Tag Archives: tariffs

Wrong Again!

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How many times do the experts have to be wrong before we ignore them? Remember the predictions that the Trump tariffs would add to inflation? Well, the numbers tell a different story.

On Wednesday, The Conservative Treehouse reported:

The Bureau of Labor and Statistics (BLS) released the December price information on Tuesday 1/13/26 [DATA HERE].  Overall, the topline inflation number is moderate at 2.7% much lower than economists projected.

However, that’s not the only important element.  To get an understanding of the impact from tariffs to imported consumer goods, you can look at TABLE-2 [DATA HERE].  As you skim the categories we import the most, electronics, television, sporting goods, apparel, shoes, tools, furniture, etc. what you will note is that the prices are stable with negligible inflation impact noted.

What this means is that tariffs are not creating any upward price pressure on the imported good.  The December ’25 imported good prices are stable despite massive tariffs applied in the second and third quarter of 2025.  As expected, based on history from 2018/2019, the exporting nation (and company) are absorbing most of the wholesale price increased due to tariffs.

The imported goods are reaching the consumer with no substantively changed price.  Some domestically generated goods (food and housing) are still driving the overall inflation number, particularly in the year-over-year calculation, but no substantive price pressure is coming from the import sector.

Export dependent nations are squeezing their own productivity, their governments are subsidizing the critical industries, and the tariffs are being absorbed before the products leave the docks.   This is the USA “rust belt” in reverse.  The same scenario played out in the USA for decades as domestic manufacturers tried to retain U.S. industry.  Now the foreign countries are experiencing their own economic squeeze.

This is part of the inflation table:

The article concludes:

Having gaslit the American electorate over the issues of Joe Biden’s economic/energy policy which created record inflation, the same media who ran cover for Joe Biden then switched during the Trump administration to calling the subsequent high costs an “affordability” crisis.

In essence, Biden’s economic, energy and monetary policies drove 2021/2022 inflation to record levels, this made all prices rise massively. Those high prices are now the “affordability problem” all U.S. consumers are dealing with.

When will we learn not to pay attention to the ‘experts’?

More Good Economic News

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On Thursday, CNBC posted an article about the October trade deficit.

The article reports:

  • The U.S. trade deficit six months into President Donald Trump’s tariffs tumbled to its lowest level since mid-2009, the Commerce Department reported Thursday.
  • The total was the lowest since the second quarter of 2009 as the U.S. was just coming out of the financial crisis and the Great Recession.

The U.S. trade deficit six months into President Donald Trump’s tariffs tumbled to its lowest level since mid-2009, the Commerce Department reported Thursday.

With exports rising and imports falling, the trade shortfall was just $29.4 billion for October, down 39% from the prior month. Exports increased 2.6% while imports slipped 3.2%.

The total was the lowest since the second quarter of 2009 as the U.S. was just coming out of the financial crisis and the Great Recession.

The numbers reflect the trade activity since Trump levied his “liberation day” tariffs in April 2025. Economists and policymakers worried that the levies would work against the U.S. by inviting retaliation and slowing the movement of goods and services around the world. However, Trump has backed off many of the most severe tariff threats he made, and the data shows a strong market for U.S. products.

To be sure, the year-to-date deficit still was 7.7% higher than the same period in 2024.

The article concludes:

“The latest figures suggest firms are successfully doing more with less labor, giving more credence to a jobless expansion,” said Matthew Martin, senior economist at Oxford Economics. “Productivity will be key to determining the economy’s speed limit and inflationary dynamics. If productivity growth continues to accelerate due to tax cuts, deregulation, and technological advancements, including AI, economic growth can pick up without causing unwanted inflation.”

Though hiring has been weak, the Labor Department reported Thursday that layoffs are holding low.

Initial unemployment claims for the week ended Jan. 3 totaled 208,000, pushing the four-week moving average to its lowest since April 27, 2024.

President Trump is a businessman. When our Founding Fathers formed our government, they did not want career politicians. As we have seen, career politicians talk about problems and corruption, but they don’t seem to do anything about them.

What History Says vs. What The Media Says

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On Friday, Breitbart posted an article about what the historical data says about the impact of tariffs.

The article reports:

A sweeping new analysis of tariff policy spanning 150 years suggests that the economic establishment may have fundamentally misunderstood how tariffs affect prices and employment, a finding with profound implications for understanding President Donald Trump’s trade policy and the proper response by the Federal Reserve.

