President Donald Trump has sure blown the door open on trade with China. I can appreciate that he had to get some issues out in the open and get China to the table to discuss some very real long-term trade issues, but steel and aluminum shouldn’t have been the issue. China only exports 2-3 percent of the steel we use yet produces more than half the world’s steel with government-owned and operated and subsidized steel mills. But when Trump added tariffs to an additional $50 billion worth of imports, that got their dander up. And they retaliated with a similar number.
Now we’re in a tit-for-tat skirmish that I hope doesn’t turn into a full-on war of retaliation. Beef and soybeans missed the first announcement of tariffs but were quickly added two days later. It always aggravates me when ag products become the tool of trade wars simply because it’s about feeding people in the most efficient, least-cost way.
We Americans have always tried to set the example on free trade and have always had to endure some products and industries that required protection; every country has their sacred cows. Like rice in Japan. The rice industry there is highly subsidized and U.S. rice going to Japan is subject to huge tariffs.
But beef going to China shouldn’t be that big of a deal for the U.S. beef industry. It could someday be huge for U.S. cattle producers, but that’s a long way off. I appreciate the desire to improve on trade relations around the world. Things do change, and adjustments are needed. But it’s certainly not as simple as it once was.
Bilateral trade deals are great, and we need to see more of them. We haven’t seen any efforts from the Trump administration yet. Pulling out of the Trans-Pacific Partnership was a bad idea. Messing around with NAFTA is okay, if we improve trade for everyone, fairly.
But it seems we’re in a different trade plateau with China. They are the second largest economy behind the U.S. and represent a huge consumer market. They are very busy around the world cultivating trade, but they are reluctant to open their own country to full-on free trade and the rule of law is a little shaky there, along with the ability to protect propriety technology and property rights. We must remember they are still an autocratic, communist country operating with a different set of rules than we do. Foreign companies give up a lot to do business there.
Are we getting to the point that just being good neighbors isn’t enough, or are we headed to a new era of global domination? If you look around the world today, there are lots of issues threatening the world order as we know it.
In my mind, free trade represents peace and we all want a peaceful world. When countries come from so many different ideologies and carry so much ancient baggage, it’s hard to figure out how to find peace. I always like what President Ronald Reagan said: “Trust but verify.” Or President Theodore Roosevelt: “Walk softly and carry a big stick.”
I am reminded about the last time the U.S. became protectionists in the 1920s when we imposed tariffs on imports on everything to protect the American workers. Import-export trade stopped. And the world’s economies fell into the Great Depression. We suffered global despair. Then a couple countries decided it was time to expand and rule their regions, which brought us World War I and II to establish world order. The U.S. became the global police, along with our allies for democracy.
Are we to the point where we are being challenged as the global police? Does China and Russia and Iran want to expand their role in maintaining global order? One thing I do know is that we don’t want to let the autocratic rulers of large economic blocks become the global cops. Even western Europe is being torn apart because of nationalism and protectionism. Great Britain pulling out of the EU was a huge economic and security move for them. Remember that they ruled the oceans at one time, trading and maintaining global order, which led to tyranny.
I know I’m getting a little complex about free trade, but I feel that free trade leads to secure, peaceful relationships and does the world a lot of good. I really don’t know if trade deficits or surpluses are good or bad but playing trade games can’t be healthy for anyone because history has shown us that trade wars lead to real wars and no one wins that game.
Trump has until the end of May to get this trade dispute settled and I do hope he is a master negotiator. I read in the Wall Street Journal last week that in 2017 foreign home buyers purchased $153 billion in residential real estate in the U.S. What does that tell us about globalization? — PETE CROW
