‘Trade wars are good, and easy to win’

On Thursday Donald Trump announced that the United States would impose tariffs on imported steel and aluminium.

After a negative reaction around the world and on the US stock market, Trump has tweeted that ‘trade wars are good, and easy to win’.

Reuters: Trump tweets: ‘Trade wars are good, and easy to win’

Trump said on Thursday that the United States would apply duties of 25 percent on imported steel and 10 percent on aluminum to protect U.S. producers, although White House officials later said some details still needed to be ironed out.

Fears of an escalating trade war triggered selloffs on Wall Street and in Asia and Europe, hitting the share prices of steelmakers and manufacturers supplying U.S. markets particularly hard.

Trump believes the tariffs will safeguard American jobs, but many economists say the impact of price increases for users of steel and aluminum, such as the auto and oil industries, will destroy more jobs than curbs on imports create.

Australia’s trade minister said the measures risked triggering retaliation from other economies and could cost jobs, on Friday, while China predicted harm to trade if other countries followed the example of the United States.

In Brussels, the European Commission called the step a blatant intervention that amounted to protectionism. However, while promising to act“firmly”, it made no mention of retaliation but instead spoke of counter-measures that conformed to World Trade Organization (WTO) rules.

Brussels will join other countries in challenging the measures at the WTO and says it will also look into safeguard measures.

Reuters: Spooked by Trump tariffs, investors see few good options

The specter of a trade war started by U.S. President Donald Trump rattled Wall Street on Thursday and exacerbated worries about inflation and the future of a nine-year bull market.

The S&P 500 slumped 1.33 percent after Trump said the United States would impose duties on imported steel and aluminum, making good on promises to aggressively challenge China and other countries he blames for lost manufacturing jobs.

On Wall Street, Trump’s announcement exacerbated already-brewing concerns about inflation, which could push the U.S. Federal Reserve to hit the brakes in coming months on an expanding U.S. economy and spell the end to record-breaking stock price gains.

News of the tariffs drove the stocks of U.S. domestic steel and aluminum makers sharply higher, but the damage to stocks in other sectors was wide-ranging and illustrative of how broadly investors believe a trade conflict could damage the U.S. economy.

Halfway through Friday trading the Dow Jones was down further but had recovered slightly earlier in the day.

Investor’s Business Daily:  Sorry, Mr. President: Your Trade Protectionism Will Cost The U.S. Dearly

Protectionism is a political feel-good policy that does nothing for the economy. It’s a big cost with very few tangible benefits. That’s why President Trump has made a big mistake in imposing big tariffs on steel and aluminum.

We understand, of course, that President Trump feels beholden to his constituencies in the U.S. who have been hurt by foreign competition, particularly in basic industries like steel and aluminum. But the 25% tariff on steel and 10% tariff on aluminum that Trump seeks to impose will lead to higher prices for all, the loss of thousands of jobs and a political-crony windfall for a handful of big companies.

‘Political-crony windfall’ is becoming a familiar theme of Trump’s presidency.

WSJ: Trump’s Steel-Tariffs Plan Rattles GOP Lawmakers

Since he became president, Donald Trump’s threats to sanction global trading partners sent tremors through business-oriented congressional Republicans worried about how potential retaliation from abroad could reverberate through the businesses and farms in their districts.

On Thursday, the rattle turned into an earthquake.

WSJ: U.S. Allies Steel for Trump Tariff Tussle

President Donald Trump’s planned tariffs on steel and aluminum put U.S. allies around the globe in a tough spot, driving down stock prices and generating warnings of a possible international trade war.

UPDATE:

According to two officials, Trump’s decision to launch a potential trade war was born out of anger at other simmering issues and the result of a broken internal process that has failed to deliver him consensus views that represent the best advice of his team.

On Wednesday evening, the president became “unglued,” in the words of one official familiar with the president’s state of mind.

A trifecta of events had set him off in a way that two officials said they had not seen before: Hope Hicks’ testimony to lawmakers investigating Russia’s interference in the 2016 election, conduct by his embattled attorney generaland the treatment of his son-in-law by his chief of staff.

Trump, the two officials said, was angry and gunning for a fight, and he chose a trade war, spurred on by Commerce Secretary Wilbur Ross and Peter Navarro, the White House director for trade.

In response to NBC News, another White House official said that the communications team “was well-prepared to support the president’s announcement” and that “many of the attendees had been in the White House before and had already been vetted for attendance at a presidential event.” A different official said of the decision, “everyone in the world has known where the president’s head was on this issue since the beginning of his administration.”

There were no prepared, approved remarks for the president to give at the planned meeting, there was no diplomatic strategy for how to alert foreign trade partners, there was no legislative strategy in place for informing Congress and no agreed upon communications plan beyond an email cobbled together by Ross’s team at the Commerce Department late Wednesday that had not been approved by the White House.

