The world is on a huge collision course with China and Trump will be at the helm.
The Tax foundation has an excellent Tariff Tracker report: Tracking the Economic Impact of the Trump-Biden Tariffs.
Key Tariff Findings
- The Trump administration imposed nearly $80 billion worth of new taxes on Americans by levying tariffs on thousands of products valued at approximately $380 billion in 2018 and 2019, amounting to one of the largest tax increases in decades.
- The Biden administration has kept most of the Trump administration tariffs in place, and in May 2024, announced tariff hikes on an additional $18 billion of Chinese goods, including semiconductors and electric vehicles, for an additional tax increase of $3.6 billion.
- We estimate the Trump-Biden tariffs will reduce long-run GDP by 0.2 percent, the capital stock by 0.1 percent, and employment by 142,000 full-time equivalent jobs.
- Before accounting for behavioral effects, the $79 billion in higher tariffs amounts to an average annual tax increase on US households of $625. Based on actual revenue collections data, trade war tariffs have directly increased tax collections by $200 to $300 annually per US household, on average. Both estimates understate the cost to US households because they do not factor in the lost output, lower incomes, and loss in consumer choice the tariffs have caused.
- Candidate Trump has proposed significant tariff hikes as part of his presidential campaign; we estimate that if imposed, his proposed tariff increases would hike taxes by another $524 billion annually and shrink GDP by at least 0.8 percent, the capital stock by 0.7 percent, and employment by 684,000 full-time equivalent jobs. Our estimates do not capture the effects of retaliation, nor the additional harms that would stem from starting a global trade war.
- Academic and governmental studies find the Trump-Biden tariffs have raised prices and reduced output and employment, producing a net negative impact on the US economy.
Economic Effects of Proposed Tariffs
[Regarding point four, the Tax Foundation explains:] The actual cost to households is higher than both the $600 estimate before behavioral effects and the $200 to $300 after, because neither accounts for lower incomes as tariffs shrink output, nor the loss in consumer choice as people switch to alternatives that do not face tariffs.
In 2023, goods imports totaled $3.1 trillion and imports from China totaled $421.4 billion. With no behavioral effects, the universal tariff would raise taxes by $311 billion, while separately lifting the average tariff rate on Chinese goods to 60 percent would raise about $213 billion. Actual revenue raised would be significantly lower because of avoidance and evasion, falling imports, and lower incomes resulting in lower payroll and income tax revenues.
We estimate the proposed tariffs would reduce long-run GDP by 0.8 percent, the capital stock by 0.7 percent, and hours worked by 684,000 full-time equivalent jobs. The reason tariffs have no impact on pre-tax wages in our estimates is that, in the long run, the capital stock shrinks in proportion to the reduction in hours worked, so that the capital-to-labor ratio, and thus the level of wages, remains unchanged.
Tariffs are a Tax – Who Pays the Tax?
A Tax Policy center 2018 article explains What Is A Tariff And Who Pays It?
What is a tariff?
A tariff is a tax on imported goods. Despite what the President says, it is almost always paid directly by the importer (usually a domestic firm), and never by the exporting country. Thus, if the US imposes a tariff on Chinese televisions, the duty is paid to the US Customs and Border Protection Service at the border by a US broker representing a US importer, say, Costco.
The Chinese government pays nothing, just as the US government pays no tax to Canada for that nation’s tariffs on imported dairy products.
Who actually pays the tariff?
OK, so the importer remits the tariff to its nation’s customs service, but who really pays the tax on imported goods? The answer, I am sorry to say is, it depends.
A business will, if it can, pass its higher after-tax costs on to consumers. Thus, the price of Chinese TVs sold in the US may rise rapidly. But the firms selling those TVs eventually will face competition from companies that sell lower-cost TVs made in a third country that is not subject to the import tax. In that case, some of the tax may be paid by the firm’s shareholders in the form of lower profits or by its workers in the form of lower compensation.
The Repercussions
Trump’s 60 percent tax on Chinese imports won’t raise the estimated $213 billion because trade with China could come to a crashing halt.
Also, there is roughly zero chance that China would fail to respond some how with the most likely way buying more European goods, including planes. Boeing, GE, Honeywell, Collins, and Parker Aerospace exports would take a hit.
European exporters and manufacturers would benefit at the expense of US manufacturers.
