Republicans gobsmacked by Trump’s tariffs

[seemslikeadream]

Republicans gobsmacked by Trump’s tariffs

GOP lawmakers thought the president was going to hit China — not key U.S. allies.

BURGESS EVERETT05/31/2018 01:48 PM EDT
Republicans are bitterly protesting the Trump administration’s decision to impose sweeping tariffs on U.S. allies — alarmed that the White House ignored their frenzied lobbying campaign and afraid that the party could suffer at the polls in November.

The GOP’s free-traders were mollified this spring as the Trump administration exempted U.S. allies from steel and aluminum tariffs imposed on other countries like China. But on Thursday, that all changed as President Donald Trump imposed 10 percent tariffs on aluminum imports and 25 percent tariffs on steel imports from the European Union, Canada and Mexico.

The move thrusts the GOP back into an internecine war over free-trade policies that have defined the party for decades, just as Republicans mobilize for a hotly contested midterm campaign.

Sen. Pat Toomey (R-Pa.) called it “bad news” and predicted imminent retaliation from the key U.S. allies. Senate Finance Chairman Orrin Hatch (R-Utah) said there is "mounting evidence that these tariffs will harm Americans." And Sen. Ben Sasse (R-Neb.) warned that similar policies 90 years ago sparked the Great Depression.

“This is dumb. Europe, Canada, and Mexico are not China, and you don’t treat allies the same way you treat opponents,” Sasse said. “‘Make America Great Again’ shouldn’t mean ‘Make America 1929 Again.'"

Senate Foreign Relations Chairman Bob Corker called the move an “abuse of authority only intended for national security purposes.”

“This is a big mistake. These tariffs will raise prices and destroy manufacturing jobs, especially auto jobs, which are one-third of all Tennessee manufacturing jobs,” said Sen. Lamar Alexander (R-Tenn.), who said tariffs are “basically higher taxes on American consumers.”

Most Republicans believed that the Trump administration’s tariffs on aluminum and steel would be relegated to China and that exemptions for allies would continue into the summer. So Congress was largely blindsided by the administration’s reversal.

Most senior Capitol Hill staffers weren’t notified of the decision until late Wednesday, and briefings on the new policies weren’t conducted until Thursday, according to Republican sources. Congressional leaders were briefed on Thursday morning, according to a person familiar with the matter.

Rank-and-file lawmakers were similarly caught off-guard, having hoped that their campaign against Trump’s protectionist instincts would bear fruit.

“I don’t like trade wars. There are no winners in trade wars. There are only losers. And this scares me,” said a Republican senator. “A lot of us have talked to him, in person, repeatedly about this. He knows where we stand on it.”

The administration defended the tariffs as protecting domestic steel and aluminum industries. White House spokesman Raj Shah said tariffs on Canada and Mexico are aimed at China and enhancing national security.

“The president's actions are about protecting American steel, American aluminum. They’re critical for national security. And he’s worked to exempt certain countries and certain allies for which we have trading or security relationships. But in these instances it wasn't possible and the president took action,” Shah said on Fox News.

The U.S. has reached steel agreements with South Korea and Brazil, and agreements on both steel and aluminum with Australia and Argentina, the administration said. But that is little consolation to congressional Republicans who are furious about the administration punishing Canada, Mexico and Europe.

“The Trump administration’s trade policy is a disaster. Whacking critical allies with massive steel and aluminum tariffs under the bogus pretense of a national security threat is not in the best interest of the United States, our consumers or our businesses,” said a senior Republican aide.

Indeed, trade is the area where Republicans have grown most uncomfortable with the president. They generally tolerate his over-the-top Twitter account and have grown accustomed to his coarse rhetoric, in part because he has enacted and supported many of the center-right policies that the GOP has pursued for years, such as confirming conservative judges and cutting taxes.

Republicans worry that Trump’s protectionist trade policies could undermine all that and threaten a healthy economy before the midterm elections. Yet House Speaker Paul Ryan (R-Wis.) and Senate Majority Leader Mitch McConnell (R-Ky.) have shown no interest in passing legislation to block Trump’s tariffs or require congressional approval, a move that would essentially bring Capitol Hill to a standstill.

“I disagree with this decision,” Ryan said in a statement. “There are better ways to help American workers and consumers. I intend to keep working with the president on those better options.”

Indeed, Republicans seem to believe their only move is to complain as loudly as they can, and hope someone at the White House is listening.

“These tariffs are hitting the wrong target. When it comes to unfairly traded steel and aluminum, Mexico, Canada, and Europe are not the problem — China is,” added House Ways and Means Chairman Kevin Brady (R-Texas). "I call on the administration to continue the exemptions and negotiations with these important national security partners.”
https://www.politico.com/story/2018/05/ ... nse-615479

[peartreed]

Today's headlines in Canada's National Post proclaim, "Cue Canada's $16.6B Retaliation after Trump ignites global TRADE WAR".

Donald “The Art of the Deal” Trump is too enamored of his own exceptional genius at deal making to resist the temptation to cancel former administration contracts and renegotiate terms to his own liking and imagined luminous, personal glory. His office’s punitive powers are also too tempting to not impose “protectionist” tariffs on allies he considers too spoiled by the more accommodating former presidents.

His sudden imposition of steel. aluminum and trade duties on Canada, Mexico and the European Union have already ignited a trade war and a coordinated retaliation. The current NAFTA agreement renegotiation is also likely doomed to failure by his stubborn intransigence to emerge “the winner” with a demand for a sunset clause.

It is ironic that he will be attending a G7 summit meeting in Quebec within days, where he will expect a warm welcome in accord with his own inflated self-regard. The offended allies there will hopefully offer him a deserved seat on the sidelines.

A further lesson on the consequences of isolation might also be taught by his fellow tyrant in North Korea, if they convene their clash of egos afterwards in Singapore.

