7 ms·

Economists See Merit in Trump’s Trade Case Against China

67 points by meri_dian 9y ago

asfasgasg 9y ago
At least, you can cherry-pick two who think so (that is how many economists are quoted in the article). On the other hand, you can probably find two economists who will say almost anything. I'm more interested in surveys like the ones the IGM Forum conducts. Here is what they think about the aluminum and steel tariffs: http://www.igmchicago.org/surveys/steel-and-aluminum-tariffs http://www.igmchicago.org/surveys/steel-and-aluminum-tariffs I don't really expect the China tariffs to get much better results, but I guess we will see!
- melling 9y ago
  Yeah, you’re telling us the tariffs won’t work and people don’t agree with them. How about we back up and discuss the degree to which China is or is not being fair in trade. Elon Musk, for example, wants certain tariffs because China has a 25% tariff: https://www.cnbc.com/2018/03/08/elon-musk-sides-with-trump-on-trade-with-china-citing-25-percent-import-duty-on-american-cars.html https://www.cnbc.com/2018/03/08/elon-musk-sides-with-trump-o...
  - ajsharp 9y ago
    Sure, they're good for his business. Tariffs are generally good for the industries they protect, at the expense of consumers, because prices will rise in that industry. So one industry and it's employees receive protection from foreign competition, but consumers "pay for it" on the backend with higher prices.
    - melling 9y ago
      I’m sure what Elon really wants is a level playing field. He’d rather simply have China remove its 25% tariff. He doesn’t want Chinese consumers to have to pay more for his cars.
    - ianai 9y ago
      And as we all know, higher prices means fewer goods and services for all.
    - programmarchy 9y ago
      That's a one-dimensional view. We are not only consumers. We're also laborers, and citizens of a nation. If every other nation has tariffs, and the U.S. doesn't, then it's not a level playing field and industry and capital will leave, as we have seen. It's important to national security that the U.S. maintains its manufacturing base, and personally, I'd rather pay a little more for American goods if that means the working class doesn't descend into poverty, which is costly in other ways.
  - conanbatt 9y ago
    Out of his own pure interest..
  - asfasgasg 9y ago
    I'm not telling you whether tariffs are good or bad. I'm just telling you what I expect most economists think about it.
  - fspeech 9y ago
    Maybe understanding what MFN status https://en.m.wikipedia.org/wiki/Most_favoured_nation https://en.m.wikipedia.org/wiki/Most_favoured_nation means would help resolve arguments like this. Of course US is free to set tariffs at a level it sees fit (in accordance with its international agreements) as long as such tariffs apply to all trading partners (who are WTO members).
- Consultant32452 9y ago
  Of course tariffs won't improve the welfare of Americans. Removing those tariffs after China has changed its illegal and unfair trade practices is what is suggested to improve the welfare of Americans.
freejulian 9y ago
But I thought hackernews told me Trump was evil reincarnated and Hillary was the second coming?
- notanai 9y ago
  I wish I could get the downvote button soon.
ethbro 9y ago
Fwiw, the IP trade case seems absolutely valid. Either China can abide by international laws and actually enforce IP prosecution on strategic domestic companies, or they don't deserve to play at the free trade table. The "Well, we know the Chinese government is unfairly tilting the domestic economic market in favor of local companies, but if we give them a seat at the table then eventually they'll change" is never going to be realized when they're treated with kid gloves by everyone who wants access to their market. And now that China has a number of internationally competive industries, it seems like as good of a time as any to press harder. For all the bullshit that made it's way into the TPP, it was strategically a good idea. Multilateral tariffs are the only real pressure that an economy as big as China's will feel.
- ianai 9y ago
  Its never been about hoping they’ll change. It’s been about their size dwarfing the West’s. Maybe NAFTA was meant to create a trading alliance to rival them, but it clearly didn’t work well enough.
  - connectclass 9y ago
    and now we can clearly see that there was never going to be a middle class in China. Too much money stolen and given to communist party (and now the dictator).
    - fspeech 9y ago
      "Seventy percent of young adults in China are homeowners, according to a recent HSBC survey. The study, which looked at more than 9,000 people born between 1981 and 1998 in nine countries, found that the home ownership rate of Chinese millennials is nearly double the global average." http://time.com/money/4732889/millennials-home-ownership-china-america/ http://time.com/money/4732889/millennials-home-ownership-chi...
      - akira2501 9y ago
        China has already bailed out several upper tier cities housing markets several times. This is not the measure of economic health people take it for, at least, not in the current regulatory environment of China.
sidibe 9y ago
People might be more understanding if he wasn't at the same time threatening tariffs on everyone else too.
burfog 9y ago
Suppose that we decided that we shouldn't have abnormal tariffs. We decide to do what is typical for large and/or advanced economies. We'd have to raise tariffs.
fwdpropaganda 9y ago
"Fair" is a bullshit notion when it comes to trade. What Americans say is that China can produce <insert commodity> cheaper than the USA only because "it's subsidized", and that's unfair. What exactly does it mean to say that is "unfair"? The USA for example subsidizes their soybean exports, is that "unfair" to the rest of the world? Their society spotted a strategic opportunity in collectively working together to lower the prices of some exports. Now, it might make sense for the USA to apply strategic tariffs. But calling their decision "unfair" is just filler word nonsense, as we're all playing by the same rules.
- yourcousinbob 9y ago
  In the article, it mentions subsidizing commodities is an acceptable free trade practice that perhaps helps everyone giving Americans cheaper goods. What Americans are saying is unfair is China's blatant and state backed assault on intellectual property as well as strict limits on foreign companies. It is China's strict laws that exclude the world's tech companies and create their own markets for their own companies. These antifree trade practices benefit China at the expense of the rest of the world. That is what is unfair
