Tag: Trade Agreements

Trade Wars Cometh

Just last month Pres. Trump let it be known that he would enforce tariffs on steel and aluminum……the first shots were fired in the new trade wars…..these will effect Americans in several ways….cost of cars and even their addictive sodas…..but what will Asia do in response?

The Bangkok Post had an op-ed on this situation……

Over the past five decades or so, Asia’s economies have relied largely on an export-oriented development model to support rapid economic transformation and growth. But with US President Donald Trump fulfilling…

In the past year, Mr Trump has withdrawn the US from the Trans-Pacific Partnership (TPP), renegotiated its free-trade agreement with South Korea, and raised “safeguard” tariffs on imported washing machines…

https://www.bangkokpost.com/opinion/opinion/1439051/how-asia-can-tackle-us-trade-wars

China has made it official that it will respond…it has notified the WTO of its intentions…..

The notification came in a WTO document that was dated last Thursday but posted only after the Easter public holidays.

It came after China said late on Sunday that it has increased tariffs by up to 25 per cent on 128 US products, escalating a dispute between the world’s biggest economies.

China has now fulfilled its legal duty to notify the WTO and other member states of its retaliatory measures.

http://www.scmp.com/news/china/diplomacy-defence/article/2140113/china-will-give-good-it-gets-trade-war-united-states

The great Trade Wars of the 21st Century have begun….

This is the warning shot of the end of the “Pax Americana” (a bit melodramatic)…..do not know what that means then stay tuned for I will cover the “Pax” in an upcoming post.

Free Trade Or Fair Trade

Just the other day Pres. Trump signed his EO on tariffs on steel and aluminum imports  in doing so he has started a debate on free trade….many do not see his tariffs as good for the notion of free trade and still others think that free trade is a cornerstone of conservatism…..but is it, that cornerstone?

The American Conservative spotlights this in a recent article….

According to a recent analysis in the New York Times, President Trump’s “isolationist” trade policy is “at odds with longstanding conservative orthodoxy about the benefits of free and open markets.” The reader is further told that the president is under pressure from his working-class base, which is obstreperously demanding that protectionist taxes be placed on imported steel and aluminum.

I say not so fast.

The Times presents the GOP base’s supposed impatience with free trade as a departure from almost sacred Republican beliefs, and free trade itself as a permanent conservative characteristic. Their evidence is that large corporations favor free trade while labor unions have generally been more protectionist.

http://www.theamericanconservative.com/articles/free-trade-shouldnt-be-a-litmus-test-for-conservatism/

TAC also takes a look, a historic look, at tariffs…..

America’s first great protectionist political figure was Alexander Hamilton, George Washington’s treasury secretary. And compared to later mercantilist politicians in our history, Hamilton wasn’t even that much of a protectionist. His original U.S. tariff bill imposed an average taxation level of just 8.5 percent on imported goods. And Hamilton argued that any protection encompassed in those duties, as opposed to revenue requirements, should be discontinued as soon as protected industries established themselves in the American economy.

Hamilton’s opponents, the early American free traders, feared he had created a monster, while northeastern industrialists, particularly in Pennsylvania, predictably argued that protection should be substantial and permanent to ensure national prosperity.

http://www.theamericanconservative.com/articles/americas-tumultuous-history-with-tariffs/

It is too early to tell if the Trump tariffs will be good for the country or not…..steelworkers union seems to think it will be but many economists see it doing the opposite for the country.

Trump has already exempted some countries from his tariffs….that right there tells me that he is not serious.  If you are going to impose tariffs then it should be on all involved not a select few.

Time will tell whether good or bad.

Here A Tariff, There A Tariff

The word of the week….both this week and last is….TARIFF.

And as I always do I will look into the history of this country to explain the term of the week…….

The year was 1930 and the Congress enacted the Smoot-Hawley Act.

Okay what the Hell was the Smoot-Hawley Act?

The Smoot-Hawley Act is the Tariff Act of 1930. It increased 900 import tariffs by an average of 40 to 48 percent. Most economists blame it for worsening the Great Depression. That means it also contributed to the start of World War II.

