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Is President Trump correct in saying that trade wars are good, and easy to win?


This is not unexpected as stupid ignorant people like Trump are predisposed to say and do stupid things. Trump is a reality TV star not an authority on international economics and free trade.

Doubling down on stupid statements as Trump did today is par for the course Trump never admits how wrong Trump is.

The moron Trump does not understand how the global economy and the Free market – Wikipedia works. Even threatening a moronic Tariff – Wikipedia as Trump has done is like dropping the first bomb in starting a nuclear war. No one wins in a Trade war – Wikipedia.

3 reasons why no one wins a trade war

‘Trade wars are good?’ Two words: Great. Depression.

U.S. trade moves could spark Chinese retaliation

President Donald Trump is itching for a trade war. No matter what you do for a living, that should scare you.

In a trade war, countries impose tariffs and other barriers on imported products, often in retaliation for actions taken by a trading partner.

That can slow down business activity around the globe by crimping international trade. In a worst case scenario, trade wars can lead to a global depression. Protectionist trade polices are one of the primary factors economists cite for deepening the Great Depression.

So if there’s one thing that most economists agree upon, it’s no one wins a trade war.

But President Trump doesn’t believe that. He tweeted out Friday morning that for the United States, a trade war is “good” and “easy to win.”

Here’s how US businesses and consumers stand to lose if President Trump gets his wish for a trade war:

Prices will go up

This much is certain. In a trade war, US consumers and businesses will be left with the bill.

President Trump says he’s planning to impose a 25% tariff on imported steel and a 10% tariff on imported aluminum. That means the price of cars, appliances, packaged food and everything else that uses steel or aluminum is bound to go up.

Related: Trump’s trade fight jolts Wall Street

Even the aluminum industry’s trade group admits the smelters remaining in this country can not make enough additional aluminum to replace the supply coming from overseas. When the tariffs are put in place, imported products will continue to come in — at higher prices.

Since foreign steel and aluminum prices will be higher, domestic producers are likely to raise their prices as well.

American businesses will lose sales

Yes, America buys more from other countries than it sells to its trading partners. But don’t discount the amount of goods and services the United States does export — $2.3 trillion dollars worth.

A trade war by definition means that other countries are going to slap tariffs and restrictions on those US goods and services, making them more expensive, and less competitive — if they’re allowed into those countries at all.

And once an American business loses a contract to sell its products overseas, it can take a long time to win that business back. Their customers will find other, perhaps more dependable suppliers while the trade war is waged.

Many well-paying jobs are at risk in a trade war. In 2017, the United States exported $60 billion worth of auto parts, $56 billion of civilian aircraft, $52 billion of new cars and trucks, and $51 billion of pharmaceuticals.

Related: Why steel and aluminum tariffs matter to the U.S. economy

That’s only goods. The United States has been primarily a service economy for decades now. Today about five times as many jobs are in the service sector, such as finance, media, transportation and retail, than are in goods producing sectors, such as manufacturing and mining.

The good news is that the United States had a $243 billion services trade surplus.

American trading partners are also among its biggest lenders

The federal deficit is big and getting bigger. The Committee for a Responsible Federal Budget estimates the deficit could swell to $1 trillion by next year.

Wall Street worries that the rising amount of debt could drive up the interest rates on the government debt, since the Treasury Department will have to offer higher rates to borrow more money. That would increase the cost of borrowing for consumers and businesses, since many types of loans — including mortgages — track government bond rates.

One thing keeping rates in check so far is the demand for US debt from overseas. America’s foreign trading partners, including China, are among the largest buyers of that debt. It added $127 billion to its holdings last year and now owns more than $1 trillion in U.S. debt, making it the largest foreign holder of our debt.

The trade deficit that President Trump decries is one of the reasons for those holdings. It gives foreign countries a powerful incentive to buy that debt, since they have to do something with the dollars they get back on those sales.

If the trade gap shrinks, for whatever reason, China won’t have as much incentive to buy US debt, and interest rates could rise significantly.

1,2,3,4 let’s have a Trade War!

The President took an opportunity today to return to one of his key themes from the 2016 campaign, which is something he does whenever the news cycle turns to Russia and quitting staffers, and shocked the markets with a regressive, counter-productive and possibly destructive tariff plan for aluminum and steel.

Anyone who’s read, say, half a book about trade and tariffs knows what I’m going to post below, but it’s an important quote from the New Yorker’s Adam Davidson introducing the lunacy of Trump’s economic guru, Peter Navarro, from a couple of years ago…

It is hard to find a major American exporter who doesn’t see China as its most promising area of growth. A trade war would shatter General Motors, all of Hollywood, the music industry, Boeing, and the entire state of Washington, which exports more goods to China than any other.

Navarro and Trump also assume a manufacturing universe that no longer exists. American manufacturers have shifted away from making lower-cost commodity goods and focus, instead, on more expensive, complex products, like medical devices, automobiles, and airplanes. All of those goods require a steady input of smaller, commodity components like screws and circuit boards that are made in China and other countries. Some companies might react by beginning to manufacture those lower-cost commodity products domestically, but it seems unlikely that many manufacturers would do so. A huge tariff on China wouldn’t suddenly force Vietnam or Mexico or, for that matter, Germany or Japan to reduce their global competitiveness. Indeed, they would see it as an opportunity. Multinational corporations considering leaving China would face an easy choice: they could reinvest in the U.S., in the midst of a unilaterally created trade war, or they could invest in any other country on earth and have access to the U.S. and global markets.

Now, of course, none of these are considerations for the current moment. The goal of the President is to win today’s headlines and “shore up the base” with more promises about returning to a world that no longer exists. People in the GOP will be even more shocked that he was serious about this than the Democrats, with whom protectionism is more traditionally associated.

