Hooray! Another Month of "Trade Deal Around the Corner" Discussion
Trade War History
- In January 2018, Trump imposed tariffs on solar panels and washing machines of 30 to 50 percent.
- In March 2018 he imposed tariffs on steel (25%) and aluminum (10%) from most countries, which, according to Morgan Stanley, covered an estimated 4.1 percent of U.S. imports.[
- On June 1, 2018, this was extended to the European Union, Canada, and Mexico.
There are too many retaliations and US escalations to report, but it all started in January of 2018 according to Wikipedia.
- Article 1, Section 8 of the Constitution: "Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises." But Congress has repeatedly shifted its powers regarding tariffs to the president.
- Beginning in 1917 with the Trading with the Enemy Act of 1917 the president can impose any tariff while the nation is at war. The affected trade does not have to be connected to the ongoing war.
- Since 1974 the Trade Act of 1974 allows the president to impose a 15% tariff for 150 days if there is “an adverse impact on national security from imports.” After 150 days the tariff expires unless extended by Congress.
- In 1977 the International Emergency Economic Powers Act shifted powers even more towards the White House. The Trump administration claims that it gives the President the authority to raise tariffs without any limits during a national emergency of any kind*. Legal scholars disagree because the IEEPA does not mention tariffs at all and transfers no authority of tariffs towards the President*.
- Scholars warned that the Trump administration's use of "national security" rationales for the tariffs could undermine the international trading order, as other states could use the same rationales for their own tariffs. The WTO allows states to take actions necessary to ensure their national security, but this provision has been sparsely used, given that it could be abused. Whereas national security reasons were cited for the tariffs, it has been noted that tariffs primarily harm American allies, not enemies; the United States imports very little steel and aluminum from China directly. Trade experts furthermore noted that the United States already produces more than two-thirds of its own steel.
"Trade Wars are Good and Easy to Win"
On March 2, 2018, Trump Tweeted "Trade Wars are Good and Easy to Win"
For nearly 18 months we've had repetitive escalations of such nonsense with no end in sight.
Understanding Trump's Trade War Tactics in One Picture
The above image is the key to Understanding Trump's Trade War Tactics.
How Long Can This Go On?
Given the charade has already lasted 18 months, inquiring minds have a question.
Q: How Long Can This Go On?
A: Until Trump seriously breaks global supply chains.
The latter may have started as per my post Major Supply Chain Disruptions Coming: Thank Trump
Any Trump Successes?
None. The latest trade report shows No China Progress, Deficit With EU, Canada, Mexico, Japan Rising
Q: Will Trump ever learn?
He rally believes "Trade Wars are Good and Easy to Win".
But hey, enjoy the circular rallies.
Mike "Mish" Shedlock