By raising a protection wall to various inefficient domestic industries, Trump’s policies on tariffs, which are a protection for any number of inefficient industries, are just going to promote more inefficiency, undermining the process of real wealth generation. In a nutshell, a tariff on any imported good implies curtailing the supply of less costly goods and encouraging the supply to the domestic market of more costly domestically produced goods, punishing the domestic consumers, which are us, the Americans.
According to CNBC, while there are about 200,000 workers in the steel, aluminum and iron industries, there are 6.5 million people employed by businesses that use steel. This raises the risk of undermining rather than benefiting the US labor market. Tariffs increase costs of production for industries reliant on imported materials to produce their products. These increased costs lead to job losses in those industries. For example, President Trump’s proposed steel tariff could cost nearly 40,000 jobs in the steel-dependent auto manufacturing industry. Tariffs also cause job losses in industries reliant on exports. This is especially true if — as is likely to be the case — other countries respond to President Trump’s actions by increasing tariffs on US products.
A trade war, if this starts one, could push the global economy into a recession. By using tariffs, and ultimately imposing costs on American businesses and consumers, it puts a large segment of the economy that relies on imports at risk.
Paul Plante says
Wayne, have you ever stopped to consider that with a post like this, you are trying to talk sense to avaricious and greedy people in Washington, D.C. who lack the brains to see the light of day?
I personally cannot believe the level of gross stupidity right across the board this nation has sunk down to, where people have no sense of what happened more than five minutes ago, if even that, anymore.
And even without the tariffs, prices are already ridiculous and are getting more so by the day.
Five dollars for a roll of 1″ masking tape that is .994 inches wide.
Ten dollars for a bag of bloodmeal fertilizer worth maybe $2.
And the capper for me was a price of $46 quoted for a paint stick, which is nothing more than a glorified Sharpie with a certain color of paint in it, worth maybe $.50.
Extortionate prices and incredible greed already rule in America, with the price of a loaf of plain white bread now costing $5.00.
But getting back to tariffs, recall the Tariff Act of 1930 (codified at 19 U.S.C. ch. 4), commonly known as the Smoot–Hawley Tariff or Hawley–Smoot Tariff, which was an act implementing protectionist trade policies sponsored by Republican Senator Reed Smoot, a businessman and apostle of The Church of Jesus Christ of Latter-day Saints, and Republican Representative Willis C. Hawley and was signed into law on June 17, 1930.
The act raised U.S. tariffs on over 20,000 imported goods.
Thomas Lamont, a partner at J.P. Morgan at the time said, “That Act intensified nationalism all over the world,” and that is exactly what we are seeing all over again with the European Union and China slapping tariffs on our exports.
Getting back to Smoot-Hawley, the tariffs under the act were the second-highest in the U.S. in 100 years, exceeded by a small margin by the Tariff of 1828.
Now, it is important to note that tariffs, or as they were called back in 1787, imposts, were a subject of discussion and debate in this country right from its very beginnings, as we see from the excerpt from “A Federalist Essay” in the Independent Gazetteer in Philadelphia on October 25, 1787, as follows:
Is it in the power of Pennsylvania to protect her own trade, by entering into commercial treaties with the nations of Europe, and thereby to secure a West India or an European market for her produce?
Is it in her power to encourage our infant manufactures, to give sustenance to our starving mechanics, to prevent a general bankruptcy, or to raise a revenue, by laying an impost on foreign goods imported into this State?
All her attempts are liable to be counteracted by any neighboring State; for it is well known that the imposts have been frequently evaded in this State, and always will while Jersey and Delaware open free ports for the reception of foreign wares.
Or the “Speech to the Pennsylvania Constitutional Convention” by James Wilson on December 4, 1787, as follows:
In this Constitution, a power is given to Congress to collect imposts, which is not given by the present Articles of the Confederation.
A very considerable part of the revenue of the United States will arise from that source; it is the easiest, most just, and most productive mode of raising revenue; and it is a safe one, because it is voluntary.
No man is obliged to consume more than he pleases, and each buys in proportion only to his consumption.
The price of the commodity is blended with the tax, and the person is often not sensible of the payment.
And “A Landholder VIII” by Oliver Ellsworth on December 24, 1787:
Whether the constitution will be adopted at the first trial in the conventions of nine states is at present doubtful.
In New York the opposition is not to this constitution in particular, but to the federal impost, it is confined wholly to salary-men and their connections, men whose salary is paid by the state impost.
This class of citizens are endeavoring to convince the ignorant part of the community that an annual income of fifty thousand pounds, extorted from the citizens of Massachusetts, Connecticut and New Jersey, is a great blessing to the state of New York.
And although the regulation of trade and other advantages of a federal government would secure more than five times that sum to the people of that state, yet, as this would not come through the same hands, these men find fault with the constitution.
And “A Citizen of New York” by John Jay printed by Samuel and John Loudon in 1788, as follows:
Consider my fellow citizens what you are about, before it is too late—consider what in such an event would be your particular case.
You know the geography of your State, and the consequences of your local position.
Jersey and Connecticut, to whom your impost laws have been unkind—Jersey and Connecticut, who have adopted the present plan, and expect much good from it—will impute its miscarriage and all the consequent evils to you.
They now consider your opposition as dictated more by your fondness for your impost, than for those rights to which they have never been behind you in attachment.
They cannot, they will not love you—they border upon you, and are your neighbors; but you will soon cease to regard their neighborhood as a blessing.
You have but one port and outlet to your commerce, and how you are to keep that outlet free and uninterrupted, merits consideration.
And then there are the Oliver Ellsworth and William Samuel Johnson Speeches in the Connecticut Constitutional Convention pm January 4, 1788, as follows:
Our being tributaries to our sister states is a consequence of the want of a federal system.
The state of New York raises 60 or 80,000 pounds a year by impost.
Connecticut consumes about one third of the goods upon which this impost is laid; and consequently pays one third of this sum to New York.
If we import by the medium of Massachusetts, she has an impost, and to her we pay a tribute.
If this is done, when we have the shadow of a national government, what shall we not suffer, when even that shadow is gone?
And the speeches in the Connecticut Constitutional Convention of James Wadsworth and Oliver Ellsworth on January 7, 1788, as follows:
The paragraph which respects taxes, imposts and excises, was largely debated, by several Gentlemen.
Gen. Wadsworth objected against it, because it gave the power of the purse to the general Legislature; another paragraph gave the power of the sword; and that authority, which has the power of the sword and purse, is despotic.
He objected against imposts and excises, because their operation would be partial and in favour of the southern States.
So there is where the subject of imposts or tariffs in this nation begins, with controversy.
And more, as always, is yet to come.
In the meantime, getting back to Smoot-Hawley, the Act and following retaliatory tariffs by America’s trading partners were major factors of the reduction of American exports and imports by more than half during the Depression, and although economists disagree by how much, the consensus view among economists and economic historians is that “The passage of the Smoot–Hawley Tariff exacerbated the Great Depression.”
Are we on that road again?
I for one, would say yes.
Paul Plante says
Staying with history here, because I think Donald Trump has precipitated a Constitutional crisis here by usurping (take a position of power illegally or by force; encroach or infringe upon (someone’s rights), and arrogating (take or claim something without justification) unto himself powers delegated solely to Congress by the people to levy duties and imposts, I would return for the moment to the speech of Oliver Ellsworth to the Connecticut Constitutional Convention on January 07, 1788, as follows in support of that claim that Trump has gone off the reservation and is acting rogue in imposing tariffs by fiat, to wit:
The paragraph which respects taxes, imposts and excises, was largely debated, by several Gentlemen.
Thus, we can see that that speech by Oliver Ellsworth, an American lawyer, judge, politician, and diplomat who was a framer of the United States Constitution, and thus would know a hell of a lot more about it than Donald Trump, who knows nothing at all, puts us square into to ball park with respect to the Constitutional power to levy imposts, as follows:
Mr. President, This is a most important clause in the constitution; and the Gentlemen do well to offer all the objections which they have against it.
Through the whole of this debate, I have attended to the objections which have been made against this clause; and I think them all to be unfounded.
The clause is general; it gives the general Legislature “power to lay and collect taxes, duties, imposts and excises to pay the debts, and provide for the common defence and general welfare of the United States.
If Trump really had evidence that these tariffs were necessary for national security, then what he should have done, instead of acting like a dictator was make the case to Congress.
But he didn’t!
As to the exclusivity of this power to Congress, and Congress alone, Oliver Ellsworth provided as follows:
There are three objections against this clause.
First, that it is too extensive, it extends to all the objects of taxation; secondly, that it is partial; thirdly, that Congress ought not to have power to lay taxes at all.
The first objection is that this clause extends to all the objects of taxation.
But, though it does extend to all, it does not extend to them exclusively.
It does not say that Congress shall have all these sources of revenue, and the States none.
All, excepting the impost, still lie open to the States.
That plain language would seem to me to reserve the impost to the Congress of the United States of America, not to Donald Trump.
The Honorable Mr. Ellsworth then continued as follows:
But I think there are three special reasons, why an impost is the best way of raising a national revenue.
The first is, it is the most fruitful and easy way.
All nations have found it to be so.
Direct taxation can go but little way towards raising a revenue.
To raise money in this way, people must be provident; they must be constantly laying up money to answer the demands of the collector.
But you cannot make people thus provident; if you would do any thing to purpose, you must come in when they are spending, and take a part with them.
