Trump’s 6-Month Window To Limit Car Imports Might Lead To A New Trade War

President Trump will give the EU and Japan six months to agree to a deal that would “limit or restrict” imports of automobiles and their parts into the US. It is claimed that car imports threaten national security since they have hurt domestic producers and their ability to invest in new technologies.

In response, Consumer Choice Center Deputy Director Yael Ossowski warned that by making such a treat, President Trump asserted his intention not to proceed with a cooperative solution. Where there is no political will to cooperate on trade, there’s an increasing possibility of a trade war.

“First and foremost, claims that car imports hurt domestic producers and their investing ability are ignorant of the interests of American consumers. Should Japan and the EU limit their supply of cars, consumers in the US will have to bear the costs in the form of higher prices. Protecting an industry at the expense of domestic consumers has never made any country better off,” said Ossowski.

“Trump’s decision will, ironically, hurt the ones it seeks to protect. The US car industry is heavily dependent on imports of car parts. If the EU and Japan limit their supply of car parts to the US market, the domestic sales and production will be restrained. The consequences will be numerous and damaging, and all Americans will have to bear them.

“Chances are high that Trump’s decision will spark a new trade war and impede international cooperation. Trade wars are always lose-lose. They must be stopped in the early stages and prevented altogether. If President Trump cares about the welfare of consumers and producers in his own country, it is high time he learned that free trade is the only way forward,” concluded Ossowski.

The Consumer Choice Center is the consumer advocacy group supporting lifestyle freedom, innovation, privacy, science, and consumer choice. The main policy areas we focus on are digital, mobility, lifestyle & consumer goods, and health & science.

The CCC represents consumers in over 100 countries across the globe. We closely monitor regulatory trends in Ottawa, Washington, Brussels, Geneva and other hotspots of regulation and inform and activate consumers to fight for #ConsumerChoice. Learn more at consumerchoicecenter.org.

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The real price of a new EU-US trade war

Last month, trade commissioner Cecilia Malmström told European trade ministers that if President Trump hits the EU with 25 per cent tariffs on cars, Brussels is prepared to hit back with tariffs on some $20 billion worth of American exports.

Trade wars don’t involve the outright destruction of military action, but both kinds of conflict put political ambitions and vested interests ahead of human welfare. And though the damaging effects of trade wars are not always immediately apparent, make no mistake, they are numerous, deep and extensive.

In March, President Trump reiterated his intention to impose tariffs on cars and car parts from the EU should the two parties fail to arrive at a comprehensive deal. The US Commerce Department had previously submitted a report to the White House in mid-February, concluding that Trump could justify the tariffs on national security grounds.

As with military intervention, what matters is an outcome, not a justification. If the US imposes a 25 per cent tariff on imported EU cars and parts, it would mean higher prices for US consumers and, ironically, damage the American car industry, which depends on imported parts. By the same token, if the EU retaliates, it will end up hurting not only US exporters, but European consumers too.

Protectionists, however, haven’t been very creative in their reasoning. One of their key motivations is rooted in the idea that tariffs protect  domestic industries. The EU has been extremely successful in employing this argument. Export subsidies pushed through the Common Agricultural Policy (CAP) were initially developed to guarantee high prices for European farmers, offset by import levies. Protecting farmers was the ostensible aim of the CAP.

What policymakers didn’t see, however, was that the CAP resulted in excess supply from national producers, coupled with a lack of demand from domestic consumers. What’s more, once the CAP was fully implemented in 1967, imports from the US covered by new tariffs declined by 40 per cent.

Did the policy achieve its goal of protecting European farmers? Certainly. Did the policy’s gains outweigh the costs? Absolutely not.

The cost of protectionism is consumer choice, or what economists call ‘welfare loss’. That basic insight seems lost on most policymakers, perhaps unsurprisingly when they face well-organised industry lobbyists with deep pockets and political influence. The prospect of possible job losses in a particular region or industry is always likely to weigh more heavily on a politician’s mind than the more widely dispersed benefits of free trade.

