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What's the best argument against Trump's trade war? It's one of his few policies that I've not heard a good argument against. It seems like it's only fair that major countries have (roughly) equal trade. And fair that small countries should be permitted to have imbalanced trade in their favor, though I'm not sure that's his policy.

If that means things like iPhone manufacturing needs to be moved to the US, causing the price to double, then it's on Apple & Co to build more automated processes and/or raise prices. If car and firearms companies can do it, why not everyone else?

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Setting aside the debatable morality of nationalism, protectionism just doesn't work well in the long term. A good place to start: https://en.wikipedia.org/wiki/Protectionism

> There is a consensus among economists that protectionism has a negative effect on economic growth and economic welfare, while free trade, deregulation, and the reduction of trade barriers has a positive effect on economic growth. In fact protectionism has been implicated by some scholars as the cause of some economic crises, in particular the Great Depression.

If this were true, surely it would be in China's best interest to cease its many protectionist trade policies immediately. On the contrary, protectionism seems to work well when other countries are willing to put up with it, either for access to your workforce or access to your markets.

You might want to check the 'work well' part of that. The average American has 4x times more than the average Chinese national, even after ppp adjustments. I couldn't quickly find figures for the median, which I'd refer to use. China's net migration is also negative.

It seems highly reasonable that China would be doing better if they toned down their protectionist policies.

On the other hand, China’s GDP PPP per capita has gone up by a factor of 5.294 between 2000 and 2016 (source: WolframAlpha), so even if it is being held back by protectionism, that doesn’t look like a major part of the story.

I've noticed that this idea that trade tariffs hurt the country applying them is often brought up when the US applies tariffs, but doesn't seem to get so much play in the press when talking about China's tariffs. Instead, they're generally treated as some kind of ingenious Chinese masterstroke that only hurts the US, even when they're on key food supplies. It's like powerful folks have some ideological or commercial reason why they don't want the US to impose tariffs, and arguments are invoked or discarded as necessary to push for this.

Yes it would. It still has a long way to go but China had a massive economic boom after Deng Xiaoping largely liberalized the economy. Hong Kong and Taiwan are still far ahead of course.

Protectionism works just fine long-term. Almost every country on earth uses various degrees of protectionism, and all large economies do. They use combinations of tariffs and non-trade barriers.

You can pull off protectionism to the extent: that you don't need others; or so long as it's limited given your context; or depending on your strength and or ability to command concessions (eg lopsided deals); or depending on what you're willing to give up to protect something (eg give up cheaper prices to shield farmers, or ensure strategic national production of a thing).

Ask France about its agriculture. Ask the US about its truck tariffs. Ask Germany about its car tariffs (EU facade). Ask China about, well, everything. Ask Japan about, well, lots of things. Ask Brazil about its wild economic controls. Ask Mexico about its restrictions on the energy industry. Ask Russia about, well, everything. The list just keeps going.

You can list on one hand the relevant economies with zero or near zero protectionism.

This is not correct (or at least strongly disputed) as Cambridge University economist Ha Joon Chang explains in his book “Kicking Away the Ladder”. In essence, there is historical evidence that development through protectionism (and appropriation) has worked out well for the UK and the US.

> There is a consensus among economists

I dont know if such consensus is really justified (since these economists could be politically/ideologically biased).

However, the wikipedia article did not mention the other side of the coin - namely, what protectionism does, and if it has any benefits (and drawbacks).

Protectionism exists in the financial sectors (in which a majority of wealth is being created in the USA). I suspect that those that argue for free trade only argues for free trade for things they benefit from (but protectionism for things that might hurt themselves - even if free trade overall helps others).

I dont know if such consensus is really justified (since these economists could be politically/ideologically biased).

Do you have evidence for this, or are you just saying it because you don't like the conclusion?

> protectionism just doesn't work well in the long term.

If that were the case, the US, China, Japan, South Korea, Britain, France, etc wouldn't be major economic powers. Every major economic power today copied the US protectionist model of the 19th century to become rich. Every single one.

The US was explicitly protectionist well into the 1900s.

https://en.wikipedia.org/wiki/Protectionism_in_the_United_St...

Since 1945, we became implicit protectionists while touting free trade.

Without protectionism, japan and south korea wouldn't have toyota, sony, samsung, etc. Without protectionism, china wouldn't have baidu, tencent, etc. Without protectionism, our industries would be owned by britain and europe and we'd only be a raw materials supplier.

