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| Ford's F150 twin-cab Truck |
Anti-Tariffs
Ever since my Econ 101 way back in 1968, I've been told "Free Trade Good. Tariffs Bad". And I've believed it.
Though I was a bit wobbly when China joined the WTO in 2001, and middle-class manufacturing jobs in America disappeared in a great whoosh. The "benefits of free trade", it seems, were to buy cheap sneakers and flat-screen TVs from China.
Still, plenty of people -- every single Democrat, I'd guess, and a good number of Republicans too -- say Trump's plan, his "Liberation Day", is all too crazy.
"Extremely dangerous" says Larry Summers a voice to listen to, as ex Treasurer for president Clinton and ex president of Harvard:
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| Link to Summers' X post here |
Pro-Tariffs
Then there are those now saying "Tariffs are good". Maybe close to half of Americans.
The most powerful pro-tariffs argument I've heard is from Sean Fain, head of the United Auto Workers Union. Who pointed out that when tariffs on sedans were brought down to zero tariffs on Trucks, like the F-150, were kept at 25%.
Result? Today there are virtually no sedans built in America (well, except for Tesla! Irony of ironies), but that nearly all trucks are still made in America. The auto union puts that down to the tariffs. They support the Trump plan.
And… if tariffs are so terrible, why do so many counties have them? Including the world’s biggest exporter, China. And the world’s capital of hypocrisy and sanctimony, the EU? Riddle me that, Batman!
Meantime, it’s rather harsh and short-sighted, it seems to me and many of my countrymen, for tariffs to be levied on Australia. A long-time, stout ally. Which has a deficit in trade with the U.S. Why do this? Ditto for Canada and the U.K. Why not instead say that long-time, stout allies are not going to be part of this “Liberation Day”? Would send a better message, surely. And not turn their opposition parties, conservatives all, against them and down in the polls. Weird, weird.
Pusillanimous me
So, I'm sitting this one out.
There's my training that tariffs are bad; and there are very knowledgeable people saying they're bad.
Then there's the pro mob, with experience in the good side of tariffs making persuasive case for them.
It's surely a high risk high reward strategy that Trump's playing with here.
A big question must be: will he have the time to show if they work or not. Given that instant results are demanded of him. On the day after inauguration Dems were demanding to know why he hadn't slashed the price of eggs.... Egg prices are down now, but because it took more than a day, Trump gets no kudos. Tariffs are not eggs (as the saying goes). They're going to need much more time. I fear Trump won't be given the time.
All I can do is wait to see. Sitting so firmly on the fence that I have dimples in my big fat arse.
Reciprocity
I do hope it works, this grand experiment, as the concept of "Reciprocity" seems to me a smart one. To charge you what you charge me. If it's zero then it's zero both ways. If it's ten percent then it's ten percent both ways. That's surely a good principle.
It's just the trade and economics version of the Biblical version, Matthew 7.12:
"So in everything, do to others what you would have them do to you, for this sums up the Law and the Prophets."
When I was first in China, in the Australian embassy in what was then Peking, I served with Australia's first ambassador to China, professor Stephen FitzGerald, who was always going on about Reciprocity. Which usually fell on deaf ears in China, as they were playing their "we're a developing country" card.
Steve kept on with that Reciprocity principle his whole life. And I agree. I've written on it quite often on these pages.
So, me, I'm hoping for the best. Though we've already suffered a pretty savage beating in our US stock portfolio. Like everyone else, to be fair.
"We'll see", as the orange man says.
