“War is the continuation of politics by other means,” wrote famed Prussian military theorist Carl von Clausewitz. In our time, international trade is becoming the continuation of war and politics by other means. This goes far beyond simple, old-fashioned “trade wars” intended to protect jobs or provide government revenue.
Last Friday, markets were shaken by President Donald Trump’s levy of $50 billion in tariffs via a 25 percent duty on 1,102 Chinese products involving industries such as aerospace, communications and information technology, and robotics.
The Chinese goods targeted by these Section 301 tariffs, according to the Coalition for a Prosperous America (CPA), were the fruits of China’s “intellectual property theft, forced technology transfer, and cyber attacks.”
Mr. Trump’s “necessary” actions, says CPA Chairman Dan DiMicco, were “to hold China accountable for its hostile actions and to ensure the future viability of key U.S. high-tech sectors.”
“China steals American technology by any possible means, then sells it back to the U.S. at a profit,” says CPA CEO Michael Stumo. “In doing so, Beijing is not only directing the erosion of America’s competitiveness in high-tech industries, but ensuring that domestic U.S. companies go out of business at the same time.”
“This is an open-and-shut case of predatory behavior and outright theft,” adds Stumo, “and it will be interesting to hear how critics of the president’s trade strategy can possibly excuse criminal behavior on the part of China. Anyone supporting open trade and the free market should appreciate the President’s carefully considered enforcement of existing U.S. trade law.”
In the wake of the G-7 meeting in Canada a week ago, we have seen a less justifiable and more cynical political use of tariffs by America’s competitors. In response to President Trump’s new 25 percent tariff on imported steel and 10 percent tariff on imported aluminum, European Union lawmakers intend to launch retaliatory tariffs of specific, targeted U.S. products, including Harley-Davidson motorcycles, Levi jeans, and bourbon whiskey.
Such targets are not chosen randomly. As ZeroHedge noted, “Harley-Davidson is based in Wisconsin, the home state of Speaker Paul Ryan (R); Levi Strauss & Co. is headquartered in House Minority Leader Nancy Pelosi’s (D) hometown of San Francisco; and bourbon is made in Kentucky, the home state of Senate Majority Leader Mitch McConnell (R).”
Mr. Trump’s steel and aluminum tariffs were implemented both to protect American industries and jobs, as well as America’s self-reliance in producing strategic defense metals. Three out of four American aluminum smelters have shut down in recent decades, costing thousands of jobs, because of foreign competition.
But Mexico swiftly retaliated with $3 billion of targeted tariffs with politically targeted tariffs on bourbon (again, hitting Kentucky), pork, cheese (again, hitting Wisconsin) and other goods.
“Mexico’s list was designed to hit at parts of the United States represented by high-profile Republicans, Mexican officials have said,” reported the New York Times.
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Among Mexico’s tariff targets, writes The Times, are “steel from Vice President Mike Pence’s home state of Indiana, motorboats from Senator Marco Rubio’s Florida, and agricultural products from the California district of Representative Kevin McCarthy, the House minority leader.”
Mexican officials, writes the left-of-center webzine Vox, are aiming “to hit Trump’s party where it hurts ahead of the midterm elections.”
Nations are starting to use targeted tariffs and other trade manipulations, wrote journalist Monica Showalter, “to change our politics and force us [to] vote differently.”
If you thought “Russian collusion” was manipulating American politics, then what does it mean when foreign nations target their trade policies to harm one political party and thereby help elect its rival party? How long before one political party colludes with foreign powers to politicize trade?
By such trade manipulation, are such foreign powers – friend and foe alike – not engaging in a “conspiracy in constraint of trade,” weaponizing tariffs as a way to “gerrymander” America’s electoral politics, letting other countries pick America’s leaders?
The United States after World War II extended our nuclear umbrella through NATO to defend Western Europe, enabling them to build welfare states. But now Germany’s Angela Merkel and France’s Emmanuel Macron want to create a European Union military independent of the U.S.
The U.S. likewise gave many allies favorable trade arrangements to build up their industries and economies. But although some are now richer per capita than we are, they demand higher tariffs on our goods than we put on theirs. They also cheapen their currency to undercut us in foreign markets. As Shakespeare’s King Lear said: “How sharper than a serpent’s tooth is an ungrateful child.”
Lowell Ponte is a veteran think-tank futurist and former Reader’s Digest roving editor who has covered stories in 33 countries. For a free, postpaid copy of Money, Morality & The Machine, call toll-free 800-630-1492.