Elon Musk has branded Donald Trump’s trade tsar “dumber than a sack of bricks” and exposed a growing White House split over tariffs.
The Tesla founder said Peter Navarro, the US President’s senior counsellor for trade, was “truly a moron”….
And so say all economists about his views on trade.
Note that he’s not playing 4D chess – if anyone is. He really does believe all this nonsense about a trade defict is others stealing from us. That tariffs are good in and of themselves.
after claiming the world’s richest man was merely a “car assembler” rather than a manufacturer.
There’s that too….
It is a bloody stupid idea.
But if it suddenly causes dozens of free trade deals across the world, buggers China and Russia, perhaps it wasn’t so daft after all.
But if it suddenly causes dozens of free trade deals across the world, buggers China and Russia, perhaps it wasn’t so daft after all.
The point is that this particular stupid idea doesn’t even have that positive end goal as a target. Navarro’s beef is based on the idea that merely having a trade deficit is an unfair advantage – so free trade deals are not enough for him and Trump. No-one seems to have explained to them that being the single richest nation on the planet means you will always have trade imbalances. And they are to your advantage
It’s quite likely they’re going to keep digging this particular hole until someone physically stops them.
The people currently looking for a “super secret” win that’s going to come out of this idiocy are only helping to extend the damage the US is doing to itself. But the problem is, rolling back the support involves admitting to themselves and others that they were fooled by Trump’s rhetoric and thought he was a smart guy.
It’s going to take a lot to swallow that bitter pill.
Whether this is the endgame or not, the tariff furore has already driven a number of Asian nations – Japan, S Korea and Vietnam – to begin to renegotiate trade deals with the US, which will be to the advantage of the US.
The EU and China, neither of which have the slightest interest in free trade, are still playing hardball, but as they are both economic basket cases I doubt it will last.
This is an interesting article: https://chinaarticles.substack.com/p/hold-my-beer
The argument is that Trump’s ire and tariffs are not unreasonable when it comes to China but that he’s going about it the wrong way. The US is pissing off all its allies in order to get at China, when it should just get at China. I think that is a reasonable argument, although I think the author fails to grasp how much Trump and Vance hate the EU.
“Majority Leader Schumer Floor Remarks On President Trump’s Announcement Of New Tariffs To Protect US Workers And Confront The CCP’s History Of Trade Abuses”
All you have to do is guess which word I changed in that headline.
There was a good analogy on the wireless this morning. Everybody has a “trade deficit” with their local grocery store – we buy food from them, they never buy anything from us. That doesn’t mean the grocery store is ripping us off.
That’s been in use for a long, long, time. Don Boudreaux perhaps?
BWTM: RFK Jr is dumber than a red brick, too.
Steve Milloy at junkscience.com is keeping an eye on him.
– Everybody has a “trade deficit” with their local grocery store – we buy food from them, they never buy anything from us. That doesn’t mean the grocery store is ripping us off.
The analogy fails because it refers to two individuals (person and business) trading. Even if you took the analogy to a level of people in one parish council trading with people in another parish council, it would still fail because those councils are not nations. Nations do not trade but nations do use (and abuse) trade to compete with and harm other nations. International trade does not happen without wider consequence.
It appears Trump doesn’t care about free trade in and of itself, only so far as it effects the USA. If free trade results in American towns and cities being laid waste, and America’s enemies being able to outproduce it in weapons (e.g. naval ships) then free trade will be properly set aside. Talk of “rip off” deficits, etc, is merely dressing to sell a policy that seems otherwise counterproductive.
I’m talking about Trump, of course. Dunno about this other bloke. It may be that he genuinely believes tariffs are inherently economically beneficial; that might make him useful in implementing them.
Member what I told you about the Brit press, and how often they print things because they wish it to be true:
Maga coalition is cracking as Tesla founder calls Peter Navarro ‘a moron’
Bet you £5 it isn’t. What’s Elon going to do, make friends with the Democrats who want to put him in jail? The MAGA coalition will be around long after the unprofitable Telegraph is gone.
But trade (free or not) doesn’t lay towns and cities to waste. There are all sorts of reasons why American cities are having problems: horrible education system, lax law enforcement, too narrow a tax base or tax-restrictive policies (California, I’m looking at you and Prop 13), social programs that destroy the family and create a perpetual underclass, grandstanding virtue-signalling politicians wasting money while refusing to address the issues, and the list goes on. State and federal governments made their own contributions to the mess, participating in most of the foregoing, and adding some of their own, like immigration policy and massive deficits – to almost quote Dick Nixon “We’re all Keynsians when there’s money to spend.”
All of these ills became manifest while we (collectively) were expanding trade, but none of them have anything to do with trade – if anything, the wealth created by trade has shielded the general population from some of the damage caused by the insanity in the political and media class.
PJF
Trade is always between people – never mind all the intermediaries – and is an exchange in which each party acquires something of greater value – to them – than that which they had to give in exchange. Both parties are then better off – wealthier… and that is how wealth is created, by exchange. Wealth = what we consume, what we have – as in, Oh dear, these people don’t have much do they, they’re poor? We recognise very wealthy people because they consume/have lots and lots of stuff.
This apparently is what Trump doesn’t understand, when he says other Countries have been taking USA’s wealth. But they shipped goods in return which made USAians wealthier. No exchange, no wealth.
Export is a cost and in itself imparts no benefit to the people in the Country of production as the benefit is taken by people in the receiving Country. Its purpose is to acquire foreign currency to pay for imports. As someone said, imports are Christmas Day, exports are the January credit card bill.
