Trade War: China Imposes Retaliatory Tariffs on 128 American Products

(ZHE) As previewed one week ago, on Sunday China unveiled new retaliatory duties on US food imports including pork, nuts, wine and fruits of between 15% and 25% in response to Trump administration’s Section 232 tariffs (not to be confused with the $60BN in Section 301 tariffs unveiled subsequently) on steel and aluminum imports. In a statement posted on […]

America Is Hardly A Bastion Of Free Trade

Rhetoric has recently trumped reality. It has become a misconceived bit of common “knowledge” that the United States of America is a bastion of free trade. Little could be further from the truth. The “freest” nation on earth, as we are taught to believe, imposes a staggering number of tariffs, import and export bans, sanctions and embargoes. Yet somehow “free trade” is blamed for the financial ills of the unemployed in the formerly industrial Midwest. Instead of taking a serious look at our existing trade policies, and maybe reducing some of the regulations, President Trump promised Midwesterners that their inefficient factor jobs that have been outsourced to the “right to work” south and overseas will be brought back by imposing new import taxes on specific companies. It is a naïve and ignorant notion that singling out countries and taxing the goods they import into the US will somehow help the unemployed while having absolutely no effect on the country’s general productivity and standard of living. Besides, we’ve already been doing that for far too long.

The US imposes tariffs on over 12,000 different goods and services. No that is not a typo — over 12,000. Some of these tariffs are so significantly prohibitive that they are effectively outright bans.

Sugar, for example, is one product that Americans get gouged on, paying an average of $277 million more per year than they should. That is $277 million per year that would otherwise be used to consume other goods, invested in growing businesses, creating jobs, and raising real wages. This is nothing new. The original tariff was imposed as a “temporary” protection for US sugar farmers, that was more than 80 years ago. It has protected US sugar farmers, but has also decreased the productivity of the sugar farmers’ land. The laws of absolute and comparative advantage would dictate that the land on which sugar cane and sugar beets are grown and harvested should be used to produce goods in which these particular regions can more (cost and time) efficiently produce.

Sugar is not the only good, not by a long shot.

Even America’s favorite snack while watching America’s “favorite” past time — peanuts — are significantly more expensive than they otherwise would be because of measures to “protect” the US peanut farming industry. Specifically, the government imposes a 131.8 percent ad valorem tax on shelled nuts, even higher tariffs are applied to unshelled peanuts. The peanut farming industry is a $1 billion industry, annually. The question is how much are those numbers padded by the tariff, and how much less would consumers be paying for peanuts if peanut farmers weren’t a privileged class. A further example that demonstrates how inefficient these tariffs are is the import tax and quotas placed on rubber tires. In 2012, President Obama bragged about creating “over” 1,000 jobs in the tire manufacturing industry resulting from the measure. One account estimates that in 2011 alone Americans paid an additional $1.1 billion for tires, or roughly $900,000 per “job created,” than they otherwise would have. The same estimation concludes that 2 retail jobs were lost for every 1 manufacturing job created by the tax.

Tariffs are not the only way that the US government engages in what many would call “fair trade” instead of flat out free trade. Embargoes placed on several countries for so-called diplomatic purposes also distort international trade. Worse than the distortions they create, they don’t work for diplomatic advancement either. History tells us — and as 19^th century classical liberal Otto T. Mallery (and many others before and since) did — when goods don’t cross borders armies do. Contrary to popular belief it was not the European Union being created, it was not the United Nations mandating a beach bonfire kumbayah between countries, and it wasn’t the US military presence around the globe that has prevented another World War. It has been the increasingly open global market, the economic entanglements and the consequential benefits that nations reap when trading with others.

Before “heaping absurdity upon absurdity” as Bastiat put it in his famous essay The Petition of the Candlestick Makers maybe first we should take a look at the existing pile of absurdity that is US trade policy. To be clear, trade policies can carry many nuances. Tariffs don’t always necessarily only effect price, they could quite possibly effect profit margins of overseas corporations and create employment. They do always necessarily reduce prosperity. Even in the event that new jobs are created, they are likely to be less efficient jobs — either in cost, time or both — than their overseas counterparts. The best way to increase the number of jobs and the wages paid to those jobs is to increase the productivity of industry. First steps toward that should consist of tax reform, regulatory reduction, encouraging capital formation and accumulation, and repatriating the trillions of dollars stashed offshore as a result of high taxes and burdensome regulations.

Imposing more tariffs on more goods and more countries will simply make America a less productive society. Instead we are far better off focusing on producing the goods and services that — as the law of comparative advantage dictates — we are most superior at producing.

It’s Official: You’re Paying for Trump’s Wall — Twice

(ANTIMEDIA) “We’re going to build a big, beautiful wall — and Mexico is gonna pay for it,” was one of Donald Trump’s campaign mantras. However, as Americans who don’t have political short-term memory loss will remember, politicians break promises once they’re elected. Such is the case with Trump’s promise to make Mexico pay for his “great” wall.

