Tariffs Attacked, Dirty Trade Tricks Ignored

ZH: Chinese Ports Begin Delaying Clearing Of US Goods
Meanwhile, a commodities trader in Shandong province said he was told by customs officials that the clearance of goods from the US that are on Beijing's "list" will be delayed. Among the goods being targeted by tariffs, transportation equipment, electronics and agricultural products, among others, were high on the list. American fruit, pork, nuts, wine and - of course - soybeans, with a 25% tariff. The chart below from JP Morgan is a rough breakdown of expected tariffs by industry (however, some of the announced tariffs have yet to be implemented).
The United States retaliates openly to hidden trade violations. China, and many other nations for that matter, violate the spirit of free trade. Local companies are favored, foreign companies are targeted for technology and capital acquisition. In a nationalist system, nations pay the price for their own bad behavior, but in a globalist system, they gain an advantage by defecting locally and adhering to the law globally. They can compete on level terms in open nations such as the United States, but American firms cannot do the same in their nations. This gives foreign companies a subsidy.

Gaming of the global trading system cannot continue. President Trump is bringing symmetry back to global trade. Whether it increases or decreases foreign trade is up to America's trading partners. The can refuse to retaliate and work to roll back tariffs over time or they can escalate. The United States will not back down though, it is a politically untenable position because voters on left and right will throw out any politician who tries to return to an asymmetric trade position. Social mood will not allow it. These times call for great leaders, but those are in short supply.

No comments:

Post a Comment