Proposition: We are governed by an idiot.
Evidence:
When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!
— Donald J. Trump (@realDonaldTrump) March 2, 2018
Donald Trump has tapped out many a dumb statement on his Twitter account. What you see above may be the single most stupid statement to flow from his fingertips, in part because its immense stupidity is compounded by how consequential it could become.
“Trade wars are good, and easy to win.”
“Don’t trade anymore -- we win big. It’s easy!”
In economic terms, this is the functional equivalent of arguing that nuclear wars are good and easy to win. The long history of trade wars says otherwise. It says that nobody wins, everybody loses, and that once such wars begin, bringing them back under control before immense damage is done can be very difficult.
The vast majority of economists, liberal and conservative, agree on these points, as do most of Trump’s own economic advisers and much of his own party. Gary Cohn, director of the National Economic Council, Treasury Secretary Steve Mnuchin, national security adviser H.R. McMaster and Defence Secretary James Mattis all reportedly begged Trump not to take this step, which imposes a 25 percent tariff on steel and a 10 percent tariff on aluminum.
But as we know, Trump is an economic illiterate driven by emotion, not thought. This is a man who thinks he invented the term and concept of "priming the pump." This is a man whose preferred solution to any problem is to pick up a stick and hit somebody, so when the economic flat-earthers hand him a stick and point him toward a target, he starts swinging.
It’s so easy, we’ll win so big ... until the rest of the world starts picking up sticks of its own.
“The EU has been a close security ally of the U.S. for decades,” warns Jean-Claude Juncker, the European Commission president. “We will not sit idly while our industry is hit with unfair measures that put thousands of European jobs at risk.”
"Should restrictions be imposed on Canadian steel and aluminum products, Canada will take responsive measures to defend its trade interests and workers," says Canadian Foreign Minister Chrystia Freeland. (Canada is by far the biggest exporter of steel and aluminum to the United States.)
In Germany, Foreign Minister Sigmar Gabriel is urging the EU to “respond decisively to US punitive tariffs, which endanger thousands of jobs in Europe." Sweden-based Electrolux, Europe's largest home appliance maker, says it is postponing a $250 million investment in the United States because “tariffs could cause a pretty significant increase in the price of steel on the U.S. market."
In Australia, Trade Minister Steve Ciobo warns that this retaliatory cycle could push us into another global recession. And remember, these are what our friends are saying.
It’s also important to bring the discussion closer to home. Last year, Georgia exported $37 billion worth of goods, from aircraft to autos to kaolin, wood products and chicken. Its ports in Savannah and Brunswick generate hundreds of thousands of jobs. Logistics and warehousing have become huge parts of the state economy, and state business and government leaders have placed heavy bets on international commerce as the state’s future.
At the core of that is Hartsfield Jackson International Airport, with roughly 6,200 international flights a month moving almost a million international passengers a month. That’s important not just for the jobs and revenue it generates directly, but because that access to the rest of the world makes us highly attractive to companies that are themselves betting on international trade.
But once a trade war starts, all such bets become losing bets.
The core of Trump’s argument in favor of tariffs is that the United States has been a victim of the global economic system that it has created and encouraged. “People have no idea how badly our country has been treated by other countries, by people representing us that didn’t have a clue,” as he put it Thursday.
In reality, the U.S. economy recovered more quickly from the Great Recession than almost any industrial economy in the world. Our stock markets are soaring, corporate profits are plentiful and we have enjoyed steady growth for almost a decade now. The rest of the world looks at that performance, hears the president describe the United States as a gigantic victim, and it shakes its head in bafflement at the irrationality of it.
Well, me too.
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