Trump’s Tariffs: The Henny Pennys Are Screeching “Trade War!” and “Protectionism!” While Trump Plays Politics

by Scott Creighton

  • free trade – international trade left to its natural course without tariffs, quotas, or other restrictions
  • protectionism – the theory or practice of shielding a country’s domestic industries from foreign competition by taxing imports.
  • overreaction – a more emotional or forcible response than is justified.

Last week President Trump announced he and his administration were planning to impose minimal import tariffs on steel and aluminum (25% steel and 10% aluminum) in an effort to protect the interests of U.S. industries and workers.

Today at the White House, Trump plans to make the announcement of the finalized tariff specific details, oddly enough, in the Roosevelt room at 3:30pm. During FDR’s administration, his economic staff struggled to find ways to get around the Smoot-Hawley tariff of 1930, signed into law by H. Hoover which placed very high tariffs on over 20,000 goods imported into the U.S. Smoot-Hawley was a protectionist measure, begrudgingly enacted as a response to the Great Depression (1929-1932) .  FDR and the Democrats passed the Reciprocal Trade Agreements Act of 1934 which gave him the ability to negotiate bi-lateral trade deals independent of the Smoot-Hawley tariff but that was two years after the Depression had ended and many say Smoot-Hawley had done it job.

While Free-Marketeer neoliberal economists will say Smoot-Hawley exacerbated the Great Depression making it last longer, others will tell you the protectionist policies helped promote U.S. business and put Americans back to work. Today, when a neoliberal argues for some new corporatist free-market multilateral trade deal, they always hit their opponents with a copy of Smoot-Hawley and laugh as if they’ve proved their point. After all, FDR himself helped do away with it… right?

Truth be told, Trump’s tiny little tariff, written by his tiny little hands, is nothing more than a drop in the bucket compared to Smoot-Hawley or the Tariff of 1828. And yet, folks across the political spectrum are beside themselves screeching about “trade wars” and the dreaded “P” word… (whispers) protectionism.

You think you’ll get banned by Youtube for talking about David Hogg or “crisis actors”? Try making a bunch of videos with the term “Protectionism” in the title. Not only will they ban you, but they’ll come to your house and brand the letter “P” for “Protectionist” on your forehead. In terms of getting a job in the future, that’s worse than a neck tattoo of the Dancing Israelis on a van with the burning towers in the background (unless you are applying for a job in Tel Aviv maybe)

In reality a number of countries have enjoyed a long run at the controlled demolition of our aluminum and steel manufacturing industries. That’s a fact. And what’s interesting is watching traditionally neoliberal and “free market” Fox News actually DEFEND these protectionist tariffs because they are coming from their boy Donald (same Donald who was just recently talking on live TV about grabbing guns first and worrying about the 2nd amendment and “due process” later… yeah, THAT Donald Trump)

“A great wailing and gnashing of teeth arose across the land last week after the Trump administration announced its plan to place tariffs on imported steel and aluminum. Some conservatives cried that the tariffs – 25 percent on steel and 10 percent on aluminum – would incite an international trade war…

This hyperbole comes from conservatives who deliberately blind themselves to the devastation Chinese trade cheating has caused the American steel and aluminum industries.

This hysteria comes from corporations that use steel and aluminum and are apparently just fine with Chinese trade violations completely killing off American producers, leaving our country without domestic suppliers of metals essential for national defense.” Fox News

Ah yeah… they had to work the defense industry into the mix didn’t they? Well, it is Fox “News”

Truth is, this reporter accurately lays out the recent history of damage done to our steel and aluminum industries since 2000 and then goes on to explain how this tariff plan was actually announced back in April of 2017 when the Trump administration began their study into the effects of the grossly under-priced materials being allowed to flow freely into the U.S. thanks to our open markets policy of economic globalization.

Damn, it also sounds for a second there like someone at Fox “News” actually gives a shit about some blue-collar workers in the country.

The head of the AFL-CIO backs these new tariffs. Imagine that. Him and the union standing with Trump.

Who doesn’t back it? Pretty much everyone else including Trump’s #1 Goldman Sachs swamp critter, Gary Cohn, who resigned in protest yesterday over this deal. Big Business and Big Finance isn’t happy.