"Washington and Hamilton believed that political independence was predicated upon economic independence. Increasing the domestic supply of manufactured goods, particularly war materials, was seen as an issue of national security. In his Reports, Hamilton argued that the competition from abroad and the “forces of habit” would mean that new industries that could soon become internationally competitive (“infant industries”) would not be started in the United States, unless the initial losses were guaranteed by government aid (Conkin, 1980). According to him, this aid could take the form of import duties or, in rare cases, prohibition of imports. He called for customs barriers to allow American industrial development and to help protect infant industries, including bounties (subsidies) derived in part from those tariffs. He also believed that duties on raw materials should be generally low (Dorfman & Tugwell, Early American Policy, 1960). Hamilton explained that despite an initial “increase of price” caused by regulations that control foreign competition, once a “domestic manufacture has attained to perfection… it invariably becomes cheaper”."

https://en.wikipedia.org/wiki/Tariffs_in_United_States_histo...

Washington, Hamilton and most of our founding fathers were protectionists because our industries were young and needed protection against more established industries of britain.

When you have to lean on consensus it usually means they have no idea what they are talking about or are pushing political ideology. We have historical proof that protectionism works. It's called the US, China, Britain, Japan, South Korea, etc.

Always take evidence over consensus.

[flagged]

Please stop doing political and ideological flamewar on Hacker News.

> There was a "consensus among economists" that US economy would tank under Trump

Not among any economists I talk to or read. (Which is the bulk of the mainstream.) The consensus was “tax cuts are real, tariffs are bluster.” Hence the stock market rally. The moment the second part was proved untrue, the rally faltered (but has not stalled).

Was there really a consensus or did you just read some new article stating that, even stating that Zimbabwes economy would thank under Mugabe was not something economist had found consensus for.

> There was a "consensus among economists" that US economy would tank under Trump,

No, there wasn't. At most, there was concensus that certain policies he proposed would have adverse impact, but not all of those policies were implemented, and policies rarely have their full impact within a 1-2 year period.

> and that it can't grow at anything over 3%,

No, there wasn't.

> and that "those jobs are not coming back"

To the extent that there has ever even a widespread belief among economists, much less a consensus on that, it was (and is) on the long-term trend in certain sectors, not about the absence of positive short-term fluctuations.

> Paul Krugman, the perennial darling of progressive intelligentsia

Krugman isn't a progressive or particularly a favorite of progressives. The darlings of the progressive intelligentsia don't generally have gigs in the corporate media.

https://news.ycombinator.com/item?id=17343885

It's not an argument against tariffs in general, but about these specific ones. There has been no actual tariff put on completed iPhones yet, right? Meanwhile the costs of someone developing a new phone here have gone up, and there is even more pressure to scale up and away from domestic runs.

Perhaps it does make sense looking at the larger numbers, if there still is in fact sizable (non-military) semiconductor production to prop up. My instinct just says otherwise!

(tangential: I think free trade could have worked out much better with sane monetary policy. As it is now, every time the stuff at Targ-mart gets cheaper, the price of housing is forced to go up!)

I think it fair to say that there are both problems and benefits. Our steel and aluminum tariffs are resulting in more jobs in steel and aluminum. On the other hand, it is resulting in fewer jobs that treat steel and aluminum as the raw product. So this impacts production of nails, buildings, ships, cars, airplanes, and a ton of things I don't have the space to list here. This is well before we even get to the inevitable response from China, Canada and Europe which has impacts like this, leaving farmers unable to sell their crop.

So yes, there are more steel and aluminum jobs. But in hand there are also less jobs in farming, building construction, ship building, nail manufacture, and plane manufacturing. So the question becomes what do you value more, people working a smelter or people building airplanes, etc. Well, most people who study this have found that the effect of protectionism is fewer jobs overall and higher prices.

You can choose to disbelieve this and irrationally point to 19th century economies as a counter example while refusing to acknowledge that many factors are always in play and trade is one of them, but this is the argument being made.

Trade wars are always bad and don't need to be argued against. They are a tax hike, they are unpredictable, they disrupt ongoing business and deter future business, and they sour political relations.

Until some tangible benefits come from this trade war, it's nothing but downside. And aside from some vague claims about "fairness", it's not even clear what those benefits are supposed to be.

It’s thanks to protectionism that the US and the UK were able to become industrial economies, and pretty much in every case of development you can name, eg South Korea. In each case the government intervened radically to protect their nascent industries.

Had it not been for protectionism, the UK’s textile industry would not have competed with India’s, in fact they forced their wares on India, to the detriment of their own textile industry.

The test for whether protectionism makes sense isn't whether you can point to some specific industries that benefited from it.

