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Comment by digitalzombie | Hacker News Reader

I really hate the new tariff.

There is no need to be going into a trade war against not only traditionally our rivals but also our allies now too.

The economy is recovering and I believe it may now be heading toward a recession.

Here's the quick data on job created in raw number without the quality of the job to show that it is recovering since the 2008 recession:

https://www.washingtonpost.com/news/fact-checker/wp/2017/12/...

So the question is why do we need this tradewar? It only introduce instability and fear in our market and we have never really recover from 2008 recession yet. The quality of job suck by the way.

It's protectionism and it does not make our country competitive at all.

View on HN

So why not free trade? I hate the idea of tariffs, but when your "allies" have had non reciprocal tariffs something needs to be done. I think all of this would go away if all tariffs against US products were removed

So you believe that the US is a victim of protectionism in these countries without having protectionism of it's own? That's a pretty hard position to back with evidence.

For example US farm subsidies are significant and supply management is common in many areas, but the rhetoric around Canadian dairy supply management recently has been amplified far beyond even it's wildest possible impact. And this with a country with extraordinarily balanced trade, if anything probably a deficit. The history of trade between the two countries is littered with spats about US protecting this, Canada protecting that, but on the whole very balanced. Pretending otherwise may make for good politics (i guess that remains to be seen) but it isn't based on evidence or good policy work.

I think farm/dairy is the example where almost all countries have weird tariffs. Which is of course why they are such popular examples. But they are exceptions.

Farming, steel and a few other industries are strategic. A country fails to protect them at its peril.

I believe nobody should have tariffs. Understanding that is never going to happen, it should at least be a starting ppoint

I'm glad that you believe it, but it's not a reasonable position. The primary reason for some U.S. tariffs is the legitimate reason of national security. We provide tariffs on certain foods, mineral resources, and military products because we want to guarantee that we do not loose production ability. Should we suddenly find ourselves in a world war, we would not be creating these production lines from scratch. Therefore, tariffs are always a balancing act between being nice to our friends and ensuring we keep some level of production available.

Well, frankly I don't think it's a disadvantage. It's difficult to move out from the equilibrium of countries mistrusting each other, but I think what you describe is actually an utopia. If we manage to destroy all tariffs and make countries lose parts of their production abilities, we'd make war unthinkable, which is a net good. The US would never start an all-out war because it would starve, and whomever specialized in the agricultural products supplanting the US productive capability would never start a war because they cannot build weapons.

Of course there are huge problems with this -- what happens if whomever makes your food goes tits up, involuntarily (natural disasters, coups, ...) or voluntarily (maliciously attacking)? Who guarantees the system? How? Etc... --, if there weren't I wouldn't call it utopia. But I think raising the costs of war beyond the unreasonable is a net gain.

Note: I'm fully aware that this is an extremist and probably next to impossible position, no one has to remind me that. I just contest the fact that the objection "but then we could not go around and kill people" isn't a particularly good counter-argument for no trade barriers.

The European Union is an attempt at this utopia.

There are no tariffs on food, steel or similar between the member states. All states subsidise food production, but not steel.

You did not mention that since the founding of the EU, there has not been a single war between member states. Compare that to european history and you see the most important thing about the EU. I can live with all the things there are rightfully to be criticized about the EU, in exchange for peace in continental europe.

Wouldn't strategic reserves be a solution to this? Hoard enough to cover ramp-up time for domestic production.

Food spoils and we can't predict how long a war will last.

The only winning move is not to play.

Wait, so your first step is for other countries to remove their subsidies/tariffs but the US doesn't do the same? How well do you think that will fly in those countries?

If you mean you'd like to see the US and those countries both drop tariffs and protections, I can see you argument - but that's the opposite of the direction things are going today so I don't see the relevance. Even if it were not, it's hard to argue against a countries legitimate security concerns in some areas, although clearly that argument can be abused (again, cf current rhetoric).

That will work as soon as we have a single currency.

The EU is a really good example here of how a single currency puts everyone on the same economic accounting basis and so eliminates the ability of a country to 'fudge' the numbers through either internal subsidies or currency manipulation.

The reason you need a single currency is that if you're going to sell barrels of wheat from country X to country Y, and country Y buys televisions from country X. How many units of currency is a television worth relative to a barrel of wheat? If those values are tied to the same currency, then the economic incentive to grow wheat or build televisions will be on the same footing.

