Wednesday, June 27, 2018

Trump and the Trade Wars

Here's a good article that explains why Trump's Trade War Really Might Be Easy to Win.

I wrote something similar recently regarding Canada and NAFTA and the one criticism I'd have about the above article is that it doesn't say anything about Trump's true endgame. President Trump isn't interested in imposing tariffs just for the sake of having tariffs. He wants fair trade and has said so repeatedly. He's simply imposing a tit-for-tat tariff policy on countries that have put up encumbrances to imports from the US. For example - Trump offered Canada a full free trade agreement with no tariffs or protections on either side but Justin Trudeau will not give up his 270% protections on dairy or the Canadian subsidies on lumber. So Trudeau gets steel and aluminum tariffs from the US instead of free trade. It's his choice and sooner or later he'll come around to free trade.

The President's tariffs aren't hurting the economy either despite what you may read or hear in the media. I'm sure you've heard about the nail company in Missouri that's going to have layoffs due to the tariffs. Or certainly you've heard about Harley-Davidson moving some manufacturing to Europe also supposedly to avoid the tariffs. Really?

Just last week it was reported (though not as widely as the news about the nail company) that manufacturers' optimism hit an all-time high of 95.1% according to the National Association of Manufacturers. I guess that nail company is in the 4.9% minority but that still doesn't explain why the media is giving the nail company story so much more coverage than Volvo opening a new $1.1 billion manufacturing plant in South Carolina.

And Harley-Davidson? Were tariffs to blame when they moved some manufacturing to India a few years ago? No that was before Trump. More likely it is declining US sales and increased competition that's forcing Harley-Davidson to move some more manufacturing to Europe. Tariffs just happen to be a convenient excuse.

Just wanted to get this off my chest.

No comments:

Post a Comment