- djrogers 9y ago
  You seem to be focusing on one rallying point of the protectionist agenda (subsidized production), and not the underlying predatory trade practices. See, there are unfair trade practices, even if you think your example isn’t - practices such as dumping, or outrageously high unilateral tariffs. These destabilize global economies, and are used specifically to damage foreign industry. These are not simply a matter of ‘strategic opportunity’, which is why they are generally forbidden by international trade groups. Of course they don’t actually get to do much to enforce international law at the WTO, but that’s a different story.
  - digitaltrees 9y ago
    You make some good points. I agree. There are differences in subsidies. For example. It may be ok to subsidize food production so that a country can ensure continued ability to maintain production capacity domestically, even where it’s not economically viable. But that is very different from a country strategically subsidizing an industry with the objective of marking the products so low priced that they drive all the domestic producers out of business and then, when they are left standing, jacking up the prices. That’s called dumping. There is a reason we have the WTO and a dispute resolution process, it’s be cause some things are ok and some are not.
Feniks 9y ago
IDK man a trade war to protect your economy is basically admitting you can't compete anymore. I would be deeply ashamed and worried if my country ever had to resort to such measures. And for what, a steel industry that should have been euthanized decades ago like other Western countries did?
graycat 9y ago
IMHO, Trump's idea on tariffs and China is not really about trade, free trade, or economics. Instead, Trump's ideas go back to some simpler stuff -- predatory marketing to achieve and then exploit a monopoly. So, run losses, drive competitors out of business, then take all the market, have a monopoly, and raise prices. Also for China, much of the goal is international power. China is like the guy who promised to catch the wild pig. So each day he took a walk in the woods and left a trail of corn. Soon the pig found the corn and started following the corn trail. Slowly the corn trail led to a corral with an open gate. So, sure, as soon as the pig was inside the corral, the guy closed the gate. Done. One pig captured. China doesn't want trade or free trade; instead, China wants to use "the old take over the world ploy". So, China will try to reduce everyone else to colonies supplying goods, especially from agriculture, at low prices while they import products from China at high prices. That idea used to be called mercantilism, e.g., what England did to India. The Chinese Communist party is willing to have their citizens work however long at whatever work to support their "old take over the world ploy". For the US, the situation is easy: Slap on tariffs. The US tariffs will also be good for the Chinese people -- have the Communist party keep the Chinese people busy making consumer products, concentrating on education, a nicer country, etc. China is a big country with lots of land area near by -- Mongolia, Russia, India, SE Asia, Australia, etc., and doesn't much need to import anything and needs next to nothing from the US. Similarly the US needs next to nothing from China. The US tariffs will also be good for the US, e.g., put many millions of US citizens back to work. In many ways, the US standard of living was much higher in 1950 when foreign trade was not very important for the US. Besides, just why should the work output of US workers be shipped out of the US? Really, only if that output can be swapped for something more valuable to the US, e.g., products we need and don't have, e.g., tin, natural rubber, teak, but there isn't a lot of such products the US really needs. Okay, we could sell the output for gold, sell the gold to the US government, and let the gold accumulate in Fort Knox. To what end? Fort Knox is awash in gold. I know; I know; I know: The big plan was that poorly paid US workers would give their jobs to China, India, Pakistan, etc. and, then, get much better jobs at Microsoft selling software at high prices to China, India, Pakistan, etc. Well, mostly it didn't work: Instead the textile workers in the Carolinas are still out of work; same for the steel workers in the Rust Belt, etc. Why? Some US foreign policy thinkers thought that such trade would make a more peaceful world. The people doing the importing liked making the money. Pakistan liked getting US help setting up a textile industry and selling back to the US to get cash to buy, say, oil or stuff to make their atomic bombs. Bummer. Trump is correct: China has devastated large areas of the US fly-over states. The whole show, from Nixon's trip to China to China in the WTO to the present has been a disaster in nearly every sense for the US.
pasbesoin 9y ago
It would have been better 20+ years ago, before wholesale IP flow there and some other places. There was theft. There was also taking advantage of that theft by "Western", "IP friendly" businesses. Hardly the only, but one of the reasons that "outsourcing" had such "cost savings". Because the suppliers outsourced to weren't actually paying for the tools and technology they were using (versus e.g. a domestic U.S. producer). It would have been better 20+ years ago, before wholesale IP flow there and some other places. There was theft. There was also taking advantage of that theft by "Western", "IP friendly" businesses. Hardly the only, but one of the reasons that "outsourcing" had such "cost savings". Because the suppliers outsourced to weren't actually paying for the tools and technology they were using (versus e.g. a domestic U.S. producer). P.S. I'm all for the "third world" -- or "second", or whatever -- advancing. I don't think nor respect the idea that the "first world" had to hollow itself out to accomplish this. Nor so distort other societies and governments into such abusive forms, e.g. by using our technology to empower an abusive but cooperative faction over the others. But then I've been an optimist. The last some years of U.S. politics have really put that to the test for me, personally.

