President Trump's regulatory policy is that two regulations must be scraped anytime a Federal agency wants to issue one new regulation, and that is a great policy. The benefits will slowly seep into the economy for a long time. I applaud him!
However, he announced his policy yesterday on tariffs, particularly on imported steel and aluminum. The stock of steel companies rose $2.2 billion, while the stock market fell over $350 billion. That policy is bone-headed at best and border-line stupid at worst. There are so many arguments against this decision.
The economic argument is that this violates the principle of comparative advantage and encourages nations to produce those goods that they produce inefficiently. While there is always cheating to any trade policy, there are better, more targeted ways to deal with cheating than starting a trade war. As they say . . . brain surgery with a meat ax.
The investment argument is that the market doesn't like to be surprised or blind-sided. Yesterday's 420 point in the Dow proves that! How was this terrible decision made? Why was it made now? What is the problem it solved? There are better ways to make a bad decision.
The sociological argument is that his base, as so well-described in Hillbilly Elegy, will not benefit from this action. Globalization has hurt these people but only because politicians did not provide for the job training programs that were long predicted. We received the benefits of globalization without paying for it. Plus, this policy is inflationary, because products using imported steel or aluminum will cost more, which hurts his "base."
The historical argument is that the Smoot-Hawley bill raised tariffs in 1930 and was designed to save the American economy from foreign competition, but it instead pushed it from a bad recession into the worst depression in modern history. President Bush tried the same thing in 2002, costing over 200 thousand jobs.
The moral argument is that I find myself in agreement with Goldman Sachs, which I am loath to do.
President Trump tweeted . . . "Trade wars are good!"
The President is wrong, wrong, wrong!!
However, he announced his policy yesterday on tariffs, particularly on imported steel and aluminum. The stock of steel companies rose $2.2 billion, while the stock market fell over $350 billion. That policy is bone-headed at best and border-line stupid at worst. There are so many arguments against this decision.
The economic argument is that this violates the principle of comparative advantage and encourages nations to produce those goods that they produce inefficiently. While there is always cheating to any trade policy, there are better, more targeted ways to deal with cheating than starting a trade war. As they say . . . brain surgery with a meat ax.
The investment argument is that the market doesn't like to be surprised or blind-sided. Yesterday's 420 point in the Dow proves that! How was this terrible decision made? Why was it made now? What is the problem it solved? There are better ways to make a bad decision.
The sociological argument is that his base, as so well-described in Hillbilly Elegy, will not benefit from this action. Globalization has hurt these people but only because politicians did not provide for the job training programs that were long predicted. We received the benefits of globalization without paying for it. Plus, this policy is inflationary, because products using imported steel or aluminum will cost more, which hurts his "base."
The historical argument is that the Smoot-Hawley bill raised tariffs in 1930 and was designed to save the American economy from foreign competition, but it instead pushed it from a bad recession into the worst depression in modern history. President Bush tried the same thing in 2002, costing over 200 thousand jobs.
The moral argument is that I find myself in agreement with Goldman Sachs, which I am loath to do.
President Trump tweeted . . . "Trade wars are good!"
The President is wrong, wrong, wrong!!
