Tag Archives: Tariffs

David Stockman on How Trump Could Really Make US Industry Competitive Again

Posted on January 5, 2020 | Leave a comment

Other than some minor regulatory relief, Trump’s policies have hurt more than helped the US economy. From David Stockman at internationalman.com:

International Man: Trump’s America First economic policy seemed to help him win the 2016 election. He promised to renegotiate America’s trade deals and bring jobs back to the United States.

As president, Trump has used tariffs and other protectionist measures to try to reduce the trade deficit.

What do you think of Trump’s trade policies and tariffs?

David Stockman: The trade policies are idiotic. They haven’t improved the trade deficit. And have caused other problems.

We got the numbers in now for 2018 and we had the largest trade deficit in history!

The first point is that his trade policies are not accomplishing anything. In fact, it’s thrown many sectors under the bus. Manufacturers that import components from China are now paying much higher prices because of the tariff charge.

Farmers have gotten thrown under the bus in a major way. The whole agricultural export system that was patiently developed over many, many years has essentially been destroyed through retaliation.

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Dinner in Hanoi, by Jeff Thomas

Posted on October 29, 2019 | Leave a comment

Are Chinese products too cheap or are American products too expensive? From Jeff Thomas at internationalman.com:

“Trump is doing the right thing. Without him, we have no protection against China. China doesn’t only wish to dominate Asia, but the world.”

Here in Hanoi, so said my dinner companion – a major manufacturer and worldwide exporter of steel products.

He, like so many other major Asian producers, sees an opportunity in international trade for all of Asia to capitalize on.

In the Western world, the argument rages as to whether the US tariff war will benefit the US or not.

Of course, those of us who have a libertarian perspective regard all meddling in a free market as counter-productive. Historically, when tariffs are employed, each of the parties involved ultimately becomes a loser. The aggressor suffers as much as the aggressee, as, first, the people of that country must pay more for goods imported, and second, a trade war results in diminished trade overall, hurting both economies.

But there are benefits to be had. The benefits fall to those countries that stayed out of the fray.

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Posted in Business, Foreign Policy, Geopolitics, Governments, History, Labor, Trade

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The China Questions, by the Zman

Posted on August 25, 2019 | Leave a comment

If China is running out of friends in Washington and Europe, how much of an impact will it have on China? From the Zman at theburningplatform.com:

As is always the case in these matters, the Michael Crichton observationabout the media should be kept in mind. The growing rift between China and the United States is a complicated matter by itself. The impact it will have on global trade, the US economy and geopolitics is even more complex. Even people paid to risk real money in these areas don’t have a firm grasp of all the moving pieces. The people posting in the media know even less. Often they know nothing at all.

That does not mean there is nothing we can know. The first question, in any heated trade dispute between two countries, is “who is buying and who is selling?” and the related question is, “What is being traded?” In this regard, trade disputes are not a lot different from disputes between customers and vendors. How they proceed and how the end is entirely controlled by the relationship and the products in question. That determines who has the most leverage in the dispute.

In this case, the relationship is easy to sort. U.S. imports from China totaled $539.5 billion in 2018. U.S. exports were $179.3 billion. That export total is about 7% of all U.S. exports for 2018. Put another way, the U.S. market is about 5% of the Chinese economy, assuming the fake Chinese economic numbers are even close to reality, which is surely not the case. The Chinese market is less than one percent of the U.S. economy in 2018. Imports are about 3% of the U.S. economy.

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Posted in Business, Foreign Policy, Geopolitics, Governments, Technology, Trade

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The “Trade War” Is Over, Trump Just Doesn’t Realize It Yet. By Lance Roberts

Posted on August 20, 2019 | Leave a comment

It’s hard to beat an opponent who’s playing the long game when your time horizon is next year’s election. From Lance Roberts at realinvestmentadvice.com:

On Tuesday, the markets bid higher following a statement from the U.S. Trade Representative’s office that tariffs will commence on September 1st, but that some products will be delayed until December 15th. To wit:

“…some tariffs will take effect on Sept. 1 as planned, ‘certain products are being removed from the tariff list based on health, safety, national security and other factors and will not face additional tariffs of 10 percent. Further, as part of USTR’s public comment and hearing process, it was determined that the tariff should be delayed to December 15 for certain articles.”

The only part the algos heard was “tariffs delayed,” which sent them into stock panic buying mode.

However, stocks crashed again on Wednesday as the yield curve inverted, sending “recession fears”through the markets.

Of course, since President Trump has pegged the success of his Presidency on the rise and fall of the markets, on Wednesday, as “tweets” about a “trade talks continuing” failed to lift the markets, he resorted to more direct measures to manipulate the markets: Via CNBC:

“Trump held the call with J.P. Morgan Chase CEO Jamie Dimon, Bank of America’s Brian Moynihan and Citigroup’s Michael Corbat, according to people with knowledge of the situation.”

