling rivalry.
2
A particular problem for Paul Krugman - no matter how cogent his arguments one always suspects there's more to it than what he says. That's because with precious few exceptions he can be counted on to take the liberal/left side of an argument. To hear him tell it there is zero redeeming value in any conservative position. His defense of Alexandria Ocasio-Cortez is a good recent example. Question for Professor Krugman: are there any positions taken by the Democratic Socialists of America that you oppose? If so, why not write a column supporting the idea that you approach issues with an open mind. Any good debater can defend either side of a question well. But as a NYT reader I'd rather be able to trust a Nobel laureate to let the political chips fall where they may, than always feel he's holding something back.
2
Feel free to argue any particular problem with the article. A good debater should be able to stick to the issue rather than resorting to an ad hominem rambling.
18
TK,
You're missing the point, which wasn't about this particular column. It was about Krugman's work as a whole. For example, what's his (and your) reply as to whether there is anything to oppose in the Democratic Socialists of America's body of positions?
A polemicist cherrypicks positions which support his own views. A Nobel Laureate looks at broader considerations in search of larger truths. Krugman would be a lot more interesting were he to challenge liberal/left shibboleths deserving of challenge. Surely he (and you) believe there's something worth challenging on the left. Maybe start with disruption of the personal doings of Trump cabinet officials, and its implication for personal freedom and rule of law.
After all, conservatives from William F. Buckley, Jr. to George Will have a record of periodic opposition to natural conservative positions. Shouldn't we expect a Nobel Laureate to act less like a polemicist and more like a seeker of truth, at least once in a while?
"Democratic Socialists of America"
Since they are not a political party, and do not represent the views of the DNC (who are the official opposition to the golden boy), why are they an issue here?
There are a million working chinese professionals and 350000 chinese students in america. Many more millions work for US companies in China. Trillions of dollars are invested by chinese in america and in china by americans. Trumps trade war against China will ensure the mutual assured destruction of US and China.
2
I miss the old days when Trump could only wreck havoc with the people on the Apprentice and Navarro could only mess up the students at Cal Irvine.
17
If you were Putin, and President of the US, the policies you would implement would be those that generated the greatest pain on Americans and their institutions. You would appoint people like Scott Pruitt to increase pollution, an energy czar who was completely incompetent, you would leave thousands of job open in our government to render many agencies rudderless and incapable of fulfilling their mission. You would attack our allies while cozying up to its enemies. You would ignore the actions of our enemies who attack our democracy while you are attacking the institutions designed to protect our country. You would engage in trade wars with your allies and attempt to weaken domestic industry in the process. You would lie and use its distraction effects to hide the policies being implemented that when enacted, would serve as an effective means of politically dividing the populace. You would use your office to enrich yourself, your family and foreign business associates linked to Russia and her allies. You would implement tax cuts that increase the debt while cutting foreign investors taxes and reducing the future investment capabilities of America because of carrying higher debt loads. Yes, these are the things a Putin would do if he were President of the United States, any questions? There shouldn't be. There will always be those who would betray us for a few pieces of silver. Nothing new here, its been going on for thousands of years.
21
If you were Putin, your number one objective right now would be to break up the Western alliance system that's existed since 1945 - which principally means NATO and the EU. In other words, the Trump crowd, the Brexit crowd, and their counterparts on the continent would be your BFFs right now.
One overlooked part of Trump's Tariffs is that they are in fact a form of regressive tax increase that takes money out of the pockets of working Americans. This is tax war 2.0 by Trump who has raised taxes on us and given himself and the richest of the rich a massive tax cut. The geniuses who came up with this playbook to destroy our economy must have spent some quality time in Russia. What a way to shrink the pie of economic prosperity.
9
'Not for all the tea in China' is a quaint nursery expression seldom heard these days, followed by a geography lesson in 1964 where the population of the above superpower is estimated at 600 million and beyond.
Mr. Krugman has ventured before that economists are not fortune tellers. For those who are interested in astrology, 2018 is the Chinese Year of The Dog where our country appears to be going to the dogs. Some Americans have been saying this since the end of WWII, with pots and pans.
Some economists have been courageous enough to declare at the beginning of this year that a decade from now, China will be the leading superpower, followed by America and India.
Half the country does not understand that a Trade War is not fought with weapons of mass destruction, and is more concerned about the safety of our fledglings, returning to school.
Before November is here. Before we sit together and celebrate Thanksgiving, bear in mind that nobody is coming to our rescue. Europe is being dismantled and our Allies are not to be blamed if they think we were dumb to have elected Trump.
Trump did something right. He made some of us feel incompetent and nutty. If this president inflicts damage on those he promised to help, some voters made decide to ride out the coming elections and stay home. They might plan to watch 'The Russians are Coming!', and save some gasoline.
3
In 'The Russians are Coming', when the kid tells his dad "Ask them if they're Russians", the Russian commander replies "We are of course Norweegans on small training exercise for Nayato".
Listen to the kid. He's on to something. Go get 'em Mueller.
4
Of course trump doesn't understand trade, nothing new there. He doesn't understand anything beyond it's entertainment value. Trump lives for ego, greed and selfishness. It affects many of the boomer generation who prospered from the greatest generation but squandered the privileges, trump in spades. The result is the greatest wealth disparity since the middle ages and the steady drumbeat of planet destruction … and Trumpism. Trump gets off on the sudden realization that he can shake up the fundamentals of the entire planet, from morals to economies and he is wallowing in it. But unlike other leaders who believed they had a better way he simply enjoys the power. No con is too slimy or trick to dirty for him to keep the game going.
6
China has been trading with the world for over a two thousand years, mess with them at your own peril. Of course, we have a President and his advisers who insist they know what they are doing. As it relates to the world, very American.
5
Dr. K, is there an economics version of this tech list of foolish predictions? https://www.pcworld.com/article/155984/worst_tech_predictions.html. If so I would like to nominate President Trump’s statement: “Trade wars are good and easy to win!” as a candidate be added to “worst economics predictions” list. I suspect in the end it will rank fairly high up.
3
China has yet to use its TRUMP card. Vashing in and not buying more US Treasuries, collapsing our currency by driving the price of our money sky high, the cost of our goods to eachc other in the US into hyperinflation and ultimately crashing our country
2
You can't cash in bonds, you can only sell them to someone else. That will reduce the price, making it easier for us to service the debt, and costing them zillions of dollars. Bonds can only be redeemed for cash from the issuer at the end date.
Come on, Trump knows exactly what he is doing: His plan is to destroy America because he is an agent of Putin. Russia is using Trump as a subtle missle aimed at the heart if America. Russia needs to destabilize America and the West to enhance their position, and since they cannot defeat us militarily they have taken a page from Bin Laden and have chosen to defeat us through asynetrical warfare. The only question is, Will Congress wake up in time to save America before it's too late?
3
By being born to a New York City real estate fortune Donald John Trump "won" the only trade war that he has ever been in. Every business that Trump tried on his own failed. Except for playing a businessman on a reality TV show.
Winning the genetic lottery is not a reflection of merit, qualification and talent. Besides Queen Elizabeth II of the House of Windsor won a much bigger and better sustainable genetic lottery.
2
Trump supporters can ignore the facts of his many bankruptcies, failed casinos, conman/corrupt business deals, and still insist he is a great businessman and negotiator; doing so is delusional. Trump’s only strength as president has been conning people through media propaganda and misinformation. The ultimate Internet neighborhood gossip turned conspiracy theorist and victim of non-existent witch hunts has turned from smoke and mirrors to purposely causing outrage, chaos, and uncertainty by his actions. The Trump declared agenda of destruction of the administrative state is well underway. Trump supporters either ignore this or actively give Trump three cheers, but history demonstrates more failures than successes of purposeful high risk decisions by administrations. One can be valid in assuming someone else is benefitting from Trump’s economic agenda, and it is not the American people. It could be certain Wall Street insiders or some Cabinet officials; it could be Russians receiving “hard cash” from trade deals with China with the Trump administration working around US-and UN-imposed sanctions; it could be Trump and his family. Perhaps Americans will experience the perfect economic storm as purposeful large tax cuts to corporations, deregulation of financial markets, and tariffs combine. We are already experiencing the cruel, venomous, vicious, and inhuman treatment of others as a result of Trump’s immigration policy.
4
The entire premise of Krugman’s main argument is simply....wrong. An American manufacturer can “drawback” 99% of paid US tariffs on any dutiable imported input (steel or aluminum for instance) upon export of a finished product. In other words GE or Amana could effectively eliminate the tariff on imported steel or aluminum they use to manufacture refrigerators or washing machines for eventual export. If they sell those products here in the US they can’t get those duties returned of course. See 19 USC 1313. Krugman may be a brilliant economist but he’s no Customs lawyer.
1
Good point, assuming of course there is someone left to export your refrigerators or washing machines to who has not already put countervailing duties on these products. The newest sport in Canada is looking for the "made in US" label and putting whatever it is back on the shelf.
8
That's irrelevant.
If they sell in the US, which they will have to continue to do, they will either have to absorb their increased costs or raise their prices, which will lower domestic demand.
Nor is there any guarantee that they will maintain their profitable export market, if their goods are faced with tariffs from abroad.
3
Let me write about the Triffin Dilemma.
The dollar is the world's reserve currency. To see what that means, here is an example.
Argentina needs electric power for its northern provinces, Right across the river, Brazil has huge hydroelectric installations. It costs a fortune to transmit this power to the coast where most of Brazil's people live. Argentina wants to buy. Brazil wants to sell.
But wait, Brazil does NOT want to get paid in Argentinian Pesos. Would you? Brazil want to get paid in the world's reserve currency, dollars, which Argentina ain't got.
There have to be enough dollars outside the US so international trade can happen. Since the only country that can create dollars is the US, that means we must have a negative trade balance in the long term at least.
What are the benefits of the dollar being the world's reserve currency? Well, since other countries want dollars, they are willing to sell us stuff for less money. Also, we have many jobs that depend on international trade which needs dollars to function well.
So what can we do? We can replace the dollars that leave the country by dollars that come from the FED through the Treasury and federal spending. If these dollars are invested properly, our economy will grow and there will be little inflation.
Otherwise we will get 1996 - 2008 when the dollars flowing from the federal gov were fewer than the dollars leaving the country. Then what happened?
2
World trade is at 55% of world GDP, which is lower than before 2008. Countries like Brasil and Argentina depend on trade more so than the US. Their productivity has slowed down. Currency volume (dollars or other denomination) reflect trade and circulation, which in turn reflect production. Investment is not happening because corporations and capitalists in general don’t see much in terms of returns coming from production (say like those numbers before 1996). Instead they have poured profits in financial markets and buy backs, which are not necessarily tied to real production.
Circulation is mostly and effect of production- not the other way around.
Clear information and very accessible writing. Thank you, Professor.
Canada, China and the EU could seem most likely to wall off T partiers so that they fall on their improvised fencing gear.
The vocal majority might say that “God is in these details.”
1
Graphs etc.not necessary Paul. Just start or engage in a trade war and you lose.
We have lost this war. Trump is in denial.
How to get out of it is the question.
1
What is this really all about? By now we surely know that it is about paying back the people who brought him to power, and isn't Moscow part of that? The clever fox is Putin, bent on destroying the west.
4
Trade wars are all the talk. The Sunday shows about the next SCOTUS nomination are all the talk. What Trump wants is a clear path to being able to pardon himself in the event... well, you pick the event.
2
Don't we have to filter all Trump decisions, pronouncement and policies through the lens of "What would Vladimir Putin want?"
4
We can hope that this inflicts maximum damage on Trump voters. What an irony that we are getting help from our trading partners in trying to defeat Trump and the debased Republican party that is supporting this entire spectacle. Whatever it takes.
2
Please someone answer: what happens to these new fed tax collections???
One hears from the sycophants that Trump did not start the trade war. Rather China has been waging a trade war for years and years and we are finally responding. Their most salient point being China's penchant for intellectual property theft. So let's have a war.
Back at 9/11 a bunch of Saudis on planes committed an act of war against us, so what to do? Aha! Let's wage war on Saddam's Iraq.
Now we say China is messing with us...so Look out Canada, Europe, et al we're coming at you.
This will be easy.
4
There is a degree of similarity to the Bush presidency. Given the potential inversion of the bond market, Trump is pushing this country and probably the world into another depression. All the attempts of Trump and Fox News to shift the blame will likely fail. The pattern begins to set in the American mind that Republican government is associated with mismanagement and a collapsing economy. And as the Clinton presidency was known to say, "it's the economy stupid". The only factor is time. Will the depression hit before the midterms?
1
2018. Just listen to the hissing of the fuse lit by Trump and his fellow vandals out to commit the biggest act of global nihilism foisted upon the world. The oppression is absolutely stifling.
2
Trumps one and only plan is himself. The tariffs he is proposing benefit himself and his clients at Mar a Lago. He doesn't care about his supporters, the more he abuses them and insults them the more they love him, they have batter wife syndrome and if there is one thing Trump know how to do, it's dish out abuse. This whole tariff scam is Trump using a power he should not have to rearrange the tariff structure so he can pick winners and looser and thereby garner favor and money from those who will benefit from his choices.
5
Like his Republic predecessor in Iraq, our bumbling and directionless head of state appears to believe he can cow his enemies into submission by a campaign of "shock and awe". He believes that he can flex his American muscle and everyone will kneel and submit to his might. Such is the hubris of the powerful.
He forgets that in all matters, great and small, it is important to know what you are doing, to have a strategy, a carefully laid out plan addressing all foreseeable contingencies. Such planning is foreign to this administration's modus operandi. He's a shoot from the hip kind of guy, and gets himself and the rest of America into all the kinds of problems that naturally ensue from this Wyatt Earp style of leadership.
Why does a Donald Trump even get a single vote ? Russia interfered in the 2016 election on his behalf and he colluded with them. Nothing is a bigger threat to our livelihoods and safety than interference in our internal politics by foreign power that still has nukes trained against us. Trump is crazy. He is tweeting and talking nonsense all the time. His actions and policies are destructive to us in America, and to the world.He is contemptuous towards the law and ethics and is hiding massively corrupt activities and evasion in his taxes. He does not care about the consequences of his actions, whether regarding climate change, security(NATO), taxes(he has raised the taxes on blue states by limiting the SALT deduction) and worsening the already extreme inequalities in wealth and wages. He is racist, xenophobic, misogynist and islamophobic. He has condoned police brutality towards minorities and reversed affirmative action policies that addressed problems caused by conquest, slavery, and discrimination for 200 years. He has banned muslims from traveling here. He has mocked and disparaged women, even women who have been abused. He has made the swamp in DC swampier than ever. He appeals the the worst instincts. In his own words 'the guy is getting into something or the other all the time'. He attracts the worst elements and the state of turmoil in DC is constant since he entered the presidential campaign. Trump's destructiveness, also on trade, will take 100 or 200 years to undo.
3
When all is said and done, will the USA really come out ahead after negotiating with such aggressive, browbeating tactics?
Yes, perhaps you will get your better trade deals. For the USA. But who will want to trade with America going forward? When you’re the only remaining superpower, that’s the time to be nice.
What the world sees instead is a bully. A wolf in sheep’s clothing, exposed for what they are. This is American exceptionalism?
4
I don’t even pretend to understand Economics. I leave that up to experts like Paul. In the most simplistic terminology here is how I operate: If one store charges me more for the same product as I can get cheaper at say Walmart, it’s a no brainer. On the world stage, it’s much more complex. There are many factors that have to be considered other than “what is cheaper?” This is where we have a problem Houston. Trump is doing this mainly on emotion instead of knowing the facts. Had he actually consulted professionals before making this decision, his so-called Trade War would have never been implemented. When you or I do something this stupid, we can always say “My Bad.” When the United States does it, it’s much more difficult to reverse. The proverbial rat is out of the cage. What country is ever going to really trust us again?
3
What a far, far cry from a time when positions in government were staffed by "the best and the brightest." Those people were never considered or fled this administration in disgust. Now we have "the most incompetent and the most ignorant" left in charge.
3
The Trade War Trump has started is consistent with 1) the positions has taken for over 30 years and promised his base; or his profound desire to avenge himself on the "establishment" stemming from NYC's establishment's refusal to accept him or orders from the Russians. Further, he is petty vengeful and willfully ignorant.
Whatever his motivations he seems intent on making America broke, ungovernable, isolated and impotent abroad.
1
If Trump was such a mastermind in business he would release his taxes to show his profits. We know he got played by North Korea really badly, and he is about to spiral United States economy into something that looks like one of trumps casinos. And in case any of you who voted for him don't know this is bankrupt so many of his businesses is a joke on Wall Street. We know that our president is a liar, so when he starts telling you that the trademark is working, start whistling and walk slowly to your local bank and get your money out for the monsoon that's coming.
1
Trump will go down in history as one of the worst presidents ever, probably the worst to date.
Yet his approval rating remains around 40%.
This is truly scary.
2
And 97% of Republicans.
Krugman's in the wrong here. We lost the trade war for 3 decades as the bankers got rich outsoucing our jobs. "Free Trade" is a lie. The Chinese and our "European Partners" have been winning the trade war while our "liberal" effete have gotten rich off the death of the working class.
I somewhat agree, but were most of the titans of Wall Street that caused the 2008 deception Democrats or Republicans? I'd say the latter.
Reagan brought the working class into the GOP (universally known as the money class) with Newt Gingrich and Jerry Falwell helping. The GOP then betrayed the working classes, so I believe the conservatives were the ones who cashed in much more than the liberals. Now, however, both parties stand for only one thing: money.
1
How to start a trade war that everybody lose? Watching Stanley Kubrick's 1964 "Dr. Strangelove or: How I Learned to Stop Worrying and Love the Bomb". Navarro reminds us of Dr. Strangelove and Trump as Major T. J. "King" Kong.
So what does Trump think is going to happen next?
Something will be said that he has to tweet his displeasure about. Past that, who cares (there is no "past that" for him).
All these farmers voted for Trump and now they are losing their international marketplace. What who will bail them out economically? People who voted against Trump. While they are being bailed out, they will continue claiming that the blue states are destroying America. I'm sick of this.
4
Indeed, its a sure bet that his electorate will avidly genuflect in sacramental fealty to bigotry and racism even as their pocketbooks and wallets inexorably shrink.
4
Dr K, broaden the argument from your trade comment-So Trump and company don’t actually have a plan to win this trade war. - to there are no PLANS in any arena.
Examples include negotiations with North Korea, attacks on Canada, Nafta, Nato, European allies, Obamacare, so-called tax cuts for middle and working class, wrecking of EPA, and on and on.
There is no plan except a drunken bull in the china shop mentality of break and destroy. Rage, lies, chants substitute for policy and plans.
Solution? VOTE VOTE VOTE
3
By this time, people should be understanding why Peter Navarro is considered a crank.
2
Trump's conduct can be summarized in three words:
Ready! Fire! Aim!
3
Peter:
There’s no “Ready” or “Aim.” Just “Fire” and “Fire Again.”
The minute Trump claimed that trade wars are easy to win, somebody should have jumped in his face and said, "How the heck do YOU know? What do you know about trade? You're a real estate hustler!" Honestly, this chapter of American history reads like satire written by Gore Vidal or Terry Southern.
2
The president gets credit or blame for the economy even though it is largely out of his control - otherwise we would never have recessions. However, this time when the next recession or bear market occurs (the bear market may be starting now) blame can be laid squarely on Trump for these stupid economic policies.
This trade war is the dumbest thing a president had done since the Iraq War.
1
Great article however did anyone think trump had a plan??? He said tariffs and no open trade and his base cheered so here we are. This whole thing reminds me of a B si-fi movie, next well see the people at one of his rallies turn into zombies.
4
Our trade war helps Vladimir.
2
To Hoover's "prosperity is just around the corner" you should add Neville Chamberlain's "this paper guarantees peace in our time", Lyndon Johnson's "light at the end of the tunnel", and of course Dick Cheney's "we'll be welcomed as liberators".
Between wishing it so and making it so there is little room for egotistical idiots who believe themselves to be infallible.
4
How the heck are we going to get this angry bull out of our china shop? Trump steaks?
3
Trump's is clearly a short term strategy. He and his amateur team don't want the voters feel the immediate pain for the next a few months while the tariff causes havoc for the domestic producers. Which means he is hoping for a negotiated settlement soon. Which also means that he is not likely to go through with another round of tariff after already delcared $50 billion.
If he wins the midterm, he will expand the war and the everybody will suffer. All the more reason to take him down now. Democrats should remind the voters of that.
2
The number of American factory jobs peaked under President Carter. It has declined since the Reagan administration.
This not because of "bad trade deals." It is because factory workers are being replaced by robots, who can perform their jobs better and less expensively.
5
And replaced by humans in other countries that are willing to work in bad conditions and low wages because it is an improvement in their lives. Just like terrorized central Americans are willing to risk their lives to get to the inhuman US and work in chicken factories and roofing because it's better than being killed or starving. Free trade has enabled all of us - poor and rich - to in fact live better at less cost.
1
As the population of the earth grows from 7.6 billion to over 9 billion by year 2150 and automation reduces world wide jobs from about 4 billion to 2 billion, climate disruption will decrease historically arable land and fresh water, and populations will migrate to survive.
The severity of the looming consequences of over population, coupled with the disruption caused by a changing earth climate, will depend on how much of the wealth generated by technology, (robotics), is shared and how well human reproduction is reduced.
Six billion out of work humans will not remain docile and immobile while their children die and a walled off one thousandth of one percent own the world.
The politics, borders, gated communities and armies of the past will not work in the new world that is fast approaching, nor should it.
1
Trump is hurting the people who voted for him. He's hurting the businesses that supported his candidacy. Some of these same people and businesses won't care. The businesses will fire employees. Those employees may or may not find jobs again. Some of the Trump supporters will stop supporting him or making excuses for him. But what won't change is the attitude of the GOP, the Kochs, the DeVos's, the Waltons, etc.
If Trump was playing chess he'd've been checkmated a long time ago. If we had senators and representatives in office who had more interest in working on behalf of all Americans Trump would not be able to get away with these tariffs. If the Electoral College had done its job Trump would not be in office. As long Americans vote for the candidate with the catchiest phrases rather than the one who is qualified we will be susceptible to the "charms" of another Trump or Reagan.
It's been less than two years since his inauguration. In that time all he and the GOP have done is to reward their richest donors/supporters. If this country experiences a severe recession in the next few months don't blame Obama. Blame the GOP and those who voted these clowns into office in spite of their obvious lack of concern for 99% of us. Tariffs or not, Trump and the GOP have been deliberately destroying life for millions of Americans who are not rich.
18
If we had senators and representatives in office who had more interest in working on behalf of all Americans, someone else would be president. Many people voted for Trump to spite a system that didn't care about them.
6
There was LBJ's great society, it lasted for about 15 years until Reagan. Greed took over, big tax cuts for the wealthy, big increases in the military budgets, and the dismantling of the New Deal and the Great Society. People learned the government is the problem, not the solution. The nation became a debtor nation and Clinton proclaimed the end of big government, proceeding to cut more of the nations social security net. Unions were demonized. Family farms were sacrificed for big farm business, hostile takeovers of big corporations made many wealthy while millions lost their jobs. It was called creative destruction. We remember it well. Business greed and government together made Trump possible, Trump is their baby.
2
The Electoral College is utterly devoid of brains. It is comprised of nothing but political hacks from the winning party in each state, appointed to rubber-stamp the state's vote.
2
Retalitory tariffs aimed at DJT supporters may not be clever or an effective way to undermine DJT's base. Assuming support for DJT has a significant cult component retaliatory tariffs aimed at DJT supporters is not likely to demoralize, and may well harden, DJT support in the midwest and rural areas. Should retalitory tariffs harden support and result in higher turnout within the carefully crafted (aka gerrymandered) districts then realizing a mid-term correction in November may be more than urban concentrated Democrats and isolated independents in swing House districts can muster.
2
The light at the end of a tunnel may be an oncoming train.
When Trump's supporters discover how they have been manipulated and how their leader is incompetent and ignorant they may react very badly.
11
We can always hope. If those people had not dropped out of high school before graduating they would have learned that the well paying factory and mine jobs they depend on for membership in the lower middle class only became desirable because of Democratic economic reforms.
13
Not sure why Europe's retaliation is absent from this analysis. It makes the whole article useless.
2
One would think that even with a false sense of serenity about US invulnerability to retaliations in a trade war, these Trump economics geniuses would have had the foresight to check out the US Input-Output Table to see the intricacies of the US interindustry relationships that Krugman and Chad Brown, et. al. show so well.
https://www.bea.gov/industry/io_annual.htm
But no, armed with a dangerous sense of hubris, these geniuses have created Smoot-Hawley II, with even more damaging trade results.
4
The strategy is simple: he plays the chicken game. Our Prime Minister Rutte plays along. Trump suggested that leaving the trade dispute unresolved could still be “positive.” Rutte responded by raising his eyebrows, laughing and cutting in to say, “No.”
12
Trump's strategy is deep and long term: wreak havoc, then pick up the pieces. Has worked for him all of his life. Somehow this strategy will again work for him (personally - but sadly not for the country or the planet). His rabid supporters will, in the ensuing chaos, double down on him and find new scapegoats to blame for all their ills.
14
Trump is just as clueless as his base, which is why the bond is so strong between them.
Neither of them understand how the world really works. So Trump can act like global trade is just another one-on-one negotiation. He promises that he will get a "great deal" for the USA, just as his non-existent health care plan will be "terrific". Or that another country will pay for a wall we build.
The base thinks "This is great! This is what we've been waiting for! He's no politician! He's just going to do it!"
Trump maintains this fiction and the base will believe it for as long as they can. And when it all comes crashing down, the con man will skate away as he's always done, and the base will be in denial about it. But the rest of us will be stuck with the reality.
12
I would argue that the taxing of agricultural commodities by China and Europe is pretty worthless. All it will do is reshuffle the world suppliers into the markets with US agricultural products shifting to other markets with little effect on US farmers.
I think it is a bit more complicated and really depends how tight supply is, and how difficult it would be to switch to something different. If the supply is not tight, I think the producer gets to pay the tariff, not the buyer.
If the tariff is 2 dollars, and it costs $1 to open up production in Brazil and Argentina, what happens then next year. Or if next year is one of those years where the soybean/corn plants have huge yields everywhere. (it would be interesting to see what the trade publications in Brazil and Argentina are saying about tariffs.)
As a general rule though, if you a producer of a basic final good, you want to avoid tariffs.
4
Not much recent experience with tariff induced disruption of commodity flows on US farmers. Any claims of simple reallocation schemes though have to explain why markets closed from real or imagined contamination scares did not result in quick or easy redistributions for US farmers.
If the demand is there.
If a report on Trump's relationship with Putin re, Trump following Poot's advice on policy and trade, are anywhere near true then it explains a lot. Trump's trade war hurts all, especially our allies and all Americans.
Trump and Poot have a 'private' meeting coming up as the 'back channel' is not effective enough. Poot has big ambitions for Trump and his congress.
12
Cute rhyme: "the Chinese, unlike the Trumpies."
Needs more mention of how Trumpians are in fact helping the Russians to circumvent hard currency sanctions using soy beans.
14
Before Trump was elected, many of the major predictors had the U.S. GDP advancing at about +1.8%/year for years to come. Paul Krugman and many other Democrats/left-wingers also said there would be a big recession if the unthinkable happened, and Trump became President!
Not only was there no recession, Trump also has beaten those GDP estimates by a wide margin. Now the U.S. also is leading the other G7 countries.
Let’s see how 2018 Q2 is shaping up.
CNBC Rapid Update: U.S. GDP Tracking Estimates
2018Q2
Average +3.8%
Median +3.9%
Number of estimates 11
Based on data, news, etc. as of 7/6/2018.
---
Krugman and many of the other Democrats/left-wingers also predicted that the stock market would crash if Trump were elected.
Actually, the Dow Jones Industrial Average is UP OVER 6000 POINTS since the Election! Plus, many more points due to loads of dividends paid by the companies.
-----
Oh, how silly of me. I forgot that the most important Democratic propaganda always is correct. It is:
Everything good that happens, regardless of Krugman’s and the Democrats’/lefties’ predictions being massively wrong, is automatically due to Obama and the other Democrats.
If anything bad ever happens, it automatically is due to Trump and the other Republicans.
I’m so sorry. Just forget the whole thing.
Why is it that conservative so frequently struggle with facts and figures? Let's look at your claim that , "Actually, the Dow Jones Industrial Average is UP OVER 6000 POINTS since the Election!"
While not matching the election dates exactly, here are the actual numbers:
1/1/2009 : DJIA- 7608
1/1/2017 : DJIA- 20,663
That's an increase of +13,055! Wow, were you praising Obama? I doubt it.
Now:
7/1/2018 : DJIA- 24,456
That's a substantial increase of + 3,793. Good, but a far cry from your " UP OVER 6000 POINTS" claim.
And why are you so timid about bringing up the National Debt or annual deficit? Here are those numbers (in Billions) :
First the Obama trend...
2012: $1087
2013: $679
2014: $485
2015: $438
2016: $585
Now Trump....
2017: $665 (although this is working from Obama's budget starting in Oct 2016)
2018: $804
2019: $981
2020: $1008
I would have thought after all the bellyaching the rightwing did during Obama, they would not let that deficit creep back up. Oh well, must have been rightwing propaganda.
5
Selective reasoning running rampant here. The question is how can your hate of "liberals' cause you to be so blind to our incompetent president. Maybe when you lose your job or get your SS cut back.
The past gains in the stock market (and economy) were started well back in the Obama administration. Employment gains have simply continued as they were (around 200,000 / mo). The GOP and Trump goosed it by slashing taxes that have temporarily driven up share prices and exploded the national deficit. But now mistaking the robust economy for something he had a hand in he rushes to flaunt his power and (and ignorance) through trade wars. That, and the exploding tax-cut driven budget deficit ( from $15.7 T to $28.7 T between 2017 to 2027, from 78 to 96.2 % of GDP) is expected to crash the economy back to muddling 1.9% by 2020 and stay that way. Then there's the wreckage to the planet and environment that is embedded in the mad dash of last minute greed by the GOP and their vampire D. Trump. That's why the GOP and trump have forfeited all rights to govern except taking their cult followers off to a mountain somewhere.
4
Incompetence by a head of state has many far-reaching ramifications which, not surprisingly, come as a complete surprise to the incompetent leader.
Donald Trump was over his head in most of his business ventures, which is why they failed or required his family to bail him out. In the private sector, Trump was, on his best days, nothing more than a fast-talking salesman with only a vague idea of what he was selling.
Donald Trump is way, way over his head in essentially every area requiring skill by an American president. This is particularly true on the subject of international trade.
As the chickens come home to roost from the childish zero-sum silliness which led President Trump to impose his tariffs, it is fortunate for him that he is too ignorant to realize he is losing his trade war.
The debacle would embarrass a wiser man -- even someone with an ego as large as Trump's.
15
The one slight consolation is that both groups of trump enablers will suffer the most; the rural underemployed and farmers and the rich.
6
Rarely has the term "lame brained" been a more accurate description of a policy.
2
Please note that the Trump administration did not impose tariffs on textile goods and apparel. It would be so inconvenient for the lovely Ivanka to have to manufacture her fashion knock-offs here in the US - she would have to raise prices and risk losing customers! Also, DJT will not have his ties and MAGA hats made in the US, so he has to protect his products from tariffs. More self dealing, from the mob family in Washington.
5
As someone who started a product line that's assembled in the US, but contains components in the bulls-eye of the Trump tariffs, Krugman explains it well. Trump's trade war is not just dangerous and misguided, it's stupid. It hurts US business. He's protected some by business leader class consciousness, which wears a Republican mask. Wake up, fellas (and gals).
4
Again why is anyone surprised?
His specialty, honed as a real estate shark, is a perverse form of financial alchemy -- all he touches is gold until olfactory objection indicates otherwise.
Many chuckled when Mr. T proclaimed tax cheating as the definition of "smart." Then we marveled at industrial-scale corruption, upfront fraud, serial lies, lechery, and lewdness as the lagniappe of a business "billionaire" as POTUS. Plus the bonus of time travel as Mr. T promised the nostalgia of a whitewashed early days of Dick and Jane, See Spot Run and Little Black Sambo.
Instead Mr. T gave us not just "The Creature From The Swamp" but a full Cabinet of methane-belching millionaire monsters playing Pick-Up-Sticks or Jenga with our government to facilitate his Blind Man's Bluff regime.
