Using tariffs temporarily, as Ronald Reagan famously did against unfair semiconductor trade with Japan in his second term, to address unfair trade is one thing. However, using them to reindustrialize and protect American manufacturers has a poor record. Ask Herbert Hoover, Senator Reed Smoot, and Representative Willis Hawley.
What I honestly don't understand is how tariffs became so popular again... I get that they feel like war by other means, but they've never ended well except as the tool you describe.
Ms. Pletka, I thought you said you don't know economics. Economic tariffs have been demonstrated to be detrimental to our economic well being. But tariffs for national security are a moral choice to defend ourselves. But statesmen must have a good understanding of moral and economic principles. I'm not sure Trump does. Great stuff. Take care.
Where did the moral high ground become a choice of cheaper TV’s, cars, and clothing in exchange for your neighbors being less well off? Was that Judeo-Christian teaching, or do we have a responsibility to our fellow citizens. Am I truly a citizen of the world? If I am which countries are our friends? Are our friends blocking our products with tariffs, regulations and trade barriers (yes, Japan, S. Korea, Europe, Mexico, Canada and South America)? What is the negotiating position we should have? Should we destroy our jobs, industries, technical know-how, to promote the liberal world order?
I have a few degrees. I ran companies in Europe, the US and Japan. I know how the world fudges on every one of their obligations. I understand how state subsidies make really cheap solar panels and put Americans or illegal aliens in America out of work. I get Adam Smith. I know tariffs make things cost more and lower the overall standard of living. I drive not one, but two expensive Germany high performance vehicles. Why should I do that while people in Ft. Wayne, Tonawanda, and Cleveland have fewer opportunities earning better wages making things that add value? I understand the trade theories, and I have closed factories. I saw how NAFTA (the FT stands for “free trade” bludgeoned manufacturing and protected Canada and Mexico — to heck with Dubuque. Between tariffs and factory closures, between tariffs and no tariffs/trade barriers erected against the US, between our own regulatory penalties and fair trade, … I know which one I prefer.
This is a moral question. Donald Trump has been talking about this since the early 80’s. See Newark, NJ in the 1980’s and Newark today. Visit Trenton. Acquaint yourself with Evansville. Visit Mt. Zion. …, Ford City, Pa. Cleveland. And what are your concerns again? Are you afraid that BMW is going to cost more?
Why do friends tax our products, regulate against them, and erect trade barriers and we allow them a free hand, and “invisible hand”? Oh yes, Larry Summers says it all OK. I mention that at the local AA meeting where the average participate has lost a serious job, respect and dignity. Where their children spend hours staring at phones, working as mall guards, and maybe even pick a little cash for college stripping.
I responded to a comment above before I read your note. Now I understand why some prefer the idea of tariffs. The problem, to my mind, is not that you want your high performance German car at a better price, and don't care where it is made (assuming you're a more moral sort of fellow who feels better that your Merc or BMW is made in the USA), the problem is not even that tariffs are more "fair" -- "look how those foreigners are screwing us!! -- the problem is that they don't work. If tariffs are "leverage," (see my piece), then that's one thing, because the commitment to them is solely as a tool to achieve a different end that isn't a tariff; if tariffs are tools to "even the playing field," the evidence is manifest that they don't work. I'm all for paying a fair rate for my German car, but I'm not for every single American paying more for everything they buy in order to save 100 jobs. As the unemployment numbers out yesterday prove, you can have a great economy without charging every single of 340 million Americans a premium of thousands (if not more) in order to achieve jobs for hundreds. At least that's how I see it.
When things are working for economists, and not for workers, you get the French Revolution. The French Revolution was different than the American Revolution, it was not a systemic conflict (British aristocracy vs. American quasi-aristocracy), it was French aristocracy versus radicals and the vast numbers of poor or near poor.
The cohesiveness of our country cannot be the “economist” class and the intellectuals repelled by that Orange Real Estate swindler vs. the deplorables who live in towns with abandoned factory sites and trap houses lining what used to be neighborhoods with schools, children, and a Knights of Columbus hall. There is something wrong here. Yes, capitalism is creative destruction, but we are hollowed out. We are miles deep in financial services, and stretched on forging precision submarine periscope tubes and making basic electronics.
I know what works, and economists agree with me: Incentives. Ask Kim Jong Un. He starves his people and they comply. Food is incentive.
You know what else is incentive: tariffs. What if you take away Germany’s ability to export their high wage unemployment by raising the entry level price for that Porsche 911 to $160,000? Yes, those poor elites will have to pay more (ouch!), but many might buy that nifty, nimble, cheaper mid-engine, fiberglass Corvette, creating jobs in Bowling Green in the middle of the US of A.
And look what is happening, …, Taiwan Semi, SoftBank, and many others are building plants or investing in America, … expansion in many cases planned for elsewhere, but not anymore. All announced since that threat to democracy took office in the White House.
These tariffs serve 3 admittedly confused Trump purposes: 1. Balance trade. 2. Re-shore manufacturing. And, 3) Pay for access to our markets (only Trump would think this way, a fee to sell in the US).