China would certainly buy less US agricultural goods. But with agricultural products, it’s not easy for other countries to step up production.
In the US, the cost of a new washing machine would likely go up by hundreds of dollars, curtailing demand.
The cost of nearly everything at Walmart with perhaps the exception of food will rise.
Regressive Tax Hikes
PIIE explains Trump’s Tariff Proposals Would Harm Working Americans.
Tariffs have a negative impact on both efficiency and economic growth, but the burden of tariffs is felt differently across the population.
In the second decile, consumers spend 85 percent of their after-tax income, and this fraction declines steadily across the deciles, falling below 35 percent for the top decile. This pattern is at the root of why one might expect tariffs to be regressive taxes: lower-income households consume a much higher share of their income, and tariffs are a tax on consumption. As reviewed in Meng, Russ, and Singh (2023), the literature has consistently found that tariffs are regressive taxes in the United States, with no notable exceptions.
President Biden, despite having ample opportunity, has failed to remove the tariffs on China levied during the Trump presidency. Tensions with China have no doubt made it politically difficult to reverse many of these tariffs, but the tariffs continue to harm American households, although to a far smaller degree than Trump’s proposed tariffs would do, since they have about one-fifth the impact.
Although tariffs are clearly not effective and are even harmful, they are nonetheless perceived favorably by many. The politics therefore make tariffs, an unfortunate policy choice, difficult to undo. And that political economy consideration is yet another reason why the United States should not “double-down” on such a wrong-headed policy in the time ahead. In sum, tariffs should be rejected on both fiscal policy grounds and on traditional trade policy grounds.
Tariffs are a regressive and distortionary source of public finance, and they do not help the groups they are intended to help. They instead introduce new economic inefficiencies and collateral damage, and they make it more difficult to work cooperatively with allies and partners to solve our most vexing international problems.
Avoidance
China will undoubtedly seek avoidance measures to prevent the loss of exports. For starters, China can route goods to other countries to mask their origin.
Also, modifications made in intermediate destinations can change the origin.
Avoidance maneuvers will increase costs but bring in little revenue.
The Futility of the US Trade War With China in Two Pictures
Let’s check in on the progress of the US trade war with China that Trump started and Biden continued.
I discussed avoidance in my May 20, 2024 post The Futility of the US Trade War With China in Two Pictures
Balance of Trade Since 2018
- China from -418 to -279
- Mexico from -78 to -152
- Vietnam from -70 to -105
- Japan from -55 to -71
- Taiwan from -10 to -48
- Mexico+Taiwan+Vietnam from -132 to -305
China Shock II Is Coming, the EU Will Be Hit Hard, Then the US
On May 17, I commented China Shock II Is Coming, the EU Will Be Hit Hard, Then the US
Germany is feeling the pinch of China shock. But the US is on deck too. A global trade war looms.
German exporters are getting crushed by China. The EU as a whole cannot compete. The US is responding with massive tariffs.
China will retaliate against US tariffs. One way might be to stop exports of rare earth minerals used in cell phones, EV, computers, wind turbines, and military guidance systems.
Critical Materials Risk Assessment by the US Department of Energy
Critical Materials diagram of risk vs importance by the Department of Energy.
Please consider a Critical Materials Risk Assessment by the US Department of Energy
The US Department of Energy has placed some of the rare earth minerals we need for weapons systems, windmills, batteries, and aircraft on a critical materials list.
Nearly all of them are mined or refined in China. Yet Biden just blocked production in the US.
The world is on a huge collision course with China and Trump will be at the helm.
Our industries dump rare earth to rivers as hazardous waste, bc they radiate a little. Their life expectancy is billions years,which means their radiation is tiny, negligible, but radical environmental regulations prevent it. Slaves in Africa and China extract and process them.
Under who pays the tax, ok, but who receives the tax? The government does right? When China tariffs everything coming into there country its good but when we do it its bad?
I do not understand that. Although I agree we U.S.consumers pay more. I guess chinese consumers pay more in China?
I think the problem is while we consumers are paying more and the our governmnet is collecting more, what is our governent doing with this additional money?
Well right now looks like handing it to illegal aliens from over 100 countries
How about forcing our government to give that money back to specific designated United States Industries that we designate as crucial for our economic survival?
Steel, Antibiotic ingredients, solar, housing ???????
