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New York Times: Trump’s Trade War Escalation Will Exact Economic Pain, Adviser Says
Relevant snippets:
General comment:
In some ways, China really is a bad actor in the global economy. In particular, it has pretty much thumbed its nose at international rules on intellectual property rights, grabbing foreign technology without proper payment. And to be fair, Trump officials do sometimes raise the intellectual property issue as a justification for getting tough.
But if getting China to pay what it owes for technology were the goal, you’d expect the U.S. both to make specific demands on that front and to adopt a strategy aimed at inducing China to meet those demands.
In fact, the U.S. has given little indication of what China should do about intellectual property. Meanwhile, if getting better protection of patent rights and so on were the goal, America should be trying to build a coalition with other advanced countries to pressure the Chinese; instead, we’ve been alienating everyone in sight. Not for nothing, this issue was addressed in the Trans-Pacific Partnership (TPP) that Trump cancelled on day one.
Relevant snippets:
My comment: So, even Larry Kudlow now admits the trade war will hurt Americans. “In fact, both sides will pay,” Mr. Kudlow said on “Fox News Sunday.” “Both sides will suffer on this.”WASHINGTON — President Trump’s chief economic adviser said on Sunday that American consumers would bear some pain from the escalating trade war with China, contradicting Mr. Trump’s claim that his tariffs are a multibillion-dollar, mostly one-way payment by China to the American Treasury.
My comment: Whenever investors suspect that Donald Trump will really go through with his threats of big tariff increases, provoking retaliation abroad, stocks plunge. Every time they decide it’s just theater, stocks recover. Markets really, really don’t like the idea of a trade war.Financial markets reflected the potential for pain. Asian and European stocks were mostly lower early on Monday, and futures markets suggested Wall Street would open down, too.
My Comment: Trump fundamentally doesn't know how tariffs work. Consumers pay the tariffs, not the country of origin.Mr. Trump’s confidence in the strength of the American economy is fueling his decision to escalate the trade fight. But it is an economic gamble, one that could inflict lasting damage depending on how far Mr. Trump is willing to take his battle and what it produces in the end.
In a tweet on Sunday, Mr. Trump said the United States was “right where we want to be with China,” adding that the United States “will be taking in Tens of Billions of Dollars in Tariffs from China.”
My Comment: The wealthy and corporations got tax-cuts and the American consumer gets higher prices due to tariffs. Moreover, any growth aspect of the tax-cuts has worn off -- just in time for the contraction effects of the tariffs to kick in.The latest round of increases will push the per-household cost above $800, said David Weinstein, a Columbia University economist and a co-author on the research.
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Analysts at the Tax Foundation, a Washington think tank that forecast a large increase to economic growth from the tax cuts Mr. Trump signed in 2017, now say that the tariffs the president has put in place or threatened — and the effects of Chinese retaliatory tariffs on American exporters — would more than cancel out all the economic benefits of the tax law.
General comment:
In some ways, China really is a bad actor in the global economy. In particular, it has pretty much thumbed its nose at international rules on intellectual property rights, grabbing foreign technology without proper payment. And to be fair, Trump officials do sometimes raise the intellectual property issue as a justification for getting tough.
But if getting China to pay what it owes for technology were the goal, you’d expect the U.S. both to make specific demands on that front and to adopt a strategy aimed at inducing China to meet those demands.
In fact, the U.S. has given little indication of what China should do about intellectual property. Meanwhile, if getting better protection of patent rights and so on were the goal, America should be trying to build a coalition with other advanced countries to pressure the Chinese; instead, we’ve been alienating everyone in sight. Not for nothing, this issue was addressed in the Trans-Pacific Partnership (TPP) that Trump cancelled on day one.