The Cheapest Way For Trump To Save U.S. Oil — Lourcey Sams

Protectionism. This would be a kiss of death for free trade, one of the three pillars of economic liberalism, the other two being free markets and free capital flows.

Oilprice
The Cheapest Way For Trump To Save U.S. Oil
Lourcey Sams

Germany Stalls and Europe Craters — Alastair Crooke

But if Germany’s manufacturing woes were not sufficient in and of themselves, then combined with the threat of trade war with Trump, the prospect indeed is bleak for Europe: And the likelihood is that any of that ECB stimulus – promised for this autumn, as Mario Draghi warns that the European picture is getting “worse and worse” – will be very likely to meet with an angry response from Trump – castigated as blatant currency manipulation by the EU and its ECB. EU Relations with Washington seem set to sour (in more ways than one)....

Strategic Culture Foundation
Germany Stalls and Europe Craters
Alastair Crooke | founder and director of the Conflicts Forum, and former British diplomat and senior figure in British intelligence and in European Union diplomacy

See also

Armstrong Economics
Economic Storm Trump Will be Blamed For Because of Bad Advisers
Martin Armstrong

“Across-the-Board Tariffs on China with Retaliation and Federal Spending Create Over 1 Million Jobs in Five Years” — Menzie Chinn

I’ve read the “working paper” (and the preceding paper) a couple of times, and am not clear what happens — the results are based on splicing two models (REMI and BCG data) and running out the results.

Alarm bells went off in my head when I read this:

You decide.

Econbrowser
“Across-the-Board Tariffs on China with Retaliation and Federal Spending Create Over 1 Million Jobs in Five Years”
Menzie Chinn | Professor of Public Affairs and Economics, Robert M. La Follette School of Public Affairs, University of Wisconsin–Madison, co-editor of the Journal of International Money and Finance, and a Research Associate of the National Bureau of Economic Research International Finance and Macroeconomics

Kenneth Rapoza — Trump’s Base in Panic Over 25% Tariffs on China Goods

“I don’t think people really understand what is at stake,” says Alex Camera, CEO of Audio Control, a privately held, small business manufacturing audio sound equipment near Seattle, Washington. He imports electronic components from China and makes things like power amplifiers for cars. They design it and put it together in Washington. “Trump says China is paying these tariffs, but they are not. I am. U.S. companies are paying it at the port.”

Tariffs are port taxes due at the time of delivery and paid to the U.S. government. At best, companies like Audio Control can renegotiate its contract with its China supplier in order to lower — or in some cases — zero out the impacts of the current 10% port duty. But the hike to 25% is the real game changer. To say the business community, long seen as one of the key voter bases of the Republican Party, are terrified of an escalating trade war would not be an understatement.

“The 10% tariff required us to curtail some of our investments,” Camera says. “The potential of a 25% tariff from tonight would have a major impact on our investment and on our pricing. It frustrates me a little bit about how people see tariffs as an attack on the Chinese economy. Tariffs are an attack on my ability to use my cash to grow my business.”...

Checkpoint Asia
Trump’s Base in Panic Over 25% Tariffs on China Goods
Kenneth Rapoza

Jerri-Lynn Scofield — India Forces Amazon to Choose Between Operating e-Commerce Platform and Selling Goods on that Platform

This is equivalent to anti-trust in a platform economy. On the other hand, economic liberals will charge that it is government interference in free markets and free trade.
India’s not exactly breaking new ground here with it restriction. As antitrust expert Lina Khan noted in a February tweet: “[T]his sort of structural separation has been a key principle in US competition policy. For example, Congress in 1906 passed a law prohibiting railroads from transporting goods they owned.”
Khan continued:

We applied a similar rule to TV networks, telecom carriers, banks. There’s good reason to debate whether structural separations should apply to digital monopolies. But framing the rule as highly invasive or exotic misunderstands our own history (& success) applying it.

Khan’s the author of an influential paper in the Yale Law Journal on Amazon, Amazon’s Antitrust Paradox, and has a paper forthcoming in the Columbia Law Review on structural separations, The Separation of Platforms and Commerce.…

This is key in a platform economy, which is now one of the key factors in building out the Digital Age. The obvious danger is increase of market concentration and therefore of monopoly and monopsony power as owners of digital platforms control their markets and supply chains.

