Globally compatible policies

[Jonathan Scott]

From a scientific point of view, it has always seemed obvious to me that for stability, the economic and political policies adopted by any one country should not be mutually incompatible with other countries using similar policies, as that leads directly to conflict and instability.

As an obvious example, if tariffs are considered a good idea for the USA, why doesn't Trump consider it acceptable for other countries to raise them too?

Even if such a principle is only applied to "friendly" countries, it seems that this should be an obvious check to be applied to any policy. If it works for us, does it still work if our friends do it too?

And of course, in the modern world, with a heavy dependency on global trade, every country needs all the friends it can get.

 

[Greg Bernhardt]

If a tariff benefits the U.S. in isolation but hurts us when our trading partners do the same, then it isn’t a robust long-term strategy.

 

[jack action]

This is exactly the reasoning from Trump.

Right now, the Americans are basically supporting the rest of the world.

The USA does not impose tariffs on other countries as much as other countries impose "tariffs" on the USA. Trump is correcting this imbalance with the new tariffs.

So, still according to Trump, when other countries raise their tariffs to return to the old economic imbalance, they seek conflict and instability. Trump considers it is acceptable for the USA to impose tariffs since other countries have already done it.

 

[fresh_42]

Several car makers are considering closing factories in the USA (Japanese, I have forgotten the brands), some have already laid off workers (Volvo), and some have stopped deliveries to their distributors (Audi). The EU is exploring alternative new markets in Asia (India, Malaysia, Indonesia). Canadians began to boycott US-American products, telling their customers that their products are either Canadian or European. China sends back deliveries from Boeing. Mexico seeks a free trade agreement with the EU. China keeps following its strategy of a new Silk Road by land (freight trains from China to Germany, maritime connections to Italy).

Guess, US tariffs work, at least for the rest of the world.

 

[dlu]

From a scientific point of view, it has always seemed obvious to me that for stability, the economic and political policies adopted by any one country should not be mutually incompatible with other countries using similar policies, as that leads directly to conflict and instability

Which is why one hears of conflicts being taken to be resolved by GATT, superseded by the WTO.
Since 1947 ( yes during WWII ) there was international agreement to formalize trading procedures and regulations between member countries. Formally, the first countries to finalize agreements under GATT between themselves were US, Canad, Australisa, NewZealand, Great Britain ( the 5 eyes nations ) with other countries following suit. Subsequent agreements 1947 up to 1994 Uruguay round of negotiations (WTO ) led to a general reduction in tariffs from 25 % to 5% worldwide, with resultant boosts in economic activity and prosperity.

Trading blocks could also form and did. Thus we had the Auto Pact * Canada-US, FTA, NAFTA, AGEAN, the EU. Nations within the blocks agreed to trade with regulations more particular than GATT, to the exclusion of non-members.

*
Somewhere around the 1910's, 20s, Canada was the country with the largest exports of automobiles around the world. Even though the automobiles were of American design, the Canadian companies were entities of themselves, not just a subsidiary of their larger American cousins. The Canadian model looked like the American, but not quite, being a mismatch of Canadian made parts and of American parts the fledgling Canadian manufacturing industry did not have the know how nor capacity to produce.
The export industry of Canada was driven by 2 things:
1. The North American assembly line that could churn out a finished product quicker than the artisan method employed in Europe. at the time.
2. The access to the British Commonwealth trading block.
So one might see a Ford in NZ, but of Canadian production. No doubt it was still thought of as being American.
I suppose as years progressed, and the tariff on auto parts US-Canada dwindled, some whiz kid proposed to formalize the trading to simplify passing through customs, and the Auto Pact was born in the 60's, amongst other reasons.
*

