No Progress on Cutting Trade Deficit

February 15, 2019

Last week, the Commerce Department released the trade data for the month of November.  It was expected that the data for November would be the first to show that the tariffs enacted by Trump are beginning to “bite,” after the data for the previous two months was supposedly skewed by importers loading up in advance of the tariffs.

Didn’t happen.  Although the trade deficit was down slightly, the drop was insignificant.  At $49.3 billion, the overall deficit tracked right in line with previous months.  More importantly, the deficit in the all-important category of manufactured products (where jobs are concentrated) dropped by $4.8 billion to $72.5 billion.  Nice that it dropped, but it’s still the fifth worst deficit ever recorded.  Here’s the chart:  Manf’d Goods Balance of Trade.  The deficit with China fell by only $2.8 billion to $35.4 billion – the fourth worst deficit ever recorded with China.

So far, all of the alarm raised by globalists about harm being done to the global economy has proven to be nothing more than fear-mongering.  The impact of the tariffs – 10% on half of Chinese imports and 10% on steel and aluminum – has been zilch, other than to slightly erode the profit margins of those exporting companies and adding a couple billion dollars per month to federal revenue.  And the whining by American farmers that China has stopped buying?  Exports of “foods, feeds and beverages” is running $9.0 billion ahead of the same time in 2017, led by a 20% increase in soybean exports.

In the meantime, though the economy has been booming since the enactment of the tax cut last year, the effect is beginning to fade, as does the effect of every stimulus plan enacted for decades.  Retail sales fell last month, as did industrial production, led downward by manufacturing, especially by auto production.  It’s no surprise.  Without significant measures aimed at restoring a balance of trade, the economy will be eroded as the trade deficit worsens, regardless of any economic stimuli.

The problem is that, although the tariffs implemented by Trump so far go far beyond what any president in modern times has been willing to do, it hasn’t been enough.  The tariffs are too small and too narrowly focused.  They need to include all imports from China and need to rise to 25%.  And we need the 25% tariff on autos that Trump has long threatened.

The current trade talks with China are a complete waste of time.  When the U.S. agreed to hold off on further tariffs in exchange for such talks, China had already won.  Any deal with China, no matter the terms, is a win for China because it puts them back in the driver’s seat.  All they have to do is make promises – the same thing they’ve always done.  When they fail to meet them, what will the U.S. do?  Engage them in more talks.  Trade deals in general are utterly pointless, since tariffs are the only thing that can influence other nations’ trading behavior in our favor.  It’s extremely disappointing that Trump doesn’t seem to fully grasp this.

Advertisements

Reuters Fumbles Story about Pickups

February 6, 2019

https://www.fidelity.com/news/article/top-news/201902050800RTRSNEWSCOMBINED_L1N1ZW1LR_1

Reuters, a global publication that often passes itself off as the expert on all matters related to trade perhaps figured that it could just pick any pickup truck at random for a story about how American automakers and workers are relying ever more heavily on sales of big pickup trucks.

Mickey McMaster is on his 12th pickup truck.

The 61-year old farm equipment dealer in Decatur, Texas, two weeks ago treated himself to a 2019 GMC Denali for around $69,000 – a reward for long hours at work.

“For me this is the Cadillac of trucks, it’s a real luxury vehicle,” McMaster said. “I’ve worked my way up to afford a truck like this and it shows that I’ve earned it.”

McMaster is the kind of customer General Motors Co ( GM ) is banking on as it plans to add 1,000 jobs at a plant in Flint, Michigan that will build a new generation of its largest pickups.

Just one problem.  The 4-door crew cab Denali that Mr. McMaster bought is built in Mexico, not at GM’s Flint plant.  Though most of GM’s pickups are built at Flint, the biggest and most expensive 4-door crew cab versions (both the GMC Denali and the Chevy Silverado) are built at GM’s plant in Silao, Mexico.  The Dodge Ram pickup trucks referenced later in the article are built at Fiat-Chrysler’s plant in Saltillo, Mexico, though FC recently announced it will move production to its plant in Warren, Michigan.

I wonder if Mr. McMaster even knows that his truck was built in Mexico?  If not, I wonder how he feels now that he does know?  If he was proud of buying American, does he now feel betrayed by GM?

That might be a more interesting story for Reuters to pursue – how Americans who think they are buying American are being duped into buying Mexican imports.

 


California Admits Failure in its Carbon Reduction Efforts

February 5, 2019

https://www.reuters.com/article/us-usa-climatechange-california-insight/a-climate-problem-even-california-cant-fix-tailpipe-pollution-idUSKCN1PQ4MJ

Once in a while I divert my focus from the economic impact of population growth to highlight other impacts, like environmental.  This is one of those times, as the report in the above-linked article is so significant that I can’t let it pass without comment.  The state of California is admitting that its decades-long drive to reduce auto exhaust emissions is a complete failure.

For three decades, California has led the fight to control tailpipe pollution, with countless policies promoting cleaner gasoline, carpooling, public transportation and its signature strategy – the electric vehicle.  Californians now buy more than half of all EVs sold in the United States, and the state’s auto-pollution policies have provided a model being adopted around the world.

Indeed, California’s focus on reducing carbon emissions has been a model for the rest of the world.  In fact, such carbon reduction is the model upon which the Paris Climate Accord, whose stated goal is to reduce greenhouse gas emissions to a level at which sustainable development can continue, is based.  The result?

Tailpipe pollution here is going up, not down, despite billions of dollars spent by one of the most environmentally progressive governments on earth.

“The strategies that we’ve used up until now just haven’t been effective,” Mary Nichols, the head of the California Air Resources Board, told Reuters.

How is this possible – that such measures are having no effect?  The answer is quite simple, and it’s a point I’ve tried to drive home repeatedly.  The planet doesn’t give a damn how much you reduce your carbon emissions.  All it cares about is the total amount of greenhouse gases in the atmosphere.  Population growth is negating any gains in per capita carbon emissions.  What difference does it make if everyone reduces their personal emissions by 50%, let’s say, if the population doubles?  Not one damn bit.

That failure has less to do with energy or environmental policies and more with decades-old urban planning decisions that made California – and especially Los Angeles – a haven for sprawling development of single-family homes and long commutes, according to state officials.

Note the word “development.”  It’s the same word you find in the stated mission of the Paris Climate Accord – sustainable “development.”  It’s a code word for population growth.  “Sprawling development” doesn’t happen without it.  “Sustainable development” doesn’t happen without it.  In fact, “sustainable development” has been the biggest cause of climate change and those who continue to promote it are scamming you into supporting their real agenda – profit growth for global corporations.

The fact is that there is no solution to climate change or any of the other myriad negative consequences of population growth that doesn’t BEGIN with a focus on stablizing the human population.  That’s not to say that we shoudn’t also focus on minimizing our emissions of all kinds – not just greenhouse gases but gaseous, liquid and solid emissions of all kinds.  Nor is “sustainable development” a solution to poverty.  It’s actually making it worse, with over-crowding driving down per capita consumption and, with it, employment.

Of course, there’s no overt mention of “population growth” in this article – just “sprawling development.”  So don’t be surprised if the scam continues, but with a new, additional focus on trying to drive people together into tiny apartments in high-rise housing.  Yeah, that’ll work.  That’s a future we can all really look forward to.