"Japanese negotiators are apparently struggling with how to address this demand since there is no such test. On the one hand, they can easily agree to drop it as a concession. On the other hand, since it doesn’t exist, eliminating it isn’t going to alter the trade balance or be considered a big win by American automakers."
Claiming that something bad exists and must be defeated that does not, in fact, exist seems to be a big part of the MAGA playbook (yes, yes, whatabout [insert woke thing here]).
"Last night, President Donald J. Trump highlighted many of the egregious examples of waste, fraud, and abuse funded by American taxpayers, including $8 million spent by the Biden Administration “for making mice transgender.” The Fake News losers at CNN immediately tried to fact check it, but President Trump was right (as usual)."
You are too young to remember the early SNL character Emily Litella (?) played by Gilda Radner, but the schtick was an old woman complaining about something she mis-heard -- "What's all this about the deaf penalty? Don't deaf people have enough problems as it is?", etc. It's like that, but meaner and stupider.
I’m someone who rolls up to work in sweatpants on a regular basis and even I’m ashamed of how unprofessional things have a become in our government. The idea of an official government page calling a media outlet “losers” would be unthinkable in the Obama era.
One of the scenes I remember from the West Wing was them being upset about something the WaPo said, and an aide wanted to retaliate. Bartlett said you're right, cancel my subscription. The aide said great no more Washington Posts in the White House, Bartlett said, no just my personal subscription, from now on I'll read yours when you're done with it.
As a life long democrat, I have to grudgingly add that it would have been unthinkable even in the Bush/Reagan/Nixon admins. This is without a doubt the worst president and presidency in living memory
It does appear that some of the grants cited on that page are related to transgender hormone therapy in mouse models in various contexts (the first four, by my read, whereas the last two are much more tangential), and not transgenic mice.
I do concur that the "0wned, libtards!" subtext on the White House website is sad.
This is basically Richard Hanania’s line these days: “say what you will about the woke left, at least they are not literally making up things to be upset about.”
That is one of my complaints with the far right. Someone recently once said that the far left doesn't always engage in intellectual rigor on complicated topics, but the far right doesn't engage in intellectually at all. After having real life conversations with MAGA people, I felt that...
Worth noting here that an objection to just about any free-trade agreement involving the US is that the USA will inevitably try and impose maximalist views on intellectual property protection in the process, in what looks awfully like rent-seeking.
This was one of two reasons the TPP was unpopular in Australia - no one wanted the ‘Disney Rules’ of intellectual property applying here.
This other was the Investor-State Dispute Settlement provisions. Something which would be an even bigger stumbling block now following the case Philip Morris brought against the Australian government over their ‘plain packaging’ laws.
I think I read it here that the revised TTIP blew away those rules after the US exited
Having lived in the United States for a decade now, I’ve forgotten how much digital media content is still pirated outside of the US. Still surprises me when my buddies talk about it.
It's not just piracy. It's the near-perpetual length of copyright, attempts to keep generic drugs off the market for ever-longer periods, and so on.
While it wasn't (to my knowledge) at issue during the TPP, I had a great example of American attitudes to intellectual property in my work a couple of years ago.
Investment products are uniquely identified by a 12-character code called an ISIN. In most of the world, companies pay a fairly minimal fee to register a product for an ISIN, and you can download and use the master list for free from the national ISIN registrar. But not the USA. If you want to use ISINs of American companies, Standard and Poors requires you to pay a license fee.
So what if you're an individual investor trying to unambiguously specify what products you might want to invest in? Sorry, no ISINs for you. Spell those investment product names *very* carefully...
I'm sure it's a nice little moneyspinner for S&P for virtually no work, but it's a net loss to the economy because of the additional avoidable work it creates for everyone else involved in the industry.
This has been a weak point of all our trade negotiations. It's hard enough to get countries to make mutually beneficial agreements; It's more difficult when ,as with IP, the benefits all go one way. It means that we come out with less reduction in barriers to our goods exports.
And against interest! Given his revenues from the K-Man cartoon series, video games, action figures, and so on. I really admired his willingness to take a hit to the bottom line in the interests of principle.
He basically claimed it was not a big deal and do the things it said on the tin. My memory is that most observers didn't think it was the big deal the Matt has made it out to be.
The Interfluidity article Matt links to discusses capital flows as the primary vehicle of long term unbalanced trade, not regulations. In sector specific areas regulations are important, but I haven't seen anyone who thinks they're the key to overall trade balances.
It is bad enough when the Chairman of the CEA has the direction of causation wrong, but there is no excuse for substack commenters to be similarly mistaken. (Nothing personal, Andrew) :)
Trade restriction have zilch to do with trade balances. They are determined macroeconomically by the Savings Investment gap.
While Matt is entirely correct, we are absolutely cooked on any of this stuff for the foreseeable future. Nobody is going to think any deal with us is durable for years.
I had the depressing thought that probably the only way the US revives its reputation with global allies is by coming to their rescue to win a massive war.... which requires a massive war on our allies...... and I'm not positive we would win such a war...
I’m not that pessimistic. While polities have longer memories than markets (who still keep lending to Argentina) they are not THAT long. Assuming American democracy survives and goes back to what used to pass for normal, probably looking at a couple of years max (with some long term damage to our reputation we won’t recover from probably ever).
Still 6-8 years or so where nobody trusts a thing we say isn’t, like, great.
Why would they go back to normal? Maybe if Trump had lost in 2024, but now its going to be a full decade and a half in which the GOP is bent or built in his image. I don't see any obvious successors who would change tack.
Economically correct, in the same way that the correct response to a competitor slapping a bunch of tariffs on you is to not respond (they are hurting themselves; let them!). That's never how the politics play out though.
I think that can mostly be recovered if the courts step in and rule Trump's actions illegal. It will give credibility to US abiding by the terms of trade deals.
Anecdote: We recently moved continents and ran into this "different regulators" thing where we had to throw away the car seats we had and buy new ones. (As if EU carseats are known for being death traps...)
