September 18, 2018

New Tariffs on Chinese Imports

“President Donald Trump escalated his trade war with China on Monday, imposing 10 percent tariffs on about $200 billion worth of Chinese imports...

“The escalation of Trump’s tariffs on China comes after talks between the world’s two largest economies to resolve their trade differences produced no results. U.S. Treasury Secretary Steven Mnuchin last week invited top Chinese officials to a new round of talks, but thus far nothing has been scheduled.” Reuters

See past issues

From the Left

The left is generally worried about the negative impact of tariffs on the economy, and that Trump’s aggressive and inconsistent strategy will be a barrier to successful negotiations with China.

“Morgan Stanley researchers estimate that the latest round [of tariffs] could reduce economic growth in the United States this year by 0.1 percentage points, adding to another 0.1 percentage-point drag from tariffs currently in place... The National Association of Chemical Distributors released a study this month that predicted nearly 28,000 chemical distributor and supplier jobs would be eliminated because of higher prices."

New York Times

“Analysts say Trump’s brash approach to try to win concessions from Beijing has provoked a public fury that could ultimately thwart his efforts.Chinese President Xi Jinping’s iron grip on power depends on healthy support from the nation’s exploding middle class, and now that middle class, angered with Trump’s escalating threats, expects China’s leader to respond with strength. This could make finding a compromise to end the escalation even more difficult."

Washington Post

Moreover, “conflicting messages coming from the Trump administration... could sink prospective negotiations between the two nations before they begin...

"Chinese and American officials have held a series of talks over the dispute, and reached at least one agreement which was subsequently abandoned by the president. The lack of progress and collapse of that deal have made future negotiations more difficult, as it’s unclear who speaks for the U.S. administrationand there’s a lack of confidence that any deal will be honored.”

Bloomberg

Counterpoints:

“A 2017 report by the independent and bipartisan U.S. Commission on the Theft of American Intellectual Property put the annual cost of IP theft by all parties at $255 billion to $600 billion in counterfeit goods, pirated software and stolen trade secrets... Whatever else one might think of President Trump’s actions, he is confronting China about its unfair trade practices and theft of American intellectual property when too many others shy away from the truth for fear of Chinese reprisal.”

Los Angeles Times

These tariffs “may sound like a big deal, but... Over the past five months, the value of the the dollar has risen about 9 percent versus the yuan. That has already blunted the impact of the White House’s previous levies and means that this newest round won’t force importers to pay much, if anything, more for Chinese goods than they would have three months ago... For now, it seems like we’re watching a cat-and-mouse game between Trump’s tariffs and China’s currency.”

Slate

Regarding the Cadillac tax, “high-premium employer-based plans raise the cost of health care for everyone by encouraging the overconsumption of expensive services. This means that even Medicare and Medicaid face higher prices. Quite aside from its benefits for the health-care market, the Cadillac tax would also have the effect of expanding the tax base and making the tax code more efficient. It would raise revenues by about $15 billion a year… Rather than killing or delaying the Cadillac tax, Democrats should be trying to make it operational. The tax would raise revenue, lower costs, increase the efficiency of the tax code and give the Obamacare individual market its best chance at success.”
Karl W. Smith, Bloomberg

“The two issues with which he is most often associated, support for a balanced budget and opposition to free trade, put him at odds with both of our major political parties. An old-fashioned, soft-spoken Southerner, he nevertheless held views on so-called ‘social issues’ that would be to the left of the mainstream of the Republican Party, both then and now. He was a fervent supporter of the Vietnam POW/MIA movement in the late '80s and early '90s, but he was not in any sense a hawk. Never mind 2003. Perot opposed the first war in Iraq in 1990… Perot's death should be mourned by all Americans who regret the fact that it is no longer possible to make reasoned, non-ideological arguments about questions of public import, and by the devolution of our political life into mindless partisan squabbling.”
Matthew Walther, The Week

From the Right

The right is divided about the tariffs.

From the Right

The right is divided about the tariffs.

“Those who criticize President Trump for his trade policy toward China are blaming the victim of what amounts to international crime. They should instead blame the culprit – China... The fundamental problem facing the global trading system today is that since the turn of the century China has behaved like an outlaw at the center of world commerce...

