Trade Wars are Easy to Win. Let's Start with $12 Billion Subsidy

The White House plans to announce on Tuesday a plan to extend $12 billion in emergency aid to farmers caught in the midst of President Donald Trump's escalating trade war, two people briefed on the plan said, the latest sign that growing tensions between the United States and other countries will not end soon.

Farm groups have complained that moves by China and other countries in response to Trump's protectionist trade stance could cost them billions of dollars, spooking Republicans who fear a political and economic blowback to Trump's approach.

The White House has searched for months for a way to provide emergency assistance to farmers without backing down on Trump's trade agenda, and the new program will extend roughly $12 billion through three different mechanisms run by the Department of Agriculture.

The funds will come through direct assistance, a food purchase and distribution program, and a trade promotion program.

http://www.startribune.com/white-ho...armers-caught-in-trump-s-trade-war/489005071/

 

I believe the word you are looking for is bailout. Nothing like giving the President broad powers to install tariffs--an action that is given to Congress in the Constitution--and then make the taxpayers to bailout the industries that are affected. Worse, the spineless members of Congress that have given up their own tariff authority to the President gladly allow the administration to take money from constituents to pay for the trade war.

Trying to figure how people on this board reacted to Obama's bailout of GM back in 2009. Well, I guess I don't have to do much figuring on that one.

 

What do you mean by "China folds"?

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Yes, on some products. China might not be able to win the "trade war" but they can win many, many battles. They don't have to give in, or "fold", on everything. But that's what Trump is asking--"remove all tariffs". And yes, I realize this is an opening negotiating position.

Take soy beans. China is the world's number one consumer of soy beans. The U.S. is the number one producer of soy beans and China is the world's top consumer. Brazil and Argentina are next as producers, with China as #4. China can wait us out on this. They can buy from Brazil and Argentina Trump knows it. That's why he's already approved a $12 billion bailout for farmers. China knows a tariff on soybeans will hit farmers in states that Republicans need to carry in the midterms and Trump needs to win in 2020. (Ohio, Missouri, Indiana, Iowa, etc.) Other countries are also following this political strategy of targeting products linked to states that produce them and that are critical for Republicans to win to remain in power.

Soy bean prices are down 15% since Trump announced the tariffs on Chinese products (steel, washing machines, solar cells) and China retaliated with tariffs on soybeans. There are many farmers here in Minnesota that are losing hundreds of thousands of dollars.

Another thing China can do with agricultural products, even without imposing tariffs, is to have them get hung up in customs. Imagine loads and loads of food products rotting on the docks in China as bureaucrats following governmental orders delay and slowdown inspections and admittance to the country.

Now think of a dozen other US products that China can put tariffs upon. They only need to ride it out until November or January (if Republicans lose their majority in Congress) or perhaps another year thereafter when presidential election season starts to heat up. Meanwhile, China can buy these products for all the other countries in the world and get by. But the Chinese market is so huge, US producers can't make it without selling to the Chinese.

By picking and choosing battles that China can win they can do great damage to our economy.

 

I'm agreeing with you (mostly). Using tariffs as a negotiating tool for opening trade talks is a great strategy. The problem is it could turn into a game of "chicken", wherein the two parties aren't flexible and some real damage can be done.

Also, I'm simply pointing out that "winning the trade war" won't be easy, and that China can win a few battles and still hurt us a lot.