When it comes to trade, Trump is economically stupid, but he isn’t stupid enough to fight everyone one at once.
Thus, a trade-war fearful Trump Puts Off Final Decision on Auto Tariffs for 180 Days.
The Trump administration said Friday it would postpone for six months a final decision on whether to impose broad tariffs on automobile and auto-part imports.
Mr. Trump has repeatedly warned he could slap tariffs on cars produced by major trading partners including the European Union and Japan, citing national-security concerns. The administration has sought to use the pressure from that threat to negotiate bilateral trade agreements.
Major automakers including America’s traditional “Big Three”— Ford Motor Co. , General Motors Co. and Fiat Chrysler Automobiles NV—have complex global supply chains, with parts and assembly conducted in specialized factories in dozens of countries.
The industry would have had relatively little ability to adjust supply chains quickly in response to tariffs, so automakers expect tariffs would lead to sharp price increases. A new 25% tariff could boost the average price of a car sold in the U.S. by $4,400, according to a report from the Center for Automotive Research. The average price of an imported vehicle would rise even more, by about $6,875, the group said.
“The idea that U.S. automakers are threatened by automotive imports is fundamentally flawed and ill-conceived,” said John Bozzella, president of Global Automakers, a trade association representing the industry. “No automaker or auto-parts supplier asked for this ‘protection.’ We are headed down a dangerous and destructive course and strongly urge that the administration not impose tariffs or quotas.”
Bad Idea in General
Tariffs are a bad idea in general. Trump’s proposal was against the wishes of the auto industry Trump allegedly sought to protect.
The idea that car imports are a threat to US national security is best viewed as a lie so obviously bad that it’s a joke. But it was no laughing matter to the Big Three.
EU Negotiations
Trump wants EU trade discussions to include agriculture.
The EU says no. It is a genuine red line.
Under silly EU rules, all it takes is one country to say no. And France will not allow trade talks to include agriculture.
France is the one nation worse than the US with the US sugar, ethanol, and corn lobbies.
Farmers Need Aid
Meanwhile, Trump’s foolish trade war with China has farmers reeling. The failure of Beijing and Washington to settle differences further clouds the outlook for farmers already hit by floods and bad weather.
The Wall Street Journal reports U.S. Farmers, Wanting a Trade Deal, Brace for Aid Package Some Fear Will Fall Short.
Agriculture has been among the U.S. economic sectors hit hardest by the yearlong trade conflict with China. Now that a deal has slipped from the grasp of negotiators, farmers are facing the likelihood that the deepest downturn in the agricultural economy since the 1980s could be prolonged.
The U.S. Department of Agriculture, in the absence of a deal, is cobbling together a farm relief program that will total somewhere between $15 billion and $20 billion, according to Agriculture Secretary Sonny Perdue. This is the second such aid package since the trade fight began.
Many farmers doubt the scale of that aid package is anywhere near sufficient to make up for a trade spat that has shut them out of a lucrative Chinese market of 1.4 billion consumers.
Sagging Ag
Trade, Not Bailouts
“We don’t want bailouts,” said Mel Egolf, a farmer for over 46 years near Churubusco, Ind., whose family farm produces corn, soybeans and dairy. “We want reliable markets where we have a chance to sell our crop abroad.”
Mr. Egolf is grappling with some tough math: He has already purchased his seed and fertilizer to plant his fields for the year, with about 900 of his 1,800 acres devoted to soybeans. He needs to sell his beans at about $8.80 a bushel to break even, he estimates.
The price at the Chicago Board of Trade has plunged to about $8.40, and the price Mr. Egolf can actually get at his local grain elevator is even lower: about $7.83 as of this week. That means with $1 a bushel in aid, he’d have three pennies a bushel left over as income for the year.
Beholden to the Stock Market
Trump doesn’t listen to farmers (nor anyone else), and he never will.
Note that Wisconsin Dairy Farmers Going Bankrupt in Record Numbers, Blame Trump Tariffs.
Trump is beholden to the stock market.
He put off the auto tariffs because the Markets Were Not Exactly Pleased With Trump’s Tariff Man Act.
Lies and Buffoonery
Trump’s trade Tweet’s have been full of lies and buffoonery, so much so that I penned Dear President Trump: Stop the Damn Trade Lies.
On Tuesday, Trump Begged the Fed Start a Currency War With China. Trump specifically wanted the Fed to “pump money and cut rates like China.”
Those actions would likely goose the market, creating an even bigger bubble.
Zero Deals
Trump is so good at making deals that he has produced exactly zero deals.
- China – No
- EU – No
- TPP – Backed Out Without Trying
- Iran – Backed Out Belligerently
- Japan – No
- USMCA – On hold
Steel Tariffs Lifted
In an effort to revive USMCA, Trump lifted steel tariffs.
Despite Trump’s bragging, the end result is plain to see USMCA = NAFTA.
Even this latest cave-in may not revive USMCA. It has to get through the House led by Nancy Pelosi.
“Art of the Deal”
Trump did not even write the Art of the Deal. His ghostwriter says it’s all a myth.
Myths die hard. Partisan believers still think Trump is playing 4D, 5D, or 7D chess with tariffs and these negotiations.
