• Tag Archives Trump
  • Trump’s Tariffs Cost Americans $19 Billion in 2018

    “When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win,” President Trump tweeted last March as his administration began to impose higher tariffs on steel and aluminum imports.

    At the time, the University of Chicago polled dozens of America’s top economists on the subject, asking if they believed the tariffs would make Americans better off. Not a single one agreed they would.

    Notwithstanding the warnings of economists, the Trump administration continued to raise tariffs on imported goods throughout the duration of 2018, such that some $280 billion of imports were hit with tariff rates ranging between 10 and 50 percent.Figure 1_Average Tariff Rates.JPG

    In response to America’s move toward protectionist trade policy, countries such as Russia, China, Mexico, and the European Union have imposed retaliatory tariffs on $121 billion worth of US exports.

    A year after Trump’s tweet about the ease with which trade wars could be won, economists from Princeton, Columbia, and the Federal Reserve Bank of New York have released an analysis of how Trump’s trade policies have impacted Americans, and the results so far aren’t promising.

    In addition to the economic toll of the trade war the tariffs caused, they find that the full cost of the tariffs was passed on to US consumers, meaning the tariff hike was effectively a tax hike on all Americans. On top of that, in response to facing less international competition, American businesses have increased their prices.

    The economists estimate that Americans were left about $7 billion poorer because of the economic consequences of the tariffs, and they also paid $12 billion more in taxes to the government. Ironically enough, the Trump administration is issuing up to $12 billion in payments to farmers who have been hurt by the trade war.

    Essentially, Trump’s tariffs started a trade war, made Americans poorer, and caused them to pay more in taxes, and this new tax revenue may not even offset the costs of “bailout” payments to farmers harmed by the trade war. Genius.

    One can only hope that one day, the clear historical record of failure it has produced will lead to protectionism being discarded into the ash heap of history.


    Being Classically Liberal

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    This article was originally published on FEE.org. Read the original article.

     

     


  • Trump Is Right to Withdraw From Syria

    President Trump has ordered a withdrawal of U.S. troops from Syria. This is the right decision. The U.S. military presence in Syria has not been authorized by Congress, is illegal under international law, lacks a coherent strategy, and carries significant risks of entangling America in a broader quagmire in yet another Middle Eastern country.

    As I wrote in Axios:

    The Obama administration first deployed U.S. troops to Syria to complement its aerial bombing campaign against ISIS with special operations forces and coordinate with local anti-ISIS militias on the ground, gradually expanding from hundreds of troops to roughly 4,000.

    The mission expanded, too, from merely defeating ISIS (substantially accomplished some time ago) to ushering Syrian President Bashar al-Assad out of power, expelling Iranian forces, and edging out Russia.

    The bottom line: Absent achievable goals and a strong national security imperative backed up by congressional authorization, the U.S. presence in Syria is illegitimate and better off wound down.

    One prominent criticism of Trump’s decision is that it lacks a clear public explanation and evades the carefully planned and coordinated inter-agency process that enables such a withdrawal to be executed safely and responsibly. This is a fair criticism. Indeed, Trump seems not to have consulted the Defense Department, State Department, or really any of the national security principals in his administration before making this announcement.

    But the fault for evading process may lie more with the president’s hawkish advisors than with Trump himself. Trump has long expressed disapproval for the U.S. military presence in Syria, but his own officials—including National Security Advisor John Bolton, Secretary of State Mike Pompeo, Secretary of Defense James Mattis, and the current Special Representative for Syria Engagement James Jeffrey—either resisted or ignored the Commander-in-Chief’s clearly stated preferences on an ongoing military mission. That may have made the president feel he had no choice but to circumvent process and issue the order to withdraw on his own, via Twitter.

    That said, I do worry about an administration that is too deferential to Trump’s every whim. I was heartened, for example, that cabinet officials spent months pushing back on Trump’s call to withdraw from the Iran nuclear deal. Likewise with the president’s request for military options against North Korea, which the Pentagon reportedly slow-walked in the months before Trump shifted from maximum pressure to diplomatic negotiations with Kim Jong-un. And when Trump reportedly asked Mattis to assassinate Assad, it was probably a good thing that the Secretary of Defense chose not to take the suggestion seriously.

