“Biden’s words of support for the protesters—some of whom waved American flags as they demanded “libertad”—are nice. Actions would be better. And there is plenty the U.S. could, and should, do to aid Cubans in their fight against authoritarian communism.
For starters, Congress could lift the 59-year-old U.S. trade embargo against the island country.
Some leftists blame the embargo for impoverishing Cuba, but this is misdirection. Communism has destroyed Cuba’s once-prosperous economy. Still, the trade embargo, in place since 1962, has plainly failed to accomplish its primary goal of toppling the Cuban regime. If anything, it has helped to strengthen it by giving former President Fidel Castro and his successors a way to deflect blame for communism’s failures—a strategy that Cuban President Miguel Díaz-Canel also deployed during the initial wave of protests in July.
From America’s perspective, what has the embargo accomplished? That it remains in place nearly three decades after the fall of the Soviet Union suggests that America has failed to learn the primary lesson of the Cold War: Economic development is the best weapon to aim at communism.”
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“where is the evidence that disengagement is working? Demanding political reforms before economic changes is exactly backward—and again ignores the lessons of the Cold War.
Economic freedom is the key to other kinds of freedom. Consider what happened when the Obama administration loosened some of the rules on American travel to Cuba as part of an effort to reestablish diplomatic relations. Even with the trade embargo still in place, that slight policy change induced then–Cuban President Raul Castro to relax state controls on private commerce. While accurate figures on Cuba’s economy are understandably difficult to come by, a 2017 Brookings Institution report estimated that “the number of authorized self-employed people (cuentapropistas) rose from some 150,000 in 2008 to about 580,000 in 2017.”
Increasing entrepreneurship reduces Cubans’ reliance on the Communist state. And when people are allowed a little freedom, they tend to want more of it. ”
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“calls for the White House to allow private companies to beam internet service into Cuba to circumvent the government’s blackout and help protesters organize. Technologically, this is possible: Balloons anchored miles offshore could broadcast mobile internet signals into Cuba. The same tech was deployed near Puerto Rico after two devastating hurricanes crippled the island’s digital infrastructure in 2017.
Even if Biden does nothing more than re-instate Obama’s travel and economic policies and call on Congress to end the failed trade embargo, it would signal to the Cuban people—and to the country’s potential future leaders—that the United States recognizes trade and tourism as vital economic and political lifelines for the island’s long-suffering residents. It also would remove the biggest excuse that Cuba’s government uses to distract people from the failings of communism.”
“The bureaucratic process established by the Trump administration to determine which American companies should be exempted from paying tariffs on imports from China is a black box of “inconsistencies” and poorly documented decision-making, according to a new audit.
In a report published last week, the Government Accountability Office (GAO) cast a critical eye on the so-called “tariff exclusion process” created in 2018 as part of the Trump administration’s efforts to slap tariffs on a wide range of imports from China. The process, overseen by the Office of the U.S. Trade Representative, allowed American businesses to appeal to the federal government for permission to not pay tariffs if they could demonstrate that a given product was not available from other sources, or if a business faced “severe economic harm” due to the tariffs.
Between 2018 and 2020, American businesses submitted more than 53,000 exclusion requests. The vast majority—87 percent—were denied, and most of the denials were on the grounds that the company failed to demonstrate sufficient economic harm to the Office of the U.S. Trade Representative, the GAO found.
In other words, federal bureaucrats reviewed tens of thousands of statements from companies pointing out how the Trump administration’s tariffs would cause economic harm—because, yes, Americans paid for the tariffs—then discarded most of those requests because the harms were not “severe” enough.
What’s even worse is that there’s very little in the way of objectivity or due process afforded to companies that had their exclusion requests denied. Soon after the tariffs were imposed, members of Congress warned that the exclusion process lacked “basic due process and procedural fairness” and that it could be “abused for anticompetitive purposes.” As Reason previously reported, business owners have complained that simply getting a decision one way or the other can take months. And there is no way to appeal the rulings.
The new GAO report confirms some of those concerns.”
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“tariffs are always about protecting certain industries, and protecting certain industries always invites influence-peddling.”
“American companies were glad to see Biden review Trump’s trade policies toward China, but eight months later, they have seen little change on tariffs or other issues bedeviling their business in the world’s second-largest economy.”
“Despite being in place since 1962, the trade embargo has plainly failed to accomplish its primary goal of toppling Cuba’s regime. If anything, the policy has likely bolstered the regime by allowing the communist government to blame the U.S. for its own economic problems, as Cuban President Miguel Díaz-Canel did on Sunday. The trade embargo has contributed to the Cuban government’s impoverishing of millions of Cubans while limiting Americans’ economic freedom, too. That it remains in place nearly three decades after the fall of the Soviet Union shows that America’s foreign policy towards Cuba has failed to learn the primary lesson of the end of the Cold War: Economic freedom is the best weapon to aim at communism.”
