Trade Wars and Their Discontents

by | Apr 5, 2018 | Features, The Kovach Corner | 12 comments

A WSJ column by Daniel Henninger this morning piqued my interest. It, like many recent opinion pieces from the Journal, discussed the recent tariff talk and subsequent trade war in which we find ourselves.

The Chinese have reacted to Trump’s bluster by threatening to install their own tariffs (read: taxes on consumers). Beyond targeting the economy writ large, the Chinese have pinpointed certain commodities and products that particular states produce more than others. Primarily, as Ficlking and Ran write in Bloomberg, the targets appear to be states which Trump would need to carry to win reelection:

The weight of the retaliation comes down to six categories: Cars, soybeans, plastics, tobacco, sorghum and chemicals. There’s a canny political strategy buried in that list: The first three sectors are heavily concentrated in Midwestern states stretching from Ohio to Wisconsin that flipped from supporting Obama in the 2012 election to Trump in 2016. Tobacco and sorghum farms, too, tend to be in traditionally conservative areas of the South — Texas, Virginia and North Carolina — where Democrats have been making increasing inroads.

A few cents extra for cans of vegetables may go unnoticed by some consumers, but a 25% tariff on tobacco could have quite an impact on North Carolina farmers. Couple that with earlier tariff threats on pork, and almost all of the major agriculture groups in North Carolina will be worse off because of Trump and his trade war.

Senator Burr said that he favors open trade, of course, but that “sometimes you have to use a different tactic, and I think clearly that is what the president is doing.”

I have no doubt that Burr is a free trader, but I do doubt that he actually believes the president is one too. Larry Kudlow, Trump’s new economic advisor, has said that Trump “is a free trader at heart,” which means nothing. His actions differ from whatever the typical Republicans claim he thinks deep down, and his actions are what affect everyday Americans. Even as the prospect of steel tariffs increases steel prices, other industries are having to cut their workers to keep up with higher costs. Put simply, Trump is robbing Peter to pay Paul.

What does this look like as political strategy? For starters, the Chinese are targeting industries that would affect states essential for the Republicans if they hope to maintain majorities in the fall. So producers like tobacco and hog farmers in North Carolina, for example, will be hurt by this.

On top of that, the tariffs will also make certain Chinese products more expensive. Look on the bottom of almost any package and read where it is made — if it says Made in China, you just might pay a little bit more next time you buy that item. So consumers in North Carolina will be hurt by this.

Finally, the premier legislative accomplishment of Republican-controlled Washington is the tax cuts. However small they were for those who received them, a lot of people will in fact pay a little bit less in taxes this year. Nancy Pelosi was excoriated for calling the bonuses and savings “crumbs,” but apparently an increase on goods doesn’t matter. “So who in the world is going to be too bothered by six-tenths of a cent?” wondered Wilbur Ross. Someone should tell the billionaire cabinet secretary that a lot of North Carolinians scrape by on the margins. What little money North Carolinians may have gotten back in tax cuts could very well be reversed by an increase in the price of goods.

If the positive effects of tax cuts are wiped out by the party enacting them, for what reason would North Carolinians reelect them?

 

Note: In an earlier version of this article I neglected to qualify the tariffs as prospective. Some will not take effect for about two months, while others have repercussions felt today.

12 Comments

  1. smartysmom

    “,,,If the positive effects of tax cuts are wiped out by the party enacting them, for what reason would North Carolinians reelect them?…”

    Well, the first reason that comes to mind is that Trump’s “Fact Free” base in NC nd else where won’t know and will continue to act like the populists (that means screaming mob – look it up) that they are

    Remember the Roman populists electing Caligula’s horse tribune or something?

  2. #Frustrated by idiots yet again

    ebrun,

    Do you understand that this is an Opinion piece and not “NEWS”?

    Please give me an example of “FAKE NEWS” from this opinion piece. Please back up your example with links to real news sources – like the author of this piece did. (They are the words that are red. If you click on them, it will take you to a real “NEWS” article.)

    Please also give me an example of a “blatant distortion” from this Opinion piece and back that up with real news links also.

    If you are capable of actual thinking and writing instead of just throwing around insults.

    Kirk,

    Understanding that Smithfield Foods is owned by Henan Luohe Shuanghui Industry Group LLC ( a Chinese company) and according to their website, owns 225 farms in NC, how would they be impacted by a Tariff? Who would be putting the Tariff on pork – China or the US? Who would it impact more? I haven’t been able to figure out how that would work.

    Appreciate your comments.

    Thanks.

    • ebrun

      OK. I’ll feed back some of the assertions ,not opinions, you make in the essay:

      “….almost all of the major agriculture groups in North Carolina will be worse off because of Trump and his trade war.”

      “So producers like tobacco and hog farmers in North Carolina, for example, will be hurt by this.”

      “So consumers in North Carolina will be hurt by this.”

      These are not presented as opinions, but asserted as factual. But they are merely predictions. .Instead of asserting that “…consumers in NC will be hurt by this”, one could express the opinion that, in the future, consumers in NC COULD be hurt by this.

      And you seem to be claiming that fake news cannot be cited in an opinion piece What an absurd defense. Opinion writers on both sides routinely cite fake news and make false assertions.

      • smartysmom

        gag, hack

  3. Dennis V Berwyn

    Faulty Premise! ZERO Tariffs have been ‘installed.’ Exactly ZERO has changed..its called a negotiation…..

    • Kirk Kovach

      Dennis, you’re absolutely right. I qualified “the prospect of steel tariffs” but I neglected to do so at the beginning of the article. I regret the error and the article should now reflect my correction.

    • uknowimright

      Jees, Dennis. You don’t have to yell. Calm down and don’t work yourself up too much. Words carry farther when spoken rationally. You have a very valid point, and was right to question. Take it easy with the exclamation points and capital letters. The emotion only takes away from your very good observation.

      Good for you, Kirk. Acknowledging an error, correcting, and apologizing is the sign of good public discourse. Well done, sir.

    • ebrun

      You’re being too nice , Dennis. This is more political spin from a left winger. Another example of FAKE NEWS that anti Trump pundits and media are propagating. Nice to see someone else here calling out their alarmist cries and blatant distortions.

      • smartysmom

        gag, hack1 EBRUN, sit down and be quiet plez, no one wants to listen to you

    • chaboard

      “Exactly ZERO has changed”

      My 401k balance screams otherwise. Markets seem to believe everything has changed.

      “its called a negotiation…..”

      No, negotiations are tactical and have end goals. This is just an ignorant man having a temper tantrum with no particular goal in mind and no defined path to getting there if he did There’s a big difference

      • smartysmom

        Chapboar, it’s ok, really! this is how the stock market behaves. It will come back and your 401k will be fine so long as you don’t panic and sell low

        • Charles F Board

          Most likely (for those who have time to wait). But that wasn’t my point. The point was that the idea that starting a trade war is ‘nothing’ until the tariffs are officially raised is…..bananas.

          It’s *already* having negative consequences on the economy, on people’s lives and – no unimportantly – on the international standing of the United States.

Related Posts

GET UPDATES

Get the latest posts from PoliticsNC delivered right to your inbox!

You have Successfully Subscribed!