How Trump Thinks Tariffs Work (And How They Actually Work)

[mia]

To make the case for his trade war with China, the president is relying on blatant falsehoods and misconceptions.

...In Trump’s mind, tariffs are a potent, unilateral weapon, and protectionism is a potent, necessary economic philosophy. He argues that his tariffs are a direct tax on Beijing—a way of sapping Chinese manufacturers, raising American revenue, aiding domestic businesses, and giving Washington leverage in trade negotiations. “Tariffs are NOW being paid to the United States by China of 25% on 250 Billion Dollars worth of goods & products,” he said on Twitter. “These massive payments go directly to the Treasury of the U.S.”

This is not at all how it works; the Chinese government is no more apt to fork over billions of yuan for Trump’s tariffs than Mexico’s government is to pay for a border wall. Rather, tariffs fall on the American importers of Chinese goods, who often pass those cost increases onto American consumers. That means every time Trump raises tariffs, he risks raising costs on families and businesses....

Trump’s misconceptions on trade are not limited to tariffs. He continues to argue that the United States’ trade deficit with China is a sign it is getting ripped off, and that it is bleeding itself dry by engaging in commerce with the Chinese: “The United States has been losing, for many years, 600 to 800 Billion Dollars a year on Trade. With China we lose 500 Billion Dollars. Sorry, we’re not going to be doing that anymore!” There are many issues with the two countries’ economic relationship, and many ways that China does not play fair. But trade imbalances are not in and of themselves a bad thing. The United States has a trade deficit with China in large part because goods are cheaper to produce there, and Americans choose to consume huge amounts of them; the deficit is not a way of measuring capital losses in the United States....

Not that Trump himself would admit it. In his mercantilist, protectionist understanding of the world, trade wars are good, tariffs are a way of hitting the bad guy, and whatever the United States is doing on trade, it is winning. Alas, here in the real world, Trump’s trade war means that consumer goods are about to get more expensive and certain exporting businesses are about to face a much tougher climate, all thanks to the White House.

https://www.theatlantic.com/ideas/archive/2019/05/trumps-tariffs-show-he-doesnt-get-how-trade-works/589351/

[smirkymonkey]

1. Can we please get a president who isn't a complete moron?

This has gone on long enough. Let's cut the crap.