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“Cuba’s government is authoritarian, but there should be no mincing of words about this. Communism is what broke Cuba. The authoritarianism on display is merely the natural evolution of communist regimes—a pattern of economic and political repression that has been tragically repeated in too many corners of the world during the past century.
Biden’s statement is right to conflate the lack of economic freedom with long-running political repression in Cuba. That’s exactly why America’s trade embargo is such a backward strategy, one that assumes economic and political freedom aren’t fundamentally linked.
Look at what happened when the Obama administration loosened some of the rules banning Americans from traveling to Cuba as part of an effort to reestablish diplomatic relations. Even with the trade embargo still in place, that slight policy change helped create a boomlet of entrepreneurship amid then-Cuban President Raul Castro’s thawing of tight state control over private businesses on the island.”
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“Since taking over as Cuba’s president in 2018, Díaz-Canel has cracked down on Cuba’s private sector. Former President Donald Trump helped him smother the nascent economic reforms by reversing some of Obama’s attempts to normalize U.S.-Cuba relations and by slapping new economic sanctions on Cuba just before leaving office in January.
Advocates for maintaining the embargo against Cuba argue that increased trade and tourism would enrich and strengthen the communist regime while failing to aid most Cubans. This was basically Trump’s approach—one that reflects longstanding hardline conservative views about how to handle the communist state just 90 miles from the Florida coast. “There is zero reason to delude ourselves into believing that ‘engagement’ will get the tyrants in Havana to change their ways,” Sen. Marco Rubio (R–Fla.) wrote in January.
This is a clever misdirection. Where is the evidence that disengagement is working? The embargo has been in place for nearly six decades. How much longer should we wait? How much longer should the people of Cuba have to wait?”
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“As the people of Cuba strive to cast off their communist oppressors, the United States can do more than simply offer words of support. Undoing Trump’s restrictions on the remittances that many Cuban Americans send to their families still trapped under the communist regime would be a great place to start.
If Biden were to reinstate Obama’s travel and economic policies toward Cuba and call on Congress to end the failed trade embargo, it would be unlikely to immediately change the reality on the ground in Havana. But it would signal to the Cuban people—and to the country’s potential future leaders in the event of a full-scale toppling of the regime—that the United States is prepared to let trade and tourism serve as vital economic and political lifelines for the island’s long-suffering residents. And it would remove one excuse the Cuban government routinely uses to dismiss the failings of communism.”
“China had become the second-largest export market for American-made cars by 2017, the last full year before Trump’s trade war began. After a series of tit-for-tat tariff increases between the U.S. and China, however, American automotive exports to China fell by more than one-third. Higher tariffs on imported car parts from China raised costs for automakers in America, while China’s retaliatory tariffs on American-made cars hiked prices and reduced demand in China.
To avoid those costs and to evade increased uncertainty, some carmakers began shifting their supply chains—but not in the direction the White House was hoping.
BMW, for example, shifted much of the production of its X3 sport-utility vehicle from Spartanburg, South Carolina, to China after reporting that tariffs had cut the company’s American profits by about $338 million in 2018. The higher costs imposed by the trade war caused Tesla to announce that it was “accelerating construction” of a new plant in Shanghai.
Overall, the number of American automating jobs peaked in September 2018, shortly after Trump’s trade war began, and then declined during 2019 and 2020.
The signing of the “phase one” trade deal with China did little to stop or reverse those shifts. Even though China pledged to increase its purchases of American-made vehicles and car parts as part of the agreement, exports are still lagging well behind their pre-trade war totals, according to the PIIE report.”
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“Trump believed that hiking tariffs would reduce America’s imports from China, allowing the gap between the value of those imports and the value of America’s exports to fall. What he failed to grasp, however, is that many of those imports—especially when it comes to manufactured goods—are materials necessary for making the items that American companies end up exporting back to China: like cars.
Higher costs imposed on imports ended up slowing American exports—and thus the trade deficit actually grew. Meanwhile, companies could avoid the cost of Trump’s tariffs by shifting production out of the United States, and some chose to do that.
Biden, so far, seems unwilling to remove Trump’s tariffs. By announcing a misguided “Buy American” policy for government procurement, Biden is also expanding on some of the Trump administration’s protectionist manufacturing policies.
If the past few years are any indication, all Biden will likely accomplish by this is to further erode America’s industrial base by trading away automaking jobs in exchange for the appearance of “toughness.””
“The Biden administration is stepping up its actions to punish Myanmar’s ruling military junta in the wake of a bloody weekend targeting civilians protesting against the February military coup.