But wait -- the Harvard/Cambridge/MIT/Princeton-trained Chinese technocrats know not to disturb sleeping dragons. They also know dragons are fake and their fiery fury is less than the flambe flash of a Baked Alaska.
So why would China let Mr. T paint himself into a corner? They don't do In-Your-Face and winning to them means no one loses face.
America's global rivals value Mr. T as their own agent of mass distraction and disintegration. They want him as President-for-Life with Jared as his heir. So I bet China gives Mr. T a token face-saver so he can declare himself the winner while they take all the chips.
As Mr. Krugman says, China is for real. And Mr. T ain't.
5
What if Trump is on the ropes and knows it with the Mueller investigation, the indictments and guilty pleas (Manafort as an actual Russian agent is probably more worried about being poisoned), and with the new trove of records about all his nefarious dealings through his long time personal lawyer. While he says the tariffs are just fulfilling campaign promises, the real intent is probably a show to distract from the ongoing investigations.
If the same is true with the N. Koreans, even so, Trump had some real success there. A show of good faith backed up by a real concession that the N.Koreans have always asked for--no joint military exercises this year. For this to continue, they must now come through with what we have always asked for, that there be verifiable proof--inspections--that they are doing what they say they are doing. Otherwise, we are back to square one: they renege on everything they pretended to promise and go full steam ahead on their capabilities (perhaps what China has ordered them to do) and our present C.I.C. looks no different in this than his 3 previous predecessors.
If they want a peace treaty, that would be with South Korea, and for that, they should seriously enter into negotiations with them. The S. Koreans are not going to give up their hard won freedom to live under Communist rule, but they would be glad to share that freedom with them. There would then be no need for nuclear weapons, which would be a great relief to both China and the U.S.
Dr. K,
Your logic supporting the thesis of how to lose a trade war is flawless. I believe that no one could be so stupid to believe that this strategy will be good for the US or any of the producers of goods and services anywhere in the World.
There are trade issues but thus far I have not heard or read any specific cites if so, there are international institutions already established to resolve these issues. If these institutions are not working, the President can bring the issue before the UN. I think it is foolish, very short-sighted and unwise to alienate other countries by thinking that we can bully our way into continuing the improvement of the standard of living for the US while driving down the standard of living of others. There is just no benefit in this approach.
In a review of our history, we have been successful when we recognized the nature of power: which is achieved by having a genuine interest in the well-being of the whole planet, e.g., Marshall Plan, Peace Corp, etc.
Clearly, we do not want to make an enemy out of any country. We are all humans and it is dysfunctional to the survival of our species to ignore the basics of using the hierarchy of needs of all humanity to share our knowledge, technology, and resources in a global market.
The President, his advisors, and the Congress need to rethink how we are approaching economic development. We are being completely stupid to impose tariffs and violate the agreements reached after WWII.
4
Trump will continue the trade war until Putin tells him to stop. That's his idea of "winning."
6
Mr. Krugman, as many of the mainstream conservatives before him in the last 2 years, once again misses the mark and thus gives an intellectual nod to where there is no intellectualism at all.
The recent trade brawl started by the WH has nothing to do with executing a 'crude mercantilism' that can be sneered at, dissected, or alas, dare I say analyzed? The imposing dance of the Dodo is only to impress the meat and blood loving base, give protection to the spineless Republican enablers in the House whose seats are in potential jeopardy in the upcoming November elections, and thus provide a 'biggly' fig leaf to the ludicrous claims that Trump will single handedly bring China to its knees on Day 1 of his presidency.
This kind of falsely premised and sham analysis does nothing else but to lend false credence to an totally amateurish and Republican-enabled administration and its disastrous policies.
2
I agree with this comment. It continues to mystify me as to why so many in the more intelligent universe continue to elevate trumps narcissistic reality show ego stoking as some form of strategic thinking. Trump is trade warring just because he can and because it makes a great cheer leading line for his rabble in the red hats who are about to pay a whole lot more for their clothes at Walmart with a whole lot less after a job loss.
1
"In fact, the structure of his [Trmp's] tariffs so far is designed to inflict maximum damage on the U.S. economy, for minimal gain."
It's almost as if a foreign power is directing the Trmp [mis]administration.
6
"...What’s notable about the Trump tariffs, however, is that they’re so self-destructive..." [op cit] And in my opinion? Destructive to America itself.
Could this actually be by design? Maybe our President really isn't on our side, but that he is in fact, "working under cover,” for one of our sworn enemies [Russia, for example].
It's very clear that Donald Trump wants to destroy the very things that matter to all of us—our strength, our legacy, and our morals. Maybe it's time for those in the know [the Special Prosecutor] to determine if this man actually is our sworn enemy, and then for Congress to decide, once and for all, what to do about it.
4
Trump has certain idee fixee's that he's had for decades; for instance, his fixation on balancing trade and belief in the utility of tariffs. He's a lousy chess player, one of those amateurs who believes his demeanor alone intimidates his opponents; that he doesn't need to learn the opening game; and doesn't need to see beyond his own next move, simply because he can't. This also causes him to discount the future moves of other players as not significant, and he assumes he's good enough to handle them after they're made, without any predictive ability on his part. Things have always magically worked out for Donald, and he figures they always will. Funny thing is, this universe allows only for so much foolishness; it will take you out sooner or later, if you continue to f--k up.
3
At the end of the day, it will come down to this. Will Trump voters forgive him anything?
3
The foolishness, machismo, bordering on... (thinking of a word -how low can I go?)of this trade war in progress that will hurt our America- Paul lays it on the line. I would rather Trump listen to Dr. Krugman than have us all enact this tragicomedy, with the loss of jobs, business, wealth, in the future. in that scenario - Trump would then look good, and win bigly. I don't think that will happen. This is a Presidency of Chaos, Dramady, and bombast.
I am trying to figure out the mythos of Trump. Is he Zeus, the ultimate narcissist? or Loki, the trickster, mischievously twisting everything into a practical joke? I think all of us will rue the day this man won the highest office in the land. Steve Bannon might have the last laugh in the end.
3
Trump is losing the trade war because the only tactics he knows are based on the idea that you can only win by making someone lose.
That's it. That's all he's got.
David Honig spelled it out in an interview at NPR.
"HONIG: Distributive bargaining is what some people will call win-lose bargaining, when the parties don't have any mutual interests at all. So what they're looking for is what we call in negotiations value taking. There's only one amount of pie. And once I get some, and the other side gets some, whoever gets the most wins."
https://www.npr.org/2018/07/04/625980971/zero-sum-tactics-that-built-tru...
Trump has a very infantile world view. He can't handle complexity or empathize at all. It's always about him and gratification. There's no strategy, no overall plan because Trump simply doesn't do that. Bully and bluster is all he's got.
7
I don't like Trump. I think he's everything most people say he is. But Trump's objective is not to wage and win a trade war. Rather, it is to drive a better bargain with other countries than his predecessors were able to get. Take China, for an example, the “world’s factory,” churning out low-quality manufactured goods and imitating products and business models from abroad, costing the U.S. economy $250 billion. (Yeah, that's with a "b".)
I live in Lebanon. Yesterday, I needed to borrow a charger for my iPhone at a coffee shop. Two nice people offered me theirs. Both of their i-Phone chargers were counterfeit. Similarly, if you know where to look, whether on the streets of Beirut or New York City, you can easily find counterfeit designer clothes, designer accessories, colognes, Hollywood movies - you name it, costing the U.S. companies a lot of money.
Now if you were a trade negotiator for the U.S., and you know all that, and you expect, as always, that the China chronic copyrights infringement will continue no matter what trade agreement you end up signing, what would you do? What would you tell your boss back in Washington? What would you tell those companies that have become accustomed to such infringment for so long?
2
Knock offs will never drive an economy. Originality does. Trying to force companies to have certain symbolic work done at home at higher cost to the consumer will never work. Innovation is the worlds most valuable commodity and the US has always maintained it's edge in that 'product' in a large part through the efforts of immigrants. Trumps attack on them and free trade will be just another fools errand in the footnotes of history.
1
A while ago I read somewhere that bemoaning a trade deficit with another country is akin to complaining that you're running a trade deficit with your dentist.
4
I wonder if this timely & excellent article by Mr Krugman can somehow be reduced to a pablum the right can grasp & given to Fox news?
1
So help me, the man lurches from bad policy to worse policy, in service of an idee fixe that is downright stupid.
Congress is the only thing worse: if they had a spine, his own party would move legislation to stop this trade-war madness.
Meanwhile, we ordinary folk need to batten down the hatches, pay off debt, and be ready for the next Recession. He'll blame in on the Democrats and foreigners, but that's how fascists work. We'll be there in November to begin to wind down this rat circus.
4
Is this just Trump’s way of staying in the news?
If so, US credibility is being permanently ruined for Trump’s, and the Republican Party’s, political gain.
Not very patriotic of them...
1
some responders here are seriously relating to the tariffs issue - AS IF - that's the real issue. its obviously not. anyone who has been seeing clearly THROUGH trump ( such as the forensic psychiatrists who have written their expert, alarming positions on him in the opinions page of the Times), and anyone with an ounce of common sense and elementary understanding of human behavior- are all too painfully aware of the FRIGHTENING actions trump has been taking, with obvious deleterious consequences.
take any of trump's moves : NON have any scientific, reasoned, well thought trough consideration for the good of the country , or the world. generated on an apparent whim, they'r all backed b y childish, simplistic, cliche explanations, and are the classic products of a raging narcissist who, while under stress ( or not), has been operating as any basic textbook on personality disorders tell us he / she will.
how much longer does the country must endure the DOCUMENTED DAMAGE trump has been inflicting across the board?! shouldn't there be voices of reason ( on both sides of the aisle!) who can say : ENOUGH - IS ENOUGH ?!
4
At some point, we rational Americans have to face what becomes more obvious every single day. Trump is a compromised Russian agent bent on destroying America.
3
Well informed articles, like this from Krugman, makes me feel incredibly satisfied as they once again confirm Trump's vast incompetence.
But then I remember that he's THE PRESIDENT OF THE UNITED STATES, the office once held by political titans like Washington, Lincoln, and FDR. But the founding fathers knew that an odious demagogue could one day occupy this office, so they gave us tools to purge this scourge.
Let's watch Trump wreck the economy; he'll desperately use all the rope that he feels he needs to accomplish this. So when the time comes--at it will--let's use it to hang him and his entire gang of sycophants.
2
Since the use of words/language is the means by which we achieve nuance -clarity and the ability for complex thinking:
Did anyone expect a man who talks like your average 8 year old is capable of adult problem solving where a disciplined mind is a necessity?
Oh yes -The tens of millions of equally limited americans who support him.
An ironic union leading to their own continuing economic irrelence!
4
Again why is anyone surprised?
His specialty, honed as a real estate shark, is a perverse form of financial alchemy -- all he touches is gold until olfactory objection indicates otherwise.
Many chuckled when Mr. T proclaimed tax cheating as the definition of "smart." Then we marveled at industrial-scale corruption, upfront fraud, serial lies, lechery, and lewdness as the lagniappe of a business "billionaire" as POTUS. Plus the bonus of time travel as Mr. T promised the nostalgia of a whitewashed early days of Dick and Jane, See Spot Run and Little Black Sambo.
Instead Mr. T gave us not just "The Creature From The Swamp" but a full Cabinet of methane-belching millionaire monsters playing Pick-Up-Sticks or Jenga with our government to facilitate his Blind Man's Bluff regime.
But wait -- the Harvard/Cambridge/MIT/Princeton-trained Chinese technocrats know not to disturb sleeping dragons. They also know dragons are fake and their fiery fury is less than the flambe flash of a Baked Alaska.
So why would China let Mr. T paint himself into a corner? They don't do In-Your-Face and winning to them means no one loses face.
America's global rivals value Mr. T as their own agent of mass distraction and disintegration. They want him as President-for-Life with Jared as his heir.
So I bet China gives Mr. T a token face-saver so he can declare himself the winner while they take all the chips.
As Mr. Krugman says, China is for real. And Mr. T ain't.
4
Let us hope that the trade war and the resulting gradual decline in the economy that will almost certainly follow along with stories of the individuals and industries that it will damage will finally bring Trump down. His die hard supporters will continue to be apologists for him but those whose livelihoods are destroyed along with many moderates will begin to see him for the grifter his is and take their vengeance at the polls on him and his Congressional sycophants.
History will wonder how we Americans allowed the man do so such damage before we finally responded.
2
Toddlers like Trump should leave trade to grown-ups.
3
A few days ago, I was listening to NPR as it interviewed an Indiana soybean farmer discuss his losses due to Drumpf's ridiculous trade war. The man claimed that he stood to lose 100k dollars immediately due to the tax. This was not an insignificant amount of money for his business. In The next breath, he voiced his full support to the Drumpf administration, and it's new trade practices. This demonstrates that we are now facing what amounts to a fanatical jihad against the forces of logic, fairness, and cooperation. My feeling is that these Drumpf jihadists will do anything to return to a time when one could publicly use racial epithets well within earshot of your target racial group. Logic, science, and mathematics mean nothing to those who believe that the current administration can return this nation to a Christian theocracy where white skin reigns supreme.
10
Hey Paul, what if the apparently misguided approach is by design to damage the USA?
What if the President of the United States of America is a Russian plant??
3
Trump And His Gang Can't Shoot Straight (haiku quartet) "Trump's tariffs will harm - U.S. supply chains; China's - will harm final goods"; "Trump and Bush blundered - into bad, self-destructive, - unwinnable Wars"; "Trump always shoots from - his hip and usually - misses his targets"; "He's your Presidink, - folks; he said 'Trade wars are good - and easy to win'"
Question: If Trump was a compromised President of Russian blackmail, how would his words, actions, and policies differ from what he has tried to implement in his first year and a half?
Answer: No Difference
3
Is Trump an agent of Putin? Or are he and his cronies just profiting from the dismantling and downfall of America as the world is distracted by his “crazyman” antics?
The coming implosion of American small and large businesses at the USA’s own hand, the collapse of America’s global leadership ... to be followed by a stock market collapse ...could generate billions and billions of dollars of profits for insiders who predict this and short the market.
Now - just WHO and his family might be so dishonest, corrupt, and devoid of empathy to engineer such a scheme? Beats me. It’s not like there are any signs or warnings #eyeroll
2
Any American manufacturer using dutiable inputs in production for finished products that get exported can get "drawback" of all the duties that were paid at import upon exportation of the finished product, 19 USC 1313. Obviously, they could not get duty drawback where the imported inputs are sold domestically or sold within finished products that are sold domestically. I think that renders Krugman's entire opinion column nonsensical.
Trump and his collaborators have no plans, just a general concept of transferring as much of the wealth of Americans as possible to the top 1%. In that they are succeeding. In everything else, they are failing.
2
Notice that there are no tariffs on Ivanka's clothing.
3
How to lose a trade war?
Let the Electoral College, not the citizenry, appoint Mr. Trump for President--pleasing the tea partiers, the fanatical religious evangelicals and fundamentalists, eventually the Republican Party, and most of all, Vladimir Putin.
Now can we understand why Putin is smiling like the Cheshire Cat, ever since he helped put Trump in office?
1
Where is Congress? Will NONE of our elected Leadership protect and serve our country’s interests anymore?
Forget Mueller and the Russian Investigation! At this point, Trump has openly done far more than any previous politician in the modern era to deserve removal from his elected position. Only a blindly loyal Trump follower would deny that Trump’s attacks on the Press, his attacks on our own government, his open graft and corruption, his yawning ignorance and willful refusal to learn anything, his deluded and deliberate dismantling of the Western World Order built over 70+ years, deserve an immediate career ending response.
Then, there is the obvious lying, the clear mental instability, and the elephant in the room: Trump’s painfully apparent functional illiteracy. It’s time to admit it America: Trump can barely read or write, which largely explains much of his other behavior.
In the face of all the open and obvious issues Trump presents daily, Congress is doing nothing... and neither is anyone else. Trump is a disaster, but the far greater issue is the complete failure of the rest of the system to step in and right the ship of state.
3
Krugman is of course correct. Trade wars have no winners. Trump is dangerously ignorant regarding international trade, and naturally refuses to listen to any economic experts. I guess there is some satisfaction in knowing the retaliatory tariffs are targeted directly at Trump's base. Schadenfreude? You bet. These voters inflicted this ignorant, malevolent grifter on all of us.
5
Trump's tarriffs are probably for propaganda purposes. This is one of the side effects with representative democracies: the elected tend to chose short-term measures that guarantee them to win the next election (which will happen in just a one day time frame) than to see the country as a whole. This is the Roman system of republic, called patronage: exchange of favors cum bread and circus.
In the late Roman Republic, being elected in a public office was so socially necessary for the aristocracy that nobles got massive debt to run their campaigns (that's how, in the end of the Republic, every one was in the hands of Marcus Licinius Crassus, the man who became rich as a private contractor).
This created a vicious cycle, where the ones that didn't win resorted to desperate measures (e.g. Sergius Catiline) and the ones who got elected extortioned their provinces to the bones to make up for what they spent (a consul had only a one-year term, so time was short; in desperate cases, the consul could create a needles war just to get an extension of the mandate, as proconsul).
The system worked out as long as there were foreign people to conquer. When expansion stopped with Marcus Ulpius Traianus, Rome would only live up 64 years more, when the gold mines of Dacia got dry. After that, Rome begun to eat itself up, until its suicide was officialized with the Diocletian Reforms, which transformed it into a proto-feudal State.
QUICK.........Trump’s ignorant base needs an "Obama / Clinton is bad" fix right away, or they might begin to examine facts. Never a good thing in Trumpland.
2
On the bright side of this darkness, Tennessee is likely to fare so badly from Doofus's tariffs, the Senate seat vacated by Corker may very well go to the Democrat, Phil Bredesen.
5
Trump doesn't have a plan to do anything because a plan - any plan - requires thought and consideration. It's also worth noting that Trump didn't actually plan on winning the presidency. In doing so, he is in many ways the dog that caught the car. And what a car it was!
So now he lurches from crisis to tantrum to new crisis to new tantrum. The only winners so far are the evangelical Christians who are getting their anti-abortion judges, but their win is only temporary. I have a feeling their afterlife won't be a fun as they imagine.
The rest of us will just suffer the consequences of Trump's mediocrity. He'll only suffer after he leaves office. I hope to see him in orange someday.
2
Trump doesn't care if his trade war hurts Americans more than other countries because he needs us broke (and uneducated and poisoned...) to be sufficiently dependent on him and him alone.
1
The, like, really smart guy who knows all the big words doesn't know his A from his E?
No!
He's, like, so good at everything!
Like a disgusting cousin with no manners, brains or hygiene who you made the mistake of allowing to stay at your home,,,,
Nothing will be right till he's gone, gone, gone.
Mercifully, what in the world were we thinking, at long last, gone.
Gone.
This country has chosen to take it's economic lead from a guy who couldn't run a profitable casino where odds are always with the house.
And how can we forget Trump vodka? Easily, the stuff was terrible.
The Trump Shuttle? If it hadn't been for the Gulf War the Shuttle would have been scuttled within 18 months and, as it was, it only last 36months.
Trump University? Even the National Review called it "a massive scam". It did last longer than the Trump Shuttle though.
4
Michael Cohen and the idiotic tariffs : At last, stuff that will really hurt Vladimir Drumpf. But the trade wars will also hurt millions ?
Yes.
Since when does The Right shrink from hurting millions ?
2
The tariff tantrum toddler torched the TPP .... now we have few allies in the Pacific rim to counter Chinese aims and influence.
Aside from Japan and Korea, the other Asian nations understand their future means close relations with China, not the USA.
Trump has ceded the Pacific to China.
Trump tariffs on European goods and “tough” talk on NATO are poisoning the Atlantic Alliance.
Nixing NAFTA ruins our status with our neighbors right on our own borders.
Trump has taken us off the playing field. worldwide. Insanity!
China now steps up to build trade partnerships with our former trading partners in Asia, Europe and the Americas who are ticked off at us. Huge advantage to China in their long game.
For every dollar spent on items labeled “Made in China,” 55 cents went for services produced in the United States. Trump tariffs make it hard for American firms to do business inside the U.S., let alone in export markets.
Trump and the GOP gave us a national-assisted-suicide-pill seemingly demanded by his mouth-foaming, xenophobic, ignorant Whites-R-Us fanboys in MAGA dunce caps.
Trump and the GOP base have no clue that trade agreements and trading patterns were a huge contributor to prosperity, stability and peace.
Vote DEM to go forward and prosper; vote GOP for a self-inflicted economic disaster.
6
Before he became the President and declaring the Trade War against Canada, I frequently visited WA or OR. I mean at least 2-3 times per month. I spent substantial amount of my hard-earned cash in the U.S. Now rarely I go down to the Bellingham or Seattle in WA or Oregon beaches. I think I am not welcomed in the U.S. nowadays. Yes, I miss the Barnes and Noble bookstore and the beautiful Ruby Beach in WA.
1
Where's your nuance? WA and OR are not Red States.
Only boycott the Red State brands!
Here they are:
https://tinyurl.com/ya94ymy4)
And drop all tariffs on Blue States.
Canada should also make all Blue Staters Canadian citizens and provide homesteads.
Here's my experience of the trade war, just yesterday. I went to my grocer and the cheese I usually get at $7 is now $9. I asked the manager about it, and he said "It's imported. The prices on lots of that stuff just went up."
It just got too expensive for me to buy. My grocer was the one who lost out, and my dinner.
3
Trump's strategy is to assume the Democrats win back a chamber of congress, then when his tariffs start tanking the economy he can blame them for it.
Heck, he blames democrats for everything wrong right now despite their total minority status. He realizes the voter doesn't buy this line of nonsense, so he wants the Democrats through majority status on the hook for his failures.
1
Is it time to accept the obvious - we elected a man who has harbored a hatred of this country stemming from the US govt discrimination charges against his father and the bile he learned from Roy Cohn? The tariffs aren't poorly designed - his fight with NATO allies and G7 partners and the tariffs all point the same direction. Decoding his actions are simple - whatever accusations he slings at others are self-descriptions; the more exorbitant they are the more true of him. He told us "Obama hates America", which clearly didn't describe the 44th President but fits the 45th to a DJT.
1
China Canada and Mexico bought almost half of U.S.
agriculture ($140 billion) exports in 2017.
The 25% Mexican retaliatory tariff on U.S.cheese
will make it impossible for dairy farmers to export their highest value added product.
Exports represent 20% of U.S. farm income.
Secretary of Agriculture Sonny Perdue says USDA
will boost exports by breaking down barriers,and opening new markets. (USDA press release 0149.17)
Sorry Sonny, Mr Trump is messing up your marketing plan.
I will miss my Tillamook Oregon,three year old cheddar....mmmmmm!
David Andrew Henry
ancient Canadian economist
PS
Russian exports of soybeans to China have tripled.
5
Soybeans are Canada's #3 crop. Why have Russian soybeans tripled and not Canadian soybeans?
How soon before Trump accuses China and Canada, with their brilliantly targeted red state tariff targets, accuses those two countries of meddling in U.S. elections?
1
It's not only trade policies, It's social, environmental, world order, Under Mr. Trump's "leadership", we are becoming a backwards country...
4
Wow! I'm still waiting for Trump, assuming his advisors can get the spelling of Krugman's name correct. to retaliate with a Twitter Storm.
When one is not just ignorant, but willfully ignorant, and is supported by a base that has been encouraged and propagandized to be ignorant about facts and events that don't fit their world image, is it any wonder that you get total absurdities like
"Trade wars are good and easy to win"?
I'll bet Kentuckians who are being burned every which way by Europe's, China's, and Canada's retaliatory tariff on bourbon will STILL vote for the 4 who have sunk them in this hole: Mitch McConnell, Rand Paul, Matt Bevin, and Donald Trump.
Bourbon is the end product of a long line of industries and has tangential effects on agricultural and animal husbandry.
In fact, the 4 Trump is waging trade wars on, China, Canada, Mexico and the EU, are ALL focusing their trade barrier policy to inflict the most damage on those areas that support Trump the strongest...like Kentucky and most of the MidWest and South. That's what happens when arrogance, ego, ignorance, and a sense of vengeance meet up with experience and dedication to their own nations' national security.
The BEST thing about Trump's trade wars is they are likely to accelerate the major crash his tax cuts and cruel social welfare cuts are creating, in time for the November elections to go Blue.
I'm not hoping for a crash: It's that Trump has made it inevitable because he, with his phony degree from Wharton (Did Fred Trump endow a library or something?) thinks he knows about trade and the economy and it's clear he knows nothing.
3
To the contrary, Mr. Krugman. Trump's trade wars are being successful for the very reason that they are harming the American economy.
He's doing exactly what Putin wants -- to see chaos sown in the western alliance, to see economic disruptions with specific harm to the U.S., to create openings politically globally so that Russia can step in, etc.
In other words, what looks to be a failure is a combination of ignorance, incompetence, and planned subversion and deliberate malfeasance.
4
The Democrats have created the truly great political platform for the next elections – fierce opposition to the trade tariffs designed to protect the American economy from the cheap overseas products dumped into the US markets, fierce opposition to the White House efforts to finally end the multidecade-long subsidizing of the NATO and the defense budgets of the western European countries by the American taxpayers as well as the fierce protection for the dozens millions of the illegal immigrants crossing into America, thus jumping in front of the millions of law obeying foreigners patiently waiting in the long lines on the legal entry in America.
If the next fall the Democrats again stunningly lose a bunch of the traditionally blue states, that will be just another proof of the Russian meddling into the US democracy…
Kenan Porobic writes, "If the next fall the Democrats again stunningly lose a bunch of the traditionally blue states, that will be just another proof of the Russian meddling into the US democracy…"
Good news for people like Kenan...the Russians are already fully involved with meddling with the US Democracy as Putin gives Trump his daily marching orders.
Anyone who votes republican is voting for Putin and the Russians.
Of course, Putin want NATO disbanded and Europe dissolved back into many small countries. And now we know that Trump and his base voters like Kenan, are helping Putin achieve his goals.
And nothing would please China more than to see the United States in a trade war with the rest of the world. Kind of opens the world markets to China and allows them to become the dominant player. Trump and his base know nothing...and prove it with every tweet and every comment.
VOTE OUT ALL REPUBLICANS
2
RumpleSS, why exactly have your fellow Republicans refused to vote for Hillary? Are the Sanders primary voters the Russian agents and sympathizers too?
The Russians did it to us!? The grown ups always take personal responsibility for their failures and shortcomings. Blaming somebody else fo the loss is for the losers!
Does Trump have a plan or strategy for anything that he does? Methinks not. He proclaims that he just goes with his gut in making a decision. Just look at the fiasco he created with his immigration policy. His trade war is no different. There is absolutely no planning or consideration of what the short and long term consequences are. If Trump wants to make decisions with his "gut", he might need to change his diet to something other than burgers and fried chicken. A little dose of intelligence would help too.
3
Trump doesn't even realize it, but the war he's actually fighting isn't with China, it's with the American corporations who produce (in China) 83% of the products we import from China.
He's sticking it to his own base. And he couldn't do it to a nastier lot.
5
Way too many numbers and charts here. Just pick a target and let fly, deflect any criticism and refuse responsibility. MAGA.
1
China and Canada, the countries spotlighted here, don't have leaders who believe they are infallible ("very stable genius") gods. They don't waste time constantly bragging about imaginary accomplishments or belittling others. They surround themselves with smart people, not silly relatives and sycophants who are willing to give stupid advice as long as it's what the big guy wishes to hear. They think carefully before they make decisions, rather than blurting out anything that comes to mind during the night. They don't constantly contradict themselves in the same sentence, misquote people, or make up "facts" to suit the occasion. And they see the reality they live in, not some dream world where foreign dignitaries bend in obedience and their adoring subjects swoon at their feet.
In other words, they act like leaders. Which they are.
Meanwhile, we're stuck with Trump and a grinning congressional majority that thinks "winning" is all about them. Thanks for nothing.
6
Unfortunately many angry white Trump voters will not read this article and if they read it will not understand how their votes have helped to bring on this debacle. The Trump slogan seems so clear and easy to understand: MAGA!
Trump knows not and knows not that he knows not.
Too bad the USA didn't take Confucius' advice to shun him
2
Paul you and rest of the lefties have been wrong about Trump since day one (he'll never be president what a joke) why would we start listening to you now?
Please excuse me. I have a couple of thank you notes to write. Who would have ever dreamed I would owe a debt of gratitude to Harry Reid and Hillary Clinton? I need to thank them as PRESIDENT TRUMP nominates another supreme court justice.
as long as they get their conservative justice the rightwing will cheerfully watch the country go down the tubes
1
Obama saves the world economy? Trump will reverse that, like he tries with every Obama accomplishment.
1
Prof Krugman, did you approve of LBJ's tariffs on "light trucks" which were supposedly imposed because of W. German tariffs on American chickens but also to get the UAW to not strike right before the 1964 election? Because ALL tariffs are bad, not just the ones from a POTUS you hate? Did you approve of Clinton's tariff reductions on China by inviting China into WTO? Did you cheer Teddy Roosevelt's belief that tariffs protecting American industry was good for America? Because if so, then you're not an economist - you're a soapbox preacher.
1
How old do you think the Professor is?
Like all taxes there are both good and bad reasons to impost tariffs. The point isn't "tariffs r bad". It's that the current round of tariffs being instituted by executive fiat are poorly implemented given their stated goals.
It shouldn't exactly be a surprise that the guy who threatens to tax specific companies like Harley Davidson into oblivion is picking winners and losers. The winners: his golf buddies. The losers: everybody else.
2
Maybe the intended beneficiary of this administration's actions is Russia. Winner!
POTUS does knot know, or makes believe he does not know the old adage "You can lead a horse to water, but you can't make it drink it. He'll start understanding once the next election results are in. It will be a sad day for the commander-in-chief, but not for "We the People".
I wish the Democrats were loudly tagging Trump with raising taxes on consumers.
I also wish a few loud voices would use Trump-type names to refer to Trump himself, such as Wah-Wah Baby. To invite citizens to mail a diaper to the White House.
3
President Trump is like someone trying to smash an egg in a corner with a round frying pan. He is that clueless.
The world is currently witness to an egotistical buffoon of the highest magnitude playing President. Let's hope we survive this insanity. I have my doubts.
1
Look at the bright side. After this debacle, everybody will welcome free trade again and it will be another 70 years or so before another misinformed bigot, with small hands, tries to repeat the tirade.
3
All China needs to do is identify where Trump Enterprises have their loans, buy out those loans and then threaten to call them in immediately if the US doesn't back down. Those tariffs would be dropped in a heartbeat.
1
Trump started the trade war only to pander to his base. It was not carefully thought through. Nor is there any real strategy behind it, except perhaps the cynical political calculation that his base will see his bravado coupled with some sort of action as fulfilling his electoral promise to make America great again. In actuality, Trump supporters are confusing sheer activity with purposeful action. Trump certainly is not making America great again by picking fights with allies and kowtowing to Putin. I am sorry to say this, but at no time has America been smaller than it is now under the Trump presidency. That is what a racism imbued, parochial, faux populism does to a great nation. Hopefully the harm is not irreparable.
1
His followers instinctively love the word "war". That's as far as their understanding of the concept of a trade war goes. And as you know, we win every single war. Okay, at least those two in the last century. Ignore all those other ones lately, which happened free of charge.
Krugman is right but doesn't quite get the whole argument. For decades (and still a bit) third-world countries that wanted to increase their industrial sector (production and jobs) had an "escalating" structure of protection (tariffs and other restrictions): finished goods (think cars) had the highest protection; intermediate goods (think transmissions) were in the middle, and basic goods and machinery (think steel and machine tools) the least. Trump's structure is different, as Krugman notes. But let's go further and ask why. It's because the third world strategy was to increase industry and industrial jobs as much as possible, regardless of the sector, while Trump's is focused on a very few sectors, especialy steel, for whatever reason (votes, emotion, who knows). By coincidence, this "strategy" is negative for industrial jobs as a whole.
His goals are stupid (or worse) and his strategies are counterproductive. What a guy! He is not only the worst President in our history, but likely one of the dumbest.