Complicating matters is what is a U.S. based company anymore? They are mostly all global multinationals that do not even make anything inside the U.S. anymore
I have been globalized to death and am sick of it
We haven’t had free trade ever since the feds stuck their noses in it hundreds of years ago. So let’s dispense with the unrealistic ideological goals, shall we?
We have a real threat in the east that needs to be dealt with. If that means my low quality made-in-china products are going to cost more, I’ll make that sacrifice.
I agree totally. .If the point made by the ones that say no tariffs, their point is China will retaliate and not send rare earth minerals, military guidance(the other shit who cares) that is admitting that we are totally screwed right now
Paying more does not bother me. Thats the short term, what about the long term ?
Why are tariffs bad, but sales taxes good? Both increase prices, reduce purchasing power, and reduce demand.
Who ever said sales taxes are good?
I always here libertarians saying we should get rid of income taxes and replace them with sales taxes. Of course neither is good. But wouldn’t tariffs be a net good if they replaced income taxes?
If I buy the access road that serves a Libertarian’s house and charge him a fee every time he uses it then that is OK because it’s free enterprise but if the county builds the road and taxes the Libertarian with a sales tax then that is theft.
If the county charged a toll instead, I don’t think libertarians would complain (as much), assuming the toll went towards the maintenance of the road. But of course, private ownership is best.
Many view sales taxes as a lesser evil. Libertarians are not opposed to paying for public services per se. They just believe much as possible should be privately provided. And whatever remains should be administrated by the smallest most local government possible.
In their ideal world, most of our taxes or fees would be going to the most local levels of government. The opposite of what’s going on now.
If you are promoting the Free Trade argument then you are beating a dead horse. It’s been tried and the result was a collapse in our industrial production and employment and an overdevelopment of the finance sector that benefitted the few and hurt everyone else. Fortunately, that madness lost its support about eight years ago but not before much damage has been done. I used to believe in Free Trade and then I saw its results and I changed my mind.
IMHO, I don’t think free trade caused the collapse. Back in the late 70s-early 80s it was evident that the US could not compete with emerging low-cost producers once they’d closed the quality gap. Japan and Europe’s small cars were advantageous with the oil crisis, and the US began to respond with smaller models. In its infinite wisdom, the US govt responded with CAFE standards, requiring a massive redesign and retooling of every US model (only a few exceptions) in a very short period of time.Failures were common, made worse by Ralph Nader. High labor costs did the rest.
Back then, the collapse was due to inability to compete effectively. The same problem continues. The US invents great products, and makes much of them offshore to be cost competitive and avoid US regulations, of which there are many.
The US was unable to compete because the CEOs of American companies were no longer founders, engineers and entrepreneurs, but Wall Street appointed wealth strippers.
Agreed. But realize that free trade as practiced has no semblance to “free trade” as defined by libertarians. In order to have truly free trade, government regulation w.r.t. trade would need to be totally abolished. This is very unlikely to happen, making “free trade” only a theoretical ideal.
Many people think “Communism” failed because it was not really applied correctly when the reality is that it is a nice theory but one that has nothing in common with human nature. Since human nature does not fit the theory, they concluded that they have to change human nature to fit the theory instead of changing the theory.
I don’t disagree with either point. It is worth noting however that libertarian dogma is based on human nature unlike communism, socialism, etc.
Perfectly said. I went down that same road, watching the US get screwed for the benefit of global corps and shareholders – all out of ideology.
When out national industries will be completed, or almost completed, they will need gov and Fed protection. If within a few months the ME crisis will be over the economy will thrive for years. If an expanded regional war war our new national industries will have to work overtime. Demand for high skilled and semi high skill labor will rise. High tariffs and higher wages ==> higher taxes will fill the gov coffer.
If DEI continues to dominate industry, the US will slowly sink into oblivion. Competition and merit go hand in hand. The welfare state and DEI go hand in hand. Guess the outcome.
The US has a great many people operating at a 3rd World level but they want 1st World wages.
Correct. The problem isn’t tariffs, its wages. We need some serious wage deflation in the US.
What? What is needed is to put limits on crony capitalism and tax policies encouraging gambling (I deserve lower taxes because I have money, and make money because I have money) instead of actual work, not wage deflation.