On Saturday, the military commemorated Armed Forces Day by killing about 140 people — including six children — in 44 cities and towns amid nationwide peaceful protests, according to local reports and activists. One of the children, 11-year-old Aye Myat Thu, was buried with her drawings and toys as her family mourned beside her.
Thousands of people also fled into neighboring Thailand to escape the violence.
It’s the largest number of people killed in a single day since the military ousted the country’s democratic government in a February 1 coup. Some 500 people have been killed in total since the military seized control.
Pressure from the international community on Myanmar’s military to relinquish control has been growing, with the United Nations special rapporteur for the country recently calling the junta’s campaign “mass murder.””
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“On Monday, US Trade Representative Katherine Tai announced that the Biden administration would “suspend all US trade engagement” with Myanmar that occurs under a 2013 bilateral trade agreement. That won’t stop all $1.4 billion in trade between the two countries, but it will curb the trade relationship, namely by ending US support for initiatives that helped Myanmar integrate back into the world economy.
That may not seem like much, but experts on Myanmar’s conflict like Cornell University’s Darin Self say the move “will sting” because “cutting off trade is meaningful.””
“The Trump administration was able to reshape America’s trade policy in large part because it simply decided to ignore anything that punctured its manufactured reality about how tariffs work.
Economic data show that American businesses and consumers—not China—are overwhelmingly paying the cost of the tariffs? Send Peter Navarro out to do some television hits where he baselessly claims otherwise.
Thousands of American companies are lining up at hearings to explain why the tariffs would hurt their bottom line? Give Wilbur Ross a can of tomato soup and let him explain that those added costs are actually no big deal.
Farmers are getting gutted by the trade war? Send them fat checks, deny that your policies were to blame, and inadvertently create a new, expensive aid program that will be politically difficult to unwind.”
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“the Biden administration seems determined to keep the circus going a while longer. Take, for example, Commerce Secretary Gina Raimondo doing her best Navarro impression during an interview earlier this month with MSNBC. Asked about whether the Biden administration would roll back the Trump tariffs on steel, aluminum, and other goods from China, Raimondo argued that “the data shows that those tariffs have been effective.”
Have they? Raimondo was careful to avoid saying exactly what the tariffs have been “effective” at accomplishing, but the actual data would suggest the answer is not much—except, of course, raising prices for American businesses and consumers.”
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“The fundamental problem is the same one that Trump, Navarro, Ross, and others spent the past few years trying to hand-wave away: Tariffs simply create more losers than winners. The U.S. steel industry, for example, employs about 141,000 workers. But there are more than 6 million workers in manufacturing businesses that consume steel. The tariffs are meant to protect the former group by imposing higher costs on the latter, much larger group.”
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“Through its first 50 days in office, the Biden administration has given no indication that it is interested in providing relief to American businesses beset by Trump’s tariffs. If anything, Democrats in the White House and Congress appear to be entrenching those policies.”
“Just 12 percent of global chip manufacturing is now based in the US, compared to the 37 percent share that the country had in 1990, according to research SIA conducted with the Boston Consulting Group. The primary reasons for this decline are, according to UCLA supply chain professor Christopher Tang, the low cost of production in other countries and chemical processes with less stringent regulation abroad.
“We never had a coordinated plan, meaning these are free markets. So any companies can ship anything outside the country,” Tang explained. “So now is a wake-up call. We have shifted virtually everything, so now it’s an empty vault.”
There are many ideas for how to boost high-tech manufacturing in the US. Some, like Tang, say that part of the key is boosting the number of US students who study STEM and creating more high-tech jobs in the field. Another strategy up for consideration is beefing up US “industrial policy,” which would have the government take a more active role in encouraging high-tech industries in the US, whether through tax benefits, direct investment in research, or government subsidies. In his presidential campaign, Biden even proposed wielding the government’s power to buy these supplies directly from US manufacturers. Now with his supply chain review, Biden appears to be taking a first step toward pursuing that goal.”
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“In part, a Biden administration official told Politico, the goal is to ensure that the US isn’t too reliant on other countries and to make US-based supply chains more resilient. In his executive order calling for a review, Biden mentioned everything from another pandemic to a cyberattack to “climate shocks and extreme weather events” as examples of crises that could make it more difficult to get much-needed supplies in the future.”
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“Following the supply chain review, the goal isn’t necessarily that the US produces all or even most of a particular product or its subcomponents, experts told Recode. Instead, it’s about making sure the country has stockpiles; coordinated supply chains of needed supplies and components from different parts of the world; and enough domestic manufacturing to ensure the US can weather another crisis.
But the task of building new high-tech manufacturing in the US would be a tall order.”
