The cascade of tit-for-tat tariffs has spooked corporate executives, potentially slowing investment, and the Federal Reserve suggested this week that it might have to rethink its economic forecasts if the trade wars continue.
.. The economy is booming, but Mr. Skarich said he was not reaping the benefits. Instead, as a result of Mr. Trump’s trade policies, Mr. Skarich said his nail company may soon be out of business.
.. Mid Continent, the largest American producer of nails, imports steel from Mexico to make its nails. That steel is now subject to the 25 percent tariffs that Mr. Trump imposed on dozens of countries, forcing Mid Continent to raise its prices by nearly 20 percent.
.. Orders have plummeted by 50 percent this month as the company tries to compete with cheaper foreign-made nails. Those foreign manufacturers are not facing higher steel costs, giving them an advantage over Mid Continent.
.. While Mr. Trump might propose that Mid Continent simply buy American-made steel, it might not be so simple: Mr. Skarich notes that the cost of American-made metal is much higher than what the company had been importing from Mexico, meaning it would still have to raise prices for its nails if it used domestic steel.
.. “He ran on ‘Make America Great Again,’ and the point was to defend and protect jobs in the United States,” Mr. Skarich said. “Now here is an action he decides to take that has the potential to cost 500 U.S. citizens their jobs.”
.. China is expected to impose an additional 25 percent tariff on American lobster.. Trump’s policy was having the unintended effect of further helping Canada’s lobster market, which doesn’t face the same duties when selling to China... For several years, the cranberry industry has been struggling with an oversupply problem that has been eased somewhat by exporting juice and berries to Europe and elsewhere... Wisconsin is one of the world’s biggest cranberry producers and is the home state of Representative Paul D. Ryan.. exports to Europe were about $127 million last year.. European tariffs on peanut butter will be a blow for the makers of Peter Pan and Skippy spreads, but it is peanut farmers in Republican-leaning states like Georgia, Alabama, Florida and Mississippi who could struggle the most... The United States and China are the biggest peanut butter exporters in the world, according to the Department of Agriculture, and European tariffs would likely give China an edge in expanding its market share... “If this can give him some leverage to get a deal made, they’d be all for that,” Mr. Broome said. “If it doesn’t work and he’s miscalculated, then it could be a different story.”
Has Trump finally gone too far?
Up until now, Trumpism has been a largely victimless crime. Or, to be exact, one whose victims were largely speculative and unnamed.
President Trump has been doing great damage to the fabric of our democracy with his venomous attacks on the free press (“Our Country’s biggest enemy”), the FBI (a “den of thieves and lowlifes”), people of color (who hail from “shithole countries” and “maybe shouldn’t be in the country” if they don’t stand for the national anthem), the political opposition (traitors who don’t “seem to love our country very much”) and other favorite targets. He has been doing just as much damage to America’s international standing by attacking our allies (e.g., calling Canadian Prime Minister Justin Trudeau “very dishonest & weak”) and praising our enemies (e.g., calling North Korean leader Kim Jong Un “tough,” “smart,” “talented,” “funny”) while launching trade wars and tearing up international agreements.
.. his barbarous policy of separating the children of undocumented immigrants from their parents, Trump has finally provided vivid, camera-ready examples of how his policies are destroying the lives of ordinary people.
.. The suffering of adults — and adult men at that — doesn’t pique popular sympathy the way that the mistreatment of children does.
..Why would Trump do something so evil? Because he is desperate.
.. for all of Trump’s “fire and fury,” he has not managed to secure the border. Failing at his top task, he is lashing out at defenseless mothers and children in the hope that his inhumanity will scare other immigrants from coming.
.. not a single Republican has signed on. Even Sen. Susan Collins (R-Maine), the most liberal member of the Senate GOP caucus, is willing to criticize the family-separations policy but won’t support the effort to repeal it.
.. Republicans, seeing the fate of Trump critics such as Rep. Mark Sanford (R-S.C.) — who was just defeated in his primary after the president tweeted an endorsement of his opponent — are so petrified of crossing the vengeful strongman in the White House that they are voluntarily separating themselves from their sense of right and wrong.
.. His GOP enablers are so craven, so soulless, so abject in their dishonor that they will allow any amount of human suffering rather than risk suffering the wrath of Trump.
.. he won’t be forced to act by Congress.
.. If only we could keep the hard-working Latin American newcomers and deport the contemptible Republican cowards — that would truly enhance America’s greatness.
Thinking About a Trade War (Very Wonkish)
With Gary Cohn gone, it’s not clear that big business has any real pipeline into the White House (OK, polluters have an open line to Scott Pruitt, and predatory lenders a line to Mick Mulvaney, but these aren’t the groups who will stand up against trade war.)
