Daniel Halliday
Aug 12, 2018 · Last update 1 yr. ago.

Do tariffs and sanctions work?

With Donald Trump engaging in a wide range of tariffs and sanctions internationally, what is he trying to accomplish? And can economic sanctions and tariffs even accomplish this?
Stats of Viewpoints
Trump is using these economic measures to distract from homegrown economic issues
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Sanctions exacerbate crises and can make states topple
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Tariffs are normal in the international economic landscape and differ from sanctions
1 agrees
0 disagrees
Smart sanctioning may increase efficacy
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1 disagrees
Sanctions are the only option between a verbal and violent reaction
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Trump is using the wrong tool for the job, attacking the trade deficit with tariffs
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Sanctions target those who are not the cause of the problem they seek to address
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1 disagrees
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Trump is using these economic measures to distract from homegrown economic issues

Trump is just using sanctions and tariffs aggressively to draw public attention to the US trade deficit and away from federal government overspending. Both are something that he rallied to curtail during the run up to the election, but the latter he seems eager to boost now that he is in office. Military, infrastructure, social issues, nuclear security, commerce, security and natural disaster suppression have all been allotted an increase in budget spending. As a result the overall budget and previously non-existent vanity projects, such as Trumps proposed Mexican border wall, will cause the federal government spending to rise, something that has been overshadowed by the blame laid at the feet of foreign economies.

This however may just be part of Trump’s larger strategy of misinformation, as can be seen too with his aggressive attitudes towards the media, Muslims, and many international deals and foreign nations. Trump’s populism is focusing the public narrative on such issues in a claim of boosting the US economy, but he is actually doing the same thing as predecessors, but has just taken on an aggressive demeanour as part of a public relations smoke and mirrors campaign. This distraction becomes increasingly apparent when comparing the fiscal policies of Obama and Trump, their unprecedented levels of high spending are remarkably similar when looking at military spending, deficit and debt, however as Obama’s presidency started in recession, Trump’s policies seem all the more extreme.

Further condemning evidence comes in the form of an IMF study that found that technological advancement is a bigger driver of unemployment in the United States than Chinese competition. So what is behind the differences in Trump’s rhetoric over the reality of the situation? A cynical spectator may be left assuming Trump is trying to deregulate and capitalise financially from a failing approach before a time of great change, climate change being a looming issue that will likely require greater cooperation and great change. Whatever the reason behind his policy decisions though it is clear Trump is using tariffs and sanctions in a similar way to his use of the media and misinformation, a profiteering slight-of-hand trick straight out of the days of Trump spinning the liquidation of casinos to his advantage.

usatoday.com/story/news/politics/2018/02/13/trump-budget-spending-increases/330337002 aljazeera.com/programmes/insidestory/2018/08/sanctions-realigning-global-alliances-180809185033217.html thebalance.com/trump-vs-obama-economic-policies-4142333 scmp.com/economy/global-economy/article/3032224/technology-not-china-can-be-blamed-regional-job-losses

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Daniel Halliday
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DH edited this paragraph
Further condemning evidence comes in the form of an IMF study that found that technological advancement is a bigger driver of unemployment in the United States than Chinese competition. So what is behind the differences in Trump’s rhetoric over the reality of the situation? A cynical spectator may be left assuming Trump is trying to deregulate and capitalise financially from a failing approach before a time of great change, climate change being a looming issue that will likely require greater cooperation and great change. Whatever the reason behind his policy decisions though it is clear Trump is using tariffs and sanctions in a similar way to his use of the media and misinformation, a profiteering slight-of-hand trick straight out of the days of Trump spinning the liquidation of casinos to his advantage.

Sanctions exacerbate crises and can make states topple

Leaders are increasingly utilising targeted financial sanctions as a tool to weaken the economy of a foreign country, in an effort to address political or social actions the sanctioning state deems immoral. However sanctions can go so far as to destabilise the country’s economy completely, causing inflation, scarcity and large scale poverty in an effort to increase the likelihood of civil uprising and regime change. Used in this way sanctions become a form of economic warfare, and when combined with other measures such as the additional funding of violent rogue groups or propaganda, sanctions appear to be more a device of imperialism or proxy warfare than merely an aggressive economicly coercive measure.

Economic warfare is the real reason for the current economic and humanitarian crisis in Venezuela. Alfred de Zayas, the UN Independent Expert on the Promotion of a Democratic and Equitable International Order, was the first UN Rapporteur to visit Venezuela in 21 years, and he described the sanctions imposed on Venezuela by the United States as illegal and a possible crime against humanity under international law. These sanctions have been compared to medieval siege warfare, and de Zayas even went so far as to suggest that the US sanctions are in reality part of an effort to overthrow Nicolas Maduro’s government and promote a US-friendly regime.

