Trade wars are mostly made up of fightbacks. It is what everyone knows and so it is a surprise that President Trump is querying the decision of the motorbike manufacturer, Harley Davidson, to move some production abroad. It is only fair that the EU should effect retaliatory tariffs in response to the ones imposed by the US government on steel and aluminum products from Europe and elsewhere and in trade wars, it is usual to counter where it hurts most. It is unfortunate that Harley Davidson should be a victim of the reprisals but this is the age of globalization and outsourcing and it is inevitable it should switch to plants outside the US where lower wages and general costs will help to offset some of the slide in turnover expected from prices of its bikes going up in the EU, an important market. This is a common economic move that is vital in order to survive: at least in the long run. Trump cannot complain. He fired the first shot.
A sensible move as opposed to Trump's rationale of 'safeguarding national security', a bye-slang for old, turgid protectionism. How much of the steel and aluminum consumption in the US goes into national security? Are US metal plants at par with Chinese variants in efficiency? Isn' t it more profitable to concentrate energy on reforming labour and wages? Someone said Trump has to fulfil his promises to American workers, a sizable component of his political base. Such political promises often turn out to be rash. Too bad economics does not often work well with promises.
And on another front, the president's peremptory annulment of the Iran deal is having a bit of boomerang now. Ramping up sanctions would ultimately lead to cuts in Iranian oil production and that was going to push up oil prices, resulting in higher energy costs in the US. Unless production is increased quickly elsewhere to bridge supply gaps. Oil prices inching towards $80pb is a mayhem the delicate economy can gladly do without and so worrying is the scenario that the president had to resort to some fake tweeting: announcing that Saudi Arabia has promised to ramp up production. News that turned out to be false.
A sensible move as opposed to Trump's rationale of 'safeguarding national security', a bye-slang for old, turgid protectionism. How much of the steel and aluminum consumption in the US goes into national security? Are US metal plants at par with Chinese variants in efficiency? Isn' t it more profitable to concentrate energy on reforming labour and wages? Someone said Trump has to fulfil his promises to American workers, a sizable component of his political base. Such political promises often turn out to be rash. Too bad economics does not often work well with promises.
And on another front, the president's peremptory annulment of the Iran deal is having a bit of boomerang now. Ramping up sanctions would ultimately lead to cuts in Iranian oil production and that was going to push up oil prices, resulting in higher energy costs in the US. Unless production is increased quickly elsewhere to bridge supply gaps. Oil prices inching towards $80pb is a mayhem the delicate economy can gladly do without and so worrying is the scenario that the president had to resort to some fake tweeting: announcing that Saudi Arabia has promised to ramp up production. News that turned out to be false.
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