Is Trump Starting – and Losing – a Trade War? No and No

There is widespread concern that president Trump’s policies are inciting a ‘trade war’ that is going to bring down the global economy.

In fact, friends, the ‘trade war’ started decades ago. Nations like Japan, China and others including Canada and Mexico have been using underhanded tactics to gain advantages over the US for many, many years. And now that Trump is fighting back it is Trump who is being blamed for ‘starting’ a “trade war”.

These tactics destroyed the US manufacturing economy with unfair international competition. If Trump had been in office and had responded 30 years ago we would not have lost, or failed to create, more than 10 million manufacturing jobs. Instead US leaders let the jobs go without putting up a fight. President Trump is finally fighting back.

The American media went decades without reporting on the dishonest practices of our foreign trading partners. Only now are they reporting on the “trade war” in order to hurt president Trump for allegedly ‘starting’ it.

Trump is expecting that his tough actions over the long run will induce nations, particularly China, to stop their unfair practices, which would lead to a fairer and more open system of world trade.

This is the best system, without each nation angling for its own advantage with its own special internal policies. President Trump has been talking about China’s unfair trade practices for many years even before he became a candidate. These practices include:

*Nations like China or Canada placing tariffs (taxes) on US products being sold into China or Canada, making those imports more expensive and favoring domestic producers;

*Socialistic governments like Japan have been subsidizing their industries and then “dumping” their products on American markets at low prices. Japan did this with steel in the 1970s and 1980s, undercutting US steel producers and killing off much of the US steel industry. China is doing the same today.

*Nations put numerical quotas on how much of a certain product can be imported from outside, i.e., 100,000 cars or 1 million bushels of wheat.

*Nations like China put undue restriction on foreign companies operating in China, i.e., the foreign owners can only hold 49% shares in the company while China owns 51%.

*China has been brazenly stealing US technology for decades;

*China has been manipulating its currency in order to make their products more affordable in the world trading system;

So president Trump is reacting to decades of unfair practices. Good.

Trump’s tariffs are not intended to be permanent. They are a bargaining tool and will only become permanent if our trading partners don’t respond by halting their unfair practices.

The cost of tariffs to the US in the short run is high in some ways but favorable in others. Steel prices in the US are now high since cheaper Chinese steel has been made more expensive by the tariffs. This is hurting steel-consuming industries like auto makers and those who manufacture pipe and other equipment for oil and natural gas production.

Prices for newsprint paper from Canada have gone way up with tariffs attached, threatening the already fragile finances of thousands of US newspapers. But this is a good thing for those of us who despise the Fake News media.

Another good outcome of the steel tariffs is that seven US steel plants are reported to have re-opened since president Trump put his tariffs on Chinese steel (now 25%) along with 10% tariffs on aluminum from the European Union, Canada and Mexico.

After the New York stock market crash of 1929 the US slapped heavy tariffs on many imports to “protect” US industries in the economic slowdown. This led to retaliation around the world and the whole global trading system slowed dramatically, spreading an economic crisis worldwide. We do not want this to happen again.

Here are excerpts about the so-called “trade war” from two sources, with a Nikitas3.com comment about each:

Politico reports: The Trump administration escalated a mounting trade war with China on Tuesday by publishing a list of $200 billion worth of Chinese goods that it proposes to hit with an additional 10 percent tariff.

“Rather than address our legitimate concerns, China has begun to retaliate against U.S. products,” U.S. Trade Representative Robert Lighthizer said in a statement. “There is no justification for such action.”

Nikitas3.com comment: You can be sure that China does not want a trade war since their economy depends heavily on the US as its major market. And like any “war” we can expect China to react now that we are fighting back. China already said that it would lower tariffs on US cars being sold into China. That would be a good start, but only a start, and only if they follow through.

Politico reports: The new tariff list broadens the types of goods caught up in the trade war by targeting items like seafood, minerals, chemicals, and personal care items, such as shampoo and soap. It also includes a number of consumer products such as handbags, luggage, gloves and paper.

The new U.S. move came after China retaliated in kind against tariffs that President Donald Trump imposed last week. Other Chinese-made goods slated to face the new 10 percent tariff. The list include building supplies, such as plywood and floor panels; certain wool products, cotton yarns and threads; woven cotton fabrics; and certain automobile parts, including tires.

Administration officials said they hoped the latest action would persuade China to take U.S. concerns about intellectual property theft and forced technology transfers more seriously. That is the issue that provoked Trump to start the tit-for-tat trade war with Beijing last week.

