More Evidence that Tariffs are Working

March 8, 2019

https://www.reuters.com/article/us-trade-emerson/as-trade-wars-rage-emerson-plots-new-u-s-expansion-idUSKCN1QP0IQ

Here’s more evidence that the tariffs on Chinese imports are working.  As reported in the above-linked article, Emerson Electric now plans to move manufacturing back to the U.S.  It’s a complete reversal from their strategy of only ten years ago.

In 2009, the chief executive of Emerson Electric Co. bluntly told investors at a Chicago conference what many of his counterparts at other manufacturing firms would only say privately.  “I’m not going to hire anybody in the United States. I’m moving,” David Farr said as he blasted U.S. taxes and regulations and called it an easy decision to expand in India and China.

A decade later, Farr has made a stunning reversal: Emerson now plans to build at least three new U.S. plants and is already expanding existing domestic operations. Farr saw a new era of U.S. protectionism coming before Trump’s election – and started planning accordingly, he said in an interview with Reuters at the company’s sprawling headquarters near St. Louis, Missouri.

“For the first time now, I’m looking for best-cost U.S. locations” to build factories, he said.

Trump’s election, Farr said, accelerated a political shift against free trade policy that is now transforming many U.S. firms’ domestic investment strategy. Protectionist policies — especially toward China — are now a rare point on which many Democrats and Trump agree, relegating formerly bold Republican free traders to the sidelines.

The article goes on to provide some details of Emerson’s plans, particularly to spend $425 million on capital projects in the U.S., including $250 million for new manufacturing facilities.

And it’s not just Emerson:

Farr’s new take on U.S. investment reflects a broader questioning of overseas expansions, especially in China, for both political and operational reasons. A survey of top managers at 500 U.S. companies conducted in December by investment bank UBS AG found that 31 percent have moved or are moving production facilities to avoid tariffs. Fifty-eight percent said they expect tariffs to “have a positive impact on domestic investment.”

It’s not just the tariffs.  Farr seems to be disillusioned with manufacturing in China.

Forces beyond politics are pushing manufacturers like Emerson to reconsider investments in China, including rising labor and logistics costs there …

… Emerson’s renewed commitment to U.S. manufacturing is also part of a larger move by global manufacturers to produce more goods in the regions where they are consumed to save on transportation costs.

I believe there are other factors at work here too.  The domestic Chinese economy is flattening out at a far lower level than CEOs expected.  They dreamt of a nation of more than a billion people becoming western-style consumers in the mold of Americans, making China a market four times the size of America.  It hasn’t happened because gross overpopulation in China strangles their per capita consumption.  They built a lot of capacity in China to serve a market that never materialized – capacity that was then dependent on exports to make it profitable.  Along with higher wages and high shipping costs, Trump’s tariffs have eroded their profits even further.  Supplying the American market from China no longer makes sense.

This story, and the one I posted about yesterday – about BMW putting on hold its plans to export EV’s from China – are just tiny examples of the effect that tariffs have in driving manufacturing back to the U.S.  Just imagine the potential as this begins to snowball.  Imagine how many factories would have to be built and how many people would have to be hired to staff them to make all of the products you see on the shelves at the box stores today that are all sourced from China.  There would be an economic explosion in this country the likes of which haven’t been seen since the end of World War II.

The tide is turning against the failed concepts of free trade and globalization.  It’s crumbling right before our eyes.  The very fact that Reuters, a pro free trade and pro globalization publication until now, saw fit to even publish this information is evidence in itself of changing sentiment.

And kudos to Reuters for pointing out that Republicans were even more guilty than Democrats for pushing the free trade globalization agenda to the detriment of the American people, and that Trump has led the charge against it.  Nice to see that some on both sides of the aisle are getting on the bandwagon.

 

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Auto Tariffs? Bring ’em on!

February 21, 2019

https://www.reuters.com/article/us-usa-trade-autos/automakers-brace-for-u-s-government-report-on-import-tariffs-idUSKCN1Q503G

A Commerce Department report that likely labels auto imports a national security threat which, under Section 232 of the World Trade Organization, would clear the way for Trump to impose tariffs, is now in Trump’s hands.  It could happen at any time now.  It’s impossible to overstate the consequences of such a move.  Without question, it would be the biggest shake-up in global trade since the signing of the Global Agreement on Tariffs and Trade in 1947.