Except, of course it is essentially impossible to buy the appropriate car seats when you are outside of the country? So when you first arrive at the airport, what is one to do? You can't just rent a car, because you don't have compliant carseats (yet). You could rent them for $10 a day. Or...you could just take a taxi, which are exempt from laws about carseats for children. (Not an Uber, though, you need a carseat in those, thanks to taxi company lobbying...)
So instead of being able to use an EU carseat we used no carseat at all to get from the airport to our new home. Yay?
Car seats are a racket in the US. The manufacturers are very happy that the thing they built 2 years ago are now unsellable. By the year 2030 they'll need to withstand a bowling ball dropped on them.
I am also sure that the manufacturers had nothing at all to do with the passing of the laws in many states that they must be used until the age of eight. There’d be no profit in that, right?
This was a plot point in a HIMYM episode. One person takes the car to Walmart and buys the car seat while the other waits with the child at the airport. But really, just use the old cars wet until you can get a new one.
Concerns about "Chlorine chickens" was an entirely fake scare story invented by protectionists, the European Commission says they are safe and salads in Europe are chlorine washed.
From my understanding it’s not really about the chlorine itself, it’s that they claim the chlorine washing covers up relatively unhygenic poultry practices that will lead to more food borne illness.
I believe that the regulatory rule that is known as "chlorine chicken" does in fact directly regulate the poultry practices, and only bans chlorine washing because the testing system for poultry hygiene looks for surface bacteria as a proxy for internal bacteria and the chlorine wash removes the surface bacteria without affecting the internal bacteria.
That is, within the European regime, the chlorine washing would be a way to cheat the safety testing, so they ban it.
Of course, the media concentrated on the chlorine because the idea of eating chicken that tastes like swimming-pools smell is gross and attracts a lot more attention than the reality.
A fun example of this dynamic in the news recently, is Carney's push to abolish *interprovincial* trade barriers - for ridiculous historical and/or lobbying reasons, it's easier to buy a bottle of Nova Scotian whisky in Virginia than it is in Quebec. And in Quebec specifically, language restrictions are the definition of a non-tariff barrier keeping out out of province products (or protecting the French language)
Minds have been focused on fixing this for some reason... remains to be seen if Carney will succeed
This is all true so far as it goes, but the fundamental problem is that it seems like Trump only wants to get rid of the barriers going one way.
As in, he wants American goods to be more saleable to Japan without Japanese goods becoming more saleable here. If he did agree to the TPP, I’d imagine the trade deficit would remain roughly the same, and Trump would still complain about Americans getting ripped off.
USMCA is a case in point - there is a deal that eliminates those barriers (which Trump signed!) and yet he still whines non-stop about the state of trade with Canada.
It’s effectively impossible to make progress on this front until Trump realizes the reason for the trade deficit is that the US is a big rich country that is generally going to import more stuff than a smaller, less rich country.
Trump has spent his entire life in real estate, which is like the only zero-sum market that exists (me owning a plot of land excludes everyone else from owning that exact plot of land). He believes every transaction has a winner and a sucker, which is also why he goes to great lengths to buy real estate with other people's money.
I suspect that the "bowling ball test" is a misinterpretation of the pedestrian head-safety test that is applied in Japan (and, in a different variant, in the EU) and is not in the US.
A sphere (approximately the size of a bowling ball; also approximately the size of a human head) is fired at the top of the hood of the car. Meters in it detect how much impact force it takes; if the hood doesn't cushion the impact to an appropriate degree, then the test is failed. This is so that if the car hits a pedestrian at a low speed and the pedestrian folds up and hits their head on the hood of the car, the head injury is mitigated.
In fact, US cars generally fail this because the hood of most US cars is too rigid; it's not that the hood mustn't dent, but rather that it must give way (ideally, it's elastic and will spring back into shape, so it doesn't actually dent).
If you've seen the pedestrian head-safety test performed (e.g. on video) it does look like someone dropping a bowling ball on the hood, and I think that Trump has seen it, hasn't listened to the explanation and has guessed wrongly that the test is to ensure the hood doesn't dent - rather than ensuring that the head-simulator (the "bowling ball") doesn't get hit too hard.
I love that Trump was probably not trying lie about this, but ended up getting every salient point about this so wrong that he effectively ended up lying.
I forget if this was in response to Bernie hammering it or Trump. Or maybe both. But she dumped it because it was an electoral loser whose salience was being raised at the time.
It’s not the ringing endorsement of Democratic leadership post Obama that you and Malozo think it is. Criticizing Trump is fine but I wanted to highlight that Democrats have also regressed in terms of endorsing bad anti-market policies.
Worth clarifying that it wasn't just post-Obama. It was Obama. Obama ran and won - convincingly - across the blue wall with an anti-NAFTA platform because an anti-NAFTA platform was the winning position for communities decimated by NAFTA factory shutdowns.
Are you talking about Trump or Obama? See Kenny on USMCA. But back to Obama ... it's worth just checking the facts. Obama implemented the strictest Buy American requirements for his major stimulus packages (which were brilliant) and also brought the most number of WTO cases of any president to support US manufacturing (e.g., LG and Samsung washing machine tariffs).
At the time a huge portion of the country hated it because they (incorrectly) assumed it was a giveaway to China. It was very unpopular on both sides. It should not shock any of us that the average voter had no idea about any of the things Matt points out in this article, and assumed that TPP was just a way for Evil Corporations (TM) to outsource more jobs to Asia.
Bernie turned into politics, when it should have stayed squarely in the realm of bipartisan Secret Congress. As soon as you make something partisan, you doom it. It was likely his intention to doom it because Bernie has pretty radical views on economics and trade.
Once it was doomed, I think it made political sense for Hilary to dump it.
Usually it’s the winner who decides the policy, not the loser. It’s a good thing that I’m an independent because it would have driven me mad as a Democrat.
I have seen it proposed lots of times as regards drug development but not in other areas but any product approved as safe in one developed country should be assumed to safe in all others. Every country doing their own tests on furniture, cars etc is pointless duplication.