Nikitas3.com comment: China has been brazenly stealing US technology and ignoring US patents for decades. Everybody knows this is true but nobody has acted. Trump finally is acting. Good. Nikitas3.com has a personal story about this:

Back in the 1990s an acquaintance of mine owned a machine-tool company that used the latest computerized CNC milling machines.

My acquaintance met a “waiter” from China working in a local restaurant. He befriended the “waiter” and soon the “waiter” was asking my friend to consider moving his company to China.

As it turns out this “waiter” was really the son of a communist party official sent to the US to entice companies to move to China where their technology is then stolen. There are thousands of these young Chinese agents working in the US today, perhaps tens of thousands.

My acquaintance ultimately stayed put, but only after two trips to China to check it out.

Breitbart News reports: President Donald Trump confirmed to reporters … that tariffs on $34 billion in Chinese goods will go into effect at the end of the night, another $16 billion in two weeks, and another up to $500 billion more if China refuses to change unfair trade practices.

… Trump further warned at the time that “After the legal process is complete, these tariffs will go into effect if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced.” He went on, “If China increases its tariffs yet again, we will meet that action by pursuing additional tariffs on another $200 billion of goods. The trade relationship between the United States and China must be much more equitable.”

Nikitas3.com comment: In other words, Trump is not going to back down. He believes that China will. And if China does not, then we need to maintain the tariffs and put further pressure on China, which has been profiteering and cheating in the global economy for decades without any response from cowardly global leaders.

Breitbart News reports:
U.S. Customs and Border Protection officials are due to collect 25 percent duties on a range of products including motor vehicles, computer disk drives, parts of pumps, valves and printers and many other industrial components.

… China has threatened to respond with tariffs on hundreds of U.S. goods, including top exports such as soybeans, sorghum and cotton, threatening U.S farmers in states that backed Trump in the 2016 U.S. election, such as Texas and Iowa.

Nikitas3.com comment: This is a direct political attack on people who voted for president Trump. This shows how devious the Chinese are and always have been. Communist China has always been close to the Democrat party in the US, and even to US environmentalists.

Breitbart News reports: “An American chemical company has been rushing its shipments to China to beat the clock. A Beijing steakhouse has dropped U.S. beef from its menu. And China has been shifting soybean purchases to Brazil, from which it bought nearly 30% more beans in May than it had a year earlier, according to research firm CEIC,” the Wall Street Journal adds, noting that Chinese importers have “mostly stopped buying U.S. soybeans.”

Nikitas3.com comment: Good, then the US will stop buying Chinese products. China has a great deal to lose in a trade war. The US had a $375 billion trade deficit with China in 2017 alone.

Nikitas3.com predicts that China ultimately will make concessions when they see their economy threatened.

Update: Here is the official statement on president Trump’s trade talks with the European Union showing that the Trump strategy is working perfectly:

Joint U.S.-EU Statement following (European Commission) President Juncker’s visit to the White House

Washington, 25 July 2018

We met today in Washington, D.C. to launch a new phase in the relationship between the United States and the European Union – a phase of close friendship, of strong trade relations in which both of us will win, of working better together for global security and prosperity, and of fighting jointly against terrorism.

The United States and the European Union together count more than 830 million citizens and more than 50 percent of global GDP. If we team up, we can make our planet a better, more secure, and more prosperous place.

Already today, the United States and the European Union have a $1 trillion bilateral trade relationship – the largest economic relationship in the world. We want to further strengthen this trade relationship to the benefit of all American and European citizens.

This is why we agreed today, first of all, to work together toward zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods. We will also work to reduce barriers and increase trade in services, chemicals, pharmaceuticals, medical products, as well as soybeans.

This will open markets for farmers and workers, increase investment, and lead to greater prosperity in both the United States and the European Union. It will also make trade fairer and more reciprocal.

Secondly, we agreed today to strengthen our strategic cooperation with respect to energy. The European Union wants to import more liquefied natural gas (LNG) from the United States to diversify its energy supply.

Thirdly, we agreed today to launch a close dialogue on standards in order to ease trade, reduce bureaucratic obstacles, and slash costs.

Fourthly, we agreed today to join forces to protect American and European companies better from unfair global trade practices. We will therefore work closely together with like-minded partners to reform the WTO and to address unfair trading practices, including intellectual property theft, forced technology transfer, industrial subsidies, distortions created by state owned enterprises, and overcapacity.

We decided to set up immediately an Executive Working Group of our closest advisors to carry this joint agenda forward. In addition, it will identify short-term measures to facilitate commercial exchanges and assess existing tariff measures. While we are working on this, we will not go against the spirit of this agreement, unless either party terminates the negotiations.

We also want to resolve the steel and aluminum tariff issues and retaliatory tariffs.

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