This is not just true of Venezuela though; Iran, Russia and Syria have all been on the receiving end of some of the harshest embargoes in history from the worlds largest economy. There is a real need then for the UN to address such sanctions, but also to facilitate this there is a need for an international push back on the increasingly aggressive use of sanctions and the use of sanctions as a tool of siege warfare. Sanctions need reclassification or a grading system to regulate their use, and the UN is in the best position to advocate and impose such guidelines. Just as the use of the intentional bombing of water supplies led to the same ends as biological warfare in the Iraq War, so can sanctions lead to spiralling consequences and both require reclassification as war crimes when used like this.

irishexaminer.com/breakingnews/world/former-un-rapporteur-us-sanctions-against-venezuela-causing-economic-and-humanitarian-crisis-900603.html s3.amazonaws.com/files.cnas.org/documents/CNASReport-EconomicWarfare-160408v02.pdf?mtime=20161010171125 mintpressnews.com/us-sanctions-have-become-little-more-than-medieval-style-siege-warfare/252411 globalresearch.ca/how-the-us-deliberately-destroyed-iraq-s-water-supply/31011 armscontrol.org/act/2013-05/iran%E2%80%99s-nuclear-program-sanctions-siege

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Daniel Halliday
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DH edited this paragraph
Leaders are increasingly utilising targeted financial sanctions as a tool to weaken the economy of a foreign country, in an effort to address political or social actions the sanctioning state deems immoral. However sanctions can go so far as to destabilise the country’s economy completely, causing inflation, scarcity and large scale poverty in an effort to increase the likelihood of civil uprising and regime change. Used in this way sanctions become a form of economic warfare, and when combined with other measures such as the additional funding of violent rogue groups or propaganda, sanctions appear to be more a device of imperialism or proxy warfare than merely an aggressive economicly coercive measure.

Tariffs are normal in the international economic landscape and differ from sanctions

Tariffs and sanctions sometimes get conflated but tariffs are merely taxes on imports by the government of a country importing goods, whereas sanctions often entail outright bans on products, making certain products illegal to import. Even though Trump has instigated tariffs on China, tariffs do not always amount to a trade war as the result may just be the routing of trade elsewhere for both countries, as it will be cheaper to do so. Sanctions however often completely end the trade of certain goods and countries that enjoy a favourable relations with the sanctioning state may also become involved as sanctions can address or target third party states also, for example the US sanctions against Iran.

However this can even work both ways as third parties can also attack sanctioning states, if it deems sanctions particularly immoral or illegal. Such is the case with the EU‘s fight against the US sanctions on Iran. The European Commission announced their aim to utilise the 1996 blocking statute by August 2018, it would render these sanctions invalid and ban European companies from acting in accordance with them. Likewise the European Investment Bank has been instructed to assist investment in Iran and continue to supporting EU companies engaging in legitimate business in Iran.

The US under the Trump administration is using tariffs to punish China without directly sanctioning the country, an attempt to punish China’s economy in a similar way to sanctions without having to point to a realistic humanitarian or security concern for justifying them, although trying with its smear of Huawei. The efficacy of aggressive tariff use is still somewhat an open question though, as it has begun a trade war between the two countries and some believe it to be bringing the world economy closer to its next recession. Tariffs are often imposed for defensive purposes to protect the domestic economy industries from too massive a level of foreign competition. Tariffs will remain a normal part of international relations that are used to help a country protect their own economy from any threats or negative impacts of international trade, but engaging in frivolous tariffs can be hugely negative, a lesson the US should have learned from the 1930 Smoot-Hawley Tariff Act.

europa.eu/rapid/press-release_IP-18-4805_en.htm markets.businessinsider.com/news/stocks/ubs-slashed-global-growth-forecast-tariffs-push-closer-to-recession-2019-9-1028498425 cnbc.com/2018/04/04/one-of-the-biggest-us-trade-wars-of-the-past-had-a-tragic-consequence--heres-what-happened.html

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Daniel Halliday
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DH edited this paragraph
http://europa.eu/rapid/press-release_IP-18-4805_en.htm https://markets.businessinsider.com/news/stocks/ubs-slashed-global-growth-forecast-tariffs-push-closer-to-recession-2019-9-1028498425 https://www.cnbc.com/2018/04/04/one-of-the-biggest-us-trade-wars-of-the-past-had-a-tragic-consequence--heres-what-happened.html

Smart sanctioning may increase efficacy

Sanctions work, they are just ineffective with differing studies showing anywhere between a 20-35 percent success rate. As a result sanctions should be used in combination with other diplomatic means to increase the likelihood of success. Smart sanctions should be universal, specific, combined with long-term goals, and be targeted in order to address the governing bodies of the state they are aimed at.