This is incorrect understanding of how currencies work. Same currency works only when the area satisfies optimum currency area criteria well enough. Euroarea is in constant trouble because it is not good currency region as it is now. You need at least common fiscal policy to fix it.

In general, freely floating currencies fix all problems you mention.

FWIW, I'm not a big fan of OCA theory. Or perhaps a better way to say it is that I think the case for making the entire planet with its next day transport of goods and immediate delivery of services would nominally qualify as a single OCA. Note that Mundells criteria are focused primarily on sovereignty and not economics per se (see the Greek comment in peer comment).

Tariffs and currency manipulation are a sovereign response to prevent efficient markets that would render local labor noncompetitive.

And as I mentioned earlier, a single currency makes such manipulations ineffective and you get Greece. They can't bring their productivity up to the level of Germany or France and their economy suffers for it because all of the capital goes elsewhere.

The inability to devalue currency is why greece cant recover. The Euro is idiotic.

Greece can't recover because its exports are too expensive. Devaluing the currency in which those exports are sold in order to spur exports doesn't solve the underlying problem, which is Greek productivity. Imagine that the German economy is a Prius and the Greek economy is a truck hauling a ton in a trailer behind it, and the Greek truck is complaining that it costs more in fuel than the German Prius to get from the same point A to the same point B. Devaluing the Greek currency is like making fuel cost less especially for the Greek truck with no change in cost for the German Prius; sure, if the fuel is cheap enough for the Greek truck then maybe the Greek truck will be price-competitive in getting you from A to B, but the real solution is "how do we get the Greek truck to first dump the ton it's hauling behind it and then how do we make it more fuel efficient".

In a single-currency market, it is the responsibility of strong players to shore up the economies of weak players, or risk popular discontent in the weaker economy and the democratic dissolution of the common currency. German politicians have paid lip service to this but have not really put German resources to use in building up the PIGS economies because such a policy is unpopular with the German voting public, which wants to see those resources stay in Germany and to the nearsighted benefit of German taxpayers. This is the real root of the Euro crisis. There were always going to be weaker players in the EU, and it doesn't matter if it's Greece, it could very easily have been some other country. The question is what do stronger players do.

The US doesn't suffer from this issue because, to use an oversimplified example, California voters aren't discontent with FEMA funds used in hurricane disaster recovery areas. Californians are Americans before they're Californians, by and large.

> There were always going to be weaker players in the EU

This is true, however there were quite strict criteria (the Maastricht criteria) put in place to try and prevent this from being too bigger problem. In hindsight, those criteria weren't sufficient, in one way or another.

I believe it's correct to say those weaker economies benefited from adopting the Euro the short term, and that they wanted to join the Euro.

As a twist, the Euro was somewhat unpopular in Germany when it was introduced, because it made things more expensive. So there is a feeling that Germany "paid" the price of adopting the Euro - whether this is true or not is irrelevant for the sake of policy-making.

Even worse: Germany, an already very strong nation, gets to free ride the Euro for its export machine at the cost of its Eurozone rivals (and other competitors in Europe broadly). If Germany had its own currency, it would be considerably more expensive than the Euro is today, which would make German exports more expensive. As you note, countries like Greece, Spain, Italy, Portugal would do better because their exports would be cheaper under less expensive national currencies (unique to their individual economic circumstances), enabling them to compete better against Germany's exports. This artificial prop can be seen in the fact that Germany has the world's largest trade surplus as a percentage of its economic output.

But that is exactly the point right? If you devalue the common currency then the amount you pay Greek farmers goes "up" effectively, and the price you pay German farmers also goes "up" so the relative costs of things stay the same and nothing changes. Whereas with a translation layer (currency exchange) you can "adjust" what it costs Greece and what it costs Germany to the advantage of one or the other.

A tariff is a way to adjust this economic cost externally which takes it out of the market's hands and put it into a political realm and one step removed from the actual economy that should be adjusting.

And at the same time, the Euro is fantastic. It is just a question of your viewpoint.

Say bye to Italy.

EDIT: Sweden and Hungary too.

Thera are existing mechanisms and professes to deal with trade disputes. US has successfully used them before. Trump is lashing out from ignorance an incompetence. His apologist's from ignorance.

> So you believe that the US is a victim of protectionism in these countries without having protectionism of it's own? That's a pretty hard position to back with evidence.

You need look no further than the USA's gaping trade deficits.

> You need look no further than the USA's gaping trade deficits.

A “trade deficit” is just another name for a capital inflow surplus.

If you want a smaller trade deficit, reduce the degree to which you systematically favor capital.

