How the US Lost Manufacturing 1.

Posted on July 10, 2025 by jsh54

How did the United States rise to economic and industrial predominance in the world? First, the North American continent held a vast trove of natural resources of many kinds. All that was needed was finding ways to extract and transform those resources. Second, the country suffered from a perennial labor-scarcity. Even massive immigration in the “long 19^th Century” could not fill the breach, so Americans turned to technological and organizational innovations to increase productivity. Third, all this took a great deal of capital. The “Founders” created a pro-business environment that both helped generate American capital and attracted foreign (especially British) capital. By the dawn of the 20^th Century, the United States had the greatest industrial economy in the world. The two World Wars laid low every other industrial country, while they strengthened that of the United States. By mid-century, American industry (and agriculture, and finance, and science and technology) bestrode the world. In one symbol of both the industrial power and the diversity of the American economy, about a third (35 percent) of all private-sector jobs were in manufacturing.[1] This situation lasted through the end of the 1950s.

What were some results of that rise to predominance?

In the wake of the Second World War, the United States held a uniquely favorable position. All of the other major industrial nations were either bankrupt or war-ravaged and bankrupt. The Stalinist command-economy could compel Russians and conquered Eastern Europeans to make painful sacrifices to rebuild their economies without American aid. Elsewhere (Western Europe, Japan) relied upon American assistance. Later, the Americans added military protection against Soviet aggression.

The Americans used their leverage to remake the international economic system. The “Bretton Woods System” (International Monetary Fund, World Bank); the first steps that would lead to the European Union; and the General Agreement on Tariffs and Trade (GATT) and its successor the World Trade Organization (WTO) all came from American designs. A progressively more “open” world economy came about between 1945 and 2025.

The Western European and Japanese economies revived with a speed that astonished people who had seen the wrecked economies and societies at war’s end. They not only recovered, but generated an unprecedented and widespread prosperity. It should be obvious, but may not be to most Americans, that the vast majority of this recovery and progress sprang from the hard work of the people who received American aid. Especially in Germany and Japan, hard work, ready adaptation to new circumstances, and self-restraint became cultural values and not merely the harsh necessities of the moment. These countries also built government systems of “social provision” that shocked many Americans.

How did the United States fall from that predominant position?

The economies that the United States had helped to revive began to become competitors. This had always been expected, if only in some misty future. First, they began to supply many of their own needs, then they began to compete in “third markets” (neither Western Europe, not America). In Asia and Latin America, countries began to emulate the earlier industrializing countries. Their initial advantage lay in very cheap labor. They began by producing simple, non-durable goods at a very low cost for export to foreign markets, especially the American market.

At the same time, from the mid-1960s onward, the American economy began to shift its center of gravity. The service sector[2] began to grow rapidly. Manufacturing held steady in numbers of employees until about 1980. At the same time, manufacturers began the long trend toward shifting new production to the “Sun Belt,” especially the Southern states.[3]

With an expanding service sector, Americans seem to have been ready to surrender the lowest level of manufacturing to foreigners in return for more stuff bought cheaper. Those countries didn’t stay at the lowest level. Having earned and learned from low-level industrialization, many of them sought to move up the food-chain. South Korea, for example, developed a steel industry and a ship-building industry.

Then, beginning in 2001, China was admitted to the World Trade Organization. China has an immense population. Through the end of the Mao Zedong period, they were mostly trapped in low-productivity farming. Post-Mao governments set out to change China in a more revolutionary and constructive way than Mao had ever imagined. China would open its markets to foreign business, draw in foreign investment, shift its population from “the idiocy of rural life” to the “dark, Satanic mills” of new industrial cities, and conquer foreign markets for manufactured goods. It took China less that a decade to surpass the United States as the world’s leading exporter of manufactured goods. What the United States has retained and developed is its role as the leading exporter of services, including intellectual property.[4]

In this account, the American economy shifted its chief function from extracting primary products (so, primary sector) to transforming them into finished goods (secondary sector) to providing diverse services (tertiary sector). It’s easy to see this as a normative evolution of all capitalist economies. American aid to Western Europe and Japan after the Second World War helped those places get back on track. Similarly, American development aid assisted developing economies begin the path on which others were well-advanced. Over the years, America shedding low-value industrial jobs and shifting people up the hierarchy into high value service jobs facilitated the global rise in development and living standards.