67 points by meri_dian 9y ago

At least, you can cherry-pick two who think so (that is how many economists are quoted in the article). On the other hand, you can probably find two economists who will say almost anything. I'm more interested in surveys like the ones the IGM Forum conducts. Here is what they think about the aluminum and steel tariffs: http://www.igmchicago.org/surveys/steel-and-aluminum-tariffs http://www.igmchicago.org/surveys/steel-and-aluminum-tariffs I don't really expect the China tariffs to get much better results, but I guess we will see!

melling 9y ago
Yeah, you’re telling us the tariffs won’t work and people don’t agree with them. How about we back up and discuss the degree to which China is or is not being fair in trade. Elon Musk, for example, wants certain tariffs because China has a 25% tariff: https://www.cnbc.com/2018/03/08/elon-musk-sides-with-trump-on-trade-with-china-citing-25-percent-import-duty-on-american-cars.html https://www.cnbc.com/2018/03/08/elon-musk-sides-with-trump-o...
- ajsharp 9y ago
  Sure, they're good for his business. Tariffs are generally good for the industries they protect, at the expense of consumers, because prices will rise in that industry. So one industry and it's employees receive protection from foreign competition, but consumers "pay for it" on the backend with higher prices.
  - melling 9y ago
    I’m sure what Elon really wants is a level playing field. He’d rather simply have China remove its 25% tariff. He doesn’t want Chinese consumers to have to pay more for his cars.
  - ianai 9y ago
    And as we all know, higher prices means fewer goods and services for all.
  - programmarchy 9y ago
    That's a one-dimensional view. We are not only consumers. We're also laborers, and citizens of a nation. If every other nation has tariffs, and the U.S. doesn't, then it's not a level playing field and industry and capital will leave, as we have seen. It's important to national security that the U.S. maintains its manufacturing base, and personally, I'd rather pay a little more for American goods if that means the working class doesn't descend into poverty, which is costly in other ways.
- conanbatt 9y ago
  Out of his own pure interest..
- asfasgasg 9y ago
  I'm not telling you whether tariffs are good or bad. I'm just telling you what I expect most economists think about it.
- fspeech 9y ago
  Maybe understanding what MFN status https://en.m.wikipedia.org/wiki/Most_favoured_nation https://en.m.wikipedia.org/wiki/Most_favoured_nation means would help resolve arguments like this. Of course US is free to set tariffs at a level it sees fit (in accordance with its international agreements) as long as such tariffs apply to all trading partners (who are WTO members).
Consultant32452 9y ago
Of course tariffs won't improve the welfare of Americans. Removing those tariffs after China has changed its illegal and unfair trade practices is what is suggested to improve the welfare of Americans.