Of course, what policymakers usually justify based on a trade deficit is increased support for domestically headquartered firms and other supports for capital invested in the country, which results in more net foreign investment and higher trade deficit, which is used to support more capital-serving policy, which results in more capital inflows, etc.

You've said nothing wrong, and at the same time I'm not sure how that contradicts my point. A large trade deficit does indicate that one country's protectionism outweighs the other (i.e. larger tariffs result in a deficit).

There is no trade deficit with Canada.

I believe you're referring to the USA's "aggregate sales surplus," which measures both direct trade and sales of multinational companies--a headline making rounds on the news this past week.

These numbers include items made in China, by Chinese jobs, using Chinese components, under a US company name. It uses total sales, and not net revenue, which would change the picture by a great deal.

Lol people won't actually address your point they just downvote your post. Hn is very classy when people bring up politics

No, we just don't want to waste our time arguing with someone who very clearly is not doing so in good faith.

> very clearly is not doing so in good faith.

I'm confused. What do you mean by that?

There is no trade deficit with Canada. At all. Claiming there is one, in the face of all facts to the contrary, is not having a discussion in good faith.

So instead of enlightening me with these facts, you accuse me of acting in bad faith? I was under the impression that there was a trade deficit with Canada given the evidence I have found: https://www.census.gov/foreign-trade/balance/c1220.html .

jeromegv said there was no trade deficit with Canada, so I assumed good faith and responded to him/her under the pretense that they were referring to the "aggregate sales surplus" figure that has been in the news recently.

Can you please help me understand how I have ignored facts and acted in bad faith? I would like to fix this problem, but I do not understand where to begin.

My understanding is that your reference doesn't include services. I find this: https://www.usitc.gov/publications/industry_econ_analysis_33... and a synthesis by the WP: https://www.washingtonpost.com/news/politics/wp/2018/06/11/w...

It seems that US and Canada trade is globally balanced.

You're right. It looks like US - Canada services trade surplus makes up for the goods deficit.

There was a cumulative $370 billion trade deficit going back to 2007, and a nearly $800 billion trade deficit back to year 2000. There has been a trade deficit with Canada every year the past 30+ years, including so far in 2018. [1]

How would Canada like to run a $800 billion trade deficit with the US over the next 17 years? You know, just to make things fair over time. Didn't think so.

On the upside, the trade deficit has narrowed from a common $30 billion five years ago, to more like $10 to $15 billion. That's a pretty happy result if you're the US, given it's a consumption engine (lower domestic savings at the median, higher consumption rate, which pushes up demand for imports in most cases).

[1] https://www.census.gov/foreign-trade/balance/c1220.html

Funnily enough, the US numbers show a trade deficit with Canada, and the Canadian numbers show a trade deficit with the US. Who knew - it turns out that how you compute these things gives you the ability to wiggle a bit.

What is generally accepted though, is that internationally speaking the US and Canada are one of the most balanced know of, over long periods, and for major trading partners.

Pretending otherwise is just serving partisan politics at this point.

It doesn't count services. I did find a useful link when I wanted to respond to another comment : https://www.usitc.gov/publications/industry_econ_analysis_33...

Maybe that's happening because the US isn't competitive enough?

Not likely: https://en.m.wikipedia.org/wiki/Global_Competitiveness_Repor...

It's happening because the US is very competitive as a place to invest capital. Trade deficit can be visualized as people in the US selling capital and using the proceeds to buy goods; the reality is more complex and has more intermediate steps, but that's the net effect.

> So why not free trade?

Every country involved has industries which won't allow this. For example, all the countries in the G8 have agricultural sectors which will not allow elimination of trade barriers.

So, even if you want "free trade," you start with each country's list of stuff where there is not going to be free trade, and move forward from there.

I agree its not going to happen. I like your idea of a starting point though

It's not really my idea, it's what the larger countries basically did starting in the eighties and early nineties when free trade ideology was quite strong, leading up to the creation of the WTO and EU and so on and so forth. What you see today is the evolution of that starting point that you like...

I don't understand this position. Free trade would be nice, so let's make the furthest thing from free trade by adding tariffs?

The only time the president mentioned lower tariffs was an offhand comment at the G7. All of his other positions imply he disagrees with you and thinks trade is bad.

Oh, that's the game? Trump wants an argument to later push again for those horrible secret «free trade deals» which would have undermined European politics, consumer-safety, ecological standards and democracy itself? (TTIP and co)

Do you think the US plays by free trade?