“Biden made it abundantly clear that he supports the Jones Act, a 1920 federal law that requires that cargo ships traveling between American ports be made in America and owned and crewed by American citizens”
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“The Jones Act is an absolutely terrible law, designed purely for protectionist measures, that shields maritime companies and unions in the United States from competition. The consequence of the Jones Act is that a foreign commerce ship that goes to states like Hawaii or Alaska or to territories like Puerto Rico can engage in domestic trade in only one American port. It can travel to other American ports but cannot take on or deliver goods unless it goes to a foreign port and then returns. A vessel from Japan that’s heading to Los Angeles cannot also stop in Hawaii along the way and engage in commerce, despite the logical economic efficiencies in doing so.”
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“The end result of this restrictive law is that only two percent of U.S. freight is transported by sea, despite our long coasts, our many ports, and island states and territories. It’s in part why we have to depend so much on trucks and trains for transporting goods, even along coastal regions. Cato notes that internal shipping is about half the volume it was in 1960, while rail and truck commerce both saw dramatic increases.
Nowhere are the burdens of the Jones Act more apparent than in places like Hawaii and Puerto Rico. These restrictions distort market forces and significantly drive up the costs to transport goods to these places. The New York Fed calculated that it can cost twice as much to ship something from the American mainland to Puerto Rico as it does to nearby island nations like Jamaica. Puerto Rico actually imports jet fuel from other countries rather than the Gulf Coast because it’s just too expensive to get Jones Act-compliant vessels.
There’s no need to exaggerate the impact of the Jones Act on domestic transport costs because whenever a disaster comes around, like Hurricane Maria in Puerto Rico in 2017, the government will temporarily waive the Jones Act’s requirements so that the costs of recovery aren’t quite as back-breaking.”
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“”Among the obstacles to Jones Act reform is the complex web of special interests that benefit from preservation of the status quo. Among Jones Act supporters are U.S. shipbuilders, merchant mariners, various maritime unions, and those who actually believe the law is essential to national security.””
“Early on in his administration, Trump raised tariffs. The Cato Institute’s Scott Lincicome describes the president’s trade war as having “implemented five different tariff actions on almost $400 billion in annual U.S. imports (as of 2018) under three different laws with different rationales: ‘safeguards,’ ‘national security,’ and ‘unfair trade.'” We were promised ever-more jobs thanks to the tariffs. But as numerous academic studies have shown, the people who shouldered nearly all of the burden of these import taxes were not foreigners but, rather, Americans.
Protectionism reduces the overall wealth of the nation. Aside from a few favored and protected producers, Americans, in general, are made poorer. Consumers have to spend a higher share of their incomes to buy goods that they could otherwise get for less. As a result, ordinary Americans save less and have less to spend—even on nontariffed goods and services. The American producers of goods that use tariffed foreign inputs also see their production costs driven up, which drives their ability to compete down.
Unsurprisingly, the administration’s belligerent trade policies disturbed our trading partners. They retaliated with their own tariffs on American exports (to the detriment of their consumers). Adding insult to injury, the president’s erratic behavior, threats, and contradictory tweets about his trade policy likely spooked investors. The overall uncertainty and negative effects of the trade disputes surely dampened the beneficial effects of the president’s few good fiscal policies and regulatory reforms.
Take, for instance, the corporate income tax reduction as part of the Tax Cuts and Jobs Act of 2017. This reform should attract to the United States much foreign direct investment, or FDI. Yet, FDI flows into the United States were 10 percent lower in 2019 than during the two previous years. Simeon Djankov and Eva Zhang of the Peterson Institute for International Economics recently looked into the fall of FDI flows into the United States. “It is likely that the positive effect of the corporate tax cut in attracting FDI to the US,” they concluded, “was outweighed by trade disputes and threats of withdrawal, as well as actual withdrawals, from international treaties and organisations, which may have scared investors away.”
As for trade treaties, the Trump experiment is one that I hope we won’t repeat. First, he impulsively withdrew the United States from the Trans-Pacific Partnership, a multilateral trade agreement designed to oblige China to behave better on trade while opening up a large free-market zone with other Asian nations.
Trump renegotiated the North American Free Trade Agreement with overall negative net impacts, thanks to an anti-growth minimum wage and increased domestic content requirements. And he moved to extend high tariffs on Korean trucks as part of the one-sided reform of the George W. Bush-era U.S.-Korea Free Trade Agreement, to the detriment of U.S. consumers.
Finally, the president inflicted serious damage to the World Trade Organization—the great arbitrator of all international trade disputes—on the specious claim that the organization wasn’t sufficiently deferential to the United States. Here’s how Lincicome sums it up: The administration chose “to shut down the organization’s appellate body (basically the supreme court of trade dispute settlement) instead of negotiating new and necessary reforms in good faith (e.g., by teaming up with like-minded countries while offering actual concessions on longtime irritants like U.S. agricultural subsidies and ‘trade remedy’ rules).””