Does Dumb on Trade Trump Random Deregulation?

In the grand scheme of things, that is a rhetorical question, of course. It is bad for a rational animal to either act on incorrect principles or to do so without explicit regard to any. Hallucinations -- or blindness? No thanks.

That said, there is an article by NPR titled "Turning Soybeans Into Fuel Is Costing Us Billions," that is at once somewhat amusing and, with some effort, also somewhat instructive. Aside from needing "Regulation Mandating" at the start of the title, the piece offers many interesting tidbits on the byzantine economics of the government-created, artificial market for biodiesel made from soybean oil:

Trump's stand on imports is wrong, and he should let the market decide whether these belong in fuel tanks. (Image via Pixabay.)

The story, however, is more complicated than it seems. For one thing, that boom in Argentine biodiesel exports is over, at least for now. Last summer, the United States accused Argentina of subsidizing its biodiesel producers and "dumping" cheap biodiesel on the world market. In retaliation, the U.S. imposed hefty taxes on all biodiesel from Argentina. Overnight, those imports ceased. Americans now will have to rely on biodiesel produced here in the U.S. — which also is more expensive. (In a way, Argentina was doing the U.S. a favor, helping it satisfy its biodiesel demands more cheaply.) [link omitted]

Note that Trump's general -- but unprincipled -- animus against regulation harms America here. His desire to regulate international trade, which he sees as a zero-sum game, is making an existing regulation he should get rid of more expensive to Americans. At the same time, I disagree with NPR: While calling Argentine subsidies a "favor" is understandable, you could also view this with the same lens as "enabling" our indulgence in environmental regulations, much like an indulgent parent might shield a child from the consequences of bad choices. Considered in this way, blocking these imports -- wrong because international trade shouldn't be interfered with in this way -- has the potentially happy consequence of helping Americans see just how wasteful biodiesel mandates are. Except that with the President's unprincipled approach to deregulation, it is anybody's guess whether he'll work to get renewable fuel standards off the books. I'm betting not.

That said, I note with some amusement that the article teaches that the cost of making this particular biofuel is significantly more expensive than making diesel the old-fashioned way -- even though soy oil is a waste product of the soy meal industry, in which China is a major player.

-- CAV