In June 1930, Smoot-Hawley raised already-high U.S. tariffs on foreign agricultural imports. The purpose was to support U.S. farmers who had been ravaged by the Dust Bowl.

Rather than helping, it raised food prices for Americans who were already suffering from the Depression. It also compelled other countries to retaliate with their own tariffs. That forced global trade down by 65 percent.

Smoot-Hawley showed how dangerous trade protectionism is for the global economy. Since then, world leaders advocate free trade agreements that promote increased trade for all participants.

Our president has decided that he likes the idea of imposing tariffs on steel ans aluminum….and no matter which party one aspires to there is few that see any good coming from tariffs (my favorite part of this is to listen to a lying bitch thumping the cheap drum to the positive works that these things will do).

“Trade wars are good,” tweeted U.S. President Donald Trump, “and easy to win.”

And just like that, we’re back in the thick of it: Trump, looking to Make America Great Again, has threatened to use section 232 of the Trade Expansion Act of 1962 to impose tariffs of 25 per cent on steel imports and 10 per cent on aluminum, suggesting it’s a matter of U.S. national security. That would have a heavy impact on Canada, as it is the number-one supplier of both steel and aluminum to the United States. Of course, those proposed levies may just be more bluster for the ongoing NAFTA negotiations; indeed, Trump has said that a “new and fair” NAFTA deal would prompt the U.S. to consider an exemption.

But several things indicate things could be serious, including the Dow’s initial slump in reaction and many Republicans’ frenzied opposition to the decision. More worrying, even, is the fact that it’s entirely consistent with the rhetoric Trump campaigned on—namely, getting blue-collar workers in distressed industries back on the job with protectionist measures.

http://www.macleans.ca/opinion/what-we-can-learn-from-a-disastrous-1930-u-s-tariff-on-canadian-goods/

Some think that it will cost jobs……With economists warning of a potential 146,000 American jobs lost due to the proposed tariffs, Business Insider reveals the US states that could be hit hardest, including Louisiana, Connecticut, and Missouri.

There are some that think that this is just a tactic the president is using to keep the Rust Belt in his sphere of influence and that he will roll everything he has said back……an election ploy for the mid-terms.

We can hope that is his play but some of us do not think he is that clever.

I will do something that my Right wing brethren seldom do…..To be fair…..there is some positive news about the tariff thing…..

US Steel Corp says it will soon restart a blast furnace in Illinois that has been cold for over two years thanks to the 25% tariff on imported steel announced by President Trump last week, Politico reports. US Steel President David Burritt blames “unending waves of unfairly traded steel products” arriving in the US for the poor fortunes of steel workers in Granite City. He believes the planned tariff will turn that around. Restarting the blast furnace at Granite City Works will take up to four months. And while some believe Trump’s tariffs on steel and aluminum will be political winners, many experts are predicting harm to the US economy.

Finally…… Noah Smith at Bloomberg writes the tariffs could be a “self-inflicted wound” for Trump. He says tariffs typically don’t end up improving American industries. Rather they prevent industries from figuring out how to keep pace with global competitors, may lead to their products being seen as shoddy, and might hurt US manufacturers.

Has the GOP become an anti free trade party?

What say you?

Word Of The Week–Tariffs

There is a word that sent the world’s markets into a skid…..and that word is tariffs…..and our president pulled the “T” word……

President Trump announced new tariffs on imports of steel and aluminum—25% and 10% respectively—on Thursday, leading some experts to fear a global trade war, the New York Times reports. “Our Steel and Aluminum industries … have been decimated by decades of unfair trade and bad policy with countries from around the world,” Trump tweeted Thursday morning. “We must not let our country, companies and workers be taken advantage of any longer.” Experts say the tariffs could lead to retaliation from other countries (China is talking about tariffs on US sorghum and soybeans and the EU is considering tariffs on US cheese and bourbon), higher prices on goods using steel and aluminum, and possibly an economic slowdown. Nervous investors sent the Dow plunging 500 points immediately after the news broke, reports the AP.

