If consumers pay for tariffs, why have them, and why would countries retaliate?
Twitter Conundrum
- Jason Furman @JasonFurman: Puzzle for you: If foreign citizens effectively pay for U.S. tariffs then who will bear the incidence of the foreign tariffs that are levied in retaliation?
- John Carney @Carney: I’ve asked the opposite question of people who say that U.S. citizens pay for U.S. tariffs. Who bears the incidence of retaliatory tariffs? And if U.S. consumers are paying for our tariffs, why would there be retaliatory tariffs?
- John Carney: The related question I’ve asked frequently—and received no satisfactory answers—is why there would be retaliation at all? Why assume retaliation if you think tariffs are mostly a tax on domestic consumers?
Tariffs Are a Tax, But Who Pays?
Tariffs are a tax but who pays the tax? There are only two choices. Importers eat the cost or importers pass the cost on to consumers.
It’s not quite that simple because many forces work to mitigate tariffs. In isolation, Tariffs tend to strengthen the currency of the county that imposes them. And a strengthened dollar acts to mitigate some on the impact on consumers.
Simultaneously, a weakened yuan reduces some of the sting on exporters.
Also, importers seek new suppliers (say Vietnam or Mexico instead of China). The net economic impact on prices, imports, and revenues is not as big as one may initially think.
US Balance of Trade Select Countries Goods only 2024 Q4 Projection
Trump’s tariffs likely reduced the deficit with China at the expense of increasing the deficit elsewhere.
With the dollar strengthening vs most currencies, you have a lot of economic distortions with some industries getting hit harder than others.
In cases where there was a straight shift (say clothes from Vietnam instead of China), not much happened at all because tariffs were successfully avoided.
US Steel Importers Lose
After President Trump’s steel tariffs took effect on June 1, 2018, Mid Continent Steel & Wire reports they lost close to 200 employees while losing more than 70 percent of its sales.
Mid-Continent is the US largest producer of nails. It nearly went under until Trump granted the company a tariff exemption.
Tariffs on products (e.g. steel) are not as easy to avoid as tariffs on countries.
Who Are the Beneficiaries of Export Subsidies?
China is subsidizing exports. The Chinese exporters gain. China made many billionaires in the process.
Who are the Chinese exporters? Typically it is State Owned enterprises (SOEs) and the politically connected.
The US consumer is the beneficiary and the loser is the Chinese consumer. In effect, Chinese consumers subsidize US consumers.
Why Retaliate If US Consumers Gain?
The beneficiaries of tariffs are politically connected US unions at the expense of everyone else.
A steel example shows the complexity of winners and losers.
Industry Winners and Losers on Steel Tariffs
In the US, auto manufacturers, nail manufacturers, and specialty product manufacturers all take a hit on steel tariffs, and they are all against steel tariffs.
But the auto manufacturers do welcome tariffs on cars and trucks.
In contrast to steel where the automakers welcome cheaper steel, both the auto workers and the steel workers support tariffs on cars.
In general, US consumers are losers on tariffs, and Chinese consumers are the losers on export subsidies.
Enter Politics
Both Trump and Biden claim foreigners are stealing our jobs. The unions make the same claim. It makes for great campaign rhetoric.
It’s easy to rally political support for tariffs because consumers believe the lies they are told by unions and politicians pandering to unions.
Conundrum Solved
No one speaks for the little guy anywhere. So it is the little guy who pays the price for export subsidies and tariffs.
To solve the conundrum, all you needed to do was figure out who the winners and losers are on each side of the trade.
The overall impact due to these economic frictions and attempts to avoid them is a net loss despite the fact that there are some individual winners and losers. No one wins trade wars.
Realistically, the only case where tariffs and subsidies make any sense is in cases of genuine national security risks.
The chip sector and AI are possible examples. In contrast, cars and clothes are not security threats.
The best thing that Biden did was woo Taiwan Semiconductor to the US to build plants in Arizona. A China takeover of Taiwan is a genuine national security threat.
If China wants to subsidize US underwear, the correct response is to welcome it. To view things differently is the same as proposing a tax on the sun for free light at the expense of candlemakers.
Trump Claims Tariffs Will Make U.S. Steel Great Again
Yesterday, I commented Trump Claims Tariffs Will Make U.S. Steel Great Again, He’s Very Wrong
As U.S. Steel and Nippon sue the Biden administration, Trump weighs in on the deal.
Since there are vastly more users of steel than there are producers of steel, tariffs on steel are very poor policy.