Researchers at the Federal Reserve Bank of San Francisco examined major tariff changes from 1870 through 2020 across the United States, the United Kingdom, and France. Their conclusion challenges the conventional wisdom that dominated economic policy debates in recent years: when countries raise tariffs, prices actually fall, not rise.

The article concludes:

More importantly, the study removes the most potent intellectual weapon from the free-trade arsenal: the claim that tariffs inevitably raise consumer prices. For generations, this assertion ended policy debates before they could begin. Policymakers considering tariffs faced the accusation that they were imposing a regressive tax on consumers. Kamala Harris, in her failed bid for the presidency last year, repeatedly described Trump’s tariff proposals as a national sales tax that would increase consumer prices. Now that idea lies in tatters.

With the consumer price argument dismantled, the debate over tariffs can proceed on grounds better rooted in economic history and national purpose. Policymakers can weigh the benefits of protecting domestic industries, rebalancing trade relationships, and rebuilding manufacturing capacity against the effects on economic activity and employment. They can consider whether tariffs might encourage productive investment and industrial development, questions that have been largely off-limits in mainstream economic discourse.

The paper’s findings also call into question the Fed’s response to tariffs. If the main effects are lower inflation and higher lower employment, monetary theory would suggest that the Fed should cut interest rates when tariffs are imposed. Instead, the Fed this year took the opposite course, holding interest rates steady and only cutting hesitantly—moves that now look like a major policy mistake.

Unfortunately, in recent years, cutting interest rates has more to do with politics than economic data. When someone the fed likes is President, interest rates move lower quickly and stay low if at all possible (however, if inflation becomes too high and too obvious, they will raise them). When someone the deep state dislikes is President, interest rates tend to be lowered very slowly if at all.

Why I Don’t Trust The ‘Experts’

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On Thursday, Breitbart posted an article about the impact of President Trump’s tariffs. Generally speaking, the results of the tariffs is the exact opposite of what the experts predicted. We really don’t know if the predictions were so dire because President Trump was involved or if the experts really believed what they were writing.

The article reports:

In yesterday’s Breitbart Business Digest, we examined a new working paper from Jared Bernstein and Daniel Posthumus that documented the decline of U.S. manufacturing employment, particularly the devastating 2000-2010 “China Shock” period when 5.7 million factory jobs disappeared.

While the authors called this period “destructive” and urged preventing future shocks, they insisted that “sweeping” tariffs were not the right policy. Their reasoning was undermined by a significant contradiction: they claim tariffs would disrupt American manufacturing because we’re too dependent on foreign inputs, yet they simultaneously advocate for subsidies for sectors vulnerable to foreign export controls. They’ve essentially documented that our industrial base is dangerously hollowed out while arguing we’re too dependent to fix it.

As we explained, the real-world evidence further undermines their anti-tariff position. Despite President Donald Trump’s sweeping tariffs imposed in April 2025, the predicted “tarifflation” never materialized. Prices on tariffed imports haven’t risen as economists predicted. In fact, prices on non-tariffed domestic goods rose more than tariffed imports, while domestic goods competing with tariffed imports are actually down since Liberation Day. There certainly has not been any widespread inflation created by tariffs. The central economic case against tariffs—that they raise consumer prices—has collapsed in the face of actual data.

What we’re actually seeing is something economists have long theorized as “optimal tariff theory.“ A country with a globally dominant consumer market can employ tariffs to force foreign manufacturers to lower prices to maintain their exports. It can also successfully pressure other countries to reduce their own import barriers by threatening even higher tariffs. Finally, the household sector can force a redistribution from the corporate sector by refusing to accept the pass-through of tariff costs.

The article concludes:

Meanwhile, Biden’s subsidy approach—implicitly endorsed by the paper—produced billions in spending, out-of-control inflation, a brief construction boom, and then declining factory employment.

The paper warns that tariffs raise input costs, but we’re currently so dependent on imported inputs that we’re vulnerable to devastating supply cutoffs. The paper warns about retaliation, but sweeping tariffs have proven less provocative than thought, and there’s every reason to believe that targeting other countries’ strategic sectors would ignite backlash. The paper warns about price increases, but the data shows prices on tariffed goods rising less than non-tariffed ones.

At every turn, the real-world evidence contradicts the theoretical objections. An open-minded reader of the paper will come away grateful American’s voted for Trump’s trade policies rather than the industrial policy favored by Bernstein, Postuhumus, and the Biden administration.