"...approved as safe in one developed country should be assumed to safe in all others...."
Isn't this just going to create a race to the bottom? We're familiar with Liberian shipping registries; why won't this just create the Liberian FDA, where every drug company can get its products approved?
In practice I don’t think we have a lot of reservations about present-day European drug regulatory bodies (they care about European citizens’ welfare in Europe, and fortunately human biology is mostly the same everywhere), but I think it is a good point that regulatory harmony with respect to approval bodies instantly funnels all business to the most permissive approval regime.
The GDPR has implemented this concept in regards to cross boarder personal data transfers outside of the EU. Certain countries that have been deemed by the European Commission to have adequate levels of data protection are basically grandfathered in and don't require the additional contracting.
Okay, fair. I had not seen that you specified "developed" country, and perhaps you think Liberia is not one.
So, only certain countries will be accredited for the purposes of drug approval. But now that we are restricting accredited countries, aren't we just back into the same business of needing multilateral trade agreements? Who's going to decide on which countries are accredited? Should countries accredited by one developed country be assumed to be accredited by all others?
Yes. Welcome to the world of Ivermectin as a cancer treatment, as authorized by the Liberian FDA and as seen on the Joe Rogan and Peter Attia shows... We are already living a version of this with health supplement (non)regulation.
I think the determining factor in the corruption of the process is not so much "development" per se as the political and cultural conditions that permit lobbying, cronyism and outright payola to corrupt the approval process. Would you trust Hungary to set the standard? Turkey?
No American jury is going to give any respect to the transparently meaningless safety imprimatur of a foreign regulator like that. But FDA approval does carry weight with juries tasked with determining whether a product is sufficiently safe under state product liability law. Juries do find that products approved by FDA or some other federal agency were nonetheless not safe enough under state law, but also, juries often are persuaded that if it was good enough for a federal agency to approve, that's good enough for state law.
Maybe the "bottom" is the most efficient place. Of course you could just make it a strong presumption, let the protectionist interests jump through NEPA-sized hoops to over turn the presumption.
For a more recent example, the EU strictly limits nitrate/nitrites in food but the US is mostly completely okay with them. It isn't clear to me that the EU is wrong here. For a different direction: the US still (I think?) bans mifepristone (the "abortion pill") in many/most states even though it has been legal in the EU for decades, and it is hard to imagine Americans being okay with the EU being able to override their local sovereignty on that.
Whoever is right about nitrites it wouldn't be relevant unless someone is buying the majority of their food from another continent which seems an unlikely issue.
This seems like an unreliable heuristic. Blocking fire doors with chains is still a bad idea today, even if the go-to example is the Triangle Shirtwaist fire, which is even longer ago than 50 years. Part of why there are few more recent examples in the US is because that particular event led to reforms in the US, thus reducing the number of more recent examples. And part of why there have been fewer pharmaceutical catastrophes in the US since thalidomide, is because that led to reforms that have reduced the number of pharmaceutical catastrophes in the US. We have to reach back to the pre-reform days in order to show what the present day would be like without the reforms in effect.
Fire safety is relevant because fires are still common, I don't think there is a single example of Americans being saved by excluding European, Canadian or Japanese drugs, while making drugs harder to approve has a vast death toll every year.
One of the core arguments about Brexit in the UK was that the EU took sovereignty from the UK - which was true. The problem is any international agreement, whether it involves trade, international travel or anything else, involves loss of sovereignty. Another argument for Brexit was that the UK could form free trade agreements with other countries rather than having the EU do it for them. But of course any free trade agreement always involves losing some sovereignty, which was the reason for leaving the EU.
Separately, the term free trade agreement conjures images of men in blue overalls and hard hats getting laid off. Saying the FTA will lead to better paid jobs elsewhere is a hard argument to make.
The European Union's mishmash of doing monetary policy, administrative law and Immigration law but not fiscal policy or defense genuinely seems like an *insane* idea from the prospective of Europe, but presents an enormous opportunity *for America* to only have to coordinate with one body vs ~30 countries regarding regulation.
In 2014 trade unions claimed that the TTIP trade deal between the US and EU would mean the UK would have to sell hospitals to American companies.
So during the Brexit campaign Lord Owen ex foreign secretary and a doctor, and the Leave campaign stated voting Remain was a threat to the NHS and put out leaflets quoting the trade union leaders statements from 2 years earlier.
Great article - yet another example that even for those who agree with some of the nominal complaints raised by Trump et al. (including occasionally me), what Trump is doing in one domain after another is if anything making it all worse.
Re the Polo in particular, why not make an exemption for fewer than X vehicles sold per year? If it stays small then all good (both VW and American consumers are better off); if it ends up super popular then they can think about starting specific production according to American standards.
Minor quibble from a former DOT employee: vehicle safety standards are established by the National Highway Traffic Safety Administration (NHTSA), not FHWA.
Trump is too lazy and incuriously unconcerned with outcomes to take credit for things already accomplished and to take advantage of actual opportunities when they present themselves. And Republicans have completely abdicated all responsibility and let Trump fill his administration with people less competent and disinterested in outcomes than himself. It's all infuriating.
The other thing this doesn't include is subsidies, either explicit or implicit. Really, the list of regulations we could attempt to harmonize is endless. Of course, that's not even the argument we're having. Trump would be waging this tariff war even if every country around the world had the exact same legal regime.
It seems that the world of large trade agreements and lowering trade barriers is behind us. The EU announced reaching a trade agreement with Mercosur in 2019 and it's still not signed over concerns from French farmers.
The EU allegedly believes in this stuff, what hope is there for the US where neither party believes in free trade any more?
It's hard not to think western civilization is just sleepwalking toward disaster. Everything is going to get very bad, we're going to endure 10-20 years of pain, then the next generation is going to wake up and do a bunch of super obvious things to make people's lives better. I wish we could alarm everyone before the bad things happen, but I am not optimistic that we can
Fundamentally anything that requires a little bit of short-term pain in order to make thing function in the long-term are always going to be under threat in democracy, especially once examples of the long-term breaking down are far in the rearview mirror so only nerds know about them. Measles shmeasles.