Lloyd Blankfein says Cohn is right to leave. Of course, Blankfein is Goldman’s CEO and Cohn was it’s President… so I guess that tells you something right there.

The naysayers in the press warn of a pending “trade war” with China and a few others resulting from this. Manufacturers in the beverage industry complain the rising costs and warn they will be passed on to the consumer, which is supposed to make us sit back and say “screw those out of work aluminum workers. I ain’t paying an extra .02 for my 6-pack of Coors DAMNIT!”

Of course, they fail to mention they could EASILY just buy AMERICAN aluminum and not pay the 10% tariff… but… I guess I’m nit-picking.

But they wont buy American materials and that’s the point because they are worshiping at the alter of unrestricted global free trade and they know if something like this is imposed and it actually HELPS American industry… something else might follow it. And then, something else. And then, something else. And you see where this is going, right?

It’s like the “democracy disease” Kissinger was so concerned about in Latin America back in the early 70s when Salvador Allende won an election in Chile. One little scratch and the whole hemisphere could become infected.

Trump is already watering down his tariff with plans to exclude Mexico and Canada and possibly even the whole of the EU (after EU announced plans to target GOP heartland with tariffs of their own) by time he makes his announcement later today. That means it’s possible some Mexican company (or some Ukrainian one) will suddenly find themselves hiring a whole bunch more steel workers at .30 an hour to compete with our friends and neighbors up here stuck in the rancid middle of NAFTA.

Lindsey Graham, never one to miss out on a chance to attack Donald Trump for anything, says it’s a mistake to set these tariffs on imports. I’ll bet you anything he voted for Hillary… twice.

If it helps bring back a fraction of the jobs lost in those industries since 2000, it would be worth it I think but more likely, what Trump is doing is merely for show.

You see, Donald Trump is already worrying about 2020 and right now, in the heart of that Blue Wall that Killary LOST in 2016, there is a special election taking place… and it’s also right in the heart of the manufacturing belt hardest hit by steel manufacturing losses over the past 2 decades. With the mid-term elections coming up this year, it’s impossible to ignore the crass political aspect of all of this. Of course the establishment Republicans are too busy shooting themselves in the feet to understand the larger political side to it I suppose. They’re too busy trying to constantly prove to their donors that they back neoliberal economic ideology to care about something as trivial as unemployed American workers or even… voters.

Tellingly, the greatest Henny Penny-type response is coming directly from the core institutions of neoliberal globalization:

“Several trade chiefs from around the world decried Trump’s proposals, with the International Monetary Fund (IMF) and World Trade Organization (WTO) also quick to criticize the move.

The IMF’s Christine Lagarde said she hoped Trump would decide not to implement the tariffs and warned “nobody wins” from a trade war.

European Commission President Jean-Claude Juncker vowed to react firmly to Trump’s threat to impose tariffs on metal imports and the European Union (EU) has reportedly drawn up a $3.5 billion hit list of retaliatory tariffs.” CNBC

But wait… I thought globalization and the IMF/World Bank/EU were all COMMIES?!? I’m so confused.

No, they aren’t commies and yes, they are deeply opposed to any form of tariff being imposed by the U.S… even if those tariffs mainly target… well, commies in China.

It gets confusing doesn’t it?

Trump won the nomination and eventually the election on the promise of a more protectionist economic policy in America. He bashed Hillary’s unabashed support of the TPP and NAFTA and promised to bring jobs back to America by re-negotiating or doing away with several unfair trade deals. His protectionist rhetoric literally won him the Blue Wall that Hillary’s campaign staff wrongly assumed was theirs no matter what and now we see, a year after he takes office, he’s making a token gesture to placate that GROWING segment of voters in America right in time for a special election in Pennsylvania and right before the mid-terms in November.

Even still, it’s something. If he’s pissing off the World Bank, the IMF and Lindsey Graham, it can’t be that bad, right?

Trade wars? meh. The last people who want a trade war are the global financiers who OWN the IMF,World Bank and Lindsey Graham so I wouldn’t worry too much about that. They’ll just build a couple U.S. taxpayer-financed mills in Mexico and hire a couple thousand Peruvians to run it at a massive profit. They’ll gripe about “protectionism” and wave copies of Smoot-Hawley in the air while doing it but they understand politics and they know a craven showman when they see one.

