The Danish Prime Minister stupidly threatens to hit back at the coming US tariffs on the European Union. What we’re seeing here is the fundamental retardery and complete lack of a most basic education possessed by the mediocrities purportedly running Clown World.
The EU will be forced into a“robust response” if the US imposes tariffs on the bloc’s exports, Danish Prime Minister Mette Frederiksen warned on Monday.
US President Donald Trump has threatened to impose tariffs on the EU unless the bloc reduces its trade deficit with the US by significantly increasing purchases of American oil and gas. On Friday, Trump reiterated his threat, saying he “absolutely” plans to levy tariffs on the EU and claiming that the bloc “has treated [the US] terribly” with its trade practices. He has not yet provided specific details regarding the targeted goods or the exact tariff rates, however.
Speaking to reporters ahead of an informal meeting of EU leaders in Brussels, Frederiksen warned that Trump’s insistence on placing levies on the bloc’s goods could trigger a trade war.
“I am not in favor of a trade war. I am actually in favor of the opposite, that we trade with each other… but it is clear that if there is very strong American pressure on the European market, we simply cannot do anything but respond harshly,” she stated.
Again, a trade war is MATERIALLY BENEFICIAL to any country with a negative balance of trade. So what the Danish Prime Minister is threatening the USA with is the net BENEFIT of transferring EUR 4.7 billion to the USA.
Now, most people don’t know anything about economics, particularly journalists and politicians. They know even less about economic history, which is why you’re going to see a few people attempting to look knowledgeable by referencing the Smoot-Hawley tariff, on which the stupid and the uninformed blame the Great Depression. Of course, I addressed this in my 2009 book on The Return of the Great Depression:
For many years, it was supposed that the Smoot-Hawley tariff of 1930 played a major role in the economic contraction of the Great Depression. As more economists are gradually coming to realize, this was unlikely the case for several reasons. First, the 15.5 percent annual decline in exports from 1929 to 1933 was less precipitous than the pre-tariff 18.3 percent decline from 1920 to 1922. Second, because the amount of imports also fell, the net effect of the $328 million reduction in the balance of trade on the economy amounted to only 0.3 percent of 1929 GDP. Third, the balance of trade turned negative and by 1940 had increased to nearly ten times the size of the 1929 positive balance while the economy was growing.
The Pomp Letter has begun educating himself on tariffs and economic history, and has concluded that the mainstream hysteria is based on a foundation of ignorance.
Trump implemented a 25% tariff on steel imports in March 2018. His reasoning was related to national security, along with a desire to get US steel mills operating at 80% capacity or higher.
Naturally, the critics of tariffs would argue that steel prices should have increased by 25% or more post-tariff, but as you can see in this chart — steel prices increased through the summer (steel prices had already been skyrocketing pre-tariff too) and then began falling substantially. US steel prices eventually fell to price levels much lower than pre-tariff prices.
Why did the price of US steel decrease? Domestic manufacturing of steel increased by nearly 10% for the 2 years post-tariffs.
“The USGS data show that Trump’s tariffs may have helped goose domestic steel production in the first few years after they were implemented. Production rose to 86.6 million metric tons in 2018 and 87.8 million metric tons in 2019, before cratering in 2020 as a result of the COVID-19 pandemic. Production bounced back in 2021, as American steel mills produced 85.8 million metric tons of raw steel that year.”
This means the 2018 tariffs worked — US manufacturing of steel increased and US steel prices dropped lower.
Obviously, the pandemic created significant issues for manufacturing and industrial companies, but US steel prices still sit right now at nearly the same level as they were pre-tariff. Most importantly, steel prices have not kept up with consumer inflation since 2018.
So now you have three concrete examples from the 2018 tariffs that show the critics were wrong. The tariffs led to lower prices, increased American manufacturing, more government revenue, and the creation of American jobs. Also, US inflation (CPI) fell from 2.1% in January 2018 to 1.6% in January 2019, so the tariffs didn’t lead to higher inflation either.
The USA will win any tariff war because it has been losing the free trade war for decades. America has literally nothing to lose in this regard.
DISCUSS ON SG