1
If you wander over to CNBC, Jim Cramer and friends on the air seem to think the POTUS is on the right track and can ¨win¨ this trade war with China. According to Cramer, the POTUS has the upper hand and China has much more to lose. Of course, CNBC tries to mask its love affair with Trump now that he is POTUS, but their relationship goes back years where the on air personalities fawned over the Donald.
If you follow the advice off Jim Cramer you are likely to end up broke. Just like we will all be after Trump is done making his deals on our behalf.
2
Is this the same Jim Cramer who told everyone the economy was booming and to buy buy buy right before everything collapsed in 2008? That guy?
Cramer made his money by market manipulation, as all hedge funds do.
Here he explains how it's done:
https://tinyurl.com/mzzc4pc
Note that he admits, on the record, to illegal market manipulation and says everyone does it. This video was only supposed to go to paid subscribers to The Street.
Here's hoping trumps 'stoopid' tariff policies (along with other gambits of his "stable genius") fail bigly.
Why?
Since trump's claims are based on 'magical thinking' when his promised gains fail and HURT Red state voters in their wallets, that might wake up a sufficient number to reality.
Some of those woke folk may decide to take their chances with DEMOCRATS instead of staying on the trump chump train to defeat.
I was feeling sorry for Trump voters who may be so adversely impacted by Trump's policies as to turn against him. I should have been rooting for those policies, in order to get those voters to realize the current disaster where it counts for them, but I'd not like to see anybody get hurt in the process. Then I realized that they are apparently a group of people who won't ever change their minds about him, as he himself proclaimed (in an extremely rare case of accuracy, about shooting someone on 5th Avenue and still getting their votes). It seems almost like a Stockholm syndrome or sado-masochistic. Others here have depressingly, accurately commented on the Republicans' play on voters' amnesia by enacting policies that will hurt only after the November election. Sometimes it looks so clearly like how the small group of fanatics can take over a country and destroy whatever good there had been in it (Nazis, Bolsheviks, et al.). Let's hope a widespread awakening of decency and values will translate into a widespread voting against them (yes, against Republicans, in agreement with George Will). Let's hope...
1
Hard to believe anyone could take the office of President and denigrate to a JOKE
Trump's import tariffs somehow don't cover clothing and shoes so Ivanka won't get hurt by her father's idiocy. He can still import his long red ties from China.
2
I continue to be utterly baffled by Trump supporters who are already being hurt by his idiotic trade policies, but who not only won't give up on Emperor Donald, they keep mouthing. zombie-like, things like: "He's a businessman, so he must know what he is doing." They are so lobotomized they are to totally ready to follow the herd of MAGA-heads right off the economic cliff.
But they should realize that Trump himself is never going off the cliff. As his supporters tank under the crushing weight of his insane and destructive policies. he is raking in the cash for himself and his cronies.
Let's face it. We have a predatory president with followers who, like the schmoos in Li'l Abner, can't wait to jump into the frying pan. How will we ever recover?
2
If Trump really did hire the best people, Paul Krugman would be in the White House instead of writing about it. Peter Navarro should already have been fired for his prediction that there would be no retaliation, and it is stunning to see him on TV acting like he has done good things. Peter, for heaven's sake, you do know that Krugman won the Nobel Prize in Economics, don't you? Would you please read his columns or, even better, talk with him, so we won't have a major recession in 2019? Or are you too proud to do that?
3
EU and Canada has the exact same issues with China as we do. If this was at all about China, then mini-Putin would not have attacked our natural allies. But the little mini-Putin who invaded our White House is out to destroy the western alliance - the trade war is just a tool. Just wait and see Trump running out of the NATO conference huffing and puffing so he can get to his Russian love fest early.
1
Yet another column in which the author labors under the pretense that Trump has any interest in winning a trade war, or any war, other than his own re-election.
I respect Dr. Krugman's writings immensely. But these columns have to stop. When he, and other thoughtful, intelligent people actually take Trump's actions seriously, they do nothing more than legitimize the unstable, mentally unfit man in the Oval Office.
But there is another reason why these columns should stop. They serve to legitimize Trump in the eyes of nearly half this nation's voters, who care no more about trade wars than he does.
Oh, Trump voters may well lose their jobs because of this disastrous policy. But understand this - they do not care. They don't care at all. They only want one thing -- that their "president" tells them that as white Christians, they are the true Americans. That the rest of us aren't equal to them.
Trump voters could literally lose their jobs and homes, and they'd still be in lockstep with him. Their family members could die of treatable diseases because they couldn't afford health care, and they would still be in lockstep with him.
Trump and his voters understand one thing - racial and religious division. This is all this has ever been about. Jobs? Those are way down on the list of Trump voters' "priorities". Trump voters are very much voting their "interests", which are to see a a white, Christian America. And we need to stop legitimizing their "interests".
5
My concern is "who benefits?" None of the tariffs are on Russians goods or those items purchased from any of Trump's Russian oligarch pals. How many of Trump's Russian oligarch pals are going to benefit from Trump's insane trade wars?
2
Much Trump speech and activity betrays a "double agent" quality to them. The "Deal Making Dynamic" can disguise what is really going on and often does.
I always have the feeling that we've elected an enemy of the United States in his person. He damages, insults and condemns largely to distract attention from his real purposes and motives, i.e., to so act as to weaken what he seeks in the end to destroy. As the Milwaukee barbers said (NYT 1120/2016) and the North Koreans confimed in their way: "We got a gangster in the chair now."
1
When you are the biggest, the richest, the smartest boy in the schoolyard, and a bully, you'll pretty much always get what you want. That's Trumpism. In the short run, the trade wars might be won. But should another 9/11 happen -Heaven forbid!- do expect dancing in the streets around the world. U.S. citizens will be shocked, but will they blame Trump?
I wonder how long his audience with Her Majesty the Queen will last. She has been under the weather recently. A weak handshake, a cup of tea, perhaps a biscuit, and a quick goodbye? She will no doubt have in mind Messrs. Truman, Eisenhower, Kennedy, Johnson, Nixon, Ford, Carter, Reagan, Bush I, Clinton, Bush II, and Obama. No state dinner for Trump, no ball. Very interesting to watch!
5
No, Trump doesn't have a plan because a plan requires longterm thinking. Donald Trump only thinks to the next rally, at most to the midterms. A tariff war is the macho move he promised his base, a simplistic finger in the eye of the world, and he is delivering, keeping them happy and adoring.
Oh, six months from now his base might start suffering job losses because of the tariff war? Never mind, thinks Trump, I'll cross that bridge when I come to it. I'll just convince my base it's the Democrats' fault. They've fallen for my cons every time, so why wouldn't they again.
1
Making America Great Again by relinquishing American leadership and collaboration with most of the rest of the world is just plain stupid. Name ONE economist who agrees with Peter Navarro? Giving up the TPP gave away any influence we may have with Asian countries. Imposing tariffs just leads other countries to locate new suppliers. Trump supporters will suffer the most, especially US agriculture. So many countries will step up and replace American exports with their own products and this will be irreversible. Trump destroys while proclaiming his greatness. We are in for a very rough time unless the composition of the legislature changes. There must be legislators who will hold the Jerk in Chief accountable.
2
Trump is irrational about trade but he has been succeeding in substituting partisanship for patriotism among citizens who support him.
In my state it seems strange to hear farmers who produce a significant portion of soy beans that may no longer be purchased by China dissemble when asked if they support Trump's tariff war with China. In the past our farmers would speak clearly about what was good for them and for the country. Now, they must be confusing partisanship with patriotism and must think it is unpatriotic to say Trump's tariff war is wrong.
4
We should take care in this discussion to break it down into two elements:
1) is our overall trade balance significant?
2) if so, how to correct an unfavorable imbalance?
As for 1) I agree with the administration that overall trade balances are important in the long term and actions taken to correct over time are appropriate. A good argument supporting this is Warren Buffet’s articles on Squanderville & Thriftville. For me, there is a big difference between short term borrowing to improve productivity or future competitiveness (build infrastructure, invest in education ...) versus borrowing to have another country manufacture a cheaper iPhone that will be obsolete in a few years. We are trading a better lifestyle today with a promise to repay in the future.
As for 2) I fully agree that the administration’s tariff “strategy” is counter productive and likely to produce more harm than good. Unless, of course, you are only interested in how it plays with Trump’s base - a very plausible explanation for applying tariffs on intermediate rather than finished goods.
3
Have you ever considered inflicting maximum damage on the U.S. economy without gain might be the goal? Perhaps we don't see a strategy because the strategy is self-destruction. If the worst allegations against Trump are true, the situation suddenly makes perfect sense.
10
If winning the trade war means getting manufacturing back, he has a massive conflict of interest. The biggest headwind to American manufacturing is the cost of housing, because you have to pay workers enough to house themselves. To salvage manufacturing, he'd have to thrown the banks and the landlords, including the Kushners, under the bus.
Fat chance.
Depending on which set of economic theories you believe, it might or might not be necessary for our economy to recover manufacturing, but consider history for a moment. In almost every sort of nation-to-nation conflict you can name, whether it is military or not, the nation that manufactures the most, wins.
We could just keep selling them our real estate. If he really wanted to target China, he could make it harder for them to buy property here, but that would soften prices, which would help Americans and give manufacturing a better environment to work in, but it would devastate his and the Kushners' bottom line.
You didn't think of that one, did you?
9
I've watched huge container ships, inbound, piled high. what I was not seeing is loaded ships going TO china.
So? so that giant ship full of stuff COSTS a bunch of $ ....right? What's a $ worth to China if there's not much they wanna buy? Uh Huh..... Real estate is like "plan B".
shut that down, and that big ship is NOT bringing us the STUFF. We would have to re-learn how to make a TV, Shoes, socks. SO much else.
1
Yes, that's the point. Or else we end up like those mythical Indians who sold Manhattan for trinkets.
The next time Krugman writes an opinion column on tariff and trade issues, better have it edited by a Customs broker or Customs lawyer. Apparently, his eminence has never heard of a foreign trade zone or duty drawback. Each if these very popular mechanisms render his entire argument about high tariff inputs making US exports more costly completely nonsensical. US manufacturers never have to pay Customs duties (tariffs) on dutiable inputs once they export those inputs in same condition or as part of a further manufactured article.
Let me try to understand this. Let's say Lenovo buys an Intel processor from the US for $100 and puts it into a laptop, which they import to the US and sell for $1100. If there were a tariff on this computer, only $1000 of it would be subject to said tariff.
Is that how it works?
I'm also curious whether the tariff is based on the retail price or the wholesale price?
You're asking a slightly different question, but yes, the $100 of US origin material can escape duty assessment under a regulation called "American Goods Returned." I was talking about dutiable foreign inputs coming into the US and then going out again as part of US. products. Those inputs would ultimately escape duty assessment.
The tariff is a percentage levied on the f.o.b. price of the goods with a deduction for ocean freight (if included in the price).
US manufacturers are not the prime targets here are they. I think American farmers and consumers will be the biggest losers. As far as those US Manufacturers that export using imported inputs in foreign trade zones, what notional amount are we talking about - not much relative to the burden being put upon the American consumer and exporting firms being targeted. So that argument doesn't hold up in relative terms.
Trump really has no clue how completely the US has been abandoned by manufacturers because other countries are on the Metric system and provide health care for workers.
9
I work for a company that manufactures things. We build in metric, and provide American measurements for documentation. For example, something might be 830 cm wide but the manual also lists it as 326.772 inches.
As for health care, my employer (a large company) could lobby the government to take that burden off their shoulders, but they don't want to... it gives them more control over me.
6
I won’t pretend to have any answers, but I am interested in how Trump policy impacts Trump profitability. What if it has a negative impact? Would that be a measurement of his competence? It might be time to estimate what will be left for us after President Trump gets everything he wants. I’m hoping that he wont every want to be the last man safely inside the biggest and best bomb shelter.
If I were to look for answers, I would analyze global economic data to determine which adjustments would provide the greatest benefits for the global population. The success of global corporations is increasingly dependent on money circulating between people.
"... how Trump policy impacts Trump profitability."
Please consider this. Trump is primarily a landlord who depends on continued property inflation to remain profitable. American labor is expensive because American real estate is expensive. You have to pay workers enough to house themselves, and you have to pay for the place where you do the manufacturing. High prices = reduced competitiveness.
2
Trump is not really interested in winning a trade war, as much as he is interested in the optics and news media frenzy that he believes make him look strong. Attention is what he wishes to achieve, and that is what he is getting. The strategy is to make his base think that only he can take on the bad guys from other countries trying to take advantage of the USA. Meanwhile, Trump sells foreign made MAGA merchandise and hires “ foreigners “ to work at Mar - A- Lago. The Art of the Deal ( ghostwritten ) is as much a fiction , as his statement that trade wars are easy to win. Only he and Peter Navarro belief that.
4
The tariffs are much easier to understand on the simple assumption that Trump is acting as Putin's agent to cause maximum damage to the American economy. All Trump's other declarations and actions seem to support the assumption. Perhaps, knowing that Trump's main motivator has always been money, he even expects a large pay-off.
Trump and Navarro think we are in a world like when the countries of the American hemisphere were all European colonies (before the industrialization process begun). You are being generous saying that they think like some countries in the 60s.
However, Canada's and China's smart strategy will not work undermining Trump politically because when the president realizes the domestic consequences of his clueless policies, he will blame Navarro, fire him and, establish subsidies. Then we will be like developing countries in the 60s.
If Trump carries his policies through to their logical conclusion, the United States will become a pariah nation that no one will trade with. In particular, the trade deficit will be zero. So much winning.
8
The US has already been exposed as the world's most pretentiously fake democracy.
Gee, Trump's policies appear to inflict maximum damage to the US economy. It's as if Putin himself were making them.
16
Apparently the advice Trump wants & gets from his 3 economic stooges (Larry, Petey & Stevie) is, "That stuff real economists have been laughing at you for saying for 30 years is right Boss. Let's do it."
4
Trump never even had any concept of "winning" a trade war, any more than he had a concept of "winning" his negotiations with North Korea or anything else. His singular goals of personal wealth and fame are based on elements that have nothing to do with genuine achievements, only the illusion of achievement, as measured by numbers of photo ops. A 72 year old man does not change how he thinks and acts when he has been doing the same things for his entire life.
5
How is Russia doing as a result of Trump's tariffs?
3
When you adopt his attitude, the rationale becomes very easy to understand. He must destroy it in order to save it. Once it has been blown to smithereens, he will step in and create a new sense of momentum just in time for November, 2020.
1
It seems like the states who will be hardest hit are the red states. A case in point is Iowa, with their huge soybean export. China is retaliating not only by imposing tariffs against us-- they have turned the creation of soybean farms into a government program. This means that Iowa's marketplace has been destroyed permanently. We can't go back to "the old way" because China will be growing their own soybeans and will no longer buy from Iowa..
8
The only smart way to deal with people like Trump is to isolate them completely and give them nothing at all.
In the past, leaders who became "successful" dictators didn't first drag their countries into the muck: the countries were generally seriously struggling with economic despair. Trump may conceive of himself as becoming a successful dictator, but he's moving in reverse, dragging a country with a successful economy down. His actions are starting to take their toll, not just on the economy of the country, but on its very soul. It seems really crazy that so many people in power are going along with him.
7
A lot of Trump supporters right long with Trump think our economy can soak up a trade war. Our economy is not static and can be easily derailed through higher prices and folks being laid off because badly thought out and executed trade policy. Trump receives poor advice because he hires only yes men and women to carry out his 1930s era agenda.
2
At this point, sad to say, I am adopting the Republican attitude from the Obama days - if it hurts the country, it's good for politics - especially if it is obvious whose fault it is.
1
Exactly. I don't want to see anybody suffer economically, but the double standard we have between R's and D's is exactly what got Trump elected. For years, the media and donors have loved weak/timid Dems and strong/loud Reps.
A brand new Congress is coming, and progressive Dems aren't your grandma's party, we're ready to fight.
1
"Trump and company don’t actually have a plan to win this trade war." ,,,,,,Just like they don't have any plans for the other domestic and foreign policy choices they have made, other than to make Donald Trump "look strong" while actually doing serious damage to every working American man and woman, as well as every ally and friend America ever had.
2
That Trump has no plan as to how he will conduct a trade war is to be expected. Trump in his egotism believes that just stating a position is enough, that the statement automatically contains the outcome. He thinks that destroying the ACA for example automatically will create a perfect health care plan. The same goes for a trade war, but creating one is much easier than finding a good outcome especially when you don't have a clue as to what that would look like. Trump is the ultimate magical thinker which is the way a child looks at the world expecting that everything corresponds to what that child thinks. And as everyone around him at least those who enable him mirror that image we are doomed to having a child president.
9
It's really very simple.
Putin wants this trade war.
Putin controls Trump.
Trump starts trade war designed (as all Putin/Trump
policies are) to harm the US and advance Russia.
Putin smiles as the world puzzles.
7
99.9% of the world economists believe in trade treaties with structured tariffs and trade volume caps -- usually misleadingly referred to as "free trade agreements". For at least 2 centuries mankind has found trade treaties to be a better and more predictable scheme for international trade.
And then there is Trump, the 0.1% of business "experts" who feels that he has a better idea. It is better because it is disruptive and puts him, the 12-year old bully, at center stage with his temper tantrums.
As in many things, your manner of speaking can be far more important than what is actually said. Is Trump right in that it be in the United States' interest to renegotiate some existing trade deals? Perhaps. But what baffles the rest of the world is the manner in which he is trying to do so. Say what you like in private, but public blustering, demonstrable falsehoods, and ad hominem insults? And this pretense that America doesn't engage in its' own questionable trade practices? We Canadians have heard a lot of talk from Trump about the way our dairy industry in managed, but he doesn't seem to want to talk about that 250% tariff on our lumber. It's got to go both ways.
So now, whatever merit there might have been to the American case has become irrelevant. Deals might have been made in private. But nobody likes to be humiliated or bullied, and no sensible person (or nation) gives in to those type of tactics. Thanks to Trump's antics, no government which has to pay the least attention to popular opinion can afford to be seen giving in to him. So none will.
This isn't going to end well ... for anybody.
9
Canada, accept my apology if you can. Most of us regret what is happening and would stop it if we could.
1
I've just finished reading Heather Cox Richardson's History of the Republican Party, which confirmed my observations that Republican governments always squander the econimc gains of a Democratic administration: like George W Bush did with the balanced budget of the Clinton years, like Trump is doing with the (much slandered) Obama recovery. Nobody in his right mind can say that the economy just started to boom in January 2017, though that is what Fox and Trump wants us to believe. When there is a Republican president inherits prosperity, there is this experimenting with (Irak, or tariffs) wars and leaving the bill to the American people.
And additionally that do it with an aura of fiscal responsibility and national defense.
27
The Republican Party hasn't even got clue number one about how to operate a public sector of a mixed economy. Abandoning it is not managing it.
8
American oligarchs want "more" and they have the money to buy whatever they want. Politicians, Presidents, Supreme Court Justices, etc.
What they don't want is "exposure," of their front organizations, superPACs, ALEC, tax avoidance, and the benefits of the recent "tax reform."
2
I believe that the Republican leadership knows exactly what they're doing; they gyp the rest of us to enrich themselves and their sponsors, and confuse the issues so that people will vote for them. It is conscious, well thought out, and effective.
Elections have consequences. Most people did not vote. That was a huge mistake! Next time make sure everybody votes.
2
Hard in Canada to find produce not grown in the USA, even in the middle of local growing season. (But I'm trying.)
3
Yeah, I remember learning in school - that - that darn Canadian Shield/Laurentian Plateau is not conducive to agriculture and most of Canada's agriculture land (and therefore population) is generally within 100 miles of the U.S. border. Hopefully, November will bring positive changes here.
The auto industry is a North American industry. Neither BMW (S.C.) nor Mercedes (AL) nor Volkswagon (TN) nor Nissan (TN) has car plants in Canada and cars sold in Canada are manufactured both here and in Mexico. Toyota only has one plant in Canada (Corolla/Rav 4) and the bulk of manufacturing is done here. Canada in retaliation has placed tariffs on these products making these cars more expensive. Nissan has over 22,000 workers in TN alone (probably why Bob Corker introduced legislation to circumvent Trump's policies). Last year Canada imported 56 BILLION dollars in autos from the United States. You think the auto industry here is Not going to be impacted as Canadians buy fewer cars because of the increased cost? I guess in the long run - these car manufactures probably think it is better to stay put for now, then try to move all their operations to Mexico - but no doubt tens of thousands of jobs will be lost in this "war". Ironically, most of these plants are in red states - so I guess Trump is counting on having ever loyal supporters even when they loose their homes and can't feed their families. Congress needs to step in now and the Democrats really need to be game ready for November.
10
Can't wait to read complaints by business of lost sales, lower profits, falling stock prices. Initial numbers won't appears for a least three months, but it will come. And hopefully the news media will start now setting up their infrastructure to report true loss of jobs. Trump will be remembered not for vision, but for lack of business basics, and lack for the welfare of our citizens.
8
There is a lot of talk these days about winning and loosing a trade war. What I have not seen is, discussion about what "winning" or "loosing" means. I read, Mr Trump is focussed on trade deficits. Does that mean that we win, the trade deficit with China goes to zero or is substantially reduced? For that to happen, either we will be importing much less from China or exporting a lot more to China. If we import less, we will likely be importing those same products from another country impacting trade balances there. If we manufacture them at home, the consumer ends up paying more. Can we export more to China? Maybe but doubt it. So how is winning and loosing a trade war measured?
4
Mr. Trump thinks he has a trade strategy. Evidently he thinks he can use tactics from his real estate business, the income tax trail for which he's never revealed. You can't go to someone for a bailout on trade policy. What you do is what you get. And a stable of lawyers won't help you either.
5
"[T]he Navarro/Trump view, aside from its fixation on trade balances, also seems to imagine that the world still looks the way it did in the 1960s . . . " Donald Trump reached adulthood in the 1960s. He is still in the 1960s. People grow in height to a certain age, stop growing, and then they steadily shrink. For a lot of us, and certainly for Trump, that is true of our intellect, also. Trump operates on nostrums and heuristics served up by the conservative propaganda machine, and it stopped growing long ago.
https://www.nytimes.com/2010/04/28/books/28conserv.html
4
Many would argue that Donald Trump, tempermentally, didn't make it past the age of two.
Is it fair to say that Democrats are the party of free trade and free trade agreements like NAFTA and the TPP?
Are Republicans have returned to being the party of tariffs and protectionism as they were before Eisenhower?
As far as I can tell, the New York Times is certainly for free trade and against tariffs.
Ben Franklin, George Washington, Alexander Hamilton and Abraham Lincoln all supported tariffs. They said tariffs supported American industry and high wages.
Free trade was the policy of the British Empire and the slave states, and is now the policy of the American Empire.
The trade system of tariffs used to be called the American System which was opposed to the British System of free trade. We adopted the British System after WWII when we took on the role of the British Empire and entangled ourselves in wars around the world at much loss of American and foreign lives.
I'm for tariffs. Lower our income taxes and raise taxes on Americans who buy imported goods. Protect American industry and American workers. When it comes to taxes and trade, I think this is the best policy.
Bring back tariffs and bring the troops home.
2
Tariffs are a thing of the past. With a global economy, protectionism is a fool's errand. Car parts, as a for instance, are sourced from all over the world.
Food is a different animal. Farmers, already operating with a low price for their products, cannot afford to give up a market they helped establish. Once a market has been given away to another supplier, that market may never come back.
Trump doesn't understand who is the villain is? American corporations move their manufacturing off shore to take advantage of cheap labor. And they took the majority of it to a communist country, China. Rather than punish them for doing so, Congress allowed them to deduct from their taxes, the cost of relocation.
So the answer, at least in Trump world, is to punish our allies, destroy our markets for commodities, and increase costs on our own consumers. A real strategy for winning.
7
The economy of the 1860s was very much different from the economy of today. In fact, the economy of the 1960s was very much different from the economy of today..
3
You should read the article. It isn't against tariffs. It against tariffs that injure the supply chain to American businesse and will make them less competitive and make them fail.
Trum has made a career out of going bankrupt, what makes anyone think he can win a trade war?
7
We wonder how long will it take to fix this economic mess your glorious leader has created? What will be the long term damage? Will America recover?
5
It’s hard to comprehend what’s going on in Trump’s huge brain, especially his new interest in destroying the intricately interconnected auto industry. He whines about steep European auto tariffs while overlooking the 25 percent tariff on light trucks that protects US auto makers. (And while we’re about, what’s going to replace Mercedes, BMWs and Audi’s in the US luxury market ?) Cars and auto parts are Canada’s largest export and huge fortunes have been invested in this integrated economy. Upsetting it all in the name of US security is an insulting joke against an old ally. Trump and his lightweight advisers who claimed there would be no pushback from other countries haven created a rare solidarity among Canadians, who are starting their own personal tariffs. For meat and vegetables I will buy Canadian first and then Mexican. And my vacations this year have been Oaxaca and London and Paris. No hardship there.
11
Trump's supporters don't care if they lose their jobs. As long as they think he's fighting the "good" battle for them -- i.e., make America white again, make America homophobic again, make America xenophobic again -- they will happily lose their jobs to gain that prize.
Trump understands that all too well.
20
Yet if you don’t read the Times, WAPO, or the WSJ, the media you do use will invariably lead coverage with Trump’s assertion that the tariffs are “working” and that allies and enemies are cowering under Trump’s global trade war. Watch your local news if you doubt my words.
It cannot be over-stated the Trump regime is winning the most important war — the war for the hearts and minds of voters who ought (and could, if they wanted to) know better. It has a propaganda machine that spews out lies, falsehoods and exaggerations 24/7, with no countervailing voice. The details of tariffs, the number of missing immigrant children, the true details of Russian collusion, mean nothing. All the counts is what is claimed and, in this, Trump is unrivaled for the sheer audacity of his stream of consciousness lying.
5
Everything that DT says he is he isn't. He'll do anything and everything for attention no matter what the consequences are for the country and the world.
He thinks of himself as running with the bulls when all he does he run things into the ground.
AND GET THIS! Supreme Court Justice Kennedy's son, who works for Deutsche Bank, gave DT a $1 billion loan. as reported by democracynow.org. a few days ago.
4
It's the economic equivalent of battle by suicide bomber.
7
Donald Trump is an aging rich man who wants to take down the maximum numbers of fellow human beings upon realising that he can neither recuperate his lost youth nor take it with him.
The comments make it clear that the depths of the electorate's ignorance is matched only by the electorate's certainty about their opinions.
Wowza!
10
Navarro has a strategy, but it's so crazy that most rational people would not even consider it. Navarro's plan is to re-shore all supply lines to the US. That's right. Navarro wants that every single product made and sold in the US is made with American inputs, from sheet metal to microprocessors. Don't take it from me, take it from the man himself, and the editorial he wrote for the NYT:
https://www.nytimes.com/2018/06/08/opinion/trump-trade-g7-russia-putin-n...
Navarro seriously thinks that slapping tariffs on intermediate and capital goods will achieve this end, which is just plain nuts. America shed its machine tool making industry under Saint Ronnie, which is why American manufacturers won't be able to find US suppliers for the parts they are currently importing. As a result, many American manufacturers will face dramatically increased costs through tariffs, and go belly up, while their foreign competitors will continue to thrive, because they are dealing in a world that still believes in free trade.
But what about the size of the US market, you may ask? Well, it’s clearly not big enough for BMW/US, which America's largest car-exporter. Yes, the Bavarians make SUVs in the US, because Americans love them so much. But still most of the cars they produce in SC are sold in Asia, and the Pacific Region. Examples like this should give Navarro pause. Global companies will quit the US if their production costs go up, and, in addition, face tariff barriers exporting.
6
The title of Dr. Krugman's article simply could have been "How to Lose" because we are losing on every front: economic, social, global, and moral. The fact that Trump is leading this country into a losing situation in every aspect of our government is discouraging, alarming, infuriating, and defeating. We must cleanse our country of this ignorant, corrupt administration and restore it to the progress made over the last 100 years. That requires intelligent votes for Democrats in November, 2018.
5
Funny, how the countries who have been targeted for increased tariffs are helping Americans indirectly by bringing them to their senses - hitting them in their solar plexus. Foes like China and friends like Canada are making Americans realize their folly in supporting Trump and his enabling lackeys, who will hurt them beyond their worst nightmare. No job, no money in their wallets, unable to buy anything because of soaring prices, losing their homes to banks - what's to like about this ominous, precarious situation! Hopefully Americans will act to prevent their own destruction. They will vote in droves in November, irrespective of their blind affliation to a Leader and his lackeys who could'nt care less about them or their basic well-being. And to our shame it would be a foreign nation out to destroy us, revealing our utter stupidity and deluded, empty grandiosity. Unfortunately, this war we started would write our own obituary.
4
Why, oh why, is Trump doing this?
Let's boil it down to the simplest terms in a multiple-choice question:
a) an ignoramus on economics (as on most subjects);
b) a demagogue, who'll do anything (even harm his own nation), if he thinks he gets him more power;
c) an egomaniac, who loves seeing "expert reaction" to his every flatulent utterance;
d) acting in the interests of others, possibly Russians, due to blackmail and/or laundered monies funneled to to his shell businesses;
e) all of the above
25
But you left out Making America Great Again!
If these tariffs are damaging the economy, could they have been designed by Mr. Putin, Mr. Trump's patron?
5
Everything else he is doing benefits Russia, why not a trade policy that will damage our economy?
Still in a quandary as to whether Trump is a blunderbuss driven by rage (something went seriously awry in that man's early childhood) or a witting or unwitting tool of the Czar. He couldn't be doing Putin's work any better if he tried.
2
What price do we pay? There is so much we are giving up for this president. The only thing we receive from this president is lies. North Korea wants to de-nuclearize ,Putin is our friend, China is our friend, Europe is our enemy, Britain is better outside the EU, so is France , China will underwrite our tax decrease. The only question is how long will traitors defend him? Yes,you know who you are. We need to stop the insanity of the electoral college. It is costing American lives. One person,one vote, every citizen registered to vote.
3
This destructive economic policy makes sense when you remember that Trump is an agent of a hostile foreign power.
19
I think that the author misinterprets what Trump means by winning the trade war. For him it means winning and keeping his base and have nothing to do with economics. This is one of the reasons the Chinese are targeting Trump’s base in their retaliation.
10
Maybe we need to slow the economy down a bit before it overheats. Trade wars will do that
Sorry America we are just not big enough to bully the rest of the world into submission. The US is 5% of the world’s population, and 20% of its GDP. The rest of the world can and will build itself around and without the US, if we decide to continue to do stupid things.
They don’t have to give us the yuuuge gift of allowing the USD$ to be the world reserve currency. But if they don’t we will lose the yuuuge advantage of borrowing for our astronomical deficits/debt in our own currency. Until now we had a very sweet deal – the world gave us valuable products and we gave them little pieces of nice looking paper (that we could print as much of as we wanted). You have to be a moron to think it's a good idea to cancel or demand outright reversal of that deal. Living in the US will get very expensive and taxes will have to go drastically up to balance our budgets and pay even just the (exploding) interest on the national debt.
6
"Is there a strategy here? It’s hard to see one." I think there is and you mentioned earlier: "In fact, the structure of his tariffs so far is designed to inflict maximum damage on the U.S. economy" Remember, he's a paid Russian agent. I wouldn't be surprised if Putin gave him a list.
3
What is going to be truly disgraceful and insulting is that when the full effects of these tariffs are felt, the Republicans are going to find a way to deflect blame from their party for bringing on the broad economic malaise that is sure to follow. If Democrats were smart (and politically, that question is still very much unresolved) they would be messaging in ways that make it clear that the impending economic trouble on the horizon is directly connected to policies like this and that disgraceful tax bill right now, in a unified voice that makes clear to everyone (and especially the Trump voters, many of whom are being hurt the most by this) a) exactly who is responsible for this mess and why and b) how their policies will help to undo it.
Excellent and well-written analysis! Thank you Mr. Krugman!
4
I love how the Trump apologists all think that this is part of his grand strategy to get China to fold. At what point in his presidency has he actually done anything noteworthy other than scribbling his signature on executive orders that make most people's lives worse? His travel ban was a joke. Half of the WH didn't even know they were announcing one. He's caught the DoD off guard frequently with his pronouncements. Heck even the NK summit was a spur of the moment decision that caught everyone off guard.
Trump has no plan, no strategy and no cares beyond that of his own selfish needs. So to actually think that he's got a plan with his tariffs is a joke.