Of course pretty much any country is capable of building a strong industry in some specific area, whether that's textiles, food etc.

The question is at what cost, and whether it makes sense overall. That buildup of the UK's textile industry didn't come free, it was effectively a tax on everyone in the UK who wasn't working in textiles, because they'd otherwise have been able to buy them for less, and thus have more money left over for other things, including investing in or building other industries.

Which isn't to say that there's no use for protectionism. But specific examples like this don't help. It could just as well be that the UK was going to experience an economic boom anyway, and that protectionism slowed down their long-term growth.

US labor costs are high due to standards of living etc... Chinese comparative advantage is cheap labor, loose environmental laws. Our comparative advantages are design, technology, etc... for the time being.

US standard of living is supported by free trade (energy, goods)

That is a side effect of the current debt-based economy, where every other country uses the US dollar as a reserve

Can you (or some other knowledgeable person) explain the mechanics behind this. I've heard it a bunch of times and looked into it but I can't fully grok the advantage (and magnitude of the advantage) of being the global reserve currency

The US has ran a trade deficit since the 1970s when they got off the gold standard. The current economy is based on creation of an almost infinite amount of debt. This is possible because they are the reserve currency, and in turn other countries would invest the dollars in things like Treasury bonds.

https://www.investopedia.com/articles/economics/13/reserve-c... gives you at least some idea.

There are a few reasons why this might not be a good idea:

- it pisses off trade partners who may not act as rationally as you expect

- it might not be possible to manufacture an iPhone without cheap labour

Both of these will disrupt trade significantly, meaning productivity drops and the global economy suffers, reducing economies of scale and creating a negative feedback cycle that continues.

Also manufacturing jobs are crap, regressing your economy towards that will lower the standard of living for your citizens in general. The reason cars are manufactured in the US is to reduce shipping costs and give a great marketing line. Firearms it’s to reduce dependencies on other nations for weapons.

> Also manufacturing jobs are crap

That's far too broad of a statement. You're thinking of $1/hour 2003 Chinese labor style manufacturing, or making cheap toasters for $12 / hour.

The developed world doesn't do much of that manufacturing any longer, they all shifted to high value manufacturing. Even South Korea - a more recent member of the developed club - makes its phones in Vietnam, not domestically.

The manufacturing jobs in eg Germany and the US pay moderately well in fact. The US BLS indicates total compensation for manufacturing employees averages over $39 / hour ($25.x salary, $13.x benefits).

There are a vast array of manufacturing engineering jobs that pay far better than that.

Manufacturing jobs are progressive, not regressive. They absorb large amounts of lower skill, lower education labor. They're a requirement for countries with any meaningful population base. Without those jobs, lower skilled labor tiers end up working $10-$15 / hour service jobs (in the US), typically with few benefits. Further, they often teach a trade, valuable skills, in the process. And last but not least, it's almost always critical to make things, which you can trade with the rest of the world. A high income economy can't survive on domestic barista service jobs (ie low value consumption jobs).

>it pisses off trade partners who may not act as rationally as you expect

It forces trade partners to lower their own protections, resulting in freer trade than before. People respond to incentives.

>it might not be possible to manufacture an iPhone without cheap labour

Automation.

> Also manufacturing jobs are crap.

Manufacturing provided decent jobs for many American men feeding their families. Next you'll tell me that trucking is terrible and we should get rid of that too. Schumpterism is probably a necessary trait for ambitious people, but don't be cavalier about jobs that provide respectable livelihoods to normal people.

It's also fair that no country controls the world currency, has military supremacy, intervenes politicaly, economicaly and militarily all around the world, and basicaly bullies the rest of the world.

A more balanced world would be a better place. As it stands, I am of the impression that the weakness of the US regarding trade is the only factor that can balance the power ratios in the world.

It is extremely unfair to pick on the one matter were you are "losing" and pretend that it is morally imperative to fix it, without taking into account the whole picture.

> A more balanced world would be a better place.

How do you figure?

Under the “US empire” the world has had more progress and less conflict than ever before.

Ask that to the Vietnamese, all central and south america, the Irakies, the Palestinian, the Afgans, ...

Edit: heck, ask that to the Americans. Inequality in your homeland is rampant. What you call American Empire is known also by Globalization, and it seems that is not very popular in the US right now.

Anyway, that decission is not for the US to make, and I reckon the whole world would prefer a more balanced situation.