Great wealth in the digital age has come not from ownership of land, factories, chains, or financial institutions but rather digital platforms, first hardware and software systems and service provision, and now distribution platforms.

Of course, this is not new. Firms have always attempted to gain market power through horizontal and vertical integration "for efficiency," but this amplifies economies of scale and creates the potential for erecting gateways. Previous anti-trust legislation has eventually been brought forward to address this.

Hopefully, India will set a precedent, but the neoliberal US will oppose it vigorously as a form of protectionism that contradicts the spirit of free markets and free trade.

The US experience is troubling, however. First, retail giants like Walmart devastated small retailers and "mom & pop stores" across the country and then ecommerce, with the proliferation of platforms it brought, made it difficult for smaller sellers to compete with the giants on the Internet.

Secondly, owing to capital intensity, concentration and dominance of a few platforms increased their market power and enabled rent extraction as competition dwindled.

There's a name for this, monopoly capital. And the antidote is anti-trust as a means for decreasing concentration and increasing competition.

Naked Capitalism

India Forces Amazon to Choose Between Operating e-Commerce Platform and Selling Goods on that Platform
Jerri-Lynn Scofield, attorney

James Pethokoukis — Republicans have a big new economic idea. It's terrible.

James Pethokoukis is has a master's degree in journalism and no credentials in economics. Perhaps this explains at least part of his failure to understand that globalization under neoliberal doctrine — "free markets, free trade, and free capital flows" results in the great leveling as capital flows where resources, including labor, as least expensive in order to be be competitive. This implies that wages and capital investment in developed countries, where resources are most costly, will fall as the emerging world rises. This will continue under such a system until an equilibrium level is reached.

Obviously, domestic workers in developed countries are disadvantaged by this policy and will continue to be unless government step in to soften the blow, or neoliberal globalization is ended.

The policy of the present administration is the latter.

But it is not the only policy available for addressing the issues that neoliberal globalization entails.

MMT economists recommend recognizing that receiving real resources from abroad is a real benefit domestically. Moreover, a currency sovereign has the ability to purchase the use of real resources to prevent their being idled. Such a government also has the capacity for improving the value of real resource use through public investment in education, health care, infrastructure, R & D, etc. while addressing temporary problems with welfare provision and an employer of last resort program funded by the currency issuer.

The Week
Republicans have a big new economic idea. It's terrible.

James Pethokoukis |Dewitt Wallace Fellow at the American Enterprise Institute and editor of the AEIdeas blog

More illogic from The Week.

The author admits that this is no historical basis for Zionism but we should just pretend there is anyway, since Israel is already a nation state and failure to do so will encourage anti-Zionists to attack Israeli statehood, and that would be a bad thing. Huh?

Why Zionism should be untouchable

Damon Linker

Menzie Chinn — “So China Is Now Paying Us Billions of Dollars in Tariffs”

How does a tariff work? A tariff is a tax on imported goods, so if a Chinese good is sold to an American, the American literally has to pay the tax.

The quote above is from Mr. Trump, as recounted in Peter Coy’s “The Real Pain From Trump’s Tariffs Trickles Down to Consumers” in Bloomberg Businessweek; it clearly highlights the fact that either (1) Mr. Trump has no understanding of how tariffs work, or (2) he does understand, and he’s lying....

Trump is apparently assuming that the price remains the same domestically for the imported good and the exporter lowers the price to accommodate the tariffs. 

Minzie Chinn explains why that is magical thinking, given the reality. Tariffs spell higher prices for imports domestically. 

This is essentially a tax on consumers of imported goods.

Econbrowser
“So China Is Now Paying Us Billions of Dollars in Tariffs”
Menzie Chinn | Professor of Public Affairs and Economics, Department of Economics, Robert M. La Follette School of Public Affairs, University of Wisconsin at Madison, and Co-editor, Journal of International Money and Finance

Reuters — U.S. calls foreign mail system unfair in surprise win for Amazon

In effect, a tariff.

Reuters
U.S. calls foreign mail system unfair in surprise win for Amazon

Ramanan — Misinterpretation Of Joan Robinson’s Quote On Dropping Rocks

Keeper Joan Robinson quote on trade.

