Absolutely Worth It
In yet another escalation of the trade was Trump Administration Goes Ahead With New Tariffs on Chinese Products.
Tariffs on clothing and other imports from China went into effect on Sunday, escalating the trade war in a move expected to squarely hit consumers.
The U.S. tariffs of 15% on tools, apparel items, some footwear and many electronics will be charged on imports valued at $111 billion last year, according to an analysis by The Wall Street Journal. Additional tariffs of 15% on $156 billion of smartphones, laptops, toys, videogames and other products have been postponed until Dec. 15, after the period when goods are typically imported for the holiday season.
Mr. Trump cited the views of economist Peter Morici, who was interviewed Sunday on Fox News and said the tariffs would average Americans “not as much as the critics say” due to shifts in exchange rates and supply chains.
Business groups and others criticized the tariffs as harmful for American companies and consumers.
AFL-CIO President Richard Trumka credited Mr. Trump for “taking on China” but said, “unfortunately, he’s done it the wrong way.”
“To take on China, there has to be a multilateral approach. One country can’t take on China to try to dry up its overcapacity because they just send it through to you in other ways,” Mr. Trumka said an interview on Fox News.
Myron Brilliant, head of international affairs at the U.S. Chamber of Commerce, said that the president was using the wrong tactic to take on unfair Chinese trade practices. “The tariffs—import taxes by any other name—are or will cost every American household between $600 and $1,000 by the end of the year.”
Targeting China
Supply Chain Disruptions
No matter how preposterous one’s view on trade may be, there is always someone who will support it, and then some.
Peter Morici says the tariffs would average Americans “not as much as the critics say” due to shifts in exchange rates and supply chains.
Let’s analyze that in pieces.
- Shifts in exchange rates
- Supply chains
1A: If the shift in exchange rates mitigated the the problem, then the tariffs did not work. We would still import from China. And If the consumer costs are negligible, then why postpone until December tariffs on toys, electronics, etc?
2A: Supply chains moves are very disruptive to US businesses. It is not exactly easy to pack up and go somewhere else. But if exchange rates mitigated the problem the businesses would not chose to relocate.
The irony of the supply chain theory is that businesses do move, at an operational cost, but to other low-cost nations like Vietnam, Singapore, and Taiwan.
Manufacturing did not return to the US which was Trump’s goal.
All Trump did was disrupt supply chains at a cost to both US consumers and US businesses.
Please note that December 15 date in the above chart.
There is only one logical conclusion: Major supply chain disruptions will start soon, if they haven’t already.
What About Farmers?
Lost in all the above analysis is the major impact Trump’s tariffs have had on agriculture exports.
So even if US consumers did not pay the tariffs (they did), US farmers felt the impact of trade war retaliations.
Self-Inflicted Wounds
Please note that Amid Trump Tariffs, Farm Bankruptcies And Suicides Rise
The American Farm Bureau Federation, also known as the Farm Bureau, published a report in July that dove into farm loan delinquencies and bankruptcies based on Federal Deposit Insurance Corporation and U.S. court data.
The information showed that, “the delinquency rates for commercial agricultural loans in both the real estate and non-real estate lending sectors are at a six-year high and … were above the historical average of 2.1%.”
Wisconsin, Kansas and Minnesota led the nation in Chapter 12 filings; bankruptcy filings in Kansas and Minnesota increased so significantly in the past year that they reached the highest levels of the past decade
While Trump’s decision to impose tariffs on China and its subsequent retaliation is not the only reason for the stress farmers are under, it is a self-inflicted wound.
In another report from Newton, his analysis shows that while farm income in 2019 should increase by 10% from 2018, that would put it in the bottom 25% of the past 90 inflation-adjusted years. His analysis also includes direct payments from the Trump Administration’s Market Facilitation Program, and while it is not on the chart, 2018’s was even lower than 2019’s projected result.
