So we started a trade war: now what?

PHOTO: Bryan Ledgard, Flickr CC

Last Thursday, President Trump officially enacted steep tariffs on foreign steel and aluminum despite criticism that doing so could start a trade war. But the Trump Administration also enacted a system of waivers that would allow many allies to seek exception from the tariffs. And as soon as that window opened, top steel exporters like the European Union, Australia, South Korea, Argentina and Brazil clambered through. Canada and Mexico had already been exempted.

The reaction was swift. The Dow Jones, including most major steel stocks, took a big hit.

Now, there are several factors at play. One is that traders don’t like trade wars. They make it harder for companies to do business overseas, limiting profits. Further, Chinese counter tariffs on agricultural and manufactured U.S. goods will eventually render consequences. It’s entirely possible that we’re just trading jobs instead of saving them.

Fears over rising interest rates probably added to dour markets late last week. The United States economy currently functions on the premise of cheap borrowing being available forever. That’s probably not possible, but we are living in an era when many important people believe it should be.

One would have thought that steel companies would at least benefit from the tariffs. That didn’t seem immediately true. American steelmakers like U.S. Steel have had a relatively good year. This, however, is mostly because the U.S. economy was doing well, increasing demand for their products. Further, the improved economy in China had already staved off most foreign steel dumping anyway. But American steel and mining stocks dropped on Thursday and Friday. It might shake out to their advantage later, but it’s hard to say.

On March 2 I wrote about the president’s announcement that he would impose steel tariffs and said all of this. At the time I argued that at least we’d get a clear picture of what protectionism could do for American steelmakers. However, the myriad exceptions to the tariffs now fog this picture significantly. It forces us into a tough reality. It may be proven, in time, that a trade war with China accelerates inflation in America, costs more jobs it creates in the steel business, and triggers economic recession.

But all that being said, the tariffs are very popular among labor and mining industry advocates here in Northern Minnesota. Whether the tariffs remain strong enough, or popular enough come this November’s election, or in 2020, is an open question. In the end, we might get a costly American recession in exchange for a Republican Congressman from Minnesota’s Eighth District. Or maybe, in a great irony, the tariffs don’t even end up being an important factor in the election after all.

In this age assumptions slip away from us like steel beams from cold, wet fingers.


Comments

  1. Ranger47 says:

    Makes it tough for you to put together a cohesive labor story with a liberal slant when Trump has completely taken away the “L” from the DFL talking points….by taking action in labors favor, verses years of DFL inaction. Kinda fun to watch..

  2. We’ve had tariffs before — under Obama and Bush — and they’ve worked. We’ve never had Section 232 (national security) tariffs before. The key difference is that they will trigger a response that will likely hurt American workers, including many in Minnesota (soybean farmers and manufacturing workers chief among them). I’m all for stability in our steel industry. Some targeted tariffs would be wise. But the way this has been done has been comically ham-handed, and could tilt us toward a recession which is bad for everyone … or at least everyone who isn’t wealthy enough to consolidate power and holdings during a recession. There’s no doubt this will be politically good for the president on the Iron Range. But only for a while. By the time we get hit by long term effects this tit-for-tat will be replaced by another, and we’ll have real problems.

  3. The people who understand what is going on expect the prospective trade war to hurt, not help, the United States and its workers. For every job in raw materials that is helped, there are 25 jobs in finished production that will be hurt. Manufacturers, farmers, and people in service professions have been lobbying hard against the tariffs, for fear of retaliation, as have most GOP politicians and activists. There have been several companies who have announced that they will delay planned expansions while they watch for fallout from the process. Commodity prices for steel, copper, oil, and others fell sharply in response, because users expect that the tariffs, foreign retaliation, and any associated recession will hurt the demand for the commodities in the end.

    I agree that there is symbolic and political value in a few regions, including potentially the Range, in these tariffs, since people will find them appealing on first glance no matter how badly they work for the economy in the end. However, in the Pennsylvania CD18 special election, which occurred a few days after the announcement when it was dominating the news, steel industry workers and other labor people voted overwhelmingly against the GOP candidate, reversing trends from the 2016 election. Exit polling showed that the tariffs were not an issue in the election, and among the small number of people who cared were opposed and more likely to cause people to vote Democratic. The biggest issue on exit polling was health care, and the GOP got killed among people who had that has their main concern.