According to Business Insider, the Commerce Department recommended tariffs of 24% and 7%, but it was reported Trump preferred a “round number.” The Times describes a “frenetic and chaotic morning” leading to Trump’s announcement. White House advisers have bitterly debated tariffs for months, and Trump decided only Wednesday to announce them, CNN reports. White House aides were still discussing if the tariffs will apply to all countries or just a handful as of Thursday morning, and a White House official says the policy is not ready to be implemented yet. Advisers were still debating Thursday morning if Trump could announce anything. “Maybe he wants to make an announcement, but the proclamation isn’t ready,” one White House official says. “Without the proclamation, nothing has legal force.” Despite announcing the tariffs Thursday, Trump said he won’t sign the trade measures until next week. At this point, the specifics of those measures are unclear.

Now that the word has been used can Trump make good on his threat?

The Heritage Foundation had a bit to say on this…….

This month, at least four major trade cases will cross President Donald Trump’s desk: (1) a Section 201 (of the 1974 Trade Act) case on solar panels and modules, (2) a Section 201 case on large residential washers, (3) a Section 232 (of the 1962 Trade Expansion Act) case on steel, and (4) a Section 232 case on aluminum. These cases seek to restrict imports from all countries, minus a few exceptions, as a safeguard against alleged unfair competition under Section 201, and on the basis of national security under Section 232.

While the four cases involve different products and sectors of the economy, they have a few simple things in common. First, the domestic industries lobbying the government in each case are trying to use the political process to overcome setbacks in the economic marketplace. Second, the remedies being sought have the potential to cause serious damage to other firms or sectors of the U.S. economy. Finally, any actions taken by the government will increase the prices of the products in question in America.

https://www.heritage.org/trade/report/four-guidelines-the-president-when-considering-tariffs

President Trump’s announcement that he plans to impose a 25% tariff on steel imports and 10% on aluminum is reverberating not just in the US but around the world in the form of jittery stock markets and worries about a trade war. A look at what’s going on:

  • Beer, autos: In theory, the move could make things such as beer, autos, and even baseball bats—essentially, anything made with the metals—more expensive, reports CNN. But as the Upshot blog of the New York Times explains, how much of a price increase is unclear. “If your favorite beer producers are looking at paying an extra fraction of a cent for each aluminum can, they might just take on the cost themselves, they might raise prices, or they might split the difference.”
  • Biggest suppliers: Brazil, Canada, and South Korea supplied the most steel to the US last year, while Canada, Russia, and the United Arab Emirates were the leaders in aluminum in 2016, per CNBC. One economist warned of “surgical strikes” in retaliation, meaning counter-tariffs on specific products.

Will Congress intercede or will they what cowards do….run and hide behind the petticoats of the president?  Or will the mamby pamby Trump change his mind…..you know like he has on immigration and guns….

Geopolitics Of Trade In Asia

Fearless Leader has taken to Tweeter and in so many characters has crapped on everything he was suppose to have covered with our allies at the meeting in Vietnam……..there is a new geopolitical spin to the trade in the coming years….

The APEC Leaders’ summit meeting, which took place last week in Danang, Vietnam, crystallized the new geopolitics of trade in Asia. The leaders of the three largest economies in the world—the United States, China, and Japan—each redefined the roles their nation will play in sustaining, torpedoing, or adjusting the postwar trading order. Little is assured on how free trade and multilateral undertakings will fare as the three giants reposition themselves in their leadership bid. The only certainty ahead for us is that it will be a bumpy ride.

https://www.brookings.edu/blog/order-from-chaos/2017/11/15/the-new-geopolitics-of-trade-in-asia/

For instance Japan’s Abe would like to re-start the “Quad” from years past…..

The “Quad”?

In June this year, Japanese Prime Minister Shinzo Abe will have been in office for one-and-a-half years — a rare achievement for a Japanese prime minister in recent memory. Most of his time in office has been devoted to getting Japan’s economic house in order via “Abenomics,” and reinvigorating Japan’s domestic debate about defense issues, including collective self-defense, military spending, and national security strategy. Abe has given considerably less attention to taking the lead on bold international initiatives as he had done as a younger prime minister.