No one at the State Department, the Treasury Department or the Defense Department had been told that a new policy was about to be announced or given an opportunity to weigh in in advance.

The Thursday morning meeting did not originally appear on the president’s public schedule. Shortly after it began, reporters were told that Ross had convened a “listening” session at the White House with 15 executives from the steel and aluminum industry.

Then, an hour later, in an another unexpected move, reporters were invited to the Cabinet room. Without warning, Trump announced on the spot that he was imposing new strict tariffs on imports.

By Thursday afternoon, the U.S. stock market had fallen and Trump, surrounded by his senior advisers in the Oval Office, was said to be furious.

 

61 Comments

  1. Griff

     /  March 3, 2018

    Once NZ had a protected agricultural sector
    When all the protection was lifted it caused a shock to our primarily industry’s
    After a few years farmers adjusted and became both more efficient and more adaptable
    Few farmers would want to return to the old days as they know the industry is stronger for the change away from protectionism.
    We quickly changed from a isolated protected country to one with arguable the most free trade regimes in the world.
    I member paying 44 dollars every six weeks for a very limited phone service the pleas to buy consumer goods to any one going over seas and the wealth transfer to both the owners and workers in protected industry.
    We are far better off as we our now.
    Trump is a ignorant idiot his supporters blind to economic reality.
    No person who supports Trump can claim to be economic right wing .
    Instead they sell their principles for blind worship of a failed property developer and manufactured reality TV star.

    • David

       /  March 3, 2018

      “No person who supports Trump can claim to be economic right wing . Instead they sell their principles for blind worship of a failed property developer and manufactured reality TV star.”

      You do realise it is possible to support Trump on one issue, and not support him on another don’t you? Regardless, his trade policy was always at the Bernie Sanders end of the spectrum, which is why he got significant support from natural Sanders voters.

      Trade makes people richer, this is something Green party supporters might like to think about.

      • Griff

         /  March 3, 2018

        Green party Dave?
        Who the fuck are you talking to ?
        Griff was an Act supporter for years before he found out hew divorced from reality most righties are.

        • David

           /  March 3, 2018

          Green party supporters. Read the words. It’s not hard.

  2. It hasn’t helped NAFTA negotiations:

    • David

       /  March 3, 2018

      I don’t think this has helped NAFTA negotiations either..

  3. It always seemed just a matter of time.

    US democracy is in a mess, but at least it does have some checks and balances against an impetuous and careless president.

    • Gezza

       /  March 3, 2018

      Poor Rex Tillerson. Can’t be much longer now, surely?

  4. Joe Bloggs

     /  March 3, 2018

    The US has introduced sweeping protectionist tariffs before… with catastrophic consequences. The 1930 Republican-sponsored Smoot-Hawley Tariff Act sparked international outrage and a huge backlash that deepened the global depression and it took WW2 for the US economy to recover.

    Ironically, reports claiming the bill would harm the US economy were mocked as fake news by Republicans who described press criticism as “demagoguery and untruth, scandalous untruth”.

    trump seems determined to outdo Smoot and Hawley’s asinine efforts.

    • David

       /  March 3, 2018

      Obama put tariffs on tires a couple of years ago with predictable results.

      • Mefrostate

         /  March 3, 2018

        Gee you’re all over this thread doing everything you can to distract attention from the fact that Trump doesn’t understand trade and that this is absolutely atrocious policy.

        Anyway, even if Obama put tariffs on (he did nothing as bad as this) and even if Sanders was against free trade (he was, and it was dumb policy), neither of those things deter from the fact that Trump is completely wrong on this issue.

        • David

           /  March 3, 2018

          “Gee you’re all over this thread doing everything you can to distract attention from the fact that Trump doesn’t understand trade and that this is absolutely atrocious policy.”

          I’m glad everyone here agrees that trade is good and tariffs and obstructions to trade are a complete stupid ideas.

          “Trump is completely wrong on this issue.”

          Yes, he is. He is copying an Obama and Sanders policy on a larger scale.

  5. David

     /  March 3, 2018

    The funny thing being this is Bernie Sanders trade policy..

  6. Fight4NZ

     /  March 3, 2018

    Bad if it fails. Even worse if it works.

  7. Alan Wilkinson

     /  March 3, 2018

    I’m going to enjoy watching Lefties defend free trade now.

    • David

       /  March 3, 2018

      Yes, amusing isn’t it. Many of them are just as incoherent as Trump.

    • Griff

       /  March 3, 2018

      How about real righties like me?
      The fact you are a Trumpet makes you a lefty Marxist Alan .
      Until you drop the support for the orange idiot your posting of right wing libertarian ideology is bullshit.
      That goes for Dave as well .