2
Over here in Eastern Europe, everyone I talk to speaks of the U.S. as a “sad” place that has “lost all its power” and is “sliding downhill very fast.” I’d say that’s a pretty accurate description of the current situation.
6
I don't see this as a trade war. I see it as a shift of American purchasing power from a country that is strongly mercantilist (more reserves per capita than any country in the world) to countries that play more by the rules of free trade. China is not our friend. That should be apparent from the man made island military bases in the South China Sea. America should diversify its trade and investment in other countries besides China. Tariffs should encourage this to happen. If I don't want to do business with Walmart, I switch to Target. Simplistic maybe, but you get my point. When you are buying 4X what you are seeling, you can afford to say goodbye to China.
Once again a reminder of the profound wisdom and foresight of those <50% of the voters who just knew the wily businessman would be our salvation. Praise the Lord and Pass the Ammunition!
Trump's trade tariffs are already a disaster. It is causing thousands or US job losses and hiring freezes. American Nail company has laid off many workers and is going out of business because of trump's tariffs. Volvo has cancelled plans to create 4000 new jobs. Companies are not hiring because of the uncertainty caused by his tariffs. Soon millions of US jobs are going to be lost because of the tariffs. The cost of consumer products is also shooting up already because of the tariffs. A washing machine costs 15 percent more because steel prices have shot up by 50 percent. A car is costing 5800 more, because steel and car parts are costing a lot more.Shortages in the supply chain caused by the tariffs are causing fewer cars to get built, increasing new and used car prices even more. Higher steel prices also cause the price for a home to increase, since the builder passes the cost on to the buyer. Buyers are going to get hit with a huge sticker shock when they go out to purchase a big ticket item like a home, new or used car, a fridge, washer/dryer, or a microwave oven.Trump has already caused oil prices to shoot up,by imposing sanctions on iran. Trump has been a disaster.Harley Davidson announced that they will have to move all their jobs overseas because of Trump. To add insult to their injury, blackmailing them by threatening to raise their taxes. Trump is crazy and his tariffs are already a disaster for US trade, jobs and economy
5
Nobody wins a trade war. It's just a matter of some sides losing more than others.
1
You know why there is such a bond between Trump and his base? They both don't understand how anything works. Hence, Trump can only speak in broad terms as if everything were black-and-white, and it was as simple as "making a deal" one-on-one.
Unlike knowledgeable people, Trump is unencumbered by what the reality really is. That makes it easy to be a con man and promise that walls will be built and paid for by other countries, and that some new health care plan will be terrific. And that a trade war is as simple as throwing tariffs on nations you don't like.
The Trump base, equally ignorant (though perhaps even more so: they really want all of this to work) is wowed. Straight talk and simple solutions! This is what they've been waiting for, instead of confusing speeches and "complicated" policies from normal politicians.
Trump expects to skate away from his con like he always has. His base may or may not wake up to the fact that they've been had, but the bill will definitely come their way.
I hope Trump's tariffs really hurt Republicans, particularly those in Wisconsin and Kentucky. Perhaps suffering financially might finally wake up the GOP base that Trump is dangerous and delusional.
2
Gosh, one is almost tempted to think that the incurious nihilists staffing this government have no idea what they're doing.
2
It wouldn't be so bad we have a "mad" emperor in Trump, "if" the Republican Party had not collectively put their heads in the sand to be complicity to this madness!!!
I say: may the Trump base -- enjoy their mad king. So sorry for the rest of us.
1
Republicans brought to the floor and voted some 60 times measures to repeal "Obamacare".
time for Democrats to get in on the act with their own measures on trade, ones that hit Republicans the way they hoped to hit all the rest of us.
I propose a sweeping new tax on golf clubs in three parts: an exise tax on buying them, a tax on using them, and a surtax on using them at Trump courses. go after them with something they can understand.
3
I'd like to see more direct action - confront them where they live and eat. Refuse to serve them.
1
Commander-in-Chief Bone Spur has ordered us to CHARGE! right into the teeth of the tariff cannons.
Casualties are to be expected. The objective is truly, truly beautiful and worth it.
If you agree, please send a concise statement to the so-called president and his #1 Genius adviser,Navarro detailing the objective AND a strategy.
Best to illustrate with examples from 3-D chess. Maybe start by complementing him on the wall, the beautiful, beautiful wall.
There is no such thing as winning or losing a trade war. There's just poor decisions vs good decisions. Trump and his Republican cronies have made only poor decisions to hurt Americans. A trade "war" is an economically and politically horrendous thing to initiate, and often leads to real war and lost life's for no good reason. Republicans are despicable inhuman beings.
4
Well if we tank the economy we can then totally strip all those liberal policies that nobody actually likes, pile the minimum wage, truth I'm advertising, etc. Then we declare a crisis (blame it on pelosi to bypass any kind of critical analysis from the right) and cash in on isolationist policies to develop a new West Germany.
Then, when we've completely broken not only our own law states but also the willingness of any of our allowed to intervene, we can begin the genocide! Yaaaaayyyyyyy
Excellent column. Add to that the questionable practice of going after China, Europe and NAFTA all at the same time. Who, if hoping to win any type of war, starts by attacking three different opponents at once?
The level of hubris hardly has a precedent here.
5
The world is flat. Trade wars have a host of unintended consequences, especially by an administration living of, by and for clichés and off the cuff beliefs. But having said that and agreeing with Dr. Krugman most of the time, I have wondered for many years how it is that China has gotten away with its stealing of intellectual property and heavy handed deals with American business. Hmm, I suppose for the business community there must still be profit to be made anyway.
2
Many Asian cultures don't have a tradition of "intellectual property" at all. Ideas belong to the entire culture. This is why the theft of intellectual property issue arises. It's not aimed against America.
1
Does Team Trump have a strategy? Yes, it is called knee jerk reaction. Unplanned, off the cuff, off the teleprompter, throw meat at your base (I say, let them eat soy. There might be an oversupply available) and a self-inflicted quagmire. I am sure the brainiacs running the show will put a good spin on things. Too bad we can't go back to pre-airbags days.
Of course, I might be crying wolf about The Donald's trade wars but I think the horse is out of the barn. There is nothing like corralling a spooked horse on the run. RAW
1
Bending over and acquiescing to unfair trade practices has proven extraordinarily successful for the average working American.
The number of manufacturing jobs has exploded to where we can’t staff the mills and factories in our cities;
High paying jobs are everywhere; and
Employers are reinstating pensions and other benefits as they compete for factory workers.
There’s absolutely no need to try something new when what we’ve done has caused manufacturing in America to expand to unbelievable levels of production - now everything is “Made in America !”
OK, that’s a “fib” - but corporate profits are exploding, international banksters are richer than ever, and 10 year children in Malaysia have employment opportunities - so there really is no problem to fix.
Who cares where the products are made
In a system that's based on free-trade?
We'll soon feel the pinch
From the orange tariff Grinch
While he golfs in the Mar Lago shade.
3
Trump creates chaos with every move he makes. He proved his incapacity to run a business by going bankrupt so often that legitimate banks refused to lend him any more money. Thus his reliance on Russian laundered funds. Now Trump is in charge of the US economy and failing again at the expense of our nation.
Trump in his usual egomaniac fashion says trade wars are easy to win. Bravado - not brains ...a summary of Trump's personality. As Dr. Krugman has stated many times over, Trump has has no knowledge of trade or economy or history or diplomacy. His ignorant actions are designed to whip up the frenzy of his white nationalist base and to please special interests (follow the money...ultra-right wing hedge fund managers cashing in on a recession?). Also we need to know if Putin has encouraged this trade idiocy for Russia's benefit.
The key question arises again and again: How much havoc will the Republican leadership allow their frothing and barking mascot Trump to wreak on the world economy at the expense of the American worker? When will they come out from under their desks in the Capitol Building to perform their sworn duty of representing the people? The feckless Republican Congress serves only their rich donors and they need Trump's racist/Evangelist base to do so.
The majority of US electorate must overcome their passivity and act in their own self-interests by getting out the vote and throwing Trump and his cowardly Republican sycophants out of office.
4
I can't look at Trump, Navarro, Mnuchin, or Ross without cringing. As a team, they represent the worst of American capitalism, and as individuals, there isn't one among them that seems to care about the average American or the loss their "Fun with Trade Wars" represent.
In a Bloomberg interview in March, Navarro said of his undying allegiance to Trump: “This is the president’s vision. My function, really, as an economist is to try to provide the underlying analytics that confirm his intuition. And his intuition is always right in these matters,” Navarro said.
Trump's intuition is always right? He lost me that day - the man who was once a respected, though controversial, economist is now a Trump-bot.
5
And yet, there was Peter Navarro on CNN the other night claiming that multiple steel and aluminum plants had already reopened and that everything was just fine. He went out of his way to praise his great leader every time he had a chance. That's the kind of people clueless Donnie turns to for advice and his base loves it. So we will not have a fact based discussion on economics, trade wars and their consequences.
Navarro brushed off Jim Sciutto's question bout the retaliatory tariffs by China and others by stating that those tariffs would be met by more American tariffs. So there. This is how a death spiral is born.
5
What Trump wants from China?
Apparently he wants China to stop buying its soybeans from us and and instead buy them from Russia.
I wonder why.....
2
"....almost none of the Trump tariffs are on consumer goods......an amazing 95% are either on intermediate goods or on capital goods like machine that are used in domestic production....."
Two observation s: by not putting them on consumer goods, "the base" will not feel the pain just yet. Second, the more trump can trash our economy, tariffs on the means of production, the less he will owe Putin and other Russian oligarchs. Remember, his own son remarked that there was alot of Russian money coming into trump properties. Putin has the goods on trump and trump is doing his best to get rid of the debt.
1
As Mueller looks into whether or not Trump is Putin's puppet, Trump's actions show a will to do lasting damage to the United States. The gorgeous golden bulldog ever continues to show his minions how beautiful he is in battle while those of us with powers of discernment feel in our guts that something is rotten in Denmark. Why would the president of the United States want to destroy his own country's economy? Perhaps we should just press stop right now until we have a little better idea about why this is happening. Unfortunately, there is no stop button. The Republicans were not patriots after all. Sing it with me: And we all go down together...
China cancelled buying soybeans from the USA. China will now buy soybeans from trump’s BFF - Putin’s Russia.
trump is an intentional traitor...!!!
3
Apres moi, le deluge…….After me, the flood. This slogan, once attributed to Madame Pompadour, seems to be Trump's idea, too.
The fun fact is that Karl Marx said: it is THE slogan of every capitalist. Acting without any prudence and responsibility is clearly Trump's business.
3
If anyone cares to study Trumps business patterns, this is par for the course. Bluster, bully, threaten, bankruptcy. But Trump walks away with 30 pieces of silver jingling in his purse. Always.
Guess what Ruby Rubes, you've been had. Again.
When you don't know who the Mark is, its you. Sucka.
One can hear it now..."Nobody knew trade wars could be so complicated!" "Too bad!" "But hey! I got some great deals on farm land. I think I'll build some golf courses, maybe a hotel. Fertile soil should be good for my courses. Of course I'll have to get another 500 H-2B visa workers." Again.
Who's that laughing in the background?!
Sounds like....Putin.
3
If you believe failing New York Times Krugman, you probably also foolishly believe Kim jong Un isn't a honest wonderful and loved leader, that Putin is a tyrant and can't be trusted, that Trump's inauguration crowd wasn't the biggest in history or that Trump is the most conscientious man to relentlessly safeguard, and not loot, our national piggy bank.....
1
This is from the Nobelist who said the stock market would crash after the election. What a joke.
"Putting an irresponsible, ignorant man who takes his advice from all the wrong people in charge of the nation with the world’s most important economy would be very bad news." - PK
I'm guessing Mr. West believes the opposite, that it's smart to put an ignorant fool in charge of the world's most important economy.
Thus he also believes the 3% of climate change scientists that say No climate change - rather than the 97% that say climate change is real.
And Mr. West would therefore choose an ROI of 3% versus 97% on an investment with equivalent risk.
1
The Village Idiot’s strategy, if you want to call it that, is to do whatever he thinks (?) will get a cheer out of his tribe. A 5 minute (I’m being generous) thought process. Period. It will be a massive screwup that could go into his 7th bankruptcy, with the country along for the ride. This has been, it is, and it will alway be the story of his life until, God willing, he takes his last breath. The US will be tainted with his ugliness for most of the century.
Trickle down economics never reaches the middle class and lower but trickle down pain from trade wars sure does.
2
I'm happy they're hitting Trump County hard. They deserve what they get.
What do trump’s trade tariffs and his misogyny-attacking #Metoo have in common ? He is trying to get votes. He has not forgotten that he lost the popular vote in 2016 by 3 million votes
1
So perhaps it's a poor idea to let an ignorant madman direct trade policy? Thanks, Trump voters.
3
I am Canadian and even if all things were equal and everybody lost a little the USA would be the biggest loser.
Chrystia Freeland is our Foreign Minister and heads our Nafta team. In 2000 she published Sale of the Century the story of Russia's trip from communism to Capitalism and in 2014 she published Plutocrats The Rise of the Global Super Rich and the Fall of Everyone Else. Her entry into politics is relatively recent but I doubt there are many people as versed in the Global economy and especially Russian and Western economics as Minister Freeland.
Her insight predates Trump's arrival and her speech at the Aspen Ideas conference in 2013 titled Plutocrats: The Rise of the Global Super-Rich and the Fall of Everyone Else tells me the fable that this is a Putin/Trump alliance rather than a Putin /GOP alliance is another right wing boondoogle.
Here is Freeland's address in Aspen which focuses on income inequality.
https://www.youtube.com/watch?v=S9LIVa3WVPo
4
Trump has more than once said that he appreciates the effects of torture to extract a win with an enemy. Tariffs no doubt are his version of inflicting torture on the rest of the world - both have no reasonable outcome.
#EvilDJTrump is just going for the crowd cheer. The words he uses gets his supporters screaming his name, making him feel more and more like the Deity He wants to be and then, he shoots his best lines and they cheer so he goes out and makes policy from those lines. It does not matter if he is failing in the new york times, he can say you all are fake news, which gets him cheers too. If the GAO says he is failing he can tell his supporters it is wrong and he is right. He basically can lie his way out till suddenly all his supporters don't have jobs or food to eat. Then he will blame someone else. Not sure when his flock of clueless followers will see him as the devilish person he is, and stop seeing him as their deity. That might be only after a few years in jail for doing something really bad toward the country. But I think their will still be fans of his even after he has passed away and it's 50 years down the road. People have bought his godlike status hook, line, and sinker.
Well, you’ve been wrong on every prediction you made about President Trump, but maybe you’ll get lucky this time. Though I doubt it.
“Trade wars are easy to win”, trump said, after watching Fox News for five minutes...
3
I wonder if the blue states will end up bailing the red states out [again] if they destroy their marketplaces.
Mr.Trump is not waging a trade war, he is instigating trade chaos.He has used this chaos with immigrants, NATO, Mexico and Canada and on and on.The more chaos he creates, the more he can use fear of the unknown to gin up his base.Chaos instills fear and confusion.He wants to stand before his crowds and say, "only I can fix this".The pile of problems he likes to complain about are the very difficult ones he created.He inherited a good economy, good relations with our neighbors,and a working relationship with NATO.He has blown it all up and only concentrates on a better relationship with Russia.This is obvious to me- am I alone?
6
GO CHINA!!! GO CANADA!!! STICK IT TO THE TRUMP VOTERS!!!
This trade war is cause for celebration.
On one point, I have to disagree with Paul. Trump does have a plan...to "appear" to be doing something is a lot better than nothing. The Trump base wants the appearance of something more than actual effectiveness. That's why they voted for Trump. As long as Trump talks big, what actually happens doesn't matter.
As for this trade war causing pain, the Trump base either doesn't care or likes pain. The Trump base wants a mess. If China and Canada and Europe can target their tariffs against the Trump voters...I will support this trade war fully and vigorously. Stick it to them!!!
Remember...much of the Trump base supported Trump not because he was helping them, but because he would hurt everyone else. Turnabout is fair play here.
Trump is always, every time, doing something stupid. But when a particular piece of stupidity hurts his base...I say get out of the way, grab some popcorn, sit back and watch the fireworks with a big fat smile on your face.
VOTE OUT ALL REPUBLICANS
6
Stop looking at this topic through the lens of economic policy. Trump is looking to extort money from american industries to relent on tariffs. Its a typical gangster protection rackets.
"Nice business you have there, It would be a shame if something happened to it."
1
It’s hard to know what Trump’s motivations are but it’s clear he is out of his league especially in regards to the economy. Most everyone agrees that there are trade issues with China that need attention but the ecomnists say that Trump’s approach is terrible. Whether it’s his intention or not almost every economist is predicting Trump’s trade war will have a huge amount of collateral damage.
Putin may be the only person other than Trump and Kudlow who likes Trump’s trade war.
A tariff is a special name for a tax, a tax imposed upon Americans who decide to buy imported goods. The effect of this tax on Americans does have a negative impact on the ability of foreigners to sell their goods in America. But the tax is not imposed upon China or Germany. It is imposed upon Americans, directly limiting our freedom to chose what we do with out own money.
4
Yes, "Tariff" is the politically correct term for Tax. Better to call a spade a spade.
Op-Eds aside, we aren't getting the full picture from this newspaper on Trump's tariffs on China. There have been lots of illegal trade activities conducted by China (currency manipulation, dumping, technology transfer strong-arming, etc.) over the past 20 years that previous administrations have overlooked. The Wal-Marts of the world and their lobbying efforts have been against upsetting the apple cart as well, as they make lots of money just as things are.
But this paper has become so dead-set on reporting the news in such a manner as to make Trump look as unfavorable as possible, that we aren't getting the full coverage on all facets of this trade war- reporting that we are paying for.
1
The tariff war wasn't created by the Trump administration. It came from the steel industry which is friends with Trump. The moment the tariffs went into effect, US steel industry raised its prices 25%.
1
A note on Democrats, apart from trade.view of where they are headed, the issues ahead.
Ahh--the ultimate, blindly repeated Democratic cliché! Thinking inside the box--abandoning an outside vision! Democrats see themselves, study themselves and devour themselves over moods and meaningless differences, locked in a box of brooding and attribution until their grasp on reality slips into blind inaction.
Blind inaction, a political veil. A complicit acceptance of the status quo; no plan for change, only the bellows of policy expanding/shrinking and conceding power through fear of privilege lost.
How did Hillary miss Alexandria Casio-Cortez, a girl from the Bronx who moved to Yorktown Heights in Westchester at five, who won major votes in Jackson Heights, Corona, and East Elmhurst, a district with an international airport, pro ball park, and public riverlands, defeating a vaulted Democratic organization whose leader lived in exile, in line for House Speaker.
How did New York Hillary miss the Bronx girl Alexandria Casio-Cortez following in the footsteps of Carolyn B. Moloney and the Molinari father and daughter?
That's the box! That is blind inaction. Donna Brazile wrote and spoke about its frozen will. Jim Clyburn said the difference between polls and feet would be radio spots, too late for yard signs. Hilary maintained radio silence, The billion dollar campaign shared no funds. No crumbs.
If you take no corporate money and knock on doors, you values and message are clear.
3
What?? How does this pertain the discussion of trade and tariffs?
2
The best litmus test for one's vote is, simply, if they take corporate money - it's more important than party affiliation.
Since Trump's MO is and always has been "what's in it for me?" the obvious question to ask is, "How will this ill-conceived trade war benefit the Trump family and his minions?"
Shorting stocks, anyone? Seems pretty obvious to me...
6
Dr Krugman's excellent analysis of "How to Lose a Trade War" ignores the possibility that perhaps the intent of the Trump Administration's Trade War is not for the benefit of the U.S.. Rather, it is intended to weaken the US's standing in the Global economy and undermine its relationship with its Western allies. What more could Vladimir Putin ask for?
15
Another factor not considered by Trump Navarro are the sales of American based companies abroad that are also the result of the integration of parts made in more than one country. i.e cars made and sold by GM in Europe, Mexico, China. etc..That could be considered a form of export. Also there is the repatriation of profits by US companies abroad, like BofA, Goldman, Exxon, etc...The picture is far from simple.
1
By Trump's own admission, the United States is the largest and richest and most powerful in the world. It seems to me, past presidents did something right. And I might add some of them were Democrat.
7
I found it interesting that China is encouraging Chinese farmers to grow more soybeans by offering increased subsidies to these farmers. Also, Asian countries who grow soybeans are being asked to export them to China - tariff free.
Perhaps longer term damage to the US economy may occur as countries make necessary adjustments.
20
"Perhaps longer term damage to the US economy may occur as countries make necessary adjustments."
Some of this will be permanent. There will be a shift in world economics that will be a part of American history and "The Trump Legacy".
6
Think of the damage to the economy in southern US when consumers of cotton switched to other sources during the civil war. It took the south a century to recover.
5
Your point is perhaps the most important: many of the responses and adjustments by the world will be permanent. Declaring and end to the trade wars will not automatically result in China resuming the purchase soybeans from the US once they have cultivated an alternate source. There will be many examples of goods and products that develop alternate sources and countries that vow to be less dependent on the US. Conversely, we who produce products in the US for sale in the rest of the world will consider alternative foreign locations in order to avoid tariffs and restrictions on US goods as an insurance policy. What Trump & Co. fail to understand is that while the USA is the biggest *single* market it is only a fraction of the world market and the world market has a say. The only bright side in all of this is that people in Red States are beginning to notice the impact and that this is no accident.
9
Trump's views of winning and losing are conditioned by the losses he has faced in the private sector, where his lenders, investors and contractors always seemed to be forced into picking up the tab while he skates more or less unscathed.
As President, he operates in a similar fashion, only this time, it's the taxpayers and America's reputation that end up paying the price.
It's classic Trump, and it's clear that he just doesn't care. To him, everything is personal, except the consequences, which he always manages to shift onto the shoulders of others.
34
There is, of course, the vastly superior strategy, much favored by past administrations, of allowing other countries to (a) run up huge trade deficits with the USA and (b) let the USA spend huge amounts on the security and protection of those very same countries. The best "deals" are those enjoyed by countries like Germany - where the US soldiers boost the local economies surrounding the American bases, which keeps all of the money within Germany. Win-win for Germany. Some narrow-minded people Trump-supporters likely) might look for a thank-you note in the mail from Germany, but the US postal system is in such disarray that those thank-you notes keep getting lost in the mail. The USA should simply allow things to continue the way they are - until it simply runs out of money. It's a sure way to be popular (but waiting patiently for those thank-you notes to arrive).
if you are so worried about the US running out of money (not gonna happen, but whatever), perhaps you should consider advocating for higher taxes on the wealthiest people in the country. maybe you didn't notice, but some from that group actually bought themselves a political party and reoriented its agenda almost exclusively towards lowering their taxes. and, so far, it's worked.
we have troops in germany mostly to protect our own strategic interests. and, for what it's worth, the US postal system is actually very reliable and good.
36
@Maurice Gatien
South Lancaster Ontario
Yes of course America's vast military expenditure of which keeping a relatively small presence in Germany has nothing to do America's own security and international interests. When it comes to deals Iraq has one of the best. Past, current and residual expenditures there already top $2 trillion. Have you seen any thank you notes from there?
4
1. Why do we have troops in Germany? The answer is clear. So we can fight in Germany not in the US. IT IS FOR OUR BENEFIT.
2. Thru the FED the US can create as much money as it needs out of thin air. It will run out of dollars the day after the NFL runs out of points. Educate yourself Maurice. Learn about fiat money.
By now, most Americans should be able to see that the Trump administration lacks the knowledgeable managers to run our country. Bumper sticker solutions rarely work. If the Nov. election doesn't result in a change in congress we are doomed!
24
Seriously addressing tax, immigration and trade reform was long overdue and T should be commended for taking on something his predecessors did not.
He only lacks wisdom, judgement, conscience, experience and erudition in doing anything about them and the country is now being brought to many impending brinks.
There may be some, but not much, solace in noting that wrong reasons may not result in a bad outcome and that every train wreck offers opportunity.
4
Yes, but they did it in the worst ways possible. This wasn't tax reform, this was a massive giveaway to corporations who haven't been investing as hoped and promised by Republicans in higher wages and plant expansion but in increased stock repurchases. And we do need immigration reform, as 20% of our civilian population survey are now seniors, we have a near negative 16-64 year old population decline. If you want our domestic economy to grow we need more immigrants, not fewer. As for trade reform, we need American manufacturers to build items that foreign markets will purchase, that is the only way to handle the imbalance. For generations we have shifted manufacturing jobs overseas, this was a self inflicted wound created by the business community we just rewarded with a tax cut.
33
It doesn't matter what corporations do with their money. Taxing corporations is stupid. Corporations are legal documents and documents don't pay tax. We, not in the 1%, pay their tax in the form of lower wages and higher costs.
If you wanna tax da rich, tax them directly, not thru the businesses they run. Taxing their business won't affect them one iota. It will cost Americans jobs though.
Best, before criticizing a president’s strategy for winning a trade war, to accurately characterize the war that is being fought. See, because if it’s not ACTUALLY a trade war that Trump seeks to wage and win, you could find yourself analyzing how to upgrade the USS Arizona late the day of 7 Dec. 1941, when the ship was already underwater from Japanese bombs (and still is).
That could prove embarrassing.
Trump may not have focused excessively on the details of trade conflicts because his bombast on trade with allies could have been merely a conversation-opener to discuss immensely broader objectives with the goal of re-architecting the entire Western Alliance; but he lacked the leverage to engage that broader conversation except through trade as the entry-point. Even with China it well could be a maneuver to surface and resolve far broader issues. He might even be willing to abandon bilateral trade issues with allies once that broader conversation starts bearing fruit.
What might he REALLY be after? Well, on the tactical front, there is support for a FAR more rational approach to Iran sanctions and pressure to get Euros to support a move to keep nuclear weapons out of the hands of Persians AND Arabs in the core Middle East; and for enhanced support of Israel, whose levels have been waning in recent years. Strategically, there’s a more proportional contribution by our European (and other) allies to fund joint defense needs than they’ve been willing …
… to attempt, despite promises made by them – promises that will be extremely difficult if not impossible to keep given the freight of funding requirements for their immense social safety networks. There’s also global climate change: we’re now out of the Paris Accords, but he invited the world to come together to craft more rational and balanced approaches to this serious challenge, and this could be one goal he seeks. He’s already become bellicose on the shared-defense issue.
None of this is easy. ALL of it needs to be addressed, and Trump is not a can-kicker (or so we’re reliably informed by Kim Jong-un). And trade may well be only the door-opener.
Whether it’s Trump or his advisory team, it’s not in the interests of REAL analysts to discard such Trump-watching on the absurd pretext that a man who built a sizable global business empire and won a U.S. presidency simply is too dumb or clueless to think out of the box.
I suppose anything is possible, even something as far fetched as this. But then, Dr. Krugman's criticism of Trump's approach to trade is irrespective of any fantastical overarching plan that may or may not exist. And of course, Trump's success at this plan assumes that no other government will retaliate by targeting American business and consumers directly and wait for the next election to occur, which seems to be what they are doing. So once again, we are looking at the real prospect of another Republican generated economic disaster that someone else will have to clean up, all for having accomplished little or nothing on the many facets of this secret master plan.
17
The premise underlying this comment is that Trump is a strategic thinker with long term plans. Unfortunately, all the evidence suggests the Trump is an emotional and reactive individual who does not think beyond the present.
9
If China is trying to stop this trade war through some form of deterrence, then they're missing a trick. Yes, target the tariffs at Republican regions, it might make a difference. But these tariffs re not USA or Republican policy, they're Trump policy.
So target Trump. Putting the hurt on Iowa soybean farmers might have an effect in the elections. The escalation might tank the stop market, and give many Americans pause. But Trump cares only about Trump, and he runs a family business. Try this one, China: call in all your loans to the Trumps & Kushners; revoke Ivanka's trademarks; stop financing Trump Corporation development projects. You will get this guy's attention *instantly* if you do that.
27
Since the republicans don't do anything to stop this policy, it IS their policy
Thirty years ago would have been the time to try to impose some tariffs on Chinese imports, and to pressure the Chinese government into a trade agreement to protect American manufacturers from that country’s disregard for our patent laws. We could have, at that time, built in some protections for our labor force and not made it so easy for American companies to manufacture parts overseas with cheap labor. To try to change our trade dynamic with China now by imposing stiff tariffs, now when they hold such a huge influence over our manufacturing industry, is folly. The TTP was our chance to take advantage of the growth of China’s middle-class and start to reverse the flow of our manufactured goods INTO China, and make up for some of the mistakes that we made thirty years ago. Now Trump and Navarro and Wilbur Ross have scotched all of that.
Trump is no international businessman, and his ego would not allow him to fill his administration with people who have talent and experience, people who might disagree with him. So we have old men with wooden-heads trying to run an economy in ways that are too late. And China is now in a position to go around (or has already passed) the roadblocks that we are hastily trying to build, again too late.
20
Actually, that Gary Cohen guy was pretty smart. Oh, that's right, he resigned in protest of Trump's trade policies. Nevermind.
Trade like other social phenomena only reflects deeper human activities. In the world of global value chains, limiting trade is usually based on narrow and misguided logic. stagnation won’t be cured with its further limitation. Trade has been suffering since 2008. The appearance that nations control this human activity betrays the nature of trade, which precisely has been historically effected between groups and not within. This “war” is only the illusion that in a diminishing pie (in relative terms) can procure one a bigger slice by erecting barriers (to human and goods).
The diagnosis and treatment are of course wrong from the start. The question is what the already diminishing trade represents? Empirical data may only give us a partial answer, which needs concepts that are congruent with the phenomenon.
1
Well, let's see, Krugman, Nobel Laureate in Economics and Professor Emeritus has been wrong about almost everything Trump ever since our great president appeared on the scene. He was wrong about Trump's being elected and wrong about what would happen to the economy after the 2016 election. What makes you think he will be right about this? Trump is a dealmaker, businessman and politician and will do what it takes to ensure that our Targets, Walgreen's and WalMarts are stocked with goods OTHER than those 'made in China.' Is it normal that all over the western world we have to buy goods made in China? Why is this norm and no one says anything? Except for Trump, of course.
4
"The Economy" is not very nimble. After November 2016, it kept up the growth that had been going on throughout the Obama administration. With the promise of a massive tax cut targeted at equities (stock) owners - predominantly the top quintile of earners - markets rose through 2017 but have fallen substantially in 2018.
Damage due to the effects of a trade war will take a while to show up across the board, but ask again in a few months when prices for American farm exports have fallen drastically and American workers and consumers dependent on the international supply chain are facing higher prices and job shifts overseas.
As for stocking big-box stores with goods "other than those made in China," I'm sure that will happen. There won't be many of them, and they'll cost more, but hey, uh ... MAGA!
5
Hi, Labete, since I am from Silicon Valley but long a resident of Europe: the two wealthiest countries of any size in terms of average & total income are the US & UK just because they derive so much of their income from SERVICES such as tech, sports, entertainment, banking & all those professions which require an advanced degree. My advice to the young: play soccer, a guitar or be a good actor & go into politics. Or be a good student.
Of course, tariffs should be negotiated if they seem unfair, but that's why we have attorneys & economists, is it not?
3
Is it normal? Who knows? The law of value or the tendency to cheapen goods and services is autonomous of politicians or the human will in general. Britain was the China of the 18 and 19 th centuries. US was the China of the late 19th and early 20th centuries. An so on, what make you think it’s is up to a politician to change that, unless that is a figment of his/her imagination
6
I'm just glad I retired before Trump got elected so I don't have to live through the damage this is doing to my former manufacturing workplace and co-workers. The supply chain is in chaos, increased material costs are impossible to pass on to customers with existing contracts. Longstanding relationships with suppliers and customers on the other side of both oceans are in peril. Everyone expects workforce reductions will happen soon. Long term, maybe something positive will come from all of this turmoil. In the short term, it will cost us dearly.
24
Several startups I advise make hardware that are adversely affected by the insane tariffs.
They sell technologies that enhance the value of various types of networking technologies. The integrated circuits (a generic term for ease of explanation) are designed around the world. The semiconductor wafer fabs are in the US and Taiwan. The wafers are diced and the resulting die are assembled in China and other Asian countries. The chips are then shipped to the US where they're soldered to components. The components take a trip back to Asia (often China) where they're attached to modules. The components are shipped to other areas of China where they're placed on circuit boards. The circuit boards are then attached to the plastic housings with robots in the US or manually in China.
