Nationalist and/or Globalist - Trump's Trade policy thread

[TGHusker]

https://www.wsj.com/articles/trump-says-nafta-partners-persuaded-him-to-keep-u-s-in-trade-pact-1493320127

 

So, Mr Trump says that he is both a nationalist and a globalist. Let's discuss Trump's trade policies in this thread. We have NAFTA, PPT, Euro Zone, etc that will develop over the next few months.

His trade policies not only include trade agreements like NAFTA but also taxes and tariffs.

 

This particular article speaks of Trump 'evolving' policy on NAFTA. His campaign pledge was to junk it and start all over. Per this article he was going to do just this during his Saturday 100 day speech - for dramatic affect it appears.

However, when saner minds, the leaders of both Mexico and Canada told him of the short and mid range hardships this would cause many families and companies, Trump has appeared to back away from the cliff. All three leaders will talk about renegotiating the terms without cutting it apart in whole to start with.

 

 

The benefit with globalism is that it ties all of our national communities together in trade and communication and understanding and culture. The problem with globalization is that it ties all of our national communities together in trade and communication and understanding and culture. Here is what I mean by this. The Britton Woods Conference in 1944 was a meeting of 44 allied nations that sought to repair the international monetary and financial order after the conclusion of WW 2. While globalization & global trade has been with us since the earliest days of civilization, Britton Woods kicked off the modern era of cooperation between nations on these issues. The Coal and Steal Community (1951 Paris Treaty) in Europe was the forerunner of the European Union. That has lead to similar regional trade groups including NATO. With these types of global unions we become like a fabric, woven together like a nice sweater. Being woven together like this as an added benefit - it forces us to deal with our differences constructively instead of through war. I think it is one of the reasons the USA and China have not gone to war - they rely on our purchases and our citizen's and our economy relies on their cheap goods. However, with globalization comes restrictions also. We see some rebellion against those restrictions in the world today. Trump's election is one sign of this, so is the British vote to remove itself from the EU, the election in France has a nationalist running strong in its election. People want to retain some national identity and culture and feel secure behind their boarders. So they are pulling against the treads of globalization. Trump ran as a nationalist. The reality of governance is forcing his move to a globalist. His on the job training is showing him that he cannot be rash with his campaign promises - leaving NATO, tearing up the NAFTA agreement, naming China as a currency manipulator, and perhaps tearing up the Iran deal - not sure where he is on that as I thought he was going to tear it up day one (maybe that was Ted Cruz's promise only and not Trump's). Trump is perhaps seeing for the 1st time that if you pull one thread out of that nicely woven garment, the whole sweater becomes unusable. Just like health care, these are complicated 'deals' that go beyond any art he may have in deal making before. This is the problem of electing someone without govt experience. There is a lot to learn even for a self proclaimed deal maker.

[TGHusker]

http://www.vanityfair.com/news/2017/04/donald-trump-nafta-map

More on this topic.

Trump was ready to terminate NAFTA - giddy to sign the paperwork after he heard of Wisc milk producers being hurt by Canadian rules. He says he was 'really ready and psyched to terminate Nafta'

But the 2 leaders of Canada and Mexico politely asked to renegotiate and because 'I like them' he decided 12 hours later to renegotiate.

Just so happens that the Commerce Sec and Ag Sec meet with him and showed him a map of the hardest hit states, just so happened to be the very states that turned the election to him, he changed his mind.

 

The best way to persuade Trump is to be the last one in line to give your side of the argument. Or to appeal to his massive ego. If he likes you - you get what you want, as it appears he liked the Chinese leader who persuaded him not to call China a currency manipulator (I think he had Trump around his little finger- or maybe middle finger). Trump has no values to guide his political decisions - if he can change his mind this flippantly and this quickly on something this important - we are in for a long and potentially dangerous ride.

 

Personally, I'm glad he didn't terminate NAFTA as he originally planned - that would have been a disaster. It appears the wiser heads (secs of commerce and ag) won the day.

[BigRedBuster]

I never have understood the whole Nationalist vs. Globalist issue.