Sanctions are often broken by third party states that do not share the indignation of the sanctioning state and see an opportunity to benefit from the situation financially. This may take the form of open or covert trade with the country, but often involves the sale of controversial products such as weapons for resources. This is the case for example with the recent arrest of Meng Wanzhou, daughter of the founder of Chinese telecom company Hauwei; she has been arrested over Huawei’s alleged breaking of US sanctions against Iran by trading with the country under the covert name “F7”. It is therefore essential that sanctions are universally applied, so that third parties do not seek to flout sanctions. It has been proposed that sanctions should only be imposed by nations in groups or as part of UN initiatives, to stop other nations defying them so easily.

With sanctions being more and more frequently used since the end of the cold war it is clear they have some efficacy and are becoming a permanent feature of international relations, however states that impose them should bare in mind their limitations and try to factor that into their foreign policy. Sanctions don’t work quickly, so there must be a long-term plan that goes beyond just sanctioning a country. The issue of nationalist resentment needs to be addressed with sanctions also, as when there is no viable alternative for the people (i.e. no democracy), what can they do but learn to hate the sanctioning country? It has been proposed that sanctions should only be imposed by nations in groups or as part of UN initiatives, to stop other nations defying them so easily and address some of the downsides sanctioning carries with it.

aljazeera.com/indepth/opinion/trump-arab-nato-plan-counter-iran-doomed-fail-180810090115814.html worldfinance.com/special-reports/the-impact-of-economic-sanctions theguardian.com/technology/2018/dec/08/huawei-sanctions-software-what-you-need-to-know

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Daniel Halliday
Oct 10
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DH edited this paragraph
With sanctions being more and more frequently used since the end of the cold war it is clear they have some efficacy and are becoming a permanent feature of international relations, however states that impose them should bare in mind their limitations and try to factor that into their foreign policy. Sanctions don’t work quickly, so there must be a long-term plan that goes beyond just sanctioning a country. The issue of nationalist resentment needs to be addressed with sanctions also, as when there is no viable alternative for the people (i.e. no democracy), what can they do but learn to hate the sanctioning country? It has been proposed that sanctions should only be imposed by nations in groups or as part of UN initiatives, to stop other nations defying them so easily and address some of the downsides sanctioning carries with it.

Sanctions are the only option between a verbal and violent reaction

While merely cautioning a country is often ignored and seen as inaction, military solutions are becoming increasingly less popular and more convoluted. Sanctions represent the only viable option in the middle of these two extremes. Economic sanctions are the only way to provide incentives towards reform without resorting to a military intervention.

Economic sanctions are used often against countries by banning trade, either wholly, or with certain exceptions due to ethical concerns, for example regarding food and medicine. These can take the form of oil embargoes, such as the UN’s 1987 voluntary oil-embargo against South Africa in a push to end its apartheid policies. The embargo was supported by 130 nations applying pressure to the South Africa by restricting one of the most ubiquitous commodities that an economy depends on. This sanctioning was ultimately a success as South Africa responded to the sanctions by rolling back institutionalised apartheid on the 17th June 1991, to hold the first multiracial elections just three years later.

Diplomatic sanctions are also common, being carried out by reducing or removing diplomatic ties to a country through closing embassies and/or forcing some or even all diplomats stationed in the sanctioned country to return home. An example of this is the huge number of countries that expelled Russian diplomats following the poisoning of a former Russian spy in March 2018 in Salisbury, UK. Many governments followed then British Prime Minister, Theresa May, as she took a stand against this probable failed assassination attempt. These types of sanctions can be effective because they can isolate countries politically, especially when carried out in unison, without potentially having any economic or military ramifications.

reason.com/2013/12/06/did-economic-sanctions-help-end-aparthei edition.cnn.com/2018/03/26/europe/full-list-of-russian-diplomats-expelled-over-s-intl/index.html

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Daniel Halliday
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DH edited this paragraph
Diplomatic sanctions are also common, being carried out by reducing or removing diplomatic ties to a country through closing embassies and/or forcing some or even all diplomats stationed in the sanctioned country to return home. An example of this is the huge number of countries that expelled Russian diplomats following the poisoning of a former Russian spy in March 2018 in Salisbury, UK. Many governments followed then British Prime Minister, Theresa May, as she took a stand against this probable failed assassination attempt. These types of sanctions can be effective because they can isolate countries politically, especially when carried out in unison, without potentially having any economic or military ramifications.