Every step in the process now has delays and uncertainty. Oh, and every step seems to have unexpected added costs due to something that now has a US tariff.
The US companies have customers who want the products they ordered to be delivered on a specific day for the price that was negotiated. That is not possible.
Some may ask, "Why won't American companies pop up to build production capacity in the US?" The obvious reason is that won't work because of the proven unreliability of Trump et al. What assurance would you have that Trump won't change the entire tariff model in a tweet tonight? Not only does the opportunity change, but you're left with an expensive factory with competitive disadvantage.
49
The only clear options out of a debacle that Trump is really familiar with are 1) give it to a lawyer to figure out and/or 2) declare bankruptcy.
39
Ken missed one: Cheat. Don't pay.
30
It occurs to me that Trump has handed his erstwhile allies and enemies both the ability to prolong the tariffs, thereby ensuring his own un-reelectability.
He will be forced to end his trade war prematurely, and not on his terms, or he will run for re-election in a faltering economic environment, with numerous former supporters chastened by the economic realities.
11
That Trump supporters can be chastened by reality is a fantasy of the Left.
Ironic that the bulk of the externalities of Trump's trade war will hit his base the hardest. If Krugman's estimates of the cost of a full-blooded trade war is up to two percent of the GDP (others have lower estimates), that's approximately $400 billion per year cost.
Economists typical solution to externalities is increasing the cost to the decision-makers so that they take the harm into account. But that doesn't seem to apply to government, whether it is Trump's trade war or abuse of immigrant children. (In the case of global heating, those who put greenhouse gases in the air are not required to pay the cost of removing them or to pay restitution to their victims.)
However, I believe that the Chinese government's retaliation aimed at Trump's base will be largely ineffective in reducing support for Trump. Political support, including voting, involves a different types of decision-making than the instrumental rationality that people often use in ordinary life. Voting is largely insensitive to instrumental rationality.
19
According to one Citibank analyst, “80 percent of ‘red’ states produce goods subject to retaliatory tariffs totaling 10 percent or more of GDP, compared to 10 percent of ‘blue’ states.” This, at least, gives those of us feeling increasingly powerless some sense that the possibility of just desserts for civic malpractice abetted by a foreign power does exist, even if that justice is ironically delivered by another foreign power.
20
Trump cares about Trump. He has a family business, he's not invested in the broader economy. If China wants to change his behavior, why not target Trump's businesses? Revoke Ivanka's trademarks. Shut off the flow of financing the the Kushners. Cancel the loan for that hotel/golf/whatev development in Indonesia.
This is such an obvious move that the Chinese government must have thought of it. Why not do it? ZTE, I suppose. Which would mean that this whole "trade war" is mostly for show, on both sides. Meanwhile the businesses run by the few people at the top of both governments quietly continue to make lots of money. Globalized kleptocracy, now with the USA among the leaders of the trend.
Tariffs are taxes. Given the bragging about its income tax cuts, it is vital to keep saying that these trade actions are done by increasing tariff taxation on US consumers and businesses. Insofar as such 'taxiffs' are collected, they have the exact opposite effect on the economy than the income tax cuts except that ... the tax cuts heavily favor wealthy individuals and corporations, while Trumpvarro's taxiffs will be collected from rich, middle class, and poor alike. Likewise the retaliatory taxiffs which hurt US consumers and companies with no help to the US government's revenue stream.
Bad government policies have caused recession, inflation, job loss, corporate failures, and deficits in the past. This unprovoked government action against friend and enemy alike will cause damage, but likely increase trade among those not involved. China, for example, can trade with the EU and Canada, and any other country we slap with taxiffs without any such penalties for trade.
14
China has been buying about a third of U.S.soybean production, which it is likely to begin buying from Russia. Thus in one stroke Trump hurts U.S. farmers and gives Russia hard currency, to the detriment of sanctions enacted against Russia by the United States. The temptation to suspect that this is a deliberate underhanded favor to Putin fades with the realization that Trump seems incapable of deliberation.
22
China buys $12 billion/year in U.S. soybeans, one of the main crops of my county. Look at soybean futures over the last few months, when Trump's threatened trade war with China became imminent, and the impact is already obvious. Shame, too, since the crop looks really good this year -- which would otherwise drive down the market anyway, except for the demand created by exports. When Trump finally gets around to ending NAFTA, the bust will be explosive.
But he could follow Putin’s instructions.
If winning means making aggressive claims and taking aggressive actions without regard to consequences, than we are winning big.
This is like hitting the accelerator before you've got good directions. We're competing with other countries that are very focused on what they want to accomplish.
30
Not only does the driver not know where he's going, but also doesn't know how to use the brakes.
When you don't know where you are going, any road will take you there it is said. Are we there yet?
Trump (and his advisors) are also fundamentally confused in thinking that raising tariffs will lead to a lower overall trade deficit for the US. They won't.
As discussed in this recent post (https://aneconomicsense.org/2018/07/01/the-simple-economics-of-what-dete..., the trade deficit is determined at the macro level, as it is equal to the difference between domestic savings and domestic investment.
Higher tariffs will not have a direct effect on this balance. And any indirect effects (although probably minor in scale) might even act in the "wrong" direction (wrong when the intent is to see a reduction in the deficit). The indirect effects could, for example, lead to a fall in domestic savings, which would increase the deficit. And if they do indeed lead to higher domestic investment (a stated goal), then the trade deficit will increase.
One will certainly not win a trade war when the basic economics is not understood.
11
The free trade could be effectively destroyed in two simple ways - either by balancing the federal budgets or by printing the dollars to cover up the budget deficits
1
There is another way. If we, acting canny business people looked at the products and services that the government, a business, is responsible for as products and look at taxes as the prices of those products and services, any successful business person would say that the price of those, that is the taxes for government products, should be increased. Look at any product today and compare its price to its historical prices. I know that there are forces for price increases but government isn't immune to those rforces, yet would government success, like a business's success result by decreasing its prices?
Decreased taxes like decreased prices (from a business perspective) is the sure road to bankruptcy. Any business leader or president would be failing in their jobs by doing so!
1
The free trade could be effectively neutralized and stopped in two simple ways - either by balancing the federal budgets or by printing the dollars to cover any federal budget deficits.,.
Reading this raises the question, if an adversary knows wars are won before they are fought, while we are still arguing among ourselves about the latest battle, losing battle after battle, what chance do we have? One can learn more indispensable geopolitics (i. e., the perennial playbook of state competition) from streaming Davos seminars on YouTube than from all American mass media combined.
Winning is really no more than confining ones rivals' citizens' discourse to irrelevant distinctions while investing in one's own citizens' education. For example, we Americans whine over patent infringement. China raises a generation that now exceeds the US in new patent filings. China purchased our private graduate schools as a gift to its own youth. We let our own fend for themselves, or accept debt slavery, if they survive 12 years of 47th in the world science education to qualify. And your best idea was a centrist plutocrat of a different sex?
6
Oh, come now. Chinese rote education isn't developing a super generation. Americans should object to patent infringement. That's a lot more important that trade balances. But perhaps you haven't invented anything.
And face it, plenty of American youths go to fine high schools. That's why property values are skewed so. Americans seem to think we can compete with 1/2 the population, and leave the other 1/2 out.
Has Mr Krugman recognized the strange relation between the free trade and the national debt? A rule of thumb would be that the trade deficits closely mimic the federal budget shortages over the last few decades.It means that we are paying for the free trade by piling up the national debt. It also means that balancing the federal budgets would put the nails into the free trade coffin...
2
Correlation is not causation.
Trump won't impose tariffs on consumer goods; that's where his family's money is invested.
8
After reviewing recent past history of candidate Trump and President Trump, he has a maverick trade strategy. It seems to be based on chaos theory, a mathematical non-linear approach to dealing with unpredictable and uncontrolable (usually) multi-variable events.
President Trump's trade war is based in chaos theory. He believes that since global trade as a percentage of the US economy is only ~12%; China (20%), Canada (31%), Mexico (38%), Germany (47.2%) and Korea (43%) have more GDP at risk. President Trump is playing the 'heads I win, tails you lose' coin against trade partners. And they know it.
The political setup was accomplished during the MAGA policy indoctrination. President Trump is a master of deception and mixing countervailing promises that offer "benefits" to his base supporters and threats to punish those 'taking advantage of the U.S.'. Facts are materially different than President Trump asserts. Anyone who has or can stop the President's parade of falsehood and detraction is attacked on Twitter. Smart.
In the long-run, the US can withstand a Trade War better than other countries that have more at risk - like Canda and Mexico within NAFTA. And the cost of MAGA and bullying allies will fade in time, left to the historians and writers of crafty titled non-fiction based on insider interviews and WH leaks.
The chaos policy that President Trump put in play allows him to scapegoat the legit media, coastal liberals, undocumented refugees; and Clinton's Deep State
3
Sorry, Bob, "The chaos policy that President Trump put in play" has no -- I mean zero -- relationship to "chaos theory, a mathematical non-linear approach". If you believe it, you don't understand mathematical chaos theory or you're fooling yourself.
Addendum: Mathematical chaos theory is not truly about what ordinary people mean by chaos, and it is only one mathematical idea for dealing with some kinds of unpredictability. (Don't mistake me; it can be useful in its domain.) Another mathematical theory for dealing with unpredictability is "bifurcation theory", a.k.a. "catastrophe theory" (also a partially misleading name).
7
I guess you made it official when you used the term "deep state."
I personally would never impose the import tarrifs or fought the free trade. I would just print enough dollars to immediately pay off the imbalanced trade so China could instantly understand that the free trade isn’t in their best interest...
Didn't Adam Smith, in 1776, show that mercantilism was not a winning strategy,?
8
Are there no Republican insiders who can break down Krug’s analysis into Trum-palatable components? And show him how his misplaced targets will hurt us all, including major segments of his own MAGA faithful? Then, please find some experts to help plan a viable strategy for dealing with China’s theft of intellectual property. That’s where we’re really getting hurt—and nothing in the looming trade war even addresses that issue.
10
No doubt China played dirty for the last decades to get where they are. They could because our greedy corporations allowed it. Fool me a hundred times, blame on me. But the horse has long bolted, and they can move past us cleanly.
So Trump's strategy must be to flounder around for awhile enmeshed in a gormless trade war, cost a lot of jobs, and then declare victory.
Trump's supporters will just take out another payday loan, or maybe title loan on the pickup that they bought on time.
18
And when those folks with their lifted 60K pickups and jetskis go bankrupt in the next recession, who will they blame?
Not Trump.
"And it’s also driven by a clear political strategy of hurting Trump voters."
A consummation devoutly to be wished.
26
It would be more effective if directed not at Trump's voters, but at Trump's investments. Easy peasy.
1
Mr Krugman's analysis wholly omits that China has massive tariff and non-tariff barriers to trade that have been in place for decades.
In previous essays he's praised the Chinese economic model. Yet if their model is partially built on tariffs, why does he take a wholly anti-tariff position here?
He is completely inconsistent when he writes. It's hardly befitting of a professor.
Also, didn't Canada immediately put tariffs on transshipment of Chinese steal after Trump's tariffs due to dumping? Hardly an innocent country in this whole episode.
2
You seem to agree that tariffs are not for trade. You also imply that other countries should not retaliate for Trump's tariffs. Yet, in your view, it is Trump who is retaliating for Chinese tariffs.
You can't have it both ways.
Krugman is obviously anti-tariff. He does not condone Chinese tariffs but recognises that Trump's approach to retaliatory tariffs is a losing strategy.
Trump is retaliating for the trade deficit on the assumption that it is bad. The trade deficit is the result of various trade agreements and trade rules that the US has signed up to. To try to punish or bully other nations for that is unfair.
Try to change the rules and agreements by all means, but not through bullying and poor strategy.
22
No, that is not what I wrote. You are making assumptions based on what you think I said. Please read it again.
I directly questioned Mr. Krugman's sincerity because in the past he has written NYT op-eds where he praised China's economic model. China's economic model is built on tariffs and non-tariff barriers. Therefore, any praise of China requires a praise and acceptance of tariff and non-tariff barriers to trade.
How do you propose things are changed then? By politely asking the EU to decrease their protectionism? Asking the Chinese to stop using their military and state-owned firms for espionage? Asking the Chinese to allow foreign ownership? Asking the Chinese to stop subsidizing firms with global footprints? How do you propose getting things done?
Trump brings carrots and a stick. You propose he brings only carrots.
My understanding is that economists cannot predict recessions. But it would be interesting to get Professor Krugman's take on whether an unforced error such as Donald Trump's trade war could bring on a recession that otherwise would have happened much later.
8
Don't think you need Krugman to show that trade wars, the longer they last and the nastier they get, stimulate downturns. Views of the Smoot Hawley tariff have been revised to say that these particularly stupid tariffs were not the Cause of the Great Depression but did make the Depression much worse. That's cold comfort for those who think. like Navarro, that Trump can do no wrong. Pray that the effects of the trade war, particularly on farmers and manufacturing workers, cause the scales to fall from the eyes of a goodly number of his supporters.
Tariffs are a tax on the American consumer.
20
Just around the corner coming to a movie near you soybean subsidies, etc. What have we learned? Stable geniuses and their flock should stick the real estate development, wine and steaks, not airlines, the environment, or tax equity issues and certainly not trade. Not international relations. Or, health care.
30
Soybeans are already subsidized, have been like any other agricultural product in the US.
4
Trump will provide subsidies, money from guys and gals like you and me, to mitigate the losses to American industry and farmers. Trump will try to keep anyone from feeling the real pain. But we pay anyway, just using a credit card rather than a check.
I live in China, and I've lived abroad most of my life. No one here remotely wants a trade war, but China, and every other country, will respond in kind to whatever Trump does, and almost certainly more effectively.
These days no one can win a trade war, because what does winning it mean? That China lowers all tariffs on American goods to zero because an American president is loudly bullying and threatening them? That would never happen, because that's not how modern countries work.
The Chinese, the Canadians, the Europeans all have national pride and dignity. Dignity is something Americans often understate when thinking about or dealing with other countries. When Trump says American first he also means everybody else behind. The world knows that. The world will respond in kind.
93
China puts high tariffs on USA goods. For example, a Jeep may cost an extra $30,000 USD in China due to tariffs, making the total cost over $70,000 USD.
In that context, it's America retaliating to unfair foreign practices.
The Americans need national pride again. Chinese mercantilism is clear and unwarranted in a win-win relationship.
1
Don't you realize that the US places a 25% tariff on light trucks, vans and SUVs. Do you know the heavy restrictions the US has on imported sugar? Have you ever considered that historically the US has never been short of national pride. National pride may make for a feeling of emotional well being but it also helps support foreign wars and xenophobia. Moreover, Trump threw away a potentially effective platform of leverage against China when he pulled out of the Trans Pacific Partnership.
2
Indeed.
And I now see some Trump supporters are busting for a shooting war with China. They say that the Chinese will be no match for the military might of the US and its allies.
Which allies would those ones be..these days?
Krugman mentions that Trump has not levied tariffs on consumer goods. How could he when so many of both Ivanka's and his own consumer goods are manufactured there? He certainly wouldn't want to have tariffs deterring sales on those products.
63
The next thing of course will be protectionist subsidies for the hardest hit sectors, which will set up a lobbying war for the red state agricultural zones. The US has long argued against this and complained of it in Europe (while sugar and tobacco, of all things, are subsidized here).
19
All farm goods in the US are already subsidized, it would be an increase of those subsidies that would be demanded.
Most countries value the farmers and subsidize them to keep them in business. The result is that farmers in the US overproduce and the price drops requiring more subsidies. Which is why the US needs overseas markets for our farm goods, there is not enough demand in the US.
So by hitting the farmers in the US with tariffs, they hit Trump's base and a vulnerable industry.
The US complains about other countries while the US does the same thing for our farmers and some other industries. We dump our farm goods onto others. Which is why Europe and Canada protect their farmers.
16
exactly.
The idea of winning or losing a trade war is as amorphous as the idea that globalization is a win or loss. The US economy is too large to refer to in the aggregate and have meaning. We need to list who will benefit and who will lose when referring to policy decisions.
16
Whether it's tariffs, taking children from their parents at the border, or a nuclear summit with Kim, Trump works from kneejerk reactions, won't listen to experienced advisors, and never has a backup plan. Trump is running the country all right...right into the ground.
85
Even if tariffs are imposed on final goods, there is going to be impact on American jobs. So many service jobs depend on consumer goods - trucking, warehousing, retail, etc. If increased prices drives down demand for various finished goods, Americans are going to get laid off. Trump talks about temporary pain. How well can your average American delivery driver or Target cashier absorb the pain of a 6 month layoff?
25
Isn't it obvious? Losing American manufacturing jobs and the resultant loss of jobs from support industries (parts suppliers, repair services, restaurants, gas stations, etc.) is part of his strategy for his future. He learned from the past and is working to recreate the conditions that led to the downfall of the Weimar Republic.
39
That would imply that Pres. Trump is a student of history and has a long-term plan. Both are dubious notions. I suspect he has not cracked open a history book since college and that this trade war is based on something he saw on TV.
9
Yes, Billy T...probably he is also recreating conditions that led to his 5 or, is it 6 bankruptcies? Obviously this is what "a stable genius" does.
1
Authoritarianism always rises in financial hard times. You may be onto something.
He can blame someone else, and his gullible supporters will believe that only he can fix it.
1
Good article, but it doesn't address other effects. If I was Canadian, I'd avoid spending money on ANYTHING from the US until Trump is gone (even if tariffs go away) - I've read comments from those who will avoid American goods, services, and vacation spots.
And there will be long-term damage as other countries make multi-year trade agreements among themselves, and like China, increase production in their own countries for things like pork and soybeans. China's touched on an official call for a boycott, though some people would rather pay extra for good quality American food, though that could change with this administration's anti-EPA and anti-FDA policies.
The safest economics policy for other countries is to make plans as if the US doesn't exist, knowing that things will change when Trump is gone.
61
This isn't just conjecture. I went shopping today. As a Canadian, I can tell you that there were a lot fewer products in the grocery store labelled "Produced in the United States" and a lot more from Mexico, Chile or South Africa than there were a few weeks ago. We've made our feelings known to the managers of these stores, and they seem to have gotten the message.
12
chris87654,
I get the feeling that most countries are, right now, making plan as if the US didn't exist, as you suggest.
However, I also get the feeling that those plans are for the short, medium and long runs.
They are unlikely to go back to wanting to deal with the US because trust, once betrayed, can't be rebuilt -- it will always be weaker than it was before the betrayal.
Electing Trump was, for the world, an instructive betrayal -- and I think the lesson has been learned well.
4
Anecdotally, many Canadians are avoiding US products and cancelling US vacations. I know, it won't make a difference, we're way too small and boycotts like this are hard to sustain, but we feel better spending money elsewhere. For the first time in my life I'd rather buy something from China than the US.
1
It seems that Democrats care more about, and are looking out for the interests of Trump voters than Trump does. But Trump voters resent being "looked down on" more than they care about their own well being from trade war effects to health care to personal safety.
55
I make a point of reading Paul Krugman's Opinions because they're always insightful and pretty well unassailable. But when it comes to Trump's advisors, Krugman represents Water for Horses (donkey's in this case) who refuse to drink. And how true is it that the tariff buck doesn't stop at Trump's desk - Nope. It whacks the wallets of American consumers through overpriced merchandise and reduces global markets for US exporters before it comes to rest. Is it any wonder this man has multiple bankruptcies and a myriad of business failures on his curriculum vitae.
79
Agree. And he must be removed before he bankrupts the US! Oh wait, the tax package went through and we are on the verge. VOTE Nov. 6.
"...on his curriculum vitae."
Just a thought: use words that potus can understand--not that that's going to change anything...
1
I expect a considerable portion of the tariffs’ effect will be worked out in the currency markets.
If China, Europe or Canada "works out" the tariff's effect through currency that would further worsen the situation for American farmers and industry. If America works out the situation through currency, that is currency manipulation, which Trump (and many others) campaigned against when China did thee same.
4
Explain please.
It's wrong to single out Navarro for his bragging that there would be no retaliation when we started a trade war. Several of the people Trump hired (at taxpayer expense) to say and write things like that have, predictably, said and written things like that. Some have been specific, for example that it would be impossible for China to impose tariffs on our agricultural goods. Allegedly it's impossible for them to buy elsewhere the soybeans and other foodstuffs they need at prices they can afford.
5
Marvant I have to disagree. China can buy soybeans from Argentina, Brasil, Canada. As a matter of fact they have increased by 35 per cent their purchase of soybeans from South America. Why would you think that only the U.S. can grow soybeans? South America has lot of land and so does Canada.
51
China has also increased domestic production of soybeans. Unlike donnie’s boys, other countries have a plan.
China is subsidizing their farmers to produce soybeans now. They'll be able to weather the storm. Americans will be spending their tax cuts and more on increased cost of goods.. washing machines are up 17% and anything made in the US with steel and aluminum will go up after inventories of raw materials are used up - US steel is up 40% and climbing. A drop in export sales will likely result in higher prices as US producers try to make up for lost foreign revenue. The only good thing about this is it will hit disproportionately poorer red state consumers harder.
29
A simple strategy for this White House would be to put tariffs on China, negotiate with Europe, Japan and Mexico, and ignore the Canadians.
Another strategy would be to look at the balance between imports and exports, and then put tariffs only on those countries for which the balance of imports to exports is least favorable to the US.
The world has a complex web of trade flows, so an exact balance of trade with every country isn't likely to happen. However in practice, it is unusual for the ratio of US imports to US exports to be higher than 2. Here is a list of our worst trading partners:
1/China including Hong Kong, Ratio 2.25
2/Indonesia (goods only), Ratio 2.9
3/Malaysia (goods only), Ratio 2.9
4/Russia (goods only), Ratio 2.4
5/Thailand (goods only), Ratio 2.8
6/Vietnam (goods only), Ratio 5.7
(For simplicity I'm ignoring countries where our trade deficit is less than $10 billion, or where the ratio of imports to exports is less than 2.)
For comparison, here is a list of other major trading partners.
1/EU, Ratio 1.19
2/Canada, Ratio 0.99
3/Mexico, Ratio 1.25
4/Japan, Ratio 1.49
5/South Korea, Ratio 1.13
6/India, Ratio 1.55
China really stands out for their unwillingness to buy American goods and service. There is very little reason to be fighting a trade war with the EU or Mexico.
18
Are you arguing that there is a good reason to start a trade war with Canada, which is the US's second biggest trading partner, a trade relationship where the US has a surplus? Don't understand your argument.
1
I agree with the word "simple" when applied to this White House. "Strategy"? Not so much.
Are you suggesting that fighting a trade war with Canada, the US's second largest trading partner, is worth it? Don't understand your logic.
Trump after a lifetime in business is aware that the buyer has the power over the seller for discretionary purchases. I don't think there is anything Walmart sells from China that Americans can't live without.
5
Walmart's 1.4 million US employees might be less enthusiastic about your suggestion that US consumers forego purchases of Chinese products. Also, with $3.18 billion in Walmart sales in the US, there might be a few items that Americans feel they need.
36
Most of it is low tech stuff that can be easily made here or elsewhere.
Not at the price the U.S. consumer is used to, or is willing to pay.
3
Had Trump chosen a trade strategy that involved a plan of dividing America’s major trading partners and forcing each one separately into a bilateral agreement with the US, his tactic may have succeeded. However, he decided to take on all of the US trading partners at the same time.
That, in and of itself will soon prove to have been a disastrous decision. If there’s going to be anyone coming out stronger as a result of this trade war, it’s most likely to be China.
51
Jack absolutely! He is using a blunt instrument approach when a scalpel would be better. Why go after your close allies using the same approach with those who are not close allies?
Beyond the economics, this trade war is inflicting immeasurable damage on US international leadership. International leadership is based on common values. By starting trade wars with our best friends like Mexico, Canada, and EU countries that hold similar democratic values, we lessen the bonds that hold us together. Who will come to our aid when we need international support geopolitically? Trust was built over decades and we are trashing it all in a year.
83
Nice comment, but I'm afraid you are completely wrong. Please do not muddy the waters with words like 'democratic values' and 'international support'.
This is simply a trade war, which we all know is 'easy to win'.
You are lucky to have a president who sees things so clearly. After all, according to him, his predecessors were all duped into making bad, bad, bad trade deals. Trump is having a 'vision', and is going to right all their wrongs.
1
Peter: This is all on trump and the gop. THEY are trashing it all in a year, but you know that they will blame it on Obama, Hillary, the Democrats, and Meryl Streep.
1
I bought Canadian fresh tomatoes today and did so with a smile.
93
It's summer. Canadian winters require food imports. Let's see how happy you are in February without cheap fresh foods.
When I lived in Canada all my winter food was ported, mostly from the USA.
A good point.
However, in winter we import food from a lot of countries - berries from Chile, etc. Having to buy from other countries than the US would definitely raise the cost of what we eat. Still, there are alternatives, and it would be interesting to see how they might develop.
Judging by recent popular reaction up here, I'd bet that a lot of Canadians would be willing to pay a bit more for food. How much more is an interesting question.
Yes, Ontario produced very tasty grape tomatoes under plastic in a specific geographical niche just west of Niagara Falls. Very clever use of geography and a few geothermal wells.
4
Too bad we won't start seeing any real negative effects from these tariffs until late November, and by then it will be too late to do anything about it. This is why Trump's tax cuts were such a brilliant political strategy. The short-term spending frenzy will last just long enough for Republicans to win in November, enabling Trump to eliminate the threat of the legislative and judicial branches permanently. In a few months, Americans are going to vote overwhelmingly for the end of our Republic.
43
Who would have thought Star Wars Episode III might predict our fate? "So this is how liberty dies. With thunderous applause." Let's work together to vote sanity back into our government and bring the checks and balances back into play. Vote in November!
Does it matter? Trump voters have become like cult members.
Mr. Krugman's thorough and insightful analysis is helpful. The unfortunate part is that it has severe limitations in a discussion of the policies of a presidential impostor, which Donald Trump is as relates to having a sense of, or ability to carry out the job of the Chief Executive. This is a landmark moment in history for American news media. They're trying to cover Trump like presidents are traditionally covered, but in doing so they normalize a dangerously flawed presidency. This is a moment in history when some entity - Congress, the media, the public, the judiciary - has to step up and out of their comfort zones to re-calibrate the trajectory of the nation.
106
25% of Chinese exports are to the United States. Any business owner would not want to lose 25% of it's customer base. This definitely would inflict economic harm on the US, but maybe the harm on China is worth it. In theory, this would lead to significant labor reductions in China's export industry because China's consumption is not high enough to offset 25%. As the economy slows, Xi Jinping will need to use more of his resources to control civil unrest. Xi will be forced to choose between protecting Chinese citizens or continuing his global Silk Road ambitions.
1
Why would it be worth it to inflict harm on China and the USA? How about we find our common interests and skip that part? China is already having significant labor reductions as robots are changing the manufacturing landscape. China has 5x the number of citizens than the USA. You inability to see that potential has not been lost on American businesses. Unfortunately this administration who also seems to be looking at the future through the impediment of trying to see through their lower colon, is sharing your view point.
5
Nick, you really do need to learn more about how the international trade market affects global asset purchases and the currency markets. They're all intertwined, to which Trump is completely unaware. For instance, when China has fewer dollars because the trade war has them selling less to the US, Chinese investors will purchase fewer US stocks and bonds (both private and public). That's not in Trump's calculus, and it's huge.
4
Why would Xi choose "protecting Chinese citizens"? China is not a democracy. Chinese culture is based around total obedience and subservience to the State. Criticizing the government is a great way to make yourself disappear for a long time. The Chinese people are much, much, much more willing than the American people to endure any hardship for the good of the nation. And if their leaders say something is good for the nation, they have no choice but to believe it. They cannot and will not rise up, revolt, protest or vote their leaders out of office. "Civil unrest" is not going to happen. Mao's policies caused millions of Chinese people to starve, but they did not resist because the People's Republic of China is the most efficient government in the history of the world when it comes to brutally crushing all resistance. And China does not need to use their own consumption to offset the loss of 25% of their export market. They can simply find a new market, while American businesses are forced to go without the Chinese raw materials, parts and tools used to manufacture the vast majority of their products. Trump can't simply do business somewhere else, because he's imposing tariffs on everybody.
43
What Trump and his supporters don't seem to understand is that the USA isn't the only country in the world. And you are much easier to replace than you seem to think.
After the first Canada-US trade agreement, it made sense to do most of our international trading with you (especially since we already were anyway, because geography).
Now we have those trading agreements in place across the entire Western world. We are also working on extending that into Asia. And most of those deals are actually better for us than NAFTA ever was. We're quite well positioned in the global marketplace, with or without you.
Canada has lots of trade options. Both consumers and businesses are pivoting away from the US as a result of our new adversarial relationship. Spanish oranges are delicious; who needs Florida? Why would we buy California wine when we can import tariff-free from the world-class wineries in France and Germany?
Virtually every commodity imported from the US has an alternative (usually better-priced and higher-quality) source. What we cannot produce domestically can be imported from a trusted friend, instead of from you.
And that choice of words says it all. Even China is a more trustworthy trading partner than the US is right now. Just let that sink in.
At this point, most of our remaining trade with you is simple inertia. Finding new suppliers is a lot of work. But once the process is complete, expect inertia to kick in again -- to ensure your lost customers STAY lost.
456
Thanks, Pat. This is exactly what I, and others, have been saying.
It's not just Canada , finding that products from friendly countries are often better and less costly. The entire EU , and probably Mexico, is in on the retaliatory tariffs and Boycott USA.
62
How can you fight global warming while importing oranges that cross the Atlantic?
It's inconsistent to say the least. Either Canada is against climate change or its not.
Pat, I'm sorry to hear about your feelings, although I can't blame you. This is unfortunately what Trump wants--to break the Atlantic Alliance. He's stirring up his base in the U.S. to be (unjustly) angry with Canadians and Europeans. Our allies in turn become angry with us, and what seemed like a temporary fissure has lasting effects.
What I can say is that many Americans, especially in states like California, are even more fiercely opposed to Trump than you. Remember that the next time you boycott a California wine. We need your support.
5
The idea that Trumpsky would possess a reasonable idea of what a trade war should accomplish for Americans is predicated on the notion that Trumpsky is a good businessperson who has surrounded himself with brilliant advisers to whom he actually listens.
We know that is false, based on Trumpsky's multiple bankruptcies and his inattention to the people around him, many of whom are ill-qualified for their positions.
It is thus inevitable that the trade war will hit Americans -- especially those of the GOP persuasion -- very hard, indeed.
68
And the sooner the better
1
The free market is a myth.
Vulture capitalism has created unacceptable and unsustainable income disparities.
A well-regulated capitalism, though, can fix this unethical and immoral situation.
We have economists who know how to achieve this economic organization.
We don't have Congressmen, though, willing to institute it.
What to do?
52
Perhaps a Democratic Socialist approach to capitalism, with appropriate strong regulations to limit excesses and a strong and vibrant government sector to provide appropriate leadership and modelling of behaviour for the private sector is the way to go. It works in health. Almost every other advanced country has what some would call "socialised" medicine, with a government run system. Costs are always far below the massive expenditure of the US on health (18% of GDP). In Australia, for example, health expenditure is around 11% of GDP. The facts speak for themselves -- these systems always rate much higher than the US health system on all independent evaluations. It is only ideology that is holding the US back from real social and economic progress in so many areas.
17
Good answer. Now if only our Congressmen would open to a better way.
America needs a Better Deal.
"The free market is a myth."
You are right. Companies are heavily regulated. But what does that have to do with free *trade* and tariffs?
"Vulture capitalism ..."
It's only "vulture capitalism" when you don't benefit from a deal. If you have any investments or interesting-bearing accounts, you are a capitalist. Does that make you a "vulture"?
Your point about the different effects of tariffs on final and intermediate goods if very helpful. Perhaps Canada should reconsider its imposition of tariffs on aluminum and steel, and focus more on goods that directly (as opposed to indirectly) affect consumer prices. Of course one problem is that the bulk of Canadian exports is in raw goods.