Let’s begin with some perspective.  In 2018, 17.3 million cars and pickup trucks were sold in the U.S.  Of these, only about half of these vehicles were produced domestically.  The rest are imports.  Through November, the annualized value of imported cars in 2018 was approximately $180 billion.  The annualized value of auto parts was approximately $165 billion.  Together, that’s $345 billion worth of imported cars and trucks.  Roughly half of the cost to produce autos and parts is labor – about $172 billion.  If we assume that the average annual wage paid to auto workers is about $50,000, then that’s a total of about 3.5 million jobs that are lost to imports.

With that background, let’s take a look at the above-linked Reuters article about the possibility of Trump imposing a 25% tariffs on imported autos and parts.

The report’s recommendations may bring the global auto industry a step closer to its worst trade nightmare – U.S. tariffs on millions of imported cars and parts of up to 25 percent that many in the industry fear would add thousands of dollars to the cost of vehicles and potentially cost hundreds of thousands of jobs throughout the U.S. economy.

While it may be a “nightmare” for the “global auto industry,” it would be a dream come true for domestic U.S. manufacturers.  A 25% tariff would indeed drive up the cost of imports by thousands of dollars, and could even increase the cost of domestic autos some, depending on the amount of imported parts used in their manufacture.  The net result?  It’s not hard to imagine.  If you were in the market for a new vehicle that currently costs $30,000, which would you buy?  An import that now costs $37,500 or a domestic that now costs maybe $31,000.  It’s a no-brainer, one that would be repeated millions of times per year by new car buyers.  The result is that domestic auto manufacturing would soon double in volume while imports would slow to a trickle.  It’s as simple as that.

So how can one claim that  “hundreds of thousands of jobs” would be lost throughout the U.S. economy?  It’s easy to make that claim as long as you’re talking only about jobs lost and don’t include job gains elsewhere.  Sure, there’d be lots of jobs lost (and a couple hundred thousand is feasible) in the distribution, sales and servicing of imported autos.  But the loss of those jobs would be offset ten-fold or more by gains in the manufacturing, distribution, sales and servicing of domestic autos, not to mention the jobs involved in building the required manufacturing facilities, including buildings and machinery.

And what about this?

Senator Rob Portman, an Ohio Republican, recently introduced legislation that would shift responsibility for Section 232 investigations from Commerce to the U.S. Defense Department. The law containing the provision was passed in 1962 to keep U.S. industries healthy to meet Cold War defense needs.

“There is no way that minivans from Canada are a national security threat,” Portman told reporters.

Portman is wrong on two levels.  First of all, every imported car and truck weakens our manufacturing sector.  That could be critical in a time of war.  Just as important as our victories in the battlefield that ultimately forced the surrender of Germany and Japan in World War II was America’s industrial might that supplied them with weapons and materials.  No other nation on earth could even come close to matching America’s industrial power.  By the end of World War II, America’s shipyards were building complete destroyers, from the keel up, in two days, and Ford’s Willow Run factory in Michigan cranked out B-24 bombers at the rate of one per hour around the clock, or 650 bombers per month.  That didn’t happen by magic.  It took a veritable army of men and women experienced in manufacturing.

Existential wars – wars fought for survival against an enemy bent on conquering you – like our war against the Axis powers in World War II, are wars of attrition.  Who wins and who loses is often determined by who runs out of something first.  It doesn’t have to be ammunition or tanks or ships.  It can be something as simple as boots.  Every nut and bolt counts.  The lack of even one component can grind a war machine to a halt.  Supply chains that depend on overseas suppliers can be quickly and easily disrupted.  In other words, it’s critical to our survival that we maintain a robust manufacturing base, one that can be quickly converted to a wartime footing to supply everything imaginable that we might need.  Anything that degrades that capability is a national security threat.

