The real reason Trump wants to start a trade war

On most policy issues, when President Trump states his position, you can tell that he’s blurting out an unformed idea that is always subject to change. No one is really surprised when, a day or an hour later, he says the exact opposite, because when it comes to policy, generally speaking, he doesn’t know and he doesn’t care.

There is one exception, however: trade.

When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!

Wilbur Ross on now: “There’s about 1 ton of steel in a car. The price of a ton of steel is $700 or so, so 25% on that would be one half of 1% price increase on the typical $35000 car. So it’s no big deal.”
.. Free trade has widely distributed benefits and concentrated costs, while a tariff like this one that is meant to help a particular industry has concentrated benefits and widely distributed costs.
.. There have always been two core ideas underlying his beliefs on trade. The first is that trade is a zero-sum contest in which the only goal is exporting goods. If we import something from another country, even if comparative advantage makes it perfectly reasonable for us to do so, then the other country has “won” and the United States has “lost.”
.. Trump’s second idea about trade is that it represents a kind of contest of pride, even manhood. When he talks about trade he nearly always says that other countries, particularly China, are “laughing at us.” When we, say, buy cheap consumer goods from abroad, it means we’re the sucker, the sap, the patsy.
.. Yet you’ve never heard Trump say exactly which provisions of NAFTA he dislikes or what he would change, probably because he doesn’t know himself. He just thinks that trade wars are good, and easy to win.
.. Gary Cohn, the president’s chief economic adviser, tried to argue to him that increased tariffs would hurt the economy by raising prices on goods that contain steel and aluminum, to which Trump replied that it’s “a small price to pay.” Since he sees this issue to be about not just jobs but even more importantly about pride and dignity, that won’t persuade him.

From where Trump stands, imposing the tariffs is an end in itself. It shows those foreigners that we won’t be taken advantage of, that we’re big and strong, that nobody’s going to laugh at us and get away with it. It’s “winning.” Even if we wind up losing.

Trump insists ‘trade wars are good, and easy to win’ after vowing new tariffs

Trump is imposing the steel and aluminum tariffs by utilizing legal provision that allows the White House to take steps if it can argue that imports threaten the national security of the United States.

Trump’s comments on Thursday and his Twitter posts on Friday made no mention of national security but, instead, referenced what he said was an unfair dynamic where the U.S. buys more from other countries than those nations buy from the U.S.

.. Canadian officials said the steel and aluminum tariffs would be unacceptable and that they would retaliate if it affected their exports to the United States. A number of other countries also expressed alarm. German politician Bernd Lange, who heads the trade committee at the European Parliament, shot back: “With this, the declaration of war has arrived.”

.. Trump believes that tariffs, even on steel produced by other countries, will help revive the U.S. steel and aluminum industries.

.. trade wars are unpredictable and escalate quickly.

.. Gary Cohn tried to prevent Trump from pursuing the tariffs but was bulldozed by other advisers who thought the changes were necessary and would fulfill promises Trump made while campaigning

.. The three-largest U.S. trading partners are China, Canada and Mexico.

The Daily Shot: The White House Defends Archaic Industries at the Expense of Value-Added Manufacturing

The decision to tax steel and aluminum imports was a political move that should, in theory, play well in races such as Pennsylvania’s district 18 special elections. The larger question, however, is whether the US wants to compete in the industrial commodities businesses that had peaked decades ago. Boosting these industries will be at the expense of value-added manufacturing, which has rebounded in recent years. Even China is now shifting out of these “old economy” sectors (#2 here). Ironically, higher import prices for industrial materials may encourage some firms to move more production outside of the US.

From the consumer’s perspective, these tariffs mean higher prices on thousands of products – from US-made cars to beer cans.

Trump Promised to Protect Steel. Layoffs Are Coming Instead.

The layoffs have stunned these steelworkers who, just a year ago, greeted President Trump’s election as a new dawn for their industry. Mr. Trump pledged to build roads and bridges, strengthen “Buy America” provisions, protect factories from unfair imports and revive industry, especially steel.

.. Foreign steel makers have rushed to get their product into the United States before tariffs start. According to the American Iron and Steel Institute, which tracks shipments, steel imports were 19.4 percent higher in the first 10 months of 2017 than in the same period last year.

.. When ArcelorMittal announced the layoffs in Conshohocken, it blamed those imports, as well as low demand for steel for bridges and military equipment.

.. Earlier this year, tariffs seemed imminent. Wilbur Ross, the commerce secretary, said in late May that he expected to conclude the steel investigation by the end of June.

And in early June, Mr. Trump told a crowd in Cincinnati, “Wait till you see what I’m going to do for steel and your steel companies,” vowing that he would “stop the dumping” of products at superlow prices by other countries.

We’ll be seeing that very soon. The steel folks are going to be very happy,” he said.

.. Some officials, like Mr. Ross — a former steel executive who was on ArcelorMittal’s board until he was confirmed in February — wanted to push ahead with tariffs. But others, including economic and national security advisers, worried about repercussions, trade advisers say.

.. The tariffs had plenty of opponents. Automakers, food processors and companies in other industries that use steel and aluminum in their products complained that tariffs would drive up costs and make them less competitive, ultimately sacrificing more American jobs than they would save.

.. “The president’s own words and lack of action have actually put the industry in a worse position than if he had done nothing at all,”