Don’t fall for it like Secular Talk did the other day. It’s like his Carrier deal… ain’t what it appears too be on the surface. If it was, you think Fox “News” would be promoting it? Highly unlikely.

Like Bush and Obama before him, Trump is all hat and no horse but if this little platitude of his brings back just ONE DAMN JOB lost to open borders, free market globalization… then it’s worth it. Let him have his campaign speech talking point. Let him feature his one steel-worker put back to work at his next State of the Union address. I don’t care.

But this is not (whispers) protectionism and it’s not about to kick off a trade war with anyone. It’s showmanship. But that’s still the best we can expect these days now isn’t it?

5 Responses

  1. Trump needs to show them that he is the President and he needs to win approval of the people…………. if he sticks with this protectionism and goes on to apply more of it to other American industry companies, then I might be glad I voted for him.

  2. The promise of protectionism is the reason Drumpf got elected in the first place.

  3. I have a couple of issues with the whole tariff thingie.

    1) Bypassing Congress, which is supposed to be the branch of gov’t that decides trade agreements, by invoking “national security” is a bullshit move. We protested when Bush went over the heads of Congress with a pile of [unconstitutional, illegal] executive orders on spying and torture claiming he could do it because of “national security” and we protested when Obama did the same thing with orders changing the Obamacare law, imposing sanctions willy-nilly, and starting more illegal wars. Trump shouldn’t be exempt from the same criticism; trade is not a national security issue, no matter what his attorneys told him.

    2) At Davos, Trump offered up that he was open to the idea of re-entering the TPP negotiations. You remember the damn TPP and how everyone was so happy he immediately withdrew the US from it? Yeah, well, so much for that. He is flipping on that, too. He has no clue what the fuck he is doing. Protectionist on steel, but give away the entire country to join the freaking TPP. Figure that one out. Of course, it may be too late to rejoin the negotiations, but it is alarming that he is indicating he wants to sign up for the sucker.

    3) If we have a problem with other countries underselling us in steel and aluminum, we should go to the World Trade Organization. We were the main founders of that group and basically own the dispute judges, who rarely rule against the US in any decision. While that fact makes it obvious that we own the WTO in the same way we own the IMF and World Banks, and it is totally unfair to the other countries, Trump would be assured to get what he wants through this “legal” measure rather than starting some trade war shit.

    4) Get this: when Trump signed the tariff order yesterday, he said that there will be exemptions for countries that are “friends of ours, both on a trade basis and on a MILITARY basis.” He is openly taking military relationships into consideration, which should make it clear this isn’t about him worrying over a couple of steelworker’s jobs. It’s blackmail to get other countries to back us up in whatever country we decide to invade next. It’s a gangster threat: back us militarily, or we’ll break your legs.

    5) There are better ways to get people back to full employment than tariffs. Great article at nakedcapitalism a day or so back explaining how financial policy is a better effector for this than tariffs and trade wars. The final paragraph reads, “But there are better ways to address the problems than simply slapping tariffs on imported goods. If we refocus government fiscal policy to create full employment, then most trade issues would become a sideshow and the “flood of cheap imports” would be viewed less as a job threat, and more a means of enhancing the consumption preferences of a fully employed workforce. Surely, this is preferable to penalizing the population via trade wars, or of forcing the poor and unemployed to bear the entire burden of adjustment as and when trade liberalization takes place. A resort to protectionism is crude, but free trade’s champions cannot simply dismiss the realities of job displacement without a viable policy response beyond the assertion that free trade itself is a sacred tenet of economics.”

    https://www.nakedcapitalism.com/2018/03/trump-clumsy-fighting-free-trade.html

    Finally, anyone who thinks Trump gives one shit about the American public is kidding themselves. Listening to him talk about the “wonderful steel workers” of the US is like hearing him bring up “faith” and “God” – he doesn’t believe in any of these things and couldn’t give a rat’s ass. He is a vicious man who is only interested in one thing: his personal wealth. The only reason he didn’t quit already is because he’s learned that Congress isn’t going to do anything about him and his family making a shit-ton of cash off his position.