Only in the case of post-Mao China did the institutions and policies created by the United States after the Second World War succeed all too well. The “China Shock” wreaked havoc on American industry (and not only American industry). That had painful social and economic consequences. From one point of view, it had been impossible to foresee the scale and rapidity of China’s growth in manufacturing power. So, is the problem how to return China to the old post-war model through practicing self-restraint and focusing on domestic consumers? To become a “normal” nation in American terms?

[1] Justin Lahart, “How the U.S. Slipped From Top Manufacturing Perch,” WSJ, 14 April 2025.

[2] Doctors, lawyers, bankers, teachers, and so on, rather than just people “flipping hamburgers” as Mike Dukakis seemed to imagine.

[3] In a sense, the Southern states were “developing economies” within America’s own borders. Wages were lower, labor unions weren’t well-established, and state governments were pro-development. For more, see: American Union, stay away from me uh. | waroftheworldblog

[4] Justin Lahart, “How the U.S. Slipped From Top Manufacturing Perch,” WSJ, 14 April 2025.

Diary of the Second Addams Administration 18.

Posted on May 6, 2025 by jsh54

Americans have come to depend on cheap Chinese products. Conversely, China has come to depend on massive exports of its goods to the United States. Hence, President Donald Trump’s imposition of a 145 percent tariff on imports from China will shock both the American and Chinese systems.[1]

What does the United States get from China? At least 75 percent of electric fans, dolls, video game consoles, tricycles, food processors, and smart phones.[2] Apple, Dell, and Hewlett-Packard all source many of their products from Asia (China, Taiwan). The tariffs could push the price of a basic iPhone 16 from $799 to $1,140.[3] China also produces and exports renewable energy equipment, lithium batteries, and electric vehicles.

Much of the American reaction to the trade war with China has been “Eeeek!” One newspaper warned of “an economic crisis that could leave America poorer for generations.” A West Coast port executive said that “essentially all shipments out of China for major retailers and manufacturers have ceased.” As a result, one business economist[4] warned of “empty shelves in U.S. stores in a few weeks,” and “Covid-like shortages for consumers.” These stoppages will cascade into job losses for longshoremen, truckers and railroads, and retail sales.[5] There could be a grievous toy shortage at Christmas because 80 percent of America’s toys are made in China.[6]

What does China get from the United States? Soybeans. Some kinds of computer chips. And many jobs. All the stuff no longer going to America either has to be sold somewhere else, or stock-piled in warehouses, or not made at all. Neither of the last two is sustainable, politically or economically, for long. So China has to find a new target for its exports.

Which country will blink first? Is there a reasonable compromise that can be negotiated?

Trump has wobbled on China to a degree. He exempted some consumer electronics (smart phones, laptops) from most of the China tariffs. He also indicated that he was ready to negotiate with China and that Xi Jinping had called him. At the same time, he seems determined to “decouple” the economies of the two countries.[7] At the very least, he said, “China will probably eat those tariffs. Everything is going to be fine.”

For their part, the Chinese seem not to have anticipated the “speed and ferocity” of the American trade counter-attack on China’s economic strategy.[8] China’s public response has been to dig in. “Bowing to a bully is like drinking poison to quench thirst.”[9] Threats of retaliation abound. When Trump said that Xi Jinping had called about tariffs, the Chinese Foreign Ministry basically called Trump a liar. Hard to know which of those two to believe.

[1] “Decoupling: The U.S.-China trade divorce, The Week, 25 April 2025, p. 34.

[2] Ibid.

[3] “Inflation: How tariffs could push up prices,” The Week, 18 April 2025, p. 17.

[4] As in an economist employed by a business, in this case an asset management firm.

[5] “Trump shrugs off warnings over trade war costs,” The Week, 9 May 2025, p. 4.

[6] Feels heartless denying kids their hearts’ desire at Christmas. Still, Boxing Day can be a time for repentance.

[7] The historian Stephen Kotkin has observed that Trump often talks out of both sides of his mouth, but if you look at what he actually does, you can tell what he really means. His remarks bore on Iran’s nuclear program. He thinks Trump means to stop it, whatever that may require. There’s no reason not to apply the same view to China trade.