    That withdrawal is the right decision does not mean Syria will flourish in peace and security. Several undesirable contingencies may occur in the aftermath of our exit. The Turks may engage in operations against the Kurds in Syria’s northeast. ISIS may make some gains here and there. But if these things materialize, they should not be cited as proof that withdrawal was unwise. That’s exactly the flawed argument hawks employed to criticize the 2011 withdrawal from Iraq. Sure, it left a vacuum in which ISIS emerged. But ISIS itself is a product of the US invasion of Iraq. And our presence in Syria could very well be creating comparable unintended consequences, instead of preventing them.=

    It can’t be America’s purpose to indefinitely forestall every plausible misfortune that may or may not bedevil this troubled region. In the near term, we can engage in diplomacy to try to curb Turkish plans to target the Kurds. And with regard to ISIS, it’s not at all clear that their permanent defeat depends on maintaining a U.S. ground presence in Syria. The extremist group is already decimated, and even without an indefinite U.S. presence, it is surrounded by enemies to whom we can pass the buck (should resurgence even occur, which is not a given).

    Anyone who favors a U.S. military presence in Syria should be calling for Congress to formally authorize it. That process will require making a strong public case that deployment is required to preempt an immediate threat to U.S. security and that the mission has coherent, achievable goals that clearly define what victory looks like. Otherwise, our presence in Syria is illegitimate.

    This article is reprinted from Cato At Liberty.

    Source: Trump Is Right to Withdraw From Syria – Foundation for Economic Education




  • Why Trump’s Proposal to Lower Drug Prices Is Bad Economics

    President Trump often rails against foreign trade partners such as China that treat the US unfairly. These complaints sometimes have merit, as foreign governments often cheat and abuse US firms, which is why it’s odd that his administration is now seeking to perpetuate many of the same abuses on US-based pharmaceutical companies.

    It’s well-known that prescription drug prices are typically higher in the US than many other nations. That’s both because bad domestic policies restrict the kind of competition that would keep prices in check and the fact that many foreign governments enact price controls while threatening to steal patents from companies that don’t cooperate.

    So, it’s especially troubling to see a proposed rule from the Trump administration that would index prescription drug reimbursements under Medicare Part B—which covers drugs exclusively handled by physicians and hospitals like vaccines and cancer medications—based on the prices paid in other countries, including those with nationalized health care systems. To borrow a legal metaphor, it’s fruit of the poisonous tree.

    Promising to lower the prices of prescription drugs is likely good electoral politics, but the way the administration aims to go about it is simply bad economics.

    At stake aren’t just high-minded free-market principles but the vitality of the most innovative pharmaceutical market in the world. US drug companies have only weathered the abuses of foreign governments because the domestic market is large enough that they can recoup the losses. That’s why the president is right to call it “very, very unfair” for other countries to keep their prices artificially low at the expense of American patients; but importing those losses by allowing foreign abuses to set US prices will mean no more market in which to offset losses to socialized systems and thus an inevitable decline in research and development of new medications.

    Nor have other governments managed to avoid other downsides of their price controls. Because they seek to keep costs down the wrong way, new, life-saving drugs often take longer to reach their shores, and their patients are more likely to encounter shortages. From rent control to the gasoline lines of the 1970s, the connection between price controls and shortages has been well established.

    To be fair, the administration’s proposal is not a full-throated embrace of government control of healthcare, as it applies only to certain types of drugs for a subset of patients. But it’s part of a program created by Obamacare that focuses on small experiments with the eventual goal of implementing them more broadly. So, it’s a big step in the wrong direction.

    Medicare Part B is not a market-based system now. But rather than providing reforms that address the disease of a system overwhelmed by government mandates and distorted incentives rather than just the symptoms, President Trump’s proposed rule threatens to throw gasoline on the fire.

    Source: Why Trump’s Proposal to Lower Drug Prices Is Bad Economics – Foundation for Economic Education


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