Me: I want to talk about the logic behind tariffs. The Biden administration just introduced a whole bunch of new tariffs on products coming out of China and that seems to be in direct opposition to the idea of free trade and open markets. How does the US justify tariffs? What’s the logical framework they use?
ChatGPT:
The US justifies tariffs on several grounds, even though they contradict the principles of free trade and open markets. Here’s the logic they use:
1. Protecting Domestic Industries: Tariffs can shield nascent or struggling domestic industries from foreign competition. By making imported goods more expensive, domestic products become more competitive in the local market, supporting local businesses and jobs.
2. National Security: Some industries are critical for national security. The US argues that relying on foreign countries, especially potential adversaries, for essential goods like steel, semiconductors, or pharmaceuticals can be risky. Tariffs on these imports can incentivize domestic production.
3. Trade Deficits: Tariffs can be a tool to address trade imbalances. The US has a significant trade deficit with China. By imposing tariffs, the government aims to reduce this deficit by making Chinese goods more expensive and thus less attractive, encouraging consumers to buy domestically produced items.
4. Retaliation and Negotiation: Tariffs can be used as a bargaining chip in trade negotiations. The US might impose tariffs to retaliate against unfair trade practices or to pressure other countries into changing their policies. It’s a form of economic leverage.
5. Revenue Generation: Tariffs also generate revenue for the government. Although this is less significant today compared to historical reliance on tariffs for funding government operations, it’s still a factor.
6. Economic Strategy and Industrial Policy: Tariffs can be part of a broader strategy to encourage specific sectors. For example, tariffs on certain tech products might be aimed at boosting the US tech industry’s competitiveness on the global stage.
In essence, while tariffs oppose the concept of free trade, they’re justified as a tool for protecting domestic interests, ensuring national security, correcting trade imbalances, leveraging negotiations, and driving strategic economic policies. Critics argue, however, that these measures can backfire, leading to higher prices for consumers, trade wars, and economic inefficiencies.
Me: But aren’t these the same basic arguments countries have always made for imposing tariffs and duties on foreign products? And aren’t they same arguments the US has tried to prevent other countries for using via the World Bank and IMF?
ChatGPT:
Absolutely, these arguments have been around for centuries and are indeed the same ones the US and other countries have historically used to justify protectionist measures. The irony is palpable, especially considering the US has been a vocal proponent of free trade through institutions like the World Bank and the IMF. These institutions often encourage or even pressure developing countries to lower tariffs and open up their markets, promoting the benefits of free trade.
Here’s the nuanced breakdown of this irony:
Historical Consistency: The US, like many other countries, has long used tariffs to protect its industries, especially during its early industrialization period. The arguments for protecting nascent industries and securing national interests are timeless and have been part of economic policies for centuries.
World Bank and IMF Policies: The World Bank and IMF, heavily influenced by the US and other developed nations, have promoted policies of economic liberalization and deregulation in developing countries. These policies often come with the rationale that open markets lead to greater efficiency, economic growth, and integration into the global economy.
Selective Application: The US has often applied different standards domestically versus internationally. Domestically, it might impose tariffs to protect specific industries or address strategic concerns. Internationally, it promotes free trade, arguing that it leads to overall global economic growth and stability.
Strategic Interests: When pushing for lower tariffs abroad, the US and its allies argue that open markets benefit everyone in the long run by creating more competition, lowering prices, and fostering innovation. However, when it comes to its strategic interests, the US is quick to revert to protectionism, showing a dual approach based on context and interests.
Realpolitik in Trade: International trade policies are often driven more by realpolitik than by ideological consistency. Countries, including the US, tailor their trade policies to their strategic economic and political interests, even if it means appearing hypocritical.
In summary, while the arguments for tariffs have remained consistent over time, the selective application of free trade principles versus protectionist measures highlights the pragmatic and often self-serving nature of international trade policies. The US, like many other countries, uses whatever tools and arguments are most advantageous for its current economic and strategic needs, even if it means contradicting its own advocacy for free trade.
