I’m shocked, shocked, to find that diplomacy is going on in here. The lede and a subsequent paragraph expose the matter.
President Trump’s threat for a 50% tariff on Brazilian imports expanded his use of punitive duties over matters that have nothing to do with trade, breaking with more than a half-century of global economic precedent.
…
It is one of the latest…example of Trump using tariffs as a cudgel for political priorities outside of trade.
And
The president is betting the threat of reducing access to the American consumer will force nations to capitulate on his political priorities.
Other examples:
- tariffs on Colombia over repatriation flights for migrants back to that country
- steep duties on Canada, Mexico, and China over their role in the fentanyl trade
- tariffs on countries that buy oil from Venezuela
- threat of tariffs to attempt to secure more military spending from Asian nations such as Japan and South Korea.
The news writers at the link noted this bit of history:
Although often controversial and sometimes volatile, such as when the Smoot-Hawley Act hiked U.S. tariffs in 1930, tariffs have generally been motivated by economic or domestic political goals.
There is no more important domestic goal than national security, which necessarily is centered on the global stage.
Ricardo was right as far as he went, in that nations should specialize in those goods and services they do best and import other goods and services from other nations that the importer does poorly. But that’s pure economics. It ignores the diplomacy aspects of international trade—using exports of those specialized goods and services and imports of other goods and services as tools with which to influence other nations’ behavior across a range of milieus.
That foreign policy influence centers on matters of national security, of which domestic economics is a critical, but not sole factor. Other, equally critical, factors include providing opportunities for domestic producers to do better in those weak areas. Specialization, after all, is not the same as producing only those items with no thought to expanding into other areas for specialization.
International trade as diplomacy also includes limiting enemy nations’ access to those goods and services that a nation Ricardo-specializes in that are important to enemy nations’ own foreign adventurism, as well as limiting domestic market access by enemy nations as a means of weakening their economies and so their ability to mount those foreign adventures.
The WSJ‘s editors tacitly understand this, though they don’t seem to have made their understanding overt, even to themselves.
The US will need to mount a united front with allies to confront Beijing’s predatory practices and ensure the world isn’t dependent on China. One idea is a critical minerals alliance.
This is explicitly the use of international trade in its foreign policy/national security role and as a way to counter the People’s Republic of China’s own use of international trade to further its own foreign policy aspirations.
The news writers appear surprised find that an American President understands that international trade, and all of its tools, have very little to do with economics and very much to do with foreign policy. Sadly, they’re not alone. It would behoove all guild members to review their high school economics class notes.