Trump Claims US Farmers Treated Unfairly Then Uses Strategies That Hurt Farmers

Mike Mish Shedlock

Trump claims US farmers are treated unfairly. So what does he do? Enters trade wars that hurt US farmers.

Time to Get Smart

The results of being "smart" are piling up.

US Rejects China's Offer

The Wall Street Journal reports China Offers to Buy Nearly $70 Billion of U.S. Products to Fend Off Trade Tariffs.

In weekend talks in Beijing, Chinese negotiators led by Liu He, President Xi Jinping’s economic envoy, presented a U.S. team headed by Commerce Secretary Wilbur Ross a package that includes Chinese companies buying more U.S. soybeans, corn, natural gas, crude oil and coal, among other agricultural and energy products.

Chinese and U.S. officials estimated the value of the package at nearly $70 billion in the first year.

Trump said no. And as noted yesterday, Trade Talks With China End in Impasse and Threats from China.

Mexico Puts 20% Tariff on US Pork

Yesterday, Reuters reports Mexico Set to Impose 20 Percent Tariff on U.S. Pork Legs.

Mexico will impose a 20 percent tariff on U.S. pork imports, two industry officials with direct knowledge of the plan told Reuters on Monday, for the first time providing details of the country’s retaliatory measures to U.S. President Donald Trump’s tariffs on steel and aluminum.

Last year, Mexico imported nearly 650,000 tonnes of pork legs and shoulders worth an estimated $1.07 billion, according to government data.

Mexico Puts Tariffs on Pork, Apples, Potatoes, Cheese, Bourbon

Today, Mexico upped the ante with Tariffs on Pork, Apples, Potatoes, Cheese, Bourbon.

Winning

US manufacturers will pay more for steel and aluminum. Mexico will pay more for pork, apples, potatoes, cheese, and bourbon.

This is called winning.

Trudeau Urged to Strike Back

Trade war talk in Canada is equally amusing.

Canadian dairy farmers are concerned Trudeau will halt dairy tariffs and Canadian steel manufacturers want Trudeau to retaliate.

The Dairy Farmers of Canada branded as "troubling" and "worrisome" comments Trudeau made on NBC's Meet the Press that Canada was considering allowing U.S. dairy greater access to the Canadian market as part of the renegotiation of the North American Free Trade Agreement.

Trump, meanwhile, broadened his trade tirades on Twitter into agriculture, writing: "Canada has all sorts of trade barriers on our Agricultural products. Not acceptable!"

Trudeau also faced pressure Monday to speed up Canada's tariff retaliation on U.S. steel and aluminum imports, while it consults on imposing levies on other American consumer goods.

Everyone loses with these tit-for-tat retaliations.

Winning Smartly

Supposedly, it's "smart" when the other guy loses more than you do.

In reality, the only way to win, is to not play the game, no matter what the other guy does.

Mike "Mish" Shedlock

Comments (28)
No. 1-28
jcneall
jcneall

I don't know about that (I really don't know). Seems to me if everyone has tariffs on our products and we don't have tariffs on theirs, the "trade war" had already started long ago. We just accepted it. With such a large trade deficit, it would seem to me that the US has a lot more to gain and our trading partners a lot more to lose by not evening out the playing field some. I'm all for free trade but why does Canada have tariffs on our imports in the first place?

Droa
Droa

Talk about someone who doesn’t know what your talking about. Mexico has a tariff on all us products already and it’s called a value added tax. 16%. The US has been taking it in the shorts for years.

jcneall
jcneall

16% on all products? Seriously? If that is the case, then I'm sorry but this trade war HAS already started. Its about time we participated. Why would we ever agree to something like that?

Carl_R
Carl_R

Note an important difference, though. Mexico is harming Mexican consumers by raising retail prices. American is harming American manufacturing and jobs by driving up steel and aluminum prices.

Realist
Realist

The US has benefited from international trade for years. Now, many Americans have been bamboozled into believing that they are somehow victims of trade. Be careful what you wish for. Trade wars are lose-lose.

jcneall
jcneall

Unfortunately for you and Mish, it is not that simple. For starters, there are plenty of unemployed blue collar workers that can make a very good argument that we did NOT benefit from International trade. Secondly, exporting our dollars at a more than $600 billion clip per year is not sustainable. At some point, we have to rein that in. Mish knows this but is taking a purist position on "free trade". That's all fine on paper until you realize we have nothing resembling "free trade". Having cheap labor is one thing but hitting us with tariffs on top of that? It's not right. It's not fair. And it most certainly isn't "free trade". I'm not 100% behind Trump on this because I don't have all the details but I'll be more open to the "free trade" argument when Canada (of all countries) drops their tariffs on our goods.