There is plenty of steel from friendly nations and besides, Nippon wants to expand in the US. We should welcome the deal, but don’t because of politics.
US auto manufacturers, consumers, and specialty manufacturers will all take a hit. Not only will prices rise, the net impact will be an overall loss of jobs.
Standards of living rise when goods become more affordable. There is no benefit to inflation.
Political and Economic Irony
Trump vows to take actions that not only act to strengthen the US dollar but also increase costs.
The US is already the highest cost steel producer in the world. Opposition to the Nippon deal will increase costs. Union pandering in general increases costs.
It’s hard to increase exports when you are the highest cost producer with a strong currency on top of it.
And tariffs will provoke retaliations for political reasons even if the correct economic response is to do nothing.
I discussed this on November 23 in Trump’s Conflicting Economic Agenda and Goals Are Impossible
Trump promises to increase exports, increase tariffs, reduce the trade deficit, reduce the fiscal deficit, reduce inflation, reduce taxes, and increase growth.
Believe what you want, but Trump’s proposed policies won’t come close.
And Revenue?
Finally consider How Much Revenue Can Trump Realistically Bring in From Tariffs?
There are many moving parts to this question including Congress, retaliations, and economic impacts above and beyond tariff collection. I sort through them all.
Please check it out.
The upshot is tariffs and subsidies favor the supply side of the economy immiserating the working and middle classes in the main.
“the fact that there are some individual winners and losers. No one wins”
Very-very out of context quote, but the point stands – there are some winners or there are no winners. Claiming both is a contradiction.
You left off the most important aspect of the conversation Mish. Individuals with higher levels of skill are more valuable in the marketplace, and therefore are more highly compensated, and can maintain a higher standard of living. And just like individuals, entire nations of higher skilled people producing more complex and valuable products, have a higher standard of living. China subsidizes its industry in order to increase its populations skills and the complexity and value of its products. It makes China and the Chinese people wealthier. That China is doing this, and the USA is not, is materially impacting the standard of living of broad swathes of the American public. And this is why Donald Trump is the President, and why Republicans are turning against the free market.
What is the Chinese government subsidizing its industry with? I don’t understand.
The credit of its federal government. In China, an individual does not have to go out and pitch an idea to venture capitalists. In targeted industries, the government will find qualified people, and lend them the money directly to start a business. The business will not have to pay anything back until it is profitable, and the loan will be written down if it never sufficiently is. And the new business will get sales from the government and other industry to ensure its growth. Getting the businesses up and growing, building the manufacturing skills and knowledge, creating internal and external markets, come before initial profitability in China. The profits can come later. This allows companies to start and expand rapidly with a minimum of risk. This is Chinese socialism in action.
Developing economies protect nascent industries with tariffs. USA has decided to stop policing the world’s oceans effectively ending the brief Pax Americana era of globalization and trade. Manufacturing must be repatriated. Incentive to relocate corporate manufacturing from Asia and Europe to USA will be high tariffs and low corporate taxes. If successful USA would enjoy a boom in construction and high wage manufacturing employment. Hopefully we can put aside welfare,gig work, McDonald’s, and Amazon delivery jobs for some useful work.
Mish (or anyone with an accounting degree)
If a US importer decides to eat the cost of the tariff, can they take a tax deduction for that amount? If they can, it might cause an amusing situation where companies could lower their tax liability by paying tariffs and potentially even showing losses (to get tax money back from the government to pay the government tariff).
The tariff costs would prob be included in the inventory cost, which would decrease gross profit – unless the importer raises the sales price to customers.
Trade is a function of currency prices. It’s straightforward.
The whole steel thing to Trump is about how it looks to his base, not whether it benefits his base. That’s the reward they get for interacting with him the way they do. That might be true of Biden’s antics on this, too.
Tariffs are a form of economic war. And both sides lose in any war.
Let’s assume Trump puts a tariff on the 5 mbpd of Canadian heavy oil that we “must” import for our refineries. Our refiners pay the tax and pass it on to the US consumer. Perhaps they will eat a small part of the tax, which reduces their profits. But US consumers will still pay more for gas, diesel etc, so they will cut their consumption of these products. So refiners will reduce their purchase of Canadian oil. And Canadian oil producers will earn less. Lose, lose, lose.
And don’t try to say that Canadian producers will lower their prices because of tariffs. The price of all commodities are set by markets, not by producers (think miners, farmers etc). They have no say in the prices.
I see that Trump just said that we don’t need anything from Canada. Lol! That’s just his typical bluster. All midwest refiners (in red states) are completely reliant on Canadian crude.