This does not take away the tools of a man’s business, or the necessary utensils of his family: It only comes in, when he is taking his pleasure, and feels generous, when he is laying out a shilling for superfluities, it takes two—pence of it for public use, and the remainder will do him as much good as the whole.
Now, while that might be considered to be naïve or even childish thinking by the lax liberal political standards in vogue in the United State of America today, that is a statement from one of the founders and framers of the Constitution as to how to interpret that taxation clause in our Constitution.
Continuing to review that speech, we have:
I will instance two facts, which shew how easily and insensibly a revenue is raised by indirect taxation.
I suppose people in general are not sensible, that we pay a tax to the State of New York.
Yet it is an uncontrovertible fact, that we the people of Connecticut pay annually into the Treasury of New York more than fifty Thousand Dollars.
Another instance I will mention: One of our common river sloops pays in the West Indies a Portage Bill of £.60.
This is a tax which foreigners lay upon us and we pay it.
For a duty laid upon our shipping which transports our produce to foreign markets, sinks the price of our produce, and operates as an effectual tax upon those who till the ground, and bring the fruits of it to market.
As to the adverse impacts of tariffs on the people of America who are not rich like Trump, who has no idea whatsoever of what it is like to be not rich, focus on these words of Oliver Ellsworth above – operates as an effectual tax upon those who till the ground, and bring the fruits of it to market.
In this case, Trump’s tariffs are acting as an effectual tax on us, which is taxation without representation, a cause of our original rebellion against another tyrant in power over us in this country.
Getting back to Oliver Ellsworth:
The experiments, which have been made in our own country, shew the productive nature of indirect taxes.
The imports into the United States amount to a very large sum.
They never will be less, but will continue to increase for ages and centuries to come.
As the population of our country increases, the imposts will necessarily increase.
They will increase, because our citizens will choose to be farmers living independently on their free holds, rather than to be manufacturers, and work for a groat a day.
How wrong he was in his thinking there in that last sentence, but how was he to know?
Ellsworth then continues as follows:
I find by calculation, that a general impost of 5 per cent would raise the sum of £.245,000 per annum, deducting 8 per cent for the charges of collecting.
A further sum might be deducted for smuggling, a business which is understood too well among us, and which is looked upon in too favourable a light.
But this loss in the public revenue will be over balanced by the increase of importations.
And a further sum may be reckoned upon some articles, which will bear a higher duty than the one recommended by Congress.
Rum, instead of 4d. per Gallon, may be set higher, without any detriment to our health or morals.
In England it pays a duty of 4s.6d. the Gallon.
Clearly, the tariffs were not originally intended as a political toy for an out-of-control tyrannical American president like Donald Trump to play games with to our detriment!
And back to Oliver Ellsworth, again:
Let me point out then what has actually been done.
In only three of the States, in Massachusetts, New York, and Pennsylvania, £.160 or 180,000 per annum have been raised by impost.
From this fact we may certainly conclude, that, if a general impost should be laid, it would raise a greater sum than I have calculated.
It is a strong argument in favor of an impost, that the collection of it will interfere less with the internal police of the States, than any other species of taxation.
It does not fill the country with revenue officers, but is confined to the sea coast, and is chiefly a water operation.
Another weighty reason in favour of this branch of revenue is, if we do not give it to Congress, the individual States will have it.
It will give some States an opportunity of oppressing others, and destroy all harmony between them.
If we would have the States friendly to each other, let us take away this bone of contention, and place it, as it ought in justice to be placed, in the hands of the general government.
In the hands of the general government in no way implies in the hands of Donald Trump, who is merely the president, and the president is not the general government; Congress is.
Too bad the cowardly Congress we are stuck with today lacks the fortitude to forcefully tell Trump so.
Paul Plante says
Since we are looking at some underlying history here with respect to tariffs, and the potential they have for causing damage to our economy, and the lives of the ordinary Americans, which most of us are, we should drop back in our history to the Tariff of 1828, called the “Tariff of Abominations.”
The History Central website tells us this about the 1828 Tariff of Abominations:
President Adams fully supported The Tariff of Abominations; designed to provide protection for New England manufacturers.
The tariff was opposed, however, by supporters of Jackson.
The Tariff of 1828, which included very high duties on raw materials, raised the average tariff to 45 percent.
The Mid-Atlantic states were the biggest supporters of the new tariff.
Southerners, on the other hand, who imported all of their industrial products, strongly opposed this tariff.
They named the tariff “The Black Tariff” or “Tariff of Abominations.”
They blamed this tariff for their worsening economic conditions.
Now, as I write these words, according to the Marketwatch article “EU to impose tariffs on $3.2 billion of U.S. goods starting Friday” by Carla Mozee published June 20, 2018, the European Union began implementing tariffs on €2.8 billion ($3.2 billion) worth of goods imported from the U.S. on Friday just gone by, 22 June 2018, so the trade war has begun.
According to the article, the “rebalancing measures” are in response to the U.S. imposing respective tariffs of 25% and 10% on aluminum and steel imports from the EU on June 1, the commission said.
Agricultural goods and other U.S. products will also be hit with levies.
U.S. President Donald Trump has said the tariffs are aimed at protecting the U.S. steel industry.
There we see a case of Trump also being willing to harm one sector of the American economy, to “protect” another, which takes us back to the 1828 tariff, as follows:
From the early days of the United States there was support to place tariffs (taxes on imported goods) to help new American industries to effectively compete.
After the War of 1812, the British were able to flood the American markets with cheaper goods.
Support grew to increase tariffs.
Leading that charge to increase tarriffs was Henry Clay of Kentucky.
Clay believed in an American system of trade; a system where American manufacturers were protected and allowed to grow, while the income from the tariffs would be used for internal improvements.
Clay also wanted to insure that the US would not be dependent on the British.
The rising quantity of manufacturing in the North converted some New Englanders, including Daniel Webster, who had supported free trade, to become supporters of a rise in tariffs.
In 1816, in the aftermath of the war, the Congress passed another tariff Act that levied a Tariff of 25% on many imported goods.
While this represented a rise, it was not considered very high for the times.
There we see the power to raise tariffs being exercised by the Congress, as intended by the Constitution, which Trump is likely ignorant of, or is just ignoring.
Getting back to those earlier times in our history, we have:
The Panic of 1819, largely caused by the worldwide drop in the commodity prices, encouraged many in Congress to try to wall the US off, as much as possible, from the vagaries of the world wide markets.
Again, we see the power vested in the Congress, as intended by the Constitution, not with the president, as Trump is asserting today, and clearly, Congress can be seen acting to protect our national security back then, as Trump asserts he is doing today.
And back to history:
In 1820 a more protective measure passed the House, but failed to pass the Senate, due to Southern opposition.
The South, however, was fighting a losing battle.
The North continued to develop industry rapidly, while the South relied more and more on growing and selling cotton.
The population of the North continued to expand.
More importantly, in the battle over the tariffs, the western states that were being added to the Union tended to favor stronger tariffs.
Finally, in 1824, with Henry Clay in the powerful position of Speaker of the House, tariffs were raised to 35 percent on imported iron, wool and hemp.
Many supporters of tariffs thought that 35 percent was not high enough.
There were many tariff supporters who wanted to raise the tariffs even higher.
Supporters of soon to be President Jackson devised a plan to increase tariffs in a way to help the Mid Atlantic states, states that would be crucial to Jackson’s election hopes.
They did this, despite the clear opposition of Southern states, led by Senator Calhoun.
Supporters of a tariff rise were victorious and some tariffs were increased to as much as 50%.
The United States History website fills in these details on the Tariff of 1828, to wit:
Tariffs were made possible the U.S. Constitution and the first piece of legislation ever enacted by Congress was a tariff, passed on July 4, 1789.
A tariff provided both revenue to the federal government and protection for local manufacturers against low-cost imports.
As a result of the Embargo and the War of 1812, more items began to be produced domestically and demand for their protection increased.
Accordingly, the Tariff of 1816 gave some protection and, as demands continued, the Tariff of 1824 raised rates and extended the applicability of the list of items.
Agitation for still more protection continued, and in particular New England textile manufacturers pressed Congress and the administration for higher protective measures, arguing that British woolens were being dumped on American markets at artificially low prices.
Western support for increases could be obtained only by agreeing to include an increase on duties for the importation of certain raw materials.
When the West was accommodated, the New Englanders objected.
The South under any circumstance was opposed to protectionism.
In short, no one was really pleased with the 1828 “tariff of abominations.”
John Quincy Adams reluctantly signed the tariff measure, fully realizing he was being made a scapegoat by his political enemies.
This measure effectively ended his hopes for reelection.
Little thought was given to vetoing the tariff; the inclination of the early presidents was to exercise that power only for matters of dubious constitutionality.
The Tariff of 1828 had been purposely drafted to make Andrew Jackson appear as a free trade advocate in the South and as a protectionist in the North.
Ah, yes, politics, just as Trump is playing politics with his tariffs today.
And back to history, and harm:
After enactment of this measure, Southern cotton producers became deeply alarmed when they learned of British threats to seek other markets, given that the cost of American cotton had become so high.
South Carolina declared the Tariff of 1828 and its more moderate successor, the Tariff of 1832, to be null and void and not binding on the state or its citizens.
To placate the South, yet another tariff was adopted in 1833, calling for a gradual reduction in rates.
South Carolina nullifying the Tariff of 1828 caused a constitutional crisis in our history.
So it is interesting today that all we seem to hear from the states that will be hurt by Trump’s tariffs is silence.
