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Position on Sugar Trade Boils Down to Who Ya Gonna Trust

A complete rethinking of U.S. trade policies/strategies continues to be a high-priority for the new White House, though some still apparently haven’t gotten the memo.

“President Donald Trump’s administration is drafting an executive order to investigate the extent to which the unfair dumping and subsidization of certain imports adds to the U.S. trade deficit,” CNN reported a week ago.

“If the results of the investigation show an impact, it could lead to more tariffs on imported goods, an administration official told CNN.”

Of particular interest is the economic impact of imported steel, aluminum and “possibly household goods.”

“In late March, the President signed two executive orders aimed at combating foreign trade abuses that contribute to the United States’ half-trillion-dollar trade deficit,” the report continued.

“Those orders initiate a large-scale review of the causes of the U.S. trade deficits with some of America’s largest trading partners and also require stricter enforcement of U.S. anti-dumping laws to prevent foreign manufacturers from undercutting U.S. companies by selling goods at unfair prices.”

The emerging trade strategy mirrors a “Zero for Zero” proposal put forward by Rep. Ted Yoho of Florida that essentially says the U.S. will forego its modest tariffs and import quotas on foreign sugar in return for foreign competitors foregoing market-distorting government subsidies that artificially deflate the global cost of sugar.

But Daniel Pearson, in an opinion column published by the Cato Institute last week, dismisses Yoho’s proposal; predicting foreign producers won’t unilaterally end their government subsidies in the hope that the U.S. would then end its import restrictions.  Instead, Mr. Pearson calls on the U.S. to unilaterally eliminate its trade defenses and hope foreign competitors will then end their government subsidies.

Apparently in Mr. Pearson’s mind, demonstrated and proven market manipulators such as Brazil, India and Indonesia are more trustworthy to keep their word than the United States.

Speaking of Brazil – “The OPEC of Sugar” and the world’s #1 producer – political turmoil there last week underscores the belief that this South American nation is a tad less trustworthy than Mr. Pearson seems to think.  From a wire report story last week…

“Brazil’s Supreme Court announced that it had opened probes into around 100 top politicians as part of the largest corruption scandal in Brazil’s history. . . . The numbers in Tuesday’s decision were staggering: Investigations have been opened into 24 senators, 39 congressional deputies, eight Cabinet ministers and three governors.”

Under the circumstances, I think we’ll stick with Congressman Yoho’s worldview and Zero-for-Zero strategy.