Why is taxing imports called a 'trade war' anyway?

@livinglava,

It seems obvious to me.

Trump slapped tariffs on China to punish them. These tariffs were specifically designed to hurt the Chinese economy. China responded with tariffs designed to hurt the US economy.

The explicit intent of these tariffs is to hurt the economy of another country to force them to change a policy.

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@maxdancona,

Yep. It's the intent.

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trade war because increases import cost so buy from different countries

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Let's compare income tax and import tax for a moment:

Corporations pay income tax to the government where they are manufacturing.

Corporations may or may not pay import taxes to the government where they are selling their products.

Why does it make sense for them to pay tax where they manufacture products but not where they sell those products?

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@livinglava,

If an administration were using the income tax as a weapon... saying that they would raise taxes on a portion of the US electorate as a punishment... I would say that that was a war.

When taxes of any kind are used as a weapon to coerce or punish political adversaries, I think the term "war" is appropriate.

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@maxdancona,

maxdancona wrote:

If an administration were using the income tax as a weapon... saying that they would raise taxes on a portion of the US electorate as a punishment... I would say that that was a war.

When taxes of any kind are used as a weapon to coerce or punish political adversaries, I think the term "war" is appropriate.

It's not a weapon, though, except from the perspective of businesses who rely on exporting goods without taxation.

It is a stimulus to encourage more responsible trade and more use of local labor to reduce reliance on long-distance shipping and trade.

It's ridiculous the Democrats oppose it when stimulating more local production could vastly reduce carbon emissions and reduce unemployment and economic dependency.

It's also ridiculous that Democrats oppose a tax on big business just because it comes during a GOP presidency and targets global instead of domestic business, which already pays taxes in the form of income tax.

It's being called a 'war' by those who support keeping people economically dependent in order to control them more effectively.

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@livinglava,

I am having trouble understanding your point, and I read your last post 3 times. It still doesn't make sense.

China has put high tariffs on American soybean and pork products. This is an effective tariff to target states that supported Trump, and it seems very likely that some group of Chinese government officials sat around a table to design the tariffs that would hurt supporters of Trump as a way of punishing the Trump administration.

These Chinese Tariffs on American soybean and pork products are taking tens of millions of dollars out of the US economy and effect thousands of American jobs. It is designed to hurt the US economy and it is designed to punish American workers in States that supported Trump.

Do you really no see this as an intentional attack on the US economy in general and the Trump administration specifically?

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@maxdancona,

maxdancona wrote:

I am having trouble understanding your point, and I read your last post 3 times. It still doesn't make sense.

No, you just want to change the focus instead of discussing what I said.

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China has put high tariffs on American soybean and pork products. This is an effective tariff to target states that supported Trump, and it seems very likely that some group of Chinese government officials sat around a table to design the tariffs that would hurt supporters of Trump as a way of punishing the Trump administration.

These Chinese Tariffs on American soybean and pork products are taking tens of millions of dollars out of the US economy and effect thousands of American jobs. It is designed to hurt the US economy and it is designed to punish American workers in States that supported Trump.

By your logic, working to export products to more markets is a reward, and greater local/regional independence is a punishment.

The Chinese are perfectly capable of producing all their own food, as is the US; so why are we wasting so much fuel/carbon-emissions shipping the stuff back and forth across the ocean?

What if the US and China found peace in minimizing trade with each other instead of maximizing it?

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Do you really no see this as an intentional attack on the US economy in general and the Trump administration specifically?

I think there is a large community of investors and their subsidiaries, including governmental and non-governmental welfare/pension fund managers that only care about ways to drive up the costs and transactions of economies so they can derive profits from the growth.

Instead of looking at financial growth, they should be looking at reducing waste and dependency for the good of the planet and to reduce the burden on workers to provide for the managerial and other less-productive classes of consumers.

Why would it do any harm to localize more productive enterprises to reduce fuel/carbon waste in shipping? People might have to put in more of their own manual labor locally instead of relying on industrial workers to do everything for them, but it would be more sustainable in the long term.

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@livinglava,

I think our basic disagreement is this...

I believe that in general, trade between two nations leads to a increase in the economic output of both, and there are net positive benefits for workers, consumers and companies in both countries involved. I believe that this is easy to show empirically. Countries with more trade have stronger economies, this has been generally true throughout history.

If we don't agree on these basic points of modern economics, I don't think we will agree on anything.

To answer your post directly... yes, exports to China have significant benefits to American farms and American workers. And, imports from China have significant benefits to American consumers, American home builders and American manufacturing.

That trade in general is a great benefit to a nations economy is not in doubt... at least not to almost all economists.

I am not sure a debate about widely understood principles of basic economics is interesting to me.

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@maxdancona,

maxdancona wrote:

I think our basic disagreement is this...