What we need is to get rid of crony capitalism altogether. We can start by reducing big government which is crony capitalism’s biggest enabler. That will help reduce taxes too.
I’m not suggesting literally lowering wages. I’m only agreeing with Greg’s comment that we shouldn’t be afraid of a little deflation in wages and all else. It’s really what this over-extended economy has needed for decades.
Even the person that came up with the Sahm indicator isn’t sure this time’s unemployment uptick can be compared to previous ones that portended a recession:
https://finance.yahoo.com/news/jobs-report-could-trigger-closely-watched-recession-indicator-144917689.html
Mish didn’t like the progressive, ex Fed, Claudia Sahm. Now he is using her indicator, but a few months ago it was bs,
What drives the business cycle? Employment? Interest rates? Sales to consumers? Exports? Sun spots?….
exogenous causes.
You mean you don’t know.
It might be that the Sahm rule is actually concurrent, not a predictor, and is merely indicating that a recession is already underway–just not recognized..
I thought we had to have negative GDP for at least a month to show a recession has at least started. We don’t seem to have. We do seem to have low/slow growth however small. Agreed regarding concurrent vs predictive but given the sheer amount of data you can on the economy every week, SOMEONE should be able to accurately say if a recession has started.
We have a slight delay on the trade war tariff implementation:
US says start of new China tariffs will be delayed by at least two weeks (msn.com)
But actual war continues to march onward:
Ismail Haniyeh was the second top figure in an Iran-backed group assassinated in the past day. Tehran has vowed to avenge his death.
Russia launches one of war’s biggest drone attacks on Ukraine | CNN
put more concisely: Tariffs are the opposite of Free Trade. Free Trade benefits everyone in the economy. Tariffs benefit nobody. All they do is reduce the amount of product available.
I agree with the general gist of your comment, but I’d nit pick that tariffs to benefit those businesses that can’t compete. Same with subsidies. This is why inefficient businesses (and thier employees) love tariffs and donate to politicians that like to wield them.
Subsidies, tariffs, taxes, welfare, big government, deficit spending… all have adverse impact.
That’s not a complete picture: Free Trade does NOT benefit incompetent idiots who can not compete. That class of people; the incompetent idiots; do benefit from arbitrary restrictions on their superiors to prevent them from compete with the idiots.
And that class; The incompetent idiots; are also the exact people whom The Fed’s post ’71 policies have singularly benefited. By robbing everyone else, to handthe loot to the idiot classes who are now “the wealthy.” To such a degree, that those guys;the incompetent idiots, are now the only class of people with any wealth left to buy politicians and indoctrinationservices with. Hence: That’s the class of people who now makes all decisions in America: In boardrooms and C-suites, as well as in government.
That’s why we keep getting ever more of nothing but exactly these kinds of exercises in applied unconstrained idiocy, year in year out; administration in, administration out. That is, after all, the only way for The Fed to ensure its coquetry of non threatening, rank imbeciles can continue to preen around being useless; without risk of being ran out of town by superior life forms in the about half an hour that would take in a freeer society.
I like your name.
“The world is on a huge collision course with China and Trump will be at the helm.”
China is the rising empire and the U.S. is the declining empire. The declining empire doesn’t want to give up it’s power.
British general Sir John Glub studied 11 western and middle east empires from 869-1950 and found they had a 207-267 yr duration and 7 stages, the last 2 being decadence and collapse.
Good…so if the US predominance started in ww2, than that would mean we have at least another 100-150 years of continued dominance give or take. Btw, personally, I don’t believe one bit that the US is a declining power. Rather, China is rapidly declining these days….they don’t call it “historic garbage time” over there for no reason!
The problem with averages is they are averages of low to high. There is some probability that the US empire lasts until 2025.
Of coarse the U.S. is a declining power. U.S. predominance began with the founding of the country, not WW2. The empire expanded from the Atlantic coast, across to the Pacific coast and went global from there. China is rising. They just had military a military drill in Belarus. China is expanding it’s influence, outward. General Glub said the last two stages of an empire are decadence and collapse? Do you not see what is in front of your eyes?
“Trump’s 60 percent tax on Chinese imports won’t raise the estimated $213 billion because trade with China could come to a crashing halt.”