  4. I get a kick out of those who jump into the economic prediction business….even when they realize it’s devastated the credibility and reputation of Nobel laureates like Paul Krugman, the World’s Wrongest Economist. Reminds me of a history teacher trying to explain to me the “stresses and strains” in a beam after the I-35 bridge fell…good humor.

    (Geir Lundestad, secretary of the Nobel committee did admit Obama’s peace prize was a mistake, maybe they’ve done the same with Krugman and I missed it).

  5. Gerald S says:

    In an important piece of Kabuki theater publicized today, the Trump administration today asked the Chinese to agree to increase purchases of US computer chips, decrease tariffs on US automobiles, and open the Chinese financial sector to possible purchases of majority interests in Chinese companies by US financial institutions. In exchange, the US offered to cancel the proposed tariffs planned as penalties for Chinese intellectual property theft and possibly cancel the scheduled tariffs on steel and aluminum.

    This is all very interesting in view of the fact that agreements on all of these issues have already been negotiated and settled with just the formal announcement of approval pending.

    What emerges is that the administration is engaged in an elaborate charade intended for home consumption: after negotiating a new trade agreement, announce threats of various penalties, then retract the threats when the final agreements are publicized, all to put on a show that new “toughness” is having “results,” when in reality this is just smoke and mirrors for the credulous fans on cable news with a standard negotiation initiated under the previous administration being the real story — “pay no attention to the man behind the curtain.”

    The agreement, negotiated over months by both administrations, is a benefit to the US. The chip sales will help improve balance of payments, although at the expense not of China but of allies such as Japan and Taiwan (in fact observers think part of the deal is the desire of China to spank Taiwan, as part of the ongoing Taiwanese/Chinese issue.) The financial industry changes pending will strengthen the already internationally dominant US financial industry, especially during a time when our main rival for those services, the British, are in the throes of potential major problems due to Brexit possibly uprooting a large part of their finance industry and transferring it whole to Europe. The value of the car tariffs is questionable, since the tariffs were put in place to protect the development of the Chinese auto industry, which is now at a stage when protection is not really needed for it to outcompete American auto companies in their home market. The US may sell a few more cars, mostly in luxury and specialty categories, but the chances of a major penetration of the Chinese market are likely a thing of the past.

    Anyhow, a bit of slight of hand for the gawkers.

    • Ranger47 says:

      Nice you cleared that up Gerald….

      As strain is increased, many materials eventually deviate from linear proportionality,
      the point of departure being termed the proportional limit. This nonlinearity is usually associated
      with stress-induced “plastic” flow in the specimen. Here the material is undergoing
      a rearrangement of its internal molecular or microscopic structure, in which atoms are being
      moved to new equilibrium positions.

      • Actually, the information turns out to be fairly important. The ongoing two day rally from the stock market plunge last week is thought to be due to this development. The point that Trump is just making empty threats playing to the crowd at home, not really starting a trade war, reversed the financial markets’ near panic over the news last week of all the threats and actions on tariffs. I have not seen if steel, aluminum, copper, oil, and other commodities have rallied too, but I would suspect they have.

        • Ranger47 says:

          “It really does now look like President Donald J. Trump, and markets are plunging. . . . If the question is when markets might recover, a first-pass answer is never.” – Paul Krugman, Nobel Laureate in Economics

          • Gerald S says:

            Oops. Market is now back down sharply. The news now seems to be that they have paid back enough for catching on to the trade pantomime, and are now on to yet another Trump related problem, this time the issue of his campaign’s fraudulent access to data from social media, driving down the price of Facebook, Apple, Google, and others in the expectation that the government will introduce regulations that decrease profitability.

            Market still down on the year, about 4% from Jan 1 and about 12% from peak.

  6. ” …. top steel importers like the European Union, Australia, South Korea, Argentina and Brazil clambered through ….”
    Perhaps you meant “exporters” here?

  7. The administration has announced a trade deal with the South Koreans that has some advantages to the US.

    Although it permanently ends the threat of the steel and aluminum tariffs against Korean products, it does contain a pledge by the South Koreans that they will restrict their steel exports to the US to 70% of their average in the last few years. In the face of the end of steel tariff threats to six of our other top ten steel exporters, and in the absence of any rules against re-export of Korean steel from other suppliers, it is unclear how much impact that will have. I will be interested in seeing what the people who really know about this do in the stock market with American steel stock tomorrow.