The Case for Concerted Action

Misinterpretation Of Joan Robinson’s Quote On Dropping Rocks
V. Ramanan

TASS — Russia to notify WTO of plans for retaliation against US for steel, aluminum duties

The United States has refused to hold consultations with Russia on the WTO platform over the introduction of restrictions on steel and aluminum import, saying such measures were not special protectionist ones, the Ministry of Economic Development told TASS on Friday. With this in mind Russia is going to notify the WTO of its intention to take retaliatory measures to limit the import of steel and aluminum.

"In response to Russia’s request for consultations the United States said that it did not regard its restrictions as special protectionist ones and was unprepared for consultations with Russia within the framework of WTO procedures on special protectionist measures. All other WTO members that had requested such consultations received the same reply," the ministry told TASS.

"In this connection we plan to notify the WTO Council on Trade in Goods of our intention to take such steps. Thirty days after such notification Russia will have the right to take retaliatory measures proportionate to the damage from US restrictions on the Russian export of steel and aluminum," the ministry said....

Following the rules.

TASS
Russia to notify WTO of plans for retaliation against US for steel, aluminum duties

Impact Assessment Of $60B China Trade Tariffs

The purpose of this article is to show how the proposed $60B trade tariffs on China will impact macro fiscal flows and investment markets. To assess this regulatory change, a balance of sectoral flow analysis has been used (following British economist Professor Wynne Godley's work)….

Seeking Alpha
Impact Assessment Of $60B China Trade Tariffs

Alan Longbon

Reuters — China warns U.S. not to open Pandora's Box, unleash trade ills on world

The take-away: "Negotiations must be equal, and China will not accept any consultation under unilateral coercion,” Gao said."

China (and Russia) demand to be treated as equals, which would mean the US accepting multipolarity. 

Is the US willing to go to the mat to maintain unipolarity?

Stay tuned.

Reuters
China warns U.S. not to open Pandora's Box, unleash trade ills on world
Se Young Lee and Yawen Chen

Bill Mitchell — Donald Trump’s tariff hikes are not good policy

I am generally not in favour of trade protection. I grew up in a country that had very extensive protection (tariffs, import quotas) on manufacturing goods, which was justified on a number of grounds – capacity to shift to defense industries; stable employment; and more abstractly, an expression of becoming a ‘modern’ nation, leaving our agrarian roots behind. The initial move to impose high tariffs was that a young industry would take time to develop – the so-called infant industry argument, which goes back to the 1790 Report on Manufactures written by American economist Alexander Hamilton. The problem is that the infant never really grew up and the tariffs just became a cosy rent-sharing margin for unions and multinational corporations. Meanwhile consumers paid excessive prices for deficient-quality motor vehicles (among other products). It is clear that as trade opens up there are workers and regions that lose – and lose badly. The answer is not try to reinvent the past through protection. Rather, it is to use the government’s fiscal capacity to create new opportunities in these regions to ensure that workers disadvantaged by import competition can transit into new jobs with stable incomes. That option is often overlooked because modern governments have become obsessed with austerity. And, as I argue below, that obsession will in the context of Donald Trump’s tariff hikes, work against the European nations that are running ridiculously large current account surpluses....

Bill Mitchell – billy blog
Donald Trump’s tariff hikes are not good policy
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Ginger Gibson — Large U.S. retailers urge Trump not to hit China with tariffs

“At the same time, we are concerned about the negative impact as you consider remedial actions under Section 301 of the Trade Act could have on America’s working families,” the letter stated. “Applying any additional broad-based tariff as part of a Section 301 action would worsen this inequity and punish American working families with higher prices on household basics like clothing, shoes, electronics, and home goods.”...

Reuters
Large U.S. retailers urge Trump not to hit China with tariffs

Ginger Gibson

Marshall Auerback — There are better ways than simply slapping tariffs on imported goods.

MMT without specifically mentioning MMT. Seems to be the new tactic?

