@StumpTownStu
Long answer to what should be even longer and more detailed. Forgive, the written errors I am sure are here. Did it in a hurry while waiting on a flight.
Whether Biden made the final decision or not, in the end he stuck with Trump’s tariffs on China. You can make the case that the folks liked the sense of economic nationalism and that the tariffs were popular with them.
Trump, as one guy put it, realized that the free trade deals and economic liberalism do not matter to the folks in the middle of the country that have had huge losses in their industries. You can argue the NAFTA and GATT merits on a lot of levels, or even the USMCA for that matter. But when folks are told to ‘learn to code’ or simply ‘find another job’ they feel forgotten.
So, a lot of folks like the steelworkers applauded Trump for this and gave him credit for a resurgence in their industry.
So, under huge pressure from them, Biden had nothing to do but stick with the policy and tacitly admit that it was working and good.
So, in a sense it is a win for Trump from back then that Biden could not move away from them.
The Democrats only opposed them because they opposed Trump back then.
They use all sorts of reason to oppose them. This time around they have been using inflation. Tariffs do not, in themselves, cause inflation. Inflation is almost always a monetary phenomenon. It is all about too much government-infused money chasing too few goods.
It is not like it is a ratio where if you put tariffs on the prices go up by that same amount. That is not how it works. As long as it is not a situation where you have what we call ‘inelastic demand’ or a situation where there are simply no ‘substitutes’ available it will not have that relationship.
What people fail to realize, or choose to dismiss, this time with Trump’s tariffs is the use of them to get ‘targeted’ countries to change behaviors. This has shown to be having an affect with several places, including Mexico and Canada. They obviously made changes with the border situation. They can save face and say it was for other reasons or that they were going to do it anyway. But a result is a result; no matter.
The ideal situations many economists posit is complete free trade. This is the economic theory known as ‘comparative advantage’. This was first written about by an economist from a couple of centuries ago by the name of Ricardo.
But this does not take into account the ‘political economy’ side of things. Now you have, say, China manipulating their currency and ‘over’ protecting their state-run businesses.
Then you have a trade imbalance. You see the same thing even with allies. There is an imbalance even with Canada.
When you go absolutely free trade with no regard for the folks that lose their jobs it makes the folks suspicious that you do not have their best interests in mind when you do these trade deals. They see them for what they are: politically strategic interests. This is not to dismiss the fact that some would be for national security reasons. Some countries should not get the advanced technologies for that reason. Still others should not receive trade because of issues like South Africa had, or North Korea, Cuba, or Iran do nowadays.
Now you get to the term and see that he has changed behaviors and just the threat of it has some adapt polices or amend them and Trump has pulled back from the threat. So, now other countries see that it can be a negotiating tactic and they can get Trump to forego them by making some changes or meeting him halfway.
One of the things he did early on was to fix the Tariff Act of 1930. It had a provision in it known as the de minimis provision.
This essentially would allow smaller imports in one day at a capped price. Over the years that price had increased to $800. For comparison, Canada had their de minimis provision capped at $15. This is meant to keep the government’s costs down from having to deal with all of these every day.
So, since the USA has set the cap at high number, countries have been exploiting this. China has been the worst example, by far.
The yearly de minimis imports has reached over $50B and a lot of that is Chinese goods. That is a lot of goods that have been exempt from tariffs over the years and has only grown worse. Some have seen it as a way to dissuade China from the forced labor they were using to exploit this ‘loophole’. There are some ongoing concerns with the EO.
Trump’s EO fixed that, or will if fully implemented.
Now he is using these as a tool to bring back manufacturing and investment in the USA.
Several companies have decided to to change plans to accommodate this. Or they have sped up plans to do so. The Eli Lilly $27B for 4 plants is an example. They cited the tariffs as a key reason. CMA out of France has said they are investing $20B. TSM $100B on semiconductors in the USA. Apple has also decided to change plans somewhat and stay domestic with $430B. Siemens is saying they will build new plants in the USA and invest over $250M. A lot of companies are now changing their plans for supply chains and production back to the USA now. This is not even to mention Honda auto manufacturer that decided not to continue their build in Mexico but move to Indiana instead. They also stated it was because of tariff concerns.
This is not even to mention the Gold Card plan that might infuse much more investment capital for jobs.
But as another guy pointed out it is not whether the tariffs will work or not; but whether the folks will have the willpower to stick with it.
Of course things will not be easy and the road ahead will have obstacles.
But the longterm benefits will outweigh the short term problems.
The evidence is right there for everyone to see. Denying it is just a jaded way of thinking.
So, again:
The Democrats only opposed them because they opposed Trump back then.
Now they still oppose them because them because they oppose Trump.
Trump is again putting on a one-man clinic with tariffs.
He is teaching a master class in tariffs.