    The other two provisions of the agreement, from the US point of view, are increases in quotas of US cars allowed into Korea and an extension of what are essentially exclusionary US tariffs on Korean trucks for an additional twenty years. The first is largely just window dressing, since US automakers have not been able to sell out their much lower current quotas in Korea. The second is of questionable significance also, since Korea has long since adjusted its truck export business to not selling in the US, and instead is the dominant player in many Asian, African, and Western Hemisphere countries. Since Korea tends to specialize in trucks that would not meet US import requirements, just how much threat they would have been when the previous agreement ran out in a few years is uncertain.

    There is a lot of speculation that the quid pro quo here from the US is to cooperate with South Korean overtures to North Korea and dial back on the bombastic rhetoric and threats about North Korea. Of interest, simultaneous to the settling of the trade agreement, North Korean leaders were in China, which is of course the third big player in any discussions with the North. We shall see if that materializes.

    Anyhow, Trump does now have a trade agreement he has put in place, his first, albeit a fairly modest one with fairly modest impacts.

    • Ranger47 says:

      Obama’s Korea trade policy was useless and disastrous for Rangers. Is Trumps deal for or against Ranger workers?…It’s undeniably a big win for Range miners realizing 80 percent of the trade deficit in goods with South Korea is attributable to autos and auto parts, a core driver of the deficit.

      Trumps deal will impose a 25 percent tariff on imports of pickup trucks to the U.S. Good for Range miners.

      U.S. exports of automobiles to South Korea were capped at 25,000 per manufacturer, per year. Trumps deal doubles that cap, to 50,000. Good for Range miners.

      Trumps deal including a hard annual quota on steel resulting in a 30 percent reduction in steel imports from Korea to the U.S. A huge win for Range miners.

      Trumps deal reduces South Korea’s regulatory burdens of automobiles and auto parts as well as some labeling regulations. Good for Range miners.

      Trumps deal changes emissions standards in South Korea taking U.S. regulations into account. Good for Range miners.

      Inspections at the South Korean border have been burdensome and arbitrary depending on country of origin, including for the U.S. for many products, including agricultural. Trumps deal will alleviate these issues through joint oversight. Good for all farmers, including Minnesotans.

      Trumps deal includes pharmaceutical reimbursements for South Koreans for U.S. manufactured drugs. These premium payments have previously only been available to the South Korean companies. More U.S. products sold to Korea.

      Trumps deal prevents competitive devaluation of currency. Huge win for Americans.

      Gerald, our township Krugmanian economist, calls this modest (crumbs) for Rangers. One wonders where his proposals have been for the past 9 years.

      • Steel stocks are down slightly across the sector today in the wake of this deal. Pharmaceutical stocks are down as well. Commodity prices for corn, soybeans, and Minnesota wheat are all down. So apparently the people who have money on the line agree that this is not going to accomplish much for US steel products, pharma products, or grain sales.

        You are missing some key points.

        First, the treaty does not impact autos and auto parts at all. NO change. Korean cars are not part of the treaty. Auto parts are not part of the treaty. The tariffs on trucks already exist and are being extended, but for all intents and purposes, Korean trucks are and remain locked out of the American market. Koreans do sell SUV’s here, some of which are actually pick-up style bodies, but they are not impacted since SUV’s are not covered. Since there is no change, other than extending the status quo, there are no improvements for Americans, on the Range or elsewhere. As I noted earlier, for the most part Korean export trucks are aimed for less developed markets and, at least at this point, would not meet US safety and pollution requirements and are not exported to the US.

        Second, the deal increasing the quota of non-compliant US autos that can be sold in Korea is largely meaningless because US automakers have not been able to sell enough cars in Korea to fill the existing much smaller quotas. Korean customers simply don’t want American cars. This is akin to the Koreans agreeing to allow more imports of buggy whips. Part of the reason is the quality issue discussed below. The allowance is not for cars in general, but rather for cars that do not meet Korean automobile standards. That is not likely to be a strong selling point for products already being rejected by Koreans.

