SEVERE WX : Severe Thunderstorm Watch - Severe Thunderstorm Warning View Alerts

Please don't start a global trade war, President Trump

What Donald Trump clearly cannot see through the prism of his own warped ideology is that the US is so far behind in ...

Posted: Mar 7, 2018 12:50 PM
Updated: Mar 7, 2018 12:50 PM

What Donald Trump clearly cannot see through the prism of his own warped ideology is that the US is so far behind in its trade imbalance with the world that no matter how many tariffs he imposes, the retaliation will only leave it deeper in the hole with a damaged economy.

In short, he is risking kicking off a global trade war.

For trade, unlike Trump's simplistic view, is not a zero-sum game. It's not all about the dollars, it's about jobs. All this flailing effort at rebalancing, imposed in an instant, could take decades to correct. Meanwhile, millions of jobs risk being lost. We may save a few hundred jobs in steel, and lose hundreds of thousands in automobiles, planes and industries critical to our survival.

Gary Cohn, head of the White House Economic Council, clearly recognized this and clearly could not visualize a viable path ahead for the American economy if the President failed to recognize the existential dangers toward which the Trump administration appeared hell-bent on plunging the world.

Now he's gone and it's difficult to see any rational voice counseling restraint that remains between Trump and some economic Armageddon.

Let's look at the logic. America's trade imbalance in goods with the European Union was $151 billion last year ($435 billion in imports, $284 billion in exports.

Now, say Trump imposes a major tariff on steel and aluminum, cutting back on their exports to us, then Europe in turn imposes countervailing tariffs on our exports to them, and Trump retaliates on European automobiles, and they retaliate on American planes (critically damaging Boeing and helping their own Airbus competitor).

Canada, another victim of the Trump tariffs and the largest exporter of steel to the US, would in turn likely go straight for the jugular -- American agriculture, a total of $23 billion. Indeed, some 1.2 million jobs are devoted to exports to Canada.

Brazil, the second largest victim of Trump's steel tariffs, imported $900 million in agricultural products, as well as $4.8 billion in planes. All those exports represented 128,000 American jobs.

What is especially interesting is that all these figures come directly from the Office of the United States Trade Representative. Yet somehow, none of them seem to have made their way to President Trump, or at least made much difference once they arrived.

But there's much more trouble ahead. The rationale underpinning Trump's steel and aluminum tariffs will have set a critical precedent -- the President labeling them as being in defense of "national security."

That's an escape clause in the World Trade Organization charter that is designed to be invoked narrowly and only in the most dire circumstances. Imagine that escape clause being invoked globally and routinely. The broad use of this narrow path through and around the World Trade Organization could (Trump's other big daydream) eviscerate that organization which America has supported from the get-go.

A full-fledged global trade war would quickly and inevitably ensue. And America, its economy, its currency, its stock market would truly be brought to its knees. Of course, so would everyone else's.

This risk did not suddenly appear on the horizon. Last year, the World Trade Organization took up "two trade concerns raised at the 30 June meeting of the Goods Council. The United States said it was investigating the impact of steel and aluminum imports on national security while certain Gulf states cited national security interests in a discussion on their trade restrictions on Qatar."

The European Union warned, then, that this clause could never be invoked "for the purpose of protecting a domestic industry against foreign competition" and warned, back then, of dire consequences including "systemic risks."

At that meeting, in addition to the EU, Brazil, Australia, Taiwan, Japan -- all loyal American allies -- as well as China and Russia, all weighed in against invoking national security.

The world has been there before -- long before the creation of the WTO in 1995 or even its predecessor, the General Agreement on Tariffs and Trade after World War II. All of these were a reaction to the catastrophic American Smoot-Hawley Tariff that in 1930 helped plunge the world into the maelstrom of the Great Depression, compounding the 1929 stock market crash.

Back then, President Herbert Hoover, the Donald Trump of his day, had a trusted economic adviser -- Thomas Lamont, a partner in J.P. Morgan bank (the Goldman Sachs of its day). "I almost went down on my knees to beg Herbert Hoover to veto the asinine Hawley-Smoot Tariff," Lamont later recalled. "That Act intensified nationalism all over the world." Sound familiar?