 

I believe the US is a great country that offers unprecedented opportunity to it's population. I believe we need to do what is necessary to protect our nation's economy and keep it's public safe. I also believe we are part of a world economic system weather we like it or not. Our actions affect the world and actions in other countries affect us. Our industries are going to do business world wide and our economy is largely based on that reality. I also believe we can improve our trade laws to benefit American companies and workers.

 

So....am I a Nationalist or a Globalist?

 

The whole concept that there is a difference is odd to me.

[RedDenver]

I never have understood the whole Nationalist vs. Globalist issue.

 

I believe the US is a great country that offers unprecedented opportunity to it's population. I believe we need to do what is necessary to protect our nation's economy and keep it's public safe. I also believe we are part of a world economic system weather we like it or not. Our actions affect the world and actions in other countries affect us. Our industries are going to do business world wide and our economy is largely based on that reality. I also believe we can improve our trade laws to benefit American companies and workers.

 

So....am I a Nationalist or a Globalist?

 

The whole concept that there is a difference is odd to me.

I think it's more of a scale, so everyone is Nationalist and Globalist to varying degrees. I think you'd agree that Nationalism and Globalism are opposing concepts though.

[BigRedBuster]

It just seems like a situation where people are trying to draw lines in the sand and...like you implied....it's impossible to do. AND....those lines are being drawn not for policy reasons but for political reasons. It's one group trying to pit people against the other

 

Example....

 

Tea Partiers rant against those evil liberals because they are "Globalists" and obviously hate what made America great and they are more concerned about gaining power personally around the world.

 

Liberals ranting against conservatives because they are "Nationalists" so they must be racists and bigoted against everyone else.

 

Funny thing about this entire issue is that the Tea Partiers voted in a President to fight against those evil Globalists and he's (as we have all learned) one of the most individual global business people in the US.

[RedDenver]

It just seems like a situation where people are trying to draw lines in the sand and...like you implied....it's impossible to do. AND....those lines are being drawn not for policy reasons but for political reasons. It's one group trying to pit people against the other

 

Example....

 

Tea Partiers rant against those evil liberals because they are "Globalists" and obviously hate what made America great and they are more concerned about gaining power personally around the world.

 

Liberals ranting against conservatives because they are "Nationalists" so they must be racists and bigoted against everyone else.

 

Funny thing about this entire issue is that the Tea Partiers voted in a President to fight against those evil Globalists and he's (as we have all learned) one of the most individual global business people in the US.

Good points. And to add to that, there are a lot of people on the "left" who are opposed to Globalism because of the effect it has on workers, just as there are many on the "right" who favor free trade Globalism.

 

Interestingly, both Trump and Sanders (the populists) had anti-Globalism rhetoric.

[TGHusker]

Nationalism works fine if you can produce all or most of what you consume as a nation. Pre WW2 - we produced over 90% of what we consumed. But the world is a far different animal now. We are all tied to together for the economic benefit of all - the 'rising of all boats' .

Unfortunately what creates 'winners' over there may create 'losers' here. Thus we have seen a wave of nationalistic movements sprout up. Great Brittan, our election (although it seems to be a head fake by the president during the campaign now), France is facing it in their election. Part of it is the movement of workers across the boarders and we see that in our country, the rising anti Muslim attitudes in Europe, etc.

I'm OK wt Trump trying to level the playing field somewhat with better deals if he can make it happened, but it will be impossible to isolate ourselves in this world economy and community. The train named Globalism left the terminal many years ago and isn't returning to any ash heap of history. In fact history is really the story of globalism on the march.

[BigRedBuster]

Nationalism works fine if you can produce all or most of what you consume as a nation. Pre WW2 - we produced over 90% of what we consumed. But the world is a far different animal now. We are all tied to together for the economic benefit of all - the 'rising of all boats' .

Unfortunately what creates 'winners' over there may create 'losers' here. Thus we have seen a wave of nationalistic movements sprout up. Great Brittan, our election (although it seems to be a head fake by the president during the campaign now), France is facing it in their election. Part of it is the movement of workers across the boarders and we see that in our country, the rising anti Muslim attitudes in Europe, etc.

I'm OK wt Trump trying to level the playing field somewhat with better deals if he can make it happened, but it will be impossible to isolate ourselves in this world economy and community. The train named Globalism left the terminal many years ago and isn't returning to any ash heap of history. In fact history is really the story of globalism on the march.

I agree with the bold, but their's another part to it.

 

It works also if you can consume 90% of what we produce. That is where it would absolutely kill farmers and that's why the Ag Secretary was able to beat this into his pea brain.

[knapplc]

This is me not understanding this subject so please be nice if this is a dumb question: Does having a nationalistic trade policy mean we export little or nothing?

[RedDenver]

This is me not understanding this subject so please be nice if this is a dumb question: Does having a nationalistic trade policy mean we export little or nothing?

Depends on exactly what you mean by "nationalist trade policy" since that could cover a lot of ground, but my understanding is that generally nationalism is more about protecting interests within the borders which are harmed more by imports than exports.

[BigRedBuster]

This is me not understanding this subject so please be nice if this is a dumb question: Does having a nationalistic trade policy mean we export little or nothing?

Well, this subject of Nationalists and Globalists is such a relatively knew subject at this level of debate that I'm sure there are lots of different definitions. My assumption is that the people that throw these terms around don't even know exactly what it all means.

 

My view is that a Nationalistic trade policy would be one that is protectionist towards our industries. For instance, Brazil has (I think still) a policy where if you want to import products that compete with a major industry in Brazil, there is a very heavy tariff on your products so the domestic industry has the upper hand. I actually know a company that was banned from importing products into Brazil because they were somehow getting around the tariffs.

 

That all sounds wonderful doesn't it? We are protecting American jobs. We are keeping jobs here.

 

What people don't think about (like Trump in the campaign) is that each industry doesn't work within a vacuum. OK...you don't want cars produced in Mexico so you are going to put a big tariff on auto parts coming in from Mexico. Sounds good right? Problem is, then Mexico turns around and does the same thing to our agricultural products and our farmers suffer.

[TGHusker]

This is me not understanding this subject so please be nice if this is a dumb question: Does having a nationalistic trade policy mean we export little or nothing?

Knapp, I take it as establishing trade policies that maximize protection of nationally based businesses including agriculture. Tariffs, taxes, treaties all come into play. I see it more as relating to imports vs exports. Protecting our manufacturers against completion from incoming goods. Keep the other guys goods out and let our goods flow out as freely as possible. It sees Exports are Great - Imports as Bad. However, history has shown that taking this road (a nationalistic road of heavy tariffs, import taxes, etc) leads to retribution by the other countries - whose goods are taxed high entering into the USA. Our country's economy is now based on 'cheap goods' - & not just consumer goods (Walmart etc). Our company sources from the least expensive sources as possible and unfortunately only buying from USA manufactures only when "time' is important or if in our customer's specs. (We are an international manufacturing company). Personally when given a choice at a store, I try to buy USA when possible - my own personal 'tariff' to help the American worker.

 

 

This is a good article that debates the affect of the Smoot Hawley tariff on or as the cause of the Great Depression. While I'm not an economist (and don't play one on TV ) I agree with the conclusion of the article. If Trump follows a heavy tariff policy that he promised during the campaign - against those who don't play well with us (China for example), I believe it will lead to a recession at best and with over inflated stock prices, a near depression at worse.

This article was written in 2012 but is even more applicable today with Trump's stated campaign promises.

https://fee.org/articles/the-smoot-hawley-tariff-and-the-great-depression/

 

Final 2 paragraphs

All of which brings us to today (2012 but even more applicable today). While “welfare-warfare” states throughout the world are running huge fiscal deficits, their central banks are recklessly monetizing massive quantities of debt (inflation). Extraordinary volatility now characterizes financial markets amidst a worsening sovereign debt crisis. Major financial institutions throughout the world hold mountainous portfolios of worthless assets that government policy has steered them into holding. Defaults threaten to destroy the world monetary systems in spite of all the short-run political machinations of prime ministers and central-bank leaders. And in these dangerous waters, what do we hear from the politicians, many already with their hands red? Trade protectionism!

When political agents denounce China on trade and demand an appreciation of its currency, it is the functional equivalent of placing a tariff on each and every Chinese export. This type of protectionist saber-rattling risks igniting not only a destructive international trade war but also, with the economy in the aftermath of a colossal bubble and the world’s banker growing restless with its hoard of depreciating IOUs, vastly more damage than the world is prepared to handle. Have we learned nothing from the past?

 

[TGHusker]

 

This is me not understanding this subject so please be nice if this is a dumb question: Does having a nationalistic trade policy mean we export little or nothing?

Well, this subject of Nationalists and Globalists is such a relatively knew subject at this level of debate that I'm sure there are lots of different definitions. My assumption is that the people that throw these terms around don't even know exactly what it all means.

 

My view is that a Nationalistic trade policy would be one that is protectionist towards our industries. For instance, Brazil has (I think still) a policy where if you want to import products that compete with a major industry in Brazil, there is a very heavy tariff on your products so the domestic industry has the upper hand. I actually know a company that was banned from importing products into Brazil because they were somehow getting around the tariffs.

 

That all sounds wonderful doesn't it? We are protecting American jobs. We are keeping jobs here.

 

What people don't think about (like Trump in the campaign) is that each industry doesn't work within a vacuum. OK...you don't want cars produced in Mexico so you are going to put a big tariff on auto parts coming in from Mexico. Sounds good right? Problem is, then Mexico turns around and does the same thing to our agricultural products and our farmers suffer.

 

To your point BRB - how many manufactured goods - from underwear to autos are 100% USA origin. Not many. To be competitive in today's world economy (even if you are just a domestic seller and you don't export), most companies source materials (cotton, or raw fabric for example for underwear) - One story I saw some time ago showed a clothing company (I believe T-shirts) were buying USA cotton, shipping it overseas to Vietnam, the cotton was made into fabric and then shirts, then shipped back to the USA to be finished and labeled. Even with the freight back and forth, it was less expensive for them to have the raw T-shirts made overseas and then finished in the USA - screen printing. I teach a Global Business class on the side and find it amazing also how many USA companies (those we think are USA) are actually owned by foreign interests. The one that breaks my heart is Ralston Purina. As a kid, I remember going to the town's grain elevator's office with my Dad and on tip toes looking over the counter and seeing the red checkered Ralston Purina sign. The company is now owned by the Swiss food giant - Nestle. An American made car doesn't exist - American assembled car yes - but the parts come from all over. Large tariffs would hurt our industry worse than any benefit protection hoped to gain. I think the key is improving quality, productivity, speed of service, and innovation and technology advancements to making us more competitive with lower cost providers from overseas. I'm all for us making sure the playing field is level but we aren't going to turn back the clock.

[BigRedBuster]

It's an extremely difficult subject that, I don't think, Trump had a clue about when he was campaigning and everyone was frothing at the mouth in excitement.

 

Everything you said is true. You mentioned Ralston Purina......I thought you were going to say Anheuser Busch. That one stings.

 

What you have described is how our economy is global weather we like it or not. These transactions of companies...etc. wouldn't have been stopped no matter who was in office unless they were going to put in some pretty radical laws on business ownership that would have had major negative impacts on their own.

[TGHusker]

It's an extremely difficult subject that, I don't think, Trump had a clue about when he was campaigning and everyone was frothing at the mouth in excitement.

 

Everything you said is true. You mentioned Ralston Purina......I thought you were going to say Anheuser Busch. That one stings.

 

What you have described is how our economy is global weather we like it or not. These transactions of companies...etc. wouldn't have been stopped no matter who was in office unless they were going to put in some pretty radical laws on business ownership that would have had major negative impacts on their own.

Yes, Anheuser Busch in another one we discussed in class.

I had a fun quiz I used in class - listing 25 companies and the students had to name the USA owned companies - all well know companies. Best guess were

50% were USA owned when in actuality all 25 for foreign owned. Think of these companies below. Our 1st thought is American. But all have foreign ownership.

Trader Joes

Firestone

Colombia Pictures

RCA

Random House

Bic pens

Miller Beer

Wilson Sporting Goods

Beringer Winery

7-11