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October 23, 2018 | Forbes, Laffer ask Trump for Zero tariffs, Zero Subsidies, and Zero Barriers

Mike 'Mish' Shedlock

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.
In a letter to Trump, the Committee to Unleash Prosperity seeks zero tariffs. There were several notable letter signees.

Steve Forbes, Arthur Laffer, Fred Smith, and Stephen Moore on the Committee to Unleash Prosperity ask Trump to seize the high ground and give U.S. firms an advantage.

Please consider the WSJ Op-Ed Mr. President, It’s Time for Zero Tariffs.

Congratulations on the new U.S., Mexico, Canada Trade Deal. By keeping trade barriers as low as possible across North America, this USMCA will benefit businesses, workers and consumers in all three countries.

We are writing to recommend that as you continue to negotiate new trade deals with our other allies, you pursue the endgame goal of zero tariffs. You have said on several occasions that your objective is not protectionism but to create “a level playing field” on trade. You have even suggested to our allies on several occasions that both sides “drop all Tariffs, Barriers and Subsidies!”

We hope that you will continue to push this solution with Britain, the European Union, South Korea, Japan, and other allies. The “zero for zero” offer should include three components: zero tariffs, zero subsidies and zero nontariff barriers. The last has been a big problem for American companies in penetrating many foreign markets.

This will help American businesses expand markets overseas and create more jobs and wealth both abroad and here at home. Zero for zero on tariffs will give American companies an advantage because, as your own Council of Economic Advisers reports, the average American tariff is 3.5%, while the average EU rate is 5%. China’s is nearly 10% and the world average is around 10%. On a level playing field, American companies and their talented and productive workers can compete with anyone, and U.S. exporters—from farmers to manufacturers to tech firms—will benefit enormously if trade barriers are abolished.

Strategically, offering the carrot of zero tariffs will allow America to seize the moral high ground in the trade debate. It will also put the U.S. in a stronger position as you negotiate with China to end some of Beijing’s most abusive trade policies.

I endorse that letter 100% while adding. the US should do this regardless of whether any other nation follows. Business and jobs will flock to the first nation that does so.

Addendum

Disappointing comments from readers who believe in tariff parity.

Increasing tariffs because another nation does is pure silliness. It is tantamount to saying if another country does something stupid, we need to be stupid as well.

Tariffs are a tax on consumers and importers of usable goods such as steel. If China is subsidizing steel it is to the benefit of US manufacturers who use steel as well as consumers who pay lower prices for goods.

It is absolutely correct to reduce tariffs, regardless of what other nations do, on that basis alone.

Production and jobs will flow to the US if we eliminate tariffs. Consumers gain from lower prices, and even our exporters who use intermediate goods (again steel is a prime example), benefit.

Mike “Mish” Shedlock

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October 23rd, 2018

Posted In: Mish Talk

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