Intellectual property rights/copyright laws, both linchpins of US policy, are the very definition of government intervention.

The US aerospace and manufacturing industry is overwhelmingly subsidized by the military complex, a lot of it done under the auspices of "national security". For the US to complain about Airbus or Bombardier is simply incredible.

US agriculture is outrageously subsidized. I'll go into a specific example in a moment, but the notion that that the US is trying to play fair is simply incredible.

The US loses at the US-created WTO time and time again (see: Canadian softwood) and simply ignores the rulings.

"but when your "allies" have had non reciprocal tariffs"

I don't know what example you're thinking of, but let's consider the case of Canada (a country that the US has a trade surplus with). Canada has supply management for dairy to ensure a supply that matches demand to ensure food security. To protect this, Canada applies a high tariff for imports above the quota.

"So unfair to US farmers!" yells Trump.

Only here's the problem with his ignorant, easily swayed vision.

Canada exports less dairy to the US than vice versa. Like, 1/2 as much. The whole point of supply management is that it doesn't generate an excess, and for that small industry the exports and imports are generally only for very specialized things.

US dairy, in contrast, is hugely subsidized. To the tune of 74% of US dairy income comes, directly and indirectly, from the US government (0% in Canada comes from the government). Hence US farmers grossly overproduce and then look to dump it elsewhere, destroying production elsewhere. Just as US corn production is essentially a government enterprise, flooding the world with corn by-products and HFCSs.

Who is the villain here? Trump can rattle off some scary number to his clueless fans (I'd steer clear of the pejoratives, but given that Trump is a lifetime grifter and con man, whose virtually every statement is an outrageous lie, it is incredible that someone can be called his fan), but Canada has nothing at all, whatsoever, to do with those poor American farmers. It certainly isn't Canadian milk on American shelves causing their ills, because Canadian milk isn't on their shelves.

Nor did China cause the US poor to live in such dire straights. This is just the latest example of the US becoming more and more polarized, while convincing the poorest that it's always some external reason why they live in destitution in the richest nation on Earth.

> US agriculture is outrageously subsidized. I'll go into a specific example in a moment

Yeah, corn. That's why everything is HFCS heavy in the US. And I do mean everything.

Things that didn't need to have so much sugar like bread, ketchup, other sauces, soup, etc.

It's easier to get it than to avoid it.

And american's health suffer for it.

Be thankful that you’re getting your bread and soup ration for today, citizen.

Don't forget fossil fuel subsidies. Around $20B/year but the dollar cost is only part of the destruction here.

http://priceofoil.org/fossil-fuel-subsidies

I don't think the US plays fair either. I think everyone should play fair. Domestic subsidies I don't personally care about as it should be up to each country to deal with internally.

They tariffed our "allies" because our "allies" allow China to setup shell corporations in their countries so China can abuse trade agreements to get around direct tariffs. In return they make billions for being willing to stab the US in the back.

We need to do this because China steals 300 billion dollars in IP from American corporations every year, in addition to illegally subsidizing their companies to steal global market share

China also gives us goods far below what we could produce them for which lowers our cost of living. Complaining about China stealing $300b (I'll use your number because it doesn't really matter) in IP is like complaining about high school kids stealing Adobe CC - it's a theoretical loss, they weren't going to be a customer regardless. Tariffs don't even do anything to prevent IP theft

It gives Chinese companies a competitive advantage because instead of spending billions on R&D they just steal it.

The point is that the tariffs will be removed IF China stops stealing IP

That's the dumbest way to enforce IP law. Just take the companies to court in the US if they sell in the US or international court if selling to other countries where Chinese companies compete with American manuf. - tariffs just aren't a good way to do this as it royally fucks American consumers

You got a Citation for Canada and the EU allowing Chinese steel shell companies (the recent tariffs against canada and the EU targeted steel)?

I'd not heard that argument at all so far.

"North American content required to qualify for NAFTA is set at between 50-60 percent under Chapter 4. With this low bar, many PRC goods and services can be regarded as Canadian products"

It's not just steel, it's basically any product due to NAFTA.

http://thehill.com/blogs/pundits-blog/economy-budget/344621-...

https://www.reuters.com/article/us-trade-nafta/nafta-meeting...

https://www.tecma.com/nafta-rules-of-origin-important/

A name with a bunch of numbers behind it spouting off unsourced nonsense is trademark Russian bots on Twitter, so I'd just leave it alone.