    • To your points:

      (here is an interesting paper laying out the limitations of presidential authority on tariffs https://fas.org/sgp/crs/misc/R44707.pdf )

      1. I agree. Fast Track did not give the president new powers to create tariffs on his own volition without them being ratified by a simple up or down vote by congress. And the long standing rules regarding congress being the only body authorized to create new tariffs has been bent a little over the decades (since 1930) but it has not broken. Modify tariffs? Yes. Create them? No.

      2. TPP rumors have been circulating for a while and yes, at Davos, he told a reporter he was open to discuss it. More troubling than that is the fact that his administration is currently re-negociating NAFTA and from what I can gather, the new language of the deal comes directly from the TPP in many instances. And while Trump was given credit for killing TPP, it was dead on arrival before he got into office. Obama couldn’t get it done and even Hillary had to back off it during the campaign.

      3. The mechanism of control via the WTO is pretty much the same one they were trying to implement on a larger scale with the TPP and TTIP. It’s kind of toothless if the offending nation doesn’t agree to impose the court’s ruling on itself. Then you can sanction, but sanctioning China is going to have far reaching effects on all sorts of U.S. business (and EU businesses and so forth) far beyond just the steel and aluminum industries. So, while I agree the president needed to get congress to act on this issue rather than just making tariffs illegally on his own, I know that a resolution within the structure of the WTO would not have been successful. Not that these tariffs will either (as I pointed out earlier)

      4.I don’t know that you can draw that conclusion from his silly statement about friendly countries and our military. The idiot worships at the feet of the military and his statement about friendly countries seems more designed to justify targeting only certain nations with these tariffs and not others. However you look at it, that provision is going to seriously undermine any good his tariffs would have done for American workers. Oligarchs will just set up shop in “friendly” countries and export to us from there.

      5. Have not read the article yet but I agree with your conclusion that there are much better ways to get people back to full employment. However, open borders and completely open markets have NOT been good for our economy and the proof lies in the statistics from the early 80s onward. I think there is a lot to be said for protctionism and just go back to 1930 and you will see, it does work (or course neoliberal economists will tell you otherwise). Here’s an interesting little thought test… what if ObamaGod had done something like this for the stated reasons Trump gave? Do you think MSNBC and the Times would have shit all over Him for it? Of course not. I wonder how much TrupHate factors into people’s view of this.

  4. Thanks for taking the time to reply, Scott.

    Yeah, the whole globalization thing has not worked well for any working stiffs on the planet, only the CEOs of the biggest corporations. But I think that trade wars did help bring about WW2.

    There’s something else I thought of after I wrote my first comment; even if the tariffs were to help bring back some of the steel/aluminum industries, I doubt we will see much in the way of jobs. The thing is that these industries are heavily automated now, so you might get a couple of thousand jobs, but not much more. Plus, I have not seen the corporations do anything with new-found money except to plow it back into CEO pay and stock buybacks. I suspect that what will happen is that Boeing will hire a couple of people, buy a bunch of robotics, get a few more no-bid contracts from the gov’t and then sell some more aircraft and weapons’ systems to Saudi Arabia and those Nazis in Ukraine.

    I do hate Trump. Like, a lot. He is an imbecile and he is grotesque. Mostly, that shit he did with the “tax reform” scam is inexcusable. That is really going to hurt people in a couple of years and I do take it personally, since it affects what will happen to the SS and Medicare I have been working for all my life and am supposed to be eligible to start collecting in less than 5 years. That bill cut half a trillion out of these programs. His budget suggestions, which are only suggestions at this point, hit even harder, taking a trillion more out of Medicare, Medicaid, SS, etc. Nobody will convince me that a president who is willing to do this sort of shit is a “populist”.

    But I hated Obama too, and Bush before him. We’ve had a string of really bad guys in office. And Hillary, well, I can hate Trump and also, at the very same time, be eternally grateful she’s not in office. But I won’t excuse Trump just because “he’s not any worse than Obama”. I didn’t excuse Obama just because “he’s not any worse than Bush” or because “he’s only doing what Bush did”. Fuck that. Each of these asses are responsible for what they are doing, or did.

    Gotta run, but I have bookmarked that article you gave a link to. Looks like it will be very instructive.

    Thanks.

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