Even the threat of tariffs is getting great results.
@Raiders22
My predictions: To the Canada Mexico & Europe.. Jmho
The US is heading for a recession for multiple reasons, tariffs being a big one, and
The Orange Buffoon will blame Canada for the consequences of his own incompetence – consequences that economists are already on record as predicting. He might also blame Europe. Or he might blame a Canada-Europe conspiracy, which he’s already hinted at. He certainly won’t blame himself!
@joe pockets
1) Yessir. I have been calling for a recession for a while now. It had nothing to do with tariffs. This has been since before Trump was elected. The economy did not need tariffs to do this because it already had its own issues.
But ‘economists have called 11 of the last 5 recessions.’
But I agree with you on that.
2) I am not sure what exactly you mean? You think Trump will blame what on Mexico and Europe? What consequences? You mean if the trade things don’t go his way?
3) How are you tying eggs to tariffs? You mean if you guys start importing them? Why would there have to be tariffs on eggs? If it is deemed an ‘emergency’ the tariffs would not be on eggs?
I did see a quote from a guy the other day saying why import just eggs, why not import the chickens?
Now that Trump has pointed out that Denmark is not doing enough to protect Greenland they promptly have decided to invest over a $1B on military drones and ships in the area.
Denmark is another country that loves to point out they are a part of NATO, yet does not meet its financial obligations to NATO.
Another instance where Trump was correct and where his ‘threats’ got results.
@Raiders22
I agree with you ! When terms of a deal aren’t enforced why should US soldiers have to die? Buy some tanks and airplanes and take your sovereignty seriously if you want to keep it. People and nations always looking for a handout instead of contributing their fair share. If you flip a coin enough sooner or later you’ll get a heads ! That is proven true in Trumps idea's percentages ! If only he would have less ideas and tell less. Far fetched lies he would be palpable!
@Raiders22
Nice read here on the tariff situation, refreshing content over what has become the new normal in here
This cesspool has only deepened since January. Cesspool I don't think is even a fair name for it any longer....
Need something much dirtier, ignorant and hypocritical to represent the usernames and content in this sub.
Pretty...pretty pretty good (Larry David voice)
Funny stuff coming from you, especially considering your three characters of the story are yourself and your two imaginary interweb buddies.
Be well in these tough times....really hope you don't lose your social security
Three miscreants enter an apartment building at 2:00 am, loudly hollering and laughing, then begin vomiting, pissing & shitting on all the hallway carpets.
The next day, the vandals return and confront the building manager:
"Your building STINKS! It's a CESSPOOL!!"
[Quote: Originally Posted by Raiders22]@StumpTownStu Long answer to what should be even longer and more detailed. Forgive, the written errors I am sure are here. Did it in a hurry while waiting on a flight. Whether Biden made the final decision or not, in the end he stuck with Trump’s tariffs on China. You can make the case that the folks liked the sense of economic nationalism and that the tariffs were popular with them. Trump, as one guy put it, realized that the free trade deals and economic liberalism do not matter to the folks in the middle of the country that have had huge losses in their industries. You can argue the NAFTA and GATT merits on a lot of levels, or even the USMCA for that matter. But when folks are told to ‘learn to code’ or simply ‘find another job’ they feel forgotten. So, a lot of folks like the steelworkers applauded Trump for this and gave him credit for a resurgence in their industry. So, under huge pressure from them, Biden had nothing to do but stick with the policy and tacitly admit that it was working and good. So, in a sense it is a win for Trump from back then that Biden could not move away from them. The Democrats only opposed them because they opposed Trump back then.[/Quote]
This area in bold, in a nutshell, sums it up quite well... Trump is "trying" to make things right for the millions of workers in the Rust Belt who are the ones who really took it on the chin w/ big job losses since NAFTA was signed in the 90s. (I'm talking Indiana, Wisconsin, Michigan, Ohio, and Pennsylvania in particular).
So, we as a country are trying to make things better primarily for these hardest hit workers..........at the expense of "everyone" in this country. We are all consumers, but only some of us work in manufacturing sectors like steel making & making autos.. So, hurt everyone via higher prices, and help a small subset of workers in this country. That is the big picture.. Trump is trying to "re-tool" this country to be more manufacturing-based and employ more of these "forgotten workers," but it will only result in higher prices for everyone.
This will not end well for consumers, or the economy IMHO. And considering that consumer spending makes up 70% of our economy.... Look out below. A correction will soon be a bear market, and then Trump will have to decide how much he wants to help the forgotten workers at the expense of hurting us all.