“China has repeatedly taken advantage of [WTO rules] by committing obvious violations – allowing time to injure foreign competitors as dispute panels deliberate – and then remedying violations after adverse decisions... The U.S. has won every WTO case it has brought against China since 2004 – and many before that date – yet Beijing’s trade behavior has only deteriorated.”

Fox News

Some claim that “free trade, like immigration, is an issue that has come at the expense of American workers... between 2001 and 2015, about 3.4 million U.S. jobs were lost [or displaced] due to the country’s trade deficit with China. Of the 3.4 million U.S. jobs lost in that time period, about 2.6 million were lost in the crippled manufacturing industry, making up about three-fourths of the loss of jobs from the U.S.-Chinese trade deficit."

Breitbart

Meanwhile, critics of the tariffs point to the impact on US consumers.

“Ultimately, tariffs are another tax and [healthcare] patients will be the ones who pay the steepest price... According to a recent survey conducted by the Medical Imaging & Technology Alliance (MITA)... the tariffs would cost companies nearly $140 million per year... To help make up for the shortfall, surveyed companies unanimously planned to reduce their U.S. workforces and decrease their investments in research and development.”

Fox News

“General Motors alone has noted a $300 million increase in its commodity costs related to Trump’s steel and aluminum tariffs, while the beer industry estimates that it will suffer a $347 million annual hit...

"Trump may yet pull a rabbit out of his hat and conclude trade deals that feature notable gains for both American workers and consumers, but his current record is underwhelming, and the quality of future deals must be substantially improved if he’s simply to make up for the costs already incurred.”

The Hill

Finally, the tariffs may inadvertently help China become more competitive. “U.S. tariffs promise to make selling low-cost goods to American consumers less profitable. [Chinese] companies as a result are rethinking their operations and products... accelerating toward making higher-quality products to compete against American goods.”

The Wall Street Journal

“If Joe Biden can win his way through the primaries, he’s almost lab-engineered to beat Trump. He doesn’t cause Republican panic, he has the potential to connect with white working-class voters in a way that Hillary couldn’t in 2016, and he has a potential to connect better with black voters than Hillary did… if Biden emerges from [this] crucible, Trump will face a very different challenge than he faced in 2016.”
David French, National Review

“NBC and MSNBC embraced Sen. Elizabeth Warren of Massachusetts in the first debate of Democratic presidential candidates Wednesday night, treating her like the star of the show. The debate led off with Warren, who had a huge popularity advantage from the start… NBC anchor Savannah Guthrie started it off sounding more like Warren’s press secretary. ‘You have many plans – free college, free child care, government health care, cancelation of student debt, new taxes, new regulations, the breakup of major corporations,’ Guthrie said, before teeing up an economy question. Guthrie even used Warren’s plan to break up tech companies as the foundation for a question for Sen. Cory Booker of New Jersey… the round-robin final comments also ended with Warren, as Maddow asked her for the ‘final, final statement.’ That let NBC bookend the entire debate with Warren and Warren.”
Dan Gainor, Fox News

President Trump should be happy. As much as Warren is articulate, obviously intelligent, and energetically supported by Democrats, she would also be far easier to defeat than Joe Biden… Considering Trump's economy, the president is well placed to defeat Warren.”
Tom Rogan, Washington Examiner

A libertarian's take

“The fans who avidly followed the men’s tournament certainly weren’t doing anything wrong. And it’s hard to argue that each of them had a moral obligation to be exactly as interested in women’s soccer. Even if we could stop them from watching the men more than the women, should we?…

“It’s tempting to answer that the fan choices aren’t innocent, they’re sexist. But since we can’t peek into their hearts, to say that definitively, we’d have to assume that men’s greater speed, strength and endurance definitely make nodifference to the sport’s quality. Fair enough, but then why do fans prefer to watch Megan Rapinoe play instead of the sedentary elderly who could presumably use some exercise? Alternatively, maybe pay should be equalized precisely because biology is unfair. But that seems to be an argument for curbing the pay of all top-level athletes, who have to hit the genetic lottery just to get on the field. It might be easier to focus on the distributions across society at large, rather than every individual industry, especially when fundamental biology is in play.”
Megan McArdle, Washington Post

On the bright side...

A town in California has elected a Golden Retriever as mayor.

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