.. Congressional Republicans, terrified of the Trump base, have proved unwilling to take a stand on anything, even if big money is at stake.
.. trade decisions are being made at Trump’s whim, without input from anyone who knows anything about trade economics (Peter Navarro thinks he understands the economics, which is even worse.)
.. Trump’s version of diplomacy – not just trade actions, but the systematic praise of brutal dictators and disdain for democratic leaders – has created a very angry world out there. Nobody out there wants to give Trump even the appearance of a win, and elected leaders would be punished by their voters if they did... I think, three main questions:1. How high might tariffs go?
2. How much would this reduce world trade?
3. How costly would the trade war be?
.. an all-out trade war could mean tariffs in the 30-60 percent range; that this would lead to a very large reduction in trade, maybe 70 percent; but that the overall cost to the world economy would be smaller than I think many people imagine, maybe a 2-3% reduction in world GDP... some people would actually gain, but a lot of people, very much including large groups and many communities in the U.S., would take big hits, especially in the short-to-medium run... world’s economies, taking their lead from the U.S., abandon the rules and agreements that currently constrain their tariffs and start setting tariffs unilaterally in their perceived self-interest.
.. The problem is that if everyone does this, you get the costs of reduced trade without the benefit of improved terms of trade, because other countries are doing unto you the same thing you’re trying to do unto them... “optimal tariff warfare”, which is actually more like an arms race than a shooting war, in the sense that there’s (usually) no victor and no resolution, just a lot of wasted resources... Then you have to find an equilibrium (a Nash equilibrium, for readers of “A Beautiful Mind”) in which each country is charging its optimal tariff given what everyone else is doing... If foreigners can easily substitute away from your goods, the optimal tariff is fairly low; if they can’t, it’s high... if that’s right, we’re talking about a really big rollback of world trade... a 70 percent reduction would bring us roughly back to 1950s levels. If Trump is really taking us into a trade war, the global economy is going to get a lot less global... they do say that trade wars are bad, don’t say that they’re catastrophic... the U.S. currently spends 15 percent of GDP on imports... at the bottom of the Great Recession, CBO estimates that we were operating 6 percent below potential GDP. Of course that loss was temporary, while a trade war might be forever... The U.S. currently exports about 12 percent of GDP... if we have the kind of trade war I’ve been envisaging, something like 70 percent of that part of the economy – say, 9 or 10 million workers – will have to start doing something else... the rapid growth of Chinese exports didn’t cost the U.S. jobs on net, it changed the composition and location of employment, producing a lot of losers along the way. And the “Trump shock” that would come from a trade war would be an order of magnitude bigger... the effects don’t seem trivial to soybean farmers already facing sharp price cuts and steel users already facing much higher costs.
Just the Fear of a Trade War Is Straining the Global Economy
The Trump administration portrays its confrontational stance as a means of forcing multinational companies to bring factory production back to American shores. Mr. Trump has described trade wars as “easy to win” while vowing to rebalance the United States’ trade deficits with major economies like China and Germany.
Mr. Trump’s offensive may yet prove to be a negotiating tactic that threatens economic pain to force deals, rather than a move to a full-blown trade war. Americans appear to be better insulated than most from the consequences of trade hostilities. As a large economy in relatively strong shape, the United States can find domestic buyers for its goods and services when export opportunities shrink.
.. Before most trade measures fully take effect, businesses are already grappling with the consequences — threats to their supplies, uncertainty over the terms of trade and gnawing fear about what comes next.
.. Christine Lagarde, warned this past week about trade conflicts. “It would be serious, not only if the United States took action, but especially if other countries were to retaliate, notably those who would be most affected, such as Canada, Europe and Germany.”.. The Trump administration’s decision to reinstate sanctions on Iran has lifted oil prices, adding pressure to importers worldwide... Europe’s economy is weakening, with Germany — the continent’s largest economy — especially vulnerable... Across Europe, steel makers fret about an indirect consequence of Mr. Trump’s tariffs — cheap Chinese steel previously destined for the United States, now redirected to their continent... Mr. Trump portrays trade hostilities as a necessary corrective to the United States’ trade deficits with other nations. But economists and business leaders note that many imports are components that are used to manufacture goods at American factories... Electrolux, the Swedish manufacturer of household appliances, recently postponed plans to upgrade a stove factory in Tennessee, citing uncertainties created by the tariffs... Under Nafta, Mexico has grown into the world’s largest importer of American apples. But sales are down because the price has gone up by nearly one-fifth in the past week alone... Chinese pork producers have turned their sights to Brazil and Argentina, the only countries that now produce enough soybeans to offer a potential alternative to the American supply.