This, of course, was reminiscent of the call made by Steve Mnuchin, U.S. Treasury Secretary, during the market rout last December. But most importantly, this is about the upcoming election:

“Trump has been reaching out to corporate leaders this week amid his concerns that a slowing U.S. economy could impact his reelection chances, according to a Thursday piece from the Washington Post.”

Hopefully, he will listen to them.

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Posted in Business, Economy, Foreign Policy, Geopolitics, Governments, Trade, Uncategorized

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Endgame for the Fed? by Ron Paul

Posted on August 12, 2019 | Leave a comment

Is the same end coming for the US dollar that has befallen every other unbacked fiat currency, and by implication does it mean the end of the Fed? From Ron Paul at ronpaulinstitute.org:

The Federal Reserve, responding to concerns about the economy and the stock market, and perhaps to criticisms by President Trump, recently changed course on interest rates by cutting its “benchmark” rate from 2.25 percent to two percent. President Trump responded to the cut in already historically-low rates by attacking the Fed for not committing to future rate cuts.

The Fed’s action is an example of a popular definition of insanity: doing the same action over and over again and expecting different results. After the 2008 market meltdown, the Fed launched an unprecedented policy of near-zero interest rates and “quantitative easing.” Both failed to produce real economic growth. The latest rate cut is unlikely to increase growth or avert a major economic crisis.

It is not a coincidence that the Fed’s rate cut came along with Congress passing a two-year budget deal that increases our already 22 trillion dollars national debt and suspends the debt ceiling. The increase in government debt increases the pressure on the Fed to keep interest rates artificially low so the federal government’s interest payments do not increase to unsustainable levels.

President Trump’s tax and regulatory policies have had some positive effects on economic growth and job creation. However, these gains are going to be short-lived because they cannot offset the damage caused by the explosion in deficit spending and the Federal Reserve’s resulting monetization of the debt. President Trump has also endangered the global economy by imposing tariffs on imports from the US’s largest trading partners including China. This has resulted in a trade war that is hurting export-driven industries such as agriculture.

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Posted in Banking, Business, Debt, Economy, Government, Trade

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“Worst Year Ever”: The Chinese Ban On U.S. Agricultural Products Will Be A Death Blow For Countless U.S. Farms, by Michael Snyder

Posted on August 8, 2019 | Leave a comment

Between the weather and retaliation for Trump’s tariffs, farmers are getting mauled. From Michael Snyder at theeconomicollapseblog.com:

U.S. farmers have never experienced a year quite like this.  During the first half of 2019, endless rain and unprecedented flooding were the major problems.  As a result of the incredibly wet conditions, millions of acres of prime farmland didn’t get planted at all, and tens of millions of other acres are going to yield a lot less than usual.  Even without anything else happening, we were going to see farm bankruptcies soar to absolutely crazy levels, but now the Chinese government is essentially cutting off U.S. agricultural imports.  This will greatly depress the prices that U.S. farmers get for their crops, and so many farmers that were still hoping to squeeze out a profit for this year will be hit with a loss instead.  Ultimately, the truth is that 2019 is going to be a death blow for countless U.S. farmers that were barely hanging on financially after a string of really tough years.  Many will leave the industry entirely and never go back to farming again, and our nation will be worse off because of it.

When the Chinese announced that they were going to completely stop buying U.S. agricultural products, it sent shockwaves across the middle portion of the country.  According to the executive vice president of the American Farm Bureau, our farmers and ranchers will now be facing “just a really tough, tough time”…

“This is a body blow to farmers and ranchers all across the country,” Dale Moore, executive vice president of the American Farm Bureau, told FOX Business. “That’s one of the things that we are feeling the effects of, and this is on top of a year when mother nature has been a terrible business partner in many parts of the country. It’s just a really tough, tough time for farmers and ranchers in this country.”

Shares of industrial, farming, oil and transportation companies have plummeted, a direct result of the increased tensions between the world’s two largest economies.

Of course President Trump is trying to be upbeat and he is promising that the Chinese will not be able to hurt our farmers, but the truth is that they already have.

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Tariffs: A Threat to America’s GDP, by Bob Luddy

Posted on June 5, 2019 | Leave a comment

You don’t make people better off by taking money out of their pockets, which is, like taxes, what tariffs do. From Bob Luddy at spectator.org:

Faraways/Shutterstock.com

Tariffs are a popular remedy to maintain a favorable balance of trade and create domestic jobs. Some believe tariffs will foster a renaissance of American manufacturing, but let’s consider the facts.

America has six million unfilled jobs, with almost every industry desperately trying to hire qualified personnel. Our trade surplus is widening as these trade wars progress, and international relations are very stressed.

Free trade allows buyers and sellers to be winners and facilitates comparative advantage and the division of labor. For example, iPhones are designed and engineered in the United States, manufactured in China, and sold worldwide. China assembles the iPhone, but many countries provide the components, software, and technologies for this amazing computer.