[8] “Decoupling: The U.S.-China trade divorce, The Week, 25 April 2025, p. 34.

[9] Given China’s behavior toward its neighbors in Taiwan and the Philippines, this is comic.

China Tariff Shock.

Posted on April 28, 2025 by jsh54

Once upon a time, people harbored high hopes for post-Mao China.[1] The country adopted “market socialism,” invited Western capital and experts to facilitate its transition to participant in the global economy, and sent many of its own best and brightest to study and work in Western countries. Employing a very simplified understanding of the West’s own history, people conjectured that a market economy would grow, enrich, and make assertive a middle class that would insist upon a more responsive government. China would “Westernize.”

To accelerate this process, in 2001, China won admission to the World Trade Organization (W.T.O, successor to the General Agreement on Tariffs and Trade, G.A.T.T). “It did not have the effect that Long Shanks planned.”[2] Instead, for ten years, cheap Chinese goods deluged foreign markets. In the United States, 2.4 million jobs were lost, a million of them factory jobs. All this happened between 2001 and 2011, and it kept happening at a slower pace afterward. In 2019, China earned a trade surplus with the rest of the world of more than $500 billion. Nobody did anything about it. Why not? Well, the price of many consumer goods fell. Consumption increased for many people. The number of service jobs increased, so lots of people weren’t working in factories, “dark, satanic” or otherwise. “We’re doing better, right?”[3]

Since 2020, China has pursued a major export offensive on top of this already large volume of exports. It has done so by subsidizing manufacturers of its already low-cost products to the tune of $1.9 trillion over four years.

In one sense, the offensive has succeeded: in 2024 it earned a surplus of almost $1 trillion. Since 2013, China has deployed much of its new-found wealth to entangle other counties in a complicated relationship that makes tariff retaliation against China difficult.[4]

In another sense, the offensive has failed: it has aroused international alarm and resistance. Beyond the United States, the affected industries range from Indonesian textile factories to the German auto industry. The first phase of the counter-attack against China’s trade offensive appeared in President Donald Trump’s first term with tariffs on China. These were retained by the Biden administration. The Chinese responded by moving some of its production “off-shore’ to other countries like Vietnam and Thailand, Turkey and Hungary, and—of course—Mexico.[5] Trump’s second term began with new and gigantic tariffs on China, but also on many other countries.

The American tariffs close off an estimated $400 billion in sales to the American market. If China can’t cut back production, those goods will have to go elsewhere. Other countries have begun to follow Trump’s lead. They are hampered by those previously-established economic relationships with China.

Trump’s tariff barrage is best understood not as the start of a “Trade War.” It’s best understood as a counter-attack in a trade war that has already been going on. It’s a trade war which the United States and many other countries have been losing. Through not fighting back.

[1] “China Shock 2.0” The Week, 25 April 2025, p. 11.

[2] Reference to another Mel Gibson historical wish-it-had-been-this-way mess.

[3] To belabor the obvious, both the job losses and the failure of solidarity eventually had large political effects.

[4] See: Belt and Road Initiative – Wikipedia

[5] See: How Chinese firms are using Mexico as a backdoor to the US

Diary of the Second Addams Administration 17.

Posted on April 23, 2025 by jsh54

Has the post-Second World War period of ever-increasing “globalization”[1] come to an end? If it has, then what will replace it? Will it be a return to widespread “protectionism”?[2] Will it be a restricted and managed globalization within large economic blocs protected by a high common external tariff?

Some will attribute the troubled state of international affairs to President Donald Trump’s rash and unsteady imposition of tariffs on anyone who crosses his line of sight. In this view, “more trade is better, especially for the United States.”[3] Trump’s tariffs will push up prices for consumers while slowing down economic activity. It will make it “more costly for U.S. manufacturers to source vital parts and machinery.” The result may be “stagflation” (stagnation plus inflation), such as what beset America in the late 1970s and early 1980s.[4]

One could also attribute the smoldering crisis to a long-running combination of Chinese aggression with American complacency.