One has to wonder why.
Paul Plante says
Jumping forward to today, wherever that might be taking us next, to our comeuppance as a nation and people, most likely, we need to keep in mind that these Trump tariffs on aluminum and steel are just a drop in the bucket on what is proposed, and they are not the first shots fired in this Trump salvo.
Consider, for example, the Marketwatch article “Canada fires back over ‘unfair and punitive’ U.S. tax on its lumber” by Barbara Kollmeyer published April 25, 2017, to wit:
The Canadian government is clearly unhappy with the U.S. decision to slap a 20% tariff on softwood lumber imports from the country.
The retaliatory action by the administration of U.S. President Donald Trump in a trade dispute will tax lumber used to build single-family homes.
Commerce Secretary Wilbur Ross said the tax will be applied retroactively, affecting Canadian exports to the U.S. valued at around $5 billion a year.
The U.S. has accused Canada of allowing loggers to chop down trees cheaply and then sell at cut-rate prices, while there has also been a simmering disagreement between the two countries over dairy prices.
In a fiery statement on Monday, the Canadian government argued that American families will ultimately bear the cost of the Trump tariff and insisted that it would “vigorously defend” the interests of its softwood lumber industry:
Following up on that statement that American families will ultimately bear the cost of the Trump tariff, we come to this Marketwatch article published May 23, 2018, entitled “New-home sales wobble in April, Commerce says” by Andrea Riquier, as follows:
Housing-market professionals have wanted a stronger pace of new-home construction for years to fill the gaps in the existing-home market, where inventory remains at multiyear lows.
But most builders aren’t “slow-walking” projects, as some analysts have suggested.
They’re struggling with higher input costs, thanks in part to the presidential administration’s tariffs.
Prices of materials were 4.2% higher than a year ago in April.
And we come forward from that to this Washington Post article entitled “The Fed just made life even worse for homebuyers” by Jonnelle Marte on 14 June 2018, as follows:
As the busy spring selling season comes to a close, some Americans see their dream of homeownership under siege on three fronts.
The housing supply is low.
Interest rates are rising.
And even Canada plays a foil: Tariffs on lumber have sent the price of construction sharply higher.
Those hit the hardest?
People who are trying to buy their first homes, just as they are amassing the savings to make the leap to homeownership.
About 900,000 new single family homes will be built this year, according to projections from the National Association of Home Builders, but that will fall short of the 1.2 million homes needed to keep up with population growth and to replace old housing, said Robert Dietz, chief economist for the association.
Construction of entry-level homes is especially low as developers focus on building larger, pricier homes to make up for higher costs, Dietz said.
A tariff on Canadian lumber has helped push lumber prices up by more than 60 percent since the start of 2017, he said.
And then there is this snippet from the Marketwatch article “Housing starts roar to an 11-year high in May” by Andrea Riquier published June 19, 2018, to wit:
Builder stocks were little changed after the release, but they’ve been hammered, so to speak, by concerns that there’s little upside left for the companies.
Rising mortgage rates, cooling demand in some high-cost areas where tax law changes are taking a bite, and higher materials costs are all weighing on builders’ bottom lines.
For the year to date, the SPDR S&P Home builders ETF is down 8.5%.
Is MAGA-man Donald Trump aware of any of this?
Would he care if he was?
I seriously doubt it, myself, because it is about Trump, not the American people.
We are learning what it means to have a brainless, arrogant, mouth-running idiot as our leader.
Perhaps we deserve it.
More to come.
Paul Plante says
Dropping back to Smoot-Hawley, to see how rapidly these tariff battles can get out of control, as well as to see how far Trump has gone off the reservation with these unilateral tariffs by executive decree, as, if Trump were king of America, as opposed to merely the president, an article on the Washington International Trade Association website entitled “Did the Smoot-Hawley Tariff Cause the Great Depression?” by Bill Krist on Monday, June 16, 2014 tells us this:
Eighty four years ago on this day President Hoover signed the now-infamous Smoot-Hawley tariff bill, which substantially raised U.S. tariffs on some 890 products.
Other countries retaliated and world trade shrank enormously; by the end of 1934 world trade had plummeted some 66 percent from the 1929 level.
The first thing we notice there is that like John Quincy Adams before him, President Hoover signed a tariff bill that had originated in Congress, just as our Constitution requires.
But as we have noted elsewhere, we only have a Constitution in name, not in reality, and Trump is slapping on his tariffs because Hussein Obama before him did the same, and by God, if a Democrat can use the Constitution to wipe his backside, so can a Republican, and so Trump has.
And as I write these words, the Trump tariffs have the stock market taking a nosedive, while Harley-Davidson said it is going to move motorcycle production to Europe to avoid the stiff tariffs slapped on its motorcycles by the EU in retaliation for the Trump tariffs on EU steel and aluminum.
How to go, MAGA-man, that is making America great again, isn’t it!
Getting back to Smoot-Hawley:
The Tariff Act of 1930 (aka the Smoot-Hawley Tariff Act), started out as a bill that would only raise tariffs on some agricultural products, but a host of other special interests piled on and before the legislation finally reached President Hoover’s desk it represented one of the largest tariff increases in U.S. history.
On June 16, 1930 when the Smoot-Hawley bill was signed into law the broad economy was just starting to slip into the Great Depression.
Two years later unemployment had reached almost 24 percent in the U.S., more than 5000 banks had failed, and hundreds of thousands were homeless and living in shanty towns called “Hoovervilles”.
It needs to be said here that back before the Great Depression, a political philosophy called Social Darwinism was in vogue at the highest levels of business, finance and government in the United States of America in the Gilded Age, which was from the 1870s to about 1900, which political philosophy came back during the Ronald Reagan administration and has been embraced by Republicans, including Trump, since then, and according to the precepts of Social Darwinism, the Republicans, then and now, believed that government should not interfere in the “survival of the fittest” by helping the poor.
In the late nineteenth and early twentieth centuries, and again today since Ronald Reagan, the Social Darwinists took up the language of evolution to frame an understanding of the growing gulf between the rich and the poor in this country, and the explanation they arrived at was that businessmen and others who were economically and socially successful were so because they were biologically and socially “naturally” the fittest, while the poor were “naturally” weak and unfit, which served to explain the hundreds of thousands back then who were homeless and living in shanty towns called “Hoovervilles,”
Getting back to Smoot-Hawley:
In early May 1930 1,028 leading American economists presented President Hoover, Senator Smoot and Congressman Hawley with a letter urging Hoover to veto the bill if it passed Congress.
The economists argued that the tariff increases would raise the cost of living, limit our exports as other countries retaliated, injure U.S. investors since the high tariffs would make it harder for foreign debtors to repay their loans, and damage our foreign relations.
Unfortunately, this is what happened.
From 1929 to 1933 American exports declined from about $5.2 billion to $1.7 billion, and the impact was concentrated on agricultural products such as wheat, cotton and tobacco.
As a result, many American farmers defaulted on their loans, which in turn particularly affected small rural banks.
Today, the Smoot-Hawley tariffs represent a cautionary tale.
Jumping back to our times today, as we look for damage and fall-out from the Trump tariffs, we go back to March 1st, and the Marketwatch article “Dow ends 420 points lower as Trump calls for U.S. import tariffs on steel, aluminum” by Anora M. Gaudiano and Mark DeCambre, as follows:
U.S. equity indexes finished sharply lower Thursday, marking a third straight decline, after President Donald Trump said he would impose tariffs on steel and aluminum imports, raising concerns of protectionist trade policies that could hurt U.S. corporations and consumers.
Trump told steel and aluminum executives gathered at the White House on Thursday that the U.S. would announce tariffs on imports of those products next week.
Trump said the U.S. would set tariffs of 25% for steel and 10% for aluminum.
Import tariffs can push the price of goods and services up, and could spark retaliation from other countries, exacerbating concerns for markets about inflation pressures running high, market participants said.
“Maybe you’re doing a service for few steel and aluminum companies but you are crushing the rest of the market because people know that this is not what people want to see and it’s going to be a big problem because this ripples through the market and if you are [General Motors Co.] you could be suddenly paying more for aluminum or steel,” said Ian Winer, head of equities at Wedbush Securities.
“Either your margins are going to be hit or you’re raising prices,” Winer said.
The Wedbush trader said the talk of tariffs might prompt a similar response from China or other countries that could hurt U.S. corporations.
On March 1st, Marketwatch also had an article entitled “Treasury yields drop as Trump announces steel, aluminum tariffs” by Mark DeCambre and Sunny Oh, as follows:
Treasury prices rallied Thursday, pushing down yields, with investors rushing into government paper after the Trump administration’s decision to impose global tariffs on steel and aluminum imports triggered a stock-market selloff.
Nervous investors jumped into government paper in pursuit of havens where they could take shelter from the market volatility.
When bond yields fall, of course, that has an adverse effect or impact on bank stocks, since banks make less money off of interest when treasury yields are lower.
So with his tariffs, Trump has definitely caught the attention of Wall Street, as we see from the Marketwatch article “Dow falls for 4th day on trade fears; major indexes post big weekly drops” by Sara Sjolin and Ryan Vlastelica published March 2, 2018, as follows:
Worries over the prospect of a global trade war have rattled markets since the tariff announcement, furthered by a Friday tweet from the president that “trade wars are good, and easy to win.”
Some of the U.S.’s biggest trading partners have already threatened to retaliate, including the European Union, which has said it’ll take the matter to the World Trade Organization.