This violates the HN guidelines against insinuating astroturfing and calling names in arguments. Please read them and follow them when posting here.

https://news.ycombinator.com/newsguidelines.html

and yet the other response is exactly what that post described.

If people are discussing in good faith, why aren't they willing to do it on an account that matters to them?

I'm not sure I follow you, but it doesn't sound related to the issue of needing to follow the site guidelines when posting here, regardless of what someone else is 'spouting'. We're all spouting something.

It’s against the rules to accuse the other participants of being bots or shills. Please address the argument, not the person.

Counterpoints to the article:

> Some of the most compelling jobs to bring back to the US are the so-called “last screw” system integration operations.

Somewhat. The system integration operations are tedious and human-labor intensive. Those operations could still move to other cheaper labored countries such as Vietnam, India, etc. And if the operations can be automated, these operations will be reshored. The point of the tariffs exercise is to encourage manufacturing to move out of China and into other countries or reshored, to punish China for stealing IP and unfair business practices.

> I’ve examined the tariff lists (List 1 and List 2), and it taxes the import of basic components, tools and sub-assemblies, while giving fully assembled goods a free pass.

Trump just announced he is starting an additional $200 billion tariff on Chinese goods. That will definitely cover some fully assembled goods since the trade deficit is only around $330 billion, and there is already tariffs on $50 billion https://www.washingtonpost.com/business/economy/trump-escala...

> While stiff tariffs on the import of microchips drove investment in local chip companies, trade barriers meant the local companies didn’t have to be as competitive.

True in some ways. However, there will always be competition pressures and anti-monopoly pressures. It really depends on the shape of the market. And in technology, there are always the threat of obsolete/disruptive innovations to keep companies on their toes.

> New Tariffs Hurt Educators and Makers

If educators and makers really wanted cheap standalone components to play with, and there is a market, there will be a market sooner or later born in US for them. the $250 billion tariffs (and any subsequent ones) will make sure of that. If manufacturing can be reshored to China in 15 years, it can be reshored back to US in less time than that, with US economy booming 4% this quarter, massive capital inflow, and robotics technology growing.

I don't see how there is going to be a market built (we are talking about a five or ten year timespan here to build a semiconductor factory) around a trade barrier created by a tariff where nobody knows how long it will be in effect. Would you bet dozens of millions of dollars to create a production of already existing, cheaper produced products to supply a market created by tariffs? How easy would it for the next administration (or the current) to drop these tariffs? What about your investment then?

Which sane person would make such an investment?

> There is no need to be going into a trade war against not only traditionally our rivals but also our allies now too.

And yet other countries never seem to entertain the idea of both sides getting rid of all their tariffs, which is something Trump suggested at that G7 summit.

Everyone goes nuts when the US suggests implementing tariffs against countries that already have tariffs against us. You gotta admit, the message seems to be that other countries are allowed to protect their domestic industry via tariffs and the US is just supposed to deal with it, don’t wanna start a trade war!

Interesting how despite a few other countries imposing tariffs on the US has still led to the US being the largest economy in the world.

It's not a question of 'fairness', it's a question of what will actually improve our economy. Nothing out there suggests tariffs will do that; in fact, all data points to just the opposite.

But you've basically ignored the OP in any case; do you have a response to the rather realistic and obvious projection that, given the nature of these, assembly jobs will move out of the US, since the fully assembled goods are not subject to tariffs, but the parts are?

The US has always argued for other countries to reduce their tariffs. Here's an article from 2002, for example: https://yaleglobal.yale.edu/content/obstacles-zero-tariffs

"The fact is that there is a strong feeling in the developing world that trade rules do not apply equally. Indeed, Washington lost the moral high ground earlier this year when it slapped steep tariffs on steel imports and locked in subsidies for its farmers. As well, the US has in place a sophisticated regime of non-tariff barriers such as anti-dumping laws that exporters from developing countries have found difficult, if not downright impossible, to circumvent. "

(The "non-tariff barriers" are important - all kinds of environmental and safety standards could be considered as these, and they can be far more difficult to deal with than simply paying an import duty. This is another thing a lot of Brexiteers haven't realised)

> The "non-tariff barriers" are important - all kinds of environmental and safety standards could be considered as these, and they can be far more difficult to deal with than simply paying an import duty.

I'm glad the US has environmental and safety standards and enforces those (to some degree) on imports. Those actually accomplish some good and have positive externalities.