During his first term as prime minister, in 2006-2007, Abe initiated a Quadrilateral Security Dialogue (QSD) between Asia’s maritime democracies: Australia, India, Japan, and the United States. While the QSD drew these powers to the table early on, all concerned by the normative uncertainties posed to the regional order by China’s rise, it later fell apart. In particular, Australian Prime Minister Kevin Rudd pulled Australia out of the QSD because its participation in that dialogue imperiled the trajectory of its relations with China. China, for its part, wasted no time in protesting what it saw as an overt attempt at encirclement.

https://thediplomat.com/2014/05/shinzo-abes-quadrilateral-initiative-gone-and-forgotten/

The “Quad” idea died and now it will see a rebirth……

Ten years ago, an American, an Australian, an Indian, and a Japanese walked into a room in Manila. This was no joke. They were representing their governments at a quadrilateral meeting also known as “the Quad.” The initiative, meant to facilitate conversation and cooperation between the four maritime democracies in the context of the rise of China and India, lasted from mid-2006 to early 2008. Since it fell apart, analysts have perhaps spent more time discussing it than the officials did in implementing it.

Now, the Quad has been revived. A decade after that first exploratory meeting on the sidelines of the ASEAN Regional Forum summit in the Philippines in May 2007, officials from the four countries met there once again ahead of the East Asia Summit earlier this month. This revival will only be sustainable if it is not just a signal, but has substance. That will entail exchanging views on the strategic and economic landscape in the region, and practical cooperation. Moreover, the reunion will only last if the countries learn some lessons from its past failure. These include establishing suitable membership, tempo and agenda, explaining to internal and external audiences what the quadrilateral is and is not, and preparing for pushback from China.

https://warontherocks.com/2017/11/rise-fall-rebirth-quad/

This is an ambush for China and its rising influence in the world….but will it be successful?  Will Trump sign on or will he push his damn silly “America First” agenda that will leave this country in the mud of its own protectionist storm?

Keep in mind that protectionism is NOT patriotism……

President Trump has long wrapped his protectionist rhetoric in our flag, as necessary for America to “win” again. However, the idea that “good” American producers should be preferred over “bad” foreign producers for the good of our country gets backward who American consumers’ friends and enemies are when it comes to international trade.

That is a very important issue, as individuals share most in common as consumers. As Leonard Read, founder of the Foundation for Economic Education, wrote, “Consumer interest is the premise from which all economic reasoning should proceed.” That implies that since “my interest is progressively served by an increase of goods and services obtainable in willing exchange for my offerings … as a consumer, I choose freedom.”

https://capx.co/protectionism-isnt-patriotism/

Speaking of “Free Trade”.

We hear the term “free trade” almost daily….especially when someone is spouting off about trade and jobs it will create for us here in American…..but what about “free trade”?

Detroit carmakers get a lot of stick for their poor showing in Japan. Their Japanese sales have rarely exceeded token numbers and supposedly this is their own fault. They have apparently been so heedless of consumer needs that they haven’t even bothered to build cars with the steering wheel in the correct position for Japan’s drive-on-the-left roads. This “steering wheel” story has long enjoyed considerable credence among leading American opinion makers. Yet it is nonsense and does not stand up to even cursory examination.

The truth is that Detroit’s Big Three have always made plenty of cars configured for Japan. Indeed, as some of the first American corporations to go global, they have long catered to local needs around the world. But they have never been allowed to compete in Japan. In the words of Donald Trump, Japan does “things to us that make it impossible to sell cars in Japan, and yet, they sell cars [in the U.S.] and they come in by the hundreds of thousands on the biggest ships I’ve ever seen.”

http://www.theamericanconservative.com/articles/there-is-no-such-thing-as-free-trade/

Trade is the life line of a country’s economy….keep that in mind when you listen to the crap that Fearless Leader spouts in his speeches….we are screwed!

Weaponization Of Trade

The US is the most powerful country in the world when it comes to weapons and military might.

Force is used more often than any other technique to move the country’s agenda forward…..but there is a sector that the US uses sparingly….Trade.

China on the other hand has learned to use trade as a weapon…..

China denies mixing business with politics, yet it has long used trade to punish countries that refuse to toe its line. China’s recent heavy-handed economic sanctioning of South Korea, in response to that country’s decision to deploy the Terminal High Altitude Area Defense (THAAD) anti-missile system, was just the latest example of the Chinese authorities’ use of trade as a political weapon.

