Thus spake the Mr. Trump, on a day that the October trade figures were released, indicating a deteriorating balance.
Figure 1: US trade balance, in billions $, seasonally adjusted (blue). NBER defined recession dates shaded gray. Source: BEA/Census via FRED, and NBER.
Continue reading
Today, we present a guest post written by Jeffrey Frankel, Harpel Professor at Harvard’s Kennedy School of Government, and formerly a member of the White House Council of Economic Advisers.
A recent White House internal memo has suggested a causal relationship between the decline in manufacturing jobs and a host of social ills, including the opioid epidemic. Here is a graphical/geographic comparison of two variables that are related to these factors.
From Reuters:
President Donald Trump on Saturday said he would discuss the fate of a five-year-old U.S.-South Korean free trade deal with his advisers next week, in a move that could see him pull out of the accord with a key American ally at a time of heightened tensions on the Korean peninsula.
The Kansas City Fed’s Jackson Hole symposium this year focused on the causes, implications and remedies for the slowdown in economic growth. Major themes revolved around productivity, fiscal policy, and international trade. Here I discuss some of the major points relating to international trade and inequality, encompassing a paper by Nina Pavcnik (Dartmouth), comments by David Dorn (Zurich), and panel remarks by Ann Harrison (UPenn), Catherine Mann (OECD), Peter Schott (Yale), and John Van Reenen (MIT).
Donald Trump has reaffirmed: “One way or the other Mexico will pay for the wall.” At the same time, as recently as today, Trump threatened a government shutdown if Congress did not provide funding for the wall. Time to consider how these points are — or are not — internally consistent, even allowing for the possibility that Mexico might “ultimately” pay.
Well, I don’t think a few tariffs and quotas, plus “tweaking” Nafta, are going to do it. And blowing a hole in the Federal deficit ain’t likely to help.
At the invitation of the Italian Presidency of the Group of Seven (G7) in 2017, the Istituto Affari Internazionali (IAI) conducted a research project on “Major Challenges for Global Macroeconomic Stability and the Role of the G7” together with a major policy think tank in each of the other G7 member countries:
On imported steel, that is
From Politico today:
STEEL REPORT COULD COME NEXT WEEK: Commerce Secretary Wilbur Ross is expected as early as next week to give President Donald Trump a menu of options for restricting steel imports, senators said after a closed-door meeting with the Cabinet official Thursday afternoon.
Ordinarily, when I read a senior government official stating:
“We have other methods of addressing those who threaten us, and of addressing those who supply the threats. We have great capabilities in the area of trade.”
[US Ambassador to UN Nikki] Haley said she spoke at length to President Donald Trump on Wednesday morning about “countries that are allowing, even encouraging trade with North Korea, in violation of U.N. Security Council resolutions.”
“Such countries would also like to continue their trade arrangements with the United States,” she said. “That’s not going to happen. Our attitude on trade changes when countries do not take international security threats seriously.”
I discount such talk as constituting a non-credible threat. That’s because punishing China with effective trade sanctions would likely hurt America as much as the target (including through third channels as the global economy is hurt).
But the threat is truly non-credible if the agents are rational, as in the Rational Agent model of international relations (see alternatives, here). But using that model as a baseline is probably not correct for the Trump Administration. I think a better framework for analysis (if not a model) would be stumbling into conflict with a misapprehension of costs, benefits, and the workings of the world, as in this case.
Of course, that does not mean that China would accede to US demands even if we imposed sanctions.