Jimbo1337 said:
I said significant trade war, and you managed to blast your shotgun and thankfully one example came out that was actually "significant". It is debatable whether or not the Smoot-Hawley tariff of 1930 caused the Great Depression and whether or not it affected the rest of the world. Almost every economist, who actually scrutinized the numbers, agrees that the Great Depression was not caused by increased American tariffs and therefore did not create this "trade war". The Smoot-Hawley tariff applied to only 1.3% of the nation's GDP. America's tariff on goods went from 44.6% to 53.2% (not that significant). If you look at the years before the Great Depression (1821 - 1914), the American tariffs were higher in almost every year. If you look at the most notable years (1861, 1864, 1890, and 1922), then you will see huge increases in American tariffs without producing global depressions. Then you have the great recessions in 1873 and 1893 that was spread worldwide without the need for increase tariffs. Worldwide trade declined, but that was due to the Depression and not because of higher American tariffs. Then you may think that other countries were doing a tit-for-tat by increasing their tariffs to get back at the increased American tariffs. These countries were simply doing it in response to the Depression itself (aimed to all foreign nations without any disctinction). Even IF there was a significant trade war, what exactly does the United States have to lose? China, for example, are the ones that have a trade surplus to lose, not the US. The only way that the US can lose in a trade war is by having its trade balance get even worse, which is hard to believe considering the current state of the US right now. Well then you could say that China could stop buying our Treasury Debt. Well wouldn't that just devalue the one trillion that they already own? This would also just depress the value of the dollar, which is exactly the opposite of their current currency manipulation strategy. There is also no easy way for them to dump 1 trillion dollars either. You constantly say that Donald Trump's idea is bad based because it would create a trade war or because you just say so. The Great Depression is THE most significant example of where there could have been a trade war, yet there shows absolutely no signs of a trade war when you look at the numbers. You just say an argument is bad based off of your opinion alone, which is totally dismissive. Please provide, with evidence and not just your opinion, why Donald Trump's idea is bad and retarded. |
I said significant trade war, and you managed to blast your shotgun and thankfully one example came out that was actually "significant". It is debatable whether or not the Smoot-Hawley tariff of 1930 caused the Great Depression and whether or not it affected the rest of the world. Almost every economist, who actually scrutinized the numbers, agrees that the Great Depression was not caused by increased American tariffs and therefore did not create this "trade war".
Well that all depends on what you'd call significant.
The point is though, that most of the time when countries impose tariffs, other countries (assuming there is at least some level of economic parity) generally tend to counter with a similar tariff. So, if a country imposed a flat tariff on all products, what do you suppose the reaction would be?
The Smoot-Hawley tariff applied to only 1.3% of the nation's GDP. America's tariff on goods went from 44.6% to 53.2% (not that significant). If you look at the years before the Great Depression (1821 - 1914), the American tariffs were higher in almost every year. If you look at the most notable years (1861, 1864, 1890, and 1922), then you will see huge increases in American tariffs without producing global depressions. Then you have the great recessions in 1873 and 1893 that was spread worldwide without the need for increase tariffs. Worldwide trade declined, but that was due to the Depression and not because of higher American tariffs.
I honestly am not sure what you're trying to say here. From my understanding (which could surely be wrong) there are different tariffs on different types of goods, and often vary from country to country. I know in agriculture tariffs were raised about 11% which I would call significant. I'm not really sure what you mean by "tariffs". Do you mean the average on all products to all countries, or was it a particular industry you're looking at?
I wasn't able to find that kind of data, so I can't really comment much further on that. If you want to give me the links you used, then I could say more.
As for the overall effect, the economy is complex and it's hard to pinpoint how much effect one component has. I've read economists who say it did little, and other economists who have said it practically caused the whole thing. I'm obviously not going to do that kind of research, so that's all I could really say. I haven't yet seen someone say it was a good idea.
Even IF there was a significant trade war, what exactly does the United States have to lose? China, for example, are the ones that have a trade surplus to lose, not the US. The only way that the US can lose in a trade war is by having its trade balance get even worse, which is hard to believe considering the current state of the US right now.
A reduction in trade volume with China could have a rather bad impact on particular industries. The auto industry for example. We export about 16 billion dollars of cars, which I believe makes them our largest importer for that. The car industry is going to get hit twice, because they also import a lot of materials from China.
Consumers are going to have to pay more for things we usually get from china (electronics, sneakers, etc). And you can say this will just encourage consumers to buy american, but that's not always possible.
I'm not going to go into a whole thing, but even if America "wins" then certain industries can still get hurt.