I believe that in general, trade between two nations leads to a increase in the economic output of both, and there are net positive benefits for workers, consumers and companies in both countries involved. I believe that this is easy to show empirically. Countries with more trade have stronger economies, this has been generally true throughout history.

I understand this economic principle. It has to do with economies of scale, specialization, etc.

Have you considered, though, that modern industrial economics has become so productive that resources are being wasted in the pursuit of ever more profit, when we could actually suffice with less and be better off as a species and a planet for doing so?

Let me give you a concrete example: let's say you use modern technologies to build a house in a month. Now you finance the house over a 30 year mortgage so that puts the buyer to work for 30 years in an office to pay off the house. What if instead of spending 30 years worth of gasoline/energy driving back and forth to an office, the home buyer just worked on gradually building his own house by hand. It would take longer and more manual labor, but it would save energy, cause less traffic on the roads, which means less pavement, and overall the environment and planetary future are better as a result.

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If we don't agree on these basic points of modern economics, I don't think we will agree on anything.

I don't know if you can agree on the benefit of reskilling people to perform more economic labor locally with less waste of fuel and other resources.

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To answer your post directly... yes, exports to China have significant benefits to American farms and American workers. And, imports from China have significant benefits to American consumers, American home builders and American manufacturing.

That's very vague. If the price of the foods produced and traded are lowered for consumers, they might just end up spending the money on other products and services that get overinflated.

You save a little money on food but end up paying a higher mortgage. What good is that?

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That trade in general is a great benefit to a nations economy is not in doubt... at least not to almost all economists.

It is a benefit to investors who can profit on the transactions. It creates more office jobs and other non-productive jobs, which cause people to drive around, waste fuel, and waste other resources.

Some types of trade may be necessary and good, but those will surely continue despite taxes/tariffs on trade.

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I am not sure a debate about widely understood principles of basic economics is interesting to me.

You should realize that most economists are biased in favor of financial/monetary transactions. If a person builds their own house and spends only a few thousand dollars on materials, economists can't factor that into GDP until they assign a value to what the labor achieved. For that reason, they focus on commerce/sales over other forms of value addition.

If you look more carefully, saving labor and resources is actually valuable, but it isn't quantified as such. E.g. if you finish a 40 hour job in 20 hours, you bought yourself 20 hours of freedom, but if you only get paid for 20 hours of work, it seems as if you worked less and made less. For this reason, more inefficient work can be quantified as generating more money than more efficient work that generates less, while the actual value/quality of what is produced may be high.

As I said, economists are biased in favor of financial transaction that can make investors money and generate tax revenues, etc.; even if they are more wasteful overall.

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@livinglava,

You are inventing economic points that are just wrong. You started out arguing against the term "trade war", now we are arguing about the value of international trade in general.

I don't want to argue with you about well-known economic principles. I am going to skip that subject that unless you say something interests or challenges me. It is obvious to me that trade in general improves economic output and productivity. If you disagree with this, OK... but it doesn't interest me to argue something so basic.

Quote:

Have you considered, though, that modern industrial economics has become so productive that resources are being wasted in the pursuit of ever more profit, when we could actually suffice with less and be better off as a species and a planet for doing so?

Let me give you a concrete example: let's say you use modern technologies to build a house in a month. Now you finance the house over a 30 year mortgage so that puts the buyer to work for 30 years in an office to pay off the house. What if instead of spending 30 years worth of gasoline/energy driving back and forth to an office, the home buyer just worked on gradually building his own house by hand. It would take longer and more manual labor, but it would save energy, cause less traffic on the roads, which means less pavement, and overall the environment and planetary future are better as a result.

This is interesting enough....

There is a strong argument that the best thing for the planet would be for all humans to go back to a pre-industrial time. Is this what you are arguing for? I would probably agree that this is best for the planet. It doesn't mean that I am willing to give up conveniences like cars, electricity and indoor plumbing.

The question about what is "best for us as a species" is subjective.

I like being an engineer... it suits me. I like traveling in an airplane. I like to buy socks rather than knitting them myself. I like to be able to buy a TV or a stereo for a small fraction of my income and use the rest of the money for airplane tickets (something that brings meaning to my life).

All of the things that I enjoy about my modern American life; cheap electronics, mass produced clothing, exotic fruits (avocados don't grow where I live), bumming around on the internet.... stem from an economy that is based on trade.

Giving these things up would likely be better for the planet. The might be what is "best for the species" although as an individual human, I would like to have the freedom to decide for myself what is valuable in my life.

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@maxdancona,

maxdancona wrote:

You are inventing economic points that are just wrong. You started out arguing against the term "trade war", now we are arguing about the value of international trade in general.

I don't want to argue with you about well-known economic principles.