It's also worth noting that other countries have significant non tariff barriers as well, perhaps more significant than the US, and ones with less positive effects. Some Chinese examples are the Great Firewall (https://www.nytimes.com/2016/04/08/business/international/ch...) and fact that a large part of the Chinese economy is still state-owned (and could be politically directed to avoid importing American products without any need for a tariff).

> Everyone goes nuts when the US suggests implementing tariffs against countries that already have tariffs against us. You gotta admit, the message seems to be that other countries are allowed to protect their domestic industry via tariffs and the US is just supposed to deal with it, don’t wanna start a trade war!

You do know the US is already heavily protectionist and many tariffs are protections against the US's price dumping due to its heavy subsidies, right?

And that the US already has plenty of tariffs to boot?

Yup. Heavily protectionist. Thats exactly how an unbiased economist would characterize US trade policy. Stop watching msnbc dude.

The USA became the world's largest evonomy with massive tariffs on basically all imports. Smoot Hawley Act anyone? Those were removed gradualy starting in the 1970's and lo and behold the trade deficit sky rocketted while the manufacturing economy plummeted.

i cannot see how the US has no/fewer/lower tariffs than their trading partners. here are some numbers for US-EU trade: https://www.statista.com/statistics/547412/average-eu-and-us...

and here's an article arguing why there's no US-EU trade deficit, in German, though: http://www.sueddeutsche.de/wirtschaft/handelsstreit-usa-eu-h...

what they argue for: sure, looking at goods, there's a deficit for the US. But once you take services and primary and secondary income into account, then the US actually cuts the better deal with the EU.

imv, trump/the current US gov are twisting the numbers to get a better deal.

Could you explain what services, primary and secondary income mean in this context and why they matter? Im sorry I don't read German.

> Those were removed gradualy starting in the 1970's [...]

> trade deficit sky rocketted

Is a trade deficit important to not have?

> manufacturing economy plummeted.

By which metric?

A trade deficit means that, on net, your trade partners end up with your currency and no goods to buy with it. So they start buying up assets in your country. Factories, companies, land, housing, bonds, etc. so by maintaining a trade deficit for so long, we have legally sold a large fraction of the assets in our country to foreign investors. (Foreign direct investment) How do you think Trump made his billions?

Having Saudi Oil Sheiks own all the Soccer teams in England is the result of the UK trade deficit.

Having chineese bussinessmen buy up all the valuable real estate in our biggest cities is a result of the trade deficit.

Massive underemployment (more baristas fewer mechanics) is a result of the trade deficit.

A trade deficit means that, on net, you've sent a bunch of pieces of paper to a country and they have given you actual stuff in return. So then they give that money back to you by investing in your country.

>Having Saudi Oil Sheiks own all the Soccer teams in England is the result of the UK trade deficit.

More English soccer teams are owned by Americans than all the russians oligarchs and arab sheiks combined.

Source?

>investing in your country

>foreign direct investment

>sheiks owning the sports teams and chineese businessman owning all the prime housing

We're saying the same thing

> We're saying the same thing

That's because you still haven't answered the original question:

>>> Is a trade deficit important to not have?

E.g., consider your examples:

>sheiks owning the sports teams and chineese businessman owning all the prime housing

Given that I'm not the type of person who buys sports teams and prime housing (of the sort purchased by Chinese businessmen), why should I care about that style of FDI? I mean, I guess it must suck for the American ultra-rich that they now have to compete with the Chinese ultra-rich for access to ultra-veblen goods like owning sports teams, but... why the hell should the rest of us care which mega-rich person owns the local sports team!? What possible material impact could that ever have on us?

The only type of FDI that effects my life is FDI in productive assets, like factories, and those are strictly good for me (more and better-paying jobs).

"So we lost the Toyota factory but on the plus side the sports team isn't owned by a Sheik" seems like a really dumb trade-off. What am I missing here...?

> Smoot Hawley Act anyone

generally regarded as making the depression worse.

I don't think I've ever seen someone defend that.

Hopefully you realize that eliminating all tariffs was never a US negotiating position, it was a random stupid thing the president said.

He wants reciprocity — you tariff me, I tariff you. It’s not just for grins.

Get back to the original point: why is it acceptable for other countries to levy tariffs against the US but not the other way around?

The original point is that you are factually wrong. We already had tariffs on g7 countries.

The country we have the least trade barriers in the world is Canada. He started a trade war with them.

He ran on a platform of ending free trade agreements & protectionist policies. He’s enacting them. So it’s hard to take him serious when he suggests a free trade agreement with the g7 as a throwaway talking point.

But both sides already levy tariffs on the other side, just with different emphasises. Look at US truck tariffs as an example.

> you tariff me, I tariff you

Really, cause they described Trudeau as stabbing them in the back and said there is a special place in hell for people like him. He said Canada would respond with tariffs after Trump put in tariffs.

Can other countries trusy Trump administration at all at this point? It seems obvious, to deal with Trump, you have to prepare for the worst, since he is not predictable and tends to whatever he wants and whenever he desires.

Not at all.

Here is a perspective from the Norwegian foreign minister [1], with google translate [2].

The key word here is uncertainty and unpredictability.

[1]https://www.nrk.no/urix/_-vi-ma-jobbe-annerledes-med-donald-...

[2]https://translate.google.com/translate?sl=auto&tl=en&js=y&pr...

Several European leaders have said publically (though in nicer words) that they don't trust America under this administration anymore.

e.g. Sebastian Kurz, a few days ago (1): "The American President is unconventional and American politics has become unpredictable. [...] This is a challenging geopolitical situation."

(1) German Interview - https://derstandard.at/2000081642343/Kanzler-Kurz-Wer-auf-Or...

Why would that trust be necessary? It very clearly isn't. Which is not the same as arguing that trust can't be valuable or critical in international relationships depending on the context.

China has gone from a $1 trillion to a $13 trillion economy in 20 years, with vast barriers to trade (into their country) and extreme domestic protectionist policies (eg barring majority domestic business ownership, and most foreign acquisitions).

China is the greatest one-way mercantilist economic result in recorded history. There's very little trust in any relationship with China, they do literally whatever they decide fits their nationalist aims, whether that's annexing territory, stealing corporations (Ant Financial), forcing technology transfers, blockading foreign ownership, whatever it takes to buy time until China is impossible to resist. China is already buying up Eastern Europe, and buying votes within the EU (eg bribing Greece for favorable voting). Is that a premise of trust? Of course not, they're using their increasing might strategically wherever they can, and it's going to get a lot worse.

The fact is, all nations should pursue their self interest. When the US decides to act as everyone else does and pursue its economic self interest, it's denounced. And there's China parroting that they're in favor of free trade, while being aggressively against free trade in practice, and hardly being called out for the hypocrisy internationally.

The reason the US is denounced, is because the export gravy train is coming to an end, the easy exports into the US that many other large economies have enjoyed are going to get more expensive going forward. If that wasn't the case, all of these other nations wouldn't be upset about the US change in behavior: they all know the US is an immense global consumption engine that powers their domestic production.

Responding to psergeant's comment below:

> I wonder if you could help me understand Trump trying to rescue ZTE in terms of what you’ve just said?

The US got China to immediately sign off on the Qualcomm acquisition of NXP in exchange for the ZTE deal. That's an extremely valuable acquisition for the US tech industry.

Simultaneously the US has received $2.2 billion in fines from ZTE over time for their violations of US sanctions. Further on top of that, the US is getting even more compliance pledges from ZTE.

It's a substantial self interest win for the US. The US gets to eat one of Europe's valuable tech companies (of which they have relatively few), which then reduces Europe as a tech competitor over time. I'd call the ZTE deal a win, win, win, win arrangement.

> The fact is, all nations should pursue their self interest.

This leads to hugely destructive wars. The history of the post-war order has been trying to build common interest through multilateral institutions.

Nonsense. Self-interest != hostility.

>>> If that wasn't the case, all of these other nations wouldn't be upset about the US change in behavior... The fact is, all nations should pursue their self interest.

>> This leads to hugely destructive wars.

> Nonsense. Self-interest != hostility.

Right. Just because someone is looking out for their own self interest doesn't mean that they are constantly "winning" a zero-sum game with someone else. In fact, sometimes cooperating is the most self-interested move you can make...

Which is exactly why all of these other nations might be "upset about the US change in behavior" without necessarily prescribing any course of action that isn't also in the US's best interest.

> Why would that trust be necessary? It very clearly isn't.

Okay, why should North Korea cooperate with Trump?

Why should Iran?

He says one thing then turns around and does another. How do you come to an agreement with that sort of person on anything?

It's not about having good or bad policies. It's about being able to do any sort of good faith negotiation.

I wonder if you could help me understand Trump trying to rescue ZTE in terms of what you’ve just said?

Maybe get back to the original question and the reason Trump is interested in starting a trade war? Why is it OK for other countries to levy tariffs against us but not the other way around?