2
Some thoughts for Trump supporters. Mr. Trump's success in business is as a marketer. Customers paid premium prices to rent, buy, or enjoy a Trump property. Mr Trump used undocumented workers (stiffing them of wages when it suited him), Chinese steel for his Las Vegas property, non American linens, furniture and fixtures even in the new Trump Washington hotel, etc. Please remember the exemption Mar a Largo received in order to bring foreign workers to do work (in 2017) that no American would do for the (apparently) low wages offered. And yes, he closed several dozen "deals" in and around his four (or five) corporate bankruptcy protections.
He pulled out of the TPP and I'm sure his reduced State Department is making lots of gains with the dozen or so deals needed with those partners. Ditto with Nafta, Pulling out of the Paris accord and claiming to bring back coal cedes the future for the past. Does the President know about diesel locomotives and the solar panels powering the "coal industry museum" in Appalachia? Do his fans?
So of course Mr. Trump has no, or a very imperfect strategy. Why should anyone be surprised? Marketing is his thing.
122
I believe we give him way too much credit for success in his business as in marketeer. The reasons for his success were non-payment of taxes and avoiding payment for services rendered to his properties; a totally shameful and a shamble of a businessman.
"Trump obviously believes that trade is a game in which he who runs the biggest surplus wins"
AND "Trump/Navaro look at the world as tho it is the 1960s" (paraphrasing)
How can you read the minds of the Trump adminstration Krugman?
How about if 95% of what Trump is doing is theatrics of negotiating. Call out the massive trade surpluses of other countries (even tho it is not a black and white good or bad) because it is complex issue the other leaders don't even seem to try to argue against. Show the willingness to inflict some tariffs, while the hurt on the US economy doesn't matter too much because it is so strong. Set the stage where other nations have a lot more to lose than the US (because the US economy is so much larger than elsewhere). Win the trade war by getting somewhere close to zero tariffs, which is what Trump had suggested.
4
"Show the willingness to inflict some tariffs, while the hurt on the US economy doesn't matter too much because it is so strong." Not if your business has been profitably selling pork, soybeans, lobsters, and shellfish or some other basic commodity to the Chinese. Once they have established new sources of supply, why would they ever come back?
47
"How can you read the minds of the Trump adminstration Krugman?"
Krugman can read newspapers and watch the news, just like everyone else.
"How about if 95% of what Trump is doing is theatrics of negotiating."
Putting jobs and the economy at risk is much more than "theatrics".
"Show the willingness to inflict some tariffs, while the hurt on the US economy doesn't matter too much because it is so strong."
How much are you willing to be "hurt"?
44
Believing in the “theatrics of negotiating” means we cede all attempts to hold accountable our leaders. We don’t need clarity, or public policy presented coherently to the citizenry for their approval. The master of “the deal” is doing his thing. Any outrageous statement is simply an opening gambit in a zero-sum transactional world.
8
As others have said before; steering the USA economy is akin to maneuvering an aircraft carrier i.e. changes of course occur slowly. I personally feel Trump is still enjoying positive Obama economic effects, while augmenting it a bit with lower corporate taxes. Hence the recent job number increases. However, the next change of course will be all Trump. Once the course is finally changed by Trump, it will take some time to affect a new course. The deficit rise is guaranteed with Trump's tax cuts. Stubbornly continuing these trade tariffs will set a new downward economic course, and it will take a significant time period to swing it in another direction. Buckle up, me hearties.
92
We are already seeing the Trump effect. Since the end of January, when all of this trade nonsense became serious, the DJIA has been stuck at around 24,000. It had been climbing quite steadily for quite some time before that. Unfortunately there is more hesitation on the part of investors to come, especially as the tit-for-tat trade war escalates. The Trump cult does not understand that most corporations have a global supply chain and that things labelled "Made in China" have a large fraction of American input, and quite possibly a U.S. corporation involved in producing it even at the final stage. They have no idea how to tackle China's unfair trade practices without shooting American business in the foot.
47
The next president will get the blame,and Trump will be called a political genius. Facts are not on his side,but time ("heals all wounds") is.
I agree, steering an aircraft carrier is a slow process. Unless she is sinking.
1
Given the technological advantage that the US have, we are already winning the trade war against China. (Just take a look at how China gave in after the ZTE sanction) While Chinese dictators have to appeal to the people, they dare not to do real harm. (For example, try didn't even try to use their US debt as a weapon) It's only a matter of time for G6 to surrender.
That's the hard truth Americans choose to ignore.(Perhaps most people are just to nice to admit how much harm they've done to others) Even if a war against allies and trade partners is unnecessary, given that the definition of winning is suffering less than your enemies, trade wars are "easy to win".
Foreign leaders only have slightly more options than immigrants faced with US technology and US military.
3
Have you thought about the consequences of the US dollar being replaced as the globally accepted currency for international trade?
Also, didn't someone once say that the bigger they come the harder they fall? I think he even made it a song. Jimmie somebody.
Joseph in Missoula
4
Who currency will that be?
The German euro that has crushed the economy of Greece and other southern European states?
The closed capital account manipulated chinese rmb?
What else is liquid and in enough volume to satisfy global trade flows?
The Euro would be fine. Canadian, Aussie, NZ dollars also good.
And by the way the "German Euro" (no such thing) had nothing to do with crushing Greek's economy. The Greeks managed that all on their own with their state-wide corruption.
The U.S. is the most powerful and wealthy country in the world. Who could possibly get into a trade war with the U.S. and come out ahead of the U.S.? That does seem to enable Trump and his strong support amongst Republicans in Congress to justify what he is doing. The most self destructive mistakes of great powers comes from hubris about their power. They always believe that God or nature assured their superiority over all other nations, and so they just did not recognize when they were making terrible choices. Trump et al are not paying attention to the significance of details, and the details may cause them big disappointments.
50
Hubris? That's Trump's middle name.
You are right, but If everybody gets into a trade war with Trump, and they will, then it’s death by a thousand cuts. He is at war with everyone, what trading partner does he like?
"They may, however, have stumbled onto a strategy that will lose it even more decisively than one might have expected".
Maybe this isn't stumbling at all, but MAGA = Make America Grovel Again.
But who could be interested in that?
25
Brian in a previous post had suggested that the oligarchs want a monopoly on the economy including labor costs. That would seem paranoid in a different time but not today. What do the oligarchs actually want, no unions, fewer benefits, businesses become citizens, regulation is gone, and we rely on religion to give us answers, sounds like the middle ages to me.
The history of mankind is the history of power subjugating labor from Caesar, Genghis Khan, Stalin to Trump, Putin, Erdogan. The powerful feel superior and entitled and the little people are bamboozled until they feel tread upon. We little people won in our revolution, in universal education, in universal suffrage, widely respected journalism and when unions worked and now we are losing again. Think about it! Do we want our freedoms or to wallow in arguments about powerless beliefs in religion or economics or immigration etc. It is high time we take our democracy and our republic seriously and not just be conned out of it.
65
Agree but here's something to consider: when the powerful have accumulated too much wealth and isolated themselves from the rest of society, they have ultimately become victims. They cannot control nature, natural disasters, international trade relations, wars, and other social and political disasters. In 14th century Europe, great landowners were forced to "hire" peasant labor when the feudal system that had been in place for several centuries collapsed due to the Great Hunger that swept Europe as a warming climate suddenly turned cold and rainy. Land tenure changed drastically when the Black Plague swept through the Continent, killing nearly half the population. Kings, dukes, barons, priests - none of them were prepared or able to cope with these unforeseen circumstances. While economic and social progress was set back for nearly two centuries, people found better ways of coping. There is nothing to say that our country and society could not encounter unforeseen circumstances that will drastically alter how we deal with problems.
11
You wonder if Trump realizes goods are produced as part of networks of marketing/production in many nations --and generally operated by successful U.S. corporations.
His tariffs will affect their profits, the stock market, and ordinary peoples' investments.
Does Trump understand international economics, economic development or the political economy of the Asian theater?
His supporters may see it as guts, but more likely they'll lose their jobs. Then pay a ton in non-employer provided insurance. Ordinary workers with jobs will face consumer prices hiked $6,000 on new cars.
Harley-Davidson realizes the U.S. market added $2,200 per motorcycle shipped to Europe. Auto manufacturers warn of 100,000's of jobs lost. Much disheartening talk of rising cost of farmers' cash crops. Trump supporters still?? What a price to pay.
52
At least Trump is consistent. His motto should be "Policies without Plans." In his eagerness to 'shake things up,' he continually embarks on policies without any target for what they will accomplish, how they will be carried out to completion or what to do when the target is reached. We have seen it on immigration, on tariffs, on tax cuts, on regulation roll backs, on climate, on Iran, etc. If he feels it tweets well, he's off and running. I guess he has some mystic belief that his magical powers will always lead to favorable outcomes and clear exit strategies.
38
It is interesting that Putin supports Trump because he thinks that he is of use to him. But when a recession comes to the US and the rest of the world in a year or two,helped by Trumps tariff policy, Russia will suffer along with every other country and Putin (and we) will need a Democratic administration, who will be willing to spend the money to work all of us out of it.
23
Putin profits from a rise in prices for oil, gas, and metals. That is what we are seeing. On oil, his need is for something over $60/barrel, and now he's got it.
Russia isn't suffering from this, and won't. Its economy is entirely different from ours, deeply inferior and incomplete, but apart from damage this way by that same difference.
I don't mean that "Putin did this." He has no such agency. But he won't be hurt by it, and won't regret it, either.
Neither will the Saudis or other Gulf oil rulers. They too will cheer this on, and more so if we launch a war on Iran and thereby dig our own hole even deeper. I don't assign agency to them either.
What is important here is to have a clear idea of winners and losers. We are no likely to be winners, but some others are.
25
China will be the biggest winner.
With a market four times the size of the US, faster growth, and with piles of money they are perfectly positioned to pick up our trading partners and carry them into the future.
Russia makes nothing and seems to have no particular plan for the future, whereas China does.
I really have a hard time sympathizing with the Trump voters who are being impacted by this. Donald Trump is doing exactly what he said he would do, which is exactly what they voted for.
86
Many of the Trump voters believe the USA is being unfairly treated by most of the world, and the short term pain Trump is creating will be worth the long term gain.
12
@ Sally, yes the Trumpsters do believe that, but the US is only 25% of world trade. Once the world adjusts the short-term pain will become long-term pain, and there will be no long-term gain at all. Global trading will adjust around the US. Since the US is out of the global trade agreements, the rest of the world will make decisions without us.
This is the big opportunity that China has been patiently waiting for. Trump and his Trumpsters don't realize that China now has a market over four times larger than the US and that market is growing faster than the US market - which is to say that it's the future.
Chill, the economy is doing great :)
Missing from the discussion on trade, limited to import/export commodities is what are economy is today: service. when our service trade is added into our commodity trade we are 1.5 trillion dollars in the black,ie, we are trade winners in total world trade. Yes we send more dollars for commodities than we get back in commodities but the traded commodity dollars come back in service trade dollars to our benefit. We are not going to be able to match manufactured commodity trade because we will pay our workers more than our trading partners pay theirs.
But for all the China talk, I thought the problem with China was the stealing and reselling of our intellectual property with no reimbursement to us, the US. I have heard for at least the last 20 years that has been the big China problem stealing our intellectual and proprietary "products". I do not see this admin dealing with that
27
Good point, Optodoc. When Trump talks about trade deficits, he's always talking about the deficit in goods. The U.S. enjoys a significant surplus in the service industry (movies, software, financial industry, higher education, pharmaceutical research, etc.) As you point out, when both goods and services are calculated, we end up winners. Also, European investment in American manufacturing plants in the past two decades has more than made up for any deficits in trade with the EU. I hope we don't lose that investment.
1
You are absolutely right. But Trump's supporters and his cabinet do not care, because if they did they had no reason to act like they do. The worst part is that, apart from destroying existences worldwide, there is no further benefit. They fear to stop the dotard from "running" amok - with a golf car.
There is a clear winner in Trump's campaign of multiple simultaneous trade wars. Putin.
As Trump's trade war with our major allies weakens the ties of commerce, friendship and security that have bound out nations together for three-quarters of a century, Russia is seeing is long-held dream of splitting the alliance of democratic countries become reality.
Russia was a late and generally reluctant entrant into the WTO because it preferred a less legalized and formal global trading system that left more room for politically-directed trade, such as basing the price of commodities (such as natural gas but also many others) on the perceived politically friendliness of trading partners. As Trump prosecutes his trade war with China as a tool for appealing to his political base, he is legitimizing the position that trade policies should be based on politics, not laws, and can vary without warning or explanation.
23
Trump's base is really limited. In real fact it is shaky in the sense hat it was formed by those affected by changing economic conditions. His tariff plan, if there really is one, ignores the harm it is going to do to those who elected him. He originally gained their support by promises. They will support him to a point. That point is where they can't feed their children and keep their homes.
Trump has no economic understanding and very poor economic advice.
23
I hope that that's true, but I fear that his base is blind enough to support him regardless of what the effects of his policies are. They will always find someone else to blame, because they are unwilling to face the fact that they brought this on themselves.
28
The extreme Right is always energized by recession.
The really, really bad timing of this poorly planned manuever is that both the US and China are on the edge of catastrophic bubbles. When this trade war forces those two to pop, there will be no global safety net- we've both already printed all the free money the global economy can handle. We, cumaltively, have also never paid the Piper for the last spending spree.
Bad times ahead.
13
The US is on another bubble, likely to pop.
China wasn't the last time, and isn't this time. It does not have a bubble economy.
China's economy does have weaknesses and problems. They are not the same as ours.
China's problems are from rapid progress. It must be evened out, and expanded. Some has been overdone for the moment, and must be adjusted.
Empty buildings must be filled by the growing economy, but building out the infrastructure ahead of need was always part of their planning. Step Two is to fill out the infrastructure. That they must now do their intended Step Two does not make Step One wrong.
The US has done no step one, and has no step two in sight.
12
I've seen Chinese ghost cities. There is no plan, it was build build build because CPC promotions are granted for raw GDP numbers.
China is in a debt trap. Their central bank governor Zhou Xiaochuan 周小川 said so last year in a public statement.
Oh, so said another way, Trump's tariffs on China will negatively, and disproportionately, affect Trump's base. And that China's tariffs on US goods will do likewise. Divine Justice triumphs once again!
42
Boring down on one detail reveals another dimension to President Trump's tariffs: soybeans & hard currency for Russia.
From Bloomberg News:
'Russia sold about 850,000 metric tons of soybeans to China from the start of the 12-month season in July [2017] through mid-May [2018], according to Russia’s agriculture agency Rosselkhoznadzor. That’s more than during any season before and compares with about 340,000 tons sold during all of the previous period, Chinese customs data show.'
https://www.bloomberg.com/news/articles/2018-05-17/china-buys-record-amo...
Russia's sales to China result in an increase in hard currency for Russia. US sanctions against Russia crippled access to hard currency.
President Trump not only constructed and is now implementing a tariff program that hurts the United States, but his program helps Russia.
Is there any doubt that President Trump is helping Russia at US expense? Is there any doubt Trump is an 'intelligence asset' of Russia's President Putin?
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Russia's soybean sales are real, but they are small numbers compared to the oil, gas, and metals exports now priced so much higher.
9
Trump is clearly Putin's Poodle.
But no problem -- the likes of Fox News spins it for the base so that Putin is now a GREAT friend of the US...
Do these guys see ANYTHING before falling off the cliff like lemmings?
Thanks for that link.
Trump touted tariffs as retaliation for American multinational corporations outsourcing American jobs in the millions and devastating factory sites in the thousands. His idea for tariffs was strictly to play to his base who had lost their jobs.
He told them repeatedly, "Vote for me and I'll bring your jobs back." They believed his lie.
The unfair practices of multinational corporations were revealed when they outsourced jobs at the expense of workers for their own profits and brought these products back to the US for sale. A loophole existed when the trade policies were made originally, without protection for American workers. It's almost too late to correct this wrong committed by the multinational corporations as the tariffs should have been placed against them early on, to avoid this injustice.
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Agreed. We need laws that close these loopholes for multinationals. I don't see Trump even suggesting those kinds of reforms.
1
The American Century is coming to a close. Almost 100 years exactly since we became world heroes helping to bring the Great War to its end.
We had a good run.
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The Roman Empire did much better, fwiw.
1
There is no doubt that like all wars a trade war will be good for nobody involved. But wars are not won by making things better for everyone. They are won by making it harder on your enemy than on yourself. That's why the USA won WWII and the Cold War. I would never pretend that I know more about the details of the global economy and how a trade war would effect it than Dr. Krugman. But, when it comes to strategy, if we really do have a trade war the question is not who will benefit (nobody), but who can hold on the longest with the fewest casualties.
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Americans often object to our participation in wars where there is no definition of what winning the war means. Trump's Trade War is a case in point.
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No one can define what winning means. People don't fight wars because they know what winning means. They fight out of necessity. Americans always object to fighting wars as they should. But I can tell you this. When Americans are dragged into wars we always win.
CBH, I wish I believed that we always win. My memory of Iraq is too fresh (and Viet Nam). But shooting wars aren't like trade wars. It's not going to be a matter of collective will power. There will be losers in a short time--farms that go under, factories that close, etc. If the goal were to eliminate tariffs worldwide (which I doubt, although Trump sometimes says this), why withdraw from the TPP? And would that be palatable to our farmers and oil producers? I don't think there is a goal, which is why this will all end at some point with Trump backing down and declaring victory. But lasting damage will be done to U.S. farmers and workers.
"an instant classic, right up there with Herbert Hoover’s “prosperity is just around the corner.”"
Hoover's mistake was that he thought we were in a "recession" then sometimes called a "panic." He did not even know of the idea of depression as we now understand the Great Depression.
Hoover saw that our economic history of industrialization since the Civil War showed a recession would be self correcting. A sharper recession would be a shorter recession. He sincerely thought we could get over it and get on with prosperity if we did it as short, sharp recession. He never imagined the idea of a deep depression being made deeper as it gets sharper.
Hoover was a very smart and successful man, with a good understanding of what we then knew. The Great Depression was a massive learning experience for economists. They dug in to that new experience in great depth to avoid ever doing it again. A major proof of their new understanding was the Post-WW2 transition to a peace economy that did not dive right back in to the Depression, something that was much feared during and right after WW2.
FDR promised not proven ideas, but to keep trying new ideas until we found something that worked. He openly addressed failure of his new ideas, promising to "frankly admit" them and try something else. Hoover had tried the then-proven.
Our current Long Recession is another learning experience. It is something new. We need leaders to try new things like FDR did, not to promise more of the same.
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Hoover's economic policy got us into the great depression, he never understood what his own policies had created. That's why he couldn't be creative to undo what he had done.
Trump is just like Hoover, his policies will lead to ruin and he won't be able to understand what he did nor admit to what he did. And thus he will never be able to undo the harm he caused.
2
It's more like Hoover stuck to the ideological dogma that he and the Top 1% of the day believed in over what made more sense but went against what they believed in.
Yes, economic theory and data wasn't as advanced as it is now. But enough people in Hoover's day were making a persuasive case that he was throwing gasoline onto the fire. Not unlike the modern day GOP's slavish devotion to tax cuts all the time, Hoover and his fellow travelers could not let go of their blinders.
1
“Is there a strategy here? It’s hard to see one. There’s certainly no hint that the tariffs were designed to pressure China into accepting U.S. demands, since nobody can even figure out what, exactly, Trump wants from China in the first place.” I do not think Trump administration is obligated to disclose his strategy to MSM ahead of time. Additionally, this is a trade war with tariff here and there on the surface, but it’s really an economic war mainly with China in technology leadership and national security. Even the world most powerful companies like Apple, Google are bending to Chinese government (not their competitors) with twisted regulation to corner US companies. These challenges from Chinese regime CANNOT be dealt by any individual US firms, it MUST be led by US government. Period, your essay is focusing too much on the outward issues unfortunately.
2
Trade negotiations are not like poker. If you do not tell the other side what you'd like to see happen, then nothing happens. Each side is mutually adjusting, not winning.
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Trump disclosed his strategy a long time ago. These tariffs are designed to enable him to claim that he is keeping his campaign promises. He hasn't disclosed any other strategy to the MSM--or anyone else--because there isn't any other strategy. No other "strategy" could account for these actions. (And you don't propose one.) Too bad for all of the Americans who will be affected by those unfortunate "outward" issues like jobs, income, and the ability to provide for their families.
19
I'm sure Trump's secret plan to protect technology will be a great comfort to Trump voters laid off from auto plants and from hundreds of thousands of other U.S. manufacturers who rely on steel & aluminum parts. It will surely delight the Midwestern farmers who watch their markets shift -- permanently -- to other nations. Agribusiness will gladly see their other food exports literally rot in Chinese warehouses while officials slow-walk the paperwork and inspections. It will please the retailers whose sales and margins drop due to higher-priced goods. The staff they lay off will dance with the customers who can no longer afford their goods. I hope you don't need a washing machine -- I'm sure your Apple ipod will substitute just fine. But these are petty "outward" concerns. This will work out every bit as well as his secret negotiations with North Korea.
1
John D'oh!: "Thank God, someone is finally doing something about our trade imbalance with China."
"The following staff members are being laid off immediately due to the President's tariff policy: John D'oh!..."
John D'oh!: "D'oh!"
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Wouldn’t it be grand if reporters asked Trump or Sarah H. Sanders questions about how Trump determined what kinds of products they would impose tariffs on? Or even Lighthizer, Kudlow or Navarro?
Because the Administration is not forthcoming on what they are doing and because reporters don’t take it to task on these policy issues, we are left to ex post facto analysis.
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I have yet to see either give an answer on any question in any matter. No amount of pressuring from reporters has led to anything being told.
The coming trade war will damage the entire world, but it will hit America the hardest, and hasten its general decline. The influence of a nation is multi-dimensional; it operates on many levels at once. As economic power wanes, as moral leadership collapses, as democratic institutions wither, as diplomatic leverage disappears, American "greatness" becomes a shimmering mirage. There are surely broad historical conditions that are pushing America away from its domination on the world stage. But there are most likely powerful entities that are happy to accelerate the process. Trump is the perfect tool for such a project.
Trump may not know that what he is doing will gravely harm America, but somebody does. Someone is feeding him biased information (e.g. lies) and inducing him to enact policies that simultaneously stroke his ego, energize his base, and undermine American power. Someone is playing a very sophisticated game.
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Very well thought out comment! You must have gone to a good college.
From Montclair, John, it's a rather short drive over the GWB or through the Lincoln Tunnel to Manhattan. Ask a sample of native New Yorker's this question, "For as long as you're heard about Donald Trump, have you thought favorably or unfavorably about him?" If you'd like to double-check the validity of those answers, walk over to Park Avenue, Fifth Avenue, and Central Park West and ask the same question of the moneyed crowd. You'll quickly realize that he's been devious and untrustworthy for a lifetime.
But let's assume, for a moment, that you're right, that Trump has been duped into believing that a tariff-induced trade war is good for the United States. Who may that behind-the-scenes person be? A good guess: His first name starts with a 'V' and his last begins with a 'P.' Now, 'VP' could indeed be Mike Pence, but it's probably the other guy.
1
"Someone is playing a very sophisticated game."
We get to guess? Does his name begin with a P and rhyme with Newton?
Trumps Tariffs are not a mistake. They are specifically designed to destroy small- and mid-sized businesses and farms, and to benefit larger, more internationalized corporations. The end effect is a monopolization of the American economy, which is what most of the big money GOP donors want. With fewer employers competing for workers, companies can drive down wages and cut benefits, such as health insurance, pensions, etc. A far-right-wing Supreme Court will do the rest by declaring any form of individual assistance, such as Social Security or medicare, unconstitutional.
The only remedy is for journalists to report the facts, not get blinded by Trump's publicity antics, and to get as many people as possible to vote in November and in all following elections. What is at stake is the choice, whether we want to continue being citizens in a constitutional Republic or do we want to be mere subjects in an autocratic oligarchy.
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The US having *decades* of trade deficits, is a problem.
Yes, it is true that tariffs are not the right answer.
But neither is kicking the can further down the road.
China has had a national industrial policy for decades, and it shows. They have been growing at a phenomenal rate for decades nonstop.
China has been using many policies similar to FDR's New Deal - which we would do well to emulate. China is also using policies which are unfair. China has demanded technology transfer as a condition of market access, or simply denied market access in some cases.
And the results have weakened the US economic - and therefore security - position.
But unfair or not, there are better solutions than tariffs, such as internal US policies to increase demand: Stimulate and support domestic industries seen as critical, and implement policies to foster competition, rather than monopoly.
Ham handed tariffs are disruptive, and indicate a misguided zero sum economic worldview. A better approach, would be to continue trade as usual, while increasing internal US output to build our *own* clean energy, our *own* clean transportation, improved common infrastructure. This will stimulate the economy, and avoid leaving an infrastructure deficit, and competitiveness "debt" to future generations.
And regarding labor? High demand correlates well with high productivity and wage growth.
But to avoid cries of "Solyndra", we must eliminate corruption. Of candidates nominated for *both* parties.
16
"The US having *decades* of trade deficits, is a problem."
Trade deficits are never a problem. We get "stuff", they get "dollars". What do you suppose they do with "dollars"? What do you suppose we do with "stuff"?
8
Don’t forget the problem of inflation.
And to avoid public corruption, it might be helpful first to elect people who, at least, try to adhere to minimum ethical standards, like avoidance of conflicts of interest.
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"China has been using many policies similar to FDR's New Deal - which we would do well to emulate."
I'd say "return to." Post WW2 Truman, Eisenhower, Kennedy, LBJ, and even Nixon and Ford followed that pattern. The Republicans did not expand it, but they did not roll it back either.
Starting with Reagan, they rolled it back. Even Bill Clinton rolled it back, which he called triangulating with their roll back.
We need to return to what worked during our most successful era, from the FDR invention of it to its destruction started by Reagan.
They'll say, "but what about Carter's stagflation?" That came from the Nixon-Ford long stall of our success, not from anything Carter did or did not do. They did not roll back, but they did not help either.
They were like today's Republicans in their politics of refusal to act. Ford's "idea" was to promote a campaign button, the infamous WIN button, Whip Inflation Now. Only then did we get Carter, who was fought in every thing he tried to do much as Obama was, even to the point of sabotaging the Iran Hostage deal for electoral advantage.
11
Trump's mistakes in politics hit the U. S. on a daily basis. The rest of the world is quite happy with this outcome. For example: EU and Japan are about to sign one of the biggest free-trade-areements ever. Same with Canada. Next Monday Li Keqiang visits Germany. He brings a pencil to sign multi-billion treaties. Mexico is around as well. Thank you, Donald.
These agreements will bring new excellent supply chains and ameliorate existing ones. And so the workers and companies in the countries concerned benefit, bypassing deals with the U. S..
Trump himself focuses on weakening his own position in any area he touches. His lying about (non exiting) trade deficits (Canada, EU). Then there is his oblivion of tariffs charged on EU light trucks (25%), etc. Once new players are in, it is extremely difficult (and cost-Intensive) to win old customers back. This effect is additionally hindered by already existing tariffs plus the insecurity of what else is to come.
Offering attractive deals becomes more difficult, as the national demand will sink. And other competitors free of a tariff-burden will blow you out of these markets with their competitive prices. That is a downward spiral which, right now, could be easily stopped. Unfortunately, this will be improbable, because your president is too simply structured to grasp this.
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The Japan-EU free trade deal will not say what our Trans-Pacific Partnership said. Its only similarity is in being a deal.
The problem with the TPP was its terms, written in secret for the advantage of insiders, specifically Democratic Party donor insiders.
We needed a good deal. We got a bad deal. Then we were left with no deal. That does little credit to Trump, but none to Democrats either.
Our problems are long-standing and growing. A focus on just Trump misses the real problem, misses it to the advantage of those who want it to be missed.
3
"EU and Japan are about to sign one of the biggest free-trade-areements ever."
Why is a trade agreement needed to "to scrap a 10 percent tariff on passenger cars made in Japan"? The fact is that the EU has been taxing its own members through tariffs. That's nothing to celebrate.
And why "over a period of seven years"? That sounds like foot-dragging.
Quotes are from here:
The E.U.-Japan Trade Deal: What’s in It and Why It Matters
By James Kanter
July 6, 2017
https://www.nytimes.com/2017/07/06/business/economy/japan-eu-trade-agree...
"EU and Japan are about to sign one of the biggest free-trade-areements ever."
Why is a trade agreement needed "to scrap a 10 percent tariff on passenger cars made in Japan"? The fact is that the EU has been taxing its own citizens through tariffs. That's nothing to celebrate.
And why "over a period of seven years"? That sounds like foot-dragging.
Quotes are from here:
The E.U.-Japan Trade Deal: What’s in It and Why It Matters
By James Kanter
July 6, 2017
nytimes dot com
I think Paul Krugman realizes that The Donald is just doing it because he can do it and he promised to do it.
It doesn't matter to him or anyone not associated with the businesses hurt--and even some of them that can stand to lose the income--that he doesn't win.
It was like this many years ago when I spoke to a colleague and he said, "what I like about Reagan is that he said he's going to do something and, by God, he's going to do it..."
Well, of course sometimes Reagan did what he said he was going to do and often did the exact opposite of what he said he was going to do. The point is that the people that voted for Trump just care that they "won" and the Dems lost.
We are a society of petulant, indulgent teenagers.
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Please, Progressive, don't insult teenagers by equating them with The Donald ...
I quite disagree. We Dems are not petulant teenagers. It's the Republicans. This false equivalence is just so much manure.
Was the ACA meant to appeal to petulant people? The Iran deal? DACA? Dodd-Frank?
No! They were serious, well-thought out attempts to deal with actual serious problems. Of course they weren't perfect. This is planet Earth & human beings we're talking about but we Dems are actually trying.
Multi-front conflicts are a bad idea. Why did Germany lose WW2? They rolled over Western Europe pretty quickly, and England was in bad shape, with her air force being depleted and her transatlantic supply lines under attack from U-boats.
However, before finishing business in the west, Hitler opened a second front against the Russians in the east. That was foolish, but it almost worked out. Russia came close to collapse, especially at Stalingrad.
What really doomed the German war effort was the Japanese attack on Pearl Harbor. That brought America into the war, and from that point on the Axis powers were overstretched, outnumbered and eventually defeated.
My point here is that simultaneously fighting Canada, Europe, Mexico and China is a really bad idea. A better plan would be to put tariffs only on China, to show the others that we are serious. Negotiate with Europe and Mexico. And leave the Canadians alone because they are a good trade partner.
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Unwise multi-front conflict was initiated by "with us or against us" Dubya, both military and economic.
It was expanded by the Hillary Team around Obama, like Victoria Nuland in todays opinion piece who expanded it into Eastern Europe with what she said was "$5 billion" of our money.
Now Trump continues to expand it. It had been a bad idea, doing damage to us, for the 16 years before Trump arrived. He's only made worse what was already happening.
The fix is not to go back to ideas that had already taken us to this.
6
Its a little more complex than fighting on multiple fronts. First off we didn't defeat the Germans, the Soviet Union did. We jumped into Europe to prevent the Soviet Union from rolling into Western Europe. After all we waited until June of 1944 to invade the Continent. I know we were in Italy, but that went nowhere. Our invasion of France, I would argue, was the first battle of the Cold War against the Soviet Union. It was clear by the summer of 44 that the Germans were going to loose. But we fought on multiple fronts and could have fought indefinitely because we were not having to face fighting on the home front. That is how you win wars. We couldn't possibly have lost. The longer the war went on the greater the advantage we had.
4
Mark, I don't understand your comment. What did Victoria Nuland expand into Eastern Europe? Are you talking about the growth of NATO?
I disagree with you that Obama had any choice but to try to defeat ISIS. This was a problem he inherited, and one we had to deal with, regardless of who our secretary of state was.
Trump's view it would be easy because the export/import numbers were so unbalanced neglected the psycho/political realities at play as well. Logically the Chinese have far more to lose in a war than we do. But politically, their leadership is not subject to democratic elections, so they can force austerity on their citizenry a lot longer than we can. Psychologically, Trump has mistakenly been outspoken as opposed to discreet about concessions he demands from China. Saving face is a big deal in China, so they can't appear to simply give in to him even when they logically should. Finally, taking on the world at once as opposed to going after China with like minded allies was a huge error in judgement. This alone makes me wish the Republicans in Congress, except for a few, weren't so afraid of taking him on.
12
China doesn't have as much to lose as Trump imagines. Much of trade deficit with China is actually just passing through the country for assembly into a finished product after being made somewhere else.