That may be the intent… trade with China coming to a crashing halt. A robust Chinese economy helps build a robust Chinese military. It also keeps the billion+ Chinese people happy, as it grows a wealthier society. Empires are clashing.
I read his paper. He cherry-picked the empires and totally ignored the much more numerous flash-in-the-pan empires that lasted not even 100 years, which present-day China can arguably be one of them now. Napoleon’s empire lasted 15 years. The Japanese empire lasted 35 years. On the other hand Rome lasted more than 2100 years.
It would seem though, that Rome was an exception, not the rule. Democrats seem to be intent on handing control over to the WEF, UN, WHO, globalists.
Tariffs is only one aspect of the whole economic policy changes coming with a second Trump administration.
Opening up the economy with deregulation, encouraging Capital flows back to US from where it has been hiding overseas. Making the US a place for Domestic growth to once again be deemed a favorable outcome. These are the kinds of things that will prove out merit over DEI in the workplace that can make America a place of self sufficient prosperity.
Only thing that has protected Biden administration from full impact of its’ inflationary policies has been the US importing so much of what is consumed Domestically. Funded by Credit which has become unpayable.
Taken in isolation Tariffs can be made the Bogeyman by anyone. Taken as one part of a multifaceted approach to getting money recirculating in the pockets of US citizens instead of sitting in a Bank account overseas it is just another tool.
The money supply does not need to be expanded by printing if the velocity of money were to get increased.
No one fears spending if they are confident that another payday is just ahead.
Very informative, thank you.
Deregulation definitely has a much better chance with Trump but the swamp will try to stop it.
In my thoughts the weak money velocity is a primary cause of Domestic Weakness.The never ending Trade deficits sucks the wage earners pockets dry. This has been replaced with consumer debt to compensate.
If money recirculates within a community it multiplies effect. The Baker who hires the Carpenter to fix his Bakery leaking Roof. The Carpenter then goes to the supply House to buy materials. The supply House has a Driver and Truck mechanic to make Transportation of bulk goods possible. The Driver then has some money in pocket and takes his better half out to dinner, the cook at the Diner finds employment, so does the waitress.
This is a closed loop and those Bakers dollars go around, create and multiply community earnings.
What happens when the supply House uses Domestically produced product?
This brings money to another community and gets their cycle of growth going.
However if the supply house is stocked with foreign made goods as most of its inventory, the Baker money ends up creating work in another Nation and the Domestic workers end up having to Borrow rather then earn so as to have material things of Life.
In a Nation like the US there is no reason with all the Bounty that this country has, that there should be the kind of economic hardships going on at this time.
This is purely a Failure of Leadership at the Highest Levels.
The only problem is Trumpanomics lasts only until the Dems take the House, Senate, or Presidency. Or the economy changes so badly that policies get reversed/handouts begin.
There is always the risk of failure when any course of action is chosen.
If however success proves to be the outcome and a noticeable benefit occurs in the average persons lifestyle, odds are they will look for continuance of what is proving out.
What has Trump been saying to Black community? What have you got to lose.
That applies to a much broader electorate at this time.
What does anyone have to lose who can not work enough jobs to make the months Bills.
I do not think other then the Christ doing it anyone believes Trump walks on water. His policies are what matters and they do starkly differ from what is being offered by the other side.
Why have any tariffs and taxes?
Welfare for the incompetent.
Exogenous causes might send the 10Y down. The Dow might wipeout Kamala Harris smile.
We can pretty much depend on politicians to do the wrong thing, no matter the issue. Tariffs are like taxes and welfare; they merely rearrange those who pay and those who benefit, usually with a net-negative result.
Not understanding the underlying problem, or not being able to come up with a solution, or being unwilling to implement solutions that will work, the politician resorts to throwing (your) money at it, or taking money from it (adversely affecting you), or by making laws, because more laws solve every problem.
So, what is the problem in this instance? IMHO, it is the failure to compete effectively. Erecting barriers to trade will NOT make the US compete more effectively. IN fact, the reverse happens. If the tariff increases the price of a Chinese-made mousetrap by $4, you can be darn sure the US-made mousetrap will increase by $4. Either way, you will still pay more than $4 with state taxes. The US mousetrap manufacturer has no incentive to build a better, cheaper mousetrap; BUT CHINA does.
The solution is obvious: stimulate more innovation in the US and lower production cost.; and keep doing it. God help the US when Chinese innovation surpasses it.