The agricultural industry is a case in point. European farmers know what they stand to lose if the EU opens its market to agricultural imports from across the pond. In much the same way, the US car industry knows it would suffer from proper competition with European car giants.

But do we as consumers know what we would lose and what we could potentially win with a more liberal trade policy? When was the last time we truly noticed an imported cheap good in the store?

Should the US impose a tariff and the EU retaliate, it’s likely most of us won’t even notice that we’re in a trade war. However, the US-China dispute demonstrates amply that, just as with real wars, those fought with tariffs do not have winners.

The latest data suggests that the trade war with China has cost American consumers $20 billion and US exporters $16 billion. Both the US and Chinese economies each lose about $2.9 billion annually because of Chinese tariffs on soybeans, corn, wheat and sorghum alone. It’s a stark reminder that trade wars not only hurt the side that starts it, but also the one that retaliates.

As with every war, it is often assumed that threats and acts of aggression, in this case, tariffs, will bring about victory – certainly that seems to be Trump’s view. Ultimately, however, they always end up causing destruction. Simply put, there is no argument for protectionism that justifies its impact on all of our welfare.

As in the Prisoner’s Dilemma, both parties are better off if each chooses to cooperate. In this case, the EU and the US will both win if instead of seeking to sucker their opponent, they work together on a mutually beneficial trade deal.

Maria Chaplia is a media associate for the Consumer Choice Center.

Originally published at https://capx.co/the-real-price-of-a-new-eu-us-trade-war/?fbclid=IwAR3gyZAHqvPflQK1D9TseLZjE8-_O4WqM9BH_PUoff_z0gzvAd8l116t_Qg

Broad Coalition calls on Congress to reclaim its authority on tariffs

Arlington, VA – A coalition of 30 organizations, including the Consumer Choice Center, led by Americans for Prosperity (AFP) and Freedom Partners Chamber of Commerce released a letter today encouraging lawmakers to reclaim their tariff authority, which has been delegated to the executive branch.
Read the letter HERE
In the letter, the groups write:
“As the Senate Finance Committee begins its important work of considering legislation related to tariffs, we write to urge you to include important priorities in any proposal put forth by the Committee.
“Article I, Section 8 of the Constitution provides Congress with ‘the power to lay and collect taxes, duties, imposts and excises.’ Over the years, however, some authority related to tariffs has been delegated to the executive branch. As a result, the president has unilaterally imposed tariffs – which are taxes on Americans – on more than $300 billion in imports last year without the explicit approval of the peoples’ elected representatives in Congress.
“Congress now has an opportunity to reclaim some of this tariff authority, with the Senate Finance Committee leading the way. … As the committee continues to review and craft legislative proposals, we stand ready to assist and support you in this endeavor.”


European Union and United States should agree on no tariffs on either food or cars

Trade representatives of the European Union and the United States are meeting today to discuss the scope of EU-US trade talks. The United States argues for an opening of trade relations on food, while the European Union wants to avoid the introduction of tariffs on automobiles.

In response, Bill Wirtz, Policy Analyst at the Consumer Choice Center (CCC), argued that there was an easy compromise to be found here:

“The essential question is: why can’t we have both? Free trade on food means more choices and better quality food for European consumers, and free trade on cars will mean more choices and better quality for American consumers. The goal should be the bring tariff and non-tariff barriers done to an absolute minimum, ideally to zero,” said Wirtz.

“Some EU leaders, including French president Emmanuel Macron, argue in favour of protectionism on food, in order to court the vote of the agricultural sector. That is short-run economic thinking, and hurts consumers. Protectionism has been intellectually bankrupt for centuries, and it’s time we admit it,” said Wirtz.

“We don’t know what the future holds. Maybe the roles will be reversed in a couple of years, and consumers will be longing for European food and American cars. In any way, it shouldn’t be the role of these trade representatives to restrict consumer choice. The European Union praises the advantages that free trade has had for this continent. It shouldn’t be any different for those across the Atlantic,” concluded Wirtz.