#3 makes all the foreign goods cost more to pay for all the corporate and personal taxes that we currently pay or borrow to cover the cost of defense of the world’s sea lanes, GWOT, Ukraine aid, Israel aid, Egypt aid, etc. And who will pay the most for these import taxes?, The buyers of cheap TV’s or Beemers? Import duties will act as a kind of Value Added Tax and the biggest consumers will pay more — and eventually buy less. Americans will find substitutes. Average people will buy a Ford - likely a used one.
So what do these Access fees do? They even up the regulatory cost disadvantages US factories face (workplace, environmental, social, legal), the unseen foreign trade barriers, the subsidies foreign governments pay to their local producers, currency manipulation, and the cheating used by our friends and adversaries to tap into the U.S. market. These tariffs will help negotiate true “free trade,” since it exists almost no where. You may know GATT has not reached an agreement in about 25 years, and there are tariffs everywhere which GATT is “discussing.” “Discussing” mean, countries are saying “NO, we will not lower our tariffs.” And many of those “discussing” are developed friends of the US.
I understand the markets are rattled and you and I will have to work until we are 85, but the tariffs are bringing home the reality the US faces: the reality of bankrkuptcy — this is in the background. Better maybe to bite the bullet and start acting to get the trade thingy narrowed, work with some eccentric billionaire guy to cut a trillion or more of Federal spending, and reduce regulation to allow the animal spirits to take up the slack.
As an economist (yes, you are), you know what we are doing is not working for many, many people. Time to shift our focus from finance, consulting, legal, and government jobs to … making stuff, for ourselves, … and if this tariff strategy works, we will be making stuff for others too. These tariffs will not last forever, but they will go on longer than any of us imagined.
Hold fast. This is 1981 Volker Country. It’s gonna be a rough ride.
Patience, patience. So many things are up for grabs and each country has something the U.S. wants — they are all different, defense, immigration, drugs, criminals, subsidies, trade barriers, trade deficits, taking Gazans, … enforcing intellectual property, building factories here, hiring here, NATO, …, patience.
And The Donald ain’t gonna settle with anyone fast (see Israel). Get ready for some surprises. Also, the markets will go up and down, and up and down, and then, up, up, up.
Buy on the dips. And soon you will be driving that $280,000 Porsche GT3.
Using tariffs temporarily, as Ronald Reagan famously did against unfair semiconductor trade with Japan in his second term, to address unfair trade is one thing. However, using them to reindustrialize and protect American manufacturers has a poor record. Ask Herbert Hoover, Senator Reed Smoot, and Representative Willis Hawley.
What I honestly don't understand is how tariffs became so popular again... I get that they feel like war by other means, but they've never ended well except as the tool you describe.
Ms. Pletka, I thought you said you don't know economics. Economic tariffs have been demonstrated to be detrimental to our economic well being. But tariffs for national security are a moral choice to defend ourselves. But statesmen must have a good understanding of moral and economic principles. I'm not sure Trump does. Great stuff. Take care.
Where did the moral high ground become a choice of cheaper TV’s, cars, and clothing in exchange for your neighbors being less well off? Was that Judeo-Christian teaching, or do we have a responsibility to our fellow citizens. Am I truly a citizen of the world? If I am which countries are our friends? Are our friends blocking our products with tariffs, regulations and trade barriers (yes, Japan, S. Korea, Europe, Mexico, Canada and South America)? What is the negotiating position we should have? Should we destroy our jobs, industries, technical know-how, to promote the liberal world order?
I have a few degrees. I ran companies in Europe, the US and Japan. I know how the world fudges on every one of their obligations. I understand how state subsidies make really cheap solar panels and put Americans or illegal aliens in America out of work. I get Adam Smith. I know tariffs make things cost more and lower the overall standard of living. I drive not one, but two expensive Germany high performance vehicles. Why should I do that while people in Ft. Wayne, Tonawanda, and Cleveland have fewer opportunities earning better wages making things that add value? I understand the trade theories, and I have closed factories. I saw how NAFTA (the FT stands for “free trade” bludgeoned manufacturing and protected Canada and Mexico — to heck with Dubuque. Between tariffs and factory closures, between tariffs and no tariffs/trade barriers erected against the US, between our own regulatory penalties and fair trade, … I know which one I prefer.
This is a moral question. Donald Trump has been talking about this since the early 80’s. See Newark, NJ in the 1980’s and Newark today. Visit Trenton. Acquaint yourself with Evansville. Visit Mt. Zion. …, Ford City, Pa. Cleveland. And what are your concerns again? Are you afraid that BMW is going to cost more?
Why do friends tax our products, regulate against them, and erect trade barriers and we allow them a free hand, and “invisible hand”? Oh yes, Larry Summers says it all OK. I mention that at the local AA meeting where the average participate has lost a serious job, respect and dignity. Where their children spend hours staring at phones, working as mall guards, and maybe even pick a little cash for college stripping.
What was your worry again?