The prospect of increased trade protectionism—long cited as a primary political risk to stocks this year—was just the latest catalyst for volatility to return to markets in a pronounced fashion.
Trump on Thursday said he would sign orders next week imposing a 25% tariff on steel imports and a 10% tariff on aluminum.
“You’ll have protection for a long time,” Trump told steel industry executives.
Many U.S. companies use steel and aluminum in their production, such as airplane makers and beverage companies.
Tariffs can push up the cost of goods, which in turn lifts the selling price or reduces profits, if the manufacturer absorbs the costs.
And right now, as I write these words, the Dow is down 488.03.
Game is on, people!
Will the MAGA-man win?
Will we be the losers when he does?
Stay tuned, more is yet to come!
Mike Kuzma, Jr. says
Ahh, the ol’ tariffs for Thee(imposed UPON the USA) but not for me( the rest of the world) gambit…..
So, BOHICA is the new policy for America?
Or could this be the opening bid in policy negotiations?
Paul Plante says
Given that perception is at least 99% of operative reality, it is whatever people perceive it to be, Mike. so it may well be that yes, BOHICA is indeed the new policy for America, although it might not be, depending on who you are talking to at the moment, and you have to take into consideration that a massive majority of the American people approve of Trump’s handling of the economy, something I am sure you are well aware of, so that would seem to argue against it being BOHICA as the new policy for America, unless that is what the majority of the American people are approving, in which case it is BOHICA as the new policy for America.
In the meantime, BOHICA or not, Trump has started a trade war that he does not know how to end.
He is like a dog who always dreamed of bringing down a Greyhound bus, and now he has his teeth sunk firmly into the front tire of one and it zooms by at sixty miles an hour.
Trump is doing like LBJ back in the VEET NAM times – making foreign policy decisions based on their appeal to his base in this country, so like LBJ, Trump is now in a trap of his own devising.
He has a transmission that lacks a reverse gear.
As to perception being the better part of reality, yesterday, Marketwatch had an article entitled “10-year Treasury yield sinks to more-than-3-week low as stocks swoon” by Sunny Oh published June 25, 2018, where we were told as follows:
Prices for U.S. government bonds rose on Monday, pushing yields lower, after the Treasury Department as U.S.-China trade tensions further heightened.
The Treasury Department is drafting limits on Chinese investment into U.S. companies with “industrially significant technology,” a government official with knowledge of the matter said on Sunday.
Plus, the National Security Council and the Commerce Department are coming up with export controls to prevent important technologies from being sent to China.
The plans are expected to be announced by the end of next week.
The curbs come on top of the tariffs that President Donald Trump imposed on $50 billion of Chinese imports.
Trump also threatened an additional levy on $400 billion of imports if Beijing attempted to retaliate.
Beijing has threatened to match the tariffs.
With a return of trade tensions kicking off the week, investors bought haven assets like U.S. government paper as they fled from stocks.
“Trade tariff anxiety continues to grow as the Trump administration institutes new measures on Chinese investment in the U.S. citing security concerns,” said Tom di Galoma, managing director of Treasurys trading at Seaport Global Securities.
“Many market participants are worried that ongoing trade war will ignite a global recession.”
So whether or not it actually is or is not BOHICA as the new policy for America, the bond traders and investors seem to think Trump’s mouth has us in a trade war that is going to hurt them.
Perception is reality, Mike.
And while we are on the subject of Trump’s running mouth backing him into a corner he can’t get back out of, because he is stupid and arrogant, we have the Marketwatch article “Opinion: Trump bets that power politics can offset weakening U.S. economic fundamentals” by Stephen S. Roach published June 25, 2018, to wit:
With each passing day, it becomes increasingly evident that President Donald Trump’s administration cares less about economics and more about the aggressive exercise of political power.
Showing no appreciation of the time-honored linkage between trade deficits and macroeconomic saving-investment imbalances, the president continues to fixate on bilateral solutions to a multilateral problem — in effect, blaming China for America’s merchandise trade deficits with 102 countries.
Similarly, his refusal to sign the recent G-7 communiqué was couched in the claim that the U.S. is like a “piggy bank that everybody is robbing” through unfair trading practices.
But piggy banks are for saving, and in the first quarter of this year, America’s net domestic saving rate was just 1.5% of national income.
Not much to rob there!
The same can be said of fiscal policy.
Trump’s deficit-busting tax cuts and increases in government spending make no sense for an economy nearing a business-cycle peak and with an unemployment rate of 3.8%.
Moreover, the feedback loop through the saving channel only exacerbates the very trade problems that Trump claims to be solving.
With the Congressional Budget Office projecting that federal budget deficits will average 4.2% of gross domestic product from now until 2023, domestic saving will come under further pressure, fueling increased demand for surplus saving from abroad and even bigger trade deficits in order to fill the void.
Yet Trump now ups the ante on tariffs — in effect, biting the very hand that feeds the U.S. economy.
You’re rational, Mike.
Can you refute any of that with logic?
As to the box Trump’s running mouth has got him in, that article continued as follows:
Can power politics offset the increasingly tenuous fundamentals of a saving-short U.S. economy that continues to account for a disproportionate share of global military spending?
Can power politics contain the rise of China and neutralize its commitment to pan-regional integration and globalization?
The Trump administration seems to believe that America has reached a propitious moment in the economic cycle to play the power game.
Yet its strategy will succeed only if China capitulates on the core principles of the growth strategy that frames President Xi Jinping’s great power aspirations: indigenous innovation, technological and military supremacy, and pan-regional leadership.
Like Trump, Xi does not do capitulation.
Unlike Trump, Xi understands the linkage between economic and geostrategic power.
Trump claims that trade wars are easy to win.
Not only is he at risk of underestimating his adversary, but he may be even more at risk of over-estimating America’s strength.
The trade war may well be an early skirmish in a much tougher battle, during which economics will ultimately trump Trump.
It takes a stupid man to sing a stupid song, and boy, is Trump stupid now.
And then there is this Marketwatch article entitled “Trade-war worries threaten highest-flying tech stocks, too: economist” by William Watts published June 25, 2018, as follows:
Think the highest-flying tech stocks are immune to trade tensions?
As Monday’s market action suggests, it might be time to think again.
The tech-led weakness comes as the Trump administration considers efforts to block Chinese investment in the U.S. as well as curbs on technology exports to Beijing.
That comes on top of the Trump administration’s threats to impose tariffs on imports of as much as $450 billion in Chinese goods; Beijing has threatened to retaliate.
BOHICA as a policy or otherwise, Mike, that sounds like a trade war to me.
Which takes us to the Marketwatch article “Opinion: Does Trump’s trade war court American humiliation?” by Peter Morici published June 25, 2018, to wit:
However, I cannot think of an American foreign policy initiative in the last century that has been so incompetently executed and by such a quarreling team of advisers as the Trump administration’s “easy to win” trade war.
Trump has been successful in finally getting American allies to admit China poses a significant long-term threat to Western prosperity and security.
However, poking sticks in their eyes by imposing steel and aluminum tariffs on Canada and all of the European Union when the real focus of metals tariffs should be China, Korea, Turkey and a few others that flagrantly subsidize or transship Chinese products is no way to win support to effectively confront Beijing.
Similarly, China can quickly counter duties on $50 billion, $100 billion or even $200 billion of its exports by targeting with tariffs U.S. farmers and other industries in Republican districts vulnerable to Democratic challenges, and disrupting the operations of U.S. firms operating in China.
This is what happens when a nation puts an imbecile in charge of it.
And while we are on the subject of singing the “Stupid Man Blues,” check out the Marketwatch story “Trade war with Canada hurts U.S. home builders’ confidence” by Andrea Riquier published June 18, 2018:
The Trump administration’s trade spat with Canada is costing builders.
A lumber pricing index known as the Random Lengths Composite Framing Price index is up 59% since the start of 2017, mostly due to the administration’s 20% lumber tariffs, NAHB Chief Economist Rob Dietz told MarketWatch.
And then we come to this Marketwatch article “Stocks suffer worst day in weeks as Trump’s trade threats rattle; Dow ends below key level” by Anora M. Gaudiano and Ryan Vlastelica published June 25, 2018, as follows:
U.S. stocks closed sharply lower Monday, with major indexes seeing their biggest one-day drop in weeks and the Dow bearishly closing below a closely watched level for the first time in two years as fresh threats from President Donald Trump against U.S. trading partners underlined how the risk of protectionist policies has not left the market.
In a Twitter post Sunday, Trump called on trading partners to remove their “trade barriers and tariffs or be met with more reciprocity by the U.S.”
That tweet may be aimed at the European Union, which on Friday began implementing tariffs on $3.2 billion in U.S. imports.
The president responded by threatening 20% tariffs on European cars entering the U.S.
China has also been in the firing line, and by the end of the week, Trump is expected to announce curbs on Chinese investment in U.S. technology firms as well as on tech exports to Beijing.
Trump has already threatened more retaliatory levies against Chinese imports, if that country attempts its own tariff response.
Signs of a prolonged trade war took a toll on stocks last week, as investors grow increasingly concerned that the global economy could take a hit from those tensions.
“You can now make the case that we’re in a trade war.”
“The language has gotten bad enough, companies are saying the issue is impacting them, and there’s a sense that the numbers and scope of the issue are ratcheting up,” said Willie Delwiche, investment strategist at Robert W. Baird.
“Having the Dow close below its 200-day is not a good development.”
