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Monday, October 01, 2018

The guys who got the election wrong got the trade war wrong, too

President Trump caught reporters flat-footed in the election in 2016.

He again caught them flat-footed in the renegotiation of NAFTA this summer.

In July, Patrick Gillespie, an economics reporter for CNN, said, "America's last trade war exacerbated the Great Depression in the 1930s, when unemployment rose to 25%. Claiming it was protecting American jobs, Congress passed the Smoot-Hawley Act in 1930. The original bill was meant to protect farmers. But to build political support, many lawmakers asked for tariffs -- or taxes -- on all sorts of goods in exchange for their vote."

Never mind that nobody was buying much at the time because there was a worldwide recession at the time, the media (and many economists) blames tariffs.

Donald J. Boudreaux, an economics teacher at George Mason, flat out called President Trump's policy economic suicide.

Boudreaux wrote in a column for Fox News, "The U.S. economy is booming -- but it depends on trade. Exports support 10 million U.S. jobs, imports support another 16 million,  and every single one of us has a life that's full of items manufactured abroad.

"Trump’s trade war means higher prices for American consumers, lower margins and less revenue for U.S. firms, and worse jobs for workers. It's economic suicide."

But the stock market didn't buy that, and unemployment has fallen to the point where workers can quit a bad job knowing they can get something better.


Economist Jeff Rubin wrote, "Canada's next salvo in the trade war should hit Trump where it really hurts — coal."

In his column, Rubin said, "Trump would surely feel the burn if the estimated 800 Burlington Northern Santa Fe unit trains of coal hauled every year to the Westshore Terminals were hit with a carbon tax imposed by the federal or British Columbia government. Former B.C. Premier Christy Clark had threatened to slap a 70 per cent carbon tax on those very shipments in retaliation for soaring U.S. duties on softwood lumber."

Canada was wise enough to ignore that advice because the United States can survive without Canada better than Canada can survive without the United States.

Good luck selling those Made in Ontario Impalas in Europe.

President Trump used tariffs to force a renegotiation of NAFTA. That done, he moves on to force Red China to make trade concessions.

This helps American workers, American consumers, and American thousandaire retirees as it buoys the stock market.


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Trump the Press covers the nomination.

Trump the Establishment covers the election.

Fake News Follies of 2017 covers his first year as president.

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  1. Economists are like Irishmen, put two of ‘em together and you’ll get four opinions. Unlike the Irishmen though, economists don’t have the compensation of producing Tullamore Dew.

  2. You reckon Trump’s new agreement, the “United States Mexico Canada Agreement”, or “USMCA”, carries the implied hint of who’ll The Donald will get to enforce its terms?

  3. They should combine economics and political "science" into one department in all the universities and just call it Democratic Socialism Studies.

    1. Brilliant comment. It's so true.

    2. I used to read Boudreaux a lot. He is conservative/libertarian and a proponent of Austrian economics - Hayek, etc. and Bastiat. One problem and maybe the only problem I have with the Austrian model is that of free trade. What may have been true in the 1870s or 1920s is not true today and PDJT was wise to put the squeeze on other countries as a negotiating ploy.

    3. Actually Classic Economists, think Milton Friedman, Walter Williams and Thomas Sowell, are quite good. They explain how things do work. It is applied theory economists who postulation how to make things work the why think think they should who are worthless. For example these applied idiots will pontificate the the magic benefits of a living wage, never mention the costs.

    4. Good point. Everything carries a cost.
      I also like the economists who don't distinguish cost from price. I don't care what health care costs. That's the hospital's worry.
      What is the price? That's my worry.

  4. Trump woudn't 'feel the burn' if the oil valve at the International Line suddenly was locked-out...

  5. Must Watch re USMCA:

  6. Whenever I would tell an uninformed friend that China exports to the U.S. about five times in value more than it import from us, they are shocked. Each and every one of them had no idea the trade deficit was that unbalanced. Suddenly, they realize that a trade war would work to our benefit. All this "no one wins a trade war but we are sure to lose" talk pushed by the media suddenly looked different.

    Of course one man understood this. But he was crazy, unhinged and not in the least bit approved by all the right (meaning left) people who went to all the right (meaning hard left) schools in the elite. We're now 19 months plus into the Trump presidency. Where is all this Armageddon and apocalypse and economic collapse (and colonization of the U.S. by Russia) that all the right (you know the drill) people were guaranteeing would happen?

  7. Long past time to cease calling them reporters.


    Journalism requires accuracy.


    Journalism requires truth.


    Journalism requires fortitude of endurance. (Aka, makes ya wanna puke, but you don't allow it)


    The msm: vomitariums all.

  8. Nearly everything produced by the universities is false, since we all know they are left-wing brain-washing factories.
    Trump will win in 2020 because we will have survived the destruction caused by the marxist, globalist muslim usurper from Kenya and his anti-American policies. There are just barely enough enlightened people in this country to see the genius of Trump.

  9. “The guys who got the election wrong got the trade war wrong, too.”

    So ... nice grouping then?

    1. They seem to be getting this election wrong, too.

  10. Truly a magnificent accomplishment--and even a good deal for our neighbors, who we want to prosper, too.

    Thanks, Mr. President.

  11. China's already blinked, several times, on trade.

    Check this out:

  12. Thanks for naming a couple of names, Don!
    I also like Bourdeax, and like Free Trade -- which I don't see him mentioning in his article is something Trump wants.

    He makes a good point:
    "Plus, tariffs aren't a one-way street -- trading partners will hit back by imposing their own taxes on American exports. China has already announced retaliatory tariffs ..."
    He fails to note what the current status of tariffs is.

    Trump is the one announcing "retaliatory tariffs" since the situation has been US with low/no tariffs vs (Mex, Can, EU, China) with higher tariffs.

    The other countries have been "fighting" a trade war, without US retaliation -- so there's been no pain there. They've been benefiting from Unfair Trade, and with Trump it is becoming more fair, with lower overall tariffs, which is economically better for the world.
    But more better for the USA is reducing our "trade subsidy" to our trading partners.