[Quote: Originally Posted by Raiders22]@joe pockets 1) Yessir. I have been calling for a recession for a while now. It had nothing to do with tariffs. This has been since before Trump was elected. The economy did not need tariffs to do this because it already had its own issues. But ‘economists have called 11 of the last 5 recessions.’ But I agree with you on that. 2) I am not sure what exactly you mean? You think Trump will blame what on Mexico and Europe? What consequences? You mean if the trade things don’t go his way? 3) How are you tying eggs to tariffs? You mean if you guys start importing them? Why would there have to be tariffs on eggs? If it is deemed an ‘emergency’ the tariffs would not be on eggs? I did see a quote from a guy the other day saying why import just eggs, why not import the chickens?[/Quote]
Raiders, what is/was your call for a recession based on.... Because you'd be hard pressed to find any "meaningful data" that would support your contention that we were headed for recession, before Trump's adventure into Tariffs 2.0. What are these issues you speak of..
I think efforts to provide training to these "forgotten workers" in other fields that can't be outsourced (like energy) would have been $$$ better spent. There has to be a better way forward than going forward w/ a solution that will hurt everyone, and help only a few. This just doesn't make any sense.
@Rush51
So do you think these corps that ditched the US will just return because of tariffs? This would mean a loss of BILLIONS in foreign investment in PPE, how long will it take for the fake tariffs to equal or be greater than the loss on those investments AND the increase in labor costs in the US, AND (a big and here) the cost to build/rebuild manufacturing in the US? How long even if they decided tomorrow to come back to the good ole USA would it take for those imaginary manufacturing plants to be in use and functioning?
I have not seen reference from any of your side about the nuances and loopholes of these fake tariffs because the headlines you here in the media are NOT what the truth is about how these will work and how you get around them.
Then toss in the cost to the consumer on the tariffs to our goods and products, these tariffs are such a scam waste of time they are useless noise which will go nowhere.
@Rush51
Not sure how detailed an answer you are looking for.
But labor market data for one. The numbers had slowly been weakening. The unemployment rate had jumped above its 3 year MA a few months ago. This is a very reliable indicator of a looming recession.
The stock market is never a great leading indicator on the larger look. But a lot of people like to use it as a gauge. But it had been sort of obscuring the overall economic situation.
I had even written that I feel we might already be in a recession or nearing one back then.
Once the FED started cutting rates the market went up a good bit. The same thing when Trump won, it went up. But that does not take into account the real economic numbers. That is more rash exuberance and hopeful speculation.
I think the hope that the cuts would stave off a recession and ease into a ‘soft landing’ are wishful thinking.
It seemed late summer when the ‘Sahm Rule’ got triggered (3 month MA of jobless rate goes up .5 points above the 12 month low) it was signaling a start of a recession. For example, the market had its worst 3-day period in over two years. But then the FED and the election may have staved off a worse situation. The market really preferred a Trump win and he began to look more likely to win then. But the market and the economy do not always align on a future outlook.
@Rush51
Another issue is the debt that the consumer is carrying now. So, you have to consider how the folks are handling incurring all-time high debt that they were building up with the tremendous inflation rates and decades-high interest rates.
There has also been a shift in what the economy is producing and what the consumer is demanding. If this is exacerbated by the debt it can easily affect the overall economy. This type of disruption is never good.
It will be interesting to see how the job market handles the government layoffs. There is still demand in the market, and if those folks can quickly fill some of the jobs it will help.
Then you do have to factor in the tariffs. It is more the ‘fear’ of what might happen with them than the tariffs overall. Because tariffs, in and of themselves, are not inflationary.
Then you have to look at how the immigration curtailment, legal and illegal, will affect the economy.
Right now there is a lot of self-deportation going on. Coyotes are getting about $10-15K to smuggle folks out of the USA right now. That may hurt the job market for a while as well.
But if you couple all of that with a potential drop in demand and that causes the economy to slow growth and, even, inflation. Then the Fed might have to really be aggressive with cuts. This could also cause a recession. The FED is notorious for acting too late and always are proving they are not able to do as much as expected.
@Rush51
Then you look at the top level stuff. The government printing money and the stimulus money has created a mess. The GDP/debt ratio is a very serious concern. It is now over 125%. Interested rates go up; the interest payments increase. They borrow more to pay. Investors move to bonds. Lending rates go up. So, companies and people cut back spending.
Then the folks that are really tuned into their companies and their outlooks do not have a great outlook — the CEOs and CFOs. Their chances of a recession has been steadily increasingly. It is now over 60%. It was in the 40-50% range for a while.
A report came out just last week that said the Consumer Confidence was way below what they were looking for. The guy was pointing out that the 2024 numbers have been pretty much finalized and have mostly been revised down.
His thoughts were the numbers will show that the USA has been in a recession for several months already.
I tend to agree with his assessment.
When you have seen travel to tourist places down and see the economy contracting, it is very hard to not get a recession.
How bad it is/was/will be is a matter of how some of the ongoing things I mentioned play out.
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