Anti-trade

The matter is quickly falling off the radar screens. A couple of weeks ago, Donald Trump upset foreign governments and financial markets across the globe by announcing he would impose stiff tariffs on steel and aluminum products brought into the US. A number of national leaders, including China’s Xi, warned Trump of the perils of protectionism.

A number of governments, angered by Trump’s resort to crude protectionism, began preparing retaliatory measures against the tariff imposition. A trade war seemed impending, spooking businesses everywhere.

Trump’s own Republican allies in the US Congress were shocked at the tariff announcement. It ran against the core of what the Republican Party stood for: international engagement and free trade. A number of Republican legislators publicly opposed the tariff plan. Republican senator Jeff Flake drafted legislation to override the threatened tariffs.

Apparently pleased at the new round of chaos he induced, Trump announced he loved trade wars. He thinks they are easy to win.

That declaration only underscores the extent Trump is unschooled in modern economic wisdom. The entirety of economic history shows unerringly that no one wins a trade war. Creating barriers to trade only made all sides more miserable than they were.

The first loser is Trump himself. His chief economic adviser resigned his post after the tariff announcement was made.

The latest Washington rumor has it that Trump will replace him with a conservative media commentator. In a word, the US President will replace the economist with an ideologue. That can only expose his administration to more policy blunders.

The next victim of protectionism will be American consumers. If tariff walls are raised, consumers will have to pay more for the steel and aluminum products they consume.

After that, American manufacturing will suffer. With costlier raw material inputs, American products cannot compete with foreign equivalents. More quality jobs will be lost. Only a few obsolete jobs, if at all, will be saved at the US Rustbelt, the epicenter of Trump’s political base among the largely white, largely rural and largely poor sections of America.

When the actual tariff order was issued, it turned out to be a non-event. The order created many openings for exempting countries from the tariffs. The two main exporters of steel and aluminum products to the US – Canada and Mexico – were immediately exempted. This was very likely because of complications in the North American Free Trade Agreement (NAFTA), which Trump dislikes but which the US remains bound to.

Australia and the European Union, major exporters of steel and aluminum to the US market will probably win exemptions. Britain, even if it leaves the EU, will likely be exempted. When America’s chips are down, Britain will be the last ally to abandon it.

In sum, Trump tried to sound protectionist to please his poorly educated base but held back on the implementation of what could only be a self-immolating trade strategy. He took the world’s markets on a costly roller-coaster ride for basically nothing.

Whimsical

Earlier this week, some stray committee at the House of Representatives passed a resolution that would have the effect of cancelling next May’s barangay elections and moving it to October. Fortunately, the move was met with nearly universal disinterest.

To have the force of law, the Senate should concur with the House action. That is unlikely. Sometimes, despite the cost and inefficiency of having a bicameral legislature, good things happen because of it.

The Comelec was polite in commenting on this sudden move by the congressmen. The poll body limited itself to saying the billions spent preparing for next May’s elections will go down the drain. Those elections, rescheduled once before, require months of preparation for poll workers. None of the poll officials called the congressmen insane.

The DILG, for its part, assured everyone the polls would be held as scheduled. That might be interpreted as defiance of the legislative branch of government. On this matter, no one appears terribly agitated.

Some might be wont to call the House an asylum. That might be a bit too severe. Let’s just say they tend to march to a different drummer.

Recall how the House punished some of its leading lights for not supporting the death penalty bill? That bill is in some freezer somewhere in the Senate.

The explanation offered by the congressmen for moving the barangay elections yet again is so that it can be held simultaneously with the plebiscite for the new Constitution. Why that has to be, no one knows. The money for the elections next May has already been spent. The plebiscite will require printing new voting forms and ballots, a different expense altogether. Different drummer, indeed. Only the congressmen believe a new draft Constitution will be plebiscite-ready by October this year. The Senate is still in the early stages of discussion on the matter. The Consultative Commission promises to have a product SONA-ready by July. But that product is only for President Duterte’s consumption.

Even if the President accepts the work of the ConCom in full, all he can do is to endorse this to Congress. Getting the House and the Senate to agree to anything regarding Charter change will be a challenge.

Of course, fully a third of the incumbent congressmen are on their third and final term in office. They should want a new Constitutional arrangement in place as soon as possible, preferably one that lifts term limits. We do not know yet if this will happen at all.