I have heard from friends in San Francisco that when Trump was President
container ships went back to China with loaded containers yet since Biden has
been President they are going back to China empty?
The US-China Trade War Is Still Happening – The Diplomat
Bon Kasprak
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#yiv2909009428 P {margin-top:0;margin-bottom:0;}Increasing tariffs on things
producers send to us simply means that the people pay more for the same
products. Telling manufacturers to make things at home to compete with
embargoed products means that we produce less. Computer chips anyone? Have
some dip with that. Eric
OPINIONPAUL KRUGMAN
The Trumpian Roots of the Chip Crisis
July 8, 2021, 7:00 p.m. ET Credit...Doug Mills/The New York Times
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By Paul KrugmanOpinion Columnist What’s the current state of the U.S. economy?
A quick summary might be “booming with bottlenecks.”And some of those
bottlenecks reflect the mess created by Donald Trump’s trade policy.Where we
are now: Employment is growing at a rate we haven’t seen since 1984. So,
probably, is gross domestic product, although we don’t yet have an official
estimate for the second quarter. We are, however, suffering from shortages of
many items, which are crimping production in some areas and leading to sharp
price increases in others.Some of these shortages are getting resolved. For
example, two months ago, lumber cost almost four times as much as it did before
the Covid-19 pandemic; since then, its price has fallen more than 50 percent.
Other bottlenecks, however, seem more persistent. World trade is being held
back by an inadequate supply of standard-size shipping containers — the
ubiquitous boxes that carry almost everything, because they can be lifted
directly from the decks of ships onto railroad cars and truck beds — and
experts expect the shortage to last at least until late this year.And there’s
another bottleneck that may be an even bigger deal than the container shortage:
a global shortage of semiconductor chips. ADVERTISEMENTContinue reading the
main storyYou see, these days almost everything contains silicon chips. So an
insufficient supply of chips is a problem not just for producers of computers
and smartphones; there are chips in just about all durable goods, including
household appliances and, crucially, cars.As a result, the chip shortage has
had large and perhaps unexpected ramifications. Lack of chips is limiting
production of automobiles, leading some people to buy used cars instead. And
soaring used-car prices are a surprisingly big contributor to inflation — in
fact, they accounted for about a third of May’s total rise in consumer
prices.So why are we facing a semiconductor shortage? Part of the answer is
that the pandemic created a weird business cycle. People couldn’t go out to
eat, so they remodeled their kitchens, and they couldn’t go to the gym, so they
bought Pelotons. So demand for services is still depressed, while demand for
goods has soared. And as I said, practically every physical good now has a chip
in it.But as Chad Bown of the Peterson Institute for International Economics
documents in an important new article, the Trump administration’s trade policy
made the situation much worse.When Trump took us into a trade war with China,
there was clearly a lot he and his advisers failed to understand about modern
world trade. Among other things, they didn’t seem to grasp that modern trade
consists not of simple exchanges of goods — they sell us cars, we sell them
aircraft — but of complex supply chains, in which the production of a given
item often involves activities spread across the globe.
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Continue reading the main story ADVERTISEMENTContinue reading the main
storyGiven this reality, the structure of the Trump tariffs was, well, stupid:
They focused mainly on intermediate inputs like semiconductors and capital
equipment, which American companies need to compete in the world market. As a
result, multiple studies have found, the tariffs actually reduced U.S.
manufacturing employment.But Trump’s trade policy wasn’t just poorly conceived.
It was also erratic. Nobody knew which products might face new tariffs or
whether the tariffs he had imposed would remain in place. And in high
technology, especially semiconductors, Trump began imposing export
restrictions, again in an erratic fashion (and with an apparent lack of
awareness that, in many cases, China could simply turn to other suppliers).Paul
Krugman’s Newsletter Get a better understanding of the economy — and an even
deeper look at what’s on Paul’s mind. Get it.As I wrote at the time, the
problem was less that Trump was a self-proclaimed Tariff Man than that he was a
capricious, unpredictable Tariff Man. And this messed up business planning,
especially in semiconductors.Consider foreign producers selling into the U.S.
market. Such producers had little incentive to add capacity, because for all
they knew, they might suddenly face high tariffs. But U.S. producers also had
little incentive to invest, because for all they knew, the tariff protection
they were relying on might go away overnight — or they might abruptly find
themselves barred from selling into foreign markets.Basically, international
supply chains don’t work very well when the policies of one of the world’s key
economies are governed by the whims of a leader who gets his ideas from cable
TV.Notice that I’m not being a free-trade purist here. There’s a good case for
interventionist government policy to ensure reliable supply chains — and the
Biden administration is moving in that direction. It’s important, however, that
this policy be designed by people who understand the issues and that the rules
of the game be clear enough to let businesses plan. ADVERTISEMENTContinue
reading the main storyIn other words, we need a policymaking style that’s the
opposite of what we had in the previous administration.For what it’s worth, I
don’t think bad policy is the main cause of the bottlenecks we’re experiencing,
nor do I believe that these bottlenecks will prevent a rapid economic recovery.
But Trump’s tantrum-based trade policy did real damage, and we’re still paying
the price.