“Plus you’re seeing bond yields move down and copper falling recently.”
“Both of those could be a sign that there aren’t just concerns about trade, but also about growth going forward.”
European stocks dropped sharply on trade worries, while Asian markets finished lower for largely the same reason.
Shares of Harley-Davidson Inc. declined by 6% after the motorcycle maker said EU tariffs on the company’s motorcycles increased to 31% from 6%, and will raise the cost of the average motorcycle shipped to the EU from the U.S. by about $2,200.
BOHICA as policy, indeed, Mike.
If this is the opening bid in policy negotiations, then we are the ones who are going to do the suffering for it.
Paul Plante says
Mike, over in another thread @ June 26, 2018 at 12:56 pm, you said ” David, the way to solve the WORLD’S problems, donchaknow is to impoverish, starve and make stupid the American people,” and “EVERYTHING can be made better if only Americans can be made to suffer.”
It seems that MAGA-man Donald Trump, also known as “Old Stupid” the way Andrew Jackson was known as “Old Hickory,” heard you loud and clear on the suffering, impoverishing and starving part, at least, since the American people are already quite stupid themselves, having gotten there all on their own, and has followed through with his policies to make it happen, as we are told today in the Wall Street Journal article “U.S. presses all countries to end Iran oil imports by November” by Ian Talley published: June 26, 2018, to wit:
The U.S. expects all countries to cut oil imports from Iran to “zero” by Nov. 4 or risk sanctions, a senior U.S. State Department official said on Tuesday, expressing a toughening of the Trump administration’s Iran policy as Washington tries to politically and economically isolate Tehran.
Buyers of Iranian crude had expected the U.S. would allow them time to reduce their oil imports over a much longer period, by issuing sanctions waivers for nations that made significant efforts to cut their purchases.
But the senior State Department official said Tuesday the administration doesn’t plan to issue any waivers, and would instead be asking other Middle Eastern crude exporters over the coming days to ensure oil supply to global markets.
The tactic is likely to further escalate geopolitical tensions between the U.S. and other nations as the Trump administration pits itself against its allies and other major economies over its nearly unilateral Iran policy and a host of challenges on trade.
Oil prices immediately jumped 3% on the news, with West Texas Intermediate crude for August delivery rising to $70.02 a barrel on the New York Mercantile Exchange.
Trump just put the squeeze on us, the American people, Mike.
We are who he is going to make suffer.
And then there was the Marketwatch article “This sign of strain indicates U.S. bond auctions could get ‘sloppier’: Jefferies” by Sunny Oh, published June 26, 2018, where we learned as follows:
“If foreign demand should continue to decline as auction sizes continue to increase, the auction process will probably get sloppier as dealer participation increases,” said McCarthy, in a June 21 note.
We are a debtor nation, as you well know, Mike, and we have to rely on money to run our government and fund all our various wars around the world from other countries such as China.
So the idiot with the bad hair in the White House, the up-jumped casino operator who knows absolutely nothing whatsoever about running a government, is giving those nations a good excuse to keep their money to home, which shifts the burden back to this country and we, the American people.
More suffering and impoverishment, Mike.
And then there is the Reuters story “Atlanta Fed’s Bostic: Trade Moves Raising Downside Risk to U.S. Economy” by Howard Schneider, June 26, 2018, at 3:28 p.m., where we are told as follows:
Since the Fed’s June policy meeting the Trump administration has announced tariffs on $50 billion of Chinese goods, threatened to expand that to another $200 billion, and also to tax European car imports – steps that have led to retaliation and threats of it on the other side.
Fed officials have dealt with that risk since Donald Trump was elected, largely downplaying it as a policy concern while waiting to see actual results.
But the recent actions have now led U.S. companies to take real steps, including shifting production elsewhere to skirt taxes.
Good bye, American jobs!
And we have the Marketwatch article “Stock market posts partial rebound after trade-driven selloff” by Victor Reklaitis and Ryan Vlastelica published June 26, 2018, to wit:
Harley-Davidson Inc.’s stock fell 0.6%, building on Monday’s 6% drop, which came after the motorcycle maker said it would have to eat the “substantial” short-term costs of recent EU tariffs, but it planned to move some production overseas to ease the burden over the long term.
President Donald Trump blasted the company on Twitter for a second day in a row, threatening to tax the company “like never before” if it moves production overseas.
What a mindless thug Trump is with those bullying threats, as if this were some third-world ****hole with him as our tin-pot dictator, but we already knew that, didn’t we.
And that move is going to cost some 800 American workers their jobs.
Sounds like suffering and impoverishment to me, anyway.
And then we have the Marketwatch article “Treasury yields struggle for direction despite simmering trade tensions” by Sunny Oh, published June 26, 2018:
Trade tensions continued to simmer after Chinese President Xi Jinping said Monday “in the West you have the notion that if somebody hits you on the left cheek, you turn the other cheek.”
“In our culture we punch back,” in front of an audience of corporate executives.
Which takes us to the Wall Street Journal article “Trump hints he’ll back off tough new curbs on Chinese investment in tech” by Bob Davis published June 26, 2018:
President Donald Trump suggested Tuesday that he will ease off his demands for tough new restrictions on Chinese investment in technology industries and will rely instead a 1988 law being updated by Congress that authorizes the government to review foreign investments for national security problems.
If Trump’s decision holds through June 30, when the new policies are scheduled to be announced, it would represent a significant backing away from threats the president has made against China and a possible olive branch to Beijing before the July 6 imposition of tariffs on $34 billion of Chinese goods.
Looks like the MAGA-man was forced to blink!
As he would say in one of his TWEETS: “not good, not good!”
And there is the latest update.
Stay tuned, because with this fool in the White House, we are assured of much more suffering and impoverishment yet to come.
A friend says
The sky is falling! The sky is falling!
Get a grip Paul.
Paul Plante says
The sky is falling?
Where exactly is that happening, “A friend,” although I know not what of?
I went outside upon reading what sounds like the mewlings and bleatings of Chicken Little or some delusional paranoic in your post above, and I carefully, using precise scientific instruments to make very precise scientific measurements, made very precise measurements (I am an engineer trained in the scientific method, afterall) and I carefully scanned all quadrants to be sure, but the sky up here where I am is where it always has been, and there are absolutely no signs of any kind of stress or strain that would cause it to fall.
That’s up here, of course, and since the sky over everyone’s heads isn’t the same sky, it is very possible that the sky is indeed falling where you are, in which case, “A friend,” maybe you better run like hell to get out from underneath it, lest it land on you and pin your hands so you can’t post in the Cape Charles Mirror anymore, and what a loss to mankind that would be, ain’t it, “A friend,” although I do not know what of.
Are you sure you’re not simply confused?
You’re not thinking of the volcano in Hawaii collapsing, are you, and thinking it must be the sky falling that is causing the collapse to happen due to the extra weight of falling sky piling up on top of it, because the heat from the volcano melted the pins that hold the sky in place?
Is that your theory?
Or are you thinking about that massive asteroid speeding past earth that is visible to the naked eye that everyone is on about, mistaking that massive asteroid speeding past earth that is visible to the naked eye for a piece of falling sky?
If so, “A friend,” I think you can relax, because a massive asteroid speeding past earth that is visible to the naked eye doesn’t mean our sky is going to fall as a result.
So get a grip, dude, while you still have some sanity left – thinking a massive asteroid speeding past earth that is visible to the naked eye is the sky falling could drive you plumb bonkers, afterall, and what a loss to America and its people that would be, ain’t it, “A friend?”
A friend says
Trolled again Paul!
You are so easy… Wind him up and watch him go!
Thanks for the entertainment!
Paul Plante says
Oh, no, dude, believe me, the pleasure was all ours.
You should have heard all the hoots, and guffaws and horse laughs and mirth and merriment when people heard about your theory that the sky was falling based on that volcano in Hawaii collapsing because you think it is the sky falling that is causing the collapse to happen due to the extra weight of falling sky piling up on top of it, because the heat from the volcano melted the pins that hold the sky in place.
That was great, they said.
“What next will the dude come up with,” they now wonder.
And they are waiting with bated breath to hear your explanation for why Trump, whose hotels seem to be infested with bedbugs, is getting his economic advice from coke sniffer “Lefty Larry” Kudlow.
So, please don’t keep them waiting too long for your theory on that to coke forth.
Thanks for the entertainment, “A friend,” keep it coming, because this sad world sure does need something to laugh about, and they are looking,to you as a source of supply.
Mike Kuzma, Jr. says
So far I have been very pleasantly surprised at how well our President is doing.
You say blink, I say maybe that was the mid point he was aiming for anyway.
The status quo has indeed gotten us to this point. To change it, sometimes it is a painful and ugly process.
But we have been down the same ol same ol enough for me. Try something different.
Paul Plante says
As someone who took an oath to protect and defend OUR Constitution from enemies foreign and domestic, which means standing up to a petty tyrant like the Huckster-In-Chief Donald Trump, who is making a mockery of OUR Constitution which his arrogation of legislative authority to impose tariffs, which are a form of taxation OUR Constitution gave exclusively to the Congress, as one of the few Constitutionalists in here, Mike, I am surprised that you are so blasé about that usurpation of legislative authority by Trump.
But look at me, prattling on about protecting and defending the Constitution from domestic enemies like Donald trump, as if there actually was a Constitution, as opposed to an empty word in a meaningless oath, such is the case in the United States of America today.
