As far as I understand it, the idea behind tariffs is to protect domestic industries from cheaper foreign alternatives. And that’s a choice that sometimes makes sense unless you’re wedded to the idea that the price of consumer goods and services is the only thing that ever matters. What the president doesn’t seem to have fully anticipated is that when countries retaliate against you for imposing tariffs on their products, they can do real damage to domestic industries. For example, the soybean growers are completely freaking out, and companies as diverse as General Motors, Harley-Davidson, and Whirlpool are raising the alarm that they are so far in the losing end of Trump’s trade war.
Trump is already making an effort to adjust, with a proposal to spend $12 billion helping out agricultural interests who are getting hammered and perhaps a massive twenty-five percent tariff on foreign automobiles that he intends to implement later this year. If he goes ahead with the latter plan, he’ll splinter his party.
Before Trump could impose tariffs on auto imports, the Commerce Department must issue a finding that they pose a national security threat to the United States. Several Republican lawmakers have said such a finding would be laughable, but the Commerce Department has flexibility to make a determination on its own.
A Commerce Department official, speaking on the condition of anonymity to discuss the process so far, said the review had not been completed and no final decisions had been made.
But even with a final decision at least one month away, many of Trump’s fellow Republicans are getting nervous.
“There are some in the economic community who view this as the bright line,” said Douglas Holtz-Eakin, a Republican and former director of the Congressional Budget Office. If Trump does this, Holtz-Eakin said, many Republicans have told him they will no longer “support the president any more. They are done.”
It seems like a strange line to draw. Trump’s self-dealing, his ridiculously incompetent and dishonest staff, his absurdly corrupt cabinet, his embrace of white nationalists, his child separation policy, his refusal to do anything about Russia’s threats to our electoral system, his war on the intelligence community, and his embrace of the worst world leaders and attacks on our traditional allies would all be clear moral lines that should never have been crossed. But the Republicans will tolerate all of that and draw a line instead on imposing tariffs on automobiles.
They’re getting a rude awakening that a deal with the devil always involves a deceptively attractive tradeoff. They put up with Trump to get regulatory relief so they can pollute with impunity. They put up with him to get tax cuts. They put up with him because they hate Iran or want to do business in Russia. They put up with him because they want to fill the courts with Federalist Society stalwarts who will roll back labor rights, consumer rights, antitrust enforcement, civil rights, gay rights, and women’s rights. But the lunatic has a mind of his own, and he’s going to wreck whole industries and perhaps send us all into another global recession. A lot of rich people are going to lose a lot of money in this trade, and they don’t think that should be part of the bargain.
It’s hard to have any sympathy for these folks especially because, as always, the most significant pain will be felt by people who don’t have any cushion and can’t get by if they lose their job. They’ll be losing their primary home rather than selling off one of their vacation houses.
In limited circumstances, a tariff might save American jobs but when they’re applied like this, with no rhyme or reason, what we get instead is a desperate effort to avoid the consequences. So, now there will be a $12 billion emergency spending bill to solve a problem we didn’t need to experience. Here’s how that looks:
The Trump administration announced on Tuesday that it would offer about $12 billion in emergency relief to U.S. farmers, who have been hit hardest from the administration’s protracted trade battle.
But [the president of the Minnesota Soybean Growers Association, Michael] Petefish said that “$12 billion damage is just sort of scratching the surface of the economic impact.”
Petefish added that an argument could be made that the trade war has caused $12 billion worth of damage to soybean farmers alone.
“What’s concerning is the future” Petefish said. “Are we going to keep pumping $12 billion into the farming economy? What we need is markets.”
Multiple GOP lawmakers have echoed Petefish’s concerns.
Sen. Ben Sasse (R-Neb.), for example, said on Tuesday that “America’s farmers don’t want to be paid to lose — they want to win by feeding the world.”
Trump counters that he’s a trade genius and his critics need to be patient and stop nipping at this heels. In the end, it will all be worth it.
The way the Republicans will try to handle this in a federal election year is to do a patchwork of triage. The hope is that the patient won’t die and will even be grateful that the people who shot them are willing to put gauze on the wound.
It’s likely to contribute heavily to lost seats in the midterms.
If Trump does this, Holtz-Eakin said, many Republicans have told him they will no longer “support the president any more. They are done.”
It seems like a strange line to draw.
I don’t find it strange at all.
They are just trying to save their asses in the midterms
I’ve never been a fan of, “Let’s hope things get really bad and then they’ll see.” Still, I’m tempted to think that Trump tanking the economy on the eve of the midterms might be one of the lesser bad things that could happen to us.
Funny, isn’t it, but not in a ROTFLOL kinda way.
My flawed understanding is that Ag in the USA is already heavily subsidized anyway. IOW it’s one of the “industries” that gets a lot of that damned Socialism rammed down its (allegedly unwilling???) throats. All while these same people whine and complain about having to pay for adequate health care and education for everyone (eg, all of those undeserving blahs and browns) in the USA.
Any bets that the $12billion windfall will most benefit BigAg and not Mom & Pop?
I have absolutely no proof, but that’s my speculation.
Yet Mom & Pop will most likely cling and grasp to their tinpot dictator. Aren’t soybean farmers already saying that they’ll NEVER stop supporting Trump??
There’s no reasoning with these people. I’m not sure even this will be Trump’s Waterloo.
Time will tell.
I’ve always found it interesting that all the Invisible-Hand-Free-Markets! PhD’s and think tank gurus always ignore the fact that the U.S. government creates and remakes the entire agricultural economic sector with each Farm Bill.
While the government does this for all others industries as well, our agricultural sector is the most obvious example of how there are no such things as free markets and the hand is much less invisible that we’re led to believe.
About that Invisible Hand
Good point. The small farm is fast disappearing. So some of that money would go to big ag.