A Newsweek article in May detailed a Fox News interview with Patty Edelburg, vice president of the Washington-based National Farmers Union, which represents about 200,000 U.S. farms. In the interview she said, “It has been insane. We’ve had a lot of farmers—a lot more bankruptcies going on, a lot more farmer suicides. These things are highlighting many of the news stories in our local news.”
Soybean Prices
Anti-Suicide Corn Maze
Trump’s Ludicrous Position
Trump’s notion that Trade Wars are Good and Easy to Win is truly ludicrous.
Each escalation made matters worse.
Please recall that Trump made that Tweet on March 18, 2018. That’s 1.5 years ago.
Mike “Mish” Shedlock
Trump’s populist goal of returning manufacturing jobs to the US is obviously rhetorical. Some may return, but not most.
I think most people understand that the types of economic activity the trade war tactics are attempting to push out of China don’t involve the kinds of jobs likely to be done economically by US workers. But that not really the point. We cannot continue to do business with China as long as they continue to steal the IP of US companies.
Let the manufacturing jobs and supply chains flow to Vietnam, Singapore, et al., so long as it isn’t China. China does not innovate, they replicate, and produce cheap goods at slave labor wage rates. That is not what I would consider any sort competitive advantage in comparison to other SE Asian producers.
Trump Says “Tariffs Absolutely Worth It”
Screw this guy, he does not have to try to make ends meet on a disabled vets pension, with zero, one, two percent COLA adjustments while rent has risen 90% in the last 5 years, insurance up hundreds of percent.
I am buying NOTHING not strictly needed to stay alive or keep the car running. I can put off buying nearly everything for at least a couple years. I hope others do the same, send the economy into such a tailspin they might actually sit up and take notice of how mad people are. Unfortunately, a deep recession will also likely get Trump dumped, and right now there is not one democrat running I would vote for, possible exception of Mayor Pete, but, no matter how indignant the left gets or how unfair it is, the nation just is not electing a gay man to the Oval Office.
We are going to be in recession soon anyway, (I say we already are and years from now August 2019 will be pinpointed as the start of it). Not buying because of tariffs will just make it that much worse.
And it is not even just the tariffs on goods imported, it is all the components that will damage corporate profits so they will have to raise prices on everything no matter if any of it or how much of it is imported. So, next year when almost everything is 15-20% more than today I just can’t wait to see how they justify giving people on a fixed income a lousy 2% COLA increase and the only thing I am sure of is that it will not be more than 2%.
Soybean prices were 50% lower in 2006…
This is such a two sided argument and the Big Corporations will win…The technology companies manufacturing in China should be highlighted as they are a major beneficiary of the cheap labor. There are many examples of companies that have had to provide Intellectual Property to the Chinese in order to manufacture over there…can this be considered a cost of doing business?
American workers were victims of Big Corporations looking to earn a profit….by reducing their costs of production…why is no one bitching about all of the technology companies using India or the Philippines for Customer Service?
If you want to try and be a part of this then do not buy products made in China…
Realist wrote “The charity I am involved with has been re-training…”
My state has been over-run by non-profit organizations. The people working in these so called charities make more than many people in the private sector. The charities do not pay a penny in taxes, while they push for more taxes to be paid by others.
In the nearest large city to me, the largest land owner is a college. They pay no taxes. Mom and pop stores are closing, and they aren’t blaming the Chinese or supply chains or Putin or any of the excuses I hear about in the news.
Property taxes keep going up, while the largest property owner (the college) keeps buying more land for itself, which then becomes tax exempt, so the rising cost of running the city gets divided across fewer and fewer mom and pop stores.
The college continues to churn out graduates who get minimum wage jobs. Many struggle under student loans because college tuition skyrocketed. If colleges were doing their job, folks like Realist (at a so called charity) wouldn’t be dodging taxes to do the work the colleges were supposed to do.
Non-profits were a great idea when they first started. But the system has been abused.
One thing that is overlooked is that millions of acres were left unplanted this year due to an extremely cold and wet winter in the Midwest. What was planted is doing poorly in some cases. This one was really bad followed by two other bad but less sever winters.
I have had to re-educate myself many times in my career. I have seen many jobs and careers go down the rat hole with wages and benefits driven down by undocumented immigrants and changing technologies and conditions.
One thing I focused on was getting into a craft where English skills, reading, writing, and communication is prized along with the ability to solve problems technologically. I have never looked back.
Breaking things up with China will require some pain. When the Soviet Union fell and the massive military base economies closed in the US no one wined about it. We all sucked it up knowing a better future of peace MAY be possible.
Trump Derangement Syndrome is a real mental illness in this country. Other presidents talked and acted almost just as stupid at times but the press let it pass. He would do better to keep his tongue on a leash and his fingers off the send button at more times than not.
Agreed.
Shifting away from the lopsided trade systems of the past is going to involve a lot of short term costs. But the long term costs of the status quo (where we all lose our jobs and get buried in debt) are much higher.
Investing in the future means accepting some costs now, in the hope for a better tomorrow. Trump has forced Washington DC to confront the enormous costs of Washington DC’s way of life… and they don’t like it. They complain endlessly.
But I haven’t heard any of these political establishment types explain how their system is going to help the average country bumpkin like myself. All I see from their system is debt and taxes and job losses, with an occasional pointless war mixed in.
Admitting there is a problem is step one, and Trump is forcing the country and the world to admit that ever rising debt is a not a functioning system at all. its stealing from the future. I don’t like Trump’s deficit spending, but Congress writes the budget Trump just signs off on it. The whole political system needs to get their spending under control
The problems were there before Trump, and its high time the political bumpkins accept this and start fixing things.
What bursts the bubble? Creating it. Thank globalism.
Trade with China represents <5% of GDP. If you want bash Trump, why don’t you focus on what matters? For example, the biggest competitive factor for US businesses are stable, low tax rates, and the tax on int’l income that does not apply to many int’l competitors.
https://www.armstrongeconomics.com/markets-by-sector/foreign-exchange/usd/dollar-contagion-trump/
The key to attracting capital is freedom/entrepreneurship and the rule of law. The establishment is destroying both to protect their jobs, perks, and power. The latest example could be coming in the form of the McSally and Schiff Bill, which will make it a felony for a NON-CONTACT (verbal) assault on a public official. As Denninger highlights,
“You merely have to put a public official in a position where they believe you might strike them in any form or fashion, even if said belief is nothing more than your physical crowding leading them to believe you may strike them with, for example, your blunt body (e.g. shoving them with your chest, etc.) Not even an attempt to swing a fist or slap with an open hand is required.” This is a minor misdemeanor now. Not anymore, which is exactly what govt needs to intimidate anyone thinking of standing up to a corrupt, abusive govt.
https://www.lawfareblog.com/proposed-bills-would-help-combat-domestic-terrorism.
China is run under a communist government why trade with them ? So American business can have slave labor wages ?
Karl Denninger came across some information recently, which showed that the push in STEM education was about driving down the wages of people working in those fields by flooding the market with new STEM workers.
They are less effectively “communist” than the US by now. Which is why, as opposed to 50+ years ago, “their” economy is now producing more and more stuff more efficiently than “ours.” And out innovating “us.” Such is the cost of keeping Party members, whether in Moscow or on Wall Street, in ever increasing splendor, despite them not doing anything whatsoever of value in return.
“We” kicked the commies’ rear back in the 50s. With the size of government, monetary system and legal and regulatory intrusiveness which existed back then (hardly perfect, but magnitudes better than now). Return to that, and we’ll kick their rears again. It’s not as if Communist China is some form of economic Nirvana which noone can figure out how to compete against, after all. It’s just another tun-of-the-mill commie country. Problem is just that, by now, once free America is way worse, less free and more intrusive, hence less efficient, than some mere run-of-the-mill commie.