As for "winning" this isn't a zero sum game. We're not playing monopoly here. Even if the deficit shrinks in our favor, if we're doing significantly less business overall, that's not a good thing. Trading should be a mutally beneficial relationship not HAHA I HAVE MORE MONEYS THAN YOU! I WIN!!!
So we lose by doing less business with China, having to pay more for imports, decreasing our volume of exports, potentially driving down the value of our goods via surpluses, raise the cost of doing business for markets like auto who are using Chinese machinery and supplies, have people lose jobs because we're selling less, etc.
Well then you could say that China could stop buying our Treasury Debt. Well wouldn't that just devalue the one trillion that they already own? This would also just depress the value of the dollar, which is exactly the opposite of their current currency manipulation strategy. There is also no easy way for them to dump 1 trillion dollars either.
I could say that, but I didn't and I wouldn't, because it would be an illogical move. If anything they would be inclined to buy more. If you're going to anticipate my arguments, at least anticipate good ones.
You constantly say that Donald Trump's idea is bad based because it would create a trade war or because you just say so. The Great Depression is THE most significant example of where there could have been a trade war, yet there shows absolutely no signs of a trade war when you look at the numbers. You just say an argument is bad based off of your opinion alone, which is totally dismissive.
Please provide, with evidence and not just your opinion, why Donald Trump's idea is bad and retarded.
Well you've dropped Mexico out of the argument so we're making progress.
First off, the data does not show that trade did not suffer because of the Smoot Hawley act. Unless you have a degree in economics, I don't see that you have more effective modeling techniques than economists. It's a question without a clear answer. As of yet, I haven't found any economist arguing it helped in any way. That's all I'm going to say on this matter, cause I don't want to get into a whole thing about it.
And yes, there were no significant trade wars if you just call every one of them that occured insignificant. Part of the reason they seem insignificant is because, as of yet, I don't believe a country has made such a large tariff against one nation of relative economic parity, because Donald Trump hasn't been the president of anything yet. We've seen smaller scale trade wars (along with brutal wars started over taxes and other economic issues) because we've seen smaller tariffs. We see that countries tend to respond with a nearly equivelant tariff. We can throw out the phrase trade war, because we seem to be taking its meaning very differently, and simply say that China will likely impose counter tariffs.
As for negative effects? Well, GM for instance not only relies on Chinese machinery, but sells more cars to China then to US consumers. It will slow our progress in what what might soon be the world's largest economy, with or without us. We'll have to pay more for products, many of which aren't created in America. Products like iPhones are technically imports, but the net effect benefits the US more than China. Tariffs are meant to protect American companies, but how many of the products that we're going to tax are even made in America anymore? Individual comapnies and industries who do a large volume of business with China will suffer, (assuming retaliation) we'll have surpluses of certain items which may or not be perishable (specifically in regards to agriculture) which will drive down their value. Individuals may lost jobs as a result of the lost business, etc. It will likely have a negative impact on our overall relationship with China. And also keep in mind, this is not the only tariff or sanction Donald Trump wants to implement.
Basically, the only way this plan works is if China says "Waaaaaah he called me a mother fucker. Let's do what he says. But, that's not a likely scenario. You say we need to be aggressive as if China doesn't also want to appear strong. It is highly unlikely that they will roll over. What in China's recent history makes you think they're going to just cave to American demands? Has China caved immediately to the US since the communist revolution? They haven't in the past, and despite what Donald Trump may say, having the message given by a reality tv host who not even Bill O Reilly takes seriously (look up their interview. Bill isn't buying the BS Donald is spewing) is going to help. And if China doesn't cave, then I don't see how this could benefit the economy at large.
And all of this is contingent on getting this passed through congress (unlikely) and then passed by the WTO (more unlikely). Considering that this is pretty much against the rules of the WTO and Congress has been unable to pass anything related to currency manipulation, Trump is most likely going to have to go back to the drawing board.
So those are the reasons. Some of them are pretty self evident. Others are extrapolation. Obviously, the only way I could provide the evidence you're asking for is if there was such a large tariff in the past (there wasn't to my knowledge), or if we actually implemented the policies and saw. So I can't really show evidence since I can't see into the future. What I can, and did, do was provide logical predictions. This isn't a hard science, so that's the best kind of evidence you can get. If you have any reason to claim these predictions are illogical, go for it.
https://www.youtube.com/watch?v=U8yj1YkoaM8
Interview with Bill O Reilly. As an aside, Donald Trump says here that the US doesn't impose tariffs on China which is straight up bullshit.
http://lincicome.blogspot.com/2011/04/unbearable-asininity-and-immorality-of.html
A better explanation of the potential ramifications.