freejulian 9y ago

But I thought hackernews told me Trump was evil reincarnated and Hillary was the second coming?

notanai 9y ago
I wish I could get the downvote button soon.

ethbro 9y ago

Fwiw, the IP trade case seems absolutely valid. Either China can abide by international laws and actually enforce IP prosecution on strategic domestic companies, or they don't deserve to play at the free trade table. The "Well, we know the Chinese government is unfairly tilting the domestic economic market in favor of local companies, but if we give them a seat at the table then eventually they'll change" is never going to be realized when they're treated with kid gloves by everyone who wants access to their market. And now that China has a number of internationally competive industries, it seems like as good of a time as any to press harder. For all the bullshit that made it's way into the TPP, it was strategically a good idea. Multilateral tariffs are the only real pressure that an economy as big as China's will feel.

ianai 9y ago
Its never been about hoping they’ll change. It’s been about their size dwarfing the West’s. Maybe NAFTA was meant to create a trading alliance to rival them, but it clearly didn’t work well enough.
- connectclass 9y ago
  and now we can clearly see that there was never going to be a middle class in China. Too much money stolen and given to communist party (and now the dictator).
  - fspeech 9y ago
    "Seventy percent of young adults in China are homeowners, according to a recent HSBC survey. The study, which looked at more than 9,000 people born between 1981 and 1998 in nine countries, found that the home ownership rate of Chinese millennials is nearly double the global average." http://time.com/money/4732889/millennials-home-ownership-china-america/ http://time.com/money/4732889/millennials-home-ownership-chi...
    - akira2501 9y ago
      China has already bailed out several upper tier cities housing markets several times. This is not the measure of economic health people take it for, at least, not in the current regulatory environment of China.

sidibe 9y ago

People might be more understanding if he wasn't at the same time threatening tariffs on everyone else too.

burfog 9y ago

Suppose that we decided that we shouldn't have abnormal tariffs. We decide to do what is typical for large and/or advanced economies. We'd have to raise tariffs.

fwdpropaganda 9y ago

"Fair" is a bullshit notion when it comes to trade. What Americans say is that China can produce <insert commodity> cheaper than the USA only because "it's subsidized", and that's unfair. What exactly does it mean to say that is "unfair"? The USA for example subsidizes their soybean exports, is that "unfair" to the rest of the world? Their society spotted a strategic opportunity in collectively working together to lower the prices of some exports. Now, it might make sense for the USA to apply strategic tariffs. But calling their decision "unfair" is just filler word nonsense, as we're all playing by the same rules.

yourcousinbob 9y ago
In the article, it mentions subsidizing commodities is an acceptable free trade practice that perhaps helps everyone giving Americans cheaper goods. What Americans are saying is unfair is China's blatant and state backed assault on intellectual property as well as strict limits on foreign companies. It is China's strict laws that exclude the world's tech companies and create their own markets for their own companies. These antifree trade practices benefit China at the expense of the rest of the world. That is what is unfair
djrogers 9y ago
You seem to be focusing on one rallying point of the protectionist agenda (subsidized production), and not the underlying predatory trade practices. See, there are unfair trade practices, even if you think your example isn’t - practices such as dumping, or outrageously high unilateral tariffs. These destabilize global economies, and are used specifically to damage foreign industry. These are not simply a matter of ‘strategic opportunity’, which is why they are generally forbidden by international trade groups. Of course they don’t actually get to do much to enforce international law at the WTO, but that’s a different story.
- digitaltrees 9y ago
  You make some good points. I agree. There are differences in subsidies. For example. It may be ok to subsidize food production so that a country can ensure continued ability to maintain production capacity domestically, even where it’s not economically viable. But that is very different from a country strategically subsidizing an industry with the objective of marking the products so low priced that they drive all the domestic producers out of business and then, when they are left standing, jacking up the prices. That’s called dumping. There is a reason we have the WTO and a dispute resolution process, it’s be cause some things are ok and some are not.