I’m not an expert on world trade disputes, but it seems to be that the U.S.A.’s current whining about Chinese manufacturing is pathetic and hypocritical. American manufacturers, with the full support of the U.S. Government, has spent 40 years outsourcing their manufacturing to China in order to benefit from lower Chinese wages and TCO, so they could sell their cheap products to the world. Those same policies that benefited U.S. companies in the past now pose an economic threat, as Chinese companies make and sell their own goods to the world. There’s a stunning level of hypocrisy criticising China while having benefited from these manufacturing dynamics, but try to find that perspective articulated in the mainstream U.S. media. Instead they just continue to act as the P.R. arm of the U.S. government and its corporate owners.
And surely we want the world for have as much cheap, high quality green energy products as possible, don’t we? On one hand, the U.S. government says that climate change is a top global priority – on the other hand, they don’t want China to produce too many products to solve the problem.
Me:
The U.S. government is complaining that China is “creating an oversupply of clean energy products”. They are also complaining that China is “overproducing” products and “dumping” them on global markets. This seems churlish to me. I thought the US believed in “open markets” and capitalism? Don’t the US also use tariffs and government funding to make their manufacturers more competitive?
ChatGPT:
You’re picking up on the contradictions that often emerge in international trade rhetoric. The U.S. has long championed open markets and free trade, but that support is sometimes tempered by national interests and the desire to protect domestic industries.
Let’s break down the criticisms you’re mentioning:
Oversupply of Clean Energy Products: China has heavily invested in clean energy manufacturing, like solar panels and batteries. The oversupply issue is essentially that China can produce more than the global market demands. This drives down prices, benefiting consumers and countries looking to transition to renewable energy but also putting pressure on non-Chinese manufacturers who struggle to compete with lower-priced imports.
Dumping Allegations: Dumping refers to selling products abroad at prices below their normal value (often below production costs) to capture market share. Critics in the U.S. argue that China’s subsidies and state support lead to artificially low prices that damage U.S. manufacturers.
U.S. Use of Tariffs and Subsidies: Yes, the U.S. has its own protectionist policies, such as tariffs and subsidies. The Inflation Reduction Act of 2022, for instance, incentivizes U.S. clean energy manufacturing, while tariffs imposed during the Trump administration continue to impact trade with China.
In essence, while the U.S. preaches free markets, it’s not above using government interventions to protect its industries. The complaints about China are often rooted in the notion of maintaining a “level playing field,” where countries are expected to follow a similar set of market rules. However, these rules are often defined through political and economic lenses that favor the rule-maker’s interests.
These dynamics reflect broader tensions in global trade, where the line between fair competition and protectionism becomes blurry, especially with strategic sectors like clean energy.
Me:
Can you give me examples of where the US used its economic and military power to make sure its manufacturers didn’t have to worry about a “level playing field”?
ChatGPT:
The U.S. has often wielded its economic and military power to protect and advance its manufacturers’ interests, sometimes at the expense of the concept of a “level playing field.” Here are a few notable examples:
Marshall Plan (1948-1952): After World War II, the U.S. implemented the Marshall Plan to aid Western European reconstruction. While it provided crucial support for European economies, it also tied many of the aid recipients to American products and markets. The plan ensured European countries remained aligned with U.S. interests and created a favorable trading environment for American manufacturers.
Operation Ajax (1953): The CIA-backed coup in Iran removed Prime Minister Mohammad Mossadegh and reinstated the Shah. The overthrow protected U.S. oil interests and their control over Iran’s oil resources, ensuring that American and British oil companies retained profitable operations in the region.
Intervention in Latin America: Throughout the 20th century, the U.S. supported coups and regimes in Latin America to ensure stability favorable to American businesses. In Guatemala (1954), the U.S. supported a coup to protect United Fruit Company’s interests after land reform threatened its dominance.
Trade Agreements and WTO Disputes: The U.S. has leveraged its negotiating power in international trade agreements like NAFTA and the WTO to secure preferential treatment for its manufacturers. At the same time, it has challenged other countries at the WTO for practices that disadvantage U.S. companies, winning cases like the one against China for rare earth export restrictions.
