Trade Wars

Trump's claims about foreigners and jobs have all turned out to be false. The jobs and the products will go abroad no matter what he does. Tariffs caused just that: Harley Davidson will make motorcycles for Europe abroad, due to Trump.

How long will it take for Trump followers to realize that just Trump repeating a statement over and over does not make it true? This authority is incompetent, he does not need respect.

Trump has told his followers that trade with Mexico is unfair, trade with Canada is unfair. No explanation is needed for the followers, as they know the world is unfair to the US! The countries don’t let us sell cheaper GMO products, or maybe cheese. The problem with farm goods is that most countries exclude certain farm products from international agreements. This is for the purpose of keeping some food production at home. It is not a good idea to import 90% of your food, there could be some event that leaves you without food.

But we trade fancy finished goods. Let’s take an example. Two factories make 1000 cars in a month. In Mexico they make 1000 red Malibus. In Alabama they make 1000 blue Malibus. No red Malibus are made in USA. US buyers want some red Malibus. With cheaper labor, 150 red Malibus are sent to US at Mexican bulk price. Mexicans want some blue Malibus. In exchange for the same money, 100 American blue Malibus are sent over.

Mexicans end up 50 Malibus less.  They sell all the 850 remaining Malibus to Brazil, who were willing to pay more than Americans.

Can this sort of unbalanced trade with a low wage country be fixed with tariffs? Not really. If the Mexicans end up selling the Malibus to the US with a price that is the price we pay, the tariff just ends up with our government. We then sell Malibus with to Mexico with 0% tariff. The Mexicans still lose.

Trump has convinced his followers that tariffs somehow allow us to control trade. If we put tariffs on products coming in, the selling country will do the same to us. Both governments collect tariffs but consumers lose.

Initial reports of the war with China claim Trump is winning and the stocks will not suffer. But there are always people paid to write optimistic articles and columns in financial papers and major newspapers. These are there for the purpose of making people "trust" stocks. You can look at stocks yourself and see which ones depend the most on trade.

Conservative business minded peopled have looked at tariffs. They analyze jobs, income, consumption of goods. From the internet:

Let’s look at an example of how that happens. The U.S. government decides to implement a tariff that will “saves” 1,200 full-time jobs at a tire plant.

Each of the saved jobs pays an average wage of $40,070 a year ($20.69 per hour). Sounds pretty good, doesn’t it? Maybe that’s a policy we should support.

But what if I told you that those 1,200 jobs cost the American consumer $900,000 each? Oh, and while 1,200 jobs were created, it came at a cost to the American economy of 2,531 jobs. That might make us reconsider whether the policy was all that beneficial.

Unfortunately, this is not a hypothetical situation: it’s the real-world effect of a tariff on Chinese tires.

In his 2012 State of the Union address, President Obama claimed that, “over a thousand Americans are working today because we stopped a surge in Chinese tires.” What he failed to mention is that for every tire job that was “saved” two other jobs were lost or not created and that each job “saved” cost Americans an additional $900,000 a year.

If the workers only got $40,070, what happened to the other $859,930? It went into the pockets of the tire companies, many of which are not even located in the U.S. When the companies pushed for the tariffs to “save American jobs” what they were really doing was increase their own profits by preying on the economic ignorance of the American public about the effects of tariffs. (Crony capitalists are gifted in finding ways to get the public to support policies that make them richer while making other citizens poorer.)

 (From ACTON INSTITUTE POWERBLOG: Why tariffs and protectionism make Americans poorer)

We will still buy the goods we need and spend the same amount of money. We will just get a smaller TV, or a product with less features for the same money as before.

This sort of analysis is too complicated for the Trump voter to get. They, including the pig farmer in Iowa still coming to grips with export tariffs, refuse to believe Trump is wrong, simply a clever bullshitter who knows his audience.