Raymond Richman - Jesse Richman - Howard Richman
Richmans' Trade and Taxes Blog
Politics and the Trade War
Samuel Rines has a good piece on the broader political moment of which the trade war is only a part. https://nationalinterest.org/feature/trade-war-not-only-about-trade-58822. It misses two or three things though. First, China's rise was facilitated by the US failure to counter it's mercantilism until it was much too late. Second, the state capitalism model has many anticedants. Finally, the challenge of global economy versus state regulations needs more attention.
Regulation to Address Undervalued Currencies
The Trump administration appears to be moving forward with regulations that will allow the Commerce Department to impose countervailing duties against countries found to have undervalued currencies. Currency manipulation and undervaluation have long been a prime tactic of mercantilists, and so this regulation is a welcome move that will expand the capacity of U.S. companies to respond to subsidized competition from abroad. A comment period is now open on the proposed regulations.
Under the regulations, the Commerce Department in conjunction with the Treasury Department will determine whether the currency has been undervalued. Specifically:
Trump's China Tariffs will Succeed -- we're published in today's American Thinker
Here's how we begin:
To read the rest, go to:
The liberal trade world that was built after World War II is on the verge of collapse. And the only politician who can save it is Donald Trump. And the only way to save it is to win the trade war with China.
Donald Trump was elected president in part because he recognized the bankruptcy of US trade policy and promised to do something about it. As negotiations with China enter a difficult and vital phase, America is very lucky to have a president with the gumption and determination to see this fight through. The trade war with China is one that the US must, can, and will win. And when it comes to the tariffs proposed so far, the US has not yet begun to fight. China should change course, stop reneging on its negotiated promises, and become a normal capitalist nation. But if China prefers to remain mercantilist, totalitarian, autocratic, illiberal, and despotic, the US must treat it as it deserves -- to a healthy course of isolation, disinvestment, and containment.
For decades the United States has been played for a sucker by China's totalitarian masters...
Tariffs Raise Costs on Dryers (Without Dryers Being Taxed?!?)
A few weeks ago a working paper by Aaron Flaaen, Ali Hortaçsu, and Felix Tintelnot got a great deal of attention. The headline treatment in many publications was along the lines Mark Perry at AEI gave it: "Trump’s washing machine tariffs created 1,800 US jobs, but at a YUGE cost to consumers of $820,000/job." The Washington Examiner opined that this study showed "Why protectionism fails."
But there are some strange things going on in the analysis of the paper. The authors acknowledge one such flaw in the abstract when they write: "We find that in response to the 2018 tariffs on nearly all source countries, the price of washers rose by nearly 12 percent; the price of dryers—a complementary good not subject to tariffs—increased by an equivalent amount."
Come again? Let's lay this out for a moment and pause to think about it objectively.
1. Tariffs were placed on washers. Washer prices went up by about 12 percent.
2. Tariffs were NOT placed on dryers. Dryer prices went up by about 12 percent.
Now let's apply some basic logical reasoning. Mill's method of agreement implies that if a cause produced an effect, then the cause must be present in both cases. Clearly the effect happened in both cases but the tariff was applied in only one case. Hence, the tariff cannot have caused the increase in price of the goods...
Journal of Economic Literature:
Atlantic Economic Journal: