Charles Payne comments on Canadian Reagan anti-tariff ad

Key Concepts

• Trade Negotiations: Discussions between countries to establish terms for international trade.
• Tariffs: Taxes imposed on imported goods.
• Protectionism: Economic policy of shielding domestic industries from foreign competition through tariffs, quotas, or other restrictions.
• Dumping: The practice of selling goods in a foreign market at a price below their cost of production or below their domestic market price.
• Semiconductors: Electronic components that are essential for modern technology, such as computer chips.
• DRAM (Dynamic Random-Access Memory): A type of semiconductor memory used in computers and other electronic devices.
• Anti-dumping Complaint: A formal complaint filed by a domestic industry alleging that foreign companies are selling goods at unfairly low prices.

Trade Negotiations and Ronald Reagan's Stance on Tariffs

The video discusses President Trump's decision to halt trade negotiations with Canada, which was reportedly influenced by a video highlighting Ronald Reagan's apparent disdain for tariffs. However, the transcript argues that this portrayal is incomplete. While Reagan did express reluctance to impose tariffs, stating he was "loathed to take" such steps, his administration did implement them when necessary to protect American industries from unfair trading practices.

The Semiconductor Trade Dispute with Japan

A key example cited is the trade dispute with Japan in the 1980s concerning semiconductors. Japan was accused of "dumping" chips on the American market, meaning they were selling them at prices below cost, while simultaneously imposing barriers that prevented U.S. chipmakers from selling their products in Japan. This predatory practice severely jeopardized the U.S. semiconductor industry, which at one point held a dominant 70% share of the DRAM market in the 1970s but lost it to Japan.

Reagan's Protectionist Measures and Their Impact

The transcript asserts that Ronald Reagan was not solely a free-trade advocate and resorted to protectionist measures on multiple occasions during his presidency. These included tariffs on various goods such as automobiles, steel, sugar, textiles, machine tools, motorcycles, and lumber. Specifically, the imposition of 100% tariffs on Japanese semiconductor exports, valued at $300 million at the time, is highlighted as a successful intervention. While not an immediate solution, these tariffs contributed to a significant recovery for U.S. chipmakers. After five years, U.S. chipmakers managed to double their market share in Japan to less than 10%.

The Fight Back: Micron and J.R. Simplot

The narrative then shifts to the "fight back" aspect of this trade battle. The transcript points out that in 1983, the CEO of Advanced Micro declared Japan had won the dynamic RAM market, indicating a sense of defeat within the U.S. industry. However, this was not the end of the story. The video introduces J.R. Simplot, an Idaho native and eighth-grade dropout who had previously achieved success in the potato market.

In 1979, two brothers started a DRAM company in Idaho, a challenging endeavor given Japan's dominance. They secured an investment from J.R. Simplot in 1980. Simplot's investment was driven by his vision and expertise in commodity markets. He invested $1 million, while larger U.S. semiconductor companies remained inactive.

The turning point came in June 1985 when Micron filed an anti-dumping complaint. A few months later, Intel and National Semiconductor followed suit. Simplot also actively lobbied President Ronald Reagan. The transcript suggests that these actions were instrumental in the subsequent resurgence of the U.S. semiconductor industry, leading to America's current dominance in the sector.

Conclusion

The video argues that the narrative of Ronald Reagan being solely against tariffs is misleading. His administration employed protectionist policies, including significant tariffs on Japanese semiconductors, to combat unfair trade practices and revive the U.S. semiconductor industry. The story of Micron, J.R. Simplot, and the subsequent anti-dumping complaints demonstrates a proactive effort to fight back against predatory foreign competition, ultimately contributing to the strength of the American semiconductor sector.