Free Trade

Posted by coaldigger 6 years, 10 months ago to Government
69 comments | Share | Best of... | Flag

Donald J. Trump Tweeted:

"Canada charges the U.S. a 270% tariff on Dairy Products! They didn’t tell you that, did they? Not fair to our farmers!"


I am sure he will be subjected to many "lessons in economics" by all the experts that point out that tariffs are just a tax on your own people. I agree with the principle but strongly disagree with trade agreements with individual or groups of nations that set up such barriers. The US is the prime market for almost every good and service. The government has no role in setting prices but it is almost impossible to ignore the unfair management of markets by others. I would be 100% in favor of having 0% tariff on everything imported from any country that imposed no tariff on US goods and in favor of 1000% on goods from any country that imposed tariffs on US goods. Handicapping might be a way of making golf more entertaining at the club on Saturday morning, but notice that when they play for money, everyone is 'scratch".


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  • Posted by 6 years, 10 months ago in reply to this comment.
    I worked for a company that was German owned then came WW I and it along with numerous others were confiscated by the US Government then resold after the war to new stockholders. I would say that foreigners that invest in America are adding to the capital base, producing valuable goods and creating American jobs. It is very difficult/costly to pack up your land and factory and move them back to your homeland.
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  • Posted by Lucky 6 years, 10 months ago in reply to this comment.
    The backstabbing foreigners have made your stuff expensive in their country thereby punishing themselves for being inefficient.
    It is their country, they do not have to justify their stupidity to you.
    So they have done that.
    You can do the same, reciprocate by cutting your nose to spite your face. Punish your people just to demonstrate a mistaken sense of pride, some income redistribution towards a few moochers may be the real reason.
    There may be a proper reason for doing it (apart from possibly setting a stance for negotiating). John Stuart Mill said tariffs can ' help infant industries'.
    Does that ever work?
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  • Posted by Lucky 6 years, 10 months ago in reply to this comment.
    Your argument about buying land and factories instead of goods is interesting.
    Yes, I would think twice before abolishing a tariff where that could happen.
    To be considered- if foreign nationals (or governments) own much land and
    factories in your country, what influence do they actually have? Are the land
    and factories still not subject to your laws? So who depends on, and who dictates to who?
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  • Posted by $ WilliamShipley 6 years, 10 months ago in reply to this comment.
    One of the basic rules of negotiating is that you never get the best deal without demonstrating your willingness to walk away.
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  • Posted by DrZarkov99 6 years, 10 months ago in reply to this comment.
    Have you ever been part of a negotiating team for commercial or government purposes? I have, for both, and there is a lot of posturing and position statements that seem counterproductive to the inexperienced. I've played the "good cop, bad cop" routine to reduce contract costs, and I've threatened to walk out of international military discussions to get the other side serious about engagement. Been there, done that, so what Trump is doing is very familiar territory to me.
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  • Posted by Jstork 6 years, 10 months ago
    Tariffs between Canada and the U.S. How about the interprovincial trade barriers in Canada? They essentially equate to tariffs. I am punished by my province by purchasing a product for a more reasonable price in another province. So much for capitalistic freedom. If the locals want to have my business, they can: as long as their prices are reasonably competitive and they have the product/s I wish to purchase. Why buy honey from a local for $8 for 500 grams when I can still get Canadian honey for $2.80 for 500 grams? I love to support the locals, but I can't afford to pay for their Escalade.
    My government penalises me with high customs and duty fees for importing products (not available or for twice the cost in Canada) from the U.S.
    I don't differentiate between an individual's geographic location who works to provide a product or service at a price I can afford. It is the government who makes the problems. What about a community that borders two countries. In accordance to government legislation and regulation, they are not free to trade with one another without government interference even though the only thing separating them is an arbitrary political border derived from bureaucracy.
    Free citizens: I think not.
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  • Posted by Temlakos 6 years, 10 months ago in reply to this comment.
    It stops being a good thing the minute someone starts to dictate economic policy to the United States because they own a significant-enough chunk of American land.
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  • Posted by CircuitGuy 6 years, 10 months ago in reply to this comment.
    "If the imported goods, subsidized by the source nation, displace the production of local goods, the people producing those goods will need to find new work. If that work is of lesser compensation, then the benefits of the lower prices may be more than outweighed."
    Suppose it weren't a subsidy. Suppose one nation or trading partner had access to some resource or technology not practical in the other place? If you still say tax it, what if it were with the same country as the competitor? It seems like this is a policy of gov't using force to keep people from creating new value and trading it with one another. I know you're not for that, so why does it matter if it's a some natural resource or a subsidy?
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  • -1
    Posted by CircuitGuy 6 years, 10 months ago in reply to this comment.
    "Trump's tariff talk is an attempt to rattle cages and get people talking seriously about how to improve global markets and induce real free trade"
    I'm amazed at how many things President Trump does get woven into a narrative where they are part of complicated machinations to achieve the opposite of what he's actually doing.
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  • Posted by CircuitGuy 6 years, 10 months ago in reply to this comment.
    "what the other country does when it taxes its own people for buying goods from this country.

