Tag: Trade War

Thanos Trump Threatens China ahead of Trade Talks

Kevin Doremus | @k_doremus

According to the Washington Post, Chinese internet users now refer to President Trump as Marvel villain Thanos.  President Trump has been negotiating a new trade deal that would attempt to reduce the US’s trade deficit with China. Similar to Thanos snapping his fingers, Trump threatened to increase tariffs to 25% on Chinese goods causing a sharp decline in the Chinese stock market on Monday. Continue reading “Thanos Trump Threatens China ahead of Trade Talks”

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Trump’s Tariffs: A Tax on Us

Nickolas Roberson | United States

A newly published report by the Tax Foundation on the 5th of December has found that the Trump administration’s recently imposed tariffs on aluminum, steel, solar panels, and a plethora of other industrial goods from China will increase taxation on Americans by $42 billion.

A tariff, as defined by the said report, is “a type of excise tax that is levied on goods produced abroad at the time of import.” Their intent is to “increase consumption of goods manufactured at home by increasing the price of foreign-produced goods.” This pricing of foreign goods is artificially increased, as the government is taxing its citizens for purchasing and consuming products. Things affected are foods, such as bananas or rice, personal goods, such as televisions or furniture, or commercial goods that could be tractors, cars, airplanes, etc. Why? The governments of our world state that their intentions are to protect their domestic industries from the competition and “vices” of foreign businesses and companies. In reality, tariffs are further methods for big brother to increase his control over us, regulating our methods of voluntary exchange, what goods we trade, and by taking away our money in the form of extended taxation.

Regarding the Trump administration’s tariffs specifically, there will be a 25 percent tariff on imported steel ($7.3 billion tax increase), a 10 percent tariff on imported aluminum ($1.7 billion tax increase), 25 percent tariff on imported goods from China that have a total value of $50 billion ($12.5 billion tax increase), and a 10 percent tariff on $200 billion worth of other imports from China ($20 billion tax increase). Thus, as reported by the Tax Foundation, the overall tax increase will be near $42 billion on American citizens. Additionally, the administration threatened to implement another $129 billion worth of tariffs on more Chinese products and merchandise.

When analyzing the economic impacts of the President’s current protectionist tariffs, the Tax Foundation found that they would “reduce long-run GDP by 0.12 percent ($30.4 billion) and wages by 0.08 percent and eliminate 94,300 full-time equivalent jobs.” If the proposed tariffs are implemented as well, “long-run GDP would fall by 0.38 percent ($94.4 billion) and wages by 0.24 percent, and 292,600 full-time equivalent jobs would be eliminated.” It should be reiterated that tariffs are artificially increased prices of imported products and services by the government to discourage consumers from purchasing them. It is truly a form of taxation. No Chinese business or manufacturer is paying this tax, as the Trump administration continues to attempt to debate and establish.

Now, what are the origins of tariffs? For centuries, European nations practiced a trading system dubbed mercantilism, which attempted to prevent goods and services from leaving a home country, preventing trade value from leaving the said country. Incredibly high tariffs and other trade barriers were put into place, leading to high costs for manufactured goods and multiple trade wars throughout the world. However, in 1776, an economist named Adam Smith published his work titled Wealth of Nations.

This magnum opus regarding economics questioned the systems of mercantilism and proposed the idea of free trade: an economic theory that promoted competition between businesses and individuals across a global scale, voluntary trade without regulations such as tariffs, and no discrimination against imports or exports. As this new idea spread across the globe, nations and its citizens experienced a rapid flow of commerce, development of economies, and increases in productivity and innovation. The practice of the aforementioned theory was so successful. Organizations such as the World Trade Organization, NAFTA, and the European Union were developed to continue to promote its benefits to the human race.

Unfortunately, President Donald Trump and his administration seem to be ignoring this history of free trade and its plethora of benefits. With their tariffs, both current and proposed, competition will be stifled in the economy of the United States, resulting in higher prices for goods and services; jobs will be lost, GDP will fall, and the overall economy could possibly become a bear market. The next question that must be asked: will these tariffs counteract the benefits of Trump’s deregulation plan, with it increasing the economic freedom and reducing the regulatory costs of the nation? Furthermore, when will this expansion of government end? When will big brother stop raping and pillaging people for their capital and assets to pay off its own enormous debt? Only time will be able to answer this question, but one thing is obvious to the naked eye: the future of the United States of America is a foggy and obscure one.


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Cheating Destiny: The USA Can Beat China Using Russia

By Daniel Szewc | Poland

One simply cannot deny the modern geopolitical warfare going on between China and the USA. On the surface, China is ahead, winning influence over land in Africa, Europe, and Southeast Asia. Of course, America, the world power of our era, cannot be earning much, since they already dominate so much of the globe. But how can the USA maintain its power?

China and the Line of Defense

Firstly, the “line of defense against China’s rise”. This is exactly what the USA used against the Soviet Union. Instead of an open conflict, they want a geopolitical version of Reagan’s military buildup. This caused the Soviets, who wanted to out-compete America, to go bankrupt and ultimately collapse.

Using this method, Trump wants to tie China’s hands and give better deals than the Asian nation. China proposed building a new silk road? Trump gave Central Europe the support for the Intermarium. China proposed being the arbitrator of Israel-Palestine talks? Trump acknowledged Jerusalem as the Israeli capital. China wants a good deal with Duterte? The Trump administration has been trying to schedule Duterte’s visit to the White House since May 2017. He even recently had the U.S. Ambassador to Manila say that America has a “strong interest” in pursuing Duterte’s visit. North Korea is China’s closest ally in East Asia? Trump manages to secure peace talks with Kim Jong Un, and pushes for reunification, just to move the Chinese sphere of influence back to its border.