I don't think you can, because I think you only understand them on a superficial level as dogma. It is not easy to go beyond the vagaries of general economic language to analyze the way it translates into more tangible details of economic production, distribution, and consumption and the various choices people have of how to use their time and resources, and how those interact with financial commerce.

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I am going to skip that subject that unless you say something interests or challenges me. It is obvious to me that trade in general improves economic output and productivity. If you disagree with this, OK... but it doesn't interest me to argue something so basic.

If you're not willing to discuss it, then don't assert it.

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This is interesting enough....

There is a strong argument that the best thing for the planet would be for all humans to go back to a pre-industrial time. Is this what you are arguing for? I would probably agree that this is best for the planet. It doesn't mean that I am willing to give up conveniences like cars, electricity and indoor plumbing.

No, you are expressing a common fallacy that historical periods exist in coherent wholes and that any form of economic change would require a radical break from the current time period to return to a previous one or go into a completely new one. Think evolution, not revolution.

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The question about what is "best for us as a species" is subjective.

Not really. There is a certain amount of leeway for people to waste resources in the short term without it causing immediate problems. However, over time resource waste adds up and there is no way to escape the consequences as they build up generation after generation. This problem was very clear when people realized that the long half-life of radioactive waste meant that ash from nuclear power plants would be piling up for hundreds of centuries before it would be safe to handle.

Nuclear waste is just one example, though. If you are good at analyzing patterns in terms of the net effects of their cycles over a very long term, you can see how certain practices are not sustainable if they are maintained from generation to generation.

When we choose unsustainable economic habits, we are dooming future generations to figure out ways to change things that we could never muster the will power to change ourselves.

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I like being an engineer... it suits me. I like traveling in an airplane. I like to buy socks rather than knitting them myself. I like to be able to buy a TV or a stereo for a small fraction of my income and use the rest of the money for airplane tickets (something that brings meaning to my life).

Great, so you must realize that it would be more efficient to build machines to produce things more locally and reduce total shipping rather than produce them across the ocean and ship them in containers to various ports?

Can you acknowledge that the only reason it is more efficient to make things in Asia and ship them to the US and Europe is because of huge wage gaps that make it too expensive to produce things where they are distributed? Does that make sense to you?

There are people who are not doing anything very productive in the US who could be producing things locally instead of shipping them in from Asia, and it would reduce a lot of waste and CO2 emissions to do so.

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All of the things that I enjoy about my modern American life; cheap electronics, mass produced clothing, exotic fruits (avocados don't grow where I live), bumming around on the internet.... stem from an economy that is based on trade.

Ok, but if eating exotic fruits proved to be unsustainable and cause climate change that destroy quality of life for future generations, are you willing to sacrifice those future people for your own indulgence?

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Giving these things up would likely be better for the planet. The might be what is "best for the species" although as an individual human, I would like to have the freedom to decide for myself what is valuable in my life.

The invisible hand constrains that freedom. You may wish you had the freedom to fly a helicopter everywhere but you accept the invisible hand's prohibition of that option.

The invisible hand is currently being limited by government policies that reduce competitive pressures to manage and save money. When the economy crashes, huge numbers of people would find themselves in Great Depression circumstances if it wouldn't for all these tricky interventions governments enact. I'm not arguing that it's good to let people die off in another Great Depression, but we should realize that this socialism that maintains our purchasing power is artificial and we should put more effort into reducing resource waste because it is bad for the future of the planet and thus our species as well as others.

Tariffs are a small tool for stimulating more local production and reducing resource waste by making better use of local labor. If you only see it as a drag on the global economy, you're looking at it from the wrong perspective.

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@livinglava,

I like discussing these things with you because you have interesting ideas. The challenge is that you make things up. You state things from your imagination or from a simple misunderstanding as if they were facts. Some times your statements directly contradict reality.

I feel like I am debating your fantasies.... which puts me at a distinct disadvantage because you can make up anything you want.

It is a basic, demonstrable, measurable fact that trade increases local economic output.

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@maxdancona,

maxdancona wrote:

I like discussing these things with you because you have interesting ideas. The challenge is that you make things up. You state things from your imagination or from a simple misunderstanding as if they were facts. Some times your statements directly contradict reality.

You're assuming you know what reality is and what it's not. Do you critically think about things you read or just accept them as gospel?

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I feel like I am debating your fantasies.... which puts me at a distinct disadvantage because you can make up anything you want.

If you can't reason beyond defining something as a fantasy or not, you won't make it far beyond reciting dogma.

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It is a basic, demonstrable, measurable fact that trade increases local economic output.

You don't even understand how vague these summary concepts like 'trade' and 'economic output' is. You are generalizing across a vast range of economic events, some of which are augmented by trade and others which aren't or which are impeded by it. Without using a magnifying glass on specific examples, such generalizations are doomed to being too vague to be meaningful.

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Why is taxing imports called a 'trade war' anyway?

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