So moving right along, Mike, WHY does the trade situation exist today the way it does?
If something is going to be changed, like trade policy, one should have at least a clue as to how the situation developed, and that takes us to this article, the “Political History of Offshoring,” which I personally remember quite well, having been against offshoring back then, although without a voice to express my dissent, given that the Cape Charles Mirror did not exist back then.
Jumping into that article, we have this essential history to understand, if anything is going to be changed, to wit:
In the early 20th century, two economists, John Maynard Keynes and Friedrich von Hayek, developed macroeconomic theories that have since dominated the economic policy of capitalist states.
Now, Mike, we are the epitome, the very acme of the “capitalist state,” and the very epitome, the very acme of the “capitalist,” is this same Donald Trump, whose actions to benefit the ONE PERCENT since he became president are dominated by the same economic theories that caused this trade mess in the first place.
So riddle me how Trump is going to change something that he is a part of?
Getting back to the “Political History of Offshoring:”
Keynes, who became increasingly popular during the Great Depression, believed general economic trends could overwhelm the specific behavior of individuals.
In order to have an efficient and working economy, Keynes thought government needed to assert control over certain aspects of it.
Ultimately, states established trade barriers, through tariffs, in addition to a variety of other methods to provide this control.
In return, these states provided protection for their industries and the workers within those industries.
Keynesian theory dominated capitalist economic policy from the Great Depression through the early 1980s.
Actually, it didn’t end there, and if you Google the question “is Trump a Keynesian,” the answer you get back is overwhelmingly YES.
Consider the Bloomberg article “Even Trump Is a Keynesian” by Noah Smith on November 18, 2016:
What does the election of Donald Trump mean for macroeconomics?
Above all else, it means that the half-century-long challenge to Keynesian ideas is over.
The insurgents lost.
Now, Donald Trump is amping up the Keynesianism.
Though the economy isn’t in a recession, Trump seems to be betting that Keynesian policy will keep the economy — and his popularity — buoyant.
Ah, yes, Trump’s “popularity” – not rational thought, just pure emotion.
But let’s skip past that reality and get back to the “Political History of Offshoring:”
In 1979, British voters elected Margaret Thatcher as their prime minister, and in 1980 US voters elected Ronald Reagan as their president.
Both these heads of state turned to the teachings of von Hayek who believed in trade liberalization and the free market economy.
In other words, von Hayek preached what we now call “globalization.”
Governed by the belief that free markets provided the answer to the economic difficulties experienced in the 1970s, Prime Minister Thatcher, President Reagan and their successors tore down barriers to trade through mechanisms like the General Agreement on Tariffs and Trade (GATT, which was established in 1948, but substantially reinforced from 1986-1993), the North American Free Trade Agreement (NAFTA), the formation of the European Union, and ultimately the World Trade Organization (WTO) which superceded the GATT in 1995.
All these agreements and organizations were developed to promote free trade.
In fact, upon the signing of the first GATT agreement, the US along with 22 other countries agreed to effectively lift 45,000 tariffs that existed.
The result of trade liberalization has been the susceptibility of American jobs, which traditionally have paid workers more than laborers outside US borders, to being shipped offshore as companies seek less expensive labor.
HOLY COW and WOW, Mike, look at that – it was Ronald Reagan and the Republican party that created the mess that Trump, a Republican in the mold of Ronald Reagan, is now trying to solve.
But Trump is a modern-day Ronald Reagan, so it seems that he is going to turn around a corner here, and run smack dab into himself coming the other way, which is to say, the Huckster is confused and deluded with his trade policy, so far as I can see.
That Trump is Ronald Reagan re-incarnated is again quite obvious from even a casual reading of the news, such as this Washington Post article “How Donald Trump is like Ronald Reagan” by Daniel W. Drezner February 8, 2018, to wit:
For more than a generation, GOP politicians have compared themselves to President Ronald Reagan as the political bar to reach.
When President Trump’s acolytes try to spin that his first year was littered with monumental accomplishments, they write things like “Trump Already the Most Successful President Since Reagan” or “Trump is Greatest President Since Reagan.”
Some D.C. think tanks, like the Heritage Foundation or the Competitive Enterprise Institute, have issued reports favorably comparing the 45th president to the 40th.
So, Mike, I am curious here as to how you see this farce developing further.
With respect to trade, Trump literally has to dismantle all that Ronald Reagan and the Republicans put in place in the first place, which means that Trump has to disavow Reagan, who is the Republican icon that Trump is compared to today.
Back to you, Mike.
Mike Kuzma, Jr. says
Um, Reagan had the idea for a Canadian/Mexican/American trade agreement, but it was Clinton, in 1994 who ultimately crafted and signed it into law.
And GATT and the Tokyo Meetings(86-94) were INTERNATIONAL in its genesis.
Nope, sorry doing the SAME thing over and over and expecting different results is the very definition of insanity.
BUT, I ama going home, and cooking me a Boca ‘burger’ to celebrate Kennedy retiring from the SCOTUS.
And a very relevant ruling in Janus.
Gee, I wish I still drank, today seems a very Champagne day, ya know?
Paul Plante says
Insanity seems to be the word that describes these times we are living in right now.
And I have never been a fan of “off-shoring” our production to other countries, which is what destroyed the Dutch, if you recall your world history, and the British, again, if you recall your world history.
And now, thanks to a continuation of idiots in the White House of BOTH worthless political parties, it is destroying us.
So yes, doing the same thing over and over and expecting different results is insanity.
Reminds me of some ignoramus in the administration of Bush the Smaller who said they didn’t need to know history, because they were the ones who were going to write it.
And so they did, just as we are doing in here today.
Who was it that said, “STOOOPID IS AS STOOPID DOES?”
Ah, yes, Forrest Gump!
Too bad he is not in the White House right now instead of this wind-bag, blowhard Donald Trump.
Paul Plante says
In the meantime, another trading day on Wall Street has come to a close, and Trump’s running mouth has managed to drive the S&P 500 below its 50-day moving average according to the Marketwatch article “Stocks end decisively lower as major tech and internet names sell off; indexes close at lowest level of June” by Anora M. Gaudiano and Ryan Vlastelica published June 27, 2018, as follows:
U.S. stocks closed solidly lower on Wednesday, with the losses driven by a pronounced drop in large-capitalization technology and internet stocks, while the S&P 500 closed below a closely watched technical level, which could be a sign that the recent weakness in stocks isn’t over yet.
Sentiment was once again driven by uncertainty over trade policy, and while major indexes opened higher, they turned negative in midday trading, with selling accelerating throughout the session and major indexes closing at their lowest levels of the month.
Trade-related headlines dominated global equities, and the whipsaw moves reflected uncertainty over the state of trade negotiations.
China’s central bank guided the yuan to a six-month low against the U.S. dollar on Wednesday, sending the Chinese currency tumbling, a move some analysts described as a shot across the bow of the U.S.
“Uncertainty around trade has risen with recent actions and rhetoric,” wrote Keith Parker, chief U.S. equity strategist at UBS, in a note to clients.
“The unintended consequences of trade actions are having large impacts.”
Does the mouth-running Trump have a clue as to those “unintended consequences” as he lurches and blunders forward with his protectionist trade rhetoric?
I for one seriously doubt it.
Then we have the Marketwatch article “10-year U.S. government bond yield posts steepest one-day drop in a month” by Sunny Oh published: June 27, 2018, where we gather this information:
Treasurys also continued to rally on the back of trade tensions.
Discord within the administration over how trade policy should be conducted has broken out into the open after Treasury Secretary Steven Mnuchin and Peter Navarro, Trump’s trade adviser, gave opposing statements about whether the investment restrictions were targeting Beijing or the U.S.’s other trading partners.
That said, President Donald Trump appeared to backpedal on placing strict curbs on Chinese investment.
Is “backpedaling” another word for “blinking?”
Seems so to me, anyway.
And then there is the Marketwatch artricle “Durable-goods orders fall in May as auto demand slump” by Jeffry Bartash published: June 27, 2018:
2:54 p.m. ET
Orders for durable goods fell 0.6% in May following a revised 1% decline in April, the government said Wednesday.
The biggest drop in new orders for cars and trucks since 2015 spurred the second straight decline in demand for durable goods, perhaps a sign that intensifying trade disputes between the Trump administration and other countries are causing businesses to hesitate.
Bookings also fell for primary metals, some computer products and electrical equipment.
The U.S. has also slapped tariffs on foreign steel and aluminum.
The air is coming out of the illusion of an economy Trump inflated with massive deficit spending in what has to be one of the most blatant and greatest upward wealth transfers using government funds, i.e., robbing from the American people, I have seen in my lifetime.
And then there is oil.
Who can forget oil?
Certainly not anyone who drives a car or heats their home with oil,
According to the Marketwatch article “U.S. oil prices settle at highest since 2014 as crude supplies notch biggest weekly drop of the year” by Myra P. Saefong and Christopher Alessi published June 27, 2018, this ism the latest news o that front:
Oil prices rallied Wednesday, with the U.S. benchmark settling at its highest since 2014 as domestic crude supplies notched their biggest weekly drop of the year so far.
Traders also showed concerns over U.S. threats to sanction countries that don’t stop importing oil from Iran by Nov. 4.
On the New York Mercantile Exchange, August West Texas Intermediate crude tacked on $2.23, or 3.2%, to settle at $72.76 a barrel.
That was the highest finish since Nov. 26, 2014.