Needless to say, markets hate this idea, because it’s dumb, and the Dow Jones immediately vomited up 500 points as the impromptu declaration was made in front of an audience of steel CEOs.

For many segments of the economy, a 25% tariff on metals means an increased cost of doing business (think construction, auto manufacturing, etc) and the end result is actually a tax on the consumer. Whether or not it leads to sustainable jobs in 2018 and beyond for steelworkers remains to be seen. Even that isn’t a slam dunk.

And this is before we even know what the retaliatory actions from Asia and Latin America might be.

I’ll leave you with Linette Lopez’s lede, she’s been warning about what trade protection could mean for a year now…

If President Trump puts in place steel and aluminum tariffs recommended by the Commerce Department, his administration will be crossing an unspoken line in the sand no country has crossed since World War II…once the US starts invoking national security to protect industries, everyone can do it. That’s why no one has done it. The international trade system is built on trust, and no one has violated that trust to this degree.

Aside from Navarro and Wilbur Ross, no one else in the administration seems to think this is a great idea right now.

And you can see the stock market’s reaction writ large in shares of Ford Motors:

Trump doubles down: ‘Trade wars are good, and easy to win’

  • “When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win,” Trump tweets.
  • Trump announced Thursday that he will impose 25 percent tariff on steel and a 10 percent tariff on aluminum as early as next week.

Trump: “Trade wars are good and easy to win”

Even if new tariffs on steel and aluminum spark an international trade war, President Donald Trump is confident the United States would come out on top.

“When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win,” Trump tweeted Friday morning. “When we are down $100 billion with a certain country and they get cute, don’t trade anymore – we win big. It’s easy!”

The president appeared to be referring to his earlier comments on the current U.S.-Mexico trade deficit, a figure he claimed tops $100 billion. The United States had a net trade deficit of $63 billion with Mexico in 2016, according to census data.

According to the Commerce Department’s International Trade Administration and IHS Global Trade, Canadian and Brazilian steel accounted for 16 percent and 13 percent of U.S. steel imports as of September. Mexico was the fourth-largest source of foreign steel to the U.S., according to the findings.

Trump announced Thursday that he will impose 25 percent tariff on steel and a 10 percent tariff on aluminum as early as next week in an effort to force partners into “fairer” trade agreements.

The move helped spark a 420-point drop in the Dow Jones industrial average Thursday, as shares of Boeing and General Motors and other manufacturers that use steel and aluminum fell.

The major indexes extended their losses Friday, with the Dow falling nearly 400 points in early trading as Wall Street assessed the president’s commitment to the plan despite criticism from countries like Canada and Japan, companies, trade groups and members of Congress.

“This hardly seems like a President likely to back down later today,” Peter Tchir, a macro strategist at Academy Securities wrote in a note. “It is still hard to see why he would undo so much of the good that was done with tax reform.”

WATCH: Trump’s tariffs could lead to unintended consequences

Trump’s tariffs could lead to unintended consequences

Trump’s tariffs mean higher prices — and maybe even beer in plastic bags

The stock market is stumbling toward a sizable weekly loss, whacked in large part by trade-war fears.

President Trump has “shocked the markets with a regressive, counter-productive and possibly destructive tariff plan for aluminum and steel,” complains Josh “The Reformed Broker” Brown.

Check out: These stocks took the biggest hits on fears of a Trump trade war

Canada, the European Union and China (well, the Chinese steel industry, at least) have come out swinging in response, and Trump is fanning the flames for a battle in trade:

When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!

— Donald J. Trump (@realDonaldTrump) March 2, 2018

At least the weekend is coming. You can kick back with a beer — no one will ever mess with that, right? Uh-oh.

That’s the worried message from GQ writer Luke Darby and the Midwest Food Processors Association’s Nick George, who combine for our call of the day.

“The fallout from these tariffs could be tremendous, including rising prices, layoffs and beer coming in plastic bags like Canadian milk,” says Darby.

He’s suggesting brewers will hike prices for six packs if they have to pay more for aluminum cans, as he also jokes that they’ll switch to using plastic bags. (Yes, many Canadians buy milk by the bag.)

The tariffs “definitely could raise prices” for consumers, says George, president of the Midwest Food Processors Association, according to a Milwaukee Journal Sentinel report.

They’re part of a horde of people worried about the potential impact on the big users of aluminum and steel. There’s buzz about Hershey Kisses, cars, Apple Macbooks and other beloved goods possibly costing more.

Read: Why the stock market took the tariff announcement so hard

And see: Trump steel tariffs to hit these 8 nations the hardest (China isn’t one of them)

Tariffs can push up the cost of goods, which in turn lifts selling prices or cuts profits. Many U.S. companies use steel and aluminum, from airplane makers to beverage giants. Trump said yesterday that he’d decided on tariffs of 25% for steel imports and 10% for aluminum and would sign orders next week.

“Nothing gets people riled up like messing with their beer,” says Thrillist writer Dustin Nelson.

Key market gauges

Futures for the Dow YMH8, -1.01% , S&P 500 ESH8, -0.66% and Nasdaq-100NQH8, -0.73% are slumping, and the Dow DJIA, -0.78% , S&P SPX, -0.10% and Nasdaq Composite COMP, +0.16% were already looking at weekly losses of more than 2% as of yesterday’s close.

Europe equities SXXP, -2.06% — and German stocks in particular — are hurting, after Asia took a hit on trade-war jitters. Oil CLJ8, +0.20% and the dollar DXY, -0.25% are losing ground, with the buck at its lowest yen level since 2016. Gold GCJ8, +1.14% is gaining, while bitcoin BTCUSD, -0.67% has been trading around $11,000, as the Bank of England’s boss hints at regulatory action in the U.K.