John Oliver Hilariously Illustrates Trump's Ignorance of International Trade

I find John Oliver to be a hit-or-miss sort of comedian. I usually think he does hilarious work (e.g., voter ID laws, police militarization, Puerto Rican debt). There have also been times where he is completely off-base, such as when he reported on charter schools or net neutrality. I have a background in international trade policy, so when I saw Oliver's latest episode on trade (see below), I was as impressed as I was amused.

I was amused because he is able to deliver it in his usual, hysterical style. I was impressed because he was able to get a lot of facts about trade into a segment that lasted a little over 20 minutes. As Oliver points out, trade is a topic that Trump knows nothing about, and here is why:

1. On the morning of July 24, 2018, Trump tweeted that tariffs were great. Later that day, the Trump administration announced that is going to subsidize the farming industry with $12 billion to cover the damage done by tariffs. 
2. On August 4, Trump tweeted that if other countries cannot negotiate better trade deals, they will pay us in tariffs. What Trump fails to realize is that a tariff is a tax on consumers. Prices increasing on consumer goods and services as a result of tariffs is something we have seen with past tariffs, and is something already apparent with Trump's current trade war.
3. Let's forget for a moment that Trump erroneously thinks the U.S. ran a $817 billion trade deficit last year. Trump thinks that trade deficits are inherently bad, and that's not the case. I covered this in detail back in 2017, but a few main points. One, there is more to the economy than trade balance. Two, we're not throwing away money when we run up a trade deficit because we are consuming goods and services that are improving our quality of life. Three, we have run a trade deficit for over 40 years, and U.S. economic growth has been fine. Finally, if you want to focus on trade deficit, you need to focus on capital and savings, not trade flows.
4. Trump argues that trade with China is the main reason why we have lost so many manufacturing jobs. While some manufacturing jobs went overseas, the reality is that technological development [in the form of automation] is responsible for about 85 percent of the loss in U.S. manufacturing jobs. 
5. Economists do not fully agree on much. However, there is an overwhelming consensus among economists (including Trump's former economic advisor, Gary Cohn) from across the aisle that freer trade creates jobs, lowers production costs, and is a net benefit to both nations. 
6. While tariffs can create some jobs, what tariffs do on net is create greater unemployment because the inputs to create goods has increased as a result of the tariff. In the case of steel, steel tariffs help those who produce steel, but hurts those who use steel to manufacture their goods.
7. Trump does not understand just how complicated supply chains are. It is foolish to think that a product is entirely made in the United States without at least some input having a foreign origin. Trump made a comment that he wants to impose tariffs on Mercedes-Benz and BMW cars from coming in the country because it comes from a German company. It turns out that the largest BMW plant is in Spartanburg County, SC. 
8. The economy is so interconnected that you cannot tinker with one thing without causing a ripple effect. The Federal Reserve recently expressed concern that because many countries use Chinese intermediate inputs, it will increase the cost of doing business and make the U.S. less competitive in the global market. 

We are finding ourselves in a trade war. Trump has escalated the trade war from 18 products at the beginning of this year to 10,000 products. What is scarier is that this zero-sum view of trade is being driven by Trump's top trade advisor, Peter Navarro. If President Trump wants to make America great again, implementing policies that will increase the price of consumer goods, lower employment, agitate diplomatic relations with allies, and potentially create enough uncertainty to trigger a recession is not the way to go about it. Although the past is not a hopeful indicator, I hope that someone can get through to Trump before the trade war gets out of hand and we pay the consequences for Trump's ignorance.