Trump's tariffs are a solution in search of a problem

We have, by far, the largest economy in the world. In GDP terms, our economy is $7 trillion more than our nearest competitor, China. https://www.investopedia.com/insights/worlds-top-economies/

Prior to the beginning of last week our economy was on fire, and the stock market was setting records nearly every week. Essentially, we have full employment. Wages are up. GDP is up. Our economy has been on a tear for nine years.

So, what seems to be the problem?

To be more specific, what exactly is the problem Trump is trying to solve with his harsh tariffs? Why in the world start a trade war with the second largest economy in the world and the one economy American consumers rely upon most? Why drive up prices? Why place inflationary pressures on our economy and, perhaps, cause a recession?

Sure, there are inequities in the trading relationship between the U.S. and China, but there are always inequities in every trading relationship with every country, even Canada. And, yes, China is stealing a portion of our I.T.

But, Trump's tariffs are like taking a blowtorch to light a birthday candle.

What has been the result? The stock market is the canary in the coal mine. How has it done since Trump's tweet signaling trouble ahead? Large cap stocks, or those in the S&P 500, have now lost $1.1 trillion since Trump surprised markets with his May 5 weekend tweets.

Today the Dow Jones Industrial Average dropped 617.38 points, or 2.4%, to 25,324.99 and posted its worst session since Jan. 3. The S&P 500 also had its worst day since early January, falling 2.4% to 2,811.87. The Nasdaq Composite dropped 3.4% — its biggest one-day loss of the year — to 7,647.02.

Instead of cooperating and fulfilling Trump's fantasies concerning the outcome, China retaliated by raising tariffs on $60 billion in goods. There are no talks scheduled.

Beginning with Monday of last week millions of Americans have lost millions of dollars in retirement savings, and it is likely to get worst.

“I think this is a prelude of things to come,” said Phil Blancato, CEO of Ladenburg Thalmann Asset Management. “We should expect more volatility for the foreseeable future.”

All of this is the responsibility of Donald J. Trump. Thank you, Mr. President. No doubt Vladimir Putin is proud of your performance.

 

This, I think will be the core of Trump's legacy - besides the corruption. In many ways it seems as if the economy is doing fine, but in others it seems as if it is about to fall apart. I also think Trump came to believe his hype, and thinks he knows how to negotiate. I also keep seeing reports that indicate that Mr. Trump thinks that tariffs hurt China, more than American consumers. Either American importers will take the hit, or prices will rise, putting a damper on the economy. In the meantime, Republicans gets to pretend the tax revenues are on the rise.

 

He's working under a fundamental misunderstanding about what trade deficits even are and he's circumventing the Constitution to "solve" them.

 

It is interesting to listen to the alt lefties complain about tariffs and Trumps attempt to change NAFTA. These are the same people who squawk when a company leaves the US and then squawks again when an American made Tee shirt costs them more than $2.00.

 

These alt lefties, are they the ones that live in the heads of conservatives?

 

Putin called up Trump and told him to raise tariffs so that Russia can become a more attractive trading partner compared to the US.

 

Shocker! Retired California "teacher" doesn't appreciate that a nation thrives on self sustaining mfg industries. After failing to impart that knowledge for decades, he reveals that he's never possessed it. Still he's collecting his "teacher's" pension while his governor busily contrives new ways to over tax said industries to help fund his public pension fund which threatens to bankrupt the state. Newsom will keep pushing US mfgrs into the welcoming arms of China, and our brilliant "teacher" will keep bemoaning the taxation of the US goods produced there. Take our jobs, take our social security contributions, take our individual and corp tax revenues, and give us nothing in return.

 

The trade deficit with China is a problem.

 

Trump has been in office for 29 months. In that time he has failed to make one significant trade deal with anybody. So much for the Great Negotiator. What are the chances of deal with China, a foreign adversary?

There are no trade talks scheduled. Trump makes up for this by saying he will meet with his good friend, President Xi, at G20 summit next month. Despite the fact that Trump has a strong tendency to make up very convenient lies, many people believe him.

Xi has not said a thing about significant talks with Trump at the G20. In fact, he hasn't said a thing about meeting Trump. This is all coming from Trump. We have heard that before. In January, he was telling us how great things were going in the trade talks with China.

Trump's fans are gullible enough to swallow that line. What Trump fails to realize is that the vast majority of Americans don't give a hoot about the Chinese economy. We are only concerned about our economy and concern rises when the President does something to harm our economy.

Now he is talking about another $15B of welfare going to farmers on top of the $12B they have already received. What about welfare for the poor housewife who sees prices dramatically increasing on products and food she needs for her family? Also, farmers don't want welfare. They want a level playing field and an end to Trump's trade war with China. That said, Trump has greatly hurt the American farmer with his policies.

 

No, that is another lie Trump has told to his base because they are the only ones who will believe it. Trump is counting on his fans not using their common sense.

Most of his fans know that our economy is much larger than China's. What exactly does that mean? It means that American consumers buy a lot more products than Chinese consumers. It means that it is only logical we will buy more from China than they buy from us. That accounts for the trade deficit.

And the trade deficit is not a problem. It is good thing because it speaks to the overwhelming superiority of the American economy over the Chinese economy. The products our importers buy from China account for the trade deficit and are bought by American consumers in our vibrant economy.

Trump wants you to believe the trade deficit is money we are losing to China. That is a lie. The trade deficit is the product differential between China and the much larger U.S. economy.

Considering the success of our economy and our full employment, I will ask again. What is the problem Trump's tariffs are supposed to be solving? Why is he placing inflationary pressures on our economy? Inflation leads to recession.

