Some Non-Economic Implications of the National Security Rationale for Protection

In several recent pieces [1] [2] [3], I have worried about the economic implications of trade protection, particularly those moving forward in the guise of “national security”. In this post, I want to make a couple of observations on some non-economic implications.

From Politico:

President Donald Trump’s protectionist rhetoric on trade has already set the United States apart from its global allies, but the White House’s pending moves — sweeping new trade policies to protect the steel industry — could be the first major steps to reverberate across global economies and incite other countries to retaliate…

The pending Section 232 review, under which the administration is considering whether to limit imports of both steel and aluminum in the name of national security, would help Trump keep his campaign promise to crack down on unfair trade practices. The administration has been debating the issue behind closed doors for months, including in a high-level meeting this week with the president, and it finally appears to be moving toward a coherent path forward.

…“The president’s advisers are coalescing around a tailored approach that would target the steel imports of individual countries, rather than across-the-board measures against every nation that sends steel to the U.S., according to two sources familiar with the discussions.

Those who doubt we are heading toward implementation of some substantial protectionist measures should read this account, which characterizes the President as being “hell bent” on moving forward.

Chad Bown at Peterson IIE has outlined what countries would likely suffer the most – i.e., our traditional allies. That’s partly because imports of Chinese steel have already been reduced by conventionally used anti-dumping and countervailing duties. As for aluminum, see this NYT article.

However, to the extent that China is now again in the firing line – partly because of a perceived failure to rein in North Korea, I expect that a large amount of the rhetoric justifying the use of Section 232 will be aimed at China.

Not only is the use of Section 232 more likely to lead to retaliation by our trading partners. I think it might also be inflammatory with respect to certain minority groups within the United States. Almost exactly 35 years ago, Vincent Chin was beaten to death with a baseball bat in Detroit because he was blamed for the plight of two unemployed auto workers (who, obviously, mistook him for being Japanese, instead of American of Chinese descent). It does not take too much imagination to believe that, in the current political environment, commentary about the enemies of the people can be re-deployed against certain countries, and hence minority groups associated with those countries. While the President has recently spoken of the evils of Germany, I do not realistically believe there will be a surge of attacks on Americans of German descent, but should diplomatic and economic relations with China or other nations deteriorate, other groups may be targeted.

Count me worried.

11 thoughts on “Some Non-Economic Implications of the National Security Rationale for Protection

  1. Erik Poole

    Yes, the comments on Germany are rather interesting. In a manner of speaking, President Trump admitted that American workers are culturally inferior. German workers are too productive and too quality-focused for the good of inferior American workers.

    I agree that Americans of German descent are unlikely to be targeted. That Saxon component means that Brits and Germans look awfully similar.

    I share the fear that others will be targeted by righteous ‘real Americans’ dishing out justified violence. Trump’s Muslim hysteria has already lead to the death of an innocent Sikh of American origin, and at least two others being shot.

    Trump has now elevated Islamic terrorism to the status of existential threat to the USA and the rich west. (Recall that this is the same man who wanted to move the US embassy from Tel Aviv to Jerusalem.)

    So I fully expect more Americans who look like Muslim terrorists to die at the hands of American patriots.

    Will these same patriots target ABCs (American-born Chinese) because China is not doing enough to stop the existential (sic) threat of North Korea? Perhaps not.

    Reply
    1. PeakTrader

      It should be noted, manufacturing is a much larger part of the German economy, where both the U.S. and Germany are highly productive.

      There’s much less productivity in emerging industries, e.g. Information and Bioech Revolution firms, where the U.S. leads the rest of the world combined.

      And, there’s less productivity in retail, which U.S. consumption leaves export-led Germany in the dust.

      Also, it’s a gross overreaction to believe Americans will target Asians or Muslims – it’s just more leftist hysteria. Moreover, the German culture is not worth looking up to or mimicking, at least by Americans.

      Reply
      1. Menzie Chinn Post author

        PeakTrader: Yeah. This article is fake news. (That’s sarcasm, if you weren’t clear on it).
        So too is this article.

        And of course, in your world, there was never a surge in hate crimes against Muslims in the wake of 9/11. This article must be fake news in your book too.

        Americans will never target Asian-Americans? I guess the internment of Japanese-Americans and the Exclusion Act never occurred in your alternative universe.

        Geez. Double geez.

        Reply
        1. PeakTrader

          Menzie Chinn, it’s a tiny percentage of the population. There are always extremists. You won’t hear much about violence or hate crimes by minorities, towards the police, or by leftist and socialist activists, etc. from the mainstream media.

