Blog #68 Trump Tariffs are Gold for USA
I wrote this article for the Boston area newspapers in March 2018!
Today, Tariffs are back on the Trump plan. China did nothing but pay the tariffs and prices did not rise. The EU has been getting away with outrageous tariffs on US goods. Time to end that nonsense by the EU and other countries. Trump will use the Tariff hammer to make free trade fair trade. Under the Democrats, Globalism has enabled unfair trade against the USA!
In the meantime, with Biden adding a Trillion dollars in debt every 100 days, we are careening towards bankruptcy. We are now OVER $35 TRILLION in National Debt. Time to end this lunacy is NOW!!!!
Trump Tariffs Worth the Risk
John Shoemaker, March 2018 Boston Metrowest Newspapers
Many feared wrongly that Trump would launch missiles and start nuclear war.
Instead, he launched the nuclear option with potential trade wars around the world.
The enemy includes many of our otherwise known allies.
Why do this?
The numbers are absolutely staggering.
While the U.S. is over $21 Trillion in debt, the Federal Government is racking up annual budget deficits of a trillion or so, give or take a few billion. Alongside this mess is the fact that our trade deficit has been running in the red for decades, now over $560 Billion in 2017.
In fact, the U.S. trade deficit is more than the total deficits of the top 25 deficit trading countries “combined”.
Those with the most surplus trade balances include Germany, Japan, China, and South Korea, with combined surplus CAB or Current Account Balances exceeding $700 Billion in 2017. The U.S. CAB is over $460 Billion in 2107, the largest in the world. The second largest is the U.K. at $92 Billion.
Of all countries, China presents the most concern for the U.S. with its predatory practices of dumping products, high tariffs, restrictive trade, intellectual property theft, infiltration into universities (science, technology, engineering) with Confucian Centers, cyber intrusion and hacking and more.
The U.S. trade deficit with China exceeded $375 Billion. A distant second and third place, Japan and Germany, were less than $70 Billion each.
The EU, in total, had a $135 Billion surplus with the U.S. in 2017.
The U.S. simply cannot match the imports of foreign goods with exports of American goods under the current scheme.
One reason is apparent: most countries in the world put tariffs on our products while we do little or nothing with foreign products. This imbalance of trade has been allowed to proceed for decades at America’s disadvantage.
Trump, as the “change agent” for America, has said enough is enough. We cannot afford to continue like this and witness our non-competitiveness in a world increasingly dominated by China.
Trump calls the situation for what it is, “ridiculous and unacceptable” and that “we are like the piggy bank that everybody’s robbing”. He says, “this must end.”
When it comes to tariffs, most developed countries don’t issue broad-based tariffs against all goods from a named country.
Many countries typically issue tariffs on a case-by-case basis, whether to protect an individual industry, a company, or a specific set of products or services. However, tariffs against U.S. products by specific countries often exceed 30% net over the tariff we place on similar products from that same country. But worse, some will levy tariffs up to 100% and beyond to stop or inhibit trade altogether.
The U.S. has been particularly vulnerable to manufactured products such as metals, autos and machinery, electronics, and consumer products. The results are visible in American job losses numbering in the millions.
No one likes tariffs against their products. The U.S. has tolerated it for years, which has enabled continued abuse. “Globalism” ruled the political thinking in the U.S. in both political parties.
Yet the outcry against the U.S. raising its tariffs is loud.
As Trump raised tariffs on imported aluminum and steel, China reacted in kind. Canada is outraged that Trump would raise tariffs on their dairy products, even with Canada tariffs of nearly 300% on our products.
Opposition to tariffs declares emphatically that no one wins a trade war.
Trump makes an important point, however, “we already lost the trade war”. Now we are looking for fairness and a level playing field. Further, in a shock to many countries, Trump suggested eliminating all tariffs to have real free trade.
The expressions on the faces of world leaders was clear – they were frozen and dumbfounded at the idea.
For too long these other countries have taken their tariffs for granted and simply never thought they would have to change.
It was a similar reaction at the NATO Conference in Brussels last year when Trump was brutally candid and aggressive in stating that it is time for member nations to start paying their just dues for protecting their own countries with American military might.
They were aghast. They simply thought our gullibility and generosity were endless.
Now, Trump has launched a risky initiative to strike back against tariffs by fighting fire with fire.
While early in this war game, it seems China has more to lose. China’s stock markets in Shanghai and Shenzhen are reeling with massive losses. The pressure on President Xi is building.
Canada is rethinking its policies on dairy products. The EU is going to act on aluminum and steel being dumped by China.
Early results suggest Trump is winning.
As usual, if he wins, America wins big.
If he loses, the Democrats will be cheering in the streets.
Trump likes to manage conflict head-on.
We can only hope we don’t crash.