One wonders what would happen if 50% of welfare expenditures was switched to improving US competitiveness.
One way of making the US more competitive is to improve the perceived value of Made in the USA. For example, every good sold on the Internet should have place of manufacture listed near the price. Already, it is required on physical items in stores. Ever notice how seldom Amazon shows place of manufacture, or how Chinese companies change their brand/company names to sound western? Make this simple change, and the government/mass media can brainwash the populace to buy Made in the USA. It will likely be more effective than tariffs.
I like that
Bibi in Tehran beefed up Trump.
Trump is sick and tired of the world ripping us off. He was harping on this way before he became our President.
Sorry world but Uncle Same is not going to pick up the tab anymore. Sorry NATO. Sorry Ukraine. Sorry UN. Sorry trading partners. If you want to do business with the US you are going to have to pay your share. It’s about time someone in DC is going to put America First and stop being the world’s sugar daddy.
You are mistaken. Americans PAY the Tariffs, so WE are paying WAY more than our fair share of any burdens you can list out. I simply do not understand how you can have missed this point after reading Mish’s article here, so I am guessing that you did NOT read it.
Guilty as charged! I usually react to the headline then skim/read the article.
The bigger point is that Trump is negotiating with our trading partners. He comes in with a bold position then waits for the world to come knocking with a better offer. Works every time.
Sometimes I have the comment written before Mish even posts the article. You can generally anticipate what he will write about and what his take will be.
Americans pay lots of taxes. Why get all bent out of shape about tariffs when those at least have a corollary benefit of favoring our own manufacturing? Also, because tariffs and sales taxes are paid by ALL denizens of the US, at least we get SOME revenue out of the tens of millions of illegals. We are running an almost $2T deficit, after all.
Tax = Theft
“Why get all bent out of shape about tariffs when those at least have a corollary benefit of favoring our own manufacturing?”
They don’t in any way favor our own manufacturing. Exactly the opposite.
They increase costs for Americans. Including American producers. Who have to pay more for steel, more for parts, more for labor etc…
The only ones benefiting, temporarily, are current OWNERS of uncompetitive has-been industries. As well as; possibly; some small pockets of privileged union laborers, who gets to collect way-above-market wages off the back of all other workers, who are made worse off by the systemic cost increases. Along with the usual coquetry of regime leeching deadweight ambulance chasers and the like, who are suddenly “needed” to “interpret” the various pure-nonsense “laws” their frat bros in Congress made up as additional make-work for them.
What benefit American manufacturing; is lower costs and LESS restrictions. On, among other things, where they can most competitively source inputs. That’s the only thing which would make American manufacturing more competitive. Hence able to grow. Ever more totalitarian government, coming up with ever more costly ways to prop up a few genuinely incompetent; now nominally “owned” by oh-so-connected, at best half literate, idiots in “PE”and the like; zombies shells, does nothing for American manufacturing. Other than relegating them to even further behind their superiors abroad as far as competitiveness is concerned.
That all makes sense if you disregard the last 40 years of history.
Over the past 50 years,exactly as over the 40 preceding, THE overriding trend is for the free trading, predominantly Asian, economies to gain ground. While the only thing the “import substituting” “bring the ‘jobs’ home” backmarkers have to show for their repeated exercise in applied illiteracy, are ever weakening competitiveness, and ever greater levels of poverty.
There is no way around the logical inevitability that increased costs do NOT improve efficiency. Hence do not improve competitiveness, nor wealth. No amount of childbrained attempts at fitting pointless, poorly defined and realistically unmeasurable “empirical” “curves” to make a case for 2+2 being 73, can ever work. Increased efficiency, which is just another way of saying increased wealth, derives from lower costs by simple logical necessity. There is no, even possible, yes but mommy look at Expert Quack on TeeVeeee…..
The argument does change if tariffs are SUBSTITUTED for even less efficient, even straight up illegitimate, forms of raising government revenue. Such as income and sales taxes. Viewed as a means of raising revenue, tariffs; if applied efficiently, evenly and predictably across the board; are both a legitimate and efficient means of raising government revenue. Something no form of fully Stasi dependent activity taxation can ever be. But that’s a whole different debate. May as well be 444’th degree chess, by Trumpo’s non-standards.