I guess the businessman in the White House had a better understanding of economics than the experts.

The Results Of Failing To Prepare

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President Trump has been in office for about five months. He has cleaned up some of the mess he inherited, but there are going to be things that are going to take a while. Our government has not always done a good job of predicting and dealing with future problems. The problem of obtaining rare earth minerals is one that could be very serious in the coming months.

On Tuesday, Victor Davis Hanson posted an article in The Asia Times. The article reported:

America usually has other countries over a barrel. Not the other way around – unless you’re old enough to remember when the Organization of Petroleum Exporting Countries (OPEC) cracked the whip and Washington and the West usually fell in line.

But last week China forced President Trump to back down on tough tariffs that were hurting the PRC.

Rare earth minerals. They’re nearly all sourced from China and Beijing choked off exports.

Major American companies – car makers for example – warned Trump they’d have to curtail or shut down operations in a matter of weeks.

…The Trump administration reduced tariffs in exchange for Beijing’s sort-of agreement to allow rare earth exports to US customers.   

How much and how fast is unknown – but expect the PRC to slow-roll this and squeeze all it can – such as sensitive business data – from its customers.

At best, this is a temporary reprieve.

The US side also agreed to drop plans to ban Chinese students from US universities. 

It’s not that they are rare. The US has plenty of rare earths. It’s just much cheaper to source from China, and US environmental laws make domestic mining and processing difficult and expensive.

They are essential for commercial manufacturing – cars, electronics, computers, etc.

And more ominously they’re needed for military production – to include aircraft, ships, submarines, radars, missiles, lasers, satellites, guidance systems, night vision devices and more. 

It’s not Trump’s fault. He got caught holding the hot potato.

China’s chokehold on rare earths was known a long time ago.

American business and the US military knew. And Congress knew as well.

And they knew the Chinese might use their dominant position to squeeze other countries.

In 2010 after Japan detained a Chinese fishing boat that rammed a Coast Guard ship near Japan’s Senkaku islands, China banned rare earth exports to Japan.

 Japanese industry squirmed. The boat and its skipper were returned.

And Japan set about finding alternate sources of rare earths. 

The United States?

Apparently it did nothing.

It was 15 years of idiocy by the business class, officialdom and the military’s perfumed princes.

Please follow the link for further information. We need to be mining our own rare earth elements.

Income From Tariffs

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On Friday, Zero Hedge posted an article about some of the impact of President Trump’s tariffs.

The article reports:

U.S. tariff revenues reached an all-time high in May as President Donald Trump’s trade policies started to fill government coffers.

According to the May 28 Daily Treasury Statement, revenues from “customs and certain excise taxes” climbed to a record high of $23.28 billion this month, up from $17.431 billion in April.

May was the first full month that Trump’s levies took effect. Most of the tax collections occurred on May 22, exceeding $16 billion.

Shortly after his April 2 “Liberation Day” announcement, the administration imposed 10 percent tariffs on nearly every country in the world.

Fiscal year-to-date—the federal government’s fiscal year runs from October 1 to September 30—tariff revenues total $93.85 billion.

Almost half of that revenue has been collected in April and May of this year.

The article concludes:

U.S. Trade Representative Jamieson Greer testifies before the Senate Finance Committee in the Dirksen Senate Office Building in Washington on April 8, 2025. Kayla Bartkowski/Getty Images

“All these things are on the table,” Greer said. “The reality is, we have this enormous trade deficit. It got worse over the Biden years, and if we don’t fix the global trading system, it’s just going to get even worse going forward. We have to fix it.”

According to the Census Bureau, the U.S. goods trade deficit narrowed sharply in April, declining to $87.6 billion. This is down 46 percent from the record high of $162.3 billion registered in March.

The article does mention that as companies move their manufacturing to America, the tariff income will decrease. However, as that happens, employment in America will increase, individual and corporate tax revenue will increase, and the expense of unemployment will decrease.

The tariffs are a part of the economy moving in the right direction.

The Fentanyl Tariffs

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On Thursday, The Daily Wire posted an article about President Trump’s attempt to use tariffs as a bargaining chip in the war against fentanyl.

The article reports:

We’ve been trending in this direction for some time now, but after yesterday’s ruling by a three-judge panel on the United States Court of International Trade in Manhattan — which struck down all of the Trump administration’s tariffs — it’s now official: We don’t need any more rulings from federal judges about what the president of the United States isn’t allowed to do. Those are completely pointless. Instead, what we need, in our alleged first-world democracy, is a ruling from some federal court explaining, in as much detail as possible, what exactly the president of the United States does have the authority to do while in office. That would be the most efficient way forward, at this point.