Tariffs on Japanese Electronics and Cars (1980s): As Japan became a significant competitor to the U.S. in cars and electronics, the U.S. used tariffs and quotas to restrict Japanese imports and protect its own manufacturers.
Recent Trade Wars with China: The U.S. imposed tariffs on a wide array of Chinese goods to counter what it claimed was unfair competition due to Chinese government subsidies, currency manipulation, and intellectual property theft. The tariffs effectively protected certain U.S. industries, even as they strained global supply chains.
These actions demonstrate how the U.S. has historically prioritized its national and economic interests, often invoking the language of free markets but frequently resorting to state intervention, military action, or diplomatic leverage to secure advantages for its industries.
The West has been attacking Iran for defending itself and its allies since the early 1950s. To understand the issues between the two countries we have to go back to the roots.
1.The Zionist occupation of Palestine and the displacement and oppression of the mostly Muslim Arab population since the 1930s. Iran sees itself as one of the few active protectors of Palestine. Its funding of Hamas and Hezbollah are all about supporting the Palestinian fight for freedom from occupation and oppression. Here’s a recent quote from the Iranian FM: “The current crisis is rooted in the occupation of the Palestinian territories, displacement of its original inhabitants, organized killings and terrorism, looting of natural resources, apartheid and systematic discrimination and continued aggression on al-Quds in the last 75 years.”
Every time anyone from the West points the finger at Iran as being the instigator of tensions without also acknowledging this history, they are selling you a fairytale.
One of my hobbies at the moment is to use ChatGPT to help me analyse the news. I imagine this will be come pretty standard in the near future, and there will be better tools to use. At the moment it seems the ABC has blocked ChatGPT from reading its articles, so I have to copy and paste the article into GPT. But then I run a couple of prompts to get it to breakdown the story for me. My basic objective is to get GPT to act as a second brain, helping me uncover the biases in news stories and highlight the gaps in the coverage.
If you want to understand why the USA is terrified of China, trying to slow it down with a trade war and banning it’s social media apps, it has less to do with “national security” and mostly to do with R&D expenditure. Have a look at the way China’s R&D has grown in the last 20 years. In 2000, their R&D was about 1/10 of the USA’s. Today, they have nearly caught up (although private R&D in the US continues to keep them ahead). And there are no signs of China slowing down, either, with a goal of a 10% YoY increase declared at the latest “Two Sessions“.
The US National Science Board recently warned that “China has now surpassed us in STEM talent production, research publications, patents, and knowledge-and technology-intensive manufacturing… China has set the goal of being the world’s leading S&E (Science & Engineering) nation and these NSB reports demonstrate that the United States is on the verge of allowing them to realize that objective. We already see this in artificial intelligence, where China out publishes us, has more patents, and produces more students than the United States.”
What happens when most of the latest technological innovation is coming out of “Communist” China?
For example, he talks about the “grim conditions created by a dysfunctional economy”, but fails to mention these grim conditions are largely caused by crippling and illegal US sanctions. The sanctions have been criticized by the UN high commissioner for human rights who said last year they would ‘significantly exacerbate the crisis for millions of ordinary Venezuelans’, but the Post doesn’t even mention them until paragraph 8 and even then not mentioning the UN criticism or the illegality of the sanctions. He also doesn’t mention the report published by the Washington-based Centre for Economic and Policy Research last year that 40,000 people may have died in Venezuela since 2017 because of US sanctions.
The Post then goes on to quote Ecuadoran President Lenín Moreno who “insisted that Maduro’s “despotic regime” had to go”. Moreno is the guy who took a sharp turn to the right when he became President in 2017, after a meeting with Trump’s former campaign manager Paul Manafort (currently serving seven years in jail), then revoked Julian Assange’s asylum, after allowing Assange’s private conversations with his lawyers be bugged and shared with the US (it’s alleged), and accepted a US-backed $10 billion loan from the International Monetary Fund and the World Bank. It’s the same Moreno who has been roundly criticised by his own people during the 2019 Ecuadorian protests, and who is currently sitting on an all-time low popularity, reaching only 7% of approval as of February 2020.