China’s government has encouraged and then exploited states’ economic reliance on it to compel their support for its foreign-policy objectives. Its economic punishments range from restricting imports or informally boycotting goods from a targeted country to halting strategic exports (such as rare-earth minerals) and encouraging domestic protests against specific foreign businesses. Other tools include suspending tourist travel and blocking fishing access. All are used carefully to avoid disruption that could harm China’s own business interests.

Source: China’s Weaponization of Trade by Brahma Chellaney – Project Syndicate

Maybe the US should take a page from the Chinese playbook…..learn to use our trade as a weapon.

This could go a long way of making the promise of more jobs come true….plus could minimize the use of military force….an aspect that is becoming almost too expensive to continue.

Towards a New Trade Policy

I have been looking at our trade policies recently……most are horrible for the worker and there is a consensus that we need to find a new and improved trade policy….

I have found a pretty good piece that covers this situation…..

International trade deals have lost their consensus support as more workers view them as anathema to good-paying jobs, requiring the U.S. politicians to rethink these strategies

On Jan. 23, President Donald Trump signed an order directing the U.S. Trade Representative to withdraw the country from the Trans-Pacific Partnership (TPP), the trade deal that the previous administration had spent years negotiating with eleven other nations around the Pacific Rim. This executive action represents a first step towards a controversial new direction in trade policy.

The TPP was already on life support, as the 2016 election campaign made it toxic with the majority of American voters. Bernie Sanders, Ted Cruz and Donald Trump all focused great energy on the trade pact as an example of the failed economic policies of recent decades. Even Hillary Clinton, despite her previous public support for the TPP and other trade agreements, was forced to come out against it, to fight off criticism from Sanders in the primaries, and Trump in the general election.

Source: Towards a New Trade Policy – Consortiumnews

I understand the need for economic growth….but I do not think it should come at the expense of the workers and the Middle Class.

Trump’s Trade Reforms

The election of 2016 trade and jobs were a focal point of many voters….and the rhetoric was aimed at those concerns so much so that a win was registered in trump’s column.

He promised to re-negotiate some trade agreements and eliminate others and this would help create jobs that most Americans desperately need and want….

All great campaign words but how will they play out in reality?

Trump’s proposals for high tariffs might sound good. But combined with policies that weaken unions, they’re not good for wages.

President Donald Trump claims he will use international trade policy to bolster the middle class and reduce income inequality.

“The great American middle class is disappearing,” he wrote for USA Today during his campaign. “One of the factors driving this economic devastation is America’s disastrous trade policies.”

That rhetoric resonated with many of the disaffected and downwardly mobile workers who had voted for Democrats in past elections. It seemed to echo labor’s longstanding criticisms of so-called free-trade deals.

Source: Trump’s Trade Reforms Will Not Increase US Wages

Yes, it is early in his reign and there is still time of sanity….the biggest question is…..will the middle class survive?  Or will those jobs actually materialize?

Don’t Bury TPP Just Yet

Happy Valentine’s Day everyone!

Trump was vocal on his opposition to NAFTA and TPP….so vocal that he probably got him some votes from labor…..he promised to re-negotiate NAFTA and end the TPP….(and the peasants danced)…..

Most Americans are all in favor of free trade…..but are they?

Free trade is the economic policy of not discriminating against imports from and exports to foreign jurisdictions. Buyers and sellers from separate economies may voluntarily trade without the domestic government applying tariffs, quotas, subsidies or prohibitions on their goods and services. Free trade is the opposite of trade protectionism or economic isolationism.

Politically, a free trade policy may just be the absence of any other trade policies; the government need not positively do anything to promote free trade. This is one reason it is sometimes referred to as “laissez-faire trade” or “trade liberalization.” Governments with free trade agreements (FTAs) do not necessarily abandon all control of taxation of imports and exports. In modern international trade, very few so-called FTAs actually fit the textbook definition of free trade.

Now that we have talked about “free trade”….shall we talk about the future of TPP?
There was a sigh of relief when Trump was elected….for now the TPP is dead and soon buried.
Think again!

