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Trump's tariff move shows he flunked economics

moe

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https://www.cnn.com/2018/03/02/opinions/trump-tariff-move-shows-his-ignorance-sachs/index.html
Jeffrey Sachs is a professor and director of the Center for Sustainable Development at Columbia University. The opinions expressed in this commentary are his.


(CNN)President Donald Trump fired the first shot in a delusional and destructive trade war: tariffs of 25% on steel and 10% on aluminum. Shares of US Steel jumped 5.75%, about $460 million in market capitalization, but the overall US stock market capitalization fell by more than 1%, around $340 billion.

A few steel companies might benefit a little -- in the short term -- but the United States as a whole, and the world, could suffer enormously from Trump's reckless ignorance.

Whatever US steel producers might gain from a trade war would be offset by the losses to steel users and consumers, plus the social costs of protecting uncompetitive jobs. But the blow to the stock market reflects the possibility of something far more dire: a downward spiral to a global trade war in which all countries, including the US, will be deep losers. We have been there before: The trade wars of the early 1930s helped to trigger, then deepen and prolong, the Great Depression.

But don't expect an impulsive and ignorant man like Trump to heed the lessons of economic history, logic of retaliation, and the basics of trade.


His actions are based on three primitive fallacies.

First, Trump thinks that America runs trade deficits with countries like China and Germany because the US is being swindled by them. The real reason is that the US saves too little and consumes too much, and it pays for this bad habit by borrowing from the rest of the world. The Trump theory of international trade is like a man in deep debt who blames his creditors for his spendthrift behavior.
Come to think of it, that is precisely how Trump has spent his whole business career: over-borrowing, going bankrupt, and blaming his creditors.

Second, Trump thinks that trade barriers will protect the US. Nonsense. These measures might temporarily protect US Steel, but not US society. American consumers will lose. US businesses that buy steel will also lose because now they must pay higher prices. American export competitiveness will suffer as production costs rise.

Third, Trump believes that US trade barriers will crush China and sustain American global economic and military dominance. How pathetic. China and Europe will surely retaliate. American companies will face reduced access to China's fast-growing market. China will shift its own exports to other markets, especially towards fast-growing Asia, as well as towards Africa, Europe, and Latin America.
American exporters will lose their relative competitiveness in those markets as well.

Nor will jobs be saved even in the US steel industry, except perhaps in the very shortest term. The US has been protecting its primary metals industry, off and on, for decades while employment has declined from around 1.2 million workers at the end of the 1970s to about 375,000 workers now.
It is automation more than international trade that costs jobs in the sector in the long term, and that will mean no boost of long-term employment in steel, much less in the economy at large (with a sure loss of jobs outside of the protected metals industries).

Within one day, other countries announced their displeasure and in some cases, their intention to retaliate. The European Union Trade Commissioner Cecilia Malmstrom stated that the EU would have no option but to respond. "Imposing sweeping measures like this is generally not the way forward. We risk seeing a dangerous domino effect from this."

Others pointed to the US violation of World Trade Organization rules. China reacted coolly, objecting to the US action but without any immediate declarations of retaliation. A former Chinese vice minister of trade stated, "China does not want to see a trade war with the United States. But if Trump insists, China is not afraid of it."

Trump is making these primitive errors because he hasn't a clue as to how the world economy works and how to deliver on his promises to raise US living standards. Raising US living standards requires long-term investments in education, research and development, environmental sustainability, and infrastructure.

But for Trump, it's always gimmicks and lies: tax cuts and increased budget spending that are paid for by rising public debt. Federal budget cuts on science, advanced technology, and environmental safety that leave the US less competitive and highly vulnerable to hurricanes, floods, and forest fires. And reckless trade wars that will harm US competitiveness and trigger global retaliation.
 
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Apparently, neither you nor CNN understand the role that tariffs had in building and maintaining America's economic strength in the past.
 
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https://www.cnn.com/2018/03/02/opinions/trump-tariff-move-shows-his-ignorance-sachs/index.html

His actions are based on three primitive fallacies.

First, Trump thinks that America runs trade deficits with countries like China and Germany because the US is being swindled by them. The real reason is that the US saves too little and consumes too much, and it pays for this bad habit by borrowing from the rest of the world. The Trump theory of international trade is like a man in deep debt who blames his creditors for his spendthrift behavior.
Come to think of it, that is precisely how Trump has spent his whole business career: over-borrowing, going bankrupt, and blaming his creditors.

Second, Trump thinks that trade barriers will protect the US. Nonsense. These measures might temporarily protect US Steel, but not US society. American consumers will lose. US businesses that buy steel will also lose because now they must pay higher prices. American export competitiveness will suffer as production costs rise.

