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allies, Asia, auto tariffs, China, Europe, Germany, intellectual property theft, Japan, Robert J. Samuelson, South Korea, steel tariffs, tariffs, The Washington Post, Trade, Trump, value-added taxes, {What's Left of) Our Economy
Nationally syndicated Washington Post columnist Robert J. Samuelson intended this week’s essay to show how foolish, and possibly disastrous, President Trump’s emerging new trade policy will be – including for the national security goals the administration has set. That’s why it’s so ironic that his column instead unwittingly revealed how thin a reed the nation’s long-time security strategy has been, and nowhere more so than in the importance it’s assigned to its long-time security alliances in Europe and Asia.
Samuelson’s piece conveys a warning that the administration’s trade policy moves so far are on course to undermine national security in two related ways: by ignoring the alleged imperative of enlisting its major allies in a multilateral campaign to discipline predatory Chinese intellectual property and related trade and industrial policies that need curbing; and by actually antagonizing these countries and thereby jeopardizing the very existence of those alliances.
This argument conveniently overlooks several big trade and security fundamentals. First, globalist pre-Trump American leaders themselves have insisted that they’ve long tried to create multilateral pressure on China’s rogue economic behavior for years before Mr. Trump became president – though it’s unclear how serious these efforts were. For example, the Trans-Pacific Partnership (TPP) trade deal largely touted by the Obama administration for its potential to curb China’s influence contained a back door for numerous imports with major levels of Chinese content.
Second, it’s anything but obvious that U.S. alliances strengthen American security on net. As I’ve pointed out frequently (including this past week), they continue to expose the American homeland to the risk of nuclear attack even though the Soviet-style kinds of global threats their nuclear guarantees were intended to counter have been (literally) gone for nearly three decades. Moreover, as has been widely reported, the militaries of many of these allies have deteriorated so markedly that their potential as force multipliers for the United States is open to serious doubt.
But Samuelson’s analysis makes no sense even if these considerations are put aside. The key is in his own portrayal of leading U.S. allies – which he describes as livid about recent American steel tariffs, and sure to become even angrier is levies are imposed on their motor vehicle exports to the United States. Indeed, he worries, major auto-exporting countries like Germany, Japan, and South Korea could well become so upset with the United States that they not only retaliate in kind, but unhesitatingly move to supply China with whatever high tech goods and services Washington embargoes or restricts.
In other words, these allies would redouble their efforts to feed the Chinese beast even though all of them face China trade, technology, and/or national security threats of their own, and even though the United States continues to provide them with crucial military protection – including, in the case of Japan and South Korea, from Chinese designs. But these same allies were supposed to be amenable to cooperating with Washington to deal with China? Even more revealing, the allies would choose to intensify confrontation with the United States instead of (finally) proposing concrete steps to deal with the China problem over which they profess concern.
And they would display no interest whatever in meaningfully removing the formidable obstacles they have created to block American automotive exports. (The recently reported German auto-makers’ proposal to eliminate all tariffs in the sector on both sides of the Atlantic would leave in place towering European value-added taxes – e.g., 19 percent in Germany – on motor vehicles and most other imports. No such U.S. equivalent exists either for autos or for light trucks and sport utility vehicles.)
No one can fault these European and East Asian countries from acting in their own perceived interests – or even for trying to have their cake and eat it, too. Indeed, for decades, globalist American foreign policies have encouraged and actively enabled precisely this kind of free-riding. What these countries should be faulted for is posing as allies (let alone allies with justifiably hurt feelings), and worse, as paragons of sobriety and free market values nobly resisting a wrecking ball of an American President. As for any Americans and U.S. leaders who keep fooled by this act for so long and, more important, failing to take the policy hints – shame on them.
I have not seen this argument regarding VAT taxes.
Okay, let us support Nation A relies on VAT taxes for the bulk of general tax revenues (pension, medical funds are often financed separately).
But we know exporting companies in Nation A do not pay the VAT taxes.
Yet, exporting companies in Nation A use the public roads and infrastructure, the public-educated workforce, the fire and police services, public health programs, general administration costs and benefit from national security outlays. .
The exporters generate costs for government, akin to domestic manufacturers, but pay no general VAT taxes. In short, exporters are subsidized. They are allowed to freeload, or piggyback for free on taxes paid by other businesses and consumers that create a civil and safe country.
I look at global trade this way: You are watching a World Cup football game in a thick fog, with referees who are myopic, bribed referees, our fans.
Who won that game? Was it fair?
There is no way to untangle the welter of laws, regulations, subsidies
I recently looked at Singapore. The government of Singapore owns all the land in Singapore (and this adjusts rents) , and 80% of the population lives in government-built housing. They have a 7% sales tax on all imports, despite the mythology that they are a “free port.” They run government investment corporations, and built an entire island for the petrochemical industry. Plenty more, but it would take a book.
Singapore’s corporate socialism, or crony capitalism, has been very successful, much more so than the US “free trade” policies.
OK, so we should continue to be appeasers in the eyes of Samuelson? Hillary Clinton would have continued down the same path, signed NAFTA 2.0 (TPP), and our yearly trade deficit may easily have topped $1 Trillion per year? No bueno.
Apparently Samuelson doesn’t realuze we already have an improved trade deal with South Korea, and President Trump appears to have a very close relationship with the PM of Japan.
Did he avoid the disaster called Canada? They lost 30,000 jobs last month, there are no negotiations with the US, their PM insulted President Trump, and NAFTA being canceled seems a forgone conclusion.
How many auto factories will move to America if NAFTA is canceled? (Canada has several huge factories providing cars to the American market with mo tariffs.)
With the writing on the wall, EU leaders appear to be making major concessions to President Trump and our $20 Trillion economy. They saw Canada; they see he’s not bluffing, no matter how much the snowflake Canadian negotiators try to sweet talk out-of-power liberal politicians. This could be a disaster for our northern brothers.
Is President Trump a wrecking ball for fighting for American jobs, or for ramping up peace talks with North Korea? How is this an act? Wilbur Ross and Peter Navarro appear to be tigers.
Interestingly, the Mullahs in Iran are in a free fall. Is this a coincidence too? Or did decisive action and strength help precipitate this situation?
Samuelson seems out of touch.