Even without retaliatory tariffs on US exports the import tariffs do not appear to be making America appreciably greater. In fact, we have fresh evidence that says it is already costing jobs in the US.
The reasons are quite simple and equally rational.
Lefties often bemoan the greedy and stingy nature of corporations.
‘They just want to pay as little as possible and grab as much profit as possible for themselves’ they say.
‘They have no proper scruples, do not subscribe to any specific ideology or any other discernible moral code’ they say.
There is only one odd thing about this observation, unlike virtually all the other things that the left says, it is actually quite correct.
One complaint that cannot, however, be made with a straight face is that modern corporations are overly nationalistic.
This is not a bad thing – unless that is if you are a something of a protectionist who wants to put up barriers to trade.
The US government wants American made patriotic profits but the corporations merely wants the profits, not giving a toss in which geographical area they are located. Money is mobile after all.
So if resources are more expensive in the US logic dictates one should make fewer things there and more where they are cheap.
This was quickly illustrated by the response to the Steel tariffs.
Especially telling was electronics manufacturer Electrolux which stated that it is about to put on hold a planned quarter of a billion USD expansion while awaiting the effects of the new steel tariffs on the price of steel. So fewer new jobs – at least for now.
Electrolux is not acting to halt expansion because it is outraged by Trumps actions. Corporations cannot afford feelings; they are unprofitable.
Electrolux is acting in this way because it is in their financial interest to wait and see if the steel prices makes their US facilities less attractive to invest in.
So even before counting in the cost of any punitive responses against US exports the net result looks likely to be fewer jobs and more expensive white goods for Americans.
That’s not great. A businessman Trump may be, but Gordon Gecko he is not.
Make America greedy again may sound like a hard sell to the voters but it would actually make the country a lot more great.
Kent, how did you manage to write a post on this without mentioning NAFTA? This isn’t happening in a vacuum. Connect the dots.
NAFTA was not mentioned because it is irrelevant to the point I was attempting to make here. Namely that any barrier to import steel will affect all companies that wants to use steel in their production. It is certainly true that NAFTA – in addition to TPP – is an important piece of the puzzle when talking about Trumps views on trade. However, an attempt to bring in every aspect in an attempt to connect all the dots would generate a book rather than an article. Whether Trump manages pull out of NAFTA or not does not affect the undesirable… Read more »
Kent, thanks for the reply.
I reckon this tariff gambit can *only* be understood in the broader context of what Trump wants to do on trade. Criticising it is fine, but it’s rather like criticising White’s opening move in a chess match.
I’d be interested to read your thoughts on the broader play if you’re interested in writing about that for future posts.