“We” are a dump by now. That’s our problem. Not the rest of the world. And “we” are a dump specifically because of the policies which has enriched darned near all those currently in power and wealth. So those beneficiaries of government and Fed largess, use all the influence they can buy, trying to dream up (more likely, they are simply too dumb to understand what has happened even if they try) one strawman or another, which they can get their captive dupes to blame instead. So far seemingly successfully, unfortunately.
Oh my…
“More Americans are now employed in well-paying manufacturing positions than before the Great Recession. The miracle hasn’t slowed. The latest jobs report continues to show robust manufacturing growth, with manufacturing job creation beating economists’ expectations, adding the most jobs since January.”
Thank you Donald Trump!
China is a horrible place for US consumers to be supporting. They are the number 1 polluter of the Ocean and the air. They are number 1 in the important rare earth minerals because they don’t follow any environmental rules and don’t mind killing a few workers. The people in China are basically oppressed slaves and US companies are exploiting this to use slave labor. As you buy the cheap Chinese goods, just never take the time to see how they were produced. Stay ignorant
Supporting the slave state, will eventually lead to our own enslavement.
As Elon Musk said, “China is the future”.
You sound smarter than Elon Musk!
While I agree supporting less polluting producers than many Chinese ones are a good thing if one can afford it, noone needs Donald Trump for that. Nor anything else, for that matter. Just make a point of buying non Chinese goods (buy Taiwanese or Japanese or Korean if you want to stick it to the Chinese maximally), even if you have to pay a bit more for them. I’d like to say “buy US manufactured goods,” but unless you first verify you are buying from someone either still owned by the original founding family, or by broadly dispersed stockholders; all you’re doing is supporting more of the rot exemplified by “private equity” and other Fed and ambulance chaser fueled pathologies.
Much more important is why the Chinese put up with more pollution than many other peoples. Which is primarily due to them not affording to be as picky as those in richer countries. The US didn’t have any more stringent pollution laws either, back when Americans were no richer than current Chinese. And I don’t recall Washington DC limiting who could drive on what days back then, to reduce pollution. IOW, as the Chinese get richer, they will, like everyone else before them, start to prefer such luxuries as cleaner air and water, over pure efficiency of inherently polluting industries.
Don’t forget that they have murdered over 50 million of their own citizens.
Trump said something important: He wants to order American companies back to America. This means there is a s t e p f o r w a r d in his understanding of the problem. It is not the Chinese, but the behavior of American corporations that are the problem. They have off-shored the equipment and the labor, making huge profits (CEO’s of corporations that were off-shoring were getting 3× the pay increases as comparable executives). If the policy is to stop this, the government has to enact measures which will change the incentives for those companies. Even then, it would take a long time to redevelop the hollowed out manufacturing base.
For those who think agriculture and manufacture are only small components of GDP, try to think of some historical examples of countries that because wealthy without a strong agricultural and manufacturing base.
“Manufacturing did not return to the US which was Trump’s goal.”
Bringing back “manufacturing jobs” is like bringing back subsistence farming jobs.
There’s a word-thinker problem here. In common usage, “manufacturing” does not seem to encompass “building things”. How, exactly, are Amazon, Microsoft, Google, et al not “manufacturers”? These companies certainly build things. Things far larger, more complex, and more valuable than anything Ford or GE built in the 50’s.
So the word, “manufacturing”, seems to encompass only activities that existed in times remembered by the old. Guess what? Jobs have changed. If you don’t include modern jobs when you talk of “jobs”, then you’ll always be confused and confounded.
Generally speaking. Manufacturing jobs, in America, are fairly well paying with benefits and overtime.
That a bloke with only a high school education can qualify to fill.
Much, much better than any obama coffee slinger job.
“Bringing back “manufacturing jobs” is like bringing back subsistence farming jobs”
“That a bloke with only a high school education can qualify to fill.”