In just the past five months, federal courts have held that the Trump administration has no authority to do the following:

  • Change federal government websites
  • Fire any Executive Branch employees
  • Ban mentally disturbed individuals from joining the armed forces 
  • Eliminate slush funds for corrupt NGOs
  • Stop funneling billions of dollars of taxpayer money to anti-white universities like Harvard
  • Eliminate wasteful “administrative spending” that’s tacked onto every single scientific grant
  • Deport illegal alien gang members — even the wife-beaters and terrorists
  • Cut federal funding to child castration services for children

When I read this list, I wonder exactly what the courts are willing to allow the President to do!

On May 30th, The India Times reported:

The tariffs in question were put in place to encourage the countries behind the fentanyl crisis in America to crack down on the manufacture and transport of the drug. Admittedly, the drug comes into America because there is a market for it here, but it would be nice if we could all work together to solve the problem.
The courts have wandered far out of their lane. It’s time the Supreme Court stepped in and stopped this nonsense. However, I am beginning to wonder how many of the Supreme Court Justices are interested in following the Constitution rather than their political or personal leanings.

Views On The Trump Economy Are Slowly Changing

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The Democrat rant that ‘the economic sky is falling’ seems to have fallen on deaf ears. The economy is slowly coming back after four years of inflation and slow job growth. The workforce participation rate is steady, but climbing slightly, and inflation is somewhat under control. We can all rejoice in the significant drop in gasoline prices.

On May 27th, CNBC posted the following headline:

Consumer confidence for May was much stronger than expected on optimism for trade deals

I love how when a Republican is in the White House, good news is always unexpected.

The article reports:

Consumer optimism got a much-needed boost in May on hopes for trade pace between the U.S. and China, according to a survey Tuesday.

The Conference Board’s Consumer Confidence Index leaped to 98.0, a 12.3-point increase from April and much better than the Dow Jones consensus estimate for 86.0.

Much of the positive sentiment, according to board officials, came from developments in the U.S.-China trade impasse, most notably President Donald Trump’s halting of the most severe tariffs on May 12.

“The rebound was already visible before the May 12 US-China trade deal but gained momentum afterwards,” said Stephanie Guichard, the Conference Board’s senior economist for global indicators.

May’s rebound followed five straight months of declines. Consumers and investors had grown sour on economic prospects amid the intensifying trade war that Trump has launched against U.S. global trading partners, with China a particular target.

I think all of us consumers feel optimistic when we don’t have to mortgage our house to buy a steak or fill up our gas tank.

The article concludes:

The present situation index increased to 135.9, up 4.8 points, and the expectations index posted a major surge to 72.8, a 17.4 point gain. Investors also showed more optimism, with 44% now expecting stocks to be higher over the next 12 months, up 6.4 percentage points from April.

Views on the labor market also improved, with 19.2% of respondents expecting more jobs to be available in the next six months, compared to 13.9% in April. At the same time, 26.6% expect fewer jobs, down from 32.4%.

Survey officials said sentiment improved across age, income and political affiliation, though noting that the “strongest improvements” came from Republicans.

Let’s hope Congress can pass laws that keep this going.

The View From The Lair

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Sweating Blood

A few weeks ago, I commented on the effects that PDJT’s tariffs would have on the world’s economy, especially China’s. Like most everyone, I underestimated our esteemed President Trump. Chairman Xi started out by putting up a strong face. That is very important to many cultures, especially in the orient. Keeping “face” is essential to maintain dignity, to present strength and composure, to display courage and conviction. To do less than this is to invite shame. In some instances, death is preferable to shame.

Shaming is a tool used by our Marxist enemies to generate a reaction to their taunts and abuses. It is effective only against those with a conscience and who can hold shame. Alas, they are invulnerable to the same tactics used against them because they have neither shame nor conscience.

I projected that the tariffs might take over 60 days to show some effect. The Chinese stated that they would “fight to the end” to oppose the US tariffs. Apparently, the end is nearer than they thought. Now, the Chinese are lowering their retaliatory tariffs on some microchips as well as other products. There are as many as 16 million Chinese factory jobs at risk of being lost due to the tariffs. Container ships are reportedly being turned around. Which means a LOT of already manufactured products will not be paid for. Note: there is no unemployment in China. No work, no pay. No pay, no food. Things go downhill from there. Think of 1932 USA but with over a billion people.