“we ” dont pay tariff if we chose to NOT buy crap, unfortunately sometimes there is no-other option , then yes, the little guy consumer gets F’kd
You had me at “Trump will be at the helm”.
Lets goooooooooooo!!!
Trade with China won’t come to a crashing halt. CCP has enough problems internally. The threat of more tariffs puts Jerry the Printer in a sticky wicket. They want to hit ctrl P but with inflationary risk, will have to wait until the recession is on the deck of the boat in Jaws. By then everyone is swimming. A nice swim would be salutary, except there are more sharks in the water.
We’re gonna need a bigger boat. TIme to annex Mexico and Canada.
NAFTA !!!!
Mexico = cheap, hardworking labot
Canada = natural resources and great scenery.
Not NAFTA. Annex! Make North America Great Forever.
Ok. Point taken Mike.
Now can someone come up with a policy and formula that begins to bring at least closer to balance out trade deficit????
We all criticize but know one comes up with any better ideas
Do trade deficits, as large as ours not matter? It has too
So any idea?
This is over-simplistic; however,
Think of it as the USA is borrowing trillions each year to spend on foreign goods. Some of that debt is held by other countries, and when interest rates are low, the cost is minimal. That changes when a) interest rates increase b) the debt matures and rolls over. Adam Smith’s point was we enjoy a better lifestyle with free trade. It is true in the short term. In the long term, the foreign goods wear out, and you still have the debt.
You fix the problem by
1) balancing the budget, and reducing the debt (aka living within your means)
2) making the US more competitive and innovative. Net imports are not necessarily equal to net exports, but if they are not more-or-less balanced over time (in a post industrial/digital era) national wealth will concentrate in the export-producing sectors and the rest will suffer.
#2 is a sore point with Adam Smith. Example, after WW2, US wealth transferred to Europe, then Japan, then China… Those countries benefited, as did the USA. In some cases, their living standard is now higher than the US (eg Switzerland). In most cases, their infrastructure is also in better condition.
The first step would have to be the US relinquishing being the worlds reserve currency. At the same time some other country (or bloc like the EU) would have to take up that position.
Until that first step happens it will be utterly impossible to balance the trade deficit.
Europe doesn’t want the Euro to be the reserve currency. It just wants a strong currency.
That’s easy, just make the stuff here. The problem is, it will be very expensive.
End the absolute idiocy that was and is Fed. Use Gold as currency. Exactly as was the case back when “we” did balance the “trade deficit.”
That will always work. Guaranteed. Sustained deficits would result in no more gold left to import anything with. Problem solved. Simply and efficiently.
The ONLY reason “we” wet away from that, is that it makes it harder for the junta to steal money from productive people and enterprise, in order to hand the loot to the 100% useless imbeciles making up the produce-nothing, comprehend-nothing, be-useful-for-nothing “fiiinance” and “inveeeestment” rackets.
It’s depressing to see how economic idiocies are spreading like a virus in both parties. But Trump always manages to be a big step ahead when it comes to especially dumb proposals.
What do you think Kamala’s reparations will do to the economy?
Tariffs are not inflationary if you replace a cheap supplier for another.
US must give easy access to Indian companies, blocking chinese imports. The first country is a democracy with similar enemies: China, radical muslims. A free trade agreement with United Kingdom would be pretty good also.
—-
Trump Is Heading For Defeat
Without a dramatic change of strategy, this election is now the Democrats’ to lose
KEITH WOODS
JUL 29, 2024
https://keithwoods.pub/p/trump-is-heading-for-defeat
Labor productivity has nothing to do with labor. It was rarely a question of an average worker devising a clever way how to make more widgets per hour. Instead, productivity gains made during the past two centuries were mostly coming from machines producing stuff faster and replacing more and more workers. (Thereby making it appear as if an average worker who could keep their job suddenly became able to produce ten times as before.)
As long as energy and raw materials — needed to build and operate those machines — were cheap, this approach predictably resulted in higher profits, ultimately replacing almost all highly skilled manual labor with automatic production lines and robots.
This trend is about to end though.
https://thehonestsorcerer.substack.com/p/the-productivity-trap
What does this mean for the populace, average IQ 100, and declining?
