HORIST: It is not a trade war … yet.

Larry Horist

8 years ago

In its efforts to undermine the Trump presidency in every way possible, Democrats and the &num;NeverTrump media resistance movement spin every event to the extreme negative&period;&nbsp&semi; There is no objectivity in their uncompromised prosecutorial efforts&period;&nbsp&semi; Were one to be totally ignorant of trade issues and only consume the reports found in the left-wing media cabal, one would likely believe that President Trump is declaring a unilateral trade war on the rest of the world &ndash&semi; and that it will be a disaster for the United States&period;&nbsp&semi; Nothing could be further from the truth&period;&NewLine;As a lifelong conservative, I am totally an advocate of free trade&period;&nbsp&semi; The freer, the better&period;&nbsp&semi; This has not been the position of the old guard Washington establishment&period;&nbsp&semi; Looking at the Democrats, it appears that Trump has pulled off something just short of a political miracle&period;&nbsp&semi; He has actually gotten the Democratic Party to abandon its longstanding support of organized labor and the union&&num;8217&semi;s pro-tariff policies&period; Suddenly, everyone on both sides of the aisle is a free trader&period;&NewLine;Republicans have been consistent advocates of free trade in their speeches, but not so much when it comes to action&period;&nbsp&semi; While they have paid lip service to the principle, they have been lacking in turning principle into policy&period;&NewLine;There is also common agreement that the United States has been disadvantaged by trade policies for many years&period;&nbsp&semi; The most notable example has been China, that routinely violates accepted standards of fair trade&period;&nbsp&semi; They place very high tariffs on goods coming in from the United States and other western nations&period;&nbsp&semi; They often subsidize exports in a number of ways, including paying shipping costs&period;&nbsp&semi; &NewLine;They impose extraordinary costs and inhibiting red tape on foreign businesses locating in China &ndash&semi; although they have loosened up on the more Draconian policies of the past&period;&nbsp&semi; They still ban foreign investment in business sectors that they deem to be critical to national security, including natural resources, communications and certain tech industries&period;&NewLine;China&rsquo&semi;s most flagrant abuse is the theft of intellectual property&period;&nbsp&semi; The problem has been going on since Mao Zedong lifted the Bamboo Curtain and allowed China to become part of the world trade community&period;&nbsp&semi; The most serious problem has been China&rsquo&semi;s propensity for reverse engineering critical electronic and high-tech products in order to produce identical components&period;&nbsp&semi; They also use their intelligence community to steal industrial secrets by old fashion spying and by more modern cyber hacking&period;&nbsp&semi; It was recently reported that China obtained our most sensitive Navy development plans&period;&NewLine;More obvious to the consumer are the Chinese iconic &ldquo&semi;knockoffs&period;&rdquo&semi;&nbsp&semi; On Wangfujing &&num;8212&semi; the main walking street of Beijing &ndash&semi; there is a Rolex shop where people can purchase the real McCoy for tens of thousands of dollars&period;&nbsp&semi; Around the corner is a street merchant who sells a very convincing knockoff for around twenty bucks &ndash&semi; and less convincing ones for five&period;&nbsp&semi; &NewLine;The fact that trade abuses have been part of China&rsquo&semi;s operation to such an extent and for so long has more to do with the old guard Washington establishment&period;&nbsp&semi; They allowed it to happen&period;&nbsp&semi; Trump has a point when he says he does not blame the Chinese &ndash&semi; or any other nation that takes advantage of America&period;&nbsp&semi; He blames those who did nothing to stop it &ndash&semi; at least nothing more than complain&period;&NewLine;The problem with the critics of Trump&rsquo&semi;s trade policies is that they have no solution &ndash&semi; just as they had no solution for decades&period;&nbsp&semi; Since they are the architects of the status quo, they would continue the status quo&period;&nbsp&semi; The only problem is that without proactive policies, the situation does not remain static&period;&nbsp&semi; It gets worse &ndash&semi; just as it has with North