Chinese aggression should and does strike fear in the hearts of men. China has used hard work, the mobilization of national talents, the repression of consumption below what might have been, the conversion of a vast population of under-employed peasants turned into tireless industrial workers, borrowed Western expertise, intellectual property theft on a grand scale, manipulation of the international trade regime, the repression of individual liberty by an autocratic state, and appeals to national pride. Economic power has been transformed into military and diplomatic power. China has begun to throw its weight around in the Far East and beyond. The goal seems to be to evict the United States from the Western Pacific. That would be a first step to establishing Chinese hegemony over South Korea, Japan, Taiwan, the Philippines, and Vietnam.[5] On the other hand, there’s a particularly American character to China’s policy. As the political philosopher George Washington Plunkitt once said, “I seen my opportunities and I took ‘em.”[6]

The manifestations of American complacency appear in the triumphalism following victory in the Cold War;[7] the misinterpretation of Francis Fukuyama’s The End of History and the Last Man Standing; the combination of a long decrease in defense spending to yield a “Peace Dividend”; and the cornucopia of material benefits unleashed by ever more free trade. Toy shops and coffee shops and retirement savings will now suffer. Nobody wants discomfort.

[1] Defined as progressive rounds of reducing barriers to trade, finance, and migration.

[2] Defined as individual nations or blocs of nations raising up tariffs and non-tariff barriers to trade, combined with restrictions on the movement of capital and people.

[3] Republican Yoda Karl Rove in the Wall Street Journal, quoted in “Global order: Goodbye to the age of free trade?”, The Week, 18 April 2025, p. 34.

[4] Tom Orlik in Bloomberg, quoted in ibid.

[5] Strategists refer to Japan, Taiwan, and the Philippines as the “First Island Chain.” South Korea and Vietnam can be considered the mainland anchors of this chain. Together, they provide the geographic positions from which to limit Chinese power projection. The loss of that island chain to Chinese domination would cripple both American trade relations with those countries and power projection. For some idea of how the United States reached this advantageous position, see Evan Mawdsley, Supremacy at Seas: Task Force 58 and the Central Pacific Victory (2025).

[6] “I Seen My Opportunities and I Took ‘Em.”: An Old-Time Pol Preaches Honest Graft

[7] Queen – We Are The Champions (Live Aid 1985)

Diary of the Second Addams Administration 16.

Posted on April 22, 2025 by jsh54

The United States and China continued hammering each other in mid-April 2025. Both countries raised their tariffs on each other (the US to 145 percent and China to 125 percent). China barred is airlines from taking delivery of Boeing jets and its rare-earth and magnet producers from exporting to the United States; while the United States tightened the screws on AI technology exports to China. The United States showed some interest in negotiating, but China wouldn’t bite.[1]

The incoherence of the Trump administration’s tariff policy with regard to the rest of the world flooded into the China policy. President Donald Trump said that there would be no “carve-outs,” then crawfished again. There would be only a 20 percent tariff on cell phones, laptops, and modems. Then he crawfished again: new tariffs on electronics and semi-conductors would soon be announced.

Regardless of their incoherence, the main point in the eyes of some critics lay in the pain that they inflict on ordinary Americans. Tariffs will force up prices and disrupt supply-chains. “Mom-and-pop shops that rely on Chinese imports” will suffer.[2] “Mom-and-Pop! Their lives of hard work and service to the local community wrecked by Trump’s tariffs!” Well, actually, most of the Mom-and-Pop stores got destroyed decades ago by Walmart and Amazon. This is just evoking a nostalgic image for lack of a good argument.

Other critics warned that the tariffs will just make China mad. It will retaliate in ways that hurt Americans and America. China can restrict exports (as with rare earths and high-end magnets); China can blacklist American firms, driving down their profits and the value of their stocks; China could sell off a part or all of its $760 billion in U.S. Treasury bonds.

They aren’t drawing the logical conclusion. First, we’re very vulnerable to Chinese pressure and, to some degree, dependent upon Chinese good will to fend off disaster. So we should make nice? How about we remember the old adage that “If I owe you $100, then I have a problem; if I owe you $1 million then you have a problem”?