Why Trump Is So Clumsy About Fighting 'Free Trade'
There are better ways than simply slapping tariffs on imported goods.
Marshall Auerback / AlterNet

See also at AlterNet

Blowing Up Some of the Biggest Myths About the Economy and the Deficit
Paul Sliker, Michael Palmieri and Dante Dallavalle / Democracy at Work

also

Beat the Press
Washington Post Says Stronger Patent and Copyright Protections Are "Free-Trade"
Dean Baker | Co-director of the Center for Economic and Policy Research in Washington, D.C

Also

Counterpunch
Trump’s Travesty of Protectionism

Michael Hudson | President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City, and Guest Professor at Peking University

Barkley Rosser — Is Treasury Secretary Mnuchin Right About The Impact Of The Dollar On US Trade?

Let me conclude that while I agree with Dean that lowering the value of the dollar may will certainly tend to increase the quantity of exports and lower the quantity of imports as well as tend therefore to increase employment somewhat, this does not mean that I necessarily support a "talking down the dollar" policy. One obvious problem, mentioned by Summers, is that a too obvious and aggressive such nationalist policy is likely to call forth retaliation from other nations, just as an aggressively protectionist policy is likely to do. They will start talking down their currencies and perhaps engage in more direct policies to lower their values, which can easily end up in a "beggar thy neighbor" war as described by Joan Robinson in 1937. More often than not a wiser policy for a TeasSec is not to push either a strong or weak currency policy and just keep quiet, just as such a policy is often best for central bankers as well, even though the TreasSec is "in charge" of the dollar. Sometimes asserting that authority is nothing more than a pointless macho exercise.

Econospeak
Is Treasury Secretary Mnuchin Right About The Impact Of The Dollar On US Trade?
J. Barkley Rosser | Professor of Economics and Business Administration James Madison University

Reuters — ECB hits out at Washington for talking down the dollar

European Central Bank chief Mario Draghi took a swipe at Washington on Thursday for talking down the dollar, a move he said threatened a decades-old pact not to target the currency and might force his bank to change its own policy.

Reuters
ECB hits out at Washington for talking down the dollar
Balazs Koranyi, Francesco Canepa

Asia Unhedged — Freed from White House role, Bannon takes aim at China

Bannon-backed Ray Moore defeated the  Trump-backed establishment candidate in the Alabama GOP rimary for senator. Fresh from victory, Bannon now smells blood in the water. Trump is now isolated between the GOP establishment he needs to get things done in Washington and his anti-establishment base that wants the "swamp" drained, which means the establishment of both parties.

US business is bound at the hip to China as a result of Chinamerica policy. Since the GOP establishment is funded by US business, this portends to be quite a battle. 

And China holds a pretty strong hand in the game, too. While both parties would be bruised, it is not clear who would emerge from a trade war stronger. And there are strategic considerations, too.

Better make some more popcorn.

Asia Times
Freed from White House role, Bannon takes aim at China

Asia Unhedged

See also

The US attack will be aimed state subsidies.

“Overcapacity is a big problem already and given the 2025 plan and the subsidies that it contemplates for a number of new industries, one of the worries that one has to have is that that may result in future overcapacity,” [US Commerce Secretary Wilbur Ross] was quoted by the FT as saying.

“For example in robotics, there apparently are something like 400 robotics companies in China right now and people in the industry tell me their estimate is that maybe 360 of those are in it to get the subsidies and tax breaks and are not really that serious about products.”

China’s robot revolution a threat to US, says Ross

China's Xi says BRICS must promote open world economy

The BRICS group of emerging economies must promote trade liberalization and an open world economy, Chinese President Xi Jinping said at a business meeting on Sunday at the start of a three-day summit being held in southeastern China.

The heads of state from Brazil, Russia, India, China and South Africa will gather in the city of Xiamen through Tuesday, giving China as host its latest chance to position itself as a bulwark of globalization in the face of U.S. President Donald Trump’s “America First” agenda.

How the worm turns (and ideology changes) in the face of interests.

Reuters
China's Xi says BRICS must promote open world economy
Yawen Chen and Michael Martina

Stephen S. Roach — America and China’s Codependency Trap

On August 14, President Donald Trump instructed the US Trade Representative to commence investigating Chinese infringement of intellectual property rights. Whatever the merit of such allegations, Chinese retaliation against US trade sanctions would almost certainly cause far more economic damage.

Project Syndicate
America and China’s Codependency Trap

Stephen S. Roach, former Chairman of Morgan Stanley Asia and the firm's chief economist, now a senior fellow at Yale University's Jackson Institute of Global Affairs and a senior lecturer at Yale's School of Management