        The steel quota deal is superficially a good deal, but since Trump has already cancelled the tariffs for the other six of the seven largest steel exporters to the US, it is unlikely to make much difference, since any deficit in Korean exports is likely to be made up by other exporters. As I noted earlier, the deal also makes no provision for the possibility of re-export of Korean steel from other countries to the US.

        South Korea has a highly regulated health care system with the price of drugs negotiated by central authorities, and South Koreans already pay only a fraction of what Americans pay for the same drugs. The rebate payments previously went to the insurance companies, who passed on the price reduction to customers, as they were required to do by Korean law. Now it can be sent directly to the customers. The net cost will be the same unless the drug companies increase the discounts. Since the highly regulated and organized Korean health care system is much less vulnerable to drug company promotion than the US, and since commercial advertising of drugs is illegal there (as it is everywhere except the US and New Zealand,) it is hard to imagine that this is much except another window dressing clause, since it is not going to make any significant change in demand for particular drugs in Korea.

        It remains to be seen how the “joint oversight” of products, especially ag products, works out. East Asians have a notoriously higher demand for quality for all products and a higher level of sanitation and wholesomeness standards for food than Americans (just check reliability scores on various products to see the impact.) American food standards for things like rat feces, hair, and dust in grain products and bacteria, drug, and chemical content of meat are repugnant to Asians. Those will not be changed by this treaty. Any perception by the Korean public that American products are being allowed to not meet Korean standards may well backfire at the consumer level. That has already happened in Japan, where there is a widespread perception that US products are inferior and contaminated, and could easily happen in Korea.

        As far as currency, we are the ones devaluing our currency at the moment. Steve Mnuchin wants to continue that. Does the treaty forbid us to devalue our currency also?

        The devil is in the details.

        • Fake, local township economist, news Gerald..

          • David Gray says:

            Succinct. I wish everyone could master that art.

          • Gerald S says:

            Amusing. You can fool some of the people all of the time…

            The whole pitch on this treaty is directed toward people who are willing to suspend belief and ignore the facts in their eagerness to see Trump as a success.

            Please cite even one point I made that you have any evidence — other than from cable news and right wing blogs — is fake.

  8. Ranger47 says:

    Rangers can tell when someone is singing off-key Gerald. Unfortunately, you do it with aria’s.

  9. Dominick Richardson says:

    Bottom line is the United States has racked up massive trade deficits with virtually every trading partner since we embarked on a free trade crusade. While I am not totally opposed to free trade, it must be fair trade. Before casting judgement on the President and his tariffs let’s give it some time and see how this whole thing plays out.

  10. There is an emerging consensus by observers as to what these trade deals mean, and if it works out it reflects very well on Trump.

    There is a strong feeling that the recent deals to revoke the threat of aggressive tariffs on Chinese goods and to adopt the rather empty agreement with the South Koreans are actually part of the effort to strengthen relationships and defuse animosity between the US and both countries in preparation for the upcoming meetings with Kim Jong-un, creating a more united front among the three key players in dealing with the negotiations. Interviews with the South Korean diplomats involved in the negotiation of the trade treaty make it very clear that that was their primary goal. The fact that the announcement of the treaties came at a time when the Chinese had, in the wake of the treaty resolution, gotten Kim to make his first overseas trip of his career to come to China and discuss policy with Chinese leader Xi Jinping and his advisors strengthens that interpretation.

    If this is the true purpose and it succeeds in paving the way to significant progress with North Korea, it certainly negates any issues that the agreements are fairly trivial in themselves, and will be part of a diplomatic triumph.

    • One of the interesting observations analysts made about the agreements is that the amount of steel exports the Koreans agreed to forego is almost exactly the amount of the total steel exports by China to the US — 2.9% of total imports — that will be removed from the protective tariff list by the new agreement. That suggests that the South Koreans are compensating the US for the impact of the new Chinese treaty on steel imports, and creating a wash for the US in allowing Chinese exports back in.

      • Ranger47 says:

        There is “an emerging consensus by observers”, “a strong feeling”…and “interesting observations” – no reason to doubt our local township economist now.