      Whataboutism is a symptom of cogitative dissonance.
      It is away of avoiding addressing your own stubidty in supporting the Trump moron.

      • Alan Wilkinson

         /  March 3, 2018

        You rant and froth like a loony Lefty so if the cap fits wear it, Griff.

        • Joe Bloggs

           /  March 3, 2018

          Regurgitating the same hackneyed talking points as ever, Alan.

          You’re so cute when you’re in rabid-righty mode… thanks for sharing and bringing so much amusement into our lives.

          • Alan Wilkinson

             /  March 3, 2018

            Your “thoughts” on free trade, Joe? Conflicted much?

            • Joe Bloggs

               /  March 3, 2018

              Any support I have for free trade rests on three principles:

              1. where global commerce operates to help the poorest communities build factories and businesses that lift them out of oppression
              2. where global trade replaces military might, and
              3. where global trade is used to eliminate income inequality

              I’m not ‘muchly’ conflicted by those three principles Alan.

              But when free trade is used to:
              – outsource jobs to low income workers
              – outsource jobs without adequate labour protections
              – steal intellectual property
              – degrade natural resources
              – destroy native cultures
              – line the pockets of a few at the expense of the many
              then free trade is counterproductive and pernicious…. much like your trolling.

            • Alan Wilkinson

               /  March 3, 2018

              So with a leg firmly on each side of that fence, Joe, do you support Trump’s action or oppose it?

              And of course your three numbered principles in favour are in immediate conflict with most if not all of your objections to it – leaving you free to make your random choices as the mood or ideology takes you.

            • Griff

               /  March 3, 2018

              It is not trolling joe.
              Alan has had his arse spanked and is pretending he has some scrap of dignity left.
              Unfortunately for him it is obvious to anyone not in the thrall of trumpism he has been thrashed.

            • Joe Bloggs

               /  March 3, 2018

              Are you sure you actually read what I said? ‘cos your lack of comprehension is starting to be an embarrassment, little fella…

              What I just pointed out is that there’s a case to be made for free trade as long as it benefits everyone in pro-social ways. But when it is used to drive wedges between the rich and the poor then it’s pernicious.

              Sorry I’ve used words of more than one syllable but if you can’t understand words like pro-social and pernicious then you’re as dumb as trump.

            • Joe Bloggs

               /  March 3, 2018

              ps. I still think you’re cute, even when you act dumb. That little wattled neck of yours quivers so seductively… oh, baby!

            • Alan Wilkinson

               /  March 3, 2018

              Very silly, Joe. Most international trade simultaneously has conflicting effects on both sides of the trade. Long words and silly insults don’t make a difference.

              Griff is having a bad temper day.

            • Joe Bloggs

               /  March 3, 2018

              Sorry Griff, my comment about lack of comprehension was directed at the old coot, not you. My humble apologies.

              Poor Alan, I think his trump apologist syndrome is entering its tertiary stage… his response to the realities of trumpian policy are becoming really quite delusional at times.

            • David

               /  March 3, 2018

              “Any support I have for free trade rests on three principles:

              1. where global commerce operates to help the poorest communities build factories and businesses that lift them out of oppression
              2. where global trade replaces military might, and
              3. where global trade is used to eliminate income inequality”

              It can’t do number 1, while also doing number 3, by definition. They are incoherent ideas.

            • Alan Wilkinson

               /  March 3, 2018

              Good to see you in your natural habitat, Griff – a Lefty tag team.

            • Joe Bloggs

               /  March 3, 2018

              David, you can be really incoherent at times. I think you’ve O.D.’ed on Wilkinsonite.

              An essential element of eliminating income inequality is funding economic growth of the poorest communities: channeling money into the emptiest pockets rather than into the bank vaults of billionaires.

            • David

               /  March 3, 2018

              “An essential element of eliminating income inequality is funding economic growth of the poorest communities: channeling money into the emptiest pockets rather than into the bank vaults of billionaires.”

              Sigh….

              Economic growth is never equal. All economic growth creates inequality. Build a factory in a poor area and pay good wages, all those who work there are now better off. That means they are now richer than those who do not work in the factory.

              The massive economic growth in China has lifted hundreds of millions out of poverty and created enormous income inequality.

            • PartisanZ

               /  March 3, 2018

              Depends what you call “poverty”?

              Poverty is a much more difficult thing to measure than income inequality.

      • David

         /  March 3, 2018

        “How about real righties like me?”

        Keep’n i real are you? What do you think a real righiy is exactly?

        Trump has enacted some very good policies. The tax cuts are good and his judicial appointments have mostly been sound. The idea that supporting one of his moves means you support everything is just plain dumb.