What seems to be ignored is that when people in Country A buy from people in Country B, they (in Country A) acquire an asset which exceeds the value, to them, of the money – in the currency they produce – they sent to B.
The money sent to B has to return to A either by buying goods from A (trade) or by investing in A’s economy.
This assumes a free market. Markets are not free when Governments intervene to impose taxes, regulations and restrictions.
Politicians use tariff and non-tariffs to protect the profits of their cronies in return for the rewards their cronies give them whatever they may be, electoral support, favourable media headlines, folding stuff in brown envelopes, campaign contribution, etc.
The crony list includes, but is not limited to: big corporations, banks & finance, unions, agri-sector.
Trade is always about competition and will “harm” a competitor. Lidl and Aldi have “harmed” competitors, Tesco, Sainsbury’s, ASDA, etc by offering low prices equivalent goods causing the others to reduce their prices and therefore profits – and Oh my ears and whiskers, what about their workers’ jobs? . Should tariffs be imposed on Lidl and Aldi? Are they abusing trade? The benefit is to consumers, not producers which is the way it should be.
Consumption is the sole end and purpose of all production; the interests of producers is only to be considered as much as it serves the interests of consumers. Adam Smith.
“The money sent to B has to return to A either by buying goods from A (trade) or by investing in A’s economy.”
False dichotomy.
B can exchange currency quite easily.
“Everybody has a “trade deficit” with their local grocery store – we buy food from them, they never buy anything from us. That doesn’t mean the grocery store is ripping us off.”-
You try living with a ‘trade deficit’ across all your incomes and expenditures and see how long you last.
No-one seems to have explained to them that being the single richest nation on the planet means you will always have trade imbalances
They’ve had a stroke of luck then. . You get rich by creating value. Not by importing value others have created.
Consumption is the sole end and purpose of all production; the interests of producers is only to be considered as much as it serves the interests of consumers. Adam Smith.
But almost all consumers are also producers. The only people weren’t producers in AS’s time were certain aristocracy & beggars.
“B can exchange currency quite easily.”
True, but only because there is demand from others for that currency to trade with or invest in A’s economy. B knew this when the accepted US dollars (or whatever) in payment. The logic still applies, albeit at one remove.
“You try living with a ‘trade deficit’ across all your incomes and expenditures and see how long you last.”
That not the argument, though, is it. Obviously you need an income, which has more purchasing power in a free market.
That’s just goofy, wat.
Whether this is the endgame or not, the tariff furore has already driven a number of Asian nations – Japan, S Korea and Vietnam – to begin to renegotiate trade deals with the US, which will be to the advantage of the US.
This is probably bollocks. [a] because many of these nations have little of significance to offer the US beyond what they’re already doing (that’s the whole reason some of those ‘reciprocal’ tariffs are so high – they just aren’t rich enough to be buying billions of dollars of stuff from America), [b] because Trump is almost certainly exaggerating their eagerness to do a deal and [c] in the long term they are going to have less trust in America and are likely to want to move trade to more reliable partners – which is what Japan is already doing.
The EU and China, neither of which have the slightest interest in free trade, are still playing hardball, but as they are both economic basket cases I doubt it will last.
This is definitely bollocks – The EU and China are about as happy with free trade as America is. That is, in general they all want as low barriers to trade as possible, whilst protecting chosen industries. Don’t let’s start pretending that America is some free trade saint – it really isn’t, and under Trump is aggressively against free trade, which is what has got these guys’ backs up in the first place.
In China’s case, they already export more to the rest of the world than America does. Sure it’s got a lot of economic problems (so does America), but it’s got a lot of firepower and a leader that has a lot fewer problems directing its population.
No-one seems to have explained to them that being the single richest nation on the planet means you will always have trade imbalances
They’ve had a stroke of luck then. . You get rich by creating value. Not by importing value others have created.
This is also bollocks… or at least misses out that you get rich by also not doing what other people can do cheaper (Tim’s whole free trade commitment is based on this principle). America won’t get richer by making a chunk of their population do below minimum wage jobs that they’d farmed out to developing nations.
You get rich by creating value above that of your neighbours, not by indiscriminately demanding that you get to do all the jobs they’re doing.
I wasn’t claiming the US is in favour of free trade. It clearly isn’t. However, it is still amusing to see China and the EU pretend that they are champions of free trade, while piling on reciprocal tariffs.
Real free trade supporters, like our host, would say suck them up, because tariffs are bad.
China and the EU are both very much economic basket cases, one drowning under the weight of regulation and one under the weight of unoccupied real estate. To argue otherwise is, as you so eloquently say, “bollocks”.
“That not the argument, though, is it. Obviously you need an income, which has more purchasing power in a free market.”
It is the argument. How can a country live with expenditures beyond its income? Only by constantly borrowing money from foreigners, or selling them its assets, or convincing them to invest their money in that country.
A person could spend more than their income by (for example) mortgaging their wholly owned house, and spending that cash. Or selling their antique furniture and buying Ikea instead. Or inviting their neighbour to buy them an car and then paying a fee to use it. All of which is probably going to end in tears eventually.
And the same goes for countries, only it’ll just take a bit longer most likely. But eventually you run out of foreigners to lend you money, and stuff to sell, and you’re dead broke.
@Jim – “You try living with a ‘trade deficit’ across all your incomes and expenditures and see how long you last.”
Even if that were the case, one of the stupidest things I could do to remedy this would be to dramatically and ostentatiously suddenly refuse to accept stuff from everyone, who had got used to it and are harmed by the suddent change. It might also convince them that the IOUs I had been issuing should no longer be accepted and demand something of more reliable value.