Yes, I read Jonah Goldberg's "Suicide of the West" and he makes a convincing case that we don't appreciate what a miracle modernity and liberal democracy are, and how unusual they are historically.
If we did, we would be a LOT more careful with them, and how we play politics.
In particular there is a strain of anti-Western in universities (particularly elite universities) that is REALLY dangerous.
And I think the far right has used it as a justification of why we need someone like Trump to protect us from them.
Exports of goods and services at 30% of global GDP is at a historical high and is *twice* as great as it was in 1980. Western* civilization will probably be fine. Unless the Trump folks are somehow neutered I'm afraid I can't say the same for the US which will be on the outside looking in.
I doubt it. Arguments about free trade versus tariffs date back to the literal founding of the Republic, with Alexander Hamilton facing off against Henry Clay. These are eternal debates that never go away, they just find new form in a new generation. Read any 19th century history of any random European country and you'll find fights between the protectionists & the free traders are one of the core political arguments of the time. (The British Corn Laws, etc.) We're in a protectionist phase now, undoubtedly that will change again in a decade or two, then change again further down the road, etc.
Also worth thinking about economic incentives- the US exports a very small amount for such a rich country. You mention the EU but they export much more than we do, so obviously they're more interested in free trade at the moment
In Argentina Peron usured in a protectionist era in the 40s that might only be coming down now, and only once Peronism failed so severely in the post COVID world that Argentines decided to trust an unstable madman who goes around swinging chainsaws. (I say this as a Milei sympathizer). Previous attempts to move past Peronism never managed to stick as the protectionist impulse became deeply embedded in the culture.
These periods can last for quite a while. Not to say it will happen here, but it can happen.
this seems uncharitable. Milei is an economist that actually understands how economies work, and cares about the details, and knows how to fix things. I think this stands in sharp contrast to Trump.
If you were to ask his fans (named pubertarians since a lot of them are teenagers that got libertarian-pilled from growing up in a failed collectivist society) they would agree with that description and say they even enjoy it. They take pride in how Milei has rants that build up until he unleashes at whoever made a wrong comment (ie unstable) and most would argue he presents himself in a crazier way than a typical politician but is not actually crazy.
My observation isn't meant to be normative. I'm just observing that free trade versus protectionism is an eternal issue that reoccurs every generation, the same as 'conflict between ethnic groups' or 'natives versus immigrants' or 'is the left too soft on crime, or is the right too harsh on people who've made a minor mistake'. Or 'should we go to war with x country over perceived slight vs. should we make peace'. Every generation in every society will cycle through these issues for the rest of human history. Sometimes one side is ascendant, sometimes the other side is
Trade and immigrants are two that we ought to be over by now. Save conflict of issues that are not win-win. Even policing/prosecution has conceptual optimum, but it is hard to know what it is.
"Japanese negotiators are apparently struggling with how to address this demand since there is no such test. On the one hand, they can easily agree to drop it as a concession. On the other hand, since it doesn’t exist, eliminating it isn’t going to alter the trade balance or be considered a big win by American automakers."
Claiming that something bad exists and must be defeated that does not, in fact, exist seems to be a big part of the MAGA playbook (yes, yes, whatabout [insert woke thing here]).
Whatabout all that money spent on transgender mice ...
It is really sad to see this on the White House website: https://www.whitehouse.gov/articles/2025/03/yes-biden-spent-millions-on-transgender-animal-experiments/
"Last night, President Donald J. Trump highlighted many of the egregious examples of waste, fraud, and abuse funded by American taxpayers, including $8 million spent by the Biden Administration “for making mice transgender.” The Fake News losers at CNN immediately tried to fact check it, but President Trump was right (as usual)."
You are too young to remember the early SNL character Emily Litella (?) played by Gilda Radner, but the schtick was an old woman complaining about something she mis-heard -- "What's all this about the deaf penalty? Don't deaf people have enough problems as it is?", etc. It's like that, but meaner and stupider.
And Roseanne Roseannadanna
Making Puerto Rico a steak, violins on television.
The early SNL was really funny, but really corny by today's standards.
I’m someone who rolls up to work in sweatpants on a regular basis and even I’m ashamed of how unprofessional things have a become in our government. The idea of an official government page calling a media outlet “losers” would be unthinkable in the Obama era.
One of the scenes I remember from the West Wing was them being upset about something the WaPo said, and an aide wanted to retaliate. Bartlett said you're right, cancel my subscription. The aide said great no more Washington Posts in the White House, Bartlett said, no just my personal subscription, from now on I'll read yours when you're done with it.
As a life long democrat, I have to grudgingly add that it would have been unthinkable even in the Bush/Reagan/Nixon admins. This is without a doubt the worst president and presidency in living memory
It does appear that some of the grants cited on that page are related to transgender hormone therapy in mouse models in various contexts (the first four, by my read, whereas the last two are much more tangential), and not transgenic mice.
I do concur that the "0wned, libtards!" subtext on the White House website is sad.
It's empirical and linguistic nihilism. It is supremely lazy.
In the defense of police abolition, there are in fact police!
This is basically Richard Hanania’s line these days: “say what you will about the woke left, at least they are not literally making up things to be upset about.”
That is one of my complaints with the far right. Someone recently once said that the far left doesn't always engage in intellectual rigor on complicated topics, but the far right doesn't engage in intellectually at all. After having real life conversations with MAGA people, I felt that...
I for one am absolutely tired of MAGA creating strawman arguments and then fighting and then claiming wins for things they've made up.
Worth noting here that an objection to just about any free-trade agreement involving the US is that the USA will inevitably try and impose maximalist views on intellectual property protection in the process, in what looks awfully like rent-seeking.
This was one of two reasons the TPP was unpopular in Australia - no one wanted the ‘Disney Rules’ of intellectual property applying here.