Chairman Xi is presently chairman for life. That position does not state how long the term actually is. With the economy beginning to collapse his term may not be as long as he had expected.

Sending out the military against factory workers in cities all across China will be…problematic. Tiananmen Square situations in multiple cities would certainly be bad optics. Mao had no problem with killing millions of his people, but they mostly succumbed to starvation, primarily due to ignorance and central planning. Bad central planning…which it almost always is.  There were no cell phones, no way to document the tragedy.  Seeing the army slaughter civilians because they are rioting for pay and food might be a different situation.

A government coup in China will likely be different from what the Marxists pulled off with Biden. Regardless of what they wished they could do, putting a bullet in Biden’s brain (not that he or anyone else would notice) would not be as acceptable to the news vultures as doing the same to PDJT.

It has been said that war is a result of poor diplomacy. But diplomacy takes different forms. Chairman Xi wants to take Tiawan. Tiawan isn’t interested. The Chinese have already embarked on a very aggressive program to build an enormous army, navy and air force. They have constructed new islands with military bases on them. The invasion of Tiawan wouldn’t require this…but to fight us as well certainly would. With his economy faltering and civilian unrest, how does he pay for the military buildup? Buy guns or butter? Can he afford both? His population growth has also stalled. Who will support both the economy and the military?

POTUS is using economic warfare to replace military warfare. He can starve the military buildup and prevent a shooting war. And in doing so, return basic manufacturing capacity to the US. He’s still playing 5D chess; everyone else is playing tiddlywinks.

ciao,

The Snark

Why Some Imported Products Are Cheaper

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There are a lot of reasons for the decline of manufacturing in America. Many of those reasons are related to trade deficits and the desire for cheap goods, but some are related to the cost of doing business in America. For better or worse, corporations in America who choose to operate within the law are required to pay their employees a minimum wage. We can debate over what that wage should be, but the fact of the matter is that a minimum wage exists. Some other countries have no qualms about employing slave labor or paying people very low wages. The Chinese have used Muslims as slave labor for years. So why would a manufacturing company want to locate in America? There are a number of incentives (in addition to the lowering of the corporate tax rate). America has dependable energy and is moving toward lowering the cost of energy. America protects property rights–the state cannot come in and simply take your business away. Innovation is also protected by patent and copyright laws. America represents a stable environment in which to do business. Changing the structure of tariffs also has moral component.

On May 12, The Federalist reported:

…But Trump’s tariffs were not just economic, they were moral. Rather than relying on foreign countries, particularly China, that benefit from abusive labor practices, Trump put America first by deciding the U.S. must stop pretending inexpensive products come with no human cost. 

…During Trump’s first term, his administration repeatedly highlighted human rights abuses abroad, especially in regions like China’s Xinjiang province, where the Chinese Communist Party is running forced labor camps filled with Uyghur Muslims. More than a million Uyghurs and other Muslims have been detained by China and sent to reeducation camps in what is called the “Xinjiang Uyghur Autonomous Zone” for a range of reasons, including attending religious services, having more than three kids, or texting verses from the Quran. 

China forced many of its religiously and ethnically targeted workforce to toil away in factories, making products distributed and sold across the globe. Muslim slaves in China produce countless store shelves worth of goods, according to the U.S. Department of Labor, such as textiles, hair products, and aluminum, among many other things. They get extremely low pay, can’t contact or visit their families (unless, in some circumstances, they are heavily surveilled by the government), and they can’t leave. 

The article concludes:

Yes, U.S. prices may go up a bit in the short term. Maybe American girls will find two dolls under the Christmas tree instead of 30, as President Trump suggested Sunday on Meet the Press. Maybe U.S. students will sharpen five pencils instead of hoarding 250 like mini office supply tycoons. But maybe underpaid workers in China won’t have to literally slave away making those dolls or pencils for someone else’s kid in a distant Land of the Free. 

President Trump believes temporary price fluctuations are a trade-off worth making in the interim, and he is doing what no other president had the guts to do. There is short-lived pain before lasting progress, and Trump is willing to take the heat now to put human rights and American prosperity over easy profits. 

About Those Tarriffs

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When President Trump announced his reciprocal tariff program on April 2, 2025, he held up a chart illustrating the tariffs being charged America at that time. The chart below came from Newsweek.