        • Griff

           /  March 3, 2018

          The tax cuts are stupid.
          You don’t cut taxes unless your books are at worst balancing
          Cutting taxes when your books are in defict is borrow and hope.

          By the way
          “Conservative” is not right wing libertarian .
          It is authoritarian .
          You and Alan are confused.

          • David

             /  March 3, 2018

            It’s not politically possible to balance the books in the US. To set that as a prerequisite for tax cuts is to set the stage for tax rises.

          • David

             /  March 3, 2018

            Just to add. The idea of setting a fiscal requirement for tax cuts if fundamentally authoritarian. You are saying people are only allowed to keep their money when the government has sorted it’s spending out.

            That puts a priority on the state of that of individuals, the very opposite of libertarian.

        • Joe Bloggs

           /  March 3, 2018

          The tax cuts are a flop.

          Shareholders at Berkshire Hathaway benefited by US$29 billion, while Republican Paul Ryan tweeted about a secretary’s $1.50 increase in take-home pay as a signal of success.

          Share buy-backs announced by large U.S. companies have exceeded $200 billion in the past three months, more than double the prior year.
          https://www.wsj.com/articles/boom-in-share-buybacks-renews-question-of-who-wins-from-tax-cuts-1519900200

          Only a third of Americans now think they’ll see an income tax cut (and you can bet your last dollar that they’re all higher income earners)

          Disney Co was just one of the major employers who has used its Parks worker bonuses as leverage in labour negotiations, while Parks Div profit jumped by 21% to US$1.35 billion in the latest quarter.

          Even a new poll from a pro-trump group shows that nearly half of Americans believe major corporations are giving workers “crumbs” while top executives benefit from big bonuses
          https://www.americafirstpolicies.org/data/february-national-toplines/

          • David

             /  March 3, 2018

            “Shareholders at Berkshire Hathaway benefited by US$29 billion, ”

            Good news. There are tens of thousands of share holders in Berkshire Hathaway, the largest of whom are pension funds or unit trusts, so this benefits millions in reality.

            • Joe Bloggs

               /  March 3, 2018

              How much has found its way to the people who need it the most? The richest 10% of American households own 84 percent of all stocks.

              It’s just another trickle-down gush-up tax law for the rich.

              Incidentall,y aside from Warren Buffet’s 36.8% share, the largest shareholders of BRK are:
              – Fidelity Management – privately owned investment company
              – Capital World Investors – privately owned investment company
              – First Manhattan – privately owned investment company
              – Vista Equity – privately owned tech venture/investment company

            • David

               /  March 3, 2018

              All companies that run pension funds, investment funds IR4K etc.

              They have tens of millions of customers. If you fail to understand the idea of mutual funds, there really is little hope.

    • Alan Wilkinson

       /  March 3, 2018

      Down-tickers hate me having fun. So funny!

      • Joe Bloggs

         /  March 3, 2018

        Happy days… I just love it when you’re all emotional like this… ya big softy!

        • Alan Wilkinson

           /  March 3, 2018

          #metoo

          • Joe Bloggs

             /  March 3, 2018

            G’arn cutey… wasn’t it Hosko that announced this week #metoo is tasteless, tacky, and tabloid…?

            • Alan Wilkinson

               /  March 3, 2018

              So he agreed with me that the Stuff/Mau stupidity was half-witted posturing. Pretty obvious.

      • Mefrostate

         /  March 3, 2018

        I don’t hate you for having fun. I hate you for refusing to condemn Trump when he betrays your principles, and for instead using it to continue your pathetic attacks on the left. The left didn’t just start a trade war, the left actually wanted to keep the US in the TPP. Maybe look at the log in your own eye, for once.

  8. David

     /  March 3, 2018

    I should add here that the EU imposed tariffs on Chinese steel last year and it seemed to pass by without all of you getting as excited as you have in this thread.

    https://www.reuters.com/article/us-eu-steel-china/eu-raises-import-duties-on-chinese-steel-angering-beijing-idUSKBN1780VU

    • Alan Wilkinson

       /  March 3, 2018

      The Commission, acting on behalf of the 28 EU countries, set final duties of between 18.1 and 35.9 percent for five years for producers including Bengang Steel Plates Co, Handan Iron & Steel Co [TANGCB.UL] and Hesteel Co.

      More selective but comparable magnitude. Of course the EU has never favoured free trade externally despite being founded on that principle internally.

    • Kitty Catkin

       /  March 3, 2018

      Well done, Mr Trump.

      I imagine that US consumers won’t want to spend more on things like vaccum cleaners any more than anyone else does.

      If cheaper materials are used, the prices are kept down – one doesn’t have to be an economist to work that out.