This other was the Investor-State Dispute Settlement provisions. Something which would be an even bigger stumbling block now following the case Philip Morris brought against the Australian government over their ‘plain packaging’ laws.
I think I read it here that the revised TTIP blew away those rules after the US exited
Having lived in the United States for a decade now, I’ve forgotten how much digital media content is still pirated outside of the US. Still surprises me when my buddies talk about it.
It's not just piracy. It's the near-perpetual length of copyright, attempts to keep generic drugs off the market for ever-longer periods, and so on.
While it wasn't (to my knowledge) at issue during the TPP, I had a great example of American attitudes to intellectual property in my work a couple of years ago.
Investment products are uniquely identified by a 12-character code called an ISIN. In most of the world, companies pay a fairly minimal fee to register a product for an ISIN, and you can download and use the master list for free from the national ISIN registrar. But not the USA. If you want to use ISINs of American companies, Standard and Poors requires you to pay a license fee.
So what if you're an individual investor trying to unambiguously specify what products you might want to invest in? Sorry, no ISINs for you. Spell those investment product names *very* carefully...
I'm sure it's a nice little moneyspinner for S&P for virtually no work, but it's a net loss to the economy because of the additional avoidable work it creates for everyone else involved in the industry.
This has been a weak point of all our trade negotiations. It's hard enough to get countries to make mutually beneficial agreements; It's more difficult when ,as with IP, the benefits all go one way. It means that we come out with less reduction in barriers to our goods exports.
As I recall this was why Krugman came out against the TPP at the time.
"... Krugman came out against...."
And against interest! Given his revenues from the K-Man cartoon series, video games, action figures, and so on. I really admired his willingness to take a hit to the bottom line in the interests of principle.
He basically claimed it was not a big deal and do the things it said on the tin. My memory is that most observers didn't think it was the big deal the Matt has made it out to be.
The Interfluidity article Matt links to discusses capital flows as the primary vehicle of long term unbalanced trade, not regulations. In sector specific areas regulations are important, but I haven't seen anyone who thinks they're the key to overall trade balances.
It is bad enough when the Chairman of the CEA has the direction of causation wrong, but there is no excuse for substack commenters to be similarly mistaken. (Nothing personal, Andrew) :)
Trade restriction have zilch to do with trade balances. They are determined macroeconomically by the Savings Investment gap.
I think that's what I am saying in contrast to Matt's discussion of non-tariff trade barriers.
While Matt is entirely correct, we are absolutely cooked on any of this stuff for the foreseeable future. Nobody is going to think any deal with us is durable for years.
I had the depressing thought that probably the only way the US revives its reputation with global allies is by coming to their rescue to win a massive war.... which requires a massive war on our allies...... and I'm not positive we would win such a war...
If there were a major war in Europe the current regime would probably side with Russia.
I’m not that pessimistic. While polities have longer memories than markets (who still keep lending to Argentina) they are not THAT long. Assuming American democracy survives and goes back to what used to pass for normal, probably looking at a couple of years max (with some long term damage to our reputation we won’t recover from probably ever).
Still 6-8 years or so where nobody trusts a thing we say isn’t, like, great.
POTUS 48 needs to be fucking great. It's kinda rare to know so far in advanced that they are being dealt a shit hand.
And without a good Congress it will be impossible for them to be great. The odds are not ever in our favor
Why would they go back to normal? Maybe if Trump had lost in 2024, but now its going to be a full decade and a half in which the GOP is bent or built in his image. I don't see any obvious successors who would change tack.
A massive war on our allies, you say? Don't worry, Don and Pete have something cooking for just this occasion!
The current Republican House wresting back control of tariffs and trade could maybe do it.
But it would have to be same party. If you wait until 2026 and the DEMOCRATS do it then it's still flip-flopping administrations.
It always brings a smile to read sentences like this in Matt's post: "The Trump administration needs to treat the process seriously."
Yes, I'm sure they'll get right on that.
I think he is addressing center-right independents who voted for Trump, but are open minded enough to be convinced that this was a very bad idea.
Genuine question: are there any such people reading MattY?
Apparently in the group chats, per Semafor lol
Unless we rewrite the constitution.
True, but we can still get most of the advantages of mutual free trade with unilateral free trade (except for with China for security reasons).
Economically correct, in the same way that the correct response to a competitor slapping a bunch of tariffs on you is to not respond (they are hurting themselves; let them!). That's never how the politics play out though.
And in a “Trade war” setting it’s probably the right thing as a negotiating ploy
I think that can mostly be recovered if the courts step in and rule Trump's actions illegal. It will give credibility to US abiding by the terms of trade deals.
Well not unless we actually sigh treaties, and change laws through congress
Anecdote: We recently moved continents and ran into this "different regulators" thing where we had to throw away the car seats we had and buy new ones. (As if EU carseats are known for being death traps...)
Except, of course it is essentially impossible to buy the appropriate car seats when you are outside of the country? So when you first arrive at the airport, what is one to do? You can't just rent a car, because you don't have compliant carseats (yet). You could rent them for $10 a day. Or...you could just take a taxi, which are exempt from laws about carseats for children. (Not an Uber, though, you need a carseat in those, thanks to taxi company lobbying...)
So instead of being able to use an EU carseat we used no carseat at all to get from the airport to our new home. Yay?
Do they inspect your carseat at the rental checkout? Seems like the kind of thing that would be ignored.
Would that invalidate auto insurance in case of an accident?
I mean, driving one trip with no insurance is a risk that seems to me to be broadly in line with risks that people are generally willing to accept.
Car seats are a racket in the US. The manufacturers are very happy that the thing they built 2 years ago are now unsellable. By the year 2030 they'll need to withstand a bowling ball dropped on them.
I am also sure that the manufacturers had nothing at all to do with the passing of the laws in many states that they must be used until the age of eight. There’d be no profit in that, right?
This was a plot point in a HIMYM episode. One person takes the car to Walmart and buys the car seat while the other waits with the child at the airport. But really, just use the old cars wet until you can get a new one.
