Trade War Or Just Sanctions?

I’ve thought about this for the last couple of days. Donald Trump wants to put tariffs on aluminum and steel, and that’s really only the start. Of course, people like Paul Ryan and Lindsay Graham, are totally opposed to it. They feel that if Trump starts putting tariffs on goods coming into this country, it will have the same effect on our goods being shipped to other countries, and they’re right. Britain has already said that they would consider slapping a tariff on our agricultural products.

If Trump goes through with the tariffs, is it a good thing? Will it start a trade war? And if it does, what are the consequences. Well, I’m wading into an area I’m certainly not an expert on, but with that aside, let’s examine it shall we?

First of all, Trump says a lot of things that later seem to wash away. Call it a trial balloon, or a wish list or just trying to tweak someone’s nose, it’s something he’s done in the past, and probably will continue to do. But for the sake of argument, let’s say he’s serious (which I really doubt). Is it a good thing? It can be. Certainly in the aluminum and steel industries which are pretty much non-existent in this country. That would indeed raise the price of building materials and raw materials for industry. That means you and I pay more, but at the benefit of American jobs. And we know Trump is all about American jobs.

Second, will it start a trade war? It very well might. Most of Europe is against this. So is Canada, where we get most of our steel from. The question is, do we really want to piss off our neighbor to the north? They are one of our largest trading partners, and it probably would spark a trade war. 16% of US steel comes from Canada. The problem with trade wars is that it has unintended consequences, and it’s much easier to get into than get out of. If you carve out exceptions, it really upsets the countries that didn’t get those exceptions. I doubt Canada would be spared in this. The consequences are unknown.

My initial hunch is that Trump shouldn’t do it. I understand it’s protecting some American jobs, but let’s save the nuclear bomb for something that has a LOT of American jobs. Let’s use it on something like technology, or an area where we thrive and are getting hammered by countries we don’t like much. I’m thinking countries like China, or even Russia. What’s the harm in getting into a trade war with them? It actually might bolster our negotiating power. Canada? C’mon! We love those guys!

In the grand scheme of things, I’d prefer that Trump put his efforts into solving bigger issues at home. Let’s get the immigration stuff fixed. Let’s get rid of Obamacare, and open up the healthcare insurance market to everyone. My lord…the individual healthcare market here in the desert is absolutely abysmal! Let us buy it like we buy car insurance, or life insurance, or homeowners insurance, and let us buy it across state lines to increase competition! Trade tariffs? Nah…not needed!

Carry on world…you’re dismissed!

 

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6 thoughts on “Trade War Or Just Sanctions?

  1. Health insurance should absolutely be like purchasing auto and life insurance…….. and competitive. It is a simple solution or at least a step in that direction. On the trade, I get what Trump is trying to do or threatening. Maybe he is just bluffing to get the other nations to ease up. The balance of trade has been unbalanced for way too long and has cost us jobs and has hurt our economy. Something should be done, and I think Trump is just testing the water before he jumps in. As an international banker I see what comes in and what goes out. Those countries can’t afford to lose our business, they rely on our business and in many aspects rely too much on the U.S. We are their greatest customer. But that said…….Trump is a negotiator….I don’t think he’ll risk losing business in the long haul, I have more confidence in him gaining assets for American business than what those presidents did before him, which was nothing. At least it is a topic of conversation. NAFTA……..thank you Bill and Hillary! Check their bank deposit transactions after NAFTA agreement was finalized!!!

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