A bloke with only a high school diploma will soon be replace by a robot that gets no good pay or benefits. The only reason that i not happening fast enough is because lower labour cost (even lower than automation) is found elsewhere. My advice to the “bloke” is to prepare for more than high school.
AI will replace people with a PhD.
Eventually yes. The reality is there will not be enough jobs for the population.
On the plus side, maybe it won’t be so hard for the Fed to meet it’s 2% inflation target over the next 12 months…?
This is garbage propaganda. The tariff bs is way overblown by all the media including Mish. The Chinese tariffs account for about $200 billion in extra costs in a $20 trillion economy, BFD. Its better to take this medicine now or should we wait until are totally f’d over by China. The Chinese govt is maleovelent who in their right minds would let them continue to engage in nefarious trade practices with us in order to facilitate our demise. What free trade text book is that in??? Its also irrelevant if the jobs don’t come back as Trump promised. You had to know this was pure political BS in order to gain votes. Like Mexico paying for the wall. There are labor shortages to begin with who the hell will fill those jobs. The free market if allowed to function will reshore those jobs possibly with robotics/automation and eliminate the need for low skilled low pay labor. Geez its getting nauseating listening to the chicken littles screaming the world is coming to an end because we are standing up to China.
So why delay the damn tariffs?
Optics
b/c ultimately we want fair trade, not trade war
because business owners would have eaten those costs, no time to hedge against it with contracts already signed.
And why didn’t we do this under the Presidents Bush?
bc Bush is/was a freaking deep state puppet
OK, so you know how to call people names. Question: have you ever had an original thought?
So why is manufacturing and farming contracting right now?
Everything is cyclical. Wait until the first of the year.
200 billion, concentrated in a few sectors…….. Most of the $20billion you are referring to, is services. And most of the remaining, is utilities and oil.
Noone needs to “take this medicine. Just let Americans off the plantation and attempt to become a free country again Then everything will work itself out just fine. That’s what freedom to work things out as they best see fit, without orange haired baboons intervening, have always done for people. And will always do. Noone other than incompetent, connected leeches, benefits from cutting the baboons in on everything. Nor on anything at all, for that matter.
Nefarious trade practices?
You mean producing goods more cheaply?
You mean “subsidizing” cheap goods, that is, using Chinese taxes to gift Americans and still make a profit?
Nefarious trade is just BS.
Half of the products are American companies using Chinese labor, so it is actually nefarious American practices.
Taking advantage of child labor, unsafe working conditions, slave wages, oppressive government rule is not nefarious?
Of course it’s garbage. “free trade” zealots are about to have their pride hurt unless they can manufacture a recession via fear-mongering
So you’re one of those Phil Gramm “mental recession” types? You don’t think there are any ill effects to printing our way out of everything?
The Fed is the market. Without huge intervention, the reintroduction of price discovery would crater stocks, housing, and much more.
“Manufacturing did not return to the US which was Trump’s goal.”
And yet…
He has only added 500k manufacturing jobs. I thought we were gonna get 6 million back. I guess not
500K “manufacturing” jobs, for $500 billion in new debt…… No wonder the dude prepared for the Presidency, by hanging out in bankruptcy courts….
Did you actually read the article you’re referencing, including the date…or just find some random half-assed positive Forbes article?
Pretty sad argument from this article.
Couldn’t find anything more recent than last October? I’m glad you posted that, because I looked through DeVore’s other articles and saw immediately that he’s a rah-rah BLS shill. Everything is unicorns and rainbows!
Ironically, nobody deserves to be unemployed more than those who draw paychecks from legitimizing .gov stats. In a just world, Chuck would be the one standing in a bread line.
2bananaovsky
As Churchill said, you can always count on Americans to do the right thing – after they have tried everything else. So they first tried the Republicans, then the corporate Democrats, then a right-wing populist. Only after they have tried all these things, will they go for a left-wing social democratic approach.