Concerns about "Chlorine chickens" was an entirely fake scare story invented by protectionists, the European Commission says they are safe and salads in Europe are chlorine washed.
https://efsa.onlinelibrary.wiley.com/doi/epdf/10.2903/j.efsa.2006.297
From my understanding it’s not really about the chlorine itself, it’s that they claim the chlorine washing covers up relatively unhygenic poultry practices that will lead to more food borne illness.
I encounter "This safety practice is bad because it works and gets rid of the problem" so often that it drives me up the wall.
"EVs are bad because they make car use sustainable."
"Okayyyyy??"
In that case why not directly regulate those conditions?
Because it's not actually about risk mitigation. It's a non-tariff trade barrier to reduce domestic competition.
I believe that the regulatory rule that is known as "chlorine chicken" does in fact directly regulate the poultry practices, and only bans chlorine washing because the testing system for poultry hygiene looks for surface bacteria as a proxy for internal bacteria and the chlorine wash removes the surface bacteria without affecting the internal bacteria.
That is, within the European regime, the chlorine washing would be a way to cheat the safety testing, so they ban it.
Of course, the media concentrated on the chlorine because the idea of eating chicken that tastes like swimming-pools smell is gross and attracts a lot more attention than the reality.
A fun example of this dynamic in the news recently, is Carney's push to abolish *interprovincial* trade barriers - for ridiculous historical and/or lobbying reasons, it's easier to buy a bottle of Nova Scotian whisky in Virginia than it is in Quebec. And in Quebec specifically, language restrictions are the definition of a non-tariff barrier keeping out out of province products (or protecting the French language)
Minds have been focused on fixing this for some reason... remains to be seen if Carney will succeed
It’s funny how many products sold in the United States have packaging in English and French but not Spanish, because of Quebec.
I always have a moment of confusion with that.
This is all true so far as it goes, but the fundamental problem is that it seems like Trump only wants to get rid of the barriers going one way.
As in, he wants American goods to be more saleable to Japan without Japanese goods becoming more saleable here. If he did agree to the TPP, I’d imagine the trade deficit would remain roughly the same, and Trump would still complain about Americans getting ripped off.
USMCA is a case in point - there is a deal that eliminates those barriers (which Trump signed!) and yet he still whines non-stop about the state of trade with Canada.
It’s effectively impossible to make progress on this front until Trump realizes the reason for the trade deficit is that the US is a big rich country that is generally going to import more stuff than a smaller, less rich country.
Trump has spent his entire life in real estate, which is like the only zero-sum market that exists (me owning a plot of land excludes everyone else from owning that exact plot of land). He believes every transaction has a winner and a sucker, which is also why he goes to great lengths to buy real estate with other people's money.
And also, he's just a fucking idiot.
https://www.youtube.com/watch?v=8HcEODEPHQQ
I suspect that the "bowling ball test" is a misinterpretation of the pedestrian head-safety test that is applied in Japan (and, in a different variant, in the EU) and is not in the US.
A sphere (approximately the size of a bowling ball; also approximately the size of a human head) is fired at the top of the hood of the car. Meters in it detect how much impact force it takes; if the hood doesn't cushion the impact to an appropriate degree, then the test is failed. This is so that if the car hits a pedestrian at a low speed and the pedestrian folds up and hits their head on the hood of the car, the head injury is mitigated.
In fact, US cars generally fail this because the hood of most US cars is too rigid; it's not that the hood mustn't dent, but rather that it must give way (ideally, it's elastic and will spring back into shape, so it doesn't actually dent).
If you've seen the pedestrian head-safety test performed (e.g. on video) it does look like someone dropping a bowling ball on the hood, and I think that Trump has seen it, hasn't listened to the explanation and has guessed wrongly that the test is to ensure the hood doesn't dent - rather than ensuring that the head-simulator (the "bowling ball") doesn't get hit too hard.
I love that Trump was probably not trying lie about this, but ended up getting every salient point about this so wrong that he effectively ended up lying.
Perhaps Trump was dropped on his head
nit: Hillary also came out against the TPP.
I forget if this was in response to Bernie hammering it or Trump. Or maybe both. But she dumped it because it was an electoral loser whose salience was being raised at the time.
It’s not the ringing endorsement of Democratic leadership post Obama that you and Malozo think it is. Criticizing Trump is fine but I wanted to highlight that Democrats have also regressed in terms of endorsing bad anti-market policies.
Worth clarifying that it wasn't just post-Obama. It was Obama. Obama ran and won - convincingly - across the blue wall with an anti-NAFTA platform because an anti-NAFTA platform was the winning position for communities decimated by NAFTA factory shutdowns.
We forgive politicians for lying about promises to do harm. Unfortunately, Trump was telling he truth!
As President, he replaced NAFTA with USMCA and wanted to pass TPP. Unlike Bernie or opportunists like Hillary, he was pro-trade as President.
edit: I mistakenly stated that NAFTA was replaced with USMCA under Obama.
Wait, didn’t Trump replace NAFTA with USMCA because he was *anti*-trade as president and he thought NAFTA was too pro-trade?
Yes, you're right. I had mistakenly stated that Obama replaced NAFTA with USMCA.
Are you talking about Trump or Obama? See Kenny on USMCA. But back to Obama ... it's worth just checking the facts. Obama implemented the strictest Buy American requirements for his major stimulus packages (which were brilliant) and also brought the most number of WTO cases of any president to support US manufacturing (e.g., LG and Samsung washing machine tariffs).
Populism continues to be bad. That’s the populists’ fault!
It's better to win elections.
In what world is my comment an endorsement of anything?
The most that could be said of Warren-Sanders Administration was that Harris's economic policies were not as bad as Trump's.
At the time a huge portion of the country hated it because they (incorrectly) assumed it was a giveaway to China. It was very unpopular on both sides. It should not shock any of us that the average voter had no idea about any of the things Matt points out in this article, and assumed that TPP was just a way for Evil Corporations (TM) to outsource more jobs to Asia.