Secondly, our national debt – now over $22 trillion – has grown to the point at which it threatens the viability of our economy.  Our national debt is directly tied to our trade deficit.  Every dollar drained from our economy by purchases of imports must somehow be put back to work in the economy, and the only mechanism available to do that is through federal deficit spending, financed by the sale of debt to those countries awash in our trade dollars.  Our debt is now growing by nearly a trillion dollars per year, and the $345 billion trade deficit in autos and parts is a major contributor.  The trade deficit is, without question, a national security threat and every imported minivan that Senator Portman references is part of the problem.

Tariffs are the only mechanism at our disposal for restoring a balance of trade – something we haven’t had since 1975 – and applying tariffs on the import of autos and parts is critical if we are to have any hope of achieving that balance.  Tariffs can’t simply be used as leverage to force other nations into trade concessions because they’ll never willingly give up their trade surpluses, regardless of their promises, as we’ve seen time and again for many decades.  We need tariffs now and they need to be permanent.

 


MAGA: Is Trump Becoming a Liability?

January 28, 2019

In the wake of the government shutdown fiasco, you have to begin to wonder whether Trump is becoming a liability to the “Make America Great Again” movement.

It isn’t so much the fact that he reopened the government.  It’s the way he did it.  He caved in.  He totally capitulated to Democrats’ insistence on maintaining an open border, getting absolutely nothing in return.  What should he have done?  First of all, he should have followed through with his threat of declaring a national emergency.  Secondly, he should have withdrawn America from NAFTA and immediately put in place tariffs on all manufactured goods from Mexico, effectively making Mexico pay for the wall like he promised.   Finally, he should have immediately begun deporting the “deferred action” illegal aliens that he offered to protect.

The “deal” to reopen the government for three weeks, supposedly for the purpose of giving Trump and congress time to negotiate a deal on border security, is a farce.  Trump has given up all leverage that he had on the border wall issue and Democrats have made it crystal clear that they’ll never support a dime for securing the border in the only way that it can be secured – by building a barrier.  Either there’ll be an impasse again, or Trump will cave in a 2nd time and try to sell something less than a barrier – maybe more funding for border patrol agents and technology – as a win.

The problem goes far beyond the border wall issue to the half-hearted, inconsistent implementation of virtually every element of his “Make America Great Again” (or “MAGA”) program, a program consisting of three key elements:  a re-balancing of trade to bring manufacturing jobs back to the U.S.; putting an end to rampant, out-of-control immigration – both legal and illegal; and putting an end to the rest of the world behaving like a spoiled, entitled teenager treating the U.S. like a doting parent, providing everything it asks for and getting nothing but scorn in return.

We were promised a wall to virtually put an end to illegal immigration across our southern border, to be paid for by Mexico.  We were promised a prompt withdrawal from NAFTA, and tariffs on products from Mexico, which would have made fulfilling the border wall promise a snap.  We were promised tariffs on Chinese imports and on auto imports.

Soon after the inauguration, Trump invited Red China’s communist dictator to dinner at Mar A Lago and was quickly seduced into holding off on tariffs on China.  Then he caved in to pressure not to withdraw from NAFTA and instead got sucked into a ridiculously drawn out negotiation of a new agreement with Mexico and Canada that may or may not be any improvement at all, and that Congress seems in no hurry to take up.  Goodbye to any chance of getting Mexico to pay for the wall.  He did implement a small ten percent tariff on half of Chinese imports after it became clear that Chairman Xi’s promises were nothing more than a ploy, but caved in on further implementation once the global corporations began their pissing and moaning.  Now we’re sucked into the same kind of trade negotiations that the rest of the world has used for decades to stall America’s efforts to stand up for itself.

Then there’s North Korea.  Give Trump credit for using the toughest sanctions ever to forced them to agree to denuclearization, but Kim’s promises have proven hollow and North Korea seems to be off the hook once again.

I don’t blame Trump alone for all of this.  Everyone around him has been against him from the start – the Democrats who despise him and would never agree to anything he wanted, the media, global corporations, global organizations, his own staff and even members of his own family (globalists like Kushner and Ivanka) who have stonewalled his programs.

All of the backlash from the MAGA initiatives was to be expected.  I predicted as much in Five Short Blasts – a period of inflation caused by significant tariff-induced price increases, but eventually followed by explosive economic growth as manufacturing in America returned.  Trump needed to go all in with his program quickly, enduring withering criticism for a couple of years or so before having the last laugh when GDP began to explode as factories were rebuilt and as the manufacturing sector of the economy exploded.  It would have taken a lot of guts to be almost universally despised in the short term in order to have history remember him as an American hero in the long term.