America didn’t lose WW1 or WW2. Since then, your point holds.
I agree. Trump is about 80% bluster but that 20% or so is going to matter a lot this time around.
China is not our friend. They want to dominate the global economically, and they want to dominate militarily and in space as well.
Everyone knows Trump is using threats of tariffs against Mexico & Canada to get those countries to control our borders with them better. The reality is that other than sanctions, tariffs are about the only way he’s going to be able to get them to do even half of what Americans expect they do.
China is a completely different matter. As Mish has pointed out many times, America has to become more self-sufficient when it comes to strategic goods production. We’ve got the oil part mostly down. Now’s the time to go after pharma, etc.
Whether you, Mish or anyone else who hates tariffs likes it or not, America is going to go through some amount of decoupling from China over the next 30 years. AI & robotics will ensure this takes place.
The status quo isn’t going to get the job done. It’s that simple, and I feel reasonable certain Trump doesn’t want a trade war with any country. He’s narcissistic but not suicidal. How successful he is with executing on this plan is a long way off and to be determined, but I feel certain he’s ready to be the president that leads us down this different path.
The grand irony about this is if you asked anyone here if they approve of ‘central planning’ they’d most likely scream no unless of course, it’s central planning under Trump then it seems ok…..
Lots of promises were made so let the fun begin….
I have been repeating this over and over; let Trump do whatever he wants. Let him put tariffs on everything. Then we will see how it all works out. It’s a great real world experiment.
I am merely pointing out a few possible glitches that can occur with tariffs. Particularly when it comes to the 8 mbpd of heavy oil that we “must” import. We cannot use the 10 mbpd of light shale oil that we export. And it would take 5-10 years to build new refineries that could use our domestic shale oil.
I am watching how this all plays out with great interest.
I particularly like Trump’s statement that we need “nothing” from Canada. A strange statement from someone who was trying to get more pipelines built to access even more Canadian oil and gas.
We both agree that Trump is great at talking out of both sides of his mouth. I agree 100%. It will be interesting to see how the tariffs play out as well as his drill baby drill promises.
So from what you know, will Trump be able to reverse Biden’s public lands oil exploration ban? I thought that I read that he would be able to reverse it.
There are so many things Biden is doing in his final days to throw Trump’s administration off it’s hard to keep track of.
I expect Trump to reverse as many drilling bans as possible. And I expect it to have zero effect. Because no one wants to drill at $70 oil. If oil rises over $80, then I expect more drilling. But most of it will be in existing areas that are already being drilled. Very little will happen in banned areas, unless prices jump to $90+.
May make sense economically.
But politically, it may be better to start drilling in these currently banned areas, if Trump reverses the bans. Once private companies have invested in these new projects, it makes it more difficult politically and even legally under some circumstances for the federal government to take back that legal right to drill
– That’s just his typical bluster. > Exactly!
Look who’s talking about it however. You, Me, Us and boards like this everywhere. Canada is for sure, as their Leaders are doing the same (as they typically do), and that stirs up the pot some more.
Trump will or maybe won’t, start his negotiations After All the Talk slows down. Then He can see what makes sense, after the bluster dissipates, and He can see what’s in play, if anything.
Off topic question, why is US Treasury buying back long dated bonds in the 1+%-3+% coupon range today? Seems better to have low rates locked in for several years than refinance with short term debt as has been the recent practice.
Is there a deal to be made where we trade 10% tariffs for a guarantee that every state becomes a right-to-work state w/in the next 20 years?
You assume no one is against both. Like who’s “we”.
I haven’t seen discussion on the role of subsidies to industries/producers that in effect eliminate competition. Airbus was subsidized by EU to allow the firm and its industry components to maintain a competitive advantage against Boeing. WTO found Airbus guilt. Tariffs are another form of subsidizing. Countries which have high operating costs -like US – are at disadvantages as the industry/producers can’t offer a competitively price product. Hence, economic/political decisions need to address the imbalance and the impact of jobs which are provided by in country manufacturing and thereby revenues to government through taxes on individuals and profits against lower prices.
A number of international automakers set up plants in US and Mexico to address tariffs as costs to ship and sell to US made the products too expensive for many consumers. Tariffs have a place in global trade and a number of companies use on US make products.
2 year high in prices paid this morning in the econ data. Our inflationary depression continues. A flaming trainwreck. Rates continue to go up. The Fed fucked up. Again.