The oil-price gains came after Brent and WTI closed up Tuesday by more than 2% and nearly 4%, respectively, following threats by the U.S. to sanction countries that don’t cut their imports of Iranian crude to “zero” by Nov. 4.
Tuesday’s announcement by the U.S. State Department “may well have been designed to ramp up the pressure on the Iranian regime, but it is also likely to exert further upward pressure on U.S. prices,” said Michael Hewson, chief market analyst at CMC Markets UK.
That news is great news for Trump’s gouger buddies who feed off the American people, the people who spend time with Trump at Mar-A-Lago, and for Trump, that is really what it is all about – maintaining his class in the opulent style they have become accustomed to, which takes us to the CNBC story “Majority of Americans approve of Trump’s handling of the economy for the first time: CNBC survey” by Steve Liesman published 25 June 2018, which proves that the old adage of a fool being born every minute still holds true in America, to wit:
For the first time since President Donald Trump took office, the CNBC All-America Economic Survey shows more than half the public approving his handling of the economy, and it appears to be having some impact on his overall job approval rating.
On specific policies, the president’s biggest winners are tax cuts for individuals and businesses and renegotiating trade deals.
A plurality of 45 percent approve of Trump’s imposition of tariff’s, with 38 percent disapproving.
I wasn’t in the poll, but I would be over with the 38 percent disapproving, because I am not a fan of chaos.
As to how great the economy is doing for the average American, that CNBC article gives us this:
One problem for the president: Just 34 percent of Americans say they have seen an increase in their take-home pay because of the tax cuts, roughly the same as when the question was asked in March.
I thought Trump was going to make us all rich.
And while we are on the subject of the blow0hard Trump sowing the seeds of chaos, we have this from an article in The Hill on 06/27/18 entitled “Trump putting booming economy, own popularity in jeopardy” by Liz Peek, a former partner of major bracket Wall Street firm Wertheim & Company who for 15 years has been a columnist for The Fiscal Times, Fox News, the New York Sun and numerous other organizations, to wit:
A plurality of 45 percent approve of the tariffs Trump has slapped on imports such as aluminum and steel; only 38 percent disapprove.
That is worrisome because the president will be emboldened by these soundings, and will likely continue to press a trade battle that is beginning to have real consequences for the economy.
European carmakers are hinting that if Trump follows through on threats to raise tariffs on imported cars, they may re-evaluate their sizable commitment to manufacturing in the U.S.
Daimler AG, parent of Mercedes-Benz, stated that retaliatory charges on its exports to China from its Alabama plant are hurting its bottom line.
Wisconsin cheesemakers face stiff import duties now shipping into Mexico.
Evidence is mounting that Trump’s trade battles with friends and foes alike could soon dampen the extraordinary optimism that the president has inspired through lowering taxes and rolling back regulations.
Wall Street’s top economics team at ISI Evercore issued a cautionary note to clients within the past few days, recounting numerous tales of “trade pain” — anecdotal evidence that rising uncertainty about the disputes is causing business managers to suspend expansion plans and delay investments.
In short, President Trump is playing with fire.
With his aggressive efforts to level the playing field for American exports, he risks tapping the brakes on an accelerating economy and sideswiping his own improving approval ratings.
As we head toward the midterm elections, it is inconceivable that he and his advisors will allow the trade battle to spiral out of control, but recent headlines have suggested it could happen.
That would be a self-inflicted wound of enormous proportions.
Investors are signaling impatience with the president’s combative trade posture.
While the underlying momentum of the economy remains on track, rising anxiety about the impact of the trade disputes has led to increased volatility and a market downdraft.
Early in the spat with China, Beijing officials appeared willing to grant some relief from tariffs and be somewhat amenable to changing policies to allow American companies greater access.
The markets greeted such overtures enthusiastically.
But the Trump White House was not willing to take “yes” for an answer, and the threats, as well as the goods targeted by tariffs, expanded.
China then balked, with President Xi Jinping seemingly deciding that in his country, where saving face is a national pastime, he could not afford to be seen giving in to the pugilistic American president.
In a recent meeting with multinational CEOs, Xi commented that in China it is not the custom to turn the other cheek but rather to “punch back.”
This was an alarming message, and investors treated it as such.
And there we have the news for today.
What will tomorrow bring?
With Trump in the White House, who the hell knows, starting with him.
Stay tuned, more is yet to come.
Mike Kuzma, Jr. says
I’ll just grab one, Paul
Liz Peek is a moron who rode her skirt up Wertheimer( I KNOW that from the inside) who lets her liberal politics flavor her writing.
As for China,they are terrified TERRIFIED of a trade war seeing as how they have an export import imbalance of around 4 to I, maybe 5 to 1.
If we stop shipping them stuff, we eat cheaper(mostly agricultural products TO China) if we stop BUYING from them, THEY starve.
And Xi knows damn well that a billion hungry Chinamen means the sign painter has a new name to paint on the President’s door.
Take a chill pill Paul. The lefty press is doing their job too well on you.
Ya know, red meat is very calming…………..;)
Give it up, you won’t convince me to either jump off a bridge TODAY!!!!!!!OMG!!!!! because of intraday market fluctuations, nor will I disparage the only man who gives America a chance in the face of a long term Democrat/Liberal/progressive plan to destroy us.
Or actually eat a veggie patty.
Paul Plante says
I’m an engineer, Mike.
In my head, unaided by computers, which did not really exist when I was training as an engineer, I can take things apart, a talent that leads to what is called “reverse engineering” (the reproduction of another manufacturer’s product following detailed examination of its construction or composition), or I can take the Table of Elements in my head and see in there what is available to be used to develop “technology,” which is nothing more than the physical expression of an IDEA, and then I can develop the techniques and other technologies, the “systems,” if you will, required to extract those elements and process them in the necessary ways to create “new technology.”
I have actually built, on behalf of an American corporation, process equipment, i.e. “technology,” for export to Ireland, in order to get around EU tariffs.
I procured the materials, the various technicians required to actually build the components, and I had those components then containerized and sent to Ireland, where I again procured the necessary technical skills to assemble the technology in Ireland, in an Irish-run company with Irish technicians operating it.
So, were the Irish then “stealing” our technology, as the Huckster in the White House wildly claims, with his screeching and moaning and hollering, like a mindless idiot, to people like myself who know better, and are embarrassed, at the minimum, to have such a mindless and clueless idiot in the White House, making America look small and mindless and weak?
Or is Trump full of ****?
And then I participated, again on behalf of an American corporation, in a “TECHNOLOGY TRANSFER” with a Japanese company in a joint venture.
So, were the Japanese “stealing” our “technology?”
And how about me, Mike, was I selling out America by sharing “OUR TECHNOLOGY” with people like the Irish and the Japanese who were trying to “steal” it from us, because they are too ******* stupid to be able to develop “technology” by themselves?
And speaking of stupid, which Trump is possessed of by the bushel full, how stupid do you really have to be to think that the Chinese, for example, are “stealing” our technology?
Those charges are paranoid ravings, Mike, precisely because there is no such thing as “our technology,” and what a moron Trump is to think so, and then claim that there is.
And there is what I am against, Mike, this fool in the White House railing like a madman, which conveys to the rest of the world the image of people like you and me being mindless fools, as well., because we have one as our “leader,” an idea I take every opportunity to dispel, just as I am doing in here.
“HEY, CHINA, I AM NOT WITH TRUMP, AND HE IS NOT WITH ME!”
Ideas are not exclusive to white Anglo-Saxon males, Mike, despite the Social Darwinism Trump adheres to, that being the belief that white, wealthy, Anglo-Saxon Americans are biologically superior to other groups, especially such “racially inferior” species such as the Chinese, a people in Trump’s world view noted for having absolutely no history of their own worth mentioning, and who could not possibly survive as a people but for the U.S. technology they are able to “steal” to keep them barely afloat as a nation.
But being a white, wealthy, Anglo-Saxon American who is so very bigly, actually, biologically superior to other groups, especially the Chinese, Trump will never be able to realize that.
Nor does he realize, Mike, that the real driver of our economy these days, thanks to Ronald Reagan and “GREED IS GOOD,” is FINANCE!
And FINANCE, Mike, is what drives the development of technology, and FINANCE, the RENTIER CLASS that Trump is a member of, is about PROFITS!
And it is that “system” which BULL*******-in-the-china-shop is disrupting.
And historically, Mike, and you know this as well as I, when the SYSTEM OF FINANCE is disrupted by tariffs, chaos historically has been the result.
How many economies in history based on finance have already been destroyed by the imposition of retaliatory tariffs, Mike?
How about England?
After becoming one of the most prosperous economic regions in Europe between 1600 and 1700, Mike, Britain led the industrial revolution and dominated the European and world economy during the 19th century, being the major innovator in machinery such as steam engines (for pumps, factories, railway locomotives and steamships), textile equipment, and tool-making, technologies that we and the Germans then STOLE from them.
Britain invented the railway system and built much of the equipment used by other nations, such as us, who again STOLE it from them, by the process of reverse engineering I am an expert at.
And here come the roots Britain’s downfall, Mike – it was a leader in international and domestic banking, entrepreneurship, and trade, and after 1840 it abandoned mercantilism and practised “free trade,” with no tariffs or quotas or restrictions, so that between 1870 and 1900, economic output per head of population in Britain and Ireland rose by 500 percent, generating a significant rise in living standards.