However, I see a real danger in what’s happening here.  Trump’s incomplete implementation of these policies will yield only the pain without achieving the benefits that would eventually come, and will be deemed complete failures.  They’ll be forever labeled as “Trumpian” policies that no one will ever dare to attempt again.  America will be forever doomed to massive trade deficits and budget deficits, and will eventually collapse under the weight of gross overpopulation and a national debt that the rest of the world can no longer sustain.

It’s not too late for Trump, but it’s getting pretty darn close.  He needs to immediately begin ignoring all of globalist noise and whining and go all in with what he knows needs to be done.  Declare an emergency.  Build the wall.  Withdraw from NAFTA and slap tariffs on Mexico, and tell congress that if they don’t like it, then they can pass the new agreement he negotiated.  Slap tariffs on all Chinese exports and raise them to 25% or higher.  Slap 25% tariffs on all auto imports.  Tell the rest of the world that we’re willing to buy from them only as much as they buy from us.  Sure, the globalist outcry will be almost unbearable, but so what?  Continue down the path you’re on and history will remember you as a complete failure.  So what is there to lose?


“Collusion?” Where was the FBI when we needed them?

January 13, 2019

The news that broke yesterday about the FBI launching a counter-intelligence investigation of President Trump after he fired former FBI director James Comey got me thinking.  Where was the FBI when real collusion took place that has nearly destroyed the United States? Past presidents have colluded with other world leaders for decades to transfer all of the wealth of the United States to the rest of the world through a grand scheme of globalization that transformed America’s economy into a comatose host to be fed upon by hordes of parasitic nations.

Where was the FBI after World War II when Truman colluded with European leaders to establish the World Bank and the International Monetary fund, along with signing the Global Agreement on Tariffs and Trade, unilaterally dismantling America’s protections against predatory trade partners?  Where was the FBI when George H. W. Bush colluded with world leaders to establish the World Trade Organization, surrendering America’s trade policy?    Where was the FBI when Clinton colluded with Mexico to pass NAFTA, or when he colluded with Chinese leaders to grant China “Most Favored Nation” status?  Where was the FBI when Obama colluded with South Korea to worsen our balance of trade with them?  Or when he tried to ramrod the Trans Pacific Partnership deal down our throats?

The result of all of the above is that the United States is a shell of its former self.  We are now nearly $22 trillion in debt to the rest of the world.  Stand on a rooftop and take a look around.  Everything you see – as far as you can see – is owned by foreign governments or corporations.  You think you own your house or, if you have a mortgage and are honest with yourself, that at least your bank owns your house?  Think again.  All such debt has been bundled up and sold to foreign interests.  The same is true of virtually all U.S. property, whether “owned” by private individuals, small companies, corporations, or even your local government, state government or the federal government.  They own us lock, stock and barrel.  And with ownership comes control.  Don’t think that it doesn’t.   Incredibly, past presidents have colluded to make a communist country led by a dictator-for-life the biggest benefactor of all.  How in the hell did all of this happen?  Where was the FBI?

Where was the FBI when these past presidents colluded with the rest of the world to unleash a relentless campaign of fake news and false propaganda to brainwash and assure Americans that all of this was done in their best interest?  “Trade deficits don’t matter.”  “Everyone wins in free trade.”  “We’ll retrain you to get an even better job.”

Where was the FBI while past presidents rendered America subservient to “The New World Order?”  They never uttered a peep of protest.  They never launched an investigation.  Some have likened Trump to the “Manchurian Candidate,” an old movie about a communist attempt to get a brainwashed traitor elected president.  Given all of the above, one has to wonder who was the real “Manchurian Candidate?”  Was it Trump, or was it the string of presidents who preceded him?  Is Trump now faced with fighting an entire system that they’ve created, including the media and all of the government’s bureaucracies?  Is the FBI now part of a “Manchurian” conspiracy?  Should Trump have gone beyond Comey and fired all of the FBI’s senior leadership?