The American century has been vastly better for the world than the previous centuries of colonial European powers - you reference South America and Mesoamerica, well, the US have had far less of an impact than the Spanish and Portugese ever accomplished... and don't forget that the colonial Europeans created the country of Iraq, created the issues in the Levant (Balfour Declaration etc.) and also routinely fought and killed the Afghanis.

To paraphrase Churchill - the American century is the worst form of global hegemony, except for all the others.

Personally, I would much rather have lived my life under the purview of the USA than the Soviet Union or China, simply because, despite its excesses and hamfisted anticommunist coups, it is a country with values that consider the individual to be of value as a matter of course.

The US has been better than the English / Spanish, right.

But we are living in a different era: an era of enligntment, democracy and globalization, where multilateralism had a good chance to succeed.

The crime of the US is not that it has been worse than the past empires: it is that is has killed, for good and for a long time to come, one of the rare chances that we had of creating a world community with strong international institutions, government by the strength of the law and not the law of the strong.

For that reason you will not find much sympathy around the world.

I would argue that the US century was necessary to bring us to the place where your vision of a world community is even possible. It was the US that sheltered fragile Western Europe post WW2 from the Soviets and thus gave room for the EU to be born.

I'm not sure how you'd envisage such a multilateral world developing naturally from the imperialist days of the Great Game.

Those were the days! That is the kind of leadership we would like from the US. Not only paying lip service, but leading by example: ceding power and transferring it, step by step, to international, independent bodies, as it happened when the UN, the World Bank, the IMF, the WTO were created (not that those are without political influence at the moment).

That is the kind of US that we admire. But that US does sadly not exist anymore, and the world is awaking to that fact.

Oh, I definitely agree, especially with Trump in office, that the US century has ended. Trump is perhaps the symptom, not the cause.

I just worry about what comes next - in my corner of the world, China is actively seeking influence, perhaps even dominance, and frankly, the values of China are so antithetical to the values of my country that the idea of a protectionist inward facing US scares me - because the EU certainly isn't about to project power and influence into an ocean that doesn't lap their shores. The EU, while I admire it, is very much all about Europe, and bugger the rest of the world. Or so it seems to this one very subjective Kiwi.

I’m not claiming the US is perfect.

I’m asking what makes you think a more balanced world would have been better?

> Inequality in your homeland is rampant. What you call American Empire is known also by Globalization, and it seems that is not very popular in the US right now.

Yes. We believe the “American Empire” has been far too altruistic towards other nations and ignored its own people....

I don’t think that really helps your argument.

> Yes. We believe the “American Empire” has been far too altruistic towards other nations and ignored its own people....

We believe that:

1) The US has been extremely egoistical, by more than making up for the losses it has endured on trade by manipulating the global economy through the use of its monopoly on the dollar. Also by plundering resources all around the world (see Irak war for example).

2) That the economic problems of the US are of its own making, by buying into the fantasy of the American dream and letting its politicians funnel all richess to the 1 percenters, while promising that the money will trickle down.

> by manipulating the global economy through the use of its monopoly on the dollar

If you believe that France, or Germany, or any other members of the EU wouldn't have done the same had their currency become the global default by dint of being the largest economy on the world, you're kidding yourself.

And they would have been justly critizized for that.

> We believe that:

1) In this context why does it matter what you believe?

America doesn’t need your permission to fight for fairer trade deals.

2) I don’t think you understand Americans or our problems.

A 10% increase in tax revenues by focusing on the uber-wealthy will not fix our structural problems.

> America doesn’t need your permission to fight for fairer trade deals.

We know you do not need permission, and even when you pretend to get it (Irak war), you do it by blatantly lying.

You will not sell to the world that your fight is fair though.

> A 10% increase in tax revenues by focusing on the uber-wealthy will not fix our structural problems.

Your structural problems are not our problem - that is, as long as you are being confrontational. The world can be convinced to be more sensitive to the US's issues if the US shows sensitivity for the world's issues.

You want a fairer trade? Great! Let's do that. Let's eliminate at the same time the dollar as a huge distorting factor.

> You will not sell to the world that your fight is fair though.

I think you misunderstand the power imbalance.

The world needs to convince the US that it is fighting unfairly.

We spent over a trillion dollars on the Iraq war. We could handle a 1-2 trillion dollar trade war - who else can reliably say the same?

I would not be so sure about that. The reason why you are able to spend those huge amounts is because you are able to print the money while the world keeps on accepting it.

The same imbalance that strengthens your hand on trade (the huge trade deficit that the US has), is a big weakness regarding the dollar: the fact that the world has accumulated and keeps accumulating dollars could prove a big problem for the US once we decide your policies must be retaliated with actual measures.