[Elvis]

Huge backfire—pun intended—on Trump's tariff war.

Harley-Davidson will move some production out of US after retaliatory tariffs
...

The company is not raising bike prices for customers or retailers.

"The tremendous cost increase, if passed onto its dealers and retail customers, would have an immediate and lasting detrimental impact to its business in the region," the company said.

Instead, it will eat $30 million to $45 million for the rest of this year and $90 to $100 million annually.

http://money.cnn.com/2018/06/25/news/co ... index.html

[Elvis]

Warren Mosler points out why Trump's tariffs are a monumentally stupid idea. Elsewhere Mosler explains why the trade deficit with China is a good thing: Americans get real goods they want at cheap prices. China gets a bunch of U.S. dollars they mostly just send back to us in the form of Treasury securities (which do not finance federal spending, they just sit there in a Fed account).

It's a good thing we don't export a similar amount of stuff to China, because we'd be sending real resources out of the country. In return, we get a bunch of U.S. dollars we don't really need. For the U.S. government, dollars are easy, real resources are harder.

It sounds crazy but in general for the U.S., exports=net loss.
Thus Trump tariffs=dumber than dumb.

http://moslereconomics.com/2018/03/02/light-vehicle-sales-trump-tariffs/

The President no doubt knows that when you go shopping, buying at the lowest price is the mark of a winner, while paying too much is the mark of a loser. Yet when it comes to buying lumber from Canada, cars from Germany, and now steel and aluminum, the President has viciously attacked and is now retaliating against other nations for not charging us enough for their products!

And while everyone knows that buying at the lowest price is a good thing, there is no serious push back from Democrats, the ‘free trade’ Republicans, the media or any of the headline mainstream analysts. There is clearly something very wrong with their underlying mainstream logic that leads to this type of costly Presidential blunder.

Yes, when we buy imports jobs are lost, just as when we replace workers with machines, including lawn mowers, vacuum cleaners, and power washers, jobs are lost. And yet somehow we’ve survived all that. We went from needing 99% of the people working to grow our food to less than 1%, and manufacturing jobs are down to only 7% of the labor force. And yet the remaining 90% of us are not all unemployed, as jobs have proliferated in the service sector, where most of those jobs are now considered to be better jobs than the lost agricultural and manufacturing jobs. Nor has a trade deficit necessarily resulted in higher unemployment or lower pay. In 1999, for example, we had record imports with unemployment under 4% and inflation under 2%, and students were getting recruited for good paying jobs well before graduation.

The answer to sustaining high levels of employment and pay is fiscal policy. If for any reason, including more imports, weak demand at home is keeping unemployment too high or wages too low, the appropriate policy response is fiscal relaxation- either a tax cut or spending increase, even if that increases the public debt- and not to tax or otherwise drive up the cost of imports. Unfortunately however, the policy that allows all of us to pay the lowest prices for imports and have good paying jobs to replace those lost because of imports has been taken entirely off the table by both Republicans and Democrats. Consequently a very good thing for America- lower prices of imports- has been turned into a very bad thing- unemployment, and all because of the fake news about the public debt that is supported by Republicans and Democrats.

The US public debt is nothing more than the dollars spent by the federal government that have not yet been used to pay taxes. Those dollars spent and not yet taxed sit in bank accounts at the Federal Reserve Bank that are called ‘reserve accounts’ and ‘securities accounts’, along with the actual cash in circulation. Treasury securities (bonds, notes, and bills) are nothing more than dollars in securities accounts at the Federal Reserve Bank, functionally the same as dollars in savings accounts or CD’s at commercial banks.

Think of it this way- when the government spends a dollar, that dollar either is used to pay taxes and is lost to the economy, or it’s not used to pay taxes and remains in the economy. Deficit spending adds to those dollars that were spent but not yet taxed, which is called the public debt. And what’s called ‘paying off the debt’ (as happens to 10’s of billions of Treasury securities every month) is just a matter of the Fed shifting dollars from securities accounts to reserve accounts- a simple debit and a credit- all on its own books. (No tax payers or grand children required…) The ‘ability to pay’ is always there- it’s just a debit and a credit to accounts on the books of the Federal Reserve Bank. The fear mongering about the US running out of money or constraints by foreigners is simply not applicable to today’s monetary system.

And if you are worried about inflation, our proposal works to lower prices for all of us, while the President's direct policy is to raise the prices we all pay.

And if the concern is national security, the policy response that best serves public interest is to order the defense department to require domestic sourcing of what they consider strategically important, and let the rest of us continue to shop for the lowest possible prices.

Point is, once it’s understood that 1) the public debt is nothing more than what can be called the net money supply 2) there is no risk of default 3) there is no dependence on foreign or any other lenders 4) there is no burden being put on future generations. The President will be free to make us all winners by being our shopper in chief who works to get us the lowest possible prices.

[Elvis]

This seems the only logical reason for Trump's tariffs, of course benefitting Wall Street. More Warren Mosler:

http://moslereconomics.com/2018/03/26/v ... -comments/

So maybe it’s all about infecting China with US financial sector firms?

U.S., China Quietly Seek Trade Solutions After Days of Loud Threats

Mar 26 (WSJ) — China and the U.S. have quietly started negotiating to improve U.S. access to Chinese markets. The talks are being led by Liu He, China’s economic czar, U.S. Treasury Secretary Steven Mnuchin and U.S. trade representative Robert Lighthizer. In a letter Messrs. Mnuchin and Lighthizer sent to Mr. Liu late last week, the Trump administration set out specific requests that include a reduction of Chinese tariffs on U.S. automobiles, more Chinese purchases of U.S. semiconductors and greater access to China’s financial sector by American companies.

"Infecting"...interesting.