Indian Influence

Another great resource that the USA can use against China is the rise of India. Since they are so close, their spheres of strategic interest collide, especially in Asia. The division of influence between America and India would be much more useful for America than one with China. This is simply because India does not have as much of a global outreach as China does.

China is also already trying to grip on India by allying with their biggest regional rival: Pakistan. To weaken its neighbor, India would likely seek the help of the USA. They could also try to outmaneuver the Western superpower, but this would be immensely difficult and irrational, considering that the two countries have no major fight right now.

The Key Role of Russia

A great advantage that America has in the fight for control of Central Europe is its historic rivalry with Russia. This plays in stark contrast to China’s alliance with Russia in the New Silk Road initiative. For most of Europe, Russia still holds the negative stigma of Soviet imperialism. Alas, America does not even have to prove its might. It simply has to prove itself better than Russia, which is not difficult to do, in their eyes.

Ironically, America’s chance is in its established brand, whereas China may have a more uphill battle towards continued success. Will Uncle Sam fulfill his potential? Only time will tell.


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Do Trump’s Tariffs Really Protect Anybody At All?

By Kaycee Ikeonu | Canada

In a 1978 talk, the great economist, Milton Friedman, famously stated that tariffs protect consumers from one thing: “it protects the consumer against low prices!” Friedman, of course, could not have been more right, but his words are ignored with today’s trade wars and tariffs.

Such words of wisdom are essential today amid harsh criticism of free trade from the Trump administration. Some of these critiques include that the United States is losing jobs overseas to countries like Mexico, that the United States has large deficits compared to her trade partners, and most significantly, the need to protect steel and aluminium industries in the United States from going out of business.

An in-depth economic rebuttal of all of these proposals exists. Yet, it is not fully necessary, as the basic rules of economics outline the clear benefits of free trade. Adam Smith, in his famous book, The Wealth of Nations, declares it perfectly. It is in people of any nation’s interest to buy whatever they want from whomever sells it the cheapest.

This is a concept that could not be easier to grasp. When people buy products at lower prices, they then have more money to spend on other goods in the economy.

Now, let’s take a case that is about to happen: The U.S. imposes a tariff on Chinese imports, and now China threatens to put a tariff of $60B on U.S. goods. So, who benefits? The American economy? The American and Chinese consumers now pay a tax on goods. Without the taxes and subsidies on both sides, both countries would strengthen their economies. But instead, they are resorting to subsidizing the hurt regions after hurting them in the first place.

Thus, very few people benefit from this policy. Perhaps, exceptions exist in a few big manufacturers and the ego of the President of the United States.


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President Trump’s Turbulent Trade Tomfoolery

By Indri Schaelicke | United States

Over the past week, much confusion has surrounded the future of the US-China trade war that Trump has moved to start. Just a few days ago, all signs were pointing toward a de-escalation of trade tensions as both China and the US seemed ready to come to the table to make a deal.

But only 2 days later, it appears that the US will be starting this trade war after all. On Tuesday, the Trump Administration announced it would enact 25 percent tariffs on $50 billion in imports by June 15. The White House will also announce investment restrictions on Chinese purchases of U.S. technology two weeks later. The administration’s inability to present a clear, coherent plan threatens the stability of the market as people speculate about the future of  America’s trade policy. Over the past 5 days, the stock price of America’s largest steel producer, Nucor, has fluctuated between $62.50 and $64.50 as instability rocks the steel market. People are unsure about the fate of steel prices and are hesitant to invest in the steel industry.

Beyond instability however, there are several other issues that protectionism fails to consider. Tariffs are put into place in an effort to protect domestic companies and workers from competition from abroad. By placing import tariffs on Chinese products, the Trump administration is hoping that they can promote increased purchases on American produced products. The administration is specifically targeting protecting the steel industry, but the tariffs imposed will affect a multitude of others.

Take a look around you and notice how many things you use everyday are made of steel. The device you are using right now to read this article contains steel components. The car you drive, the tools you use, the appliances in our homes, all have important steel parts. Tariffs on steel will drive up the price of American steel and make it more difficult for companies who create products with steel components to price their own products at an affordable price. When a cost of an input in production rises, so does the final product itself. Steel tariffs will impact many industries and jack up prices across the economy.

Throughout his campaign, Trump was committed to protecting American jobs and making it a global economic force. His solution of imposing protectionist policies is not one that will lead to the greatest economic growth. Rather than isolating the US and hurting our economy, he should be looking to expand it and make it competitive in the global markets.

President Trump has already enacted large scale regulatory reform, a move that will surely help the economy boom. The corporate tax cuts introduced and signed in December 2017 have also reduced the tax strain on corporations and given them greater ability to invest and build their business. Enacting protectionist policies will only reverse the good being done for the economy.

Instead of driving up the prices of US products, which will decrease our net exports as other nations cannot afford our goods and services, Trump should aim to do just the opposite- steps should be taken to lower production costs and therefore lower the costs of final goods and services. Tariffs and other protectionist policies hike up the prices of our goods and services and make them unable to compete in the global economy.

Reducing barriers to trade is one simple way to decrease the cost of production of goods and services in the US. If the White House embraces free trade, it will see America prosper and little loss of jobs.


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