Sorry Mr. Trump, we’re not “Chinese propaganda” on trade

This week, President Donald Trump took to Twitter to denounce several articles in the Des Moines Register as Chinese “propaganda ads” because of the facts presented on trade and tariffs.

Included was an article written by the Consumer Choice Center that revealed the impact of tariffs on communities in North and South Carolina, which could affect up to 150,000 jobs in the chemicals, transportation equipment, and machinery industries that rely on exports, more than 36 percent of them in the Charlotte area.

“There is no Chinese conspiracy on trade. The real conspiracy is against the American people, who suffer when tariffs are enacted and goods are made more expensive,” said Yaël Ossowski, deputy director of the Consumer Choice Center, a consumer advocacy group located in Washington, D.C.

“The fact that the president would characterize factual analysis on the impact on workers and consumers as ‘Chinese propaganda’ reveals that this trade war has not been thought out. Ordinary men and women across America have to pay higher prices for products when tariffs are enacted in order to offset the imposed taxes. Tariffs are taxes, plain and simple.

“Pointing out the economic lunacy of enacting a trade war that will impact small and medium-sized businesses across the country, including the employees in those firms and at firms that rely on them, is vital and necessary, and the Consumer Choice Center will never cease from doing so,” said Ossowski.

“That’s why we launched the #freetrade4us campaign, and why we are seeing such great response from the consumers we represent who have already signed our petition for more free trade, not less.

“We hope the president reverses his policies on trade and tariffs and allows American businesses and consumers to enjoy low prices and free trade that can make everyone more prosperous.”

Trump’s Free Trade Suggestion remains Unheard

During European Commission president Jean-Claude Juncker’s visit to Washington D.C, Donald Trump once again suggested a tariff-and subsidy-free trade area between the European Union and the United States. Yet, the American president continues to fall on deaf ears, for reasons that tell more about the EU than it does about ominous ‘Trumpism’.

The meeting in Washington seemed to have a positive announcement within, as both parties agreed on an end to tariffs, non-tariff barriers, and subsidies on non-auto related industries. In a joint press conference, both parties announced that the European Union would increase imports on liquified natural gas (LNG), as well as American soybeans.

The European Union Commission returned to Brussels in a self-congratulatory manner, claiming to have avoided a trade war. And yet, with the exception of free trade no non-auto industrial goods, as well as vague promises on avoiding retaliatory trade measures triggered by tariffs on steel and aluminium, the meeting was unproductive. The import of soybeans cannot be increased simply through a Commission president statement: there are no EU tariffs on soybeans, and if companies in Europe don’t magically decide to buy them, then literally is expected to change. On LNG, the story is comparable: the European Union has already been promoting LNG for years, and the press conference just reiterated that point.

Politico Europe conveniently called the whole process “The art of no deal“.

Juncker’s effort to charm Trump into believing that he scored a victory is sad, in comparison to the actual opportunity that President Trump presented to the EU. Not only did Trump repeat during Juncker’s visit in D.C that he’d prefer a free trade deal with Europe that’d exclude all kinds of tariff-barriers, he also repeated the said statement in a tweet on Thursday:

However, if Juncker were to actually claim to walk in the footsteps of statesmen such as Robert Schuman, he’d embrace full free trade. In trade between rich and poor countries, both sides benefit, because they pay less for products, capital goods (machines, computers, etc.), and highly specialised labor. While it is true that job losses can occur when competition increases, it is important to account for increases in exports through free trade. The German car producer Mercedes might not like the competition of Italian cars on the German market, but since many Italians purchase his product, it’s manifestly more profitable to freely trade.

Protectionism is purely ideological because it is based on sentimental beliefs. If we were to take nationalism out of the picture, it would be difficult to argue that international free trade would be disadvantageous while domestic free trade (say, between cantons or provinces) is advantageous. This is particularly true in large trading blocs such as the European Union or, for that matter, the United States.

Tariffs are nothing more than a useful tool for the reactionary extremes of the right and left wings of the political spectrum. This is all the more visible in the sense that whenever Trump addresses the idea of freeing trade relations from all government intervention, nobody bothers to even address it.

