Published: Mon, March 12, 2018
People | By Neil Grant

European Union continues to fight proposed USA trade tariffs

European Union continues to fight proposed USA trade tariffs

That's what happens in trade wars. And if his views are based on zero understanding of the issues or even of basic facts, well, Trumpism is all about belligerent ignorance, across the board. While the Trump highlighted the nations' military and trade relationships, Turnbull moved to clarify Trump's comment about a new "security agreement", saying the president was referring to the legal paperwork that would lock the exemption into place.

Planned talks between President Trump and his North Korean counterpart Kim Jong Un are also expected to lift the mood for investors.

After all, trade (like racism) is an issue on which Trump has been utterly consistent over the years.

But wait, there's more. The Consuming Industries Trade Action Coalition found that 200,000 workers in US manufacturing lost their jobs as a result of the tariffs. That includes the Trans-Pacific treaty with 10 other countries (signed last week), plus a deal with four South American nations, potentially one with the United Kingdom if it "Brexits" the European Union, and ultimately with China.

"The problem is when you say, "All right, let's have tariffs, but let's couple that with uncertainty" - that's nearly worse", Senator Jeff Flake, an Arizona Republican pushing legislation to block the tariffs, said Sunday on NBC's "Meet the Press". Of course he wants to wreck it.

"That said, the one consistent message from Trump since the 1980s is that he is not really a free trader". But these conflicts of interest are overwhelmingly between groups within each country, rather than between countries. Our history of Herbert Hoover-esque protectionist thinking coupled with the imposition of tariffs has consistently led to failure and eventual repeal. When one side imposes new tariffs, the other side responds with tariffs of its own - often in completely different economic areas.

Trump has called the tariffs a matter of national security while threatening to tax European auto imports and impose "reciprocal taxes" on countries that charge higher duties on U.S. goods than the U.S. now charges on their products.

"We have been building a global trading system for decades". And it worked: The global deals that evolved from the reciprocal tariff approach greatly reduced tariff rates around the world, while setting up rules that constrain countries from backtracking on their commitments. It does have the potential of undermining world trading. (See sidebar on page 6) There would be no point to impose punitive measures on USA steel, since the industry doesn't export much, so they will take action against other sectors. Navarro was originally appointed head of a newly created National Trade Council; then head of the Office of Trade and Manufacturing Policy, reporting to Cohn. In that sense they make a real if hard to measure contribution to democratic governance and world peace. Foreign Minister Chrystia Freeland said that Canada buys more than half of American steel, giving the USA a $2 billion surplus in this trade. They were invoked supposedly in defence of US national security, but Trump clearly is seeking leverage in the NAFTA talks.

So Trump is in effect both violating USA law and throwing the world trading system under the bus.

Trade wars are not "good" and are "not easy to win".

But that won't bother Trump.

We hardly need another problem in agriculture. But so far there has been one big victor - Peter Navarro, director of the Office of Trade and Manufacturing Policy.

Meanwhile, in light of the recent U.S. action, OCBC Bank economist Barnabas Gan noted in his report that, while a trade war is not totally off the cards, market reaction to Trump's action has been unsurprisingly positive.

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