That's where leadership comes in. China was not even involved in TPP. If Hillary could not even explain that, I wasted my vote on her.
Bernie turned into politics, when it should have stayed squarely in the realm of bipartisan Secret Congress. As soon as you make something partisan, you doom it. It was likely his intention to doom it because Bernie has pretty radical views on economics and trade.
Once it was doomed, I think it made political sense for Hilary to dump it.
Usually it’s the winner who decides the policy, not the loser. It’s a good thing that I’m an independent because it would have driven me mad as a Democrat.
Hillary was not president.
Expected value of TPP deal = P(Hillary becomes President) * Favors not passing + P(Trump becomes President) * Favors not passing
Hillary woud have found a way to trivially tweak the deal and proclaim it fixed. As Trump 1 did with NAFTA.
Assuming Hillary’s rejection of the TPP was independent of Trump’s, which it wasn’t.
More broadly, the counterfactual to Trump is not the complete rejection of trade deals
I have seen it proposed lots of times as regards drug development but not in other areas but any product approved as safe in one developed country should be assumed to safe in all others. Every country doing their own tests on furniture, cars etc is pointless duplication.
"...approved as safe in one developed country should be assumed to safe in all others...."
Isn't this just going to create a race to the bottom? We're familiar with Liberian shipping registries; why won't this just create the Liberian FDA, where every drug company can get its products approved?
In practice I don’t think we have a lot of reservations about present-day European drug regulatory bodies (they care about European citizens’ welfare in Europe, and fortunately human biology is mostly the same everywhere), but I think it is a good point that regulatory harmony with respect to approval bodies instantly funnels all business to the most permissive approval regime.
Win - win
The GDPR has implemented this concept in regards to cross boarder personal data transfers outside of the EU. Certain countries that have been deemed by the European Commission to have adequate levels of data protection are basically grandfathered in and don't require the additional contracting.
That is why you wouldn't do it with Liberia.
"...you wouldn't do it with Liberia."
Okay, fair. I had not seen that you specified "developed" country, and perhaps you think Liberia is not one.
So, only certain countries will be accredited for the purposes of drug approval. But now that we are restricting accredited countries, aren't we just back into the same business of needing multilateral trade agreements? Who's going to decide on which countries are accredited? Should countries accredited by one developed country be assumed to be accredited by all others?
That doesn't seem a particularly hard problem and there is no need for an agreement to be multilateral.
The UK unilaterally accepted EU and FDA approval of drugs
https://marginalrevolution.com/marginalrevolution/2023/03/uk-to-adopt-pharmaceutical-reciprocity.html
Yes. Welcome to the world of Ivermectin as a cancer treatment, as authorized by the Liberian FDA and as seen on the Joe Rogan and Peter Attia shows... We are already living a version of this with health supplement (non)regulation.
Liberia isn't a developed country.
I think the determining factor in the corruption of the process is not so much "development" per se as the political and cultural conditions that permit lobbying, cronyism and outright payola to corrupt the approval process. Would you trust Hungary to set the standard? Turkey?
Hungary is part of the EU yes?
Turkey not yet. So they probably wouldn't' count.
Basically do ones with the EU, UK, Canada, Australia, New Zealand, Japan
Maybe there are a couple more I'm missing.
You say bottom, I say top!
You're the Nile, E.S.; you're the Tower of Pisa. You're the smile on the Mona Lisa.
No American jury is going to give any respect to the transparently meaningless safety imprimatur of a foreign regulator like that. But FDA approval does carry weight with juries tasked with determining whether a product is sufficiently safe under state product liability law. Juries do find that products approved by FDA or some other federal agency were nonetheless not safe enough under state law, but also, juries often are persuaded that if it was good enough for a federal agency to approve, that's good enough for state law.
Pretty easy to solve. Make the default approval unless you can prove that there is a genuine safety concern that requires an exception.
And those exceptions should be VERY rare
Besides, I think given how our bureaucracies are, I see this race to the bottom as being pretty theoretical for safety.
I agree it's more of a concern with developing countries.
Maybe the "bottom" is the most efficient place. Of course you could just make it a strong presumption, let the protectionist interests jump through NEPA-sized hoops to over turn the presumption.
For a more recent example, the EU strictly limits nitrate/nitrites in food but the US is mostly completely okay with them. It isn't clear to me that the EU is wrong here. For a different direction: the US still (I think?) bans mifepristone (the "abortion pill") in many/most states even though it has been legal in the EU for decades, and it is hard to imagine Americans being okay with the EU being able to override their local sovereignty on that.
Whoever is right about nitrites it wouldn't be relevant unless someone is buying the majority of their food from another continent which seems an unlikely issue.
See the thalidomide scandal. I'm not saying this is necessarily a bad idea, but it's not necessarily a good one either.
If it was a real issue then the go to example wouldn't be over 50 years old.
"...the go to example wouldn't be over 50...."
This seems like an unreliable heuristic. Blocking fire doors with chains is still a bad idea today, even if the go-to example is the Triangle Shirtwaist fire, which is even longer ago than 50 years. Part of why there are few more recent examples in the US is because that particular event led to reforms in the US, thus reducing the number of more recent examples. And part of why there have been fewer pharmaceutical catastrophes in the US since thalidomide, is because that led to reforms that have reduced the number of pharmaceutical catastrophes in the US. We have to reach back to the pre-reform days in order to show what the present day would be like without the reforms in effect.
Fire safety is relevant because fires are still common, I don't think there is a single example of Americans being saved by excluding European, Canadian or Japanese drugs, while making drugs harder to approve has a vast death toll every year.
One of the core arguments about Brexit in the UK was that the EU took sovereignty from the UK - which was true. The problem is any international agreement, whether it involves trade, international travel or anything else, involves loss of sovereignty. Another argument for Brexit was that the UK could form free trade agreements with other countries rather than having the EU do it for them. But of course any free trade agreement always involves losing some sovereignty, which was the reason for leaving the EU.