Trump is using the wrong tool for the job, attacking the trade deficit with tariffs

Trump is trying to use tariffs to boost US companies, despite not taking into account that these controls are being applied to intermediate and capital goods, goods that are imported into the US to manufacture into other products. Imposing tariffs on such goods will likely lead to higher productions costs for a range of companies, which will only serve to decrease competitiveness internationally for the American companies affected. What is more, retaliatory sanctions imposed on US goods by affected countries will further hurt the US economy.

The best, and most well documented example of this is Harley Davidson who plan to move part of their manufacturing process to Europe as a result of Trump's economic policies. In the last three years sales of Harley products have fallen 10%, as a result of changing tastes in the market and fierce competition from rival manufacturers such as BMW, Honda, Ducati, Kawasaki, Suzuki. This move becomes especially clear when considering Europe and Japan now have a free trade policy, that means all the major Japanese Harley Davidson rivals will have lower production costs, sell cheaper, and be more competitive and therefore have higher sales across Europe.

Trump dealt with this by simply tweeting and questioning the patriotism of Harley Davidson, threatening them with higher taxes. Trump states he is battling the trade deficit in the US in order justify his tariffs, but the US has a trade deficit because it’s an economy that consumes more than it produces, this is a normal feature for such economies. If he really wanted to reduce this deficit he could cut the immense level of public spending in the US, while promoting savings and investments in US companies.

fiscal.treasury.gov/fsreports/rpt/finrep/fr/17frusg/02142018_FR(Final).pdf ticdata.treasury.gov/Publish/mfh.txt usdebtclock.org

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Daniel Halliday
Oct 8
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DH edited this paragraph
The best, and most well documented example of this is Harley Davidson who plan to move part of their manufacturing process to Europe as a result of Trump's economic policies. In the last three years sales of Harley products have fallen 10%, as a result of changing tastes in the market and fierce competition from rival manufacturers such as BMW, Honda, Ducati, Kawasaki, Suzuki. This move becomes especially clear when considering Europe and Japan now have a free trade policy, that means all the major Japanese Harley Davidson rivals will have lower production costs, sell cheaper, and be more competitive and therefore have higher sales across Europe.

Sanctions target those who are not the cause of the problem they seek to address

Sanctions hurt the poorest and least powerful, while the people they are aimed at often just overlook and ignore them, or just use them to turn public opinion against the sanctioning country. Third party countries often overlook sanctions also, as they may not share the indignation of the sanctioning country. Depending on what is being sanctioned, these measures can sometimes damage the sanctioning countries economy also.

Sanctions are still however a go to solution in response to major international diplomatic tensions but their efficacy has often been criticised. Gary Clyde Hufbauer, Jeffrey J. Schott, and Kimberly Ann Elliott published Economic Sanctions Reconsidered in 1985 (with the latest subsequent edition in 2009), an investigation into every sanction that led to a successful outcome for the sanctioning country from 1914 to 2008. Out of the 200 sanctions studied they could find only 16 lead to the intended outcome, making sanctions look like an unsuitable political tool for complicated international issues.

They instead found the majority of sanctions slow down economic growth and increase inflation. This can be seen in its most extreme in states like Venezuela, where even targeted sanctions have failed to have much of an effect as Nicolas Maduro has retained power even through a protracted presidential crisis, and instead they have effected the Venezuelan economy, intensifying hyperinflation. This situation especially has become so bad the country’s most vulnerable, single mothers, children, the elderly, the sick and disabled citizens have suffered the most, as sanctions have led to widespread hunger amidst food shortages and has fed into a spiralling refugee crisis in the region.

washingtonpost.com/news/worldviews/wp/2017/08/02/do-sanctions-work-the-evidence-isnt-compelling/?utm_term=.5064c3e6dbee msn.com/en-au/news/world/as-venezuelas-crisis-deepens-the-most-vulnerable-are-joining-the-exodus/ar-AAFuybD

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Daniel Halliday
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DH edited this paragraph
https://www.washingtonpost.com/news/worldviews/wp/2017/08/02/do-sanctions-work-the-evidence-isnt-compelling/?utm_term=.5064c3e6dbee https://www.msn.com/en-au/news/world/as-venezuelas-crisis-deepens-the-most-vulnerable-are-joining-the-exodus/ar-AAFuybD
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