Just a few decades later, of course, WWI and the Great Depression were to change all of that, and because before WWI, Britain was “off-shoring,” sending its capital abroad to invest in railroads in this country (technology) and Germany, making that country stronger while Britain got weaker, from the late 19th century onwards, Britain experienced a relative economic decline as other nations such as the United States and Germany caught up.
That’s what happens, Mike, when a country like the United States abandons an economy based on manufacturing, which we did back in the “GREED IS GOOD” days of Ronald Reagan, and instead, develops an economy based on FINANCE, rent-seeking, and then sends it capital abroad to invest in technology development in foreign countries.
They get stronger, we get progressively weaker.
That, Mike, is the SYSTEM, and Trump has absolutely no control whatsoever over that SYSTEM.
He has no power to change it, except by totally disrupting it, causing the necessary economic chaos required to get people to really want real reform.
And Mike, this is not any kind of rocket science.
This is all high school stuff, especially today, where American children are taught that they are a tiny part of a global, not American economy, and not knowing any better, they believe they are.
Mindsets matter, Mike.
Which takes us to the CNN article “Analysis: The age of Reagan – President loomed over the ’80s, an era at odds with itself” by Todd Leopold on June 16, 2004, as follows:
In the heart of his 1984 re-election campaign, Ronald Reagan made a speech in Hammonton, New Jersey, and took the opportunity to invoke the name of one of the Garden State’s favorite sons.
“America’s future rests in a thousand dreams inside our hearts,” the president said.
And there is what it became about, Mike – the fulfillment of dreams!
For proof of that, consider the article “Consumers at heart of stimulus plan” by Christopher Leonard, Associated Press, published January 26, 2008, to wit:
ST. LOUIS — The success of the federal $150 billion emergency economic stimulus plan will hinge on whether American consumers do what they do best — spend, spend, spend.
The stimulus has been debated in Washington for more than a week as the economic outlook worsened, and now Americans are armed with specifics:
Individuals will get up to $600, working couples $1,200 and those with children $300 more per child.
President Bush and leaders in Congress hope people will spend those rebates — a flat-screen television, maybe, or a trip to Disneyland — to help revive an economy sagging from bad mortgage lending and a lack of confidence in the stock market.
PANT PANT PANT GOT’S TO HAVE, Mike – without a flat-screen TV, a TECHNOLOGY made in a foreign country, but paid for with money provided to the American consumer by the U.S. government borrowed at interest from the countries American FINANCE has shipped our capital to, life simply is not possible, because it is about dreams, just as Ronnie Reagan said, and the only way those American dreams can be fulfilled is by shipping pour capital and our technology to under-developed countries, where unlike America and its bloated cost of living, labor is cheap.
When Trump drives up the cost of fulfilling those dreams, and old people down at the bottom of the lowest economic quintile where I am do not bother having dreams as we deal with the reality of having to pay out $46 dollars for a twenty-five cent paint stick, it is the American people who are going to be howling, Mike, not the Chinese, because like me, Mike, most of them are POOR PEASANTS!
So, to me, Mike, whatever the insipid “lefty press” might be doing as their “job,” a term used to describe a toddler being toilet-trained, is mere piffle (nonsense).
It affects me not.
That is the real beauty is living in poverty, Mike, you go through each day without illusions if you want to survive, because winter is always coming.
Too bad a white, wealthy, Anglo-Saxon American like Donald Trump who is biologically superior to other groups, especially such “racially inferior” species such as the Chinese, a people in Trump’s world view noted for having absolutely no history of their own worth mentioning, and who could not possibly survive as a people but for the U.S. technology they are able to “steal” to keep them barely afloat as a nation, is unable to grasp any of that.
Maybe a stretch of poverty would do him some good – get rid of his arrogance and teach him some much needed humility.
And Mike, the American people very much appreciate you stimulating the further development if this very important subject with your input above, especially the part about Liz Peek being a moron who rode her skirt up Wertheimer who let her liberal politics flavor her writing.
Isn’t it just amazing, Mike, how many morons make it through law school and then become lawyers with literal power of life and death over us mere mortals down here at the bottom of the economic food chain where I dwell.
Paul Plante says
And getting back on topic here while at the same time speaking about getting a grip on the facts before one gets one’s mouth too far in gear, were you aware, “A friend,” that as the twenty-first century, the one you and I and Mike Kuzma, Jr. are in right now, all of us together without regard for race, color, creed, sexual proclivities, of which it seems there are many these days, or sexual orientations, here in the pages of the Cape Charles Mirror, gets underway, which it has been doing these last eighteen years, that it is believed by those who bother to ponder these things that the perceived imbalance of wealth and democracy here in the United States is believed to be unsustainable by traditional yardsticks, which in turn has raised the question of whether or not in this day and age there are any yardsticks to measure by, at all?
Consider the Marketwatch story “It’s been decades since the White House has warned the Fed the way Kudlow just did” by Greg Robb published June 29, 2018, where we find as follows:
Powell has signaled the Fed will continue to hike rates at a once-per-quarter pace, despite warnings from doves at the central bank that the market is signalling caution.
In particular, the yield curve has been flattening, with the spread between 2-year notes and 10-year notes at the lowest level since 2007.
The curve is a line that plots yields across all debt maturities.
It typically slopes upward. A flatter curve can signal concern about the outlook.
An inverted curve is an accurate predictor of recessions.
Powell and other Fed officials have said that times are different and the yield curve may not be the signal it once was.
See what I am saying there, “A friend?”
If the yield curve is actually no longer the signal it once was, and you would think this Powell dude who was a direct appointee of Donald Trump would have a clue if anybody did, then is it a signal of anything, anymore?
Or has it become totally meaningless?
And the answer is that nobody seems to know anymore what it might or might not mean, especially all these unelected political hacks on the federal reserve board, as we see from this comment in that same article, to wit:
But St. Louis Fed President James Bullard on Thursday said he didn’t know why the Fed wanted to “test this theory” by continuing to push short-term rates higher.
What’s your vote, “A friend?”
What do you want the yield curve to mean?
And that is what had the panties of American financial analyst and former television personality serving as Director of the National Economic Council under President Donald Trump since 2018 Lawrence Alan Kudlow of The Kudlow Report and Kudlow & Cramer, affectionally known to all his many Wall Street friends and Donald Trump as “Kuddles,” who graduated from the University of Rochester in Rochester, New York, where he was a member of the left-wing Students for a Democratic Society, with a degree in history in 1969, the same year I was in Viet Nam fighting to keep you free from the Commies, “A friend,” all in a bunch in that article, where we were told as follows:
It has been a long time —the early 1990s in fact— since a White House tried to influence Federal Reserve policy the way Trump economic advisor Larry Kudlow did on Friday.
In an interview with Fox Business Network, Kudlow jawboned the Fed, saying: “My hope is that the Fed, under its new management, understands that more people working and faster economic growth do not cause inflation.”
“My hope is that they understand that and that they will move very slowly,” he added.
Think about that for a moment, if you will, “A friend,” and here you can see what a good friend I am being back here by sharing this with you – one dude appointed by Trump to guide him on matters economic is questioning whether another dude appointed by Trump to head the federal reserve for Trump has a brain in his head.
Is that bizarre?
Did Trump appoint a moron to head up the federal reserve?
It sure does look it from the comments of Robert Brusca, chief economist at FAO Economics, in that same article where he told us that “Kuddles” Kudlow was trying to “guide the Fed’s eyes” to the yield curve signal:
“I’m sure Larry was trying to send smoke signals.”
“He’s trying to explain it to them,” Brusca said.
WTF, “A friend?”
He’s trying to explain it to them?
What is up with that?
How come Trump put somebody in charge of the federal reserve who knows nothing about how the economy works?
So he wouldn’t be smarter than Trump, who knows even less?
And how did “Kuddles” Kudlow in his turn become so knowledgeable?
Let’s check it out together, what say, since we have obviously bonded here.
“Kuddles” Kudlow began his career as a junior financial analyst at the New York Federal Reserve, so there we seem to have it.
But it don’t end there, because he soon left government to work on Wall Street at Paine Webber and Bear Stearns as a financial analyst, and then, in 1981, after previously volunteering and working for left-wing politicians and causes, Kudlow joined the administration of Ronald Reagan as associate director for economics and planning in the Office of Management and Budget.
Now, tell me, “A friend,” what is Trump up to here with a flaming “LEFTIE” as his economic advisor?
Is Trump planning to turn us into a socialist nation?
And getting back to “Kuddles the Leftie,” after leaving the Reagan Administration during the second term, Kudlow returned to Wall Street and Bear Stearns, serving as the firm’s chief economist from 1987 until 1994, and during that same time, he also advised the gubernatorial campaign of Christine Todd Whitman on economic issues.
Then, in the late 1990s, after a publicized battle with cocaine and alcohol addiction, Kudlow left Wall Street to become an economic media commentator, first with National Review and later hosting several shows on CNBC, and then he returned to politics in 2018, serving as Gary Cohn’s replacement at the National Economic Council for Trump.
So, you’re a savvy dude here, “A friend,” maybe not so much on astronomy or celestial mechanics, but you certainly are near or at the head of the class when it comes to presidential politics, what on earth is going on here with Trump and Kudlow?
Where is it that they are really trying to take us?
Is this some kind of left-wing plot, do you think, on behalf of the long term Democrat/Liberal/progressive plan to destroy us and make us have to eat veggie patties, instead of real red meat?
If you got it figured out, and if anyone can, we’re betting its you, can you please share it with us?
The candid world is desperate to know.