Trump Tariffs on Steel and Aluminum are Bad Economics

in #politics6 years ago

I try to avoid the political drama mostly because it doesnt interest me much, but every once and a while I get pulled in and just have to say something because it crosses over with the economic articles I write. Today I am doing so because of the Trump tariffs on steel and aluminum that have been causing a stir in the news recently and I wanted to give my opinion on them. Overall from the title you can guess I think they are just flat out bad economics and I want to explain why. This has nothing to do with my political beliefs because I would have called out any president who did something like this.

First I want to dispel the idea that trade wars are good because they arent, there are only losers when they occur and they are the people. Raising tariffs on another country will cause them to retaliate and raise taxes on the goods we export which end up hurting many more people than intended. Even if they dont retaliate immediately there is good evidence that on a long term basis we negotiate less favorable deals in the future. The government needs to keep the market as free which means staying out of it most times, that is when the people and the countries prosper the most.

The problem with Trump is he continues to try and support small industries that need to die because they are outdated. America had its time as a manufacturing country and we've moved past that, and letting developing countries do the manufacturing while we became specialized has made up incredibly wealthy. I criticized Obama for the same practice when he bailed out GM because the market is ultimately the decider on what industries our country should support. If an industry can not survive it will shrink until its profitable or it disappears which is normal. We dont want to become a country that competes in manufacturing with China because they can do it 100x cheaper, it just doesnt make sense.

These fringe industries like steel and coal that Trump continues to protect are industries that are better left to other parts of the world, not a specialized country like us. Look at a country like Japan or Taiwan which grew to immense power during the 80s from manufacturing, but now struggle to grow their economies because they cant move past it. Japan alone has been in a recession for close to 30 years, is that really what you want? Not to mention the rise in these prices might help out a small industry but the ripple effects hurt every other type of industry and all products that use steel and aluminum. The cost of your goods are going to go higher than any benefit the tariffs might have had. The whole situation is a net loss for us.

Theres a big problem with Trump right now even if we disregard any of the stupid drama and thats that he is not listening to his advisers. He has access to the best economists and smartest people in the country, but he doesnt take their advice. I dont know if there is a strategy to this , but its not a smart thing to do. America is rich because we innovate and we create new industries, not because we cater to old ones. If we want to stay competitive we innovate or we die, those are our only two options.

-Calaber24p

Sort:  

Nice post beautiful presented and explained. detail oriented with nice information. thank you for sharing @calaber24p

Its really a fact. Its good analysis. I agree with your views. Good post. Thanks for sharing a such valuable post.

Currently only political
only money politics

Trump does not know what he's doing...?
I think it's bad decision...

I'm a bit torn on this subject. Removing Trump from the equation, because, well just because. It seems that there are some very bad times and very bad industries to have trade wars in. But, I can see the positive in them as well in certain instances. I think a blanket approach just doesn't work. I'm reminded of the timber/wood/furniture industries. In North Carolina entire towns just closed up due to China undercutting our furniture industry. Did you know most of our timber is now shipped to China so they can make our furniture and ship it back. That can't be great for the environment and it definitely isn't great for all the folks that used to make furniture in North Carolina. Not the mention the destruction that their voracious appetite for our trees is causing.
Steel isn't that different to me, but there are many other areas where I think it doesn't make sense to fight it and better to just let them use their cheap labor to bring down costs on goods we import. However, I think we should always strive to have manufacturing in the U.S. In 2008 when the economy hit the crapper everyone was talking about how since we had very little manufacturing in the U.S. anymore there just wasn't any jobs for folks displaced. Now that the economy has picked up a bit, we have much more manufacturing than 5 years ago and the consensus seem to be that it's due in part to a lot of manufacturing jobs coming back after 2008. Overall I fall more to the side of free market, free trade almost every time. But, it's hard for me when countries utilize what is basically slave labor to offset their costs giving them the ability to undercut our market with cheaper products. In some instances it sorts itself out I guess, like when you go to buy a tool and realize you can by one made in China for half the cost, or you could buy one made in the USA for twice as much but it will last your whole life. People have that option, which seems like a positive. I think I'm pro trade war just about anytime China is involved. Their industries are ran by the government so they protect them very strongly by offsetting costs and even outright banning competing companies from other countries. I think we should be much harder on them in those cases. Just my two cents. I just started following you and I've already found something that really had my mind churning so thanks for that.

I don't think Trump is stopping anyone from innovating. I think he would even like it if America is more innovative, it is part of his desire for America.

Any kind of war is not good and Trump is doing anything he wants anyways... That's not good.

It’s seems like the US is always getting screwed on tariff deals. Why have 20 trillion in debt we could sure use the $$$$.

Totally agree. This is just one of the many examples of a control freak government trying to micromanage every aspect of society for their own gain. Followed :-)

Very interesting post friends.
Hello mr. @calaber24p I want to be friends with you, but it depends on whether you want to be friends with me.
To be sure I really want to have lots of friends.

Coin Marketplace

STEEM 0.16
TRX 0.15
JST 0.028
BTC 56160.19
ETH 2367.48
USDT 1.00
SBD 2.31