    They are accumulating capital, which they can then use to buy land, factories, mines, and other resources."
    I consider buying products and investing in business to be good things. They'll be more successful in low-tax countries where they can buy even more and invest even more.
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  • Posted by Herb7734 6 years, 10 months ago
    Canada's prime minister is a weasel. A backstabber, who couldn't face Trump mano e mano.For Trump who is used to dealing with creeps like that it's merely water off a duck's back, but what we see is a slick (slimy?) guy who showed his true colors.
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  • Posted by LibertyBelle 6 years, 10 months ago
    I think they should get rid of those tariffs, but in the case of totalitarian states, such as China, they should simply do a complete embargo.
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  • Posted by 6 years, 10 months ago in reply to this comment.
    This is a whole different topic but throughout history all governments have evolved to be an organism thirsting for power and self preservation and totally divorced from any service to the governed. The people have two things to give, life and treasure. The government uses the threats of taking either in order to maintain control. In the past, superstition, and fear of brutality were adequate tools but we have become more advanced and additional means are useful also. Hidden taxation, restrictions sold to be in our best interest and doles have been added to keep the scam going. I am currently reading "The History of the Medieval World" by Susan Wise Bauer and the same scenes keep playing out all over the globe. When the people get too difficult it is only necessary to engage in a war with another government with unruly citizens so you can kill enough of them off that the are content to returning to the fields without complaint.
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  • Posted by NealS 6 years, 10 months ago
    Where does all the tariff money go? Is it not just another way of hiding the collection of tax on the people? If I'm selling a dollar item to a foreign person and the export tariff is another dollar does anyone think I get that extra dollar? No, the government gets it. If the government would just take half of everything we own, they wouldn't have to hide their tax collection schemes and we could truly have fair trade. But then we'd have to have agreements with other governments. The only free trade we really have left is the garage or yard sale. Everything else is about funding the government (mostly so they can hire more people to further control us). Perhaps Trump can address the size of the government in his second term.
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  • Posted by Lucky 6 years, 10 months ago in reply to this comment.
    Correct and well put, even the observation that if a protecting tariff is cut, a factory may close and a town consequently suffer. But advocacy is not analysis.
    Consider the workers who are now unemployed or getting lower pay.
    Before, government power had led to pay and employment higher than the market alone would have provided, the costs coming from the public at large. If this is retribution, shed no tears.

    The usual approach is to give in to a pressure group and impose a tariff. Then as buyers suffer, subsidies, tax credits and so on are given as compensation to those who also have pull. Complications, subsidies and public sector careers grow. Unwinding it all may have downsides, so government says wait for us to negotiate a round of reductions.
    Maybe a new tariff strengthens a bargaining hand.