OK, I know, I’ve veered way off the road into the weeds of conspiracy theory.  But seriously, don’t you find it just a wee bit ironic that we finally have a president who is trying to extricate America from domination by world organizations and he finds himself under attack by the same FBI that was perfectly happy with America’s subjugation to foreign interests through the process of “globalization?”


What Trump Needs to Do to Survive

December 17, 2018

Donald Trump was never a very likable person -arrogant, obnoxious, inconsiderate, demeaning, a womanizer and narcissistic.  The list could go on.  He’s not eloquent, not inspiring and not a role model unless, that is, you fancy yourself an entrepreneur like him.  There’s no arguing his success as such.  What he lacked in the aforementioned qualities he made up for with ruthless ambition and a keen sense for business.  So it’s not surprising that his reality TV show, The Aprentice, was a hit at a time when millions of workers were falling victim to globalization and were left with few options but to try their hands as entrepreneurs.  Even if you didn’t like Trump, it was entertaining to watch contestants get a heavy dose of reality about what it took to make it as a businessperson.

But Trump as president?  I scoffed at the idea.  No way could such an unlikable person get enough people to vote for him.  I never would have.  When he announced his candidacy, I just assumed that a businessman like him would, of course, be another globalist.  People often said that we needed a businessman to run the government more like a business.  I always replied that what would really happen is that the government would be run for the benefit of business, to the detriment of everyone else.  But he got my attention when he started talking about “making America great again” and what that meant – tearing up bad trade deals, bringing jobs back home and reining in out-of-control immigration – especially illegal immigration.  These were all the things I’d been writing about for years.

So I turned a blind eye to all of his onerous qualities and took a chance.  Why not?  It wasn’t as though I hadn’t voted for populist losers before.  To my amazement, the “silent majority,” who’d been getting their asses kicked by globalization for decades, had had enough of it and voted for him too.  Like me, they were willing to overlook his many flaws and take a chance.  It’s not as though we didn’t know what we were getting.  The Access Hollywood tape had long since been made public.  News about his affairs with “Stormy” McDaniels and Karen McDougall had already come out.

I’ve been pleased with the results – with his policy decisions – but not ecstatic.  He’s been tough on illegal immigration, but where’s the badly-needed border wall?  Making Mexico pay for it would have been easy.  Just tear up NAFTA and slap tariffs on Mexican imports.  Instead, he became mired in a year-long renegotiation of a trade deal with Mexico, which still isn’t signed and is questionable as to whether or not it represents any improvement at all for the U.S.  The tariffs on steel and aluminum were a great first step, followed by the small tariffs on half of Chinese imports.

But now his agenda is stalled, thanks to caving into to the Chinese when they promised reforms at the G20 meeting in Argentina.  We all know how that’ll go.  There’ll be promises from the Chinese that’ll never be kept, but they’ll be enough to win them more concessions from Trump.  The long-talked-about tariffs on auto imports have never happened.  The problem with all of this is that, while what Trump has done so far has been a good start toward an overhaul of trade policy, it hasn’t been enough yet to achieve the desired effect – a migration of manufacturing back to the U.S.  Our trade imbalance is now worse than ever.  Trump has ceded the podium to the hand-wringing globalists who scare the hell out of markets with their daily dire warnings of a trade war or worse.  Now they’re conjuring up images on a new Great Depression, worse they say than 1929.  It’s ridiculous, of course, but it’s having an effect as people turn negative on the economy.  And companies clearly aren’t yet taking this new trade policy seriously, as GM recently announced plans to close plants in the U.S. and move more production to Mexico, and as Boeing just announced that they’re moving some assembly to China.

Given this past week’s news about the conviction of former Trump attorney Michael Cohen on felony charges of campaign finance law violations, it seems inevitable that Trump will face impeachment.  Never mind the fact that the hush money payments were already old news when Trump won the election, indicating that those events weren’t enough to dissuade voters from desperately seeking a change in direction for the country.  Trump won’t stand a chance of re-election with impeachment hanging over his head.  And you can be sure that the House Democrats are smart enough to bring it to a head just as the election draws near.

