As trade war escalates, Trump helplessly ‘ordered’ US companies out of China – Reason.com

President Donald Trump’s trade policies have always been, at their core, an exercise in centrally planned economy and petty authoritarianism.

Whenever the president tweets in rage about the “America First” economy or makes unverified promises about how his tariffs will bring jobs back to the United States, what he is really saying is that the government federal government knows how to build international supply chains better than private companies. do. Each new round of tariffs is a way to punish American companies for putting the interests of their customers first by sourcing goods in the most cost effective way. When White House economic advisers like Peter Navarro question the patriotism of American CEOs who do business in China, the subtext is that private companies should operate as the president sees fit, not as their shareholders, officers and managers do.

If there was any doubt about those conclusions, Trump squashed it on Friday.

I want to say…Let’s go. “US companies are urged to immediately start looking for an alternative to China.” Even coming from the most powerful chosen one on the planet, it looks like a crisis of petty tyranny.

It’s also a sign that even the U.S. presidency is largely powerless in the face of market mechanisms Trump imagines he can tweak with a tweet. Indeed, if the tariffs worked as Trump claims, he wouldn’t need to “order” American companies to do exactly what the tariffs are supposed to force them to do.

The president cannot revamp global supply chains in the blink of an eye, but his trade policies continue to hurt global markets. The Dow Jones Industrial Average plunged 500 points after Trump’s “hereby ordered” tweet – a signal, perhaps, that the stock market understands the effectiveness of central planning. Meanwhile, China threatened to escalate the trade war on September 1 if Trump goes ahead with his plan to impose a new round of 10% tariffs on around $ 300 billion in Chinese imports. . On Friday, the Chinese government announced new rates on American cars, petroleum and industrial products, expanding for the first time its retaliatory efforts beyond agricultural products.

“The point is, no one wins a trade war, and the continued escalation between the United States and China is straining the US economy, raising costs, undermining investments and upsetting markets,” Myron said. . Brilliant, head of international affairs for the US Chamber of Commerce, in a statement.

The president’s orders are unlikely to make it easier for US companies to move production out of China. In some cases, tariffs have encouraged manufacturers to move production to India, Vietnam and even Mexico, but this is only an acceleration of changes that were already underway before the trade war, according to AT Kearney. , a manufacturing and trade consulting firm including “Relocation index“Measures domestic manufacturing of consumer goods relative to imports of the same products from 14 lower-cost countries in Asia. Vietnam’s exports to the United States have doubled since 2013, for example, but the rate of growth soared during the first quarter of 2019.

These higher input costs have hurt American manufacturers who import components – companies like the Wisconsin-based company Primex family of companies, which has been doing business in China for 30 years. The “indirect costs” of the trade war, such as the pressure to change supply chains, have been “enormous,” CEO Paul Shekoski said. Told Reason Last week.

If Trump wanted to help American businesses, he would end his destructive and an increasingly erratic trade war instead of “order” rage tweets that would be easier to laugh at if they weren’t yet another demonstration of how little he knows about what he imagines he can design.

Even if the tariffs fall short of their targets, while imposing immense economic costs along the way, there is no doubt that fundamental authoritarianism at the center of the project of economic nationalism. This mask began to slip off a long time ago. Today, Trump withdrew it.




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