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Comment by beloch

12 days ago

Speaking as a Canadian, U.S. trade protectionism is nothing new. It happens all the time and frequently targets allies like Canada rather than rivals like China. What U.S. citizens should watch out for is when U.S. protectionism winds up hurting the U.S.'s own economy. e.g. Tariffs on Canadian softwood lumber may have helped out a few U.S. softwood lumber producers with good lobbyists (and Jimmy Carter), but the increase in lumber prices had a much larger negative impact on the U.S. economy as a whole due to higher costs of building materials impacting pretty much everyone.

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beloch

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nostrademons  12 days ago

That's a large part of the issue, though. The narrative 10 years ago was that we were preventing Chinese from dumping low-cost crap on the U.S. market. Okay, fair enough, keep the crap out. But recent U.S. protectionism has been targeting very high-quality, best-in-class Chinese manufacturers that honestly outcompete anything their U.S. competitors bring to market. Without that competition, there's no incentive for U.S. makers to raise their technological game, and the sector just stagnates and falls behind the rest of the world.

North America has the benefit of two oceans for national defense, but the risk associated with that is one of insularity and stagnation. Ask an indigenous person (if you can find one) how well being a couple hundred years behind European technological development worked out once hostile colonists are on your shores.

ethbr1  11 days ago

Protectionism, like industry subsidies, is a double-edged sword.

- On the one hand, as SE Asia is intimately familiar with, it can create space to create globally competitive industries.

- On the other hand, it can also remove the incentive for local industries to invest and become technically competitive.

IMHO, what I'd like to see would be a stricter link between protection measures and R&D investment.

If an industry is protected, then it is required to prove it's improving itself + limit returns to shareholders.

E.g. steadily increasing CAFE fuel efficiency standards, requirements to demonstrate decreasing costs of production (lumber and/or steel), etc.

Too often, protection measures are implemented, the excess benefits are skimmed and go directly to shareholders, and the company doesn't increase its global competitiveness (e.g. US Steel).

freedomben  11 days ago

Indeed, and we never seem to learn. Lumber prices in the US during Covid were eye-watering and wreaked havoc through the whole economy that is still being felt today, and it was almost entirely due to US protectionism of lumber.

  • bityard  11 days ago

    I'm not a fan of protectionism either, but that particular example is not true at all.

    Lumber prices rose because at the start of the pandemic, the industry predicted a housing crash and took drastic steps to downsize and then the exact opposite happened. And we were left with a garden-variety supply vs demand situation.

    If it was just protectionism, prices in Canada would not have had sharply increased lumber prices at the exact same time: https://www.cbc.ca/news/business/lumber-prices-covid-19-cost...

  • mrguyorama  11 days ago

    Yes, Trump's tariffs were exceptionally bad, stupid, poorly thought out, and poorly implemented, like the vast majority of the things he did.

    But the fact that goofus fails at doing X doesn't make doing X always the wrong choice.