We"re revolutionizing the news industry, but we need your help! Click here to get started.

You’re paying for it, not Mexico, and Trump’s newly released White House budget has made it official.

The Trump budget blueprint, released late Wednesday, calls for taxpayers to fund $4.1 billion through 2018 for Trump’s wall along the southern border of the United States. But that’s just for the initial construction. According to DHS estimates, the overall cost to taxpayers could be $21.6 billion, a figure that will likely be even higher considering the government’s penchant for going over budget and deadlines.

But wait, there’s more. Because Mexico has made it abundantly clear that it will not pay for America’s “great” wall, Trump has floated the idea of slapping a 20 percent tariff on all goods imported from Mexico to make up for the cost. This idea may sound legitimate if you disregard the laws of economics, but the reality is that Americans will wind up paying for the tariffs through higher food and consumer prices. As Anti-Media reported in January:

“Many food products that people living in the U.S. enjoy, like fruits, vegetables, beef, and avocados, could be taxed an extra 20 percent under Trump’s plan. Mexican beer like Corona? 20 percent. Tequila, too. Cars, electronic equipment, machines, engines, pumps, oil, medical and technical equipment, furniture, lighting, signs, plastics, gems, precious metals, coins, iron, and steel products are Mexico’s top exports, which could be taxed 20 percent more.”

In response to the proposed tariffs, Mexico stated it would return tariffs — or border taxes — on U.S. goods going into Mexico, which would hurt American businesses and workers. So basically, you’ll be paying for the wall twice, or possibly three times if you are employed or own a business that relies on exports to Mexico.

At a time when illegal immigration to the U.S. from Mexico has reached a 40-year low, and the supposed economic benefits of the wall are nowhere to be found (though its negative effects are already being felt), many people are likely left wondering if it’s even worth it.

Unprecedented Moves Towards War With China Would “Upend Supply Routes, Trigger Global Recession”

Economic tensions are tipping over into military ones.

Warships have sailed, and the rhetoric of Trump’s officials has shifted dramatically from the previous era.

The larger threat to the petrodollar and the continuance of U.S. hegemony has been put face-to-face with a China gaining in power and confidence, and ready to depose American dominance. It has become bold enough to make fresh claims on territory, and the U.S. has taken it as a call to war.

How much more pressure will this situation take before it explodes into a deadly confrontation? And why is world war three suddenly back on the table?

The Trump Administration is starting off on a highly aggressive posture with China – with taboo calls to Taiwan, loose talk from President Trump (since the campaign trail) about a trade war with China, and now stern warnings from Secretary of State Tillerson about China’s activities in the South China Sea.

It might come off as just a scolding, if not for the huge military assembly surrounding the region, and the unprecedented level of ICBM missile testing and genuine threats/predictions of war to come. Someone clearly means business:

China has accused Donald Trump’s administration of putting regional stability in East Asia at risk following remarks by the President’s defense secretary that a U.S. commitment to defend Japanese territory applies to an island group that China claims.

Foreign Ministry spokesman Lu Kang has called on Trump’s administration to avoid discussion of the issue and reasserted China’s claim of sovereignty over the tiny uninhabited islands…

[…]

Widespread alarm over how the region could shape geopolitical tensions was raised following the revelation that Steve Bannon, the chief strategist in Trump’s White House, said he believed the US would go to war with China within five to 10 years during a radio broadcast in 2016.

“They’re taking their sandbars and making basically stationary aircraft carriers and putting missiles on those. They come here to the United States in front of our face—and you understand how important face is—and say it’s an ancient territorial sea.”

Obviously, a hot war with China, if it ever came, would a world war of catastrophic proportions. The fact that the new administration is directly pushing for it is truly unsettling.

It seems that part of the testy call with the Australian Prime Minister may have related to fresh tensions with China, as Secretary of State Rex Tillerson has vowed to stop China’s activity in the South China Sea, and Australia has become something of a intermediary in attempting to calm tensions and avoid outright conflict.

“Any sober minded politician will recognise that there can not be conflict between China and the United States,” Mr Wang told reporters in Canberra. “Both will lose and both sides cannot afford that.”

[…]

Mr Wang’s comments, after lengthy talks with Foreign Minister Julie Bishop in Canberra on Tuesday, follow a period of aggressive rhetoric during which new US Secretary of State Rex Tillerson threatened to stop Chinese activities on reclaimed islands in the South China Sea.

Ms Bishop said she was reassured that both the Chinese and US governments have signalled they will work together and reiterated that Australia would maintain its current neutral stance on the issue.

Perhaps President Trump is eager to make his mark, and moving quickly to arrange the playing pieces according to his wishes, but the world is a powder keg, and there are those who are far too willing to set it off.

Iran, China, Russia and the entire middle east have been caught up in the threats and risks of global conflict week after week in U.S. foreign policy, and it seems that the Trump Administration will accelerate many of those conflicts.

In addition to the cost in lives and property damage that such the wide-scale, conventional conflict would bring, it would bring the global supply chain to a nasty halt, and create shortages, price hyperinflation and deeply damage trade.