Wolf’s got a good article outlining the labor markets. Here’s my post that starts with a quote from Wolf. It’s hilarious because it seems like it’s utterly beyond Wolf to admit that the Fed shouldn’t have been lowering rates. My guess is that Wolf will censor it and remove the post. Everything I post nowadays has the awaiting moderation stamp.
“Fed has been backpedaling on rate-cut expectations for two months”
Quick question: If they’ve been backpedaling on rate cut expectations for two months, why did they cut?
The data over the last two months has NOT supported the need for cuts. Sure, the rates cuts have narrowed the real interest rate, but it potentially comes at the expense of allowing the economy to start reheating.
Like most people, I just do see or agree with the Fed’s cuts. It’s as if they’re talking out of both sides of their mouths. Or is this something J Powell just does naturally & without effort / thinking?
Congrats, I see your post was not censored and was actually included by Wolf.
Unfortunately, he used it as an example of posters confidently claiming they know what the Fed should be doing (without any evidence) and then used graphs and economic rationales/theories himself to explain why you – and many such others he’s responded to in the past – didn’t know what you’re talking about – relative to Fed decisions over the past year or so.
I thought Mish might post on this, but if anyone wants to know what other info accompanied this price increase data (since Midnight did not include a link), you can look here: https://www.prnewswire.com/news-releases/services-pmi-at-54-1-december-2024-services-ism-report-on-business-302343431.html
Summary: The ISM Services PMI has been above 50 and indicating expansion for 52 of the last 55 months (both before, during and after inflation was at 9%).
And the price index did accelerate quickly in December compared to November. Many respondents noted the uncertainty and price increases that were occurring due to the “tariff threats from incoming administration”
Defending what?
If status quo was working so great then explain this.
https://www.cfr.org/article/2024-election-numbers
substituting consumer debt for what a Job should provide is not an answer.
Well lets take a look at what is happening. From White house South the President announced that a 20 billion investment from foreign investor will be made in data Centers. Might get doubled if it works out.
Where a person might ask will this get done?
oh in Sunbelt and Mid West.
Funny that, no mention of Blue State Coastal s in the mix.
Now if US C suite bean counters can muster the effort they might ask, Hm… is there something going on here?
If other countries retaliate to Trump tariffs, then their citizens are going to be paying those taxes. Americans will be better off on a relative basis. Winning!
Flagship Ukrainian brigade trained in France goes AWOL
Ukrainian and Western media reports are confirming that members of an elite Ukrainian brigade trained by French forces have deserted in alarming numbers, some before ever stepping foot into battle against Russia.
The 155th “Anne of Kyiv” Mechanized Brigade, currently deployed near Pokrovsk, has been plagued by desertions and lack of properly accounting for troops. Some sources have described “organizational chaos” in the Western-backed initiative.
“About 1,700 soldiers from a Ukrainian unit equipped by the West and trained in France went AWOL before firing a shot,” The Telegraph writes. “At least 50 members of the new 155th mechanized brigade, one of the few to operate the Leopard 2 battle tank, disappeared while elements of the unit were being drilled in France.”
To restart their tourist industry I hear Russia is paying North Koreans to to take their holiday in Russia.
I thought they were paying for them to vacation in Ukraine 😉
Once they get to Russia a special side excursion is given.
“Standards of living rise when goods become more affordable.”
Standards of living also rise when salaries increase faster than inflation. If we only look at the price of goods then deflation looks attractive although to get there we need either everything to be made in China or massive unemployment or maybe even both but prices for goods and especially labor will go down. Frankly I prefer that salaries rise.
How can salaries rise faster than inflation? Logically, this is impossible because it means more money chasing the same amount of goods which the causes bidding wars for those goods which causes prices to rise…
The only way to get standards of living to rise is via increased production (whether that happens via cheaper substitution or some tech leap that produces more with same inputs etc).
Productivity increases is the only way and they have to be pretty widespread. Also much of those increases have to translated into wages. That is a problem especially for the service industry. To sum it up just about every job now is way more productive than before with a corresponding increase in wages. You could say that it could be supplemented by stocks or whatever but ultimately it’s wages that count.
Not sure it’s wages that count as much as its discretionary spending (what’s left over after taxes, shelter, food, clothing etc) that counts.
In other words lots of people would see their standard of living rise if the tax rate went down even if their wages stayed the same.
I meant of course fake home pay. That’s the only one that counts.
Isn’t that why renters, blacks, latinos and others voted for Trump? Because he’ll take care of the ‘little guy?’
In 13 days, the ‘little guy’ is going to be taken to the land of milk and honey, rainbows and unicorns and all problems will be solved.
