Of Tweets And Trade
when Trump talked trade, he had no idea what he was talking about — no more than he did on health care, or taxes, or coal, or …. Specifically, Trump seemed to have two false ideas in mind:
1. Existing trade agreements are obviously and bigly unfair to the United States, putting us at a disadvantage.
2. Restricting trade would be good for America and bad for foreigners, so the threat of protectionism gives us lots of leverage.
.. In fact, since Mexican tariffs were higher to start with, in effect Mexico made more concessions than we did (although we were giving access to a bigger market.)
.. Oh, and China currency manipulation was an issue 5 years ago — but isn’t now.
.. stuff you export is often produced with a lot of imported components, stuff you import often indirectly includes a lot of your own exports.
.. When we buy autos from Mexico, only about half the value added is Mexican, with most of the rest coming from the US — so if you restrict those imports, a lot of U.S. production workers will be hurt.
If we restrict imports of components from Mexico, we’re going to raise the costs of U.S. producers who export to other markets;
.. protectionist policies would produce many losers in the U.S. industrial sector.
any attempt on Trump’s part to get real about trade will run into fierce opposition, not from the kind of people his supporters love to hate, but from major business interests.
.. So far, at least, the Trump trade agenda, such as it is, has involved tweeting at companies
.. the classic answer of collapsing juntas is the Malvinas solution: rally the nation by creating a foreign confrontation of some kind. Usually this involves a shooting war; but maybe a trade war would serve the same purpose.
.. If Trump does do something drastic on trade, it won’t be driven by his economic theories, it will be driven by his plunging approval rating.