Trump’s trade warmongering a risky game

It’s hard to know what is going to happen with world trade, with Donald Trump making heavy handed threats, partly retreating, then making more threats with a mist of both bullying and vagueness hovering over  it all.

Trump recently imposed steel and aluminium tariffs, citing national security. He talked tough.

Financial Times: Trump defends steel and aluminium tariffs threat with attack on EU

Donald Trump launched a fresh attack on the EU on Tuesday as he defended his plan for tariffs on aluminium and steel imports. Despite a growing Republican backlash against the tariffs, Mr Trump said he planned to impose them in a “very loving way” that would command new respect for the US around the world.

“The European Union has been particularly tough on the United States,” Mr Trump said. “They make it almost impossible for the United States to do business with them. And yet they send their cars and everything else . . .” The president repeated a threat of new tariffs on European car imports should the EU retaliate against his trade moves.

Republicans fear that any trade war that might ensue could undermine the economic benefits of last year’s tax cuts, ahead of November’s midterm elections.

In a letter to the president on Tuesday, Orrin Hatch, who chairs the Senate finance committee, said the proposed tariffs were akin to “harmful and unnecessary tax increases on American workers and consumers”.

Mr Trump insisted again on Tuesday that he was delivering on his campaign promise to protect American workers and companies from unfair foreign competition. But Republicans are trying to convince him that too broad an approach would hurt other steel and aluminium-using industries such as the drinks sector.

“This isn’t about backing down. This is about hitting your target,” Kevin Brady, chairman of the House ways and means committee, told CNBC.

But either Republican pressure or on a whim Trump has partially backed down, in the short term at least.

Reuters:  Trump temporarily excludes EU, six other allies from steel tariffs

In a presidential proclamation published late on Thursday, Trump said he would suspend tariffs for Argentina, Australia, Brazil, South Korea, Canada, Mexico and the European Union, the U.S.’s biggest trading partner, until May 1, 2018 as discussions continue.

After May 1, Trump would decide whether to permanently exempt the countries based on the status of talks, the White House said in a statement.

So Trump is all over the place. But not, on this, with New Zealand.

Stuff, March 12: New Zealand steel and aluminium exports pose ‘no threat’ to US: Ardern

Prime Minister Jacinda Ardern says New Zealand has a “strong case” for an exemption from US tariffs, claiming steel and aluminium exports pose “no threat” to the world’s largest economy.

Ardern told reporters at her weekly post-Cabinet press conference that ministers were seeking an exemption from the tariffs “as we speak” and believed the case was strong.

“We have what I would characterise as an important and broad relationship with the US, not unlike Australia, so we believe we have a strong case for an exemption.

“I think that case is enhanced by the fact that we are clearly not a target here. Our exports of steel and aluminium are very small,” Ardern said.

New Zealand sent the US a letter asking to be exempted. Perhaps Ardern should have threatened via Twitter, but I doubt that Trump nor the republicans would care much about our tiny case.

Now Trump moves to crack down on China trade with $60 billion in tariffs on imported products

President Trump took the first steps toward imposing tariffs on $60 billion in Chinese goods and limiting China’s ability to invest in the U.S. technology industry Thursday, saying the moves were a response to Beijing’s history of forcing U.S. companies to surrender their trade secrets to do business in China.

The president directed U.S. Trade Representative Robert E. Lighthizer to announce within 15 days a proposed list of products to be hit with tariff increases. After a public comment period, the final list, designed to target Chinese products that benefited from improper access to U.S. technology, will be made public.

“We’re doing things for this country that should have been done for many, many years,” the president said before signing a memorandum setting in motion the trade actions.

The president blamed China for the loss of 60,000 factories and 6 million jobs, a number that most economists say blends the impact on U.S. employment of both Chinese competition and automation.

Trump said that unfair Chinese trade practices are responsible for the yawning U.S. trade deficit with China, which has reached a record $375 billion on his watch.

But China is fighting back in trade areas that the US is vulnerable.

CNBC: China responds to Trump tariffs with proposed list of 128 US products to target

  • China on Friday announced plans for reciprocal tariffs on 128 U.S. products that include pork, wine, fruit and steel.
  • Beijing said it will take measures against the U.S. goods in two stages if it cannot reach an agreement with Washington

China’s commerce ministry proposed a list of 128 U.S. products as potential retaliation targets, according to a statement on its website posted Friday morning.

Recent U.S. trade actions severely damage the multilateral trading system and disturb the international trading order, China’s commerce ministry said, urging Washington to resolve its issues with Beijing to avoid harming the bilateral relationship.