    It is the big corporations that approach governments with proposals that if they are given some subsidy or other advantage, jobs are created, actually, taken from some other place.
    Moocher management finds it easier to get a tariff or subsidy than say enough to union demands. Politicians are happy to oblige. Labor gets more pay, management cuts R&D and has no need to match competitors' productivity.

    It is right to feel for the unemployed, tho' as a principle I prefer Judge Narragansett's- no law shall restrain freedom of trade.
    Once that power is allowed there is no end to rake-offs and cronyism.
    Act for the unemployed by requiring- Right to work.

    To conclude:
    combine free market ideals with pragmatism- say to a nation with tariffs that you do not have to buy our stuff, but we are not going to punish ourselves by imposing counter-measures by childish tit-for-tat.
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  • Posted by Temlakos 6 years, 10 months ago in reply to this comment.
    This is not normal. Why are the G-"other six" subsidizing exports to America while at the same time blocking imports from America? Because they want to accumulate capital to buy up land, mines, and whatnot in America.

    Can any society long live with an aggregate current-account deficit?
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  • Posted by 6 years, 10 months ago in reply to this comment.
    The "normal" result of tariffs should result in little or no increased revenue to the state imposing the tariff. The normal result would be that consumers would pay a higher price for the domestically produced goods and the foreign supplier would not make the sale. In this case a nation is protecting a business at the expense of its people. This can be done because of national defense, national pride and of course cronyism. The goal of zero barriers to trade would favor the productive, hard working, creative nations and expose nations and industries that were no longer capable of sustaining themselves. This is the dog eat dog nature of capitalism that scares the second-handers.

    If it was necessary to survive and we didn't have steel we would have to build better tanks, jeeps and trucks out of other materials. During WW II, we had no reliable source of natural rubber so we invented synthetic rubber. When OPEC caught us with our pants down and squeezed us on oil we found new oil and methods of extracting it. America was once, and still is in some ways the most productive and innovative nation/society that has ever existed. The secret to our survival is to understand why that happened and to nurture it.
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  • Posted by DrZarkov99 6 years, 10 months ago in reply to this comment.
    We've been doing that, pretty much, for the decades since the end of WW II. For Europe, it was to help those countries get back on their feet. For Canada, it was to help a Commonwealth country and neighbor. For Mexico, it was to help raise that country's GDP and reduce the attraction of the U.S. to their poor.

    What did it get us? The Europeans, instead of participating in a real free market, increased tariffs whenever a U.S. product threatened to become more popular with their consumers than their domestic brand (U.S. autos and trucks carry a 25% tariff). Canada put huge tariffs on American lumber (why, I'm not sure, given their abundance of those resources), dairy products, to prevent a merciless assault by those Minnesota descendants of vikings on the Canadian dairy farmers market, and thousands of other U.S. goods (over 8,000 at last count). Even before Trump's announcement of possible tariffs on aluminum and steel, Canada was already considering raising tariff rates and expanding the number of good subject to tariff. Canada has enormous transportation costs, even for its domestic products, which means without an open U.S. market, tariff free, it would have serious difficulty competing in the global market. There have been warnings by Canadian economists that raising tariffs could jeopardize NAFTA, even during the Obama administration.

    Mexico has been a little less abusive, preferring to institute a "dynamic" tariff system, with no tariff over 5-10% so long as the American product is not less expensive than the Mexican one, with exceptions. Alcohol,tobacco products, prepared foods, and sodas carry a tariff at up to 160%. Industrial chemicals have a heavy tariff burden of 50% or more, and China has taken Mexico to the World Trade Organization more than once for abuse of this practice.

    Trump's tariff talk is an attempt to rattle cages and get people talking seriously about how to improve global markets and induce real free trade. China seems to be the only one to be willing to have a sincere trade dialogue.
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  • Posted by Temlakos 6 years, 10 months ago
    Some of you are missing this key point: what the other country does when it taxes its own people for buying goods from this country.

