Trumpian trade wars, Argentina and Brazil edition

Let me see if I understand the reasoning:

1. Argentina’s and Brazil’s governments have screwed up their economies over the years.

2. So they devalued their government-controlled currencies.

3. That means American farmers earn less on their exports to Argentinean and Brazilian customers.

4. So the US government will retaliate by taxing steel imports from Argentina and Brazil.

5. Therefore, steel-makers in Argentina and Brazil will earn less money …

6. … and American customers for steel will pay higher prices.

 

2 thoughts on “Trumpian trade wars, Argentina and Brazil edition”

  1. I believe there is more to the story. If those countries depreciate their currencies, then in theory, their products could saturate the market due in part to the artificial low prices. Two wrongs don’t make a right for sure but should we just sit back and let other countries hurt parts of our industry (whether it is done deliberately or not)? Hopefully governments stop meddling in economic issues as soon as possible.

  2. Point 1 is irrelevant from the point of view of the US.

    Point 6, well that’s true, but that doesn’t mean the *US* itself will lose more money if those customers switch and buy American steel instead, for example. And more importantly that’s leverage to get what Trump wants, which may or may not be directly related to farming or steel. Or those are a small part of a bigger picture. More trade deals coming up probably?

    At the same time in the second tweet he once again pushes back on the Federal Reserve policies which he has long criticized, long before even becoming President. I think that’s the more interesting part of the story: should the US use devaluation as an economic tool to prevent getting into these situations entirely?

    Trump’s trade wars are simple in the end. First talk about tariffs. Then apply them if necessary. Then (or in parallel) negotiate a good deal. Use additional leverage if necessary. All the while attempt to sway the Federal Reserve’s policies to be about American interests rather than whatever they are currently doing (I’m not entirely sure to be honest). He’s always doing the same thing yet the media freaks out every time. He even wrote a book about it, it’s all in there.

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