Feniks 9y ago

IDK man a trade war to protect your economy is basically admitting you can't compete anymore. I would be deeply ashamed and worried if my country ever had to resort to such measures. And for what, a steel industry that should have been euthanized decades ago like other Western countries did?

graycat 9y ago

IMHO, Trump's idea on tariffs and China is not really about trade, free trade, or economics. Instead, Trump's ideas go back to some simpler stuff -- predatory marketing to achieve and then exploit a monopoly. So, run losses, drive competitors out of business, then take all the market, have a monopoly, and raise prices. Also for China, much of the goal is international power. China is like the guy who promised to catch the wild pig. So each day he took a walk in the woods and left a trail of corn. Soon the pig found the corn and started following the corn trail. Slowly the corn trail led to a corral with an open gate. So, sure, as soon as the pig was inside the corral, the guy closed the gate. Done. One pig captured. China doesn't want trade or free trade; instead, China wants to use "the old take over the world ploy". So, China will try to reduce everyone else to colonies supplying goods, especially from agriculture, at low prices while they import products from China at high prices. That idea used to be called mercantilism, e.g., what England did to India. The Chinese Communist party is willing to have their citizens work however long at whatever work to support their "old take over the world ploy". For the US, the situation is easy: Slap on tariffs. The US tariffs will also be good for the Chinese people -- have the Communist party keep the Chinese people busy making consumer products, concentrating on education, a nicer country, etc. China is a big country with lots of land area near by -- Mongolia, Russia, India, SE Asia, Australia, etc., and doesn't much need to import anything and needs next to nothing from the US. Similarly the US needs next to nothing from China. The US tariffs will also be good for the US, e.g., put many millions of US citizens back to work. In many ways, the US standard of living was much higher in 1950 when foreign trade was not very important for the US. Besides, just why should the work output of US workers be shipped out of the US? Really, only if that output can be swapped for something more valuable to the US, e.g., products we need and don't have, e.g., tin, natural rubber, teak, but there isn't a lot of such products the US really needs. Okay, we could sell the output for gold, sell the gold to the US government, and let the gold accumulate in Fort Knox. To what end? Fort Knox is awash in gold. I know; I know; I know: The big plan was that poorly paid US workers would give their jobs to China, India, Pakistan, etc. and, then, get much better jobs at Microsoft selling software at high prices to China, India, Pakistan, etc. Well, mostly it didn't work: Instead the textile workers in the Carolinas are still out of work; same for the steel workers in the Rust Belt, etc. Why? Some US foreign policy thinkers thought that such trade would make a more peaceful world. The people doing the importing liked making the money. Pakistan liked getting US help setting up a textile industry and selling back to the US to get cash to buy, say, oil or stuff to make their atomic bombs. Bummer. Trump is correct: China has devastated large areas of the US fly-over states. The whole show, from Nixon's trip to China to China in the WTO to the present has been a disaster in nearly every sense for the US.

pasbesoin 9y ago

It would have been better 20+ years ago, before wholesale IP flow there and some other places. There was theft. There was also taking advantage of that theft by "Western", "IP friendly" businesses. Hardly the only, but one of the reasons that "outsourcing" had such "cost savings". Because the suppliers outsourced to weren't actually paying for the tools and technology they were using (versus e.g. a domestic U.S. producer). It would have been better 20+ years ago, before wholesale IP flow there and some other places. There was theft. There was also taking advantage of that theft by "Western", "IP friendly" businesses. Hardly the only, but one of the reasons that "outsourcing" had such "cost savings". Because the suppliers outsourced to weren't actually paying for the tools and technology they were using (versus e.g. a domestic U.S. producer). P.S. I'm all for the "third world" -- or "second", or whatever -- advancing. I don't think nor respect the idea that the "first world" had to hollow itself out to accomplish this. Nor so distort other societies and governments into such abusive forms, e.g. by using our technology to empower an abusive but cooperative faction over the others. But then I've been an optimist. The last some years of U.S. politics have really put that to the test for me, personally.