Separately, the term free trade agreement conjures images of men in blue overalls and hard hats getting laid off. Saying the FTA will lead to better paid jobs elsewhere is a hard argument to make.
The European Union's mishmash of doing monetary policy, administrative law and Immigration law but not fiscal policy or defense genuinely seems like an *insane* idea from the prospective of Europe, but presents an enormous opportunity *for America* to only have to coordinate with one body vs ~30 countries regarding regulation.
Isn't this just basically an argument against treaties?
In 2014 trade unions claimed that the TTIP trade deal between the US and EU would mean the UK would have to sell hospitals to American companies.
So during the Brexit campaign Lord Owen ex foreign secretary and a doctor, and the Leave campaign stated voting Remain was a threat to the NHS and put out leaflets quoting the trade union leaders statements from 2 years earlier.
https://www.theguardian.com/society/2016/apr/06/brexit-is-necessary-to-protect-nhs-from-ttip-says-david-owen
This is why agreements are much worse than just unilaterally having free trade.
Great article - yet another example that even for those who agree with some of the nominal complaints raised by Trump et al. (including occasionally me), what Trump is doing in one domain after another is if anything making it all worse.
Re the Polo in particular, why not make an exemption for fewer than X vehicles sold per year? If it stays small then all good (both VW and American consumers are better off); if it ends up super popular then they can think about starting specific production according to American standards.
It’s not the polo I want but one of them Chinese EVs. I’ll be driving in a jetsons car then. Bring on the future, baby.
Minor quibble from a former DOT employee: vehicle safety standards are established by the National Highway Traffic Safety Administration (NHTSA), not FHWA.
It's this kind of woke-DEI nitpicking that made us decide to fire all of you.
Trump is too lazy and incuriously unconcerned with outcomes to take credit for things already accomplished and to take advantage of actual opportunities when they present themselves. And Republicans have completely abdicated all responsibility and let Trump fill his administration with people less competent and disinterested in outcomes than himself. It's all infuriating.
The other thing this doesn't include is subsidies, either explicit or implicit. Really, the list of regulations we could attempt to harmonize is endless. Of course, that's not even the argument we're having. Trump would be waging this tariff war even if every country around the world had the exact same legal regime.
It seems that the world of large trade agreements and lowering trade barriers is behind us. The EU announced reaching a trade agreement with Mercosur in 2019 and it's still not signed over concerns from French farmers.
The EU allegedly believes in this stuff, what hope is there for the US where neither party believes in free trade any more?
It's hard not to think western civilization is just sleepwalking toward disaster. Everything is going to get very bad, we're going to endure 10-20 years of pain, then the next generation is going to wake up and do a bunch of super obvious things to make people's lives better. I wish we could alarm everyone before the bad things happen, but I am not optimistic that we can
Fundamentally anything that requires a little bit of short-term pain in order to make thing function in the long-term are always going to be under threat in democracy, especially once examples of the long-term breaking down are far in the rearview mirror so only nerds know about them. Measles shmeasles.
Yes, I read Jonah Goldberg's "Suicide of the West" and he makes a convincing case that we don't appreciate what a miracle modernity and liberal democracy are, and how unusual they are historically.
If we did, we would be a LOT more careful with them, and how we play politics.
In particular there is a strain of anti-Western in universities (particularly elite universities) that is REALLY dangerous.
And I think the far right has used it as a justification of why we need someone like Trump to protect us from them.
Exports of goods and services at 30% of global GDP is at a historical high and is *twice* as great as it was in 1980. Western* civilization will probably be fine. Unless the Trump folks are somehow neutered I'm afraid I can't say the same for the US which will be on the outside looking in.
* Let's say "modern industrial" instead.
I doubt it. Arguments about free trade versus tariffs date back to the literal founding of the Republic, with Alexander Hamilton facing off against Henry Clay. These are eternal debates that never go away, they just find new form in a new generation. Read any 19th century history of any random European country and you'll find fights between the protectionists & the free traders are one of the core political arguments of the time. (The British Corn Laws, etc.) We're in a protectionist phase now, undoubtedly that will change again in a decade or two, then change again further down the road, etc.
Also worth thinking about economic incentives- the US exports a very small amount for such a rich country. You mention the EU but they export much more than we do, so obviously they're more interested in free trade at the moment
In Argentina Peron usured in a protectionist era in the 40s that might only be coming down now, and only once Peronism failed so severely in the post COVID world that Argentines decided to trust an unstable madman who goes around swinging chainsaws. (I say this as a Milei sympathizer). Previous attempts to move past Peronism never managed to stick as the protectionist impulse became deeply embedded in the culture.
These periods can last for quite a while. Not to say it will happen here, but it can happen.
"Argentines decided to trust an unstable madman"
this seems uncharitable. Milei is an economist that actually understands how economies work, and cares about the details, and knows how to fix things. I think this stands in sharp contrast to Trump.
I said it tongue in cheek, buts it's not far off.
If you were to ask his fans (named pubertarians since a lot of them are teenagers that got libertarian-pilled from growing up in a failed collectivist society) they would agree with that description and say they even enjoy it. They take pride in how Milei has rants that build up until he unleashes at whoever made a wrong comment (ie unstable) and most would argue he presents himself in a crazier way than a typical politician but is not actually crazy.
I don't think Hamilton faced off against Clay, except from beyond the grave.
Debates abut the shape of the earth and the malevolence of witches' were more common in the past than today. :)
My observation isn't meant to be normative. I'm just observing that free trade versus protectionism is an eternal issue that reoccurs every generation, the same as 'conflict between ethnic groups' or 'natives versus immigrants' or 'is the left too soft on crime, or is the right too harsh on people who've made a minor mistake'. Or 'should we go to war with x country over perceived slight vs. should we make peace'. Every generation in every society will cycle through these issues for the rest of human history. Sometimes one side is ascendant, sometimes the other side is
Trade and immigrants are two that we ought to be over by now. Save conflict of issues that are not win-win. Even policing/prosecution has conceptual optimum, but it is hard to know what it is.