There’s some irony here regarding the Trans-Pacific Partnership. The US joined the TPP in part to improve it’s influence in the Pacific trade region to combat China’s growing influence. Trump withdrew the US from the TPP as soon as he became president last year.

If the US-China trade war comes to actual blows, and the US imposes tariffs on member countries of the TPP (now signed by eleven countries as the CPTPP), this may strengthen China’s hand in the region.

To further confuse things – Mnuchin: US to consider TPP re-entry after other priorities

U.S. Treasury Secretary Steven Mnuchin says that the United States will consider rejoining the Trans-Pacific Partnership after it deals with other priorities.

The other priorities seem to be threatening tariffs and raising the prospects of trade wars.

Trump withdrew the U.S. from the agreement last year, but the remaining 11 members pressed ahead and recently signed a sweeping free trade deal in the Chilean capital.

Mnuchin said Wednesday that the Trump administration is focused on talks to renegotiate the North American Free Trade Agreement.

That’s odd, because the two countries the US is renegotiating with, Canada and Mexico, are in the TPP. If they renegotiate NAFTA it could be difficult to then bring that in to the TPP.

Businesses like certainty on things like trade so they can plan into the future. US farmers need to know which crops are worth planting in future seasons. US car manufacturers would like to know how much their steel is going to cost. It may depend on which country they import steel from, and what Trump ends up deciding. Companies like Apple that do a lot of their manufacturing in China are likely to be anxious about the outcome of the escalating trade threats.

Things like international trade are a lot more complex than running a reality TV show where dramas every week keep the ratings up – and there a more than just one host running the world show.

Some things Trump does may turn out for the god of the US and possibly for the greater good, but there’s just as likely to be negatives, and one bad misstep could precipitate a major negative.

Stock markets often recover from temporary upheavals, but sometimes they don’t.

Express: Trump trade war threat sends world markets PLUNGING: Dow Jones, FTSE, Dax and CAC all drop

DONALD Trump’s trade war threats has caused a global stock market crisis with the Dow Jones, FTSE, Dax and Cac all plunging.

The US President is on the verge of slapping tariffs worth $60billion on China, sending investors fleeing towards safer currencies.

The levies for Chinese products would be the “first of many”, Mr Trump said yesterday as he confirmed they would be going ahead.

Reverberations have been felt throughout numerous stock markets.

The US share market steadily rose through last year, but since Trump has been throwing around trade threats and tariffs it has become a lot bumpier, and has dropped from it’s highs (and trump has stopped claiming credit for the trends).

Dow Jones over the last twelve months:

That shows a slight recover so far today after a significant trade war affected drop on Thursday. It shows a bumpy track over the last two months.

UPDATE: The Dow Jones finished the day down 1.77%, to a 3 month low.

Trump’s bluster and brinkmanship  is a very risky game.

 

 

40 Comments

  1. Gezza

     /  March 24, 2018

    With another one this week, Trump’s most costly war may yet turn out to be with his Mrs, depending on how many more tarts start reneging on their nondisclosure agreement and payoffs & go public about his infidelities.

    • Kitty Catkin

       /  March 24, 2018

      I like Stormy Daniels’ retort to those who call her a whore ; ‘That’s a very successful whore to you.’

      • She’s a whore – rich or not. It’s the oldest profession but not a well respected one. That will never change.

        • Kitty Catkin

           /  March 24, 2018

          At various times in history, they have been. The demi-mondaines of the Belle Epoque not only made fortunes, men would pay them just to be SEEN with them . Some prostitutes married well.

          The opening sentence of Harriette Wilson’s autobiography is wonderful; ‘I shall not say how, and why, I became, at the age of fifteen, the mistress of the Earl of Craven.’

          • Traveller

             /  March 24, 2018

            I love that line

            • Kitty Catkin

               /  March 25, 2018

              It was written in the early c.19.

              I like Nell Gwynn leaning out of her carriage when it was booed and pelted because people thought it was the Catholic Louise de Keroualle’s, and crying something like ‘Nay, nay, good people, desist, I am the Protestant whore !’

  2. David

     /  March 24, 2018

    Ardern might try to be a little more diplomatic in the future, everyone knows Trump takes things personally..stupid girl showing off to her mates.
    Han fisted but Trump wants to bust open some pretty awful trade barriers and China and the EU have some shockers, sometimes it takes something a bit different than the laborious negotiations that string out for decades. Get in grab someone by the throat and demand a level playing field or someones going to get a black eye.