Rare earths and magnets are described as “critical to manufacturing everything from cars and planes to drones and weapons systems.” So we are dependent on our chief rival for these goods? In case of open conflict, or even just tense bargaining over important issues, China could boycott their export to the United States? With what effect on our ability to produce “cars and planes… drones and weapons systems”? OK, suppose we got into a dispute not with China, but with China’s ally Russia? I know that’s far-fetched, but give me some rope here. Say Russia attacked Ukraine. Would fear of China withholding key resources cause us to support Ukraine less fully than we could do and might want to do? In any case, would it be a good idea to try to regain our technology industrial independence?

Second, the United States isn’t really hammering China with tariffs. Almost alone and in his usual rabbity fashion, Donald Trump is hammering China. Lots of right-thinking people are trying to distance themselves from a president engaged in a trade war with our deadly enemy in economy and international relations. Who do you think Taiwan, South Korea, Japan, and Australia would want to win that one, if they have to choose? Who would you choose?

[1] “Trade war with China threatens U.S. economy,” The Week, 25 April 2025, p. 5.

[2] New York Post, quoted in “Trade war with China threatens U.S. economy,” The Week, 25 April 2025, p. 5.

Diary of the Second Addams Administration 15.

Posted on April 22, 2025 by jsh54

Since the end of the Second World War, the United States has led the way in the construction of an international economic system based on “relatively free trade bound to relatively predictable governance and the rule of law.”[1] Along the way, according to some critiques, America’s trading partners have exploited the system to America’s disadvantage. Now, President Donald Trump has alleged that many of America’s trading partners engage in “unfair trade practices.”[2] In early April 2025, Trump imposed a 10 percent basic tariff on all imports, plus additional tariffs as high as 50 percent on other countries.[3]

The reaction to this announcement got ugly: the stock market lost $10 trillion; China imposed a retaliatory 84 percent tariff on imports from America; and all sorts of people howled. JPMorgan said the tariffs would probably cause a recession; and Lawrence Summers, the former Secretary of the Treasury and former President of Harvard University known for giving it with the bark on, predicted such a recession would cost 2 million Americans their jobs. Other critics argued that the tariffs would dismantle the American-led international economic system. Who will profit? China will profit, because all the countries bruised by American tariffs and incoherence might look to China as a new leader. Xi Jinping “is unlikely to miss the priceless opportunity Trump has given him.” Really? China will abandon its long-running policy of repressing domestic consumption and conquering foreign markets in order to replace the Americans as the world’s leading consumer-nation?

Then Trump abruptly crawfished, suspending the implementation of his “additional” tariffs on most countries for 90 days. For these countries, the administration was willing to negotiate, if they wanted to do so. However, he jacked up the tariff on Chinese goods to 125 percent in retaliation for China’s retaliation for Trump’s initial tariff increase. Treasury Secretary Scott Bessent said that trade negotiations had been the plan all along.[4]

Critics on left and right belabored the incoherence of the tariffs. Acknowledging that criticism to be on-target still leaves a question.[5] Is it useful to distinguish between Trump’s tariffs policy toward China and Trump’s tariff policy toward the rest of the world? Trump has flip-flopped on everyone except China. With China, he has doubled-down. That country produces many goods that were invented in America and are important consumer goods, like cell and computers.

What is wrong-headed about Trump’s tariff war is that he has not offered a coherent plan to rally the rest of the world against the Chinese export giant while negotiating tariff equality with America’s other trading partners. China has been steam-rolling many countries. There is a lot of fear and resentment directed at China abroad in the world. The makings are there for a better American-led system.

[1] Tom Rogan, Washington Examiner, quoted in “Trump dials down tariffs, but not for China,” The Week, 18 April 2025, p. 4. On the institutional structure of the American-led, rules-based order, see: Bretton Woods system – Wikipedia; General Agreement on Tariffs and Trade – Wikipedia ; and World Trade Organization – Wikipedia

[2] If he means that other countries impose higher tariffs on American goods than America imposes on goods from those countries and/or they raise up other “non-tariff barriers,” then he’s pretty much right.

[3] “Trump dials down tariffs, but not for China,” The Week, 18 April 2025, p. 4.

[4] Pee-wee’s Big Adventure (3/10) Movie CLIP – I Meant to Do That (1985) HD

[5] I’m willing to stipulate that it is an ignorant, probably stupid, question. But I want to ask it all the same.