13 days……
The land of milk and honey can only happen if all of Trumps policies are approved carte blanche. In other words the Senate and Congress have to rubber stamp everything. Anything less than that and Trump can rightly claim that the reason there is no milk and honey is because he wasn’t allowed to implement his policies 🙂
Anyway, Democrats have to block everything, especially things that are good for the country and average citizen. They have to do that because they need the country to be worse in 4 years in order to get elected (the greenest of green liberals would happily block fusion reactors that made free electricity for everyone under Trump just so that they could get back into power in 4 years and then implement it).
The grand irony about this is if you asked anyone here if they approve of ‘central planning’ they’d most likely scream no unless of course, it’s central planning under Trump then it seems ok…..
Lots of promises were made so let the fun begin….
It seems to me that if the democrats want to retake the government in 2028, and if all of these problems will come out of Trump’s proposals, then the democrats might be wise to just get out of Trump’s way and let him self-destruct.
What are you talking about? We were told there weren’t going to be any more elections if Trump won. Democracy is over now, remember?
the problem was the polloi was fed up with the government in power,but the problem is not solved trump is a swamp creature he has already proven that the solution is to replace both parties how?
A big reason why we have and will have stupid tariffs is that they are a great weapon in the hands of corrupt politicians. As proof, if proof is needed, many of the potential losers and winners from tariffs have already rushed to Mar o Lago to get a hearing (and one of the biggest beneficiaries of US tariffs and subsidies on EVs is actually already residing there). It’s very easy to manipulate the underlying legislation of so-called universal tariffs to benefit special interests (or target people you don’t like). Thus, tariffs are not just a tax on US consumers, they are also enablers of massive legalized corruption.
Yes, this is a primary reason the use of tariffs is questionable. And as Mish says, the mental, physical and fiscal efforts to avoid them are not small and are totally wasted.
Of course, targeted policies of any kind (including tariffs) may be warranted for specific reasons. But have you ever looked at the actual US tariff (legal) codes: https://hts.usitc.gov/
That is definitely meant for lawyers and politicians, and not for the little guy
I have looked at actual U.S. tariff legislation. That’s all you need to know that Trump tariffs are going to be hotbed of corruption.
I had the opportunity participate on a Q&A forum with an ex Trump senior staffer dealing with this very topic. Trump does not care or concern himself with the trade conundrum. He largely does not understand the moving parts at the macro level but does understand that tariffs do hurt some US domestic players more than others. What Trump likes about tariffs is that it generates revenue for the Treasury. What he likes even more is that he is the ultimate king maker on tariffs. Congress plays a secondary role. Trump likes that he can negotiate, both with US importers that may be negatively impacted and with the countries themselves. In Trump Land, tariffs are very much like a real estate deal: everything is negotiable and not everyone is going to be a winner. Two final points. Trump is well aware of retaliatory tariffs. To some extent he will throw money at those impacted, especially US agriculture. Biden, it has to be said, found that the very things that Trump likes about Tariffs came to be the very things that Biden came to like too. And so it goes…..
https://www.zerohedge.com/markets/never-accept-nippon-steel-ceo-will-fight-bidens-blocked-us-steel-deal
“Tariffs are a tax but who pays the tax? There are only two choices. Importers eat the cost or importers pass the cost on to consumers.”
This is absolutely NOT TRUE!
The third option is the exporter reduces their profit margin by reducing their export cost. This is an option, Mish, so why not state it?
While I’m not saying this 3rd option has a huge impact, it does occur & would help reduce the potential increase in inflation which is the primary concern of tariffs along with the potential for retaliation.
Tariffs are used all around the world as a fundamental means of leveling the playing field. Most importantly, they’re not going anywhere. So rather than spending so much time railing against them, why not produce the occasional article that attempts to determine what sectors need to be targeted & by how much to mitigate the potential rise in inflation and retaliatory tariffs? That makes a lot more sense.
“Importers eat the cost” is exactly what ‘reduces their profit margin’ is dude.
That’s garbage. If Trump raises tariffs broadly across any number of industries or potentially on everything imported from China, there will be some exporters who reduce their prices in order to maintain market share. Typically, this is going to happen to products where there’s a non-Chinese alternative. I have no idea how broadly this will happen, but rest assured it will happen. My only intention was to point out to Mish that there is a 3rd possibility.
Stop acting like you’re smarter than you think you are. You’re not, DUDE!
He’s right by the way. You are simply separating out whether the exporter or importer (or even manufacturer) eats the cost.