Trump’s free trade suggestions remain unheard, because the solutions of subsidising or protecting through standards are immediate and popular. The European Union doesn’t follow an ideological line on free trade, it merely pretends to do so for the efficacy of political point-scoring.

The solution on trade isn’t “somewhere in the middle”. The idea that we’ll import some American products here and there, in order to get temporary concessions on some of our goods, is unproductive and hurts consumers. The only answer Jean-Claude Juncker should give when Donald Trump suggest completely free trade between the two continents is “yes please”.

How the Carolinas could suffer from Trump’s tariffs

In the last election and on the global stage, President Donald Trump talked tough on trade. It’s us versus them and we’re losing, he says. Put simply, he views the current trade deficit, when we import more from a country than we export to it, as detrimental to American jobs. Since January, that trade deficit is $264.4 billion.

Our biggest trading partners, China, Canada, Mexico, and Japan have been able to sell more to us than we’ve sold to them, and that has left us worse off, says Trump. Tariffs, taxes placed on specific products that enter our country, will help balance that.

But that isn’t true.

To begin, tariffs raise costs for foreign firms, but that means that American businesses that rely on imports to source their products will themselves face higher costs. And that gets passed on to the consumer.

What’s more, globalization has made the cost of sourcing products from foreign markets much cheaper. Supply chains are now global, and that’s a good thing. It’s made products cheaper for consumers and producers alike.

In response, countries may retaliate. Then, we’re looking at all-out trade war. Kentucky bourbon, Harley Davidson motorcycles, cigars, and even peanut butter exported to the 28 European Union countries will have additional tariffs beginning Friday. Canada and China have threatened more.

That’s bad news for both workers and consumers, regardless of who fired the first shot.

North Carolina exports $32.6 billion of goods and services, according to the International Trade Administration. Over 150,000 jobs directly rely on exports of chemicals, transportation equipment, machinery and more. More than 36 percent of those originate from the Charlotte area.

Who will be the most affected by tariffs? Think beer drinkers and employees at automobile assembly plants, as well as pork farmers and agricultural machine companies. And everyone who depends on these industries.

North Carolina brewers have warned that tariffs on aluminum and steel will affect their bottom line, potentially raising the price of beer for you and me.

Daimler and its subsidiary Mercedes-Benz project that retaliatory tariffs will hurt profits. That affects plants in Gastonia, Cleveland, High Point, and Mount Holly, and Charleston and Gaffney in South Carolina, which employ more than 6,500 people. Thousands more will be indirectly affected.

Both states voted for Trump in the 2016 presidential election. Why would he punish those voters with tariffs that will hurt investment and affect jobs?

There are thousands of goods produced here that rely on parts, commodities and special technologies from abroad. And millions of consumers and workers depend on trade of those goods for their well-being.

The U.S. is the dominant economic power because of decades of free trade and free enterprise. Workers and consumers in North and South Carolina benefit when products flow freely across our borders, and we’re better off for it. Tariffs are a step backward.

Yaël Ossowski is a Charlotte-area native, economic journalist and deputy director at Consumer Choice Center.

Original link: https://www.charlotteobserver.com/opinion/op-ed/article213598444.html

Boeing proves protectionism doesn’t pay

A stinging rebuke by the U.S. International Trade Commission last month was a hard defeat for Boeing.

The American aircraft manufacturer brought a case to the U.S. Department of Commerce last fall in hopes of sinking a deal with their Canadian competitor Bombardier to build narrow-body jets for Delta Airlines.

Agreeing with Boeing’s claims that Bombardier was “dumping” the planes in the U.S. at a cheaper price, the Department of Commerce promptly slapped a 300 percent tariff on the C-Series jets. But that decision was overturned by the ITC last month.

That was a cause for celebration in Canada as well as the United Kingdom, considering parts of the aircraft are fabricated in Belfast and upwards of 4,000 British jobs depend on the C-series jet project. In the U.S., thousands of consumers and travellers will soon benefit from a new fleet of aircraft.

On Feb. 13, we’ll learn the commission’s justifications for overturning the tariffs, which could prompt Boeing to take another approach to tackle its Montreal-based rival.

Beyond that report, what is clear now is that Boeing will have to compete if it wants to outperform the competition. Protectionism, though the mantra in Trump’s D.C., won’t pay. Crony capitalism cannot, in itself, be the main tool used by an international firm that wants to compete in today’s global economy. Entering the arena of politics can have serious blowback.

That’s a lesson the Chicago-based firm will certainly learn after causing flare-ups in London, Washington, and Ottawa. It even put Prime Minister Theresa May’s coalition government with the Democratic Unionist Party, who vowed to protest those Belfast jobs, on shaky ground.

What’s more, the company’s protectionist play has put its lucrative defence contracts in harm’s way. Canadian Prime Minister Justin Trudeau threatened to pull Boeing’s military contracts, and UK Defence Minister Michael Fallon said their actions “could jeopardise” Britain’s £500 million relationship with the aircraft firm to supply attack helicopters and aircraft.

For a company that relies on government contracts for a large chunk of its profits, this news is concerning.

If Boeing wants to stand its ground, it’ll have to work on rectifying these relationships. Putting jobs at risk in order to stake a monopoly isn’t a good look for business, and it is toxic in politics.

This will certainly serve as a warning to dozens of other multinational firms who hope to leverage trade by seeking government monopolies and tariffs targeted at their fierce competitors.

What this affair has proven, in due time, is that waging trade wars isn’t to anyone’s benefit, surely not consumers, workers, and citizens who have the most at stake.

Full article

Workers can’t afford tariffs or a trade war, President Trump

To the Trump protectionist hammer, every product imported looks like a nail.

On Monday, we learned that President Trump’s trade enforcer, U.S. Trade Representative Robert Lighthizer, announced new tariffs on solar panels and washing machines assembled outside the U.S.

For washers and dryers from companies such as Samsung and LG, steep tariffs as high as 50 percent will be applied while solar panels assembled abroad face a duty of 30 percent for the next year. These tariffs act as taxes on foreign companies who wish to do business in the U.S.

To the casual observer, the biggest losers of these tariffs appear to be India, Korea, and, most of all, China.

But considering that millions of American consumers depend on imports for dozens of their appliances and goods at home, these measures end up hurting them the most instead.

Nearly 95 percent of Americans shopped at a Walmart in 2016, a retailer which offers low prices by a vastly robust supply chain with links all over the world. Is it really inconceivable that prices would have to rise in order to overcome the import barrier imposed on the various actors in that supply chain?

Without question, targeted tariffs may benefit one particular American company by increasing the costs of doing business for its foreign competitors. But that means prices for ordinary consumers and businesses that depend on those imports must rise, making them less affordable.

An analysis by the Wall Street Journal on the effect of steel tariffs in 2014 demonstrated that the higher cost of imported steel raised prices as much as 60 percent on products which use steel as a base metal. Domestic steelmakers such as U.S. Steel may have gained in trade volume and stock price, but companies that rely on cheap steel for their products were forced to raise prices and restrict supply – and that was bad for American consumers.

When the Department of Commerce announced a 300 percent tax on imported jets from Canada, domestic airlines balked. And with good reason. Now they will have to pay a premium to source their fleets, causing the price of air travel to rise for ordinary consumers.

The fact that China subsidizes its various industries is no doubt a concern for American manufacturers, and it should be.

A look at the United States International Trade Commission’s website finds dozens of China’s alleged manipulations: aluminum and steel tubing, wooden cabinets, paper products, and fluorescent lights.

But though slapping tariffs on every product deemed harmful to American industry may be well-intentioned, it has a demonstrated negative effect on the consumers Trump purports to help.

Low tariff rates since the 1980s have been a boon to shoppers and domestic manufacturers who rely on imports to sell to Americans.