        • Gerald S says:

          No, in this case this is all speculation, not fact, except for the facts of the interesting balance of the China/Korea steel deals in terms of what the US is giving up to China and getting from Korea, and the timing of steps toward normalizing relationships with both China and South Korea by accepting trade solutions that do not demand any significant American advantage but reduce or end the potential trade conflicts before the Korean negotiations begin.

          The question will be answered in time, when we see if the US, China, and South Korea are able and willing to team up to bring about a significant improvement in the North Korean situation. It would be interesting if the administration is engaged in an elaborately calculated series of diplomatic maneuvers to create the setting for consensus among the major players. A couple of months will tell us a lot more.

  11. Ranger47 says:

    As Dominick so aptly and concisely put – “It must be fair trade. Before casting judgement on the President and his tariffs let’s give it some time and see how this whole thing plays out”…
    Amen, chag kasher v’sameach

    • Gerald S says:

      I agree. The possibility that the administration is using these trade deals to improve our relationship with allies we need in dealing with the notorious North Korean regime offers a sensible explanation for why the administration, after loudly promising so much, would make treaties that give so little to the United States. Using South Korean and Chinese support in resolving the confrontation with the North Koreans would give Trump a major international triumph that would far overshadow the trade issues. As you say, let’s see how this whole thing plays out.

  12. Gerald S says:

    One step forward, two steps back.

    China announced yesterday that they will press ahead with new tariffs on 128 US products in response to the steel and aluminum tariffs imposed by the Trump administration. At the same time, Trump announced that his administration is going forward on implementation of new tariffs designed to punish China for accused violations of intellectual property rights. Both of these issues were supposedly being covered in negotiations between China and the US that were reported, based on information from Treasury Secretary Steve Mnuchin, to be near conclusion, and which Trump had taken credit for, suggesting that the negotiation has hit a snag.

    Meanwhile, Trump has tweeted that he does not think the agreement reached between his administration and South Korea is satisfactory, and that he may veto it.

    As I have discussed above, the “wins” by the US in these two agreements were not very striking: 2.9% of foreign steel imports ended from Korea but immediately dealt back in ending the tariffs for the 2.9% of steel imports we get from China; an addition to sales of microchips in China potentially at the expense of sales by Japan and Taiwan; extension of an existing US exclusionary tariff on Korean trucks; an extension and increase in the number of allowed units under a waiver on safety features on US car exports to Korea that US car makers have never been able to fill at lower levels; and a set of so far unspecified regulatory changes for US exports to Korea of uncertain long term value. The largest apparent win for the US was a relaxation of rules against US ownership interests in Chinese financial companies, a potential large benefit for Wall Street but of little impact on main street.

    Some people — and I had talked myself into that idea — felt that the relaxation of trade tensions might have been designed explicitly to strengthen US relationships with China and South Korea in preparation for upcoming talks with North Korea in the next few weeks. If so, that seems to have gone by the board. I find myself wondering if the breakdown on trade is a result of an inability to reach a consensus on North Korea behind the scenes.

    Obviously it is unclear what is actually happening behind the closed doors of negotiations, but these developments suggest a significant breakdown and a return to a shooting war on trade by all parties. One positive note is that the Chinese did not impose new tariffs on their two biggest imports from the US, aircraft and soybeans, possibly suggesting a signal to the US of a willingness to continue negotiation for a ceasefire — or, if you are a glass half empty type of person, a bigger gun reserved for future trade war exchanges.

    • Ranger47 says:

      “Blessed is the man who, having nothing new to say, abstains from giving us wordy evidence of the fact.”

      • Norshorguy says:

        We can all use BrainyQuote, too, Rangey47: “When you have no basis for an argument, abuse the plaintiff”.

        • Ranger47 says:

          Charles Barkley or our local township economist…it’s a toss up. Charles is a lot briefer though..

          • Norshorguy says:

            Ranger, here’s a tip. Google “Mark Twain”, “silent” and “fool”. What you find may be of some help to you.

  13. Ranger47 says:

    It’ll soon pass norshoreguy, the days are getting longer. Studies have shown that people with seasonal affective disorder (SAD) feel better after exposure to bright light. In the meantime, get up early and turn some lights on. They say getting more light in the morning is best. Moving a few hundred miles south of the norshor would also help…

  14. Ranger47 says:

    Oh….and norshoreguy, for Pete’s sake, change your search engine! Google is a hot bed for misogynistic behavior/sexual harassment….with numerous lawsuits pending. Plus, they’re no more ethical or trustworthy than mainstream news networks. And Google Assistant? Don’t even go there!