Korea&period;&NewLine;The &num;NeverTrump community claims that the President is starting a trade war, but it seems that he is responding &ndash&semi; retaliating, if you prefer &ndash&semi; to unfair tariffs imposed on the United States&period;&nbsp&semi; He has said repeatedly that he wants to reduce or eliminate all tariffs&period;&nbsp&semi; During the G7 meeting, he proposed that the nations with the biggest economies eliminate all tariffs&period;&nbsp&semi; They rejected the proposal out of hand&period;&NewLine;In their usual anti-Trump fits of hyperbole, the media is already calling the situation a trade war&period;&nbsp&semi; That is just partisan political nonsense &ndash&semi; just as it is in calling the temporary travel ban on seven nations a Muslim Ban&period;&nbsp&semi; &NewLine;Since nothing else has worked in the past, Trump is imposing tariffs in a game of high-stakes negotiations&period;&nbsp&semi; He understands that tariffs and trade wars are bad for everyone&period;&nbsp&semi; He also understands that they are especially bad for all the nations that have tariffs against American products&period;&NewLine;The United States has the biggest and the strongest economy in the world at this moment&period;&nbsp&semi; Our projected growth rate is an astounding 4-plus percent in the second quarter&period;&nbsp&semi; That is almost double what the old guard experts predicted was even possible&period; &nbsp&semi;IF there was ever a time to retaliate against all those egregious tariffs, this is the time&period;&NewLine;Yes, there will be a modicum of pain for American consumers in terms of price increases&period;&nbsp&semi; It will not be very dramatic for the individual or the family&period;&nbsp&semi; Tariffs may result in some competitive disadvantage to American exporters, but the real impact is yet to be determined&period;&nbsp&semi; We must keep in mind that our farm products are desperately needed in many nations, including China&period;&nbsp&semi; It is more than likely that exports will remain high despite the tariffs other nations impose&period;&NewLine;The best outcome, of course, is the renegotiation of all trade relationships where the United States is disadvantaged&period;&nbsp&semi; That seems to be Trump&rsquo&semi;s objective&period;&nbsp&semi; His trade policies involve so many nations &ndash&semi; which is what scares the old guard &ndash&semi; because Trump is setting a uniform policy even as he negotiates one-on-one&period;&nbsp&semi; The underlying principle is &hellip&semi; drop your tariffs and we drop ours&period;&NewLine;While China is talking tough in round one, the reality is that American tariffs will hurt their economy more than ours&period;&nbsp&semi; Their stock market is losing value&period;&nbsp&semi; Their massive military buildup is skimming the cream off their private sector tax profits&period;&nbsp&semi; We are China&rsquo&semi;s biggest market&period;&nbsp&semi; If exports from China slow because of tariffs, their economy takes a huge hit&period;&nbsp&semi; They know that, so they most likely will have to cave&period;&NewLine;The &num;NeverTrump people argue that the tariffs on our allies will (1) undermine a critical working relationship on all levels and (2) result in a closer trade relationship with China&period;&nbsp&semi; America gets cut out, they say&period;&nbsp&semi; Highly unlikely&period;&nbsp&semi; Europe has the same problems with China that we do&period;&nbsp&semi; We are bound by a common cause that the intramural negotiations between the United States and Europe cannot disrupt&period;&nbsp&semi; China has already been rebuffed on an attempt to create a special trade relationship with Europe&period;&NewLine;The Trump resistance movement is so eager to bring down his presidency that they declare disastrous defeat long before the results are in&period;&nbsp&semi; Applied to baseball, they are reporting the winner and the score in the first half of the first inning&period;&nbsp&semi; This may give them some political points in the short term, but they could wind up with a henhouse full of egg on their collective face in the future&period;&NewLine;One can never be certain of the future, but it is my opinion that there will not be a real trade war and China, Europe, Canada and Mexico will eventually agree to a trade policy that is fairer to the United States&period;&nbsp&semi; Maybe not everything Trump wants, but better than what we have now&period;&NewLine;