Diary of the Second Addams Administration 14.

Posted on April 9, 2025 by jsh54

History lessons. The United States was a high tariff nation for a long time.[1] By 1929, the average tariff on imported goods was 36 percent. The Smoot-Hawley Tariff of 1930 raised the tariff by 6 percent.[2] In comparison, the average American tariff under recent administrations has been 2 percent. Trump’s tariffs elevate that to 23 percent. So, for the moment, the Trump tariffs have a greater impact than did the Smoot-Hawley tariff. (Give it a few years and maybe we’ll be living with still-higher Vance tariffs.)

In 1971, President Richard Nixon wanted foreign countries to revalue the dollar. To nudge them toward speedy agreement, he imposed a 10 percent surcharge on imports. He got speedy agreement and the surcharge went away.

Today. How serious a blow to the American economy are the Trump tariffs? Never mind the stock market and the headlines in the New York Times.[3] The American tariffs (at least the current high rates) aren’t likely to topple a row of dominos. Most countries aren’t eager to launch a trade war with anyone just because the United States has launched one with everyone. Most countries remain committed to “globalization” and comparatively free trade.

What is true of Europeans and non-Chinese Asians is also true of many Americans. One recent poll reported that 54 percent of respondents opposed the tariffs, while 42 percent supported them. Pressure from constituents may bring Republican members of Congress off the sidelines, at least on this issue.

Then what about retaliatory tariffs on American goods? This sounds a little odd when Americans are being told that tariffs on foreign imports is really a tax on ordinary Americans. Same goes for tariffs on American goods in foreign countries. Do democracies abroad suddenly want to impose possibly long-term “tax” increases on their own constituents?

So, it is not clear if American tariffs and foreign retaliation are a done deal for the long haul. Many of the target countries want to cut a deal with the United States. China is an exception.[4] It’s fair to say that people are not entirely sure what President Donald Trump wants. Does he want tariff equality with most of America’s trading partners, while battering the daylights out of China? Does he want a “fortress America,” as many people believe or hope or fear? If he does want a “fortress America,” would that system survive the end of his term?

In 1932, the British created a system called “Imperial Preference”: low to no tariffs around the members, combined with a high external tariff directed against the Americans. Could Trump use tariff negotiations to create something similar? Tariff equality within the bloc and high tariffs by directed against China.

[1] Greg Ip, “An Unpopular and Survivable Trade War,” WSJ, 8 April 2025.

[2] However, it denominated tariffs in dollar terms, not in percent of price terms. As prices fell all around the world in the early Thirties, the absolute cost of the imports increased by much more than 6 percent. They rose as high as an additional 19 percent above the 36 percent level.

[3] Wait. Wall Street and the NYT are on the same side? The problems of the Democrats in a nutshell. “We are the people our parents warned us about.”

[4] It may turn out that Canada is also an exception. Canadians are the nicest people in the world. Until they’re not. In Normandy in Summer 1944, an attacking Waffen SS unit over-ran a Canadian Army field hospital. They killed everyone. Then the Canadians counter-attacked and recaptured the hospital. The Canadians never “captured” any more Waffen SS troops.

JMO 1.

Posted on March 31, 2025 by jsh54

Both the Wall Street Journal and the New York Times have been squalling for years about how China controls most of the “rare earth” metals that are vital for much modern technology.[1] Also, they are hard to find and difficult to develop in the United States. That is “We’re doomed!” Then, turns out that there are important “rare earth” sources in…wait for it…Greenland and Ukraine. President Donald Trump has made plain his determination to get a tight grip on both. “Oh what an awful man he is, trying to insure the well-being of the United States in such a rude fashion!”

The same religious-fanatic dictator has been ruling Iran for 35 years. The elections are rigged to keep out any representative of “liberal” opinion; there’s a big political prison into which prisoners disappear and from which they rarely emerge; the morality police can get away with murdering girls who don’t wear the hijab properly; corruption is rife and the upper ranks of society live well; living standards low for most people, in large part because the country spends a lot of its oil wealth on weapons systems and on the Revolutionary Guards Corps; the regime built a “ring of fire” around Israel not as a defense against the “Zionist entity,” but as the front line in Iran’s drive to revolutionize the Middle East on its own model; and the regime is close to producing nuclear weapons.[2] Iran also is allied with Russia, China, and North Korea. Lots of Iranians are unhappy with their masters. Help them pressure the regime for meaningful change.