This is the chart:

As you can see, the majority of the suggested tariffs America would charge are significantly less than the tariffs currently being charged America. In fact, many of the suggested tariffs are half of what the country involved charges America. So why all this meltdown from the political left, the Washington establishment, and the RINO Republicans? Because when you institute tariffs, you decrease the importance of the federal income tax and thus decrease the power of those who write the tax code.

According to the tax foundation:

There’s the literal statutes that Congress has passed (Title 26 of the U.S. Code). The Government Printing Office sells it spread over two volumes, and according to them, book one is 1,404 pages and book two is 1,248 pages, for a total of 2,652 pages. At perhaps 450 words per page, that puts the tax code at well over 1 million words. (By way of comparison, the King James Bible has 788,280 words; War and Peace runs 560,000 words; and the Harry Potter series is just over 1 million words.)

So how was our tax code formulated? It is a tribute to lobbyists and Congressmen who want to be re-elected. One illustration of that was what happened when President Trump during his first term limited the SALT (state and local tax deduction) on federal income tax forms to $10,000. Congressmen from state with lower property taxes celebrated (because they were no longer subsidizing states with higher property taxes), and Congressmen from states with high property taxes complained because they knew their constituents would not like paying a higher federal income tax. There is talk of increasing or ending the limits on the SALT deduction in the budget currently being debated in Congress. 

The war on President Trump is based on a number of factors. If his presidency is successful, it will prove that America does not need to elect a politician to be President–a businessman who is NOT connected to the Washington swamp can probably do a better job. If President Trump’s policies are enacted, Americans in the middle and working classes will thrive. Wall Street and the political elites might not do as well. If President Trump’s policies are blocked, I think the economic outlook for America is bleak.

View From The Lair

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SWAG Observations

The other day my compatriot, the esteemed Dr. Alan Harrop, provided an excellent analysis of the purpose and effect of the POTUS tariff strategy. As I have mentioned, Alan covers facts very concisely, rarely delving into conjecture.

I have no such compunction. There is another facet to the tariff strategy that is a bit of a SWAG (Scientific Wild Ass Guess), but I offer it with researched background.

Right now, the Federal Reserve is holding interest rates high to defeat inflation, which is a normally accepted practice during normal times. Times are not now normal. Inflation is coming down, but haven’t hit the goal yet. Meantime, the real estate market is stagnant. While 7% mortgage rates are not historically high (my first was a bargain at 9.5%), if anyone has a 2-3% mortgage, they aren’t budging from it. Who can blame them? But there are a lot of those mortgages out there. So those folks are sitting tight. And 7-7.5% can still be a stretch considering the beating that inflation has had on earning power and savings. And the housing demand is bursting.

Other credit demands are out there too. Businesses want to build, to expand, to hire. But money is tight.

Enter the tariffs. By using the tariffs, POTUS can bypass the Fed by using the tariffs to drop the bond market so that capital will then seek other sources of earnings.

POTUS nominated Powell during his first term, along with a number of other nominating mistakes. (Comey? Sessions?) The Fed is an independent agency, beholden to neither the President nor the Congress. But it is hardly non-political. Fed Chair Powell is a denizen of the swamp as much as any of them. So, Powell has done things his way, regardless of what the POTUS wants.  And POTUS does what he needs, regardless of what Powell wants. POTUS wants the dollar to remain the dominant trade currency, for the value of that dollar to slip compared to other countries, and to draw manufacturing resources – money, research, and talent – to the US.

The US is the 800-pound gorilla of the world’s economies. Without us, the rest of the world will grind to a trickle, especially China. Chairman Xi may try to save face, but 30 days of the new tariffs and he will be sweating. 60 Days and he’ll be sweating blood. But he can’t allow US products, especially durable goods like cars, to be imported. The quality differences are just too large. He’s caught between a rock and a hard spot. By squeezing the energy market, PDJT impacts Russia as well.

POTUS has signed the death certificate for globalization. The Swamp, especially the “elites” (I can’t describe Pelosi, Scheemer and company as “elite” with a straight face), are seeing their money train careen off the tracks. And the BullDOGER just keeps uncovering more of their theft.

Remember when President Barack O’Bozo was stumping for Her Majesty Hilarious Clinton, Queen of Chappaqua, and asked just how in the world that then candidate DJT was going to return all those manufacturing jobs? What was he going to do, “wave a magic wand”? It looks like 6-7 trillion dollars is already lