Posted on 03/17/2018 6:59:32 AM PDT by SeekAndFind
Nothing in her op-ed strikes so much as a glancing blow at any of the criticisms of the tariffs.
In the New York Post, Betsy McCaughey says the steel and aluminum tariffs have come under “an avalanche of false criticism.” Let’s check out her arguments one by one, in order.
National security I
McCaughey writes,
Tariff-bashers claim in war, the United States could rely on foreign suppliers. That’s ridiculous. Uncle Sam can compel our manufacturers to make defense needs a priority — but not foreign producers. The biggest suppliers targeted by the tariffs are Brazil, South Korea, Russia and Turkey. Should our nation’s victory in war hinge on them?
Tariff-“bashers” don’t generally claim what she says they do; as her very next paragraph implicitly admits, they note that the U.S. can produce enough steel for our military needs. But she fails to take down even this strawman. Her last two sentences ignore the fact that Trump backed down from applying the tariffs to Canada and Mexico, the biggest and fourth-biggest foreign sources of steel. So even if we were down to foreign sources, we would have to be in a conflict in which Canada and Mexico, as well as Brazil, etc., were all unable or unwilling to let us buy their steel. (Most of these countries are treaty allies of ours.) This does not seem very likely — even if we get a national-security team as hawkish as some Trump critics fear — and if we were in such a conflict, steel would probably be the least of our worries.
National Security II
McCaughey: “Tariff opponents argue that US military needs for steel and aluminum amount to only 3 percent of domestic production. That’s now. But in a major military conflict, those needs would soar. In World War II, domestic steel producers had to boost production over 200 percent to meet military demands.”
Another way of looking at the same data is that we currently produce more steel than we did on the eve of the greatest mass-mobilization war in history. When Secretary of Defense Jim Mattis was asked to weigh in on the tariffs, he cautioned against global tariffs on steel, advised against any immediate action against aluminum imports, and expressed concern about the impact of rash action on our allies.
Prices
McCaughey again: “Critics claim tariffs will raise steel prices. That’s questionable. The opposite is more likely to happen, industry experts suggest. Tariffs will shift demand to domestic steel, enabling plants here to operate closer to capacity. That will bring down the unit price of American-made steel — not raise it. That’s Econ 101.”
So, uh, there are going to be two prices for steel products in the U.S.? One for products made here, and a higher one for imports? Nobody is going to engage in arbitrage to reset a price for the whole market? American steel companies are going to pass up the chance to raise profits by charging a higher price in response to foreigners’ having to charge a higher price? Econ 101 was a while ago for me, but I don’t recall any of it working this way. And there is already evidence that prices are spiking in anticipation of the tariffs.
Fair trade
McCaughey continues,
Tariff-bashers also accuse Trump of abandoning “free trade.” Don’t believe it. US workers are being stung by sucker trade — not free trade. European countries hit US-made autos with a 10 percent tariff, four times higher than the tariff on European-made cars sold here.
At best this is an argument for action against European cars sold here. It’s not an argument for making it harder for U.S. workers in auto plants to get their supplies. And, by the way, Trump’s steel and aluminum tariffs are higher than other countries’ tariffs on American steel and aluminum. So McCaughey’s foreign counterparts can make the same bad case for doing their part to start a trade war.
The WTO
“Don’t hold your breath for help from the World Trade Organization — a conclave of 164 nations, mostly poor and anti-American, empowered to impose binding trade rules. The US gets clobbered at the WTO, just as it does at the United Nations.”
The U.S. wins the vast majority of the cases it brings before the WTO. The U.S. is also free not to comply with adverse decisions by the WTO, a freedom we sometimes exercise.
Targets (and Prices)
“Trump’s Commerce Department proposes using tariffs to reduce imports, enabling domestic steel production to top 80 percent of capacity. Do the math. While imported steel will cost more, imports will drop from a third to a fifth of all steel used here. The lion’s share of steel used here will be made here, and prices will likely fall, as furnaces operate closer to full capacity.”
This argument substantially reprises one above while adding a touching faith in the government’s ability to make markets reach a politically determined goal. Other people have actually done the math, and determined that because of the exemptions of Canada and Mexico, “it would seem mathematically impossible that the tariff levels called for in the proclamations could achieve the protections of U.S. steel and aluminum that the Commerce report set out as goals.”
Back to Fair Trade
McCaughey concludes by noting that the U.S. has lower tariffs and non-tariff barriers to trade than most countries do, adding, “You wouldn’t know it, listening to the WTO.”
It’s true that we have lower tariffs than most countries. The principal source of evidence for that contention is, in fact, the WTO’s database. Our record on non-tariff barriers is less clear. One study found that between 1990 and 2013, the U.S. led the world in imposing non-tariff barriers, and not by a small margin.
Assume for the sake of argument, however, that McCaughey is right in suggesting that we have fewer trade barriers than most other countries. The point does nothing to disprove the major criticisms of the steel and aluminum tariffs: that they are not plausibly related to national security, that they will cost more jobs than they save, and that they risk a cycle of retaliation that will further impoverish Americans and foreigners alike. Nothing in her op-ed strikes so much as a glancing blow at any of those contentions.
I've found that it's much harder to defend these tariffs on steel and aluminum than it is to defend across-the-board tariffs on products and raw materials.
I think Betsy McCaughey is smart, but I've come across enough of her articles and interviews in the last couple of years to question her credibility on specific issues. I suspect she's a paid shill for industry or political groups.
When I read this article in detail I'll also be interested to know if she discloses the fact that she's the ex-wife of U.S. Commerce Secretary Wilbur Ross -- one of the strongest proponents of these tariffs in the Trump administration.
We are losing the trade war we have been in for thirty years. Trump is fighting back and asshole NeverTrumpers complain. NRO GFY.
RE: asshole NeverTrumpers complain.
Which part of his article do you find wrong?
>> Which part of his article do you find wrong? <<
Who around here reads the articles? Strongly frowned upon. We read only the headlines. That’s enuff.
You run a 100% trade deficit with your grocery store. Are you losing that "war"?
These tariffs are political moves and negotiating tools. Arguing for their merits on economic grounds makes McCaughey come across as an ignoramus.
I’m watchful of the actions of one of the biggest frauds out there - tommy Donohue mister chamber of Commerce who loves illegals, hates our President and has issued ‘warnings’. Easy for me to support our President when the usual slime goes bat sh**
And how many items has your local grocery store bought from you?
Keep in mind that when it comes to tariffs, the Chamber of Commerce represents a lot of industries that BUY aluminum and steel.
Hmmmm....... Well, considering the mutual funds I own contain companies like Clorox, Unilever, Google, UPS, Exxon and many, many others, I'd say that over the years the number of transactions is in the millions.
Let me see .... should I believe Betsy McCaughey (who I am quite familiar with (NY and all)) or Ramesh Ponnuru WHO? Oh, National Review, the “Never Trump” Magazine.
Trump’s move was designed to set some expectations for NAFTA negotiations, AND to underline Trump’s demand that Red China control its dependent wack-job in North Korea.
You note that the Nork fatman called for a meeting within 3 days of Trump’s shutting off PRC steel (which is fenced in here through Canada) and PRC aluminum (which is fenced in through Mexico.)
You also note that Trump chose to ‘suspend’ the Mex/Can tariffs after Nork Fat-Sow begged for a meeting.
If implemented, the tariffs would have added $300.00 or so to the cost of a new car, or about $5.00/month to the payments. They would collect $9 Billion in revenues, which is about what the State of Wisconsin spends in 90 days of budget.
Not really a big “sacrifice” for the sake of several thousand US citizen steelworkers, is it?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.
