That's how Chiefio sees President Trump's tariffs.
We had a system of all sorts of countries with tariff barriers against US goods and not very motivated to “negotiate” along with a few players who had strong merchantilist trade barriers (not just tariffs but “standards” that often were a bit bizarre and currency manipulation and more) and you want to both “condition the battle field” while you find out “how strong an opponent will each one be?”.
So Trump throws a Tariff Firebomb into Global Trade and watches who runs where. Who has strength and who is an easy play. And he gets his answers.
. . .
This wasn’t any failure, and it isn’t a “back track” as it is only a 90 Day “Pause”. It was firing an opening salvo, and seeing where the enemy response came from. Who wanted to surrender, and who wanted to fight ... I’d count that as a “win” for shaping the battle field and choosing the grounds for the battle.
Clearly Trump has read his Tsun Su and his Clausewitz.
. . .
This is a Get ‘Er Done NOW! frontal assault on 40 years of accumulated Crap up to and including election rigging and assassinations (or attempts of same that failed…) and all to be completed in 2 years. There WILL be dozens of eggs broken, hundreds of bits of Fine China in the China Shop trampled into fragments, and a LOT of casualties in the troops.
We, the MAGA folks, are JUST FINE with that. The faster the better.
Blow up the Federal Government, we can always start over. DESTROY “the Rules Based World Order” it wasn’t working all that well anyway what with “color revolutions” and “Faux Democracy” and all. SHUT DOWN trade with China if that’s what it takes, as long as it returns jobs and manufacturing to the USA. Throw Economic “Hand Grenades” if that’s what it takes. We’re here for you if you need us.
Unfortunately, to me, it looks like the UK and EU “leadership” are corrupt and “slimy weasels” in all this, leading their countries to ruin, and China are a bunch of CCP Liars & Cheats who can not be trusted. So Trump is pissing in their coffee? OK… Can I join in? ;-)
We’ll know in 90 days if this works.
In the mean time: IF I can’t buy cheap Chinese plastic crap for 10 ¢ and have to pay 20 ¢ to get it from some other socialist hell hole, I really do not care. IF my neighbor gets a job at the new Plastic Crap Factory in the USA, well, we’ll have a back yard BBQ and I’ll buy the beer.
There's more at the link.
That sounds about right to me. Ever since the demise of the gold standard, international trade has been denominated in increasingly devalued currency, and economic strength has reflected that. Most countries imposed far higher tariffs on imported goods to protect their own economies. That resulted in the USA accepting their goods at low rates, while our exports to them were charged higher rates. That meant, in turn, that most of our factories migrated overseas, where corporations could pay lower salaries to their workers, send their production to the USA at minimal cost, and reap the benefits for their shareholders and executives. The working stiffs who used to produce those goods here? Who cared about them? They could always apply for unemployment and food stamps . . .
I think President Trump sees very clearly that if we don't tackle this problem right now, we're economically doomed. It's almost on the brink of our national bankruptcy already. We simply can't go on accumulating massive deficits every year, adding them to an already effectively unpayable total debt. Let's face it - a US national debt of (at the time of writing) $36.7 trillion is impossible to pay off. There isn't that much money in the world! We've got to deal with it now, or it will overwhelm us. President Trump understands full well that we cannot go on importing goods and exporting dollars, while having our own exports of goods hobbled by high tariffs on the receiving end. It's got to stop, and it's got to stop now.
All those complaining about what it's doing to the stock market are wearing economic blinkers. They're not looking at the wider picture - only their own profits. If the stock market crashes, it'll be an economic blow, but we've weathered such before and will do again. If we as a nation become bankrupt, that's an order of magnitude worse than a stock market crash, because millions of people will be out of work with almost no notice. The federal government doesn't have any spare cash to dole out in unemployment insurance, food assistance or other aid: and if it "prints dollars" to pay such bills (as has been done all too often in the past), those dollars will be worthless because there's no economy to back them up. What costs a dollar today will cost ten tomorrow, and a hundred the day after that. If you're in doubt, examine Weimar Germany, or Venezuela, or Zimbabwe, or any of a large number of other nations that suffered economic catastrophe that way.
We've got to stop the rot. It's almost too late to do so. Tariffs are a bitter pill to swallow, for US consumers as much as for foreign countries and companies that export goods to us, but it's medicine we must take - or face the consequences.
Peter
12 comments:
We've had Bretton-Woods, GATT, BIS, the petrodollar and the CIA fiddling our media and politicians and music and films and books and education and industry and defence organisations for so long that some hardcore folk bent on righteousness and honesty and decency are looking forward to seeing the fat hypocrite dimwit Norteamericanos get a well earned comeuppance. If the South had won, they would have remained independent and been able to shine the Bill of Rights better than the Lincolnian-Wilsonian satanic blood-drenched shitfest that has enabled all the fckery around the world. Well, someone had to do it, but it is nauseating to watch the bloviating wrapped in those cursed stars and stripes.
“Clearly Trump has read his Tsun Su and his Clausewitz.”
Yup. He even wrote a book about it.
https://www.amazon.com/Trump-Art-Deal-Donald-J/dp/0399594493
Tell that to Coyote Blog.
