Raising duties on imported cars could prove trickier than on steel and aluminum imports
Volkswagen AG , BMW AG and Daimler AG, which makes Mercedes—have built factories in the U.S. and Mexico in recent years that are geared to export to Europe and China, not just to sell to Americans.
The German manufacturers employ around 36,500 Americans at their factories in South Carolina, Alabama and Tennessee. If U.S. exports face retaliatory tariffs and it becomes more difficult or uncompetitive to export cars from the U.S., European auto makers would likely have to shift those jobs to Mexico or bring them back to Europe.
.. Fears of a global trade war is leading Volvo Cars Corp., the Chinese-owned Swedish auto maker, to reconsider the scope of a new plant that it is building near Charleston, S.C
.. “If the factory in South Carolina could not export, it would be half the size. It would not employ 4,000 people anymore but just 2,000,”
.. Steven Armstrong, president of Ford’s European business, dismissed Mr. Trump’s claims that American auto makers were blocked from selling cars in Europe.
“He obviously hasn’t seen our booth this morning,” Mr. Armstrong said on the sidelines of the Geneva Motor Show. “If the product fits the market, consumers will buy it.”
The Macroeconomics of Trade War
diverting demand equal to 3 percent of GDP from foreign to domestic products would not increase US output by 3 percent relative to what it would have been otherwise, let alone the 4.5 percent you’d expect if there’s a multiplier effect. Why? Because the US is close to full employment.
.. a 3 percent rise in output relative to trend would reduce unemployment about 3 times that much, 1.5 percentage points. And that just isn’t going to happen.
.. What would happen instead is that the Fed would raise rates sharply to head off inflationary pressures (especially because a 20 percent tariff would directly raise prices by something like 3 percent.) The rise in interest rates would have two big effects. First, it would squeeze interest-sensitive sectors: Trump’s friends in real estate would become very, very unhappy, as would anyone who is highly leveraged (hello, Jared.)
.. Second, it would drive up the dollar, inflicting severe harm on U.S. export sectors. Greetings, farmers of Iowa!
So protectionism wouldn’t do very much to reduce the trade deficit, even if other countries didn’t retaliate, and would inflict a lot of pain across the economy. And that’s without getting into the dislocations caused by disruption of supply chains.
.. Add in the fact that other countries would retaliate – they’re already drawing up their target lists – and the fact that we’d be alienating key allies, and you have a truly terrible, dumb policy idea. Which makes it quite likely, as I see it, that Trump will indeed follow through.
U.S. Now Exporting as Much Oil as Some Gulf Countries
U.S. crude exports surged to a record 1.984 million barrels a day last week– an increase of close to 500,000 barrels a day from the previous week’s level, which was also a record.
The export rate is more than twice as high as it was a month ago. Until these last two weeks, the most that had ever been shipped from U.S. shores was 1.3 million barrels of crude a day—a level reached in May.
Kuwait ships more than 2 million barrels of oil abroad per day. The U.S. is still an oil importer. But net imports of crude fell to a record low last week, analysts at Citigroup said in a research note. Almost all of the foreign crude brought to the U.S. last week was from Canada
.. Canada remains the biggest destination for barrels leaving the U.S., according to federal data as of July. But Latin America, Europe and increasingly, Asia, are also clamoring for the oil.
China has emerged as the second-largest buyer of U.S. oil this year.
The Coming War on Business
In a series of essays for conservative magazines like Chronicles, Francis hammered home three key insights.
The first was that globalization was screwing Middle America. The Cold War had just ended, capitalism seemed triumphant and the Clinton years seemed to be an era of broad prosperity. But Francis stressed that the service economy was ruining small farms and taking jobs from the working class.
- His second insight was that the Republican and conservative establishment did not understand what was happening. He railed against the pro-business “Economic Men” who thought G.D.P. growth could solve the nation’s problems, and the Washington Republicans, who he thought were infected with the values of the educated elites.
- Francis told Buchanan. “Go to New Hampshire and call yourself a patriot, a nationalist, an America Firster, but don’t even use the word ‘conservative.’ It doesn’t mean anything anymore.”
- .. His third insight was that politics was no longer about left versus right. Instead, a series of smaller conflicts — religious versus secular, nationalist versus globalist, white versus nonwhite — were all merging into a larger polarity, ruling class versus Middle America.
“Middle American groups are more and more coming to perceive their exploitation at the hands of the dominant elites. The exploitation works on several fronts —
- economically, by hypertaxation and the design of a globalized economy dependent on exports and services in place of manufacturing;
- culturally, by the managed destruction of Middle American norms and institutions; and
- politically, by the regimentation of Middle Americans under the federal leviathan.”
appalled by pro-corporate Republican economic policies on the one hand and liberal cultural radicalism on the other. They swung to whichever party seemed most likely to resist the ruling class, but neither party really provided a solution.
The Buchanan campaign was the first run at what we now know as Trumpian populism.
.. “The ‘culture war’ for Buchanan is not Republican swaggering about family values and dirty movies but a battle over whether the nation itself can continue to exist under the onslaught of the militant secularism, acquisitive egoism, economic and political globalism, demographic inundation, and unchecked state centralism supported by the ruling class.”
.. Francis was a racist. His friends and allies counseled him not to express his racist views openly
.. in 1994 Francis told a conference, “The civilization that we as whites created in Europe and America could not have developed apart from the genetic endowments of the creating people, nor is there any reason to believe that the civilization can be successfully transmitted to a different people.”
.. When you look at today’s world through the prism of Francis’ work, a few things seem clear: Trump is not a one-time phenomenon; the populist tide has been rising for years. His base sticks with him through scandal because it’s not just about him; it’s a movement defined against the so-called ruling class.
.. Trump may not be the culmination, but merely a way station toward an even purer populism.
.. Trump is nominally pro-business. The next populism will probably take his ethnic nationalism and add an anti-corporate, anti-tech layer. Google, Facebook, Amazon and Apple stand for everything Francis hated — economically, culturally, demographically and nationalistically.
.. As the tech behemoths intrude more deeply into daily life and our very minds, they will become a defining issue in American politics. It wouldn’t surprise me if a new demagogue emerged, one that is even more pure Francis.