I responded to a comment above before I read your note. Now I understand why some prefer the idea of tariffs. The problem, to my mind, is not that you want your high performance German car at a better price, and don't care where it is made (assuming you're a more moral sort of fellow who feels better that your Merc or BMW is made in the USA), the problem is not even that tariffs are more "fair" -- "look how those foreigners are screwing us!! -- the problem is that they don't work. If tariffs are "leverage," (see my piece), then that's one thing, because the commitment to them is solely as a tool to achieve a different end that isn't a tariff; if tariffs are tools to "even the playing field," the evidence is manifest that they don't work. I'm all for paying a fair rate for my German car, but I'm not for every single American paying more for everything they buy in order to save 100 jobs. As the unemployment numbers out yesterday prove, you can have a great economy without charging every single of 340 million Americans a premium of thousands (if not more) in order to achieve jobs for hundreds. At least that's how I see it.
Tariffs don’t work? What is working?
When things are working for economists, and not for workers, you get the French Revolution. The French Revolution was different than the American Revolution, it was not a systemic conflict (British aristocracy vs. American quasi-aristocracy), it was French aristocracy versus radicals and the vast numbers of poor or near poor.
The cohesiveness of our country cannot be the “economist” class and the intellectuals repelled by that Orange Real Estate swindler vs. the deplorables who live in towns with abandoned factory sites and trap houses lining what used to be neighborhoods with schools, children, and a Knights of Columbus hall. There is something wrong here. Yes, capitalism is creative destruction, but we are hollowed out. We are miles deep in financial services, and stretched on forging precision submarine periscope tubes and making basic electronics.
I know what works, and economists agree with me: Incentives. Ask Kim Jong Un. He starves his people and they comply. Food is incentive.
You know what else is incentive: tariffs. What if you take away Germany’s ability to export their high wage unemployment by raising the entry level price for that Porsche 911 to $160,000? Yes, those poor elites will have to pay more (ouch!), but many might buy that nifty, nimble, cheaper mid-engine, fiberglass Corvette, creating jobs in Bowling Green in the middle of the US of A.
And look what is happening, …, Taiwan Semi, SoftBank, and many others are building plants or investing in America, … expansion in many cases planned for elsewhere, but not anymore. All announced since that threat to democracy took office in the White House.
These tariffs serve 3 admittedly confused Trump purposes: 1. Balance trade. 2. Re-shore manufacturing. And, 3) Pay for access to our markets (only Trump would think this way, a fee to sell in the US).
#3 makes all the foreign goods cost more to pay for all the corporate and personal taxes that we currently pay or borrow to cover the cost of defense of the world’s sea lanes, GWOT, Ukraine aid, Israel aid, Egypt aid, etc. And who will pay the most for these import taxes?, The buyers of cheap TV’s or Beemers? Import duties will act as a kind of Value Added Tax and the biggest consumers will pay more — and eventually buy less. Americans will find substitutes. Average people will buy a Ford - likely a used one.
So what do these Access fees do? They even up the regulatory cost disadvantages US factories face (workplace, environmental, social, legal), the unseen foreign trade barriers, the subsidies foreign governments pay to their local producers, currency manipulation, and the cheating used by our friends and adversaries to tap into the U.S. market. These tariffs will help negotiate true “free trade,” since it exists almost no where. You may know GATT has not reached an agreement in about 25 years, and there are tariffs everywhere which GATT is “discussing.” “Discussing” mean, countries are saying “NO, we will not lower our tariffs.” And many of those “discussing” are developed friends of the US.
I understand the markets are rattled and you and I will have to work until we are 85, but the tariffs are bringing home the reality the US faces: the reality of bankrkuptcy — this is in the background. Better maybe to bite the bullet and start acting to get the trade thingy narrowed, work with some eccentric billionaire guy to cut a trillion or more of Federal spending, and reduce regulation to allow the animal spirits to take up the slack.
As an economist (yes, you are), you know what we are doing is not working for many, many people. Time to shift our focus from finance, consulting, legal, and government jobs to … making stuff, for ourselves, … and if this tariff strategy works, we will be making stuff for others too. These tariffs will not last forever, but they will go on longer than any of us imagined.
Hold fast. This is 1981 Volker Country. It’s gonna be a rough ride.
I feel like this WSJ editorial sums things up: https://www.wsj.com/opinion/auto-industry-tariffs-china-cars-ford-stellantis-tesla-donald-trump-ef7e235a?st=erzwH9&reflink=article_copyURL_share. I’m just not sure how this is going to work, per my latest substack. Right now, it appears to be a monstrous fail.
Patience, patience. So many things are up for grabs and each country has something the U.S. wants — they are all different, defense, immigration, drugs, criminals, subsidies, trade barriers, trade deficits, taking Gazans, … enforcing intellectual property, building factories here, hiring here, NATO, …, patience.
And The Donald ain’t gonna settle with anyone fast (see Israel). Get ready for some surprises. Also, the markets will go up and down, and up and down, and then, up, up, up.
Buy on the dips. And soon you will be driving that $280,000 Porsche GT3.