Imagine that we slap a tariff on Chinese-made cell phones and it has the effect of completely eliminating the demand for those phones in the US. China is not out however many billions in sales are lost. They're just out whatever their tiny share of the overall cost is.
Trump's ability to inflict economic pain on China is not nearly as great as he imagines.
2
Why do Westerners believe the Chinese will so easily tolerate austerity and declining living standards?
Sort of racist assumption about people based on ethnicity.shameful.
Paul, the only hope for the American rest belt is a massive, two or three decade push on infrastructure - on rebuilding all the roads, bridges, and locks that sane, dispassionate patriots acknowledge are crumbling before our eyes, and coupling that effort to construction of high speed rail from sea to shining sea, but particularly from lower cost suburban and rural communities to high-priced US cities (where most white collar jobs reside), while doubling down on access to education, including adolescent vocational training and continuing education.
That's our best shot. Sure, China has been playing fast and loose on trade - but you don't take them on mano-a-mano. You take them on as part of broad trading coalitions, arrived at through properly negotiated deals (deals in which labor interests are as forcefully represented as those of investors and capital). IMHO, that wasn't the case with the TPP - a point that, if memory serves me, I believe that you agree with.
Trump is necessarily a go-it-alone type of guy, inasmuch as a narcissist is incapable of thinking in broad multi-national terms, or of anyone else but himself.
The problem with our economic status quo was not that it was multi-national - but rather that it served the interests of the narrowest sliver of the advanced industrialized population, the interests of management and the investor elite. Trump is a part of that elite - even if his personality is more that of a thug and brown shirt than any sort of elite.
44
Mr. Krugman said, "So Trump and company don’t actually have a plan to win this trade war. They may, however, have stumbled onto a strategy that will lose it even more decisively than one might have expected." Using the automotive industry as an example, imagine the damage to other sectors that will occur as Navarro and trump continue to attempt to publicly bully other countries through negotiations, ultimately damaging the US for generations to come..
The automotive "supply chains are among the most complex in the world, with each vehicle containing more than 20,000 parts originating from thousands of different suppliers (SupplyChainDrive)."
In other words, hundreds of thousands of jobs here & abroad are peripherally tangent to building the cars we drive. Tariff discussions don’t identify the silent industries-jobs threatened.
The seat covers, carpets, headliners, door panels, wood finishes, seat belts and windows; examples of interior materials globally sourced. Light bulbs, tires, electrical looms, brakes, engine components, relays, switches, valves, and so on, sourced here abroad, assembled abroad and here.
Make America Great Again is a Fake Meme - it is the prosperity lie whilst trump dismantles the US here and abroad.
187
Its interesting how Trump is interested in gross trade numbers and focuses on final products. Subtlety is lost on Trump and that is where success lies in real world. This is the basis of Trump's notion of business success, which is how one crushed the other guy. The other guy, in this case is going to retaliate and upset the subtle balance. They use alternative sources in the supply train and US businesses who once thought Trump was such a great probusiness pol with his giant tax cuts and deregulation is going to poison the whole situation.
12
This is a President who will lie when it's easier to tell the truth, and will say "up" when the truth is "down". When he says that “trade wars are good, and easy to win”, what should anyone conclude from that statement? 'Nuf said.
25
who benefits from this trade war? i know little about economics, but it would seem to me that the only beneficiaries are those who know it's coming... and either buy or sell certain stocks in certain industries. is mueller looking into this? is the IRS? is anyone?
16
Bingo. I suspect someone is making real money. Unfortunately, we can't see his or his company's tax returns.
1
Sadly, his enablers in congress, McConnell in particular, are perfectly comfortable trashing the country to pack the court.
78
It's good to read some clear-headed analysis of the looming trade war. As for Trump's true goals, there can only be two options. Either he actually thinks his simplistic view of trade is sufficient and that a trade war is "easy to win", or he is posturing to look tough to his voting base. But since he has relieved all the adults in his administration of their jobs, the better to follow his vaunted, voluminous gut, the man who despises experts and won't read more than a page of text without losing interest is setting policy. And since his depth of understanding is as thin as his skin, the policy tends to be very, very bad. Oh well, it's just the world's economy after all, so no biggie, right?
42
Rob writes about Trump and his trade war, "...since his depth of understanding is as thin as his skin, the policy tends to be very, very bad. Oh well, it's just the world's economy after all, so no biggie, right?"
Yes, of course, Trump's skin and understanding of anything is very thin. But Rob...and all Canadians...you need to look at the good side. You are smart enough to target your retaliation at the Trump voters. The more you hurt them, the weaker they become. So, join in the fight, boycott all goods made in states that voted for Trump. The weaker they become, the better it will be for everyone...across the entire planet.
Trump wants war, but is clueless. Like a drowning victim in full panic, he wants to take down anyone and everyone around him. I say hand him a lead life vest and step back.
VOTE OUT ALL REPUBLICANS
1
Trade wars are never easy to win, especially for those actively engaged in them. For them, they can literally be life and death. Businesses close, people out of work, poverty, no more health insurance; dead. Does Trump care about that? Nope, not at all.
But, as usual, Trump has no skin in the game. He's always played with other people's money, now he's playing with your jobs, your livelihood, even your very existence. He doesn't even understand that leverage counts for nothing in the real world, where no one is that impressed by a real estate developer. No country is going to sacrifice their workers at the behest of Trump. Trump, on the other hand, seems willing to do that to American workers.
And it would seem that the Republicans care even less since they are allowing this reckless fool to continue to wreck not only America's standing in the world, but the whole American economy.
Trump has failed more times than he's ever been successful; and been bailed out by others. As a country you cannot afford to fail once. No one is coming to bail us out; they're waiting on the sidelines to see what pickings they can grab from this debacle of leadership, which the Republicans seem to think is just a brief aberration, an experiment, perhaps. It's not. It's life and death here for many Americans - even the ones too dogmatic and stupid to realize it.
Trump's whole term has been a fiasco cocooned in lies. And not even clever lies; juvenile lies.
335
Shoot from the hip, before you think anything through. Base your actions on ideology, not objective facts. Appeal to the lowest, most racist feelings of your followers, not to the good of the nation.
Trump's gut instincts appear to have a lower return rate than the old Chinese chicken guts fortune-telling methodology. Trump supporters don't care...as long as he pokes his filthy racist fingers into the eyes of Mexicans and Chinese and Blacks.
Meanwhile as I sit at my second home in Canada, my friends here keep asking me how America, at whose side they've fought and died in too many wars, suddenly became a "national security threat".
40
It's been a long time since anyone talked about the disastrous Smoot-Hawley era. This is a good example of how Trump ignores or fails to understand history. And he's being repulsively dishonest about trade. The lies keep mounting!
An uncompromising Trump, in his foolishness, is riskily antagonizing all these nations and keeps upping the ante. Laundry machines cost far more due his tariffs early on.
His actions already revealed he wanted to drive up the cost of solar energy.
Under Trump, health insurance is up, as is the price of gas. His tax cuts helped the wealthiest. He offends our allies.
We should demand to see his college grades, and if he ever took macro, micro or labor economics courses.
48
His educational outcome is evident in his many failed businesses. He was successful only in the pretend world of "reality TV" and his "branding".
1
Trump took up space - nothing more.
rich legacy types can always gain admission to private colleges if daddy builds a dorm or library, or just makes a nice juicy contribution to the new bleachers. it doesn't mean they will learn anything, or even crack a book.
so, I am running a contest offering many attractive prizes (specified later). anyone can enter. all you have to do is call out one single positive accomplishment Trump has made while in office. or even something positive he has said - anything at all he has done right. even one thing.
cutting the taxes of rich people while harming everyone else doesn't count; it has to be something good for Americans overall.
go!
1
No way around it. Donald Trump is doing to the USA what George W. Bush did to Iraq.
48
Iran nuclear deal. TPP. Paris Accord. NATO. NAFTA. Trade deals. North Korea. Trump doesn't want to fix any of these problems, he wants to exploit them.
57
But that's all Obama's fault, isn't it?
12
If only Obama hadn't started a trade war with the world, Trump would be sitting pretty.
Everything Trump does is the fault of someone else. He is great at deflecting blame. Better than the teflon president.
Trump’s declaration that “trade wars are good, and easy to win” is an instant classic,....”
Well, that may be, but The above declaration is much more of a giant window into Trumps psychopathic personality. War of any kind is not good, Never has been good. Is really an indicator of the deep delusions regarding reality based on the fear of death, and the insanity of assuming that one is either one's enemy who intends to kill him or enslave him in one way or another, or one's Loyal "friend".
Even when war is/was the only way to stop the current psychopaths, be they southern gentlemen who thought that blacks were supposed to be their personal property rather than fellow human beings, or the Supermen of Nazi Germany, Humanity must pay an enormous price: 620 to 750,000 dead in the US Civil War. 80,000 people died instantly when the atomic bomb hit Hiroshima. You get he idea!
War is the absolute stupidest way to solve a problem. Only severely psychotic individuals, and that includes many of the so called "conquerors" of the world think war is some kind of heroic thing.
That said, because there are an ample number of Trumpish psychopaths, sane humans must from time to time meet fire with greater fire. Incidentally, sometimes takes a while and the cost in suffering and death is high, but we have always triumphed over evil stupidity.
Trump's remaining days are rapidly dwindling. He is so obviously a loser.
12
There are also many wannabe psychopaths, like the Trumpsters. They chose a psychopath (as defined by serious abnormalities) to lead them because they thought that would be a good way to get things done.
For the same reason, psychopaths are often chosen as CEOs, in fact they represent about 20% of CEOs, the same proportion you'd find in a prison.
Many national leaders are psychopaths, which is why nuclear weapons need to be banned immediately.
These tariffs are insane and will hurt hundreds of industries. I'm in the electronics business. I'm a very small shop, but face the same issues that large companies do when it comes to securing parts and materials. Here is what the stable genius just did to our industry.
The manufacture of electronic components went to Asia about 20 to 30 years ago. First it went to Japan, then S. Korea and Taiwan. As China came on line, these initial companies moved their production directly to mainland China. America stopped making these components decades ago. Short of high end microprocessors, we don't make these parts anymore.
Trump just levied a 25% tariff on all of them. That just pushed our parts costs up 25%. We can't eat that. We all have to raise our prices which gives foreign producers a huge advantage as they have access to much cheaper parts. China supplies the entire world.
But is't worse. Trump is also levying tariffs against the components and materials that electrical equipment manufacturers use. Things like motors and the materials that motors are made of like the special magnetic steels used in magnetic devices.
None of this production will ever come back to the US. We can't come close to Asian production prices. There are no plants to restart.
But it's worse. All the metal and plastic fabricators that service the electrical and electronics industries will suffer from loss of sales to us.
Totally idiotic policy. Beyond stupid. Suicidal.
756
Alas, more actual, true, dictionary-definition facts from Bruce. Alas, thanks, Bruce.
2
I would like to hear Trump or anyone in his administration respond directly to Bruce’s comments here. I would like them to answer directly to him, explaining why, if he’s wrong, to his summary.
Of course they won’t.
2
I hope you’ve given your Republican Senator Roy Blount an earful of this. Trump ignores Democrats but may listen to Repugs - I say “may” advisedly but it’s worth trying. And I hope that your Democratic Senator, Claire McCaskill, makes the self-destructive stupidity of these tarifs a big issue in her fall campaign and forces her opponent to either defend Trump or repudiate his policies.
1
A short while ago, the focus of voters in the midterm elections was about health care-- last year's efforts to overturn the ACA and then weaken it when the repeals failed. So here come all these other things to try and drown out concern over health care and other social programs. Immigration crisis. Trade war crisis. Anything to keep the focus off of climate change and improving quality of life for Americans who aren't bringing in six figure incomes.
37
Dear Paul,
Please, refrain from the unfounded exaggerations and accusations!
Enacting the protective tariffs is not the trade war.
If it were, we would have been in the endless trade wars up to this very moment because all those other countries have had the import tariffs implemented all this time.
The quality of the published op-eds is incredibly low. In another one on the same page there is a columnist asking if Trump will stand with our NATO allies and whether he is capable of standing up to Putin.
The question could be formulated in the opposite way too, if our NATO allies will stand with us and whether Putin is capable of standing up to Trump.
Mr. Trump stood up to our western allies demanding to finally shoulder up their fair share of the NATO funding and the common defense.
We aren’t any longer in the fifties when the Western Europe was completely destructed by the WWII and it made the perfect sense to subsidize their reconstruction.
It is long overdue to treat them as equal.
However, wouldn’t it be really smart to stand with Putin to make Russia a friend?
If all of us were the best friends, just imagine what amount of the defense budgets could be permanently redirected to the health care or infrastructure.
Befriending China and Russia is the most important step in that direction. That’s a gigantic step toward the world peace. Having the identical tariffs and paying the same percentage of the GDP for the national defense is the crucial step in that direction.
3
Arguing with a Nobel laureate does not bode well for whatever point you’re trying to prove.
8
". . . because all those other countries have had the import tariffs implemented all this time."
Tariffs have been declining for decades; they currently average around two percent. From the World Bank:
https://data.worldbank.org/indicator/TM.TAX.MRCH.WM.AR.ZS?end=2016&s...
22
The stability in Europe and Great Britain has been achieved by their development of social safety nets and trying to reduce each country seeing the other as an adversary. Russia doesn't want to live that way. like Trump they want their country feared by those around them.
Germany absorbed huge costs for the reunification of Eastern Germany which I have read is a bill they are still paying.
What exactly does befriending China and Russia mean? Making business deals that benefit the Trump family but harm Chinese and American businesses seems dirty.
10
As per usual, Trump only considers one side of everything even though there is always two sides. His impulsive, unthinking way precludes the obvious and we all suffer for it. Trump is a disease of the mind and I am sick of it. I have a solution. Get rid of him come hell or high water.
29
Thanks to Prof. K for his continued patience with those of us who are casual free-trade skeptics. I for one would have no objection to a massive tariff on finished goods from China (including products 1% 'Assembled' in the US and slapped with a flag sticker) but it seems clear that the old fool in the oval is being led down a rabbit hole by advisors who have zero interest in any actual change to the trade dynamic.
Big surprise.
11
Adjusting an old shoe: fools and their support are soon punished. Soy beaners stand up and make your voices heard. Uncle Donnie has launched a bomb at you and the target includes many other American manufacturers too.
"Trade wars are easy" will fit nicely on a red hat made (in America) to fit fat heads.
16
We really must stop thinking that Trump is just an idiot. This column focuses on why his trade war strategy works against the interest of our United States, as if his goal was to help USA, albeit in a misguided way. We must keep our eye on the ball. Trump is the number one enemy of the United States. He is following Putin's trade war plan. Fascism happens gradually. Wake up America!
58
Absolutely. Only nay-sayers do not recognize Trump's genius.
4
Yes. Right. We knew this.
And—surprise, surprise—things aren't going so hot with North Korea. (Nobody knew international diplomacy could be so difficult...)
Why is anyone even surprised any more?
More to the point, why are Republicans standing by and allowing this?
32
Why? Because the Republicans in Congress no longer have a political base. They are completely dependent on The Orangutan's base, which is sufficiently credulous to believe his nonsense.
1
Dr Krugman, no one reading your blog should be surprised here. Trump does not have a viable plan. This is what happens when you do not have the knowledge nor the intellect to understand trade, and are too delusioned of your own genius to take the time to listen to real experts, not sycophants, in order to craft policies.
Trump thought that other countries, addicted to trade surpluses, would quickly surrender. But what is happening was quite predictable and unavoidable. Writing from Canada, I can tell you that any PM that showed insufficient zeal in retaliation against Trump would have been crucified. And neither Trudeau nor Freeland were in any mood to genuflect. Must have something to do with the personal animosity that The Donald showed to them.
Talking about stupidity, for years the US has been imposing taxes on Canadian lumber. And yet, in the region I am now, heavily dependent on that trade, business has not been better in many years. See, turns out that American consumers need Canadian lumber and will pay more to get it. Lesson learned. Since prices are downward sticky, if and when taxes are lifted it wouldn't be surprising if Canadian companies choose to raise prices and pocket the difference instead.
Heck of a job!
18
Prof. Krugman's tweet about this column,
"The extent to which Trump doesn't know what he's doing is remarkable, even for those who realized that he didn't know what he was doing."
really just says it all.
The level of ignorance, abject stupidity, and an egotism rooted in bigtory in this adminstration, (all combined with a calendar that says 1450) just boggles the sane mind.
There are about 120 days until the mid-term elections. If every one of the 65,844,954 citizens that cast a vote for Hillary Clinton in 2016 so again for Democratic candidates (along with several million more) on this November 6, then we have a chance at stopping this insipid train wreck before it pulls the entire nation off the rails.
VOTE PEOPLE! VOTE!!
39
Don't forget about gerrymandering. . .
4
With such a high IQ person in the Oval Office how could we lose?
12
Trump is an idiot, sure. Trade policy is not about accumulating surpluses, right. Nevertheless it is interesting to me that all the economists who assured us that we should not worry about job loss from the free trade agreement of the day are now talking about how tariffs kill "good jobs". Which is it?
4
Both.
Because you need to look at the economy as a homeostatic system. It continually adapts, but the rate at which it can adapt is determined how long it takes someone to train for the jobs that are in demand.
Sure, we can survive by shutting the door to all trade, but then we will only run our economy on what is being produced inside the country, so no more car parts, hence no more cars, no more smartphones, no more TVs, no more a lot of other stuff we got used to.
Acutely disrupting the system through such a massive intervention is like shooting a neurosurgeon up with a good dose of cocaine, heroin and pot, all at the same time and then expecting that your brain he is operating on will perform better afterwards.
By disrupting the supply chains, Trump simply increases the prices on everything while people whose jobs depend on that trade running unimpeded lose them.
Now, we could build all these things in the US, sure, but it will take 10 years minimum to set up all the new industries, realistically closer to 20. And it would be a lot more expensive, since we would have to duplicate everything that is being produced elsewhere at higher volume and lower cost. While the rest of the world will continue to do well by trading with each other, the US will continue to lose any which way you cut it.
That's what Trump doesn't get. He just can't think around the first corner he encounters.
33
The USA is doomed w/Trump and his GOP sycophants.
End of story.
48
"If your only tool is a hammer then every problem looks like a nail".
Trump seems to believe that his one go to move of adolescent insults will work on our trade partners. He seems to be confusing Xi, Merkel, May, Macron, Trudeau, Abe, and the rest with weak kneed, forelock tugging, Republican politicians. He also seems to think that their constituencies must get their opinions issued from Fox News too.
The power of the "Trade Troll" to positively impact the U.S. economy is as illusory as the "Confidence Fairy"
And at least the "Confidence Fairy" wasn't a jerk.
14
The Presidential Apprentice proves his moronic bona fides on a daily basis. Unfortunately, we ALL shall pay the price, for decades. The dumbing down of America worked, Bigly. It's called regressing to the bottom, and HIS bottom descends to the core of the planet. Seriously.
19
So, let me get this straight... You're saying that TRUMP is basically a complete moron who doesn't have a clue what he is doing with regard to his tariffs and (easily winnable) trade war because he doesn't seem to have any type of plan AND the results are disastrous for American workers...?
(This is only a problem for people actually paying attention to the facts because the "alternative facts" show that TRUMP is a "stable genius" and the USA is already "winning!")
Now that we no longer have to worry about nuclear war with North Korea, Americans can focus on celebrating "The Wall" being "built" in California and our enhanced border "security" from all those "MS-13 Gang" families being separated and detained and educated and drugged!
I'm sure it won't be long before the "alternative facts" dictate that U.S. Presidents can't be indicted or subpoenaed. Our newest "justice" will tip that scale.
It's no wonder that Putin worked so hard to help get TRUMP elected. He must be licking his chops getting ready for the "Red Wave" that will "overwhelm" the polls in November. Even though the exit polls will show otherwise, Republicans won't believe the "Fake News" perpetrating another "hoax" and "witch hunt." (After all, verifiable recounts are for low-energy, loser democracies!)
So...with all these "alternative facts" supporting them, with all the "winning" and "greatness," why are Republicans still so angry?
Oh yeah...it's the Chinese and migrant families!
9
Krugman has not a clue about whether Trumps strategy will work or not. He is only writing what liberals write who hate their president enough to wish for an economic trade issue that damages the economy. His initial point- that some of the tariffs will hurt some American workers. Did he write about how the economic issues orchestrated by Obama hurt some American coal and oil workers- obviously not. These workers are forfeit because they are mostly conservative or merely collateral damage in a zealous war to "save the planet". Such Hogwash is admired by the NYTs. The Left (and the NYTs is one of if not their main mouthpiece) functions primarily through its power as a primitive religious-like society. This is why they can say without remorse that immigrant children deserve this and that while saying nothing about inner city homeless kids who are American citizens. Why? Because they are dedicated to solidarity and constant promulgation of their beliefs and politics. They offer an illusion.
3
Coal was hurt by the increase of natural gas and green tech which was far less costly to provide than coal. Coal got doomed by it's own expense.
And oil is also more expensive, which is why many well were shut down, they were not cost efficient. And the glut of natural gas also shut down many of those wells due to the price of the product was not worth the expense of obtaining it.
None of that had to do with Obama, it was simple market prices. Which is why coal will never make a big comeback, it is too expensive.
3
Krugman is a Nobel Laureate.
Expertise, and respect for it, has been sorely lacking under the Republican party for many years, all in the quest for power. Disrespect and dismissiveness toward scientists, health care economists, public servants with expertise in myriad subjects, Constitutional scholars, among others. For several years I've been surprised at how many Americans believe they have deeper and better understanding of subjects I doubt they have ever studied. Arrogance and ideology are no substitute for education, knowledge, and facts.
3
How much do you know about the science behind climate change? Or is expertise just another form of pernicious elitism.
3
Just like his verbal bombast, Trump's reckless and thoughtless actions are intended to stimulate his base while attempting to appear powerful, decisive and disruptive, regardless of consequences of said actions. The entire fraudulent Trump presidency is based on deception and lies perpetrated by an incurious narcissistic moron. The catchphrase that should precede any utterance or appearance of Donald Trump should be: "Ladies and gentlemen, it's SHOWTIME!"
10
Trump is playing the ultimate zero-sum game in which American consumers and producers are the losers. He doesn’t seem to care. The man has to be the weakest president since Warren G. Harding. And, like Harding, he is susceptible to corruption.
Our economy cannot long thrive without its interactions with other economies. Our producers and manufacturers depend upon parts made in other countries. For example, Philippine companies have long produced automotive wiring harnesses for GM and Ford. If these are subjected to tariffs, our auto manufacturers will have to raise prices or find other means of producing wiring harnesses (and other parts, say those made in Canada and Mexico). Trump and his econ cronies apparently don’t understand this or don’t care. They think they can win the tariff war that Trump has unleashed, but they are very short-sighted. The Chinese and other governments are playing a long game. Our economy is pretty resilient and tariffs only affect a limited segment of it, but our tariff adversaries are targeting those parts of our economy that are more vulnerable – agriculture for example.
Trump will lose this stupid tariff war and then we will spend a decade rebuilding. It is reminiscent of the 2008-09 Great Recession that our banking system brought upon us through its greedy marketing of collateralized debt obligations that went bust. Do we really want another recession?
11
Yesterday one of the networks interviewed Maine lobster fishermen about tariffs. I fully expected to hear whining and complaining about cheaters. Was I ever wrong. The three interviewed made more sense than all the pundits and politicians combined. They worried, hoped for the best and were making plans to survive. One even mentioned partnering with a Canadian company to get his lobster to China. Don't know how that fits in with the President's plan to MAGA but for this one lobsterman it was a solution to a problem that he had nothing to do with.
13
Enabling fools like Trump to represent us makes us even more stupid than Trump is.
17
Trump knows what he wants to accomplish - but it is all about impressions, and mostly false impressions. He defined a win as protecting aluminum and steel and reducing trade deficits, his followers believe him, and that's what he's acting upon. The reality of the relationship between the US economy and international trade is irrelevant, at least until it all goes to hell under the Ignoramus Con Man.
10
Very well said.
Much like the Twitter war Trump started with North Korea’s Kim Jong-un, another friend of Putin, Trump was looking to be perceived by his undiscerning followers as solving a crisis, even of his own making.
He left the secret talks with North Korea claiming complete denuclearization was agreed, and gave the forwarding address for his Nobel Peace prize.
The only problem with this phony spin is the fact that our spy agencies found North Korea increased their nuclear activities after talks, rather than winding down.
Trump does not understand the immense value accruing to the US as the world’s reserve currency. Most global trade is denominated in USD. This lowers the cost of financing the federal deficit, and all else equal, improves the US standard of living.
The EU, China, Canada and other nations are reacting far more tactically to the US trade war.
They are hitting Trump’s dwindling voter base, as they are the responsible parties for the tariffs imposed in violation of WTO rules.
The problem is supply chains once broken are not so easily reestablished. Further, while the upside to “winning” concessions is very low, the downside is massive.
It is already taking its toll on businesses in canceled orders, lost jobs, and will soon show up in markedly higher prices for inferior quality.
But Trump wants to push America backwards - into the coal mines, with dirty water and air -as sponsors Putin and the Koch brothers own oil, not tomorrow’s technology.
10
There are two explanations for Trump’s actions on trade: stupidity and treachery.
The former seems more plausible as Trump and his advisers seem divorced from the realm of knowledge and learning, particularly in the field of economics. Their mercantilist perspective might have been the accepted wisdom when we were a colony of Britain, but that never made it correct even then.
The latter explanation is much more serious and involved. First, it assumes that Trump and his team are playing the game of some other master—whether Putin or some shadowy financier—is harder to discern. It also assumes some knowledge of economics in order to pick policies specifically damaging to the US.
Human stupidity usually edges out human wickedness. The former requires no learning, intelligence, or energy, while the latter relies on knowing which lever to pull and when. So, we now have our own confederacy of dunces.
11
You do a good job of trying to explain what we're in for, but I gotta say, the majority of the American public doesn't understand, and if Trump tanks the economy he'll blame Obama and everyone will believe him. Ask anybody to define what "tariff" means and they won't be able to. Same with "duty", "levy" and "capital spending." Nobody knows. Not to mention the definition of the word "asylum" and "refugee" or the difference between "migrant" and "immigrant." Not knowing what the words mean breeds apathetic voters. No one understands therefore no one cares.
8
Or, applying Occam's razor, perhaps the goal is exactly to "inflict maximum damage on the US economy"? At times, it certainly looks as tho that is the agenda.
7
Well. there it all very clear. Just follow the money. This has always been more about money than it has been about race and immigration, although they are all closely related. Trump, the Reality Show President, has no choice but to keep upping the ante to keep his ratings up. Overreach is his only option and it is not a winning one.
As has been clearly outlined in the article, and by some of the other posters, this is a war on the middle class and ultimately on democracy. That's what Donny in his dimwitted way, is really all about. Putin has to be so, so pleased. When he goes down in history Trump will put Benedict Arnold to shame.......unless of course, our good American neighbors rise up as they did in 1775 to protect their rights and heritage.
10
I don't think that Trump is even trying to get China or other trading partners to change anything. He is far more simpleminded than that. He just wants to tax their goods to reduce their trade with us and, importantly,mwants to make a showing to his base that he is tough on global trade. He and advisors haven't thought it through because that's not what their interested in.
7
trump, thank you for replacing Obama's well informed and very smart trade policies with trade ineptitude.
4
As Dr. Krugman points out with his usual informed perspicacity, Trump's tariffs are more of the same:
Arrogance and incompetence informed by ignorance.
And of course, Trump attacks our allies and China, while leaving Russia alone, thus continuing Trump's unabashed support of the Putin agenda:
Tearing apart the western alliance and disrupting China's economy, while promoting Russia to the position of world leader...and accelerating the demotion of America from that very same position.
5
Trade is global now. Nothing is going to change that. If Trump wants to isolate America from world trade and close off our borders we can become like China was for centuries, lost as the world moves past us.
4
This administration is all about ginning up hate. When it comes to actually implementing policy they are completely incompetent.
The countries we are negotiating with don't even know what we want.
7
Trump and team don’t have a plan? Wow! That’s a first!
2
Paul, and everyone else; the sooner we all realize that Trump's ONLY goal is to ruin the post WWII Atlantic (plus Japan) alliance.
This isn't about trade, it's about making the world safe for his boss Putin and his criminal gang.
Trump is a saboteur on the grandest scale imaginable.
7
The tumpie's (as you say) understand nothing but anger, racism and white privilege. Oh, and destroying the enviroment, taking away health care, etc. I wish we had a government and supporters who took a little time to think before acting.
5
Bush and the neocons said the iraq invasion or ‘war’ as they called it(sadamm had no nukes as it turned out), would be quick. They created a terrible snd tragic mess that we see every day in syria. Trump’s trade war is going to be no different, very costly, and will produce no results. They are underestimating the EU, Canada, China, the US multinationals, and the ultrawealthy, and their power. Trump’s trade war is aggression on steroids. His argument is that the US economy is doing well and the others not so well, and we can take the hit. The other side will capitulate. China, Canada, Mexico and the EU dont have a common strategy to protect their interests while Trump attacks all of them. But the Chinese are in it for the long haul. Demographics and their growth trajectory is in their favor. They are doing much that is right, investing heavily in education and infrastructure, bringing millions out of poverty and aggressively stimulating exports. The US is going the other way. Trump is crazy and going the other way, enriching himself and his donors while americans get poorer and poorer. The 4.0 percent unemployment is fake news. Growth is zero, the stock market is stuck, and people with masters degrees in engineering can’t find jobs in the ‘hot’ tech industry. The tech executives meanwhile are getting unimaginably wealthy.
3
At this point, we need to sit back and let this crumble. The Trump/ Navarro bluster is all about reality TV -- the Trade War episodes.
No need to preach to the choir. Fox will spin this, the base will eat it up, and when it fails and Trump voters get hurt, they'll work out a Deep State, Obama, Hillary blame game.
This will repeat over and over for 2+ more years, then we'll have a chance to do something about it.
8
The only people who win a trade war are those who don’t take part in it. They stand back, watch their competitors bash each other, and gain a relative advantage. So given that the US has gone to war with Canada, Mexico, Brazil, Europe, China and Japan, who is left to get ahead? I’m guess there is someone smiling more broadly than India.
3
Why is Krugman and the NY Times OK with China targeting our elections by levying targeted tariffs on Trump voters? Where is the outrage over interference in our midterm elections by China? Where are the investigations? This goes far beyond $100k of innocuous Facebook ads. These are billions of dollars of tariffs designed to alter our elections. Could the lack of interest just reflect their hypocrisy? Likely.
1
Maybe because we, and by that I mean Trump, started it all. Unnecessarily. But that's straight out of the GOP playbook - make life continually worse for the American worker and then blame immigrants, blacks, and Democrats.
2
And Facebook ads are merely the tip of the titanic Russian iceberg. Please stop listening to Fox propaganda and then regurgitating it here. When I want conservative lies and drivel I'll watch Fox myself.
2
Well, Trump knew how this would unravel, right? Trade wars are easy to win, right?
Oops, it didn’t go as he planned... what a shock!.... wait a minute, we have to blame someone else....
2
The erosion of trust in the US is hard to quantify, but in some ways may be the most damaging legacy of Trump. His gerry-rigging of the economy by using government controls is right out of the Chinese playbook that the Trump himself has been complaining about for years. Fighting fire with fire? Hardly. The US can ill afford to be viewed as an untrustworthy partner, since we don't manufacture much of what we need. China is in the driver's seat in the long term, and the US is pouring sand in its own gas tank..
7
Gosh! It's almost like America's trade war is being planned by a six time bankrupt whose only successful business has been money laundering for Russian kleptocrats. But no country would be insane enough to trust its economic well-being to someone like that, would it?
10
Anyone who seriously vetted Trump is not surprised by this. Weeks ago Trump on twitter tell the Americans that all was well because he solved the North Korean nuclear problem... It appears as we all thought, that Kim Jong Un played him, and now Pompeo is desperately trying to save face for himself perpetuating the lie.
Many of his supporters knew they were electing a liar and cheat, but now they are discovering that they elected an incompetent liar and chief. Thanks to Trump the US permanently weakens its ability to project power in Asia without annual military exercises between the US and South Korea armed forces. Therefore, if the Iran deal was the worst deal in the history of mankind, according to Ubu-Trump ...what does that make Trump's North Korea deal?