          Reply
  2. Erik Poole

    I recall the mass hysterical hyper vigilance following the Sept. 11th attacks in 2001. A Sikh man was killed for looking like a Muslim. Then the US invaded and occupied two countries so it could experiment with new weapon systems, provide American soldiers with battle field experience and create the conditions that would spawn Da’esh.

    From all other perspectives, the USA ended up with billions in expenditures, and responsible for hundreds of thousands of dead, mostly civilian. From a Baran-Sweezy Neo-Marxist perspective, these invasions and occupations made good sense. That is if you believe that the capitalist system is constantly facing a crisis of overproduction and requires wealth-destroying policy in order to survive.

    The invasions and occupations could also be justified from a perspective of deterrence. Like the Israeli kill ratios. Kill a few of our civilians and we will kill multiples more of yours. ‘Yours’ became a made-in-America designation of what constituted ‘them’.

    The ‘War on Terror’ — probably far more damaging to US interests than the disastrous War on Drugs — is most unfortunate. Now we have President Trump describing Islamic terrorism as an existential threat, which it is not, but given America’s colonial interests in supporting the Israeli nation building project, so-called ‘Islamic terrorism’ could lead ultimately blow back in the form of significant decline in US hegemony.

    Recall that violent colonialism built up the European empires and then took them down.

    Recall that the US and allied powers decisively won WW II by deliberately targeting and fire-bombing hundreds of thousands of civilians in large urban areas in both Nazi Germany and Imperial Japan. Close your eyes and you can smell the flesh burning off of grandchildren and grandparents. That is the glorious smell of ‘freedom’.

    The truth is that ‘terror’ has always been a part of warfare, modern and ancient.

    But suppose President Trump is right. Suppose it is necessary to whip up anti-Muslim hysteria in order to beat back the existential threat posed to American freedom by Islamic terrorists. Then those poor brown-skinned Americans who die at the hands of righteous American freedom fighters should be viewed as ‘collateral damage’, something with which most innumerate North Americans can readily identify.

    In a manner of speaking these ‘accidental’ victims are American patriots helping with the grand cause of saving America from the abyss.

    Reply
    1. PeakTrader

      Foreigners pay for most of the U.S. military indirectly through up to $800 billion annual trade deficits, which the U.S. captures in the global economy and in the long run, including requiring foreigners to buy foreign oil in dollars, in exchange for stabilizing foreign countries, defeating our allies enemies, and defending the U.S. global empire. It’s ridiculous to blame the U.S. for what others instigate. The powerful deterrence of the U.S. is why the world isn’t in much worse shape with many more deaths. You can thank America, the world’s only economic and military superpower, later.

      Reply
    2. PeakTrader

      And, the War on Drugs, along with the most competent police force in the world, reduced crime rates substantially, and reduced or prevented trillions of dollars of social costs.

      Reply
  3. PeakTrader

    The U.S. not only attracts investment, it attracts the investors themselves:

    Income Flows from U.S. Foreign Assets and Liabilities
    Federal Reserve Bank of New York
    November 14, 2012

    Foreign investors placed roughly $1.0 trillion in U.S. assets in 2011, pushing the total value of their claims on the United States to $20.6 trillion. Over the same period, U.S. investors placed $0.5 trillion abroad, bringing total U.S. holdings of foreign assets to $16.4 trillion. One might expect that the large gap of -$4.2 trillion between U.S. assets and liabilities would come with a substantial servicing burden. Yet U.S. income receipts easily exceed payments abroad.

    As we explain in this post, a key reason is that foreign investments in the United States are weighted toward interest-bearing assets currently paying a low rate of return while U.S. investments abroad are weighted toward multinationals’ foreign operations and other corporate claims earning a much higher rate of return.

    U.S. investors earned a much higher rate of return on multinationals’ foreign operations and similar corporate holdings than did foreign investors here, 10.7 percent versus 5.8 percent, respectively.

    The superior U.S. rate of return on FDI, as well as the greater tilt in U.S. foreign investments toward FDI, accounts for the $322 billion income surplus recorded in this category in 2011…The United States has earned a substantial premium on FDI investments at least since the 1960s.

    Reply
  4. Bruce Hall

    It would seem that, judging from the WaPo, NYT, et al, that those of Russian descent should have the greatest fears given that the Russians now constitute the greatest threat to the US and world. That’s sarcasm in case you didn’t pick up on it.

    Reply
    1. Menzie Chinn Post author

      Bruce Hall: I am willing to make a bet that reported hate crimes against people visually (even if mistakenly) identified as “Muslim”, and “Chinese” (should US-China relations deteriorate, as I expect it will) will outpace those against Americans of immediate Russian descent.

      This is not a sarcastic comment.

      Reply

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