 

Trump thinks China pays the tariffs. ""Talks with China continue in a very congenial manner - there is absolutely no need to rush - as Tariffs are NOW being paid to the United States by China," he tweeted Friday.

Tariffs are paid by American importers who buy Chinese goods. The importers have two choices, absorb the expense or pass it along to American consumers. Generally, they do the latter.

 

Yep, he understands tariffs about as well as he understands the trade deficit . . . basically not at all.

 

What does that have to do with anything I said? What does it have to do with Trump's tariffs and its inflationary effect on our economy?

You don't know. Well, that explains it.

 

What in the world are you talking about?

Another Trump fan who can't deal with the problems created by Trump's tariffs.

 

Sandy, you are so lost in Trump hatred you are becoming your own meme.

 

I wondered where you have been Sandy. Isn't it great your Deep State is soon going to have it's day in court? On topic.... Trump's strategy is sound and receives bi-partisan support. You and the deep state just hate Trump.

 

Sandy is apparently very happy with our trade with China, especially since Trump is trying to do something about it. I wonder if she is opposed to Schumer's support for Trump on this.
"
Minority Leader Chuck Schumer, D-N.Y., typically rails against Trump in his daily Senate floor opening remarks. But tariffs are a different story.

“I think if we're really strong and tough against China and the president takes my advice and gets all the other countries involved, we will come to a very good solution very quickly,” Schumer said Tuesday. “I hope he doesn't back out and come up with a weak solution, because China is going to continue to hurt us over and over again.”
https://www.washingtonexaminer.com/news/congress/schumer-backs-trump-on-china-tariffs

 

The answer Sandy is this ....we find other sources. You leave that option out and it is a big one. Actually tariffs can be almost a year off because contracts are solid until then.

 

Yup, and Trump just upped the ante with China.

Trump waited until the markets closed when he declared a “national emergency” to protect U.S. communications networks in a move that gives the federal government broad powers to bar American companies from doing business with certain foreign suppliers, which would include the Chinese firm Huawei.

Amid a deepening trade war with China, Trump declared the emergency in the form of an executive order that says foreign adversaries are exploiting vulnerabilities in U.S. telecommunications technology and services. It points to economic and industrial espionage as areas of particular concern.

It is difficult to imagine that's Trump's E.O. will encourage China to cooperate. Actually, the opposite is expected.

Wall Street is a Republican bastion. They don't want to see a Republican President harming the economy or the stock market. Despite the fact that Trump has been plentiful with his promises while totally lacking in results, Wall Street executives want to believe Trump's promises last week and this week. Although no trade talks are scheduled, Wall Street grasped at a straw when Trump said he would talk to President Xi at the G20 summit. Although, Xi has been silent Wall Street propped up the stock market yesterday and today to some degree. The market is still off by about 900 points from Monday of last week.

I wonder what silver lining Wall Street execs will find this time. More of Trump's empty rhetoric?

 

President Trump is obviously more tuned in than some of the alt-leftie posters.

 

Schumer is welcome to his opinion, and I have mine.

We have, by far, the largest economy in the world. In GDP terms, our economy is $7 trillion more than our nearest competitor, China. https://www.investopedia.com/insights/worlds-top-economies/

Prior to the beginning of last week our economy was on fire, and the stock market was setting records nearly every week. Essentially, we have full employment. Wages are up. GDP is up. Our economy has been on a tear for nine years.

So, what seems to be the problem?

The idea that China steals technology from us does not affect Joe Sixpack and Mary Wonderful. Stealing technology is a world wide game, and no doubt American tech firms steal their share.

However, if Joe is a farmer, he is being seriously hurt by Trump's tariffs. Trump is offering him more welfare.

If Joe is in manufacturing or retail, he could lose his job because of rising prices causing less demand.

Soon, Mary will see rising prices at her local market, reducing her purchasing power which reduces demand.

All this leads to recession.

In the meantime we have the largest, most successful economy on the planet with full employment.

If it works, don't fix it.

 

The problem is, we are running a trade deficit when we shouldn't be.

That's not sustainable.

You can blame the people in office over the past few decades for that.

What's really amazing to me is it took until Trump to fix it.

 

If you're going to fight a war isn't it smart to do when you are at your strongest?

 

How about Pelosi?
"“The United States must take strong, smart and strategic action against China’s brazenly unfair trade policies. Yet, today’s announcement is merely a start, and the Trump Administration must do much more to fight for American workers and products.

“The report of the USTR investigation on China’s intellectual property theft is a good first step, but far more is need to confront the full range of China’s bad behavior. Beijing’s regulatory barriers, localization requirements, labor abuses, anti-competitive ‘Made in China 2025’ policy and many other unfair trade practices require a full and comprehensive response. The tariffs announced today should be used as a leverage point to negotiate more fair and open trade for U.S. products in China.

“The Trump Administration must show the moral courage to use its economic leverage to not only guarantee free trade for American products in Chinese markets, but also to advance human rights in China and Tibet. If we do not speak out for human rights in China because of economic concerns, then we lose all moral authority to talk about human rights in any other place in the world. It is long past time that the President honor his moral responsibility to protect American workers, American values and American economic interests.”
https://pelosi.house.gov/news/press...n-trump-administration-s-new-tariffs-on-china

Apparently she sees the need, but can't quite bring herself to agree with Trump.

 

That's it?

Keep it up. If you ever actually address the issues, I will have a heart attack.

You really aren't capable of dealing with issues, are you?