President Donald Trump undoubtedly understands real estate deals and bankruptcy court proceedings, but we don’t think he understands international trade. Or perhaps he just doesn’t care about the harm his blossoming little trade war is going to cause.
In what could be one of his biggest international blunders to date, President Trump on Thursday imposed a series of tariffs on Chinese communications and airplane parts and machinery. The intent is to force China to better respect American intellectual property. Predictably, China retaliated Friday by announcing tariffs on 128 items, including many grown here – almonds, walnuts, fresh and dried fruit and wine. Farm products like avocados, pork, soybeans, etc. will be 15 percent more expensive in China, while items like recycled aluminum get a 25 percent bump. The same products arriving from Australia or Europe or India will be that much cheaper.
Not everyone sees Trump’s move as a blunder. White House trade adviser Peter Navarro is giddy over them; Commerce Secretary Wilbur Ross predicted, wrongly, that tariffs would simply bring China to the table without retaliation. Democratic Sen. Chuck Schumer called the tariffs “exactly right.” But New York Stock Exchange traders see it differently; the Dow fell 425 points Friday and was down 1,225 points for the week.
How much this will hurt Valley exports is debatable. China is not the largest importer of any of our ag products, but it is a significant market. Wine shipments to China last year totaled $2.7 billion, and most of that came from California. Some 150 million pounds of almonds were sent to China last year. As our incomes fall, even just a little, costs for things like computer tablets and smartphones will get more expensive.
Perhaps this will bring China to the negotiating table, and our nation’s “intellectual” property will be better protected. Then, folks in Hollywood, Silicon Valley, Silicon Alley and the Silicon Prairie will start seeing even greater profits.
But here in the Central Valley, where China aimed its retaliation, we’ll be busy taking one for the team. We have a question for those around here who voted for Trump: How’s the view from under the bus?
Here’s what others are saying:
The (San Jose) Mercury News – Buyers beware. The biggest losers in President Donald Trump’s tech tariff war will be consumers. ... The president’s grasp of history is weak, at best. But even he should know that the 1930 Smoot-Hawley protectionist trade policies on 20,000 imported goods exacerbated the U.S. recession into a global depression.
Los Angeles Times – The tariffs aren’t likely to inflict as much pain on China as they will on U.S. consumers and exporters. ... Even if you accept the administration’s analysis, it is also true that cheap Chinese materials and assembly factories have helped U.S. companies compete and expand globally (see, e.g., Apple). In fact, one study estimates that the tariffs on steel and aluminum would create about 33,000 jobs at metals factories while costing nearly 180,000 in other industries.
Bloomberg View – One thing to understand about President Trump’s proposed new tariffs on China is that they are ... a tax on U.S. producers and consumers. The revenue they’ll raise won’t come from China, but from the pockets of Americans who’ll have to pay more for Chinese goods. ... Starting a trade war (offers) a likelihood of high casualties for both sides. ... (Trump) and the American public should be aware of what’s at stake.
Washington Post – At some point soon, (Trump) must articulate clear and reasonable objectives, regarding both China and the allies – and then be willing to take “yes” for an answer.