Many of those defending the President's steel and aluminum tariffs, which are expected to lead to -- among many other effects, including increased inflation -- reply that "a little inflation isn't a bad thing." That we need to defend our ability to produce steel and aluminum at home.

Perhaps. But then there are the lost jobs, dying exports and shuttered factories, fallow farms. For all too often, ill-considered events can quickly spiral into uncontrollable effects that can be reversed only at enormous cost. Hopefully, another adviser to President Trump will emerge, before it is too late, and go down on his knees, and this president will listen.

West Lafayette
Partly Cloudy
90° wxIcon
Hi: 90° Lo: 72°
Feels Like: 98°
Kokomo
Partly Cloudy
85° wxIcon
Hi: 89° Lo: 73°
Feels Like: 91°
Rensselaer
Mostly Cloudy
82° wxIcon
Hi: 87° Lo: 68°
Feels Like: 86°
Fowler
Partly Cloudy
90° wxIcon
Hi: 89° Lo: 69°
Feels Like: 98°
Williamsport
Partly Cloudy
84° wxIcon
Hi: 88° Lo: 71°
Feels Like: 91°
Crawfordsville
Partly Cloudy
82° wxIcon
Hi: 87° Lo: 71°
Feels Like: 87°
Frankfort
Partly Cloudy
84° wxIcon
Hi: 87° Lo: 72°
Feels Like: 90°
Delphi
Partly Cloudy
83° wxIcon
Hi: 90° Lo: 72°
Feels Like: 88°
Monticello
Partly Cloudy
83° wxIcon
Hi: 92° Lo: 73°
Feels Like: 88°
Logansport
Partly Cloudy
82° wxIcon
Hi: 88° Lo: 70°
Feels Like: 85°
Severe weather risk, then brief, but substantial cool-down...
WLFI Temps
WLFI Planner

Indiana Coronavirus Cases

Data is updated nightly.

Cases: 751242

Reported Deaths: 13795
CountyCasesDeaths
Marion1032931788
Lake556911009
Allen41692692
St. Joseph36990565
Hamilton36588417
Elkhart29398461
Tippecanoe22901226
Vanderburgh22556400
Porter19356325
Johnson18471389
Hendricks17682317
Clark13226195
Madison13149344
Vigo12614253
LaPorte12419221
Monroe12207176
Delaware10966198
Howard10321225
Kosciusko9630121
Hancock8576146
Bartholomew8169157
Warrick7860156
Floyd7811180
Grant7242179
Wayne7162201
Boone6966103
Morgan6761141
Dubois6218118
Marshall6209116
Cass6016110
Henry5900110
Dearborn589878
Noble581488
Jackson509076
Shelby501496
Lawrence4742122
Gibson444894
Clinton442355
Harrison441875
DeKalb439885
Montgomery438090
Whitley406543
Huntington402681
Steuben400159
Miami395269
Jasper388054
Knox375991
Putnam372960
Wabash361983
Ripley347170
Adams345555
Jefferson335886
White331953
Daviess3033100
Wells295281
Decatur289992
Greene286885
Fayette284864
Posey273835
LaGrange273072
Scott270156
Clay267148
Washington246036
Randolph244783
Jennings235349
Spencer234531
Starke228058
Fountain220948
Sullivan214643
Owen211858
Fulton202942
Jay200932
Carroll193620
Orange188255
Perry187237
Rush175926
Vermillion174844
Franklin170335
Tipton166246
Parke149416
Pike138234
Blackford136232
Pulaski120647
Newton113936
Brown104243
Crawford102516
Benton101714
Martin91715
Warren84015
Switzerland8148
Union72810
Ohio57911
Unassigned0420

COVID-19 Important links and resources

As the spread of COVID-19, or as it's more commonly known as the coronavirus continues, this page will serve as your one-stop for the resources you need to stay informed and to keep you and your family safe. CLICK HERE

Closings related to the prevention of the COVID-19 can be found on our Closings page.

Community Events