Third, Trump believes that US trade barriers will crush China and sustain American global economic and military dominance. How pathetic. China and Europe will surely retaliate. American companies will face reduced access to China's fast-growing market. China will shift its own exports to other markets, especially towards fast-growing Asia, as well as towards Africa, Europe, and Latin America.
American exporters will lose their relative competitiveness in those markets as well.

Nor will jobs be saved even in the US steel industry, except perhaps in the very shortest term. The US has been protecting its primary metals industry, off and on, for decades while employment has declined from around 1.2 million workers at the end of the 1970s to about 375,000 workers now.
It is automation more than international trade that costs jobs in the sector in the long term, and that will mean no boost of long-term employment in steel, much less in the economy at large (with a sure loss of jobs outside of the protected metals industries).
4th, it shows he doesn’t care about history because every other steel tariff we imposed sunk like the titanic.
 
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https://www.cnn.com/2018/03/02/opinions/trump-tariff-move-shows-his-ignorance-sachs/index.html
Jeffrey Sachs is a professor and director of the Center for Sustainable Development at Columbia University. The opinions expressed in this commentary are his.


(CNN)President Donald Trump fired the first shot in a delusional and destructive trade war: tariffs of 25% on steel and 10% on aluminum. Shares of US Steel jumped 5.75%, about $460 million in market capitalization, but the overall US stock market capitalization fell by more than 1%, around $340 billion.

A few steel companies might benefit a little -- in the short term -- but the United States as a whole, and the world, could suffer enormously from Trump's reckless ignorance.

Whatever US steel producers might gain from a trade war would be offset by the losses to steel users and consumers, plus the social costs of protecting uncompetitive jobs. But the blow to the stock market reflects the possibility of something far more dire: a downward spiral to a global trade war in which all countries, including the US, will be deep losers. We have been there before: The trade wars of the early 1930s helped to trigger, then deepen and prolong, the Great Depression.

But don't expect an impulsive and ignorant man like Trump to heed the lessons of economic history, logic of retaliation, and the basics of trade.


His actions are based on three primitive fallacies.

First, Trump thinks that America runs trade deficits with countries like China and Germany because the US is being swindled by them. The real reason is that the US saves too little and consumes too much, and it pays for this bad habit by borrowing from the rest of the world. The Trump theory of international trade is like a man in deep debt who blames his creditors for his spendthrift behavior.
Come to think of it, that is precisely how Trump has spent his whole business career: over-borrowing, going bankrupt, and blaming his creditors.

Second, Trump thinks that trade barriers will protect the US. Nonsense. These measures might temporarily protect US Steel, but not US society. American consumers will lose. US businesses that buy steel will also lose because now they must pay higher prices. American export competitiveness will suffer as production costs rise.

Third, Trump believes that US trade barriers will crush China and sustain American global economic and military dominance. How pathetic. China and Europe will surely retaliate. American companies will face reduced access to China's fast-growing market. China will shift its own exports to other markets, especially towards fast-growing Asia, as well as towards Africa, Europe, and Latin America.
American exporters will lose their relative competitiveness in those markets as well.

Nor will jobs be saved even in the US steel industry, except perhaps in the very shortest term. The US has been protecting its primary metals industry, off and on, for decades while employment has declined from around 1.2 million workers at the end of the 1970s to about 375,000 workers now.
It is automation more than international trade that costs jobs in the sector in the long term, and that will mean no boost of long-term employment in steel, much less in the economy at large (with a sure loss of jobs outside of the protected metals industries).

Within one day, other countries announced their displeasure and in some cases, their intention to retaliate. The European Union Trade Commissioner Cecilia Malmstrom stated that the EU would have no option but to respond. "Imposing sweeping measures like this is generally not the way forward. We risk seeing a dangerous domino effect from this."

Others pointed to the US violation of World Trade Organization rules. China reacted coolly, objecting to the US action but without any immediate declarations of retaliation. A former Chinese vice minister of trade stated, "China does not want to see a trade war with the United States. But if Trump insists, China is not afraid of it."

Trump is making these primitive errors because he hasn't a clue as to how the world economy works and how to deliver on his promises to raise US living standards. Raising US living standards requires long-term investments in education, research and development, environmental sustainability, and infrastructure.

But for Trump, it's always gimmicks and lies: tax cuts and increased budget spending that are paid for by rising public debt. Federal budget cuts on science, advanced technology, and environmental safety that leave the US less competitive and highly vulnerable to hurricanes, floods, and forest fires. And reckless trade wars that will harm US competitiveness and trigger global retaliation.
U.S. steel production in 1973 was 137 million metric tons. In 2017 U.S. steel production was 82 million metric tons.
 
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I think you can figure it out.
Ok, I'll take a shot at that. It seems as though you're saying that we don't employ as many people making steel as we used to, is that right? Are you related to Einstein? surely you must be, dang. Can't wait for your next post on the subject. smh We don't make near as many woven goods as we did decades ago either. What should we do about that?
 
