Tariffs Should Prompt Countries To Refocus Economies

Row over protectionism misses the point

• Trump signs 25%+ tariffs on Canadian, Mexican, Chinese exports to U.S.

• Tariffs are a policy tool and their merit depends on objectives

• Selective and defensive, they serve a purpose

• 2010s saw an upsurge in talk of protectionism; now it has happened

• Other countries should refocus their economic strategy

• They might find a way out of the dead end of degrowth

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Europe Sold Out By Own Elites - Sacrificed in U.S. contest with Asia (Nov 10, 2024)
Pirates, Privateers And Merchant Adventurers (Aug 15, 2023)

(1,700 words or about 10 minutes of your company).

Trump in 2020. He may find investment in the energy sector constrained this time by consolidation

Feb 2, 2025

It's been a long time coming. We thought trade wars would break out in response to president Barack Obama's tariffs, and in the aftermath of the 2008 crash.

President Donald Trump imposed a 25 per cent levy on most goods imported from Canada — vehicle and auto parts, lumber, seafood, potash — and 10 per cent on its top export, energy. Eighty per cent of Mexico's exports go to the U.S., including cars, computers, televisions and household appliances. The largest increase for China is on electric vehicles (100 per cent), steel and aluminium, semiconductors and solar cells.

Trump says he wants to curb fentanyl and illegal entrants to the U.S.. He's using the 1977 International Emergency Economic Powers Act (IEEPA), a much faster path to sanctions than using trade laws.

First things

One should be asking, what's your economic strategy.

We've been duped by the 'greater good' to de-industrialise; overlooking human productivity that could make big government unneccesary.

Tariffs often lead to knee-jerk accusations of protectionism, as in the 2010s when Obama launched a case against China, accusing it of shielding its refining of raw earth minerals.

There were fears of a tit-for-tat response, just as we see after the orders of president Trump.

Protectionism can make sense when a nation is developing its capacity in a competitive area, as we'll see below. Tariffs can help rebuild essential industries, like those exposed when supply chains broke down during Covid

Trump has a number of objectives, such as persuading countries to take back illegal entrants to the U.S., and encouraging corporations to switch production to the U.S..

In 1971 president Richard Nixon imposed a short-lived 10 per cent import tax, across the board. He used the 1917 Trading With the Enemy Act and introduced it on the same day he ended the dollar's convertibility into gold, to incentivise trading partners to use floating exchange rates, and ensure that the ensuing money flows did not shackle American industries. Some see a striking similarity.

As a strategy to boost domestic energy production, it's unlikely to work, says commodities analyst Tracy Shuchart of Hilltower Resource Advisors. The shale industry is much less nimble than in 2016, since the industry has seen consolidation, she told Tom Luongo. [1]

The media frames tariffs as an offence to "free trade." That's from a media largely owned by big corporations that abandon their country of origin for the cheapest labour and lowest taxes - as they are entitled to do.

All the great industrial powers used tariffs in their time to build up their industries, embracing free trade only when they could profit even more through their efficiency over rivals.

Larry Elliot's Guardian article, From Edward III to Alexander Hamilton: history’s biggest protectionists, provides a neat historical summary. [2]

The real debate should not be about tariffs but the kind of economy we want.

The economist Adam Smith, a towering figure of the eighteenth century Scottish Enlightenment, used the metaphor, "the invisible hand" to claim that free trade creates incentives that benefit the greater good.

He described free trade in moral terms - but a moral order that was largely beyond human understanding.

"Nature has directed us to the greater part of these by original and immediate instincts. Hunger, thirst, the passion which unites the two sexes, and the dread of pain, prompt us to apply those means for their own sakes, and without any consideration of their tendency to those beneficent ends which the great Director of nature intended to produce by them." — Adam Smith, The Theory of Moral Sentiments (1759)

Greater good

Readers will recognise that the "greater good" is left to "the great Director of nature."

This century we are told that Gaia will take care of the greater good, so long as we honour her by starving the people of heat, food and fuel in the name of climate change.

This Green goddess is inadequate to the role, however; her measures are the opposite of the greater good since they explicitly reduce abundance, rather than powering a more productive society across the board.

Western politicians decrying Trump's tariffs have pursued degrowth, the de-industrialisation of their countries, by deliberately turning off the spigots of traditional energy before wind and solar are ready (if ever) to take up the slack. Having stopped digging coal, they chop down forests on the other side of the world, to feed their subsidised "biomass" power stations.

See Europe Sold Out By Own Elites - Sacrificed in U.S. contest with Asia (Nov 10, 2024)

A leading critic of Net Zero is co-founder of Greenpeace Dr Patrick Moore. It was another Moore, Michael, who supported the Jeff Gibbs documentary, Planet Of The Humans (2020) which asked essential questions — not about climate change but the honesty of the policy response. [3]

The point, perhaps, is not to argue over the "greater good" but to take a material approach based in the process of physical science; which is to acknowledge human power over nature through our adaptive learning.

Does an interest in Gaia conflict with husbandry of the Earth? Only if you insist on their incompatibility.