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OpEdNews Op Eds    H1'ed 5/13/19

Trump's "Trade War" is a War on You

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"It's not China that pays tariffs," Fox News Sunday host Chris Wallace pointed out on May 12. "It's the American importers, the American companies that pay what, in effect, is a tax increase and oftentimes passes it on to U.S. consumers."

"Fair enough," answered Larry Kudlow, head of US president Donald Trump's National Economic Council, before trying to explain that indisputable fact away.

As Trump continues his "trade war" with the rest of the world (but China more so than other countries), more and more Americans are beginning to understand what's happening here:

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Punitive tariffs on Chinese and other foreign goods are simply corporate welfare. They are a mechanism for redistribution of wealth from American consumers and workers to the most politically connected American business owners. Those businesses can charge more for their product and still remain "competitive" because their product doesn't have that extra tax levied on it.

In theory, some of that corporate welfare "trickles down" in the form of new jobs for Americans in those particular businesses. That effect seems to be more hype than reality, but even to the extent that it exists, it doesn't create greater general prosperity. The "new jobs" are an artificial sugar high. Everyone else gets just a little bit poorer for each "new job" thus created.

As the late, great Henry Hazlitt pointed out in his classic Economics in One Lesson, it's important not to ignore the unseen in favor of the seen.

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When we are forced to pay more for one thing (steel, for example), we have less money left to spend on other things (shoes or groceries, for example). Protectionist politicians vigorously direct our attention to every "new job" their policies artificially create at our expense, while hoping we won't notice the "old jobs" our decreased wealth eliminates (or makes less lucrative) in other industries.

That's not the only way protectionism makes us poorer. Those artificially created "new jobs" also distort the labor market. They shoo workers away from enterprises in which their efforts are most naturally profitable to them, to their employers, and to the consumers of their product, into enterprises where the profitability is an expensive illusion created at their own expense and yours.

Trump's "trade war" is indeed a war of sorts, powered by economic sanctions like those levied on Iran and North Korea. But the economic bombs he's dropping are landing on American, not Chinese, heads.

 

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Thomas L. Knapp is director and senior news analyst at the William Lloyd Garrison Center for Libertarian Advocacy Journalism (thegarrisoncenter.org). He lives and works in north central Florida.


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3 people are discussing this page, with 3 comments  Post Comment


Dennis Kaiser

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The con on the American consumer. The rest of the world is laughing their ar*e off at the stupidity of the American consumer who thinks Trump is really getting China. Not only does China pay nothing, but the United States corporations selling these items China is sending us merely raise their price to the consumer rather than use the higher price the consumer must pay for the item from China in order to compete. Years ago Toyota came over with their autos that were lower priced than the Chevy/Ford competitors. Nixon placed tariffs on the Toyotas in order to raise the cost to the American consumer so Chevy and Ford could better compete. The result? The a-holes raised their price thus the only competitive gain was better profited for the Chevy and Fords, but higher prices for the consumer. The same is happening now as American made washers have already gone up in price and the American consumer gets hosed again.

Submitted on Monday, May 13, 2019 at 3:33:49 PM

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Daniel Geery

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I appreciate the article and the comment, but at the same time say we MUST recognize the Chinese whose backs we are walking on. I'd say "virtually literally," to possibly coin a phrase. They get paid nothing, work their asses off for six long days a week or more, and have to squeak by to survive.

When the f are we going to recognize all Homo sapiens are the same species on the same planet with the same fate?

We won't change our ways, if it costs a cent. Hate to say it, but I still drive a car (as little as possible), my wife is shopping right now at Walmart, we order from Amazon regularly for the ease of it, have yet to see some incentive for truly cutting energy use in our middle class home (as in raising the price of electricity and heating to match their true costs and driving us to, God forbid!, conservation), and on and on goes the list.

By "living as Americans" we are knowingly or not accelerating the already baked in demise of Earth. Would like nothing more than to be proved wrong.

Submitted on Monday, May 13, 2019 at 7:31:54 PM

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Thomas Knapp

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Reply to Daniel Geery:   New Content

Are working conditions great in China? No.


But life expectancy in China has gone from 44 years in 1949 to 68 years in 1987 to 75 years now. As of 2018, average per capita income was about $12,500, about the world median and the number of Chinese living in "absolute poverty" fell from more than 200 million in 1978 to 70 million in 2017. Most urban workers receive housing from the government and pay about 1% of their income in rent; their disposable income, above what it takes to keep a roof overhead and food in their bellies, is increasing.


Their gain is not our loss or vice versa, at least as regards trade. Their industrialization -- the source of our cheap goods -- has followed the pollution track that the US and England set before them, and that's a cost to the planet and the health of the people and other life on the planet, but hopefully we'll get past that and then they'll get past it faster than we did.


Everything on Earth is not good. But economically most things are getting better when they're allowed to. These "trade wars" slow that process down.


And speaking of wars, I'll just quote Toby Ziegler from The West Wing: "Free trade stops wars." It's GOOD when different countries rely heavily on each other to provide goods. You don't go to war with someone who's making you wealthier and your life better.

Submitted on Monday, May 13, 2019 at 8:26:08 PM

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