He definitely doesn't understand how the global economy works, it is hardly a zero sum game.
 
U.S. steel production in 1973 was 137 million metric tons. In 2017 U.S. steel production was 82 million metric tons.
Is production down because of foreign supply or is demand down since 1973?
 
For a little deeper look at Trickle Down. Where does the money go that was received as dividends? Would it surprise anyone that it gets spent for stuff the family wants, or gets invested. The money spent increases demand. Demand increases and supplies increase to satisfy the added demand. More workers are needed to satisfy the added supply needs. Increases in labor adds more paydays to buy more supplies. Becomes a circle.

The added money used to invest becomes available to someone who need to increase buildings or equipment. More employees are needed to man the new positions. More payrolls is used to demand/buy more supplies. That too becomes a circle.

Trickle down works pretty well if you open your eyes and see the complete circle.
 
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Factor automation in there somewhere too.
BTW, 1973 is peak steel demand. What a fair starting point. lol. Have at it dummies. Just like every time we try protectionist policies, they will fail and Americans will suffer.
 
Thomas Sowell nailed it re. protectionism 13 years ago (link below). Here are the last couple paragraphs.

President Bush's tariffs on imported steel may have saved some jobs in the steel industry but estimates are that the higher price of steel that resulted cost several times as many jobs in industries that use steel.

With jobs, as with anything else, it is the net result that counts -- and there is no free lunch, not even in election years.


https://townhall.com/columnists/thomassowell/2004/09/09/jobs-and-snow-jobs-n1027785
 
Thomas Sowell nailed it re. protectionism 13 years ago (link below). Here are the last couple paragraphs.

President Bush's tariffs on imported steel may have saved some jobs in the steel industry but estimates are that the higher price of steel that resulted cost several times as many jobs in industries that use steel.

With jobs, as with anything else, it is the net result that counts -- and there is no free lunch, not even in election years.


https://townhall.com/columnists/thomassowell/2004/09/09/jobs-and-snow-jobs-n1027785
But this time it will be different. lol
 
yeah, the billionaire building builder has no idea has tariffs work...

lol...
 
And what exactly is the point of posting a tweet by somebody nobody has heard of that doesn't contain any actual information and is just an assertion?

lol...

that's about every libtard post on this board....
 
Oh, and FYI, the EU imposed a 18-36% tariff on Chinese steel dumping in 2017.

 
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Is production down because of foreign supply or is demand down since 1973?
World wide production is up for steel,textiles,furniture and many others .....the U.S. share for production is way down. The reason is that labor is cheaper in Asia and the Middle Americas. I find it hard to believe that several of our board friends can't seem to figure it out They want to cloud the issue by bringing up job losses. Yes...automation and some other things have reduced labor numbers....But Asian companies have surpassed us in production efficiencies. Any way you slice it....cost of production is the overriding factor as to the U.S. production losses. You make imported goods more expensive and production of those products in the U.S. will increase.
 
Factor automation in there somewhere too.
I wonder if you even understand why you have a hard time understanding what the person is saying when you call a companies help and support lines.
 
How can you call anyone an idiot if you support Trump on these tariffs? smh
I will wait and see if his tariff plan works before I condemn it.....I do support him trying to do something. If it does resurrect some industries and results in more jobs for our workers...I will give him kudos......if not....I will call it a big mistake.
 
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Do you think that this may be due to the fact that we are the biggest consumers on the planet? Companies around the world ship a lot here because we buy a lot of stuff.

True, but countries have been taking advantage of us for years. They use Mexico and Canada as entry points into the US market exploiting a giant loophole in NAFTA and costing us billions every years.

LINK
 
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Do you think that this may be due to the fact that we are the biggest consumers on the planet? Companies around the world ship a lot here because we buy a lot of stuff.
Yes...and Trump thinks we should manufacture more of the products we use instead of importing them. He also believes that it would also lead to more jobs. It is really not that complicated.
 
For a little deeper look at Trickle Down. Where does the money go that was received as dividends? Would it surprise anyone that it gets spent for stuff the family wants, or gets invested. The money spent increases demand. Demand increases and supplies increase to satisfy the added demand. More workers are needed to satisfy the added supply needs. Increases in labor adds more paydays to buy more supplies. Becomes a circle.

The added money used to invest becomes available to someone who need to increase buildings or equipment. More employees are needed to man the new positions. More payrolls is used to demand/buy more supplies. That too becomes a circle.

Trickle down works pretty well if you open your eyes and see the complete circle.
hard to see when you are chardonnay blinded and the pink vagina hat is slipping down over your drunk eyes
 
Do you think that this may be due to the fact that we are the biggest consumers on the planet? Companies around the world ship a lot here because we buy a lot of stuff.
That doesnt mean we should have a trade deficit. Every country has needs they cant supply domestically. They can buy from us to make up the difference.
 
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