For example, it does not make any sense for the EU to be unable to abide by a perfectly working international commitment (the agreement with Iran about non-proliferation, which has been positively audited internationally), just because we are unable to manage the flow of capitals when the US decides to block them. It would be in the interest of the EU to actively fight the prominence of the dollar.

> It would be in the interest of the EU to actively fight the prominence of the dollar.

Maybe if Trump starts talking about across the board 50% tariffs it might make sense.

I think the EU has far bigger structural problems to worry about.

> Yes. We believe the “American Empire” has been far too altruistic towards other nations and ignored its own people....

You really think that the US has been too altruistic? From my perspective in the South Pacific ocean, that's a very odd statement.

Unless you're referring to the $50 billion of foreign aid per annum, but then that money is less than a tenth of what the US spends on the military - if you wanted to shift spending internally. I don't think the foreign aid is curtailing internal domestic spending, I think it's political ideologies. You guys could have vastly more accessible and available healthcare and social welfare if you so chose, but for political and ideological reasons, you choose not to. It does baffle me.

I certainly agree with you that the US century has been good for many people across the world, and vastly preferable to the alternatives, but I see very little altruism in America's activies and very much realpolitik.

However, it does help when the world's leading power with the most firepower also happens to be a nation where the individual is considered valuable, and freedom and democracy considered core traits, even if your own internal execution is somewhat lacking.

I roughly agree with this, but I have a slightly different perspective. You are basically saying: "it could be worse, so we should be happy".

What I am saying is: "we could do much better, but the current course of action is bringing us to a much worse situation"

> I see very little altruism in America's activies and very much realpolitik

I wouldn’t call it realpolitik.

I think a lot of the decisions are based around a mix of altruism and ideology. It’s hard to seperate the two.

For example I would say Europeans and Americans have some fairly similar ideals overall. However, if something is bad for Europeans in the short term then they tend to avoid it.

I’d say the only exception is on European integration where they are driven by ideology.

> You guys could have vastly more accessible and available healthcare and social welfare if you so chose, but for political and ideological reasons, you choose not to.

Could we though? And with what trade-offs?

States have a lot of power in the US - so for example a state like California could implement its own single payer system and show the rest of the country how it is done.

> Could we though?

Yep, you already pay the most for healthcare in the world, yet people are routinely bankrupted by medical issues.

> And with what trade-offs?

Health insurer and pharmaceutical company shareholders might get a lower dividend.

In NZ, we have (near) free healthcare available for all, but private health insurance and private hospitals still exist as an alternative for those who want them. We have far fewer economies of scale - our entire population is only slightly larger than the population of LA in a country larger than the UK - yet our healthcare costs impact our economy significantly less than they do yours.

I know that some of the world's best medical treatment can be sourced in the US - if you can afford it, or your insurance cover it. But I also know that we spend less on healthcare and live longer, and no-one ever goes bankrupt because of medical bills.

But I also know that a former President of the USA once recorded an LP (admittedly before he was President, 10 years after he co-starred in a film with a chimpanzee) explaining that socialised medicine was pretty much Communism and/or the devil, so yeah, I find your country a very strange beast.

> Yep, you already pay the most for healthcare in the world

Our government already spends as much on healthcare as many governments with socialized medicine.

If it was simple then we would already have it.

> We have far fewer economies of scale - our entire population is only slightly larger than the population of LA in a country larger than the UK

And that’s exactly why the push for socialized healthcare scares so many Americans.

Countries like NZ clearly demonstrate it can be done at the state level.

So left leaning states can implement it and over the course of 10-15 years they can prove to the other states it is a better system.

Instead they want to push it at the federal level exposing the entire country to the risk.

> Health insurer and pharmaceutical company shareholders might get a lower dividend.

I think it might result in a lot less R&D, less capable doctors, etc.

> And that’s exactly why the push for socialized healthcare scares so many Americans.

I don't understand that - why does it scare Americans that we do it cheaper despite having a more dispersed population?

> I don't understand that - why does it scare Americans that we do it cheaper despite having a more dispersed population?

Because if you can do it with a country of a few million then there is no reason for us to handle it at the federal level.

Doing it at the federal level is then a political attack on people that want a different system and have different beliefs.

Ah, with you now.

Aside from the standard economic arguments, there is also the crony capitalism argument: Trump has discovered that because he has unilateral power over tariffs and subsidies, this gives him the power of life and death over individual industries and companies. https://johnhcochrane.blogspot.com/2018/07/trade-war.html?m=...

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