Escierto
Escierto

Every single Trump cult member has the same response. The trade wars have already started and we are losing. So now we are going to start putting up tariffs and trade barriers. Fine, go ahead and I hope that every GOP member of Congress puts his or her head on the line for that policy.

Tengen
Tengen

It's not that simple for the pro-tariff people either. The central problem isn't trade negotiations, it's Fed-induced artificially low interest rates and a TBTF banking sector. We have a huge, parasitical banker class feeding on us whether we renegotiate any trade deals or not. The dubiousness of Trump's "trade wars are easy!" rhetoric is just icing on the cake.

Furthermore, if these tariffs don't accomplish much, aren't we just telling the government to "do something" for the sake of doing something? We already know we've run up so many trillions in debt that normalizing rates and servicing all that existing debt would be crippling. We seem to be conceding defeat, admitting that we can't deal with the main problem so we're going to focus on something else (tariffs in this case) instead.

Carlos_
Carlos_

Then please do some DD. Corn in the USA is heavily subsidize. Sugar is protected by quotas. Boeing is heavenly subsidize via military contracts. Subsides, tariffs and import quotas have the same effect by different mechanisms. Mexico corn production (and its small farmers) have been driven out of business by USA big corn. They can do that because the USA mandates ethanol to be added to gasoline. Ethanol can be produced at significantly lower cost from sugar (Brazil for instance). The USA does not allow that ethanol to come into the country. Please spare me the "oh poor USA we want free trade but also fair trade propaganda". All countries do all kind of shenanigans when it comes to "fair trade" \

Carlos_
Carlos_

Oh please vat taxes are levy on all products regardless of were they are coming from. It is more equivalent to a sales tax. Or are you saying that we charge no sales tax to Mexican products here in the USA?

Carlos_
Carlos_

Actually Americans cross the border to Tijuana to buy pharmaceuticals (from the same USA labs). Moreover, if you take the time to actually read something (other than trump) you will learn:

Carlos_
Carlos_

Because it is a fallacy that the USA is about "fair trade". As heavily subsidized U.S. corn and other staples poured into Mexico, producer prices dropped and small farmers found themselves unable to make a living. Please Gramps33 do tell what is USA the land of "free trade" doing subsidizing corn?

Realist
Realist

Kudos to Carlos. I’m glad you had the time to explain the fallacies of the trade war cheerleaders. Well said.

Sechel
Sechel

When a country resorts to tariffs and quotas, nobody benefits except the owners of the domestic companies shielded from competition. Everyone else loses.

jcneall
jcneall

The corn subsidies and the whole ethanol kick drive me nuts too and they absolutely should be eliminated. My engines and body have been ruined by this stuff too. However, we still have a trade imbalance of over $600 billion. That must be turned around. Many of these tariffs will be rescinded once there have been some changes. China has already made significant offers. They've been refused but its a start. As you have made perfectly clear with your corn subsidies example, none of this is cut and dried. I am not a Trump lover but he's using tariffs as a weapon to deal with this massive trade imbalance. Wrong headed? Maybe. But I don't think so. Simply shouting "free trade, free trade!" doesn't make it so.

FlyOver_Country
FlyOver_Country

It appears to me that the tariff proponents here argue from a state frustration and emotion and not from a basic understanding of economic principals. This article is a bit dated but since the principals are timeless it still applies today.

Carlos_
Carlos_

You need to do more reading. Mercedes sold 610,965 units of cars in China last year. Cadillac sold 175,000 in China. Are the Germans getting "tariff breaks" from China? Don't know but I doubt it. The reality is that demand dictates what gets sold and what doesn't. My guess is that to compete with countries that use very cheap labor US manufacturers will need to ramp up production via automation to the nth power. That will still all those blue collar workers unemployed. And if tariffs go high enough to protect US manufacturers that can't compete on pricing then a huge group of consumers will be priced out. So no trade wars don't work

Realist
Realist

One of the biggest impediments to US growth and trade continues to be a lack of skilled workers. For the first time ever, there are more jobs sitting empty in the US then the number of unemployed. If these workers could be successfully trained to fill those empty jobs, the US economy would be growing faster and you would have a lower trade deficit and lower fiscal deficit. Yet, many on this site think instead that trade wars will somehow generate more jobs for those who are currently unemployed. Even if more jobs are magically created by a trade war (which of course is impossible), who will fill those jobs. Joe six-pack doesn’t have the skills needed to fill those jobs.

Kinuachdrach
Kinuachdrach

jcneall is absolutely right. President Trump did not start the fire. Interesting that none of the unilateral free traders can explain why Chinese workers have benefitted under high tariffs, whereas US workers have suffered under low tariffs. When theory does not explain reality, then theory needs to be revised.

Kinuachdrach
Kinuachdrach

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