    They are accumulating capital, which they can then use to buy land, factories, mines, and other resources.

    With purchase comes control.

    Now I'm sure some of you will say that those who buy land, factories, mines, etc. in this country, risk losing everything to nationalization in the event of war. But before we can even get to that point, remember this: a country that cannot on its own build tanks, jeeps, trucks, ships, planes, missiles, etc., and fully clothe, feed, equip and deploy its troops, is a country organized to lose wars.
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  • Posted by 6 years, 10 months ago in reply to this comment.
    By 1986 the steel industry in the US was already in the dust except for some electric furnaces basically recycling scrap. I worked in a building across the street from the one you were probably standing in, probably at the Top of the Triangle or the University Club and our Engineering and Construction division had already passed into history by then. We specialized in the steel industry and struggled to keep competitive with new technology. There was no keeping up because of external and internal obstacles. As new and more automated processes were brought on line they were opposed by traditionalists and sabotaged by unions resenting the reduction in labor. The EPA lurked around every corner looking for a puff of smoke and OSHA had new procedures and requirements every day. Japan, then Korea and finally China had all the technology plus workers happy to have the jobs at a fraction of the wages. Add in zero safety and pollution regulations to government subsidies and the double edged sword ended an industry.
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  • Posted by mccannon01 6 years, 10 months ago in reply to this comment.
    Greetings, coaldigger. You are correct in pointing out the fact there are additional factors involved in pricing international goods than simply tariffs. There are regulations, raw materials, labor costs, subsidies, currency manipulation, and more. However, I don't think the cost of labor, shipping, and goofy domestic regulations can account for why a Harley Davidson costing $9,000US in NY costs $20,000US in Berlin (just heard that on the news this morning) or $40,000US in Beijing (been there).

    IMHO the Japanese virtually wrote the book on "How To Screw Your Trading Partners" with special chapters dedicated to screwing the USA, parts of which have been studied and implemented by other nations. Today the tome has been added to considerably by the Chinese and taken to a whole new level. I agree with Trump in saying the major fault lies with our own government and it's time we got things fixed.

    Recall the third debate in 2016 Trump had with Clinton. He was taking bragging rights to his new building in Las Vegas and the Evil Hag cackled "made with Chinese steel" in the background. Trump missed the opportunity to ask why it was possible to produce and ship steel from the other side of the planet at a price more competitive than an American mill virtually down the block. For me, it was a deja vu moment. In 1986 I was having a business lunch on an upper floor in a rather tall building in Pittsburgh, Pa. and was standing by the window admiring the view when a VP of research from Alcoa Aluminum came up next me to do the same. He pointed at a bridge crossing the river below (I believe it was the Ohio) and said "Here we are in steel town USA and that bridge is made of Japanese steel". Oh well...
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  • Posted by $ WilliamShipley 6 years, 10 months ago in reply to this comment.
    Consumers do not necessarily have more money to spend. Since the unemployment went up as imports replaced national production. And, it isnt just the workers at the factory, when "the plant" closes all of the business in town suffers, lots of people who don't even work at the plant have less to spend, or even lose their jobs.

    I'm not a big fan of tariffs, bu the argument that the consumers win is simplistic. The consumers win as long as they maintain their current income with cheaper goods.
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  • Posted by $ MikeMarotta 6 years, 10 months ago in reply to this comment.
    That is the logical response. It is also the empirical response. Doing the right thing works. History has proven that. For those who choose to ignore history, Ludwig von Mises wrote a great theoretical work, Human Action. All of the arguments in support of. your paragraph are in there.

    The people here who advocate "0% or 1000%" are not consistent advocates of capitalism.
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  • Posted by Solver 6 years, 10 months ago in reply to this comment.
    Problem with a free market is it’s not better for everyone. It’s just better overall.
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