First Donald Trump remade the Republican Party in his own image, and now he is trying to remake America the same way — into a selfish, dishonest country with no close friends, totally unpredictable, free of any commitment to enduring values, ready to stab any ally in the back on Twitter if it doesn’t do our bidding and much more comfortable with mafia-like dictators than elected democrats.
If the Chinese feel that their access to US markets is going to be seriously impaired by tariff and non-tariff barriers imposed by Trump administration, the Chinese will simply send messages to Kim to behave like his old belligerent self.
12
Trump et al are amateurs in this chess game of the economy and tariffs. This is a man who had multiple bankruptcies as well as a deliberate ignorance toward any type of diplomacy, to whit North Korea. Once again he has let his insatiable ego and desire to control interfere with logic and sound decisions.
This trade war is of his own making. Yes, China has always been a threat, and they will continue to be without focused negotiations. They walk all over Trump in their capability and agility in the art of deviousness. The have had centuries of practice. They know where to hit and how to hit.
Re Canada...truly I say good for them. Trump has gone beyond treating them in an unneighborly fashion. They are our friends. Yet he has been uncivil, thuggish, and downright cruel to Canadians. This man's unstable hubris is ominously marching us on that road to another recession, if not worse. And yet again it will take another Democrat to right this national ship with as of now no helmsman.
7
I hope that the Chinese political strategy of taxing products from Trump country including soybeans and pork will hurt Trump supporters in their pockets. Whether they will vote with clearer minds this fall is another story. Somehow they still believe the lies that this traitor tells them. How they think that he is improving their lives by being in Putin’s pocket and destroying our allies’ relationships is beyond credulity.
Wake up and smell the Russian ties to undermine our nation, red states.
4
Tariffs are not new. The US has imposed a 25 percent tariff on trucks and pick ups since the 1960s. US farmers get subsidies that give them a big price advantage over their foreign competitors. The Chinese protect their domestic and state operated industries with subsidies. They also subsidize their exports. Japan subsidizes and protects its rice farmers. Trump’s real strategy is to get votes, not win a trade war. A trade war victory for US manufacturers resulting from Trump protectionism will be terrible for US consumers. They will raise prices, hire very little and produce shoddy quality products as detroit did with its cars in the 60s and 70s
6
I have no doubt that Trump is not the person with the admistration to correct current issues in world trade amongst our partners. But China has long been known to steal our intellectual property, raise barriers to entry for American businesses and they manipulate their own currency to prop up their economy etc... With that said what would be a good path to take with China to correct these issues? Is there a right way to address legislate trading concerns?
2
How about working with your friends, like Canada and the EU? They too share concerns with China but alone they can do little. The US alone is impotent as well.
4
I foresee a war on par with our other unwinnible war on terror. Even when Trump and company exit we will still have to deal with the fallout for years to come. Any salesmen will tell you, you don't want to sell someone one car today, you want to sell that person 10 cars in their lifetime. ,I for instance, have never owned a car other then the brand I found to be fun, safe and economical the first time I drove it. When the chains are broken and a country gets a chance to experience other trading chains, we stand to lose more than a war, we stand to lose costumers forever. Congratulations to the Republicans though, they seldom do things on a small scale. Their wars are everlasting, their judiciary will turn us into a theocracy and their trade wars will have lasting consequences that will devastate the U.S. economy right up to the point where China calls in our debt and we lose it all.
23
From what I read, Trump likes Putin best and talks to him regularly. I believe that Putin is the "Trump whisperer" in trade and probably other matters. Trump should not be making private calls to any world leader, ever. All of his conversations should be recorded and examined carefully. He insists of having private conversations with Putin at every opportunity and we have let him. Now, Russian commodity markets benefit when our ex-trading partners look for new ones. Unbelievably, today's LATimes reports that people starting to take the economic hit from these "trade wars" still support him. These people could be led off in chains singing their master's praises.
11
At one time I expected that people who ran for important positions - say the President - had some level of understanding of a number of areas, or the good sense to find experts who did understand.
Now it appears that the guy who pumps gas a a local station could do as well as Trump - maybe better, as he isn't out to wreak revenge on anyone. the only reason most of us couldn't handle the job is that we would worry about the impacts of our decisions.
Attempts to analyze his strategies and goals for the country as if he were thinking normally or had a care about impact beyond his celebrity are doomed to be fruitless. we do have an interesting phenomenon tho - he is the first person I have seen who escapes the problems facing him by holding rallies. having the spotlight and the cameras one, and repeating slogans - while his people cheer - it's his nirvana. Our nightmare. Our shame.
14
"is there a strategy here? It’s hard to see one. "
The Trump strategy is to declare bankruptcy and walk away from any failed project or undertaking
19
This analysis assumes that Trump’s motivation was economic, that he had specific trade goals that he wanted to achieve. But what we have seen in the first 18 months of a Trump administration is that actions rarely have policy goals. Instead, actions are designed for their image, a remnant of Trump’s lifelong focus on his celebrity. Trump’s trade war is intended to burnish the image of Trump the tough guy. It doesn’t matter that it will end in failure, or that he really is a political, economic and diplomatic lightweight. What matters is whether his base reveres him when he heads out to another rally fix to pump up his fragile ego.
36
He's Kanye West but with nukes.
2
Hello, Mr. Krugman.
Do you have a prediction on when the US economy will tank? How long will it take for the average American to feel the symptoms of Trump's Trade War, saying that the average American is not in denial and can recognize the symptoms?
16
The signs should be obvious by November.
2
Yes, Trump and the Republicans do have a plan to win the trade wars, but we consumers will be the losers. The entire strategy revolves around offsetting the deficits created by the tax cuts bill. I remind you that the tariffs and trade wars are not a new idea, but first proposed by House Speaker Ryan last year when the idea of imposing "Duties" on imports was batted around publicly to gauge public reaction which quickly shot down the idea as a tax on consumers. Since the name was changed from Duties to tariffs, perhaps to derail attempts by reporters to look back and see the trend, the Republicans have refined their tariffs plan and now feel confident they will win the trade wars, unlike last year. So you see, this provides evidence for me to believe that the tariffs are indeed, meant to offset the tax cuts that largely benefit the wealthy who will once again flood the Republican campaign coffers. Trouble is, the tariffs are actually a war on American consumers who will ultimately pay the tariffs and enrich the Wealthy even more.
11
These fools have an utterly faith-based belief that relieving corporations of taxation makes manna fall from Heaven.
6
"Supply chain, what's that?" ponders Trump during a Fox News commercial.
"No clue" says Kudlow. "Sounds kind of kumbaya to me, like all of that alphabet nonsense, WTO, TPP, UN, NATO, NAFTA, all I know is its all bad for America".
"The only good chain is a hotel chain" says Trump. "But I just got an idea for my next rally.
Workers of the world, you have nothing to lose but your supply chains!"
"Love it!" says Donald Jr, who just entered the room.
"Uuuuh, Daddy, can we talk?" says Ivanka, poking her head in the door.
33
Trump: Yes, supply chains...
That sounds like some kind of red tape for our great american suppliers.
Unchain my suppliers!
Next rally chant:
Get rid of all the chains!
Get rid of all the chains!
So he's screwing most of us. What manufacturers or producers are they trying to help?
10
In Trump's many failed businesses, (given a million by daddy, bailed our 14 mil a few years later, inherited 230 mil by daddy, then 7 bankruptcies), he managed to screw his investors over and over. People that do business with Trump never profit, and that is OK with Trump. Why would he change at 72 years old?
170
As I mentioned in the comments on another post, we have already decided to shift a venture that was designed with a US parent company completely out of the US. Multiple prospective customers in Asia have been telling us directly for some months that they will not do business with our company if it is US domiciled, for fear of supply chain disruption.
And now we have evidence that these fears would most likely be realized, so the die has been cast. It's sad, and I'm sure we are not the only ones.
144
The President swaggers about and imagines himself a bold warrior in the economic and business universe, a gunslinger with big-bore weapons that can tear an opponent to pieces.
He imagines the fear he must certainly create in others because he is potus and because he is DJT.
He imagines he understands the dynamics of global trade and imagines the heroic outcome his shoot from the hip decisions will produce.
There is no limit to the imagination of a narcissistic fabulist. This country has a crazy man at the helm and it’s not going to end well.
28
Imagine if instead of becoming the president of a wealthy country with nearly limitless resources, he had become the president of a poor one. Without those limitless resources, he would have already run that vulnerable country into the ground.
It's parallel to his own life. What if he had tried to start a real estate business without the inherited millions he got up front?
Your description made me visualize the white-jump-suited Elvis in 1976...
Trump's trade policies will fail if for no other reason than their basis are Trump's inexhaustible narcissism and global naïveté. He knows little of other country's options and will never recognize the necessity. Strategies and goals only impede stumblers.
12
What does Trump want from China? Simple. They just need to say “OK, you win, we lose, you are toooo smart for us.” Then Trump can move on to the next phantom challenge.
I’m pretty sure Trump cut attending his economics classes at Wharton.
25
As Dr. Krugman makes clear with his usual informed perspicacity, Trump’s tariffs are just more of the same:
Arrogance and incompetence informed by ignorance.
And of course, Trump attacks our allies and China while leaving Russia alone, i.e., Trump continues to act as if he is reading from the Putin Plan for disrupting the western alliance and the Chinese economy while establishing Russia as the new world leader.
73
Oligarchs deploying kakistocratic rulership; who live in the past, eschewing reason and embracing racialism. How can this end well?
14
what's so hard to understand about trade wars being easy to win?
1
Meantime he & family are making a fortune! So what's the issue?
9
The hallmarks of this administration have been lying, white supremacist policies and cheating by way of legalizing theft through the Great Undoing of eighty years of more or less careful alignment of public versus corporate interests in various areas of national life. Pick a topic and you'll find the government agency associated with it has been gutted.
We need to talk very differently about what it is Trump is after, using policy. We know his children have profited from these last 18 months. We also know that everything Trump does is about him. Get someone to leak his stock portfolio and you'll likely find the rhyme and reason behind his trade policy, which, oddly, his trade Czar isn't really in charge of.
We need to call things by their rightful names. ICE is run by the Klan and the rest of government by industry. At the top, a liar and thief presides.
We need precision and clarity.
---
https://www.rimaregas.com/2018/07/06/lapsing-into-imprecision-and-using-...
176
The Washington Post reports that Trump began handing out his personal cellphone number to a handful of world leaders shortly after his inauguration, including to the leaders of Mexico and Canada, and that Trudeau took advantage of the opportunity to call the president in April 2017 to speak about trade issues.
http://thehill.com/homenews/administration/395932-aides-caught-unaware-o...
1
Case in point:
As trade war rages, the shoe biz goes on for Ivanka Trump and her Chinese suppliers
President Donald Trump’s daughter has long had her apparel and shoes made in China and thanks to a major exemption for Chinese garment and footwear in the tariffs dispute, the clothing industry looks likely to be left unscathed.
The U.S. imposed an additional 25 percent tariff on $34 billion worth of Chinese goods on Friday.
Among the sectors affected were nuclear reactors, boats and aircraft, but clothing was exempted.
https://www.rimaregas.com/2018/01/07/politicos-running-list-of-what-trum...
3
Five stars! No liberals were harmed in the making of your post. Well done!
1
the tariffs are all paid by us all.
thanks, 45.
55
Perhaps Trump's primary trade advisor is Putin. Russia sure seems to be in a position to gain a lot from the Trade War among other recent Trump anti-Nato, anti-Europe policies. He has a very private meeting with Putin coming up. Trade will likely be discussed but perhaps only the quid pro quo for the Trade War - namely Russia's help in the midterms.
lff
60
Russia's sale of soybenas to China has increased with the result being a reduction of the effectiveness of US sanctions. trump enables Putin to win again.
3
It seems like the strategy is to avoid placing tariffs on finished consumer goods. After all, once the price of cheep Chinese junk (or a TV or an iPhone) go up, Trumps base will loose their patients.
7
Trump et al. are ignorant fools on trade, true But the real shift in trade balances and deficits has been caused by capital flows, not by goods or services.
Accordingly, a more productive course would be to tax Chinese currency manipulation rather than Chinese exports. In order to undervalue the renminbi against the dollar, China drives the dollar's value up by buying dollar-denominated financial assets, principally U.S. Treasury bills and bonds.
To discourage China from doing so, the U.S. government should tax the income on Chinese holdings of U.S. financial assets. For example, the U.S. Treasury would withhold tax on interest paid on Treasury bonds held by China. For every $10 billion of Treasury bond interest paid to the People's Bank of China (the central bank), the U.S. Treasury could withhold 30 percent, or $3 billion, in tax.
Taxing Chinese assets would certainly raise hackles in China, yet Chinese leaders would have no way to retaliate in kind, as U.S. holdings of Chinese assets are less than ten percent of the value of Chinese holdings of U.S. assets.
By taxing the precise actions that cause distorted exchange rates, the United States would increase the incentive for China and other currency manipulators to allow the values of their currencies to reflect market fundamentals.
Another important benefit of this approach is that it would explode the myth, commonly held in China, that the United States wants or needs China to buy U.S. Treasury bonds.
8
Commonly held here too. I have lost count of all the times I have heard someone on the right declare that the Chinese holdings of our national debt gives them the power to drive us into insolvency (‘course deficits only matter when the D’s are in control as demonstrated by December’s giveaway to those who don’t really need it. )
1
Yesterday evening, the Washington Post published a report about the president’s personal phone calls with other world leaders. He has little patience with traditional allies, but considers Vladimir Putin a partner, asking him for advice on matters ranging from North Korea to trade. In turn, according to the Post, the Russian leader gripes about “fake news” and the subordinates undermining his relationship to Trump.
Can there be any doubt about who will benefit most from this incompetent man and his hamfisted policies?
520
Since trump has proved the inability to keep a national secret, like revealing a spy source to Russia last year, how do we know trump is not jeopardizing our national security when he talks to Putin or other world leaders, or even Sean Hannity and any of trump's other civilian friends for that matter?
4
That brings to mind two questions, Jim:
1. What does Trump owe Putin? And through what channels was it done? (Think Russian oligarchs and Deutsche Bank, to start.)
2. Where are those TAX RETURNS?
3
The Professor just doesn't get it - he refuses to give Trump credit for devising a smartly targeted strategy, and seems unfamiliar with Trump's track record.
The Professor, making academic judgments, naively and ridiculously believes that Trump is working overtime to rebalance trade agreements.
Whereas it's obvious to those less myopic that Trump is playing brilliant 3D chess and is steadily advancing toward his ultimate goal of bankrupting the country, which will then allow us to repudiate $20 trillion in sovereign debt - thus providing a windfall of $61,000 for each and every American.
11
This is brilliant satire, right?
I hope so, anyway. Your so-called sovereign debt is my retirement savings. When you repudiate that, I lose my investments. So thanks for that. There is no "windfall" for Americans when the US Government defaults, there is only a worldwide depression.
226
@Fourteen -- interesting argument, but do we have to call it "brilliant?" How long will this strategy take to play out and how many Americans will be devastated financially in the process? How much hardship will people have to go through for their 61K and will it be distributed equally? Never mind that in the process the US will have to abandon any illusion of moral principles (though maybe it is to late for that already anyway). And are these other countries going to take the theft of $20 trillion without finding a way to fight back?
As well as "brilliant," couldn't we at least also call it myopic and mean spirited? MAGOT - Make America Great on The backs of others.
20
Mr. Kelm, what you say makes good correct sense, but are we not in the post-truth world?
Should we not just get over the past and face this new and wondrous future of faith with the chant, "In Trump we Trust?"
What about currency manipulation? If the dollar is overvalued -- by either/both trading partners, how can this help US manufacturers. If it is allowed to depreciate the next president will be obliged to accept Chinese rmb as a reserve currency. Isn't that inevitable?
4
Trump boasts of his big brain, but he sits on it.
289
Yes, but everything Trump boasts of is fake or hollow; and everything he accuses others of is what he does himself. This is a safe rule to apply.
3
Understanding Trump:
Trump does not have strategic aims from his actions. He’s only living a Reality TV Show.
Gutting laws and treaties is a lot easier than creating new ones. But for Trump, his aim is the maximize what he can do on his own without advisors, without challengers and without negotiators. He revels in Fox daily headlines “Trump did this that or the other”.
A rational actor should ignore him until this fad goes away.
After Trump we’ll have to fix a lot. But we don’t have to act like his will be a lasting legacy.
16
Au contraire mon ami -as the French would say- those Supreme Court appointments made by #45 are lasting for generations. Those will impact Americans for decades long after he leaves office. I, for one, do not believe that history will be kind to his legacy.
13
Trump is a reality TV star playing to his audience. There were once 550,000 jobs in steel mills, now there are 83,000. It's clear to economic experts that bringing back all those 470,000 lost steel jobs won't help the US economy a tiny fraction as much as a trade war will hurt, but Trump is selling hope to descendants of those who once worked in the steel industry, and they're buying it (at a cost they don't understand).
444
85% of those lost steel jobs were due to technology. The way you bring them all back is by hiring lots and lots of floor sweepers.
20
And there are many more jobs in solar than there are in coal mining. But don't expect facts to impinge on Trump's view of the world.
6
The cited lost 470,000 steel mill jobs wouldn't return to even a fraction of their former levels even if all their manufacturing customers filled all their needs with U.S. producers. Manufacturing processes and technologies has grown by exponents since those peaks. It would be economically improbable if even one fourth of those peak employment levels were restored.
4
"There’s certainly no hint that the tariffs were designed to pressure China into accepting U.S. demands, since nobody can even figure out what, exactly, Trump wants from China in the first place."
Let's see if I've got this right; Trumps put tariffs on the goods of all our major trade partners expecting what? Nobody knows!
30
But surely you'd not want Trump to show you his cards!
1
Having given away over a trillion dollars to the corporatists, the Trump administration now proceeds to recoup that money from the middle class through tariffs.
378
These tariffs are definitely a middle class tax increase and have already cost jobs. The farmers are not doing too well either. And the trade "war" that is "easy to win" has just begun. But the Trump supporters don't care; they are just looking to attend the next rally or view it on Fox. Anything is better to them than Clinton and the Democrats.
27
Meanwhile, back in the non-Trump global economy, "Asian trade ministers took another step toward creating what could be the world’s biggest trading bloc, expressing hope that a deal could be signed by the end of this year.
Ministers from the 16-nation Regional Comprehensive Economic Partnership, which includes China, Japan and India but not the U.S., met in Tokyo last Sunday to try and thrash out remaining differences.
“The path toward a year-end agreement is now clearer,” said Hiroshige Seko, Japan’s Trade Minister during a press conference. “As protectionism concerns increase globally, it’s important that the Asian region flies the flag of free trade.”
If achieved, the partnership would also include the 10 members of the Association of Southeast Asian Nations as well as South Korea, Australia and New Zealand, and cover one third of the world’s economy and almost half its population.
“There are great challenges to the global trading system at this point in time,” said Chan Chun Sing, Singapore’s Trade Minister. “It serves as added impetus for us to try and achieve a substantive conclusion to the RCEP process.”
Further progress on RCEP will put pressure on the US to consider rejoining the TPP, which Trump rejected out of stupidity and spite.
https://www.bloomberg.com/news/articles/2018-07-01/world-s-biggest-tradi...
The global economy will move forward without America, while Donald, Dumb and Dumber drown the country in white spite.
622
When does the "winning" start?
5
The last sentence should be: Dumb, Dumber and Donald. I think.
8
Socrates, don't forget that behind spite, hate, fear, et al. is the power of the billionaire class, regularly reinforced under Repubble presidents and Congresses (Reagan, Bush, Bush, Trump) and not rolled back nearly enough under Democrats (Clinton, Obama).
5
Call me paranoid, but when I look at the big picture of Trump's actions (playing golf excepted), I see a pattern aimed at destroying the things which have kept an uneasy peace since the end of WWII. It's like he wants the USA to endure the kind of conditions that led to the downfall of the USSR.
569
I keep asking this question, and not getting any good answers:
"If Trump were a foreign agent bent on destroying the Western alliance, how would it look any different than it does now?"
947
Yep. Agreed. And as a first step, I'm convinced he is aching to launch a nuclear attack -- on someone, anyone. I think he views this as the ultimate in manly tough. This must be prevented, yet I have no faith anyone currently in the White House or the GOP would have the backbone to stop him. Pretty freaky.
3
Sounds like what his buddy Vladimir wants..........
1
There are two ways to achieve the goal of import/export balance. We can raise imports. But even the most cynical right wing pundit surely isn't going to now argue that raising taxes, and thus raising prices, increases trade.
Or we can lower exports. I believe the goal of all these new taxes is to shut us off from global trade altogether. Disruption of the supply chains is exactly the point. American manufacturers can no longer rely on imports of anything.
It's insane but if your mindset is locked in a hagiographic false memory of the fifties it almost makes senes. American car companies did great until those rice burners came along. Amirite? Never mind that Toyotas are now manufactured in Texas, Kentucky, and Indiana while Fords are manufactured in India, France, South Africa, etc.
37
Like all Trump policies, tariffs are being used in his trade war as a cluster bomb rather than, as you note with China, a laser-guided surgical strike. The consequences will be in the "collateral damage" in Trumpland that is being targeted by the Chinese and the Europeans. If Donald Trump has a real problem with China, and he does, it's about their theft of U.S. intellectual property not their aluminum and steel exports which account for very little of their trade with us. So, tariffs are not only being used as a blunt weapon, but they're hitting the wrong target. A trade war may play well to his base, but when the bodies of their unemployed start being counted, he will surely suffer the "blowback" like the one his equally ill-considered "zero tolerance" policy is causing in separating innocent children from their parents. It may be a "game" to Trump, but in the real world, real lives of our fellow citizens will be ruined.
29
If Trump cared (or even knew) about intellectual property theft, he would never have exited the TPP. TPP was not about lowering tariffs which, up to now, have been quite low.
7
And yet, on yesterday’s national news a Trump supporter, who is a farmer in the Midwest, told the reporter that he knows that Trump will win these trade wars because he’s a “successful businessman.”
You just can’t fix ignorance. His supporters live in a myopic dreamworld, following this evil Pied Piper into the cave. Their animus towards progress and democracy will be their downfall. Unfortunately, those of us with any sense at all will also suffer enormously.
12
There are so many thing wrong with this picture that one hardly knows where to begin.
But for starters, Donald Trump's first real mistake in starting this tariff feud, was in assuming there'd be no retaliation in kind.
Just how ridiculous is that?
The next mistake he made was in further alienating our neighbours to the North and South, while not taking into consideration just how intricately interwoven our economies are.
And then there's China -- which was perhaps the biggest mistake of all. Especially since they not only practically own us, but because they also manufacture just about everything we gave up producing years ago, in order to become a nation of lazy consumers.
Add to that the E.U. tariffs on imported American goods, and you see how this president who apparently thrives on conflict has created just that on a massive scale
There are no winners here.
Least of all the United States.
SAD.
152
Let's start with his worldview. Trump’s constant refrain is: the US (the wealthiest and most influential political, economic and military hegemony in the world, which controls the world's payment system and a good chunk of its leading technology), has been systematically victimized by its neighbors, allies and competitors, using the very institutions and rules the US participated in setting up. Trump says horrible American leadership is to blame.
Trump's goal, get rid of, or minimize, all multilateral trade deals and organizations in favor of a spoke and hub system, which puts the US at the center of favorable bilateral trade agreements with every country on earth. This is seen as the key to maintaining the type of American Exceptionalism, which he and others believe is the key to the world's future.
The only things in his way are his neighbors, allies, competitors and a handful of multilateral organizations, but his first and foremost target is China, a rising power whose economic and political outlook and success he sees as a direct challenge to the Pax Americana.
His stategy is simple; he wants to decimate China's role in the global supply chain, by making Chinese goods uncompetitive. But by increasing the costs of necessary components from China, Trump is forcing American companies to pay more and thereby affecting their ability to compete with companies from countries, who do not have to pay tariffs. In the end US consumers and businesses will pay for his folly.
156
Far too subtle for 45. Idiot can't take advise; blindly blunders.
3
Dr. Krugman - you're expecting reason, logic and a rationale from Trump and his 'team'. There isn't any! This is just more kneejerk reaction to myths, misinformation and outright lies.
198
The best he can hope for is reason, logic and rational action from voters in the upcoming midterms.
Trump was about the biggest mistake you've made - after killing hundreds of thousands of Iraqis in your so-called 'war on terror'.
2
I read a lot of comments on yesterdays editorials on the tariffs that expressed the sure knowledge that with employment so high, the tariffs could not make a dent in job numbers. Believing that tariffs would hurt jobs was a liberal fantasy.
How can you fight with fact when fantasy is rampant? The argument that the economy and jobs are safe in the future because they are good now is the same as an argument in 2007 that stock pries have never been more robust, so why worry about them ever falling.
The trade war is the result of both stupidity and a vast belief in super simplistic answers to super complex problems. We are weighted down with a WH that is narcissistic, uncritical and simplistic, all at once. They don't have the capacity to even guess at how much damage they can do without trying.
636
And 1929 was a GREAT YEAR for business and stocks. Until ... well, you know.
6
Cathy,
Not even "guess at how much damage" but they'll deny that the damage exists and blame it on Democrats after it becomes significant.
1
It is almost as if they were some sort of zombies that are acting on evil received messages that have the ultimate goal of destroying the economies and political alliances of the western countries.
It is almost like this is a bad sci-fi movie.
1
A trade deficit on the order of half-a-trillion dollars annually is unsustainable. Solving this problem would require Americans to save more and buy less (foreign) goods that are not essential. A value-added tax to lower consumption might be one way to go although it will affect both US and foreign producers. Economists are no less at fault as they unquestioningly include overall consumption as part of GDP. Just as there is a need to get away from Wall Street's fixation on quarterly earnings, there is also a need for economists (both in the Government and academia) to get away from placing so much emphasis on consumption in th calculation of GDP.
3
SV - comment is all over the place but what makes a trade deficit unsustainable? And the idea that people are going to stop buying stuff at walmart, big box stores or amazon is unrealistic. Cut the trade deficit can only mean paying more for goods produced locally. And due to rising and truly unsustainable income inequality, you might recall consumers don't have the money.
27
Here is an analogy that may make this easier for you to understand. Every week I give $100 to my grocery store and receive no money from them in return (of course I get $100 of food). According to the DT definition I am a big loser in this trade war. I have parted with $100 and received no money back. I’ve been sustaining this for 50 years and am healthy. Thank you very much.
I suggest one look at both sides of the balance sheet to decide whether or not this is a good deal.
17
The purpose of investment is to produce, directly or indirectly, stuff to consume (except in wartime). So without consumption, investment makes no sense and is unprofitable. The middle class consumes while the rich invest. So as the middle class shrinks, investment loses its foundation and the whole economy sags.
Investors are incapable of understanding this. When the goose that lays the golden eggs starts getting sick, the response of each investor is to get as many eggs as possible before the goose expires. Working together to prolong the goose's life is socialism and totally foreign to the investor mentality.
8
Trump’s tariffs? Increasingly odd,
Like a circular firing squad,
Mounted on a toy horse,
Leads us on a dire course,
As Kudlow gives him the nod.
284
Always enjoy these, Larry
4
Larry,
It’s strange in years before
We never got anything more.
Our “Allies” are “ripping us off”!
All said in private before!
Like, “After November I’ll do what I can!”.
Socialism is really great if someone else pays the freight!
The “else” has always been US.
Now it’s time to get tough!
China is in there too.
A part of the “Rip-off crew”.
The “Professor’s” been wrong before.
The economy did “sorta” soar!
Donald, whose knowledge of international economics is limited to local construction jobs, hiring cheap illegal labor, branding his last name and money laundering, has no idea what the manufacturing, distribution and import/export world entails.
He is literally the Ignoramus-In-Chief purely channeling the white spite, xenophobia and cultured stupidity that forms the Ugly American underbelly that got him 'elected'.
Dry Fly Distillery, a Spokane whiskey company has had orders to Canada cancelled due to a 25% Trump tariff.
“It makes me uncompetitive in the market,” said owner Don Poffenroth.
Dry Fly is losing orders to customers in the EU, Canada and China, and will be forced to buy less local grain and cut back on employee hours.
Clarkson Hine, CEO of Distilled Spirits Council, said that the Trump whiskey tariffs “would severely harm producers, US farmers … distribution and logistics providers, as well as other input providers such as glass and other packaging suppliers”, and that the spirits sector directly and indirectly employs approximately 1.5 million people.
That's the real Trump-Trickle-Down economics --- local economic contraction all across the country as hundreds of thousands of American business - big and small - have to reconfigure their assaulted businesses, just as Harley Davidson is contracting in America.
"My ignorance is just as good as your education" is no way to run a country, except into the ground.
The Party of Stupid must be thrown out of office.
1013
The sad part is that even as people suffer job losses and economic decline, they have been primed not to believe that Trump is responsible for any of it. Those who say he is at fault are the hated "elite" who write for and read "Fake news" and who want Trump to fail. The news Trump's people will read (or watch, more likely) will tell them that it's immigrants' fault or Muslims' fault, or foreigners' fault, or Congress's fault--anybody but Trump. We're in a hall of mirrors here, and it will be a generation before Trumpers recognize what their "leader" has done, if indeed they ever do.
26
I doubt they ever will. In fact according to his lights he’s succeeding. Setting up Social Security, Medicare and Medicaid for destruction; providing the already hugely wealthy with more of societies
Wealth; allowing polluters to rape the environment; giving away public lands for 2 dollars an acre and taking women’s control of their own fertility and healthcare care in under 2 years is quite an accomplishment. Never mind destroying public education, taking orders from Putin and trying to wreck the Western Alliance that’s kept the peace since the 1940’s.
I have to think that Trump’s strategy is to quickly bankrupt our country and to isolate us in doing so. He has to be acting as an agent for Russia. No one in their right mind can be so reckless and uninformed:
Record deficits thanks to a tax cut that we did not need.
Removal of the US from the strategic TTP agreement
Removal of the US from the Paris Accord - “There is no such thing as global warming”
Using the North Korean and US summit as merely a photo opportunity- Certainly not worthy to win a blue ribbon award at a county fair, much less a Nobel Prize
Embarrassing the United States at the most recent G7 Summit
Consistently spending weekends at his resorts when he stated he would rarely leave DC which is another of his countless lies.
Bringing the swap with him to DC instead of draining it. Can we now see his tax returns?
Starting a trade war with countries whose leaders’ thinking is more sophisticated that his own uninhibited instincts: I am sure Stormy Daniels can weigh in on his natural instincts......
What is next? Is Mueller our only hope before he leads our country into a civil war prior to our colapse?
I have to believe that this President is an agent of Putin.....So sad that the con-man in Chief deceived the masses in the red states to pursue the hope of their American Dream which was only that....a dream, but is now a nightmare for all.
2
Trump is consistently unconcerned with the effects of his impulses. After his great nobel qualifying detente with Korea, we are now letting him take us down his established economic path. After six bankruptcies what did we expect? Bigger and better bankruptcies it seems. And then the default on U.S. Treasuries. Maybe this will somehow wake up the Republicans in Congress to what they are actually doing to our country, but I have my doubts. And have even less confidence in the Trump voters.
257
His "great nobel qualifying detente with Korea" is just another bankruptcy. Wait and see. Hey, read today's headline and see already.
5
Republican congresspersons are feeding at the same off-the books campaign contribution books as Trump. He introduced them to the con and now they are co-participants. That is why they treat him like “dear leader”. Mueller’s work is taking a long time, not because they haven’t been able to find anything but because they have found so much on so many levels.
2
It’s the great flaw of democracy; the assumption of putting the best people into the best positions at the best time. It’s worked mostly, until the perfect storm of six elements that turned everything:
1) the wrong Republicans at the right time
2) the wrong Democratic leader at the right time
3) the wrong use of social media at the
right time
4) the wrong empowerment of the disenfranchised at the right time
5) the wrong media network at the right time
6) the wrong opportunity for corruption at the right time
Put it all together and the results are the glaring limitations of trying to play fair with democratic principles. The inherent weakness if democracy is that those people who don’t believe in the guidelines will exploit every weakness to the bitter end, and will continue to do so until they are stopped.
It just keeps getting worse.
74
7). The wrong president of our country at the right time
A most important comment. Please read, everybody.
7) the wrong election system at all times