- Trump gives trade partners new deadline…
- Globalists advance false notions of free trade…
- Robert Kiyosaki’s latest book shows you the compounding power of weekly income…
Dear Reader,
The trade war truce nears termination… and fresh hostilities are in prospect.
Yesterday the United States Commander-in-Chief dispatched several letters of warning.
He informed Japan, South Korea, Malaysia, Kazakhstan, South Africa, Laos, and Myanmar that they must come to trade terms by Aug. 1 — else confront substantial tariff penalties.
Politico, by way of summary:
- In one-and-a-half page form letters posted to Truth Social Monday, Trump threatened Japan and South Korea, two of the U.S.’s largest trading partners, with 25 percent tariffs, a rate that roughly matches the initial “reciprocal” tariffs Trump briefly imposed on the two countries in April.
- Other letters went out to a grab-bag of countries — Myanmar, which is in the midst of a civil war; South Africa, the U.S. largest trading partner on the African continent; the Central Asian nation of Kazakhstan; and Southeast Asian countries Malaysia and Laos — threatening tariffs ranging from 25 to 40 percent.
- The letters also extend the deadline for the tariffs to kick in — from July 9 to Aug. 1 — allowing negotiations to continue, as administration presses the countries to increase their defense spending and boost agricultural imports, among other measures.
Wall Street Panics
The trade war-fearing stock market took to its bunker following yesterday’s communiques.
The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite each posted substantial retreats.
Meantime, the president announced late Sunday that any nation throwing in with the “Anti-American policies of BRICS” will confront an additional 10% tariff.
He of course referred to the economic bloc led by Brasil, Russia, India, China and South Africa.
BRICS membership likewise extends to Saudi Arabia, Egypt, United Arab Emirates, Ethiopia, Indonesia, and the recent target of American aerial bombs, Iran.
This past weekend the BRICS bloc convened in the Brazilian city of Rio de Janeiro.
Hence the president’s timely missive.
Trump’s Looking for Another Victory
I hazard the president feels flush with victory following his successful promotion of the Big, Beautiful Bill.
And that he expects the momentum of battlefield success to carry him through to trade war victory.
He believes the target nations will bend beneath American trade might.
He believes they rely far more upon trade with the United States… than the United States relies upon trade with them.
Thus he believes he “holds all the cards” as the phrase runs.
The president is also aware that the stock market attained fresh records following the trade war nastiness earlier this year.
I hazard he expects any short-term wobbles will steady once his trade targets come to terms.
He believes the stock market, upon peaceful resolution, will once again be up and away.
Thus he is willing to endure three weeks of market frets.
Is Free Trade Better in Theory Than Reality?
As a fellow of libertarian leanings, I have for my entire adult existence clung to free trade doctrine.
I embraced fully to my bosom Mr. Ricardo’s theory of comparative advantage.
Why should an England, for example, attempt to produce port when Portugal can do it far better — and cheaper?
And why should a Portugal attempt to produce wool when England can do it far better and cheaper?
Let them simply trade one for the other. The transaction works to the benefit of both nations.
Multiply this example upon multiple fronts. Free trade centered upon comparative advantage appears the superior system.
Yet is the theory of comparative advantage more theory than reality? Is the theory more restricted than free trade drummers would have you believe?
When Free Trade Theory Falls Apart
Freedom Financial News contributor Jim Rickards believes the answer is yes:
- If the theory of comparative advantage were true, Japan would still be exporting tuna fish instead of cars, computers, TVs, steel and much more…
- The problem with this theory of comparative advantage is that the factors of production are not permanent and they are not immobile.
- If labor moves from the countryside to the city in China, then suddenly China has a comparative advantage in cheap labor. If finance capital moves from New York banks to direct foreign investment in Chinese factories, then China has the comparative advantage in capital also…
- In theory, this allows for price discovery, lower costs and higher returns to capital.
- In reality, it causes lost jobs, lost competitiveness and lower wages, especially for Americans. US industry was stripped bare and US jobs were lost by the millions, with China being the main beneficiary.
Free trade is broadly considered a one-worlder’s project.
They believe borders choke the free flow of goods and people. Borders divide rather than unite.
Free trade laughs at borders… and joins the world in joyous embrace.
The Original Free Traders Believed in Borders
Yet as economist Joseph Salerno has noted, free trade originated in national interest:
- Despite their devotion to free trade, the classical economists were nationalists. They viewed free trade as one of the most important means for advancing the security, prosperity and cultural achievements of their own nations…
- [They] recognized the existence of profound differences among nations and nationalities and loved their own nations above all others…
Here Salerno shovels up the bones of economist Edmund Silberner (dates 1910–1985):
- Though hostile to militarism, [the classical economists] make it clear that their attitude is opposed neither to an enlightened patriotism nor to the principle of nationalities…
Thus rests the prosecution — free trade was conceived in the national interest.
Today’s one-worlders peddle a counterfeit good… at least by the lights of the classical economists.
And so I argue in conclusion:
Let us not cling to sterile free trade doctrine. Let us instead heed Mr. Thomas Huxley’s sage counsel:
- Sit down before fact like a little child, and be prepared to give up every preconceived notion, follow humbly wherever and to whatever abyss Nature leads or you shall learn nothing.
If fact leads you towards free trade theory, be it so.
If fact leads you away from free trade theory, be it so.
Yet let fact take you in whichever direction Nature leads… lest you learn nothing.
Brian Maher