There’s only one chance for Trump to survive.  The economy has to be going gangbusters when the next election rolls around.  The only way that happens is if he aggressively resumes his implementation of tariffs.  That means that as soon as the 90-day “truce” agreed to at the G20 ends on March 1st, he must immediately raise the tariffs on Chinese imports to 25% as originally promised, and must extend them across the board to all Chinese imports.  Secondly, he needs to immediately implement the long-promised 25% tariffs on all imported autos.  Finally, he must make it clear that the tariffs will remain in place regardless of any promised concessions from China or any auto exporters.  Tariffs cannot be negotiated away.  Lowering the tariffs can only be considered when a balance of trade has been restored, and then only incrementally.  Trump needs to immediately change the conversation, refocusing news coverage on changing trade policy and away from his legal predicaments.  If he does all of this – and the economy is doing great – voters will be willing to overlook an impeachment just as they overlooked his many flaws two years ago.

Anything short of that and Trump will be gone in two years, replaced by globalists who will undo everything he did.  And history will judge his presidency a failure.


October Trade Data Debunks Fake News About Harmful Effects of Tariffs

December 6, 2018

Don’t take my word for it.  Read the report yourself and delve into the details.  Here’s a link to the October trade data, released this morning by the Department of Commerce:  http://www.bea.gov/system/files/2018-12/trad1018.pdf.

We’ve all heard the stories.  The trade war between the U.S. and China is dragging down the global economy.  The manufacturing sector in China is slowing.  Retaliatory tariffs by China have virtually halted soybean exports from the U.S. and soybean prices are down.  Auto exports are in decline.  Tariffs on steel and aluminum are making the U.S. uncompetitive.  The October trade data makes clear that these stories are all a bunch of B.S. – lies spread by free trade globalists in the hope of heading off more and higher tariffs.

Let’s begin with the big picture.  The total trade deficit was only $0.07 billion off from the record set one month earlier.  Here’s the chart:  Balance of Trade.  In terms of the all-important category of manufactured goods, where the jobs are, the trade deficit broke the previous month’s record for the fourth consecutive month, blowing past last month’s record by $1.6 billion to a new record of $73.3 billion.  That’s an annual rate of $880 billion.  Take a look at this chart:  Manf’d Goods Balance of Trade.  If that was a chart of your household spending, you would be in an absolute panic over the deterioration in your finances.

Now, as for those bogus stories about tariffs, let’s dig into the details of the report.  First, there’s the claim about China’s economy being dragged down.  See page 3 of the report.  The goods deficit with China rose to $38.2 billion (expressed in 2012 dollars).  That’s a new record.  If anything, the report understates just how bad the trade picture with China has gotten.  Check out the balance of trade with China in current dollars:  https://www.census.gov/foreign-trade/balance/c5700.html.  The goods deficit with China has absolutely exploded, setting records for the past four consecutive months.  For all the whining you hear from Chinese officials, the truth is that they’re making more of a killing than ever before at the expense of American workers.

What about soybeans?  We’ve all seen the news reports about how much the tariffs have hurt American farmers.  It’s baloney.  Go to page 20 of the October trade report.  Soybean exports, while down a little in October,  year-to-date are running far ahead of the same time last year:  $24.1 billion vs. $19.4 billion in 2017.  The stories talk about how much exports to China have declined.  They don’t mention that the decline has been more than offset by an increase in soybean exports to Europe.  (Europe turned to the U.S. for its soybeans when China shifted its soybean sourcing to Brazil, displacing Europe from their Brazilian source and forcing them to the U.S.)  Given the year-to-date volume of exports, if prices are down now, it’s likely because of a glut in soybeans.

Auto exports?  See page 21.  They were down very slightly in October from September but, year-to-date, are up to $134.1 billion vs. $130.6 billion in 2017.  By the way, as reported on Monday, domestic vehicle sales in November held steady at the very high level of 17.5 million vehicles, debunking the whining by auto manufacturers that sales are in decline.

Steel and aluminum?  Both exports and imports are up.  Over the Thanksgiving holiday, I asked my nephew who works for a steel manufacturer in Indiana how their business is doing.  He reported that they had already blown past the sales record they set in 2017 by a substantial margin.

