The chances for equitable growth in America over the next three years may or may not be crippled by the trade war that Donald Trump is now trying to launch. What should you be reading and watching to try to figure out what is going on? I believe that the Peterson Institute of International Economics is the place to go for up-to-date analysis on the trade war that Donald Trump is trying to launch, over the—not dead bodies, but—active opposition and passive resistance of pretty much everybody in his administration save Peter Navarro and Robert Lighthizer. This is not being driven by any interest groups outside the administration. It is being driven by three people inside the administration: Navarro, Lighthizer, and Trump:
Navarro... On the few occasions that I have interacted with Navarro he has seemed to me to be... not quite all there. The kindest thing I have heard said about him comes from Paul Krugman: "Peter Navarro predicted that nobody would retaliate.... Trump’s tariffs are badly designed even from the point of view of someone who shares his crude mercantilist view.... Unlike Trump, the Chinese and other targets of his trade wrath seem to have a clear idea of what they’re trying to accomplish. The key point is that the Navarro/Trump view, aside from its fixation on trade balances... seems to imagine that the world still looks the way it did in the 1960s, when trade was overwhelmingly in final goods like wheat and cars..."
Lighthizer... I do not understand at all. The policies that he is pushing forward are pretty much 180 degrees reversed from those he worked for in his previous stints in government. He is now too old—70—to be anything other than a rainmaker at his old law firm of Skadden Arps after he departs from government. And businesses with international trade legal needs will think that the guy who launched a trade war is not a rain but a drought maker. His actions do not compute on any rational-actor decision theory.
Trump... There is little to understand. Somehow he has become convinced that running a bilateral trade deficit with a country means that we are "losing" to them, and that this should stop. Why he believes this we do not know, and he cannot explain it. We do know that none of those working for him—not Priebus, not Mnuchin, not Kudlow, not Ross, nor any of the others—have been able to change his knee-jerk instincts.
Currently the best place to go to figure out what, concretely, has actually happened is to teh PIIE's trade-war timelines:
Chad P. Bown and Melina Kolb: Is Trump in a Trade War? An Up-to-Date Guide: "The timelines below track the development of the most pressing trade conflicts with links to the latest available data and PIIE analysis...
...BATTLE #1: SOLAR PANEL AND WASHING MACHINE IMPORTS INJURE US INDUSTRIES.... BATTLE #2: STEEL AND ALUMINUM AS NATIONAL SECURITY THREATS.... BATTLE #3: UNFAIR TRADE PRACTICES FOR TECHNOLOGY, INTELLECTUAL PROPERTY (IP).... BATTLE #4: AUTOS AS NATIONAL SECURITY THREAT...
#shouldread #orangehairedbaboons #globalization #tradewar