America built its economic power behind a high tariff wall in the later 19^th and early 20^th Century. Yes, that kept prices for consumers high. It also created a huge number of blue collar and white collar jobs; vast national wealth, and the industrial base that decided the outcomes of both World Wars and the Cold War. After the Second World War, the United States adopted a free trade policy as a way to restore prosperity to a war-ravaged world. Part of this plan involved accepting higher tariffs on American imports than the Americans imposed on their trading partners.[3] The US was big, rich, and easy, while everywhere else was a pile of rubble.

By the end of the Cold War (c. 1990), these conditions no longer applied. It might have been a good time to renegotiate trade relations with many countries. “But you didn’t do that, did you?”[4] Instead, we doubled down by admitting China to the World Trade Organization (WTO). Cheap consumer goods flooded the country, wrecking many industrial areas of the United States. In the first Trump administration, the president wall-papered China with tariffs and harassed Huawei, allegedly because it posed a security threat. First, enlightened opinion deprecated this departure from “norms.” Then Biden continued them. Now President Trump is hammering everyone with tariffs. People say “well the tariffs on China are OK, but he’s also hitting our friends and allies.” Give it a couple of years and everybody will be on-board, just like before.

Trump’s cabinet is mostly made up of clowns. The president is pursuing real policies along with the rest of his nonsense. This is what you get when the Establishment abdicates on solving big problems for decades.

[1] Take a gander at Rare Earths – The New York Times

[2] Now big chunks of Iran’s client states are reeling from hard blows struck by Israel.

[3] The US also accepted Canada adjusting the exchange rate to make American goods expensive in Canada and Canadian goods cheap in the US.

[4] Looking at you, William Jefferson Clinton. We should have re-elected George H. W. Bush.

Diary of the Second Addams Administration 13.

Posted on March 27, 2025 by jsh54

President Donald Trump sees great virtues in building a tariff wall around America. Is that good or bad? It depends.

Trump’s argument is that tariffs are good for America over the long run, even if they have short-term costs. “Other countries have used tariffs against us for decades, and now it’s our turn.” Trump has claimed that tariffs will make the American economy “even more self-sufficient, producing more of its energy, lumber, steel, and computer chips than ever before.”[1] If those hopes come true, there will many jobs—white collar as well as blue collar—created. The American economy’s supply-chain will become much more secure in a time of rising international tensions. Trump has conceded that America would experience a “period of transition,” which might include a recession.[2]

Critics argue that tariffs are bad for America and for everyone else. First, tariffs raise prices for consumer countries, not for producer countries.[3] Second, if one country raises tariffs, the other country or countries will raise tariffs on the first country’s goods. This will reduce exports in what becomes a” trade war.” Slowing down the domestic economy by raising consumer prices and reducing employment in sectors tied to exports could bring on a recession.

President Donald Trump has followed a very erratic course on actually imposing tariffs. Is that good or bad? It’s bad.

In early March 2025, Trump imposed a 20 percent tariff on goods imported from China[4] and 25 percent tariffs on goods from Mexico and Canada.[5] China responded with 10-15 percent tariffs on American corn and wheat. The stock market tumbled and Trump quickly announced a month-long pause on tariffs on imported cars and parts. The Wall Street Journal wondered “which side of the tariff bed Trump will wake up on” in days to come? They got a quick answer. In mid-March 2025, Trump imposed a 25 percent tariff on all steel and aluminum (both unprocessed and turned into something else—look at your soda can) imported into the United States.

No one seemed to care about the tariff hike for China, but critics insisted that Canada and Mexico take about a third of America’s exports and send the US valuable commodities.

Is this what got Trump elected? Journalists posit that Trump won election on the promise of a vibrant economy, low inflation and unemployment, and controlled immigration. That’s not all they’re getting. One recent poll reported that 56 percent of respondents disapproved of Trump’s management of the economy. He tariff-bombed China in his first administration and talked about tariffs in the campaign for his second. Apparently, no one took him seriously. Now he is acting like a real lame-duck president: doing what he thinks is right regardless of the polls or the pols—or the stock market. Albeit in an erratic, bloviating, Trump-like fashion.