While the tariffs implemented so far have been too few and too small to have a dramatic impact on manufacturing repatriating to the U.S., there’s some very good news that you don’t hear about.  In October, thanks to the 10% tariff on steel and aluminum and the 10% tariff on $200 billion of Chinese imports, federal revenue from these tariffs was approximately $30 billion, a significant contribution toward reducing the federal budget deficit.  If kept in place, those small tariffs alone would cut the annual budget deficit by $360 billion, or by about a third.  That’s huge, folks!  Just imagine what would happen if Trump applied the tariffs to all Chinese imports, and raises them to 25%, and also applies a 25% tariff to all auto imports.  We’d have our first balanced budget in decades, not to mention companies scrambling to build domestic manufacturing capacity!

So ignore all the doom and gloom and hand-wringing by the free trade globalists.  It’s all a bunch of baloney, meant to scare you and meant to apply political pressure to stop any further tariffs.  If everyone knew the truth, they’d be applauding the Trump administration for its trade policy and would be demanding more and higher tariffs.

 


Red China’s Finance Minister All but Admits U.S. Will Win Trade War

August 24, 2018

https://www.reuters.com/article/us-usa-trade-china-finmin/exclusive-china-to-keep-hitting-back-at-u-s-over-trade-to-boost-government-spending-finance-minister-idUSKCN1L90HF

In the above-linked interview with Reuters yesterday,  Red China’s finance minister, Liu Kun, all but admitted that China is losing the trade war with the U.S., and the losses are expected to worsen.

For now the impact of the China-U.S. “trade frictions” on the Chinese economy has been small, but he is concerned about potential job losses and lost livelihoods …

… the Chinese government will increase its spending to support workers and the unemployed who are hurt by the trade conflict, and also predicted bond issuance by local governments to support infrastructure investment this year will pickup and blow past 1 trillion yuan ($145.48 billion) by the end of the current quarter.

So far, China has either imposed or proposed tariffs on $110 billion of U.S. goods, representing most of its imports of American products. Crude oil and large aircraft are key U.S. goods that are still not targeted for penalties.

“We’re responding in a precise way. Of course, the value of U.S. imports of Chinese goods isn’t the same as the value of Chinese imports of U.S. goods. We’ll take tariff measures in accordance to this situation,” … “When we take measures, we try our hardest not to harm the interests of foreign businesses in China. That’s why our tariff measures are targeted to avoid affecting them as much as we can,”

That’s a rare admission that China is already out of ammo in this war.  Although the U.S. is poised to slap tariffs on at least $200 billion of Chinese imports – still just a fraction of Chinese imports – China has targeted only half that amount because that’s all it imports from the U.S.  In a tit-for-tat trade war, Red China is already out of “tits.”

Some American businesses and industry lobbies, including the U.S. Chamber of Commerce, have criticized U.S. President Donald Trump’s imposition of punitive tariffs on Chinese goods

This statement can’t be allowed to stand without comment.  The “U.S. Chamber of Commerce” is not an “American” lobbyist.  The Chamber of Commerce is a foreign-based organization, established in France, to promote global trade regardless of its negative impact on the United States.  It opposes Trump’s trade policy because global trade will suffer as the U.S. returns to more domestic manufacturing.  The “U.S.” Chamber of Commerce is its U.S.-based branch and every local Chamber of Commerce in the U.S. is dedicated to the mission of the parent organization – promoting global trade regardless of its impact on Americans.

The U.S. tariffs have affected China’s economic growth – albeit modestly – and their impact will become even more pronounced if the trade frictions persist, Liu said.

“From my perspective, I’d pay more attention to the impact that the China-U.S. trade frictions has on jobs in China. After all, some firms will be affected, exports will be reduced and production will be cut,” …

China’s urban survey-based jobless rate rose to 5.1 percent from 4.8 percent in June. The government aims to keep the rate below 5.5 percent this year.  China plans to increase its fiscal spending to support workers or jobless hurt as higher tariffs kick in.  “We will make adequate preparations in terms of fiscal policy, and help unemployed workers find new jobs and ensure their basic social security,” Liu said.

China’s already feeling the pain.  They’re losing this trade war, and it’ll get worse for them.  In the meantime, the U.S. economy has been going gangbusters, led primarily by big gains in manufacturing, and this is only a taste of things to come if Trump continues to use tariffs to re-establish a balance of trade for the U.S.