We levy plenty of tariffs on goods from other countries to protect local industries - on average ours are very slightly lower than places like the EU, but it’s like ~2.5% vs 3%, not 0% vs 30%, which seems to be your claim.

“America’s taxes on imports are much lower than those of almost every other country.”

— The NY Times

China’s weight average tariffs are 3x higher than the United States, approximately 10% vs 3.5%.

... when you nonsensically pretend that VAT is an import tax.

"Once value-added taxes and sales taxes are included in an international comparison, America’s taxes on imports are much lower than those of almost every other country."[1]

The point still stands when not considering VAT, but the difference is far less pronounced. Though I am hesitant to trust the authors' research given the above.

[1] https://www.nytimes.com/interactive/2017/business/trade-chin..., also https://tradediversion.net/2017/03/08/on-the-nyts-building-t...

Depends on how you define "much lower", especially with a major trading partner such as the EU:

U.S. exports to the European Union enjoy an average tariff of just three percent.

Source: https://www.export.gov/article?id=European-union-Import-Tari...

In 2016, according to the World Bank, the average applied U.S. tariff across all products was 1.61%; that was about the same as the average rate of 1.6% for the 28-nation EU

Source: http://www.pewresearch.org/fact-tank/2018/03/22/u-s-tariffs-...

US to EU average import tariffs differ only by ~1.4%, sure the US tariff is (slightly) lower but it's hardly a huge imbalance.

Edit: just picking up from morsch's comment, these are international trade tariff figures which is what Trump is imposing. What countries do internally when it comes to sales or Value Added Tax is a whole different thing; these types of taxes apply to all goods and services sold within that country, regardless of origin (i.e. regardless of whether a pencil is manufactured in the UK or the US, it will still attract a domestic sales/VAT of 17.5% if sold in the UK).

US doesn't have the lowest overall tariff in the world, it is Japan who does among major countries.

Talking about fairness, it is fair for US to print their own currency and buy goods around the world, while other countries can't do the same? The reserve status of dollar doesn't come by itself, there is a price to pay, you can't have the cake and eat it.

Japan has slightly lower average trade weighted tariffs than the US.

Japan has nearly 200% higher agriculture tariffs than the US.

>Japan has nearly 200% higher agriculture tariffs than the US.

Which have a lot of holes in them. The US sends thousands of tons of un-tariffed rice to Japan every year, which they then lock into a shed and let rot. Which is their prerogative, I guess.

> Why is it OK for other countries to levy tariffs against us but not the other way around?

I see this comment a lot, I think Trump also said this, but I wonder what specific tariffs is this talking about?

My country (Netherlands) has a negative trade balance with the US, we buy a lot of software, entertainment and (heavily subsidized) Tesla's from the US. Even the "German" car I drive (a BMW) is manufactured in the US because of US trade demands. Also many international trade laws are heavily influenced by US policies that mostly benefit the US (i.e. IP, drugs).

It seems pretty clear that Trump started this trade war because he didn't like the existing equilibrium. And because he is who he is, other countries must be to blame.

I think US people will have to get used to the idea that maybe the US economy is not competitive and US people have been living above their means for a long time now. There are a lot of things the US can do to improve their competitiveness: education, health, corruption, equality, finance all have real impact on the economic competitiveness of a country and you can't make a mess out of it without it having real consequences.

US companies also will have to learn to deal with the fact that the US no longer is the single biggest economy in the world, and the US can't set the rules unilaterally. Trump is helping a lot weeding out the diplomatic goodwill that the US historically enjoyed.

US business is spoiled with their huge home market and seems to find it very hard to adapt to smaller country's rules. In order to export successfully in a more level world, you have to play it by their rules. If my country want to export flowers to Japan, and they allow them only when sterile and without a grain of sand, and they only like bright colors, then we will make them so.

>My country (Netherlands) has a negative trade balance with the US, we buy a lot of software, entertainment and (heavily subsidized) Tesla's from the US. Even the "German" car I drive (a BMW) is manufactured in the US because of US trade demands.

Your car was built in the US because the labor is cheaper and 40 percent of their cars are sold in the US and China (shipping to China from the US is basically free, better off being here).

> Maybe get back to the original question and the reason Trump is interested in starting a trade war?

The reason for starting it was explained in completely different ways. Therefore it's not clear. It's both for security reasons as well as being easy to win as well as a supposed unfair imbalance. There's no consistency.

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