    • Blazer

       /  March 24, 2018

      what ever happened to free trade and globalised …markets?NZ was told in the 80’s that the efficiency of markets meant you produce what you’re good at and abandon activity where you are not competitive.

      • David

         /  March 24, 2018

        It was the 1780s and Mills who came up with comparative advantage, the EU are shockingly anti trade and China have all sorts of tricks so Trump is just trying to level the playing field where he believes the US can compete.

        • Blazer

           /  March 24, 2018

          so ‘free trade’ is a gigantic…illusion then!

          • David

             /  March 24, 2018

            completely free trade is

            • Kitty Catkin

               /  March 24, 2018

              John Stuart Mill/Of his own free will/On half a pint of shandy was particularly ill.

  3. Traveller

     /  March 24, 2018

    On Ardern and her contribution to an exemption from steel tariffs.

    Calling Trump “orange”, proudly skiting “nobody marched when I was elected” and being pronounced the “anti-Trump” in US Vogue was hardly going to continue any warm relationship with the US Sir John Key has thoroughly encouraged, fostered and nurtured.

    I am afraid that the ham-fisted diplomacy evident (by omission and commission) towards the UK, EU, Australia and the USA does not auger well in the future for all our diplomatic and trade relationships.

    The approach to governance and mixed messages from such disparate coalition partners, including overt jingoism, xenophobia, anti Trade threatened industry interference, anti fossil fuel, anti-capitalism, does not engender trust or certainty in trade partners. Having a virtue signalling PM whose presence on the World stage has been restricted to liberal grandstanding must be confusing also, especially when embassies are reporting back weekly on the strange goings on of Gharahman, James Shaw, Peters, Mark, Jones, Genter, Curran, Robertson..the list goes on.

    Peters is found very wanting in that he was unable to preempt and deliver an exemption, and that an unsuccessful intervention of the PM was even needed.

    As for Trump. He’s not a man to do anything by halves. I cannot say how this will pan out. All the balls are in the air and there’s a lot happening until they fall.

    • Blazer

       /  March 24, 2018

      Wow..I presume like a former P.M ,you like..’everything about the place'(America)but not enough to …live there.As for ‘strange goings on’…that reeks of desperation.How has your life changed in the last 4months?

      • Traveller

         /  March 24, 2018

        Ad Hominem threadjacking trolling?

        Subject please. We all know the deep hatred and complex contempt you feel about me – a mere anonymous poster. Try taking on the public figures and issues I brought up as per PG’s thoughtful article.

        • Blazer

           /  March 24, 2018

          It was a legitimate response.Hardly a day goes by without you attacking Ardern on the flimsiest grounds.The U.S is increasingly becoming a pariah internationally,and should not be exempt from…critique.

          • Traveller

             /  March 24, 2018

            Are you serious? You need to take a long look in a mirror and consider your own clear bias, in particular National Party MPs who you relentlessly attack – quite rightly so, as public figures that is your right. However clogging up this forum attacking posters, runs counter to the rules and its beyond boring, distracting and childish.

            Ardern did all the things I mentioned. Do you think that she has encouraged warmth and concessions with the Trump administration? As an ANZUS member and close ally we should have expected an exemption. You can’t have it both ways in diplomacy.

            • Blazer

               /  March 24, 2018

              I am certainly serious.Reread your sub, it is long on biased,emotive opinion,and short on …factual integrity.

    • David

       /  March 24, 2018

      Well put. We are conspicuous by our absence on the exempt list.

      • Gezza

         /  March 24, 2018

        He probably thinks we’re a shit country somewhere in Africa.

        • Traveller

           /  March 24, 2018

          The Trump administration accords countries the status that their messaging reflects. Ardern’s sloganeering over substance is starting to be recognised even in NZ by the formerly adoring press.

          Ardern’s ideological grandstanding, then flip-flopping was evident in this week’s triumph of slogan over International diplomacy. It’ll be reported back to bases the world over and added to the appropriate file.

          “Standing in front of posters of Norman Kirk, David Lange and Helen Clark, who had all made historic environmental moves, as well as a poster of herself, Ardern volunteered that she had delayed attending a state lunch to deliver such an important message.

          “We’re working hard on this issue and we know that it’s one that we can’t afford to spend much time on.”

          Ardern gave an air of immediacy, but the Government is clearly not in a position to comment.

          Hours after Ardern accepted the petition she gave a much more ‘business as usual’ message to Parliament’s Press Gallery, even distancing herself from what may have been seen as a snub to the Indonesian president.”

