Trump's ridiculous trade wars

November 13, 2020; updated 11/16/2020 and 2/14/2022

Someone recently told me they voted for Trump because he tried to stop the unfair trade with China. Let me be clear: there is no such thing as unfair trade. Trade, whether it is domestic or foreign, is a voluntary transaction between two private parties. They could be individuals or companies. Both parties benefit from the transaction - otherwise, they wouldn't participate. It is like consensual adult sex - something with which Trump has no experience.

With everyone except his authoritarian counterparts, every transaction for Trump is a contest, a fight. He needs to be the big dog, determined to get the best of his adversary. Both parties benefiting equally is unacceptable.

It's not necessary for government to get involved with foreign trade. Just like domestic trade - which we call "commerce" - buying and selling between parties in different countries occurs all the time. These days, the barriers of ocean, language and currency are easily overcome. It's called globalization, and it is good for all of us. Donald Trump does not understand that.

As a tool of national policy, tariffs had long been fading into history, a relic of the 19th and early 20th centuries that most experts came to see as harmful to all nations involved. Yet more than any other modern president, Trump has embraced tariffs as a punitive tool — against Europe, Canada and other key trading partners but especially against China, the second-largest economy after the U.S...

Last July [2018], Trump began gradually imposing tariffs on Chinese imports...[T]he administration is now imposing 25% tariffs on $250 billion in Chinese goods. Beijing has counterpunched by taxing $110 billion of American products, focusing on agricultural goods, notably soybeans, in a calculated effort to inflict pain on Trump supporters in the farm belt. (source: CNBC.com)

The retaliatory tariffs drastically reduced Chinese imports of American agricultural products. To compensate farmers (who tend to vote Republican) the Trump administration created the Market Facilitation Program:

The Market Facilitation Program (MFP) provides assistance to farmers and ranchers with commodities directly impacted by unjustified foreign retaliatory tariffs, resulting in the loss of traditional export markets. Assistance is available for agricultural producers of non-specialty crops, dairy, hogs, and specialty crops. (source: Department of Agriculture)

The Market Facilitation Program paid farmers $12 billion in 2018 and $16 billion in 2019. (source)

The reason Trump imposed tariffs on China was the trade deficit. U.S. imports from China far exceeded exports to China. What Trump could not comprehend is that trade deficits are not a problem. Nobody is hurt. Federal budget deficits, on the other hand, should be kept to a minimum. They add to the national debt, which has to be paid down to avoid high interest payments. Due to his tax cuts and trade wars, the national debt increased by over $1 trillion in 2018 and 2019. (source) The amounts below are in billions:

Year	Nat Debt	Increase
2017	$20,245	$672
2018	$21,516	$1,271
2019	$22,719	$1,203

By 2025, interest on the national debt is set to eclipse defense spending. (source)

According to Bloomberg, the Market Facilitation Program may have overcompensated farmers. Losses for soybean farmers due to the tariffs may have been only half what they received through the program. "Almost 40% of projected U.S. farm profits [$92.5 billion] this year [2019] will come from trade aid, disaster assistance, federal subsidies and insurance payments." And you can be sure those farmers voted for Trump and complain about welfare recipients.

Update: In the 11/16/2020 Washington Post, Josep Borrell, the European Union's foreign affairs chief, is quoted as saying "The trade war is a failure. The deficit between the U.S. and China hasn’t been reduced, it’s increased. There has not been a reshoring of jobs from China to the U.S.

Opinion: Confirmed: Trump’s big U.S.-China trade deal was a flop, Washington Post, 2/13/2022

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