I don’t think you can separate productivity into two parts, one from machines and the other from people. It makes no sense since it’s the people who operate the machines. A machine is just a tool.
all I see lately is coming INFLATION
1) terrible winds – ie monsoons – another round of 20-30% property insurance increases/cancellations
2) continued stifling of food supplies – empty shelf syndrome coming
3) virtual deflation in basic(corn/soy) food stocks since cost to grow is astronomical
4) more tariffs = china bans things we need and over supplies junk we don’t
5) food/WATER wars(or lack thereof)
coming debasement of fiat $dollar gonna make paupers out of 99%
Boost interest rates NOW!
Hey Jeff Green … like I told you … it’s a race to the bottom … the only way to move inventory is to slash prices…
How’s that ‘used tesla trade’ working out for you?
EV price war angers Thai BYD owners as buyers wait for more cuts – Nikkei Asia
Tom Waits – Step Right Up (1977)
https://www.youtube.com/watch?v=pRHgE2Yi3To
Step Right Up
step right up step right up step right up
everyone’s a winner bargains galore
that’s right you too can be the proud owner
of the quality goes in before the name goes on
one-tenth of a dollar one-tenth of a dollar, we got service after sales
you need perfume? we got perfume, how ’bout an engagement ring?
something for the little lady something for the little lady
something for the little lady hmm
three for a dollar
we got a year-end clearance we got a white sale
and a smoke-damaged furniture you can drive it away today
act now act now and receive as our gift our gift to you
they come in all colors one size fits all
no muss no fuss no spills you’re tired of kitchen drudgery
everything must go going out of business going out of business
going out of business sale
fifty percent off original retail price skip the middle man
don’t settle for less
…
http://www.tomwaits.com/songs/song/322/Step_Right_Up/
Trump can talk tariffs but most of this is about negotiation. Given his track record I’m not too concerned about it. The U.S. does need to start mining our own rare earth products and move away from Chinese drug exports. They are a competitor and will leverage their advantages where they can.
Tariffs are necessary on imports from countries that do not have corporate income taxes similar to ours, but probably also if property taxes, labor laws, legislated wages, and environmental legislation are lower as well. We simply can’t tax the heck out of our own citizens and companies and then allow foreign production to bypass all those hurdles. Everyone participating in the market needs to be on an equal footing.
Then that requires US standards of living to crash to the levels of the rest of the world. Is that really what you want?
From the Article…Academic and governmental studies find the Trump-Biden tariffs have Raised Prices and Reduced Employment, producing a net negative impact on the US economy.
But Tariffs still keep being promoted as a good thing — by most Politicians ?
A good portion of the public likes them too.
The only portion of the public that likes them are those who’s job benefits from the tariffs. For example Auto Workers love tariffs on Chinese EV’s because it’s saving their jobs.
Otherwise, no one likes paying more for something.
“…Otherwise, no one likes paying more for something…”
That’s the crux of it. The average voter doesn’t understand this or simply doesn’t care, which is why a majority supoort them.
https://www.statista.com/statistics/913391/share-americans-support-raising-tariffs-steel-aluminum-party/
That is the standard response because lots of people do not like auto workers and unions even less. It’s a sound bite. When you look into it Free Trade has destroyed whole industries, most not unionized. Look at it as an ecology, a web where if enough nodes are removed, the whole thing unravels. Now if you can profit from this unraveling such as Mitt Romney style VCs, then you are all for it and will strive to put in politicians who support your view and will make laws that not only allow it but make it positively necessary for firms to offshore production and import back just to survive. The move of our industry to China was not fate. It was planned.
What you’re referring to is not free trade. Free trade and overburdening big government are completely incompatible. By definition, free trade would benefit most if not all. Free trade in this country is a pipe dream.
As commenter, KGB implies, let’s look at tax policy holistically not simply the tariff increase. Especially disingenuous calling it the “Trump-Biden Tariffs” … this article feels is quietly supporting the left to me.
I think Trump wants Tariffs as overall tax-neutral (offset by cuts) not as a tax increase. We know Biden/Harris want dozens of different new taxes including tax on unrealized income.
Massive tariffs will be compensated by massive tax cuts. The skilled labor shortage will be addressed with massive government layoffs. The military will come home to deport invaders.
I like your optimism
New Trump Catchphrase: Dig Baby Dig! (ref: Rare Earths after the China embargo)
Trump Digs Coal is my all time favorite Trump slogan.