One can hear the cry ringing through the boardrooms of capital: “Free trade is dead! Long live free trade!”

Think the ideas behind the Trans-Pacific Partnership or the so-called “free trade” regime are buried? Sadly, no. Definitely, no. Some of the countries involved in negotiating the TPP seeking to find ways to resurrect it in some new form — but that isn’t the most distressing news. What’s worse is the TPP remains alive in a new form with even worse rules. Meet the Trade In Services Agreement, even more secret than the Trans-Pacific Partnership. And more dangerous.

Source: TPP is Not Dead: It’s Now Called the Trade In Services Agreement

Take a closer look at TiSA…..

Here is where things gets scary. Team TiSA – a consortium of multinational financial, logistics, and big data corporations – are looking to set severe limits on how governments can regulate economies domestically while providing strict investor rights provisions. Deborah James outlined ten aspects of TiSA that have been accepted by all parties or are under negotiations that could have significant consequences:

  1. Companies are expanding the category of “services” in order to make it all-encompassing so that the agreement could apply as broadly within the economy as possible.
  2. Offshoring and outsourcing of jobs and downward pressure on wages could greatly accelerate as TiSA would lock in labor, tax, and regulatory arbitrage.
  3. Not only would TiSA promote offshoring of jobs, but it would also greatly expand domestic “inshoring.” Foreign contractors (say from Japan) would be able to bring in workers (say from Philippines) to conduct work inside a consumer country (say the United States) on terms well below the minimum local pay and standards.
  4. The TiSA does not include a labor chapter, and in fact the draft texts only mention labor rights once.
  5. Preventing governments at the national, state, and even municipal levels from supporting local business and local employment.
  6. The principle of “technological neutrality which TiSA negotiators take as a given would have immeasurable job impacts particularly with regard to the “gig” economy. So if a country opened its market to passenger transport services, it could not apply new and different rules to Uber than to traditional taxicabs.
  7. Job loss as a result of privatization would increase as publicly owned utilities would have to compete under the same rules as private companies, reducing the benefits of public ownership, resulting in the elimination of jobs that inevitably follows privatization.
  8. The financial services text of the TiSA is the closest thing imaginable to a guarantee of another job-killing financial crisis. If the draft texts were accepted, the TiSA would constrain governments from implementing most of the regulations that are recognized, both domestically and internationally, as essential to prevent another global financial crisis.
  9. Workers would have to shoulder even more of the tax burden as corporate tax evasions would accelerate.
  10. The TiSA could potentially be used as the basis of a foreign company’s claim against the United States

Where are all the yells and cheers now?  I am waiting!

What About NAFTA?

During his run up to the victory….Mr. Trump was adamant that NAFTA and other trade agreements were bad deals and once he was elected they would be torn up and re-negotiated…..does anyone recall this?

Well once again…if anyone cares….we may have been played…..

After repeatedly referring to NAFTA as “the worst trade deal maybe ever signed anywhere” during the presidential campaign, the Trump administration seems to be softening it’s protectionist rhetoric.  According to The Hill, in speaking to a group of concerned business leaders, Trump advisor Anthony Scaramucci said that the new administration isn’t looking to “rip up NAFTA” but rather to “right-size it and make it fairer.” 

Source: Trump Advisor Says Administration Not Looking To “Rip Up NAFTA” Or Impose “Quote-Unquote Tariffs” | Zero Hedge

Another source for this statement…….

Members of the Trump transition team are trying to tamp down concerns among corporate leaders that the incoming administration may spark trade wars with Mexico, Canada and other major trading partners over the next four years.

Anthony Scaramucci, a senior advisor on the Trump transition team, told a group of business leaders convened at a bipartisan meeting by the group No Labels that President-elect Donald Trump is a free-trader who is looking to make trade deals more fair, not scrap them.

Source: Transition official: Trump will not rip up NAFTA | TheHill

Almost daily his promises are falling by the wayside….and yet NO one seems concerned that he is crapping on the deals that he campaigned on…..now if this had been Clinton it would indeed be a big deal….but as usual….Trump will get a free ride from those that he played….