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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

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?

mindslight 8y ago
https://news.ycombinator.com/item?id=17343885 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!)
albertgoeswoof 8y ago
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.
- adventured 8y ago
  > 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).
- yontherubicon 8y ago
  >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.
olalonde 8y ago
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 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.
- chii 8y ago
  > 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).
  - antidesitter 8y ago
    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?
- h4b4n3r0 8y ago
  There was a "consensus among economists" that US economy would tank under Trump, and that it can't grow at anything over 3%, and that "those jobs are not coming back". To quote Paul Krugman, the perennial darling of progressive intelligentsia: "No, you could make me total dictator to do everything I think would work and it still wouldn’t get you up more than a few tenths." There's a reason why economics is not considered a real science: economists have a hard time explaining the past, let alone predicting the future. Their "consensus" is not usually worth the paper it's printed on.
altcognito 8y ago
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)
- yuhong 8y ago
  That is a side effect of the current debt-based economy, where every other country uses the US dollar as a reserve
  - handsomechad 8y ago
    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
    - yuhong 8y ago
      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.
    - markvdb 8y ago
      https://www.investopedia.com/articles/economics/13/reserve-currencies.asp https://www.investopedia.com/articles/economics/13/reserve-c... gives you at least some idea.
phil248 8y ago
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.
- Synaesthesia 8y ago
  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.
  - avar 8y ago
    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.
Patient0 8y ago
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=1 https://johnhcochrane.blogspot.com/2018/07/trade-war.html?m=...
gonvaled 8y ago
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.
- sheepmullet 8y ago
  > 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.
  - gonvaled 8y ago
    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.
    - sheepmullet 8y ago
      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.
      - gonvaled 8y ago
        > 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.
grigjd3 8y ago
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.

mindslight 8y ago

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

albertgoeswoof 8y ago

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.

adventured 8y ago
> 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).
yontherubicon 8y ago
>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.

olalonde 8y ago

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 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.

chii 8y ago
> 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).
- antidesitter 8y ago
  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?
h4b4n3r0 8y ago
There was a "consensus among economists" that US economy would tank under Trump, and that it can't grow at anything over 3%, and that "those jobs are not coming back". To quote Paul Krugman, the perennial darling of progressive intelligentsia: "No, you could make me total dictator to do everything I think would work and it still wouldn’t get you up more than a few tenths." There's a reason why economics is not considered a real science: economists have a hard time explaining the past, let alone predicting the future. Their "consensus" is not usually worth the paper it's printed on.

altcognito 8y ago

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)

yuhong 8y ago
That is a side effect of the current debt-based economy, where every other country uses the US dollar as a reserve
- handsomechad 8y ago
  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
  - yuhong 8y ago
    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.
  - markvdb 8y ago
    https://www.investopedia.com/articles/economics/13/reserve-currencies.asp https://www.investopedia.com/articles/economics/13/reserve-c... gives you at least some idea.

phil248 8y ago

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.

Synaesthesia 8y ago
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.
- avar 8y ago
  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.

Patient0 8y ago

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=1 https://johnhcochrane.blogspot.com/2018/07/trade-war.html?m=...

gonvaled 8y ago

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.

sheepmullet 8y ago
> 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.
- gonvaled 8y ago
  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.
  - sheepmullet 8y ago
    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.
    - gonvaled 8y ago
      > 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.

grigjd3 8y ago

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.