Here’s Bill Bonner’s take on the recently announced tariffs. From Bonner at bonnerandpartners.com:
GUALFIN, ARGENTINA – The big news last week was Trump’s hasty decision to impose tariffs on aluminum and steel.
We were happy to see it.
We were looking for an example – undeniable, indisputable, and in-your-face, jackass – to illustrate how government actually works.
“The Donald” has just provided it.
It can be hard work digging in the rocky, ungrateful soil of public policy… scraping off the honey-dirt of wishful thinking, delusion, and fraud… to uncover the corruption and stupidity of what lies beneath them.
So we would like to thank Secretary of Commerce Wilbur Ross and the president’s trade advisor, Peter Navarro, for their contributions.
They have put the claptrap right on the surface. Rarely do we get to see public officials who are such undisguised dumbkins with so little guile… and such unvarnished crackpot theories.
They have made it easy for us. Thanks again.
Here in Argentina, trade barriers have been a fact of life for a long time. A couple of years ago, we were unable to get tires for our tractor.
Argentina’s tire-making cronies were protected by tariffs. If you wanted to buy a tire, you had to pay for the locally made, inferior tire.
Unless, of course, they didn’t make the model you needed. Then, you were just out of luck.
Same thing for electronics.
Apparently, ex-president Cristina Fernández de Kirchner had some business buddies down in the south who made electronic components.
So imports of laptops, computers, smartphones, and other paraphernalia were restricted, ostensibly to give the nascent native manufacturers a chance to grow up and compete with Apple, Samsung, and Panasonic.
When you came into the country, you had to show exactly what iPhones, iPads, and portable computers you were carrying. Woe to you if you didn’t still have them when you left.
But that’s the sort of thing you expect in a “sh*thole” country – the naked use of government to transfer money from the ordinary person to the well-connected elite.
A modern, civilized country is usually more sophisticated about it.
Its economists realize that trade barriers lower output, ultimately diminishing the wealth available to a predatory elite.
Better to allow free trade to fatten the pig, they reason, before carving the ham.
In the event before us, Mr. Ross brought a group of steel and aluminum industry executives to the White House at 11 a.m. on Thursday.
These cronies bitched and moaned, no doubt, about how the Canadians were playing unfair… or how the Mexicans had lower costs… or how the Europeans made better metals.
Donald J. Trump, a fighter, grabbed a microphone. The sun had scarcely reached its zenith before he had set off a trade war, claiming it was easy to win one. Then he added, comically, on Twitter:
We must protect our country and our workers. Our steel industry is in bad shape. IF YOU DON’T HAVE STEEL, YOU DON’T HAVE A COUNTRY!
Never addressed was the real issue: How come Americans buy more things from overseas than they sell?
If he had bothered to look more carefully, Trump would have noticed that it has nothing to do with trade deals or the lack of trade barriers.
To continue reading: Trade Tariffs Will Not Make America Great Again