I have a simple question: Where the hell are the results?
Mike “Mish” Shedlock
Mish who ever you are,why don’t you do real and not fake journalism. Your stories that have anything to do with Trump show how fake and bias your information is. What Trump is doing shows how his business skills, people skills, and the love he has for this country, is making this country great again! We finally have someone in the White House who is for the people. And that is what you should research and not information you have no concept of understanding or how the big picture really works for us all.
At this point I’m starting to wonder if the Orange Blunder wakes up every morning & flips a coin to decide whether or not he will tweet about tariffs.
Call “tariffs” what they really are: “import taxes on Americans who want to buy foreign goods”. Where is Grover Norquist now? In the same place as Evangelicals who ignore Trump’s obvious venality due to convenient hypocrisy?
Tariffs are making almost no difference in the purchase of soybeans by China. China is buying less soybeans from everyone combined. China uses soybeans as food for livestock. Because of ASF, they would be buying substantially less anyway and will in the future. For a better understanding of how China is attempting to influence US elections see.
https://www.forbes.com/sites/kenrapoza/2019/05/10/for-american-farmers-chinas-soy-tariffs-are-least-of-their-worries/#4dfc053771f9
The government needs to stop giving out EBT cards and instead buy food from the farmers and bring back soup kitchens. People would eat a lot healthier and the obesity problem would be solved
“When it comes to trade, Trump is economically stupid, but he isn’t stupid enough to fight everyone one at once.”
Such a narrow view: I don’t believe his stupidity is restricted trade.
And come on: stupid enough?
Bigly! Isn’t he essentially fighting everyone now?
He is just making some wait their turn.
King Chaos is both Fearless and Foolhardy.
No fear involved. Auto tariffs are delayed until after Brexit to spare the innocent Brits and punish the Germans. President Trump rewards his friends and crushes his enemies.
The tariff on EU autos must be high enough to cover the cost of US military expenses in Poland. That would end all German exports. Imagine whirled peas and Germany without manufacturing.
So I take it US farmers are his enemies, then?
Iowa and the fertile river valleys are flooded. Farmers lost stored crops because they did not have the foresight to build ‘Indian mounds’ for refuge, equipment, and crop storage. The fault here is with the farmers and God’s weather.
China usually purchases 2/3 of all soybeans traded worldwide to feed their pigs. This year China is not buying as many soybeans because 40% of Chinese pigs were lost to swine flu epidemic. There is no retaliatory tariff, in fact no Chinese tariff on soybeans nor pork this year.
President Trump did not cause the farmers’ problems. In fact he offered to buy the whole crop of soybeans. If you think President Trump caused farm problems then you have been reading the fake news liars, WaPo, NYTimes, LaTimes, HuffPo, etc. Educate yourself.
It’s always the weather. That’s why all those pesky people died in the gulags as well. It’s just so cold in Siberia.
The forecast for next winter is early freeze, extreme cold, heavy snow, and a spring flood. Global warming does that.
The French Revolution was caused by wheat crop failures. The yellow jackets are out because of high gasoline taxes and a potato crop failure.
China will lose 25% of their wheat crop to blight. 40% of their hogs are lost so far. A cut worm blight is working through every other crop. 25% of Chinese jobs will be lost to tariffs. Chinese bank is an oxymoron. China would like to buy US pork, but China is short of dollars to pay for food. China is selling US Treasuries for dollars. If you are in the market for triple rehypothecated non existent copper then China has a deal for you.
If “The French Revolution was caused wheat crop failures,” there’d be a French Revolution every time there was a “wheat crop failure”….
The underlying reason why proper economics is not an empirical science, but rather a deductive philosophy; is that economic effects are not “caused by” anything simple and straight forward enough to be even conceptually measurable. Ditto other social sciences.
Add to that, that there is not even any non arbitrary way to determine what size wheat harvest constitutes a “failure…..”
Chinese are making a prompt transition from 2,200 calories per day to 1,000 calorie per day. That is conceptually measurable. I do not call it a failure, but a win for USA. The prospects for a revolution are not philosophical but for damn sure the emperor for life won’t survive. Trade wars are ugly, brutish, and short, arbitrary you may say.
The emperor has no clothes on underneath the robe. He is better off resigning and getting happy endings in Mar-a-lago
Since national security was the ruse for Trump pulling this stunt, I guess the national security of the country can wait six more months.
@Mish
Under silly EU rules, all it takes is one country to say no
Silly is that you do not understand why that rule is there. That rule was needed to actually create the EU. Americans keep thinking of the EU as a single country now that is silly. As we can see from Brexit, none of the countries joining was ready to lose its sovereignty even if the final outcome means exactly that.
And yes I agree that Trump realized (or someone made him see) that fighting multiple fronts was stupid. Anyway, if I was the EU I would use this time to better prepare for a trade war with the US.
draining the swamp?
“Every revolution evaporates and leaves behind only the slime of a new bureaucracy.”
― Franz Kafka
Tariffs, Shmariffs. At least we’ve ended our middle east wars and Mexico built the wall! No? Well, we got tax cuts for the rich! Mmmm… satisfying.