[1] Quoted in “The Trump economy: Adrift in a sea of tariffs,” The Week, 28 March 2025, p. 34.

[2] “Trump tariffs cause stock market whiplash,” The Week, 21 March 2025, p. 4.

[3] Which is exactly the purpose of tariffs. More expensive imports create a market for cheaper domestic producers.

[4] Previously 10 percent. The key question becomes whether the American producers can deliver equal goods at a lower cost.

[5] Even though all three countries are members of the United States-Mexico-Canada Agreement (USMCA) that replaced the North American Free Trade Agreement (NAFTA). “U.S. tariffs spark North American trade war,” The Week, 14 March 2025, p. 5.

Diary of the Second Addams Administration 12.

Posted on March 27, 2025 by jsh54

For a long time, the United States has imposed lower tariffs on the goods of its trading partners than those trading partners have imposed on American goods. The US did this because the national strategy was to foster a world of openish markets in pursuit of “peace, prosperity, and American exports around the world.”[1] A month into office, President Donald Trump is announcing the end of the Age of America as the “benevolent hegemon.” Now it is “pursuing its own interests first.”[2] Trump’s actions began wreaking havoc in the international economy. He doubled the tariff on Chinese goods, announced a looming 25 percent tariff on imported steel and aluminum, and raised the possibility of tariffs on semi-conductors, drugs (and not the fentanyl kind either), and cars.

Take the example of cars. About 8 million of the 16 million new cars sold in the United States each year are manufactured abroad, chiefly in Germany, Japan, and South Korea. Many more “foreign” cars are manufactured in American plants. In late February 2025, President Donald Trump raised the idea of imposing a 25 percent tariff on car imports.[3] One solution might be for foreign car-makers to increase production in their American facilities, while reducing exports to the United States. Fine, except that a) it takes along time to build a car plant and recruit a work force, and Trump might be out of office before the plants are ready, taking his tariffs with him back to Mar-a-Lago; and b) if they cut manufacturing in their home country, they will have to lay off many workers there, as well as taking the political heat that comes with the lay-offs.

Then there’s steel.[4] Many foreign countries subsidize their own steel industries at the expense of American producers. Eighty percent of America’s steel imports come from “friendly” countries (Europe, Japan), rather than from China.[5] Trump wants to privilege American steel-producers over those foreign competitors. American steel-consumers—car companies for example, and their American customers—will have to bear the transitional costs.

The push-back came swift and hard. Basically, “He did this in his first term and the results were BAD!” Prices rose, American companies saw their sales fall, and car companies came under a lot of financial stress.[6] Moreover, bullying our friends gains us nothing. Canada—the country that invented hockey—dropped the gloves, at least rhetorically for the moment.[7]

On the other hand, some observers thought that the threat of tariffs could serve a useful purpose. It could bring foreign trading partners to renegotiate existing trade deals.[8] In short, Trump isn’t serious about actually imposing the tariffs.

But what if he is serious? And what if he insists on including the reduction of Non-Tariff Barriers (NTB) to trade? This would include things like currency manipulation, and the taxation and regulation of American businesses abroad. Eeeek!

[1] “Trump’s tariffs: A new era of protectionism,” The Week, 28 February 2025, p. 34.

[2] See Oren Cass, quoted in “Tariffs: Does Trump know what he is doing?” The Week, 14 February 2025, p. 6.

[3] “Trade: Tariffs may hike foreign car prices,” The Week, 28 February 2025, p. 32.

[4] “Trum brings back steel tariffs,” The Week, 21 February 2025, p. 32.

[5] That is, our “friends” have been harming us for decades in the service of domestic interest groups.

[6] “Trump’s tariffs: A new era of protectionism,” The Week, 28 February 2025, p. 34.

[7] “Canada: Proudly resisting Trump’s bullying,” The Week, 14 February 2025, p. 14.

[8] “Tariffs: Does Trump know what he is doing?” The Week, 14 February 2025, p. 6.

waroftheworldblog

Smile! You’re at the best WordPress.com site ever

Tag Archives: Tariffs