Sticky points
1. Culture not included under GATT. So we can have Quebec, being predominantly speaking French imposing that a movie distributed within its borders must have a dubbed version along with the English. Not sure how that worked out, but under GATT they have the right without suffering retribution. Or from France, Champagne to be Champagne must come from one region, otherwise it is just sparking stuff.
2. Agriculture not included until sparingly perhaps 1994. Subsidies and protectionism and stupidity all around. Most countries would want food sustainability if they can for their population - Especially the developing world which can be over run quite easily by the developed. Some exceptions are evident, such as Gaza, when Israel vacated the region, Hamas destroyed the viable greenhouses and farming sectors just because. And regions, where food crops ( and forests ) are taken over to produce more lucrative cash crops (palm oil ) for the western world demand.
The US cannot claim innocence here at all. As one example, Bush's land use of corn to alcohol amounts to a gross farm subsidy framed as going green, I dare say to shut up the renewable energy 'green' dumbasses who cheered and flew on their planes to get together to party. [ Sorry for the negative politics rant ]
More work needs to be done here.
3. Developed nations, Less developed. The less developed nations are allowed to impose a tariff, and are given time to mature their industry as they progress towards more prosperity without retaliation. whether the time frame is decades, centuries, millennium, or never, is a guess, I suppose depending upon the will and political framework of the less developed nation.
4. Preferred nation status. This is treat me nice and I will treat you nice. China is a big hollow here. They have preferred nation status with the US, Canada, and I would presume with most developed nations of the world.
But they are not a good player under GATT. China would prefer its whole economy to be state run, centrally controlled rather than under the influence of free market considerations, and thus balk at compromise, even though they signed up with GATT. And, wholly being the second largest economy after the US, they still are considered as being underdeveloped due to the low per capita GDP.

Appendix
The US has substantial trade deficits with most countries of the world if goods are the criteria. Around 60% ish . Surpluses with GB, Netherlands, Belgium just to name a few.
If services are the criteria, the US enjoys a substantial surplus with most nations, if no deficit at all with any.
Investment seems to be even import/export generally.

REFERENCES.

List of the largest trading partners of the United States - Wikipedia

en.wikipedia.org

Direct Investment by Country and Industry | U.S. Bureau of Economic Analysis (BEA)

www.bea.gov

https://www.usitc.gov/publications/industry_econ_analysis_332/2023/recent_trends_us_services_trade_2023_annual_report

China

China, Mongolia & Taiwan

USTR's Office of China, Mongolia and Taiwan Affairs is responsible for managing the formulation and implementation of U.S. trade policy for the People’s Republic of China, Hong Kong, Macao, Mongolia and Taiwan, with the goal of increasing access for U.S. products and services in these markets...

ustr.gov

Following China’s accession to the WTO in December 2001, the United States and China pursued a series of high-level bilateral dialogues in the areas of trade and investment. These dialogues included the U.S.-China Joint Commission on Commerce and Trade, the U.S.-China Strategic Economic Dialogue, the U.S.-China Strategic and Economic Dialogue and the U.S.-China Comprehensive Economic Dialogue. Through these dialogues, the United States sought to push China toward complying with and internalizing WTO rules and norms and making other market-oriented changes. These bilateral efforts were largely unsuccessful, as China’s leadership doubled-down on a state-led, non-market approach to the economy and trade and did not embrace open, market-oriented principles.

Faced with these realities, in August 2017, the United States shifted to a more aggressive approach to its engagement of China with the launch of an investigation under Section 301 of the Trade Act of 1974 focused on China’s acts, policies and practices related to forced technology transfer, intellectual property and innovation, all of which involved longstanding and serious problems. The findings made in this investigation led to substantial U.S. tariffs on imports from China as well as to corresponding retaliation by China.

On January 15, 2020, the United States and China signed an economic and trade agreement, known as the “Phase One Agreement.” This Agreement included commitments from China in the areas of intellectual property and technology transfer. It also secured improved market access for the agriculture and financial services sectors, along with China’s commitment to increase its purchases of U.S. goods and services. A copy of the Phase One Agreement can be found here. Fact sheets describing the Phase One Agreement can be found here.