    • Norshorguy says:

      Ranger, you try so very hard. You had to come back twice! It’s really adorable.

      • Ranger47 says:

        Much appreciated…always working to add value, help others..

        • Norshorguy says:

          I believe you believe that. But, if one merely skims your comments one will see that you have added nothing at all. Gerald’s points still await you. Quit stalling.

          • Ranger47 says:

            Our local township economist is one wordy voice and no more credible than Charles Barkley…but if you insist we start over:

            Obama’s Korea trade policy was useless and disastrous for Rangers. Is Trumps deal for or against Ranger workers?…It’s undeniably a big win for Range miners realizing 80 percent of the trade deficit in goods with South Korea is attributable to autos and auto parts, a core driver of the deficit.

            Trumps deal will impose a 25 percent tariff on imports of pickup trucks to the U.S. Good for Range miners.

            U.S. exports of automobiles to South Korea were capped at 25,000 per manufacturer, per year. Trumps deal doubles that cap, to 50,000. Good for Range miners.

            Trumps deal including a hard annual quota on steel resulting in a 30 percent reduction in steel imports from Korea to the U.S. A huge win for Range miners.

            Trumps deal reduces South Korea’s regulatory burdens of automobiles and auto parts as well as some labeling regulations. Good for Range miners.

            Trumps deal changes emissions standards in South Korea taking U.S. regulations into account. Good for Range miners.

            Inspections at the South Korean border have been burdensome and arbitrary depending on country of origin, including for the U.S. for many products, including agricultural. Trumps deal will alleviate these issues through joint oversight. Good for all farmers, including Minnesotans.

            Trumps deal includes pharmaceutical reimbursements for South Koreans for U.S. manufactured drugs. These premium payments have previously only been available to the South Korean companies. More U.S. products sold to Korea.

            Trumps deal prevents competitive devaluation of currency. Huge win for Americans.

            Gerald, our township Krugmanian economist, calls this modest (crumbs) for Rangers. One wonders where his proposals have been for the past 9 years.

  15. Gerald S says:

    Back again to the basics, Ranger. People need to read beyond the cable news talking points and delve into the real details of trade.

    The truck deal does not cover light pickups based on SUV platforms, with the current Korean exports to the US all falling in the SUV rather than truck category and taxed as cars, which are not covered in the agreement. It does not cover anything that is currently entering the US because it is a straightforward extension of an existing 25% tariff that was due to expire in a couple of years, a high enough tax that it completely excluded trucks covered by the tax from the US. It does not end or inhibit imports of anything now being imported to America. To date, Korean companies have not been developing trucks aimed at the US market, but of course that could change.

    The deal on US cars entering Korea is a doubling of the number of cars allowed to be exempt from the idiosyncratic Korean safety requirements. This is raised from 25,000 to 50,000. The problem with this is that up until now the US car companies have not been able to sell the 25,000 allowed cars — the best they ever did was 22,000. Korean marketing surveys run by US companies show that Koreans find US cars too large, too high on gas consumption, and too unreliable to buy. Existing sales are primarily for novelty markets.

    Drug incentives previously went to insurance companies, as you said, but can now go directly to customers. This is obviously financially a wash for consumers in Korea unless the drug companies increase the rebates, and promotion of direct to consumer reimbursement will be handicapped in Korea by the fact that Korean law prohibits advertising of prescription drugs to consumers, something that is true everywhere except the US and New Zealand. How unadvertised rebates that will not lower the cost of drugs overall will affect drug sales is uncertain at best.

    The impact of the border inspection “joint oversight” will depend on two factors. The first is just exactly what agreements are actually reached when the details are completed, and the second is the reaction of Korean consumers to the changes. In Japan, efforts to relax inspection and standards for US food products backfired because the surrounding publicity led to the widespread impression that US products were second rate and unwholesome, and strong consumer resistance to buying American products.

    The steel deal impacts 2.9% of our total imports. That small amount can be easily picked up by other large exporters to the US currently exempted from the new tariffs. It would have been cancelled almost exactly by the preliminary agreement last week with China, although that seems to be moot in the face of escalation of tit for tat trade tariffs that began this week and appear to have ended any likelihood of concessions by either side.

    I think the final word on this comes from Trump himself, who disparaged the agreement as largely useless and has threatened to veto it.

    In my opinion — and it is just an opinion as opposed to the facts above, but shared by observers including most of the business press — the agreement was more symbolic than substantive, designed to stop escalation of trade conflicts with South Korea and deterioration of relations at a time when the upcoming discussions with North Korea make unified positions extremely important, while giving the administration something to show to trade hawks.

    And, in ongoing news, the Chinese have now really stuck the knife in in response to the latest blast from the US, raising tariffs on American aircraft, soybeans, automobiles, and chemicals, the major exports from the US to China. There are details, such as a weight range for aircraft, that may spare some significant ranges of products, but that remains to be seen as events progress and details are clarified.

    And in additional news, the US is trying to open bilateral talks with the Japanese on trade. So far the Japanese reaction — and they have not received a waver of the steel and aluminum tariffs — has been “no thanks, we will stick to multinational guidelines.” Further attacks on Japanese exports may bring them to the table, but at the expense of more deterioration of relationships with important allies and more risk of trade war.

    American right wing media has claimed that with both Korea and Japan we are demanding restrictions against the Japanese and the Koreans devaluing their currency. That is a strange request, given the fact that both the yen and the Korean won have been steadily rising against the dollar for some time. Steve Mnuchin has publicly stated that he is deliberately allowing the dollar to fall against multiple currencies, and will continue to do so in an effort to improve American exports. Perhaps this is insurance against potential future changes, but at this time it is the US that is manipulating its currency down.

    • Ranger47 says:

      Your most truthful statement above Gerald is: “In my opinion — and it is just an opinion as opposed to the facts…”

      Even you, as a local township economist know that even the most educated economists get a lot wrong…at best, right 50% of the time. So… you and Charles can do as good as them with a roll of the dice (and in your case, a LOT of words).

      Paul Krugman, the Nobel prize winning economist worshiped by you said – “the markets will plunge and never recover”. He predicted a global recession with no end in sight following Hillary Clinton’s loss. And that Trump-onomics would be a disaster for workers..that only Hillary could be the economic savior.

      Oops…I wonder if the committee has asked for their prize back.

      • Gerald S says:

        Ranger, as I am sure you know, none of what I said is a guess or economic analysis, just a bare report of the facts specified in the treaty and of past behavior in the Korean (and in one instance, the Japanese) market, except the one point where I noted it was an opinion. I understand your opposition to the facts, since they do not fit with your own economic theory as to the impact of the treaty. This is not economics, it’s arithmetic.

        Actually, it turns out the proposal for waiver of requirements for US cars is even more meaningless than I thought. The proposal is for raising the allowance from 25,000 cars to 50,000 cars per year PER MANUFACTURER. That would total at least 150,000 cars for the big three alone. To date, the 22,000 figure is the most American cars exported to Korea in any given year total for all manufacturers, out of an existing quota now of 75,000 cars for the big three. The largest year by any single manufacturer is 11,000. Total exports to Korea are less than 1/3 of the current allowances, and about 1/7 of the new allowances. This does not require any analysis to understand. Just read the numbers.

        If you want to read all this in a source you probably think is trustworthy, check out the far right wing Washington Examiner. They published an article about the treaty noting the exact same facts I gave, and went on to speculate that the treaty is window dressing. They, like Donald Trump, oppose it.

        I personally don’t oppose it. I am still hoping it is a prelude to cooperation between countries on the North Korean issue. But if it is not, since it really doesn’t change anything I have no problem with passing it.

  16. Ranger47 says:

    I’ve never posted “links”, but… who’d have guessed the New York Times would’ve joined our discussion. Take it with a grain of salt however, it is the NYT, not exactly a pillar of ethical, unbiased journalism.
    https://www.nytimes.com/2018/04/04/us/trump-tariffs-minnesota-mining.html

  17. Norshorguy says:

    When I read your comments, Ranger, I can’t help but think of Gabby Johnson from ‘Blazing Saddles’. You seem to really struggle here. It’s simple: address Gerald’s points. If you can’t then admit it frankly and move on.

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