Experts have told The Independent they believe such a conflict would be catastrophic… The United States would likely win […] but even a conventional military victory would be a strategic disaster. It would set off a global economic crisis and create a potential power vacuum inside defeated China “the like of which we can’t imagine”.

“It would, of course, totally upend supply routes, however, and probably cause a global recession. So it would, no matter who won in terms of military outcomes, be lose-lose and cut against the logic of self interest of both the US and China.”

If a conflict with China became real, became tangible, Americans would feel the repercussions in a very short span of time, even if the U.S. military won the conflict, as most experts predict.

The cost of such instability would be great to people everywhere.

Prepare as best you can; things are about to become unpredictable, and quite possibly unstable. There will be a lot of talk, but we will have to wait and watch to see if anything actually happens.

Read more:

Flashback 2011: Trump to China: “Listen You Motherf***ers…”

U.S. Warships Surround Disputed Chinese Waters, Prepared for War: “WWIII At Stake”

As Yuan Rivals Dollar, U.S. Launches Ballistic Missiles Over West Coast: “Lit Up California”

New Choice for World Currency: “Chinese Yuan Will Supersede Dollar as Top Reserve Currency”

Trump’s New Plan to Pay for the Border Wall: Make Your Groceries More Expensive

January 26, 2017   |   Nick Bernabe

(ANTIMEDIA) Donald Trump’s campaign promise to build a ‘great wall’ on southern border and make Mexico pay for it has already unraveled — less than a week since the reality TV star-turned-political power broker took office.

Trump has rolled back his campaign rhetoric about making Mexico pay for his wall, with the president admitting U.S. taxpayers will pay for it initially but claiming Mexico will pay the U.S. back for construction costs. The only problem is that Mexico has repeatedly refused to pay for the wall, and with turmoil already at a fever-pitch south of the border, Mexico’s government would risk all out revolution if it were to agree to any terms in which Mexicans were forced to pay for it.

But The Donald has a plan, and it seems pretty simple: Since Mexico won’t pay for the wall directly, he’ll just add a 20 percent tax their imports at the border. “We can do $10 billion a year and easily pay for the wall just through that mechanism alone. That’s really going to provide the funding,” White House press secretary Sean Spicer told reporters on Air Force One on Thursday.

That sounds pretty great, right? U.S. taxpayers will get a free wall by forcing Mexicans to pay for it by charging them to import the goods Americans consume from Mexico. Many food products that people living in the U.S. enjoy — like fruits, vegetables, and avocados — could be taxed an extra 20 percent under Trump’s plan. Mexican beer like Corona? 20 percent. Tequila, too. Cars, electronic equipment, machines, engines, pumps, oil, medical and technical equipment, furniture, lighting, signs, plastics, gems, precious metals, coins, iron, and steel products are Mexico’s top imports, which could be taxed 20 percent more.

But here’s what Trump and his short-sighted plan to pay for this wall won’t tell you: Mexico isn’t going to pay that tax — you are. By collecting an extra 20 percent in taxes at the border, Trump is about to charge you more for groceries at the supermarket. This will happen because Mexican exporters will have to raise their prices to account for the new tax, then that added cost will be passed on to the consumer. It happens every time a tariff is imposed. Not only that, but even non-imported goods go up in price because there is less competition in the market.

Imposing import taxes, or tariffs, is not a new policy. In fact, Barack Obama imposed a 35 percent tariff on Chinese tires from 2009-2012. As noted by the right-leaning National Review:

“Obama’s move could be credited with saving or creating $48 million of additional worker income and purchasing power.

“But the tariff also forced consumers to spend $1.1 billion more on tires than they otherwise would have — or roughly $900,000 per U.S. tire industry job created. And retaliatory tariffs imposed by the Chinese further hurt our economy. In early 2010, China’s Ministry of Commerce imposed tariffs ranging from 50.3 to 105.4 percent on American poultry imports, which ‘reduced exports by $1 billion as U.S. poultry firms experienced a 90 percent collapse in their exports of chicken parts to China.’”

Trump’s tough talk against Mexico is having other unintended consequences, as well. U.S. companies operating in Mexico, like Ford, McDonald’s, WalMart, and Costco, are now facing boycott threats inside Mexico in retaliation against Trump’s anti-Mexico rhetoric.

Mexico, like China did under Obama, will respond to America’s tariffs with some of their own, hurting U.S. businesses whose products are exported south of the border. The resulting trade war will only drive up consumer prices for working class Americans and Mexicans while increasing tensions between the neighboring countries to levels not seen in many, many years.

---

This article (Trump’s New Plan to Pay for the Border Wall: Make Your Groceries More Expensive) is free and open source. You have permission to republish this article under a Creative Commons license with attribution to Nick Bernabe and theAntiMedia.org. Anti-Media Radio airs weeknights at 11pm Eastern/8pm Pacific. If you spot a typo, email edits@theantimedia.org.