No doubt, throughout the course of his campaign, President Trump pledged his support for American workers in manufacturing. But with advances in technology and streamlined processes, our economy is beginning to produce more engineers than part-assemblers. And that allows more and more Americans to raise their standard of living at a fraction of the cost.

It’s been 88 years since the disastrous Smoot-Hawley Tariff exacerbated the worst effects of the Great Depression, igniting an international trade war that made everyone worse off, as revealed in a 2003 paper by the New York Federal Reserve.

President Trump is still celebrating the victory he achieved with the massive tax overhaul in Congress, lowering taxes for entrepreneurs and workers across the country.

If Trump would like to help American workers, consumers, and companies, he’d be wise to not impose yet more government regulation and taxes on the imports that so many of us rely on.

A tariff, we should remember, is just another name for a tax.

Yaël Ossowski (@YaelOss) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is deputy director at the Consumer Choice Center and a senior development officer at Students For Liberty.

Original link: https://www.washingtonexaminer.com/workers-cant-afford-tariffs-or-a-trade-war-president-trump/article/2646883

Tariffs on New Planes Won’t Cure Aviation’s Old Ills Read Newsmax

Last week, the US Department of Commerce released a statement in which it announced new tariffs on Canadian plane imports. The description Duty Determination on Imports of 100- to 150-Seat Large Civil Aircraft From Canada will sound oddly specific to most readers, but very familiar to people interested in civil aviation. One-hundred to 150-seat Canadian aircrafts are currently being produced by Bombardier — rivalling Boeing and Airbus on the U.S. market.

The American airline Delta, which has ordered 75 of Bombardier’s C-Series jets, will not be able to purchase the aircraft if the US tariff of 220 percent would be imposed. Delta has claimed that Boeing does not produce a comparable aircraft, which is why they decided in favour of the Canadian competitor.

It is notable that the imposition of this tariff could bring the Canadian producer into major financial difficulty, as it would triple the price of the C-series and endanger thousands of Canadian jobs. This also includes the UK’s Northern Irish region around Belfast, which produces the wings for the planes, which has lead British Prime Minister Theresa May to hint at a possible trade with with the U.S. over aircraft production.

Canadian Prime Minister Justin Trudeau denounced “Boeing’s protectionist and baseless measures,” saying the Canadian government does not want to “do business with a company that is attacking us and wants to lay off tens of thousands of people.”

The U.S. government is clearly taking sides in the competition between major companies, and is making trade relations difficult with its closest partners. Both Canada and the UK will be majorly important in the establishment of mutually beneficial trading relationships, especially once Britain leaves the European Union.

Ruling in favour of crippling tariffs doesn’t reflect well on the Trump administration, as it neglects both the political and market consequences of the decision.

The participation of Bombardier on the market is a major asset for price competition and pushing for innovation. The U.S. has dominated the world economy because it was able to trade competitively and with innovative products. If the administration leaves aircraft productions in the hand of one company, then it lifts the burden of the search for the competitive advantage of the shoulders of this firm.

From a consumer position, barring Bombardier from the market can lead to higher costs, as airlines will either have to buy aircrafts it doesn’t want for the price one company has dictated or not buy a plane at all. As competition is being reduced, the choices for the consumer shrink simultaneously.

In an era of cheap aviation, the U.S. should support competitive and innovative markets, not dwell in the nostalgia of past technological achievements. American companies and consumers alike will profit from more, not less free trade.

Bill Wirtz is a political commentator currently based in France. Originally from Luxembourg, he writes columns about politics in Germany, France, and the U.K., as well as about policy emerging from the European Union. His articles have been published by Newsweek, The American Conservative, the Washington Examiner, and the Mises Institute. He is a Young Voices Advocate, a regular contributor for Rare Media and the Foundation for Economic Education, and works as a Policy Analyst for the Consumer Choice Center. To read more of his reports — Click Here Now.

Free Trade For Us is a single-issue campaign produced by the Consumer Choice Center and supported by partners to raise awareness about the positive impact of free trade and to show policymakers all over the world that the millennial generation is united against tariffs, trade barriers, and retaliatory measures that only hurt consumers and workers.