          Mixed messaging from a PM plus a plethora of divergent opining from her coalition partners is a problem and it’s possible it’ll only get worse as Peters assumes the helm.

          https://i.stuff.co.nz/business/opinion-analysis/102475250/prime-minister-jacinda-ardern-promised-intervention-but-is-delivering-uncertainty

      • Joe Bloggs

         /  March 24, 2018

        New Zealand’s iron and steel exports to the US were worth $39 million last year out of a total of $433m, while aluminium exports were worth $23m out of a total of $1.1 billion.

        Conspicuously absent because exports of these commodities to America are in a practical sense irrelevant…

        • Traveller

           /  March 24, 2018

          It is relevant to our exporters on all fronts including jobs.

          It is even more relevant as to the conspicuous nature of being off the list of close friends.

          • Blazer

             /  March 24, 2018

            being left off the list of close friends!!Have you seen Cinderella…lately.

  4. NOEL

     /  March 24, 2018

    If we put tarrifs on Chinese imports how many would be products from former NZ manufacturers who moved to China for the lower wages anf tax incentives?

  5. Griff

     /  March 24, 2018

    Level the playing field .
    ROFLMAO
    gee some peploe live in a fantasy world.
    Trump is trying to prop up industry that have been in decline for decades with protectionist trade barriers.
    The idiotic supporters don’t get who pays.
    They do .
    Tariff on steel imports.
    All industry’s that use steel pay more .
    in the global markets their products become less competitive.
    In the domestic market the consumer pays more .
    Less jobs and less production for ALL in the protected market.
    Meanwhile the protected firm fail to innovate and adapt to the changing global markets .
    Making them even less able to compete over time .

    Think our agricultural sector before we went free trade.
    Few farmers in NZ would want to go back to the old days because they know our farming sector is more adaptable more flexible and leaner because of the changes.

    The USA is incredibly exposed to trade wars
    China USA trade balance .
    If the Chinese react they could bankrupt the USA.
    They own the USA dept .
    As they are not a democracy they can react without worrying about lobbyist .
    If China do not refinance the dept when it becomes due it will drive USA cost of servicing their dept though the roof .
    Dept that Trump is already blowing out with his idiotic economic policy’s.

    • David

       /  March 24, 2018

      Stick to global warming conspiracies you are way out of your depth here, but bloody funny.

      • Griff

         /  March 24, 2018

        Dave
        Please explain were I am wrong.
        I don’t mind if you think I am funny.
        I think you are an idiotic fantasist
        I regularly have opportunity to point out why hence my opinion is not an Ad hominem but a demonstrable fact. Your Ad hominem on the other hand has no content besides your well documented fantasist behavior.
        I will not hold my breath as every authoritative economic expert would agree with what I posted above .

    • David

       /  March 24, 2018

      “If the Chinese react they could bankrupt the USA.
      They own the USA dept .”

      That looks far more like a problem for China than the US. What are they going to do, foreclose?

      • Gezza

         /  March 24, 2018

        They could maybe write it off in exchange for a supercarrier or two. How many would the debt buy? They might be able to sell this idea to someone like Trump?

        • Corky

           /  March 24, 2018

          You’ve come closer to the truth then you realise. Let’s hope Trump has learnt well from Victor Kiam.

          • Blazer

             /  March 24, 2018

            so where are Sunbeam shavers these days?Still using yours…art you?

            • Corky

               /  March 24, 2018

              Sunbeam? Lol. As a matter of fact, yes. But it’s a Philips. Damn fine shaver, 40 years old. Doesn’t look a day over 20.

            • Blazer

               /  March 24, 2018

              checked it was …Remmington.

            • Gezza

               /  March 24, 2018

              “I liked it so much I bought the company.”
              “Shaves as close a a blade or your money back.”
              Still remember the tv ad.

            • Gezza

               /  March 24, 2018

              *as

            • Kitty Catkin

               /  March 24, 2018

              Blazer, that was very mean of you to let Corks drop himself in it like that 😀

            • Kitty Catkin

               /  March 24, 2018

              Didn’t someone else do that with a hotel chain ?

            • Gezza

               /  March 24, 2018

              Urrh? Do what? Drop Corks in it?

  6. Kitty Catkin

     /  March 24, 2018

    How does Trump make these things happen ? Why doesn’t the government stop him ruining the economy ?

    If he was in a novel, people wouldn’t bother to finish it because it would seem too far-fetched to be credible.