Apple is now enduring tariffs imposed on China and restrictions on the sale of technologies to Chinese companies such as Huawei. Chinese buyers have reduced their purchases of iPhones because of American tariffs. If the U.S. imposes tariffs on the importing of iPhones, it will have a very adverse impact on Apple and its suppliers. More importantly, Americans rely on iPhone technology in every industry to operate their businesses; for example, chefs store their recipes, contact their users, and order food from this small device.

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The Old World is Dying, by Michael Krieger

Posted on May 6, 2019 | Leave a comment

Michael Krieger correctly identifies what will be the defining global issue for at least the next several decades: decentralization versus centralization. From Krieger at libertyblitzkrieg.com:

Yesterday, Trump took to Twitter and unexpectedly threatened to raise tariffs on Chinese goods this coming Friday. This caught most people by surprise given incessant commentary over the past several months about how good trade talks were going and how close both sides were to signing a monumental deal. Although Trump’s tweet led to immediate turmoil in global financial markets, U.S. equities have gone up in a straight line since the market opened and are barely down as I write this. Investors appear to assume this is just theater meant make the U.S. public think he’s being tough, so that when he ultimately signs a largely meaningless sham deal with no teeth he can talk it up and pat himself on the back for being a brilliant negotiator. I’m not convinced this is correct, but it’s what markets seem to be pricing in. Either way, we’ll have answers soon enough.

More importantly, I continue to think the U.S. and China are on a major collision course irrespective of what happens with the trade deal. This charade will likely resolve either with no deal and an immediate dangerous ratcheting up of tensions, or we’ll get a deal so weak and irrelevant it’ll fail to fundamentally alter the U.S.-China economic relationship in any meaningful way, which was supposedly the whole point.

Many people still assume the “trade war” is actually about trade, when in reality it’s about geopolitical power. The Trump administration wants to knock China down a notch and consolidate global hegemony, which is why it’s been pressuring China on a variety of fronts. This pressure will not cease until China either rolls over and becomes a client state of a U.S. unipolar empire, or it fights back. My view is China will fight back.

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Posted in Foreign Policy, Geopolitics, Governments, History, Trade

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18,927 Ways Chinese Exporters Dodge US Tariffs, by Tyler Durden

Posted on October 9, 2018 | 1 comment

The Chinese, a clever people, are figuring out ways around US trade restrictions. Imagine that! From Tyler Durden at zerohedge.com:

Always an industrious people when it comes to maximizing profit and cash flow, especially if it means breaking the law, it didn’t take long for Chinese exporters to find a way to dodge hundreds of billions in US tariffs. Take the case of David Visse, a wood importers from Oregon, who this past June got a call from a supplier asking if he would like to get some Chinese plywood tariff-free. “How would that work”, asked importer David Visse. The products carry an identification code that is checked by U.S. Customs agents.

“Don’t worry about it,” the supplier said. The plywood would be stripped of its Chinese markings, and “we’ll ship it under some other code.”

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Posted in Business, Economy, Foreign Policy, Geopolitics, Governments, Law, Trade

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Protectionism Abroad and Socialism at Home, by Ron Paul

Posted on August 20, 2018 | Leave a comment

Government gets bigger and more powerful at home and abroad. From Ron Paul at ronpaulinstitute.org:

One of the most insidious ways politicians expand government is by creating new programs to “solve” problems created by politicians. For example, government interference in health care increased health care costs, making it difficult or even impossible for many to obtain affordable, quality care. The effects of these prior interventions were used to justify Obamacare.

Now, the failures of Obamacare are being used to justify further government intervention in health care. This does not just include the renewed push for socialized medicine. It also includes supporting new laws mandating price transparency. The lack of transparency in health care pricing is a direct result of government policies encouraging overreliance on third-party payers.

This phenomenon is also observed in foreign policy. American military interventions result in blowback that is used to justify more military intervention. The result is an ever-expanding warfare state and curtailments on our liberty in the name of security.

Another example of this is related to the reaction to President Trump’s tariffs. Many of America’s leading trading partners have imposed “retaliatory” tariffs on US goods. Many of these tariffs target agriculture exports. These tariffs could be devastating for American farmers, since exports compose as much as 20 percent of the average farmer’s income.

President Trump has responded to the hardships imposed on farmers by these retaliatory tariffs with a 12 billion dollars farm bailout program. The program has three elements: direct payments to farmers, use of federal funds to buy surplus crops and distribute them to food banks and nutrition programs, and a new federal effort to promote American agriculture overseas.

This program will not fix the problems caused by Tramp’s tariffs. For one thing, the payments are unlikely to equal the money farmers will lose from this trade war. Also, government marketing programs benefit large agribusiness but do nothing to help small farmers. In fact, by giving another advantage to large agribusiness, the program may make it more difficult for small farmers to compete in the global marketplace.

To continue reading: Protectionism Abroad and Socialism at Home

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