But regardless of which one (exporter, importer, manufacturer) does, there are only 2 overall outcomes as far as final price is concerned (ie what consumers really care about):
1) Prices goes up because of the Tariff and consumers eat the cost passed on to them
2) Prices stay the same and manufacturer/exporter/importer (or some combination of all 3) eat the cost.
The exporter and importer have separate margins and choices to make. Therefore, they both can choose to absorb some portion of the tariff. If an exporter & importer choose to reduce their margins, then this means less of the tariff will be passed onto the consumer.
I really have no idea why this is so hard to understand
“This is an option, Mish, so why not state it?”
TDS?
To be fair to Mish, he did write “it’s not quite that simple” due to all the mitigating factors.
For macroeconomic models, economists generally focus most on the primary effects of changes. That primary impact of a tariff will be increased costs and either the importer (intermediary) or the actual consumer will have to pay that and will likely reduce purchases (unless it’s a drug they can’t live without).
Then there are secondary impacts which are more diffuse so more difficult to model perfectly. Yes, exporting companies will likely lose business from the primary tariff effects. One secondary impact option is for them to reduce prices to maintain some lost sales. That is possible, but it’s also likely they shut down and go to making the next most profitable product/widget. Or for new exporters (in other countries without tariffs) to make up the quantity difference at prices the tariffed exporters can’t compete on.
And then there are the tertiary impacts where workers of the declining or shut-down exporting companies get fired and/or less pay and so get mad. And make political demands for their government to protect them (like US steel workers) which is why it’s probable (but not guaranteed) that retaliatory tariffs arise.
Sorry folks, but there aren’t cut and dry, easy answers to such policy changes. This stuff has to be analyzed to determine all the costs and benefits even if it does not fit your own personal political POV
Sure: diffuse, tertiary impacts, whatever
There WILL be exporters who lower prices in order to maintain marketshare.
Let’s file that under diffuse impacts that are more difficult to model or account for. However, they will exist in the new data post tariffs.
Not all exporters can control prices. Producers of resources have no say in prices. They are price takers who are at the whim of markets.
Farmers, forestry, mining, oil and gas, electricity, etc
We import 8 mbpd of heavy oil because that it what our refineries need. 5 mbpd from Canada. The other 3 from Mexico and Venezuela. And we export 10 mbpd of light shale oil which we cannot use.
Where did I say all exporters have control over their prices?
Oil is different from widgets.
Oil IS different from widgets. Absolutely true.
And we buy “a lot” of oil and other resources from Canada. Not many widgets.
We buy a lot more “widgets” (i.e., all sorts of manufactured goods) from China than we do oil from Canada.
Trump has an enormous amount of leeway when it comes to who, how, when & where he applies tariffs.
I sincerely hope he’s successful. American needs him to be in this regard and in most of the areas that are high priorities for him.
As a side note, my biggest concern is the number of terrorists & the 38K Chinese nationals who are here illegally now. These people can do an enormous amount of damage to us, if tensions rise high enough with China.
I wasn’t talking about China. I was talking about our energy imports from Canada. Mainly because I am heavily invested in Canadian oil stocks. I am not invested in China, so I don’t really care about what tariffs Trump adds to China.
My questions to you are:
Will Trump put tariffs on Canadian oil?
If he does put tariffs on Canadian oil, who will suffer the most; US refiners, US consumers, or Canadian producers? Feel free to break it into percentages. Personally I say the cost to the US consumer would be 80%, US refiner 15%, Canadian producers 5%.
Nippon steel is definitely a blind spot. If China is a state subsidized leviathan, which most definitely has extreme national security consequences, then why not let the Japanese, an ally, invest in US Steel? That’s dumb. When you see dumb, you realize the political cross currents and interests are in conflict, which is also in the end, a sign that policy becomes dumb.
Personally, I think Trump will change his opinion once in office. For him, it’s all about posturing and trying to wheel & deal. I think the Biden administration knows this, so they’ve skuttled the deal for now to spite Trump. Biden certainly has been doing a lot of this as he departs.
I agree. Japan is an ally and if they’re likely to run the operations better with a focus on the long-term, then I think it makes sense.
Time will tell, but I won’t be surprised if Trump takes steps to resurrect the deal. Again, he wants to have his hands in everything.
A much more productive nexus for Trump will be to force China to divest from all sorts of properties & companies they own. I’d start with Smithfield Foods, the largest pork products company in the US which a Hong Kong company bought in 2013.
If China wants to subsidize underwear, I say we should all go commando.