I was at a friend of mine's yesterday, he is a commercial printer. When I walked in, he was beating his eight year old 60 inch wide vinyl printing machine that he paid $16,000 for new. The yellow cartridges (there are two) were refusing to flow, his machine melts the yellow / blue / magenta crayons and then deposits it on the vinyl film.
He said everything in that printer, including the printer and the 100 foot vinyl film rolls, comes from China. But that is how he makes his money, by printing signs for people so he will have to pay the new tariffs to buy supplies eventually. And his prices will go up too. Plus the 8 foot by 4 foot aluminum backing boards that he glues the vinyl to.
Every passing day provides more and more evidence that there is no fixing things. It's all got to be torn down and rebuilt from the ground up.
I applaud the goal of moving manufacturing back to the US, but tariffs are not a great mechanism to accomplish that goal. The premise is that the only reason things are currently produced offshore is because it is cheaper. That is generally why the production left the US, but it isn't the only barrier to bringing it back. We do not have the skilled trades in the US to populate the new factories even if they are built. My company makes infrared cameras, mostly for defense. We cannot find skilled techs to assemble them. It's not a cost issue, it's that younger people who would have been the techs in years past and have the aptitude all want to be design engineers instead. Tech work is looked down on. Automation can help with that, but only so much. There's a very limited supply of skilled labor, so if companies were to try to build domestic production capacity, somehow get through the permitting, EPA studies, etc. and get the physical plant in place, there are not enough skilled people to run it, and not enough people with the desire to be trained. We ended up with a price and supply shock, but it won't be relieved in the near future by domestic supply coming online as Trump and Navarro seem to believe. They are not in touch with reality.
"We do not have the skilled trades in the US to populate the new factories even if they are built."
My advice would be finding a local technical school and sponsoring a class in building technical equipment. Our local technical school is "Texas State Technical College":
https://www.tstc.edu/campuses/fortbendco/
To a greater or lesser extent, every other western country has experienced the same outcomes as the USA arising from the implementation of free trade or lower tariffs. Manufacturing goes overseas, consumer costs are reduced and the old plants are replaced by newer, higher value, usually higher tech industries. Overall, apart from a few hiccups such as the GFC and Covid, western and other developed economies have enjoyed solid growth since WW2 (the average US GDP growth rate over that time is 3.21%). Also, many developing countries have been able to lift themselves out of poverty and achieved improved living standards.
All other western and developed countries have found this transition leaves the people and regions who used to participate in the old industries being left behind. Most of these countries have implemented an extensive range of measures to better support these people during the transition period. These include access to trade training, subsidies to support new industries, fairer wage policies, infrastructure expenditure for both development and job creation, better access to health and childhood education etc etc. I'm not saying that every one of these countries have met the challenge as much as they would like to, but universally they have done it much better than the USA.
I would contend that the USA doesn’t have a trade problem, it has neglected implementing the transitions required, the new services needed, providing opportunities for advancement and ensuring everyone receives better access to the wealth dividends from low import tariffs.
The fundamental problem lies within the US borders, increasing import tariffs won't address these issues, and it's a fantasy to expect that the old manufacturing jobs will return. The current cost of iPhones assembled mostly in China is $US846, the estimated cost of assembling them in the USA is $2300. That's what US citizens will have to pay, and the rest of the world will be feasting on the $846 Chinese versions. What company is going to make that kind of investment?
Also, it's laughable to think that cash from the import taxes (because that's what tariffs are) will flow to individuals in the Rust Belt or other deprived porttions of the US, and that the current government will provide the required support to enable them and their families to advance in life.
The situation will fundamentally remain unchanged with wealth inequity increasing, featuring a larger pool of poor people, a struggling middle class and more and richer billionaires. All this is also running the risk of US stagflation due to increased import costs being passed on to consumers and a reluctance of investors to fund new industries or services in such a febrile political and economic environment.
The imposition of tariffs is also encouraging other countries to develop arrangements to by-pass the need to trade with the USA. Even the normally hostile neighbours of Japan, South Korea and China are in discussions to establish a free trade agreement. More and more trade will be conducted outside the $USD (currently 54% of global trade invoices and 88% of foreign exchange transactions) which will impact on the US access to cheaper credit, lower the US balance of trade even further and reduce currency as a strategic lever in geopolitical dominance.
Be careful what you wish for, sometimes it's the more difficult issues that need to be faced and addressed rather than seeking a simplistic solution to complex issues. The biggest problems lie within the US borders.
The US must accept a weakened dollar if we want to see manufacturing flood into the Land of the Big PX. Otherwise, it will still be difficult to peddle our wares elsewhere. Pres. Trump knows this. The Fed is smart enough to figure that out too. But the Swamp is unhappy (as usual).
We've done away with real education and replaced it with self esteem and anti racism.
Can he paint on wood?
This is pretty much what Trump is doing with federal funding and the federal workforce.
There is too much inertia to take it apart a piece at a time as his opponents claim is reasonable - he has to do the big company approach of cutting across the board to make progress while he can.
I approve of this even though I'm an affected federal employee... Fortunately not fired yet.
Jonathan
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