The “small” farm is dead. Its been dead for 40 years. What you have is people whose fathers/grandfathers died and paid off the place. These are essentially hobby farms.
Everything else is AGRIBUSINESS … mostly ArcherDaniels in the MidWest.
There are no “family farms” left. At least, not enough to count for anything.
Kinda sad. Look the other way and they moved my shit.
You reminded me of cow self milking parlors. Cows show up, get fed and milked and released. Even get their utters cleaned in the process. And they do it all themselves. I saw one of the machines at a farm show and the fella said they have farms with well over a thousand cows now. And some even most dairy farms no longer worry about planting crops or bailing hay. Somebody else does that. Far stretch from the forty cow dairy farm I once worked at. But there are now lots of other smaller businesses around now it appears.
Those of my ancestors who had family farms mostly sold theirs and retrained for manufacturing jobs back in the post-WWII era. My understanding was that they saw no future for the family farm, and preferred to walk away while they still could on their own terms. Turned out that unions, and the pensions and benefits they could negotiate, did right by them. Never looked back.
The tariffs are essentially a giant tax on American consumers. The importers of the tariffed products aren’t going to just eat the cost.
And this right after they passed a giant tax cut for the wealthy. Then we need a big, borrowed money bailout for the industries affected by tariff retaliation.
Trump is making a mess of the American economy in ways that no one can predict or even understand. Revenues and outlays become a tangled, opaque jumble.
Trump just never seems to get anything beyond cut and run. With the bailouts to the farmers he’s acknowledging that there is damage, but by bailing out farmers he’ll be opening up a pandora’s box of suddenly socialistic republicans who want his kind of socialism.
Then there’s the rest of us that will see food prices join the recession.
Farmers here are writing off their crops here, not even trying to harvest now…cherries & raspberries so far. They can’t get labor and they can’t get buyers.
This is all anecdotal, but I have noticed the produce here in Nashville has been TERRIBLE this year. Not a lot of variety, low quality…
Now, I know there’s a drought in some areas, but this occurring in other states? And is it tied to the tariffs? I’d love to know.
hey mainsailset, do you have a citation for the produce news item? I’d love to share.
Here’s one https://www.seattletimes.com/seattle-news/washington-state-apple-cherry-industries-wary-of-trade-war
/ Our cherry season is past and friends who have family orchards have left fruit in trees. Many of the comments I see are on our (R) Representative’s page.
One cliched lesson we supposedly learned from Hitler is never fight a two-front war.
Trump is going to war, simultaneously, on a lot more than two fronts. You’d think that somewhere in his “military” education and fanboy study of MacArthur and Patton (i.e., movie watching) Trump would have learned that. (I know, I know.)
One could almost call it getting involved in a land war in Asia, eh?
So we have a new agency the WFF, Welfare for Farmers. It will have to be renewed each year.
But instead of that give the money to China to pay for their tariffs. That way we can keep the farmers employed at the same time. I understand that is an important principle here. Everyone needs to work. Besides China can use that money to build their new Asian road. Fuck the wall.
. . . providing the mechanism they plan to use for this $12B bribe reportedly dates to the Great Depression.
Agriculture has long been one of the most (probably the most) heavily taxpayer-subsidized (i.e., “welfare”, just don’t call it that!) sectors of the economy since at least then.
Yes and now it seems Trump wants to expand it, despite some objections. Perhaps there are other deserving industries in the heartland, especially in the heartland, we can subsidize as well.
I don’t know anything about agricultural policy in the United States but all countries subsidize (or otherwise protect) agriculture and agricultural land.
While I am certain that there are numerous examples of stupid or corrupt subsidies around the globe, on balance I think this is a good thing.
. . . it may be.
I can’t see a make-able argument, though, that in this instance — where it looks quite clearly to be a bribe attempting to buy off, at taxpayer expense, Trump supporters who (completely unsurprisingly) are being harmed by retaliatory tariffs in response to Trump’s stupid tariffs — it’s “a good thing”.
Is what I’m sayin’.
I apologize for Leaving the impression that I thought this particular choice was anything except idiotic.
O/T: Hey, Tom! Good to see you around these parts again! The fanatics who did their best to run you off during the primaries are pretty much gone now, so I hope you’ll stick around and offer more of your thoughtful posts.
I’ll second that.
It is big business all by itself it appears. in 2010, wiki says overall subsidies were $172b including product price support. Some of the bills supporting this predate the depression. And Larry Kudlow weighed in to say this one is temporary.
What has gone wrong for the donald? China changed the whole conversation. It is not not about trade but they got everyone talking about food. China got the donald looking like he will let people go hungry if he does not get his way. That is easy to believe when you look at his response to PR and the current stealing children from their parents.
The EU came to talk with the donald about cars today. If there is not a tweet claiming a deal today, I have no idea what happens next.
None of those things conflict with Republicans’ worship of the Lord God Mammon, or with their relationships with His Earthly Apostles, donor-class plutocrats.
And you have to bet, knowing his complete lack of self-control, that Trump is going to keep escalating- double down, especially since it’s other peoples money. Unfortunately, where he ends up pretty quickly is war.
There was some talk about preventing the use of our nuclear assets in an offensive strike without the consent of congress. If I was them, I would really start thinking seriously of quietly passing that bill. But I’m sure our two stalwart party before country traitors Paul Ryan and Mitch McConnell are going to keep laughing it off while they count the stacks of money in their custom built fallout shelters.
The inferred purpose of tariffs is to increase the price of consumer goods. You can slice it any way that you want, but that’s the goal. Increase the price of foreign consumer goods so that the demand for domestic goods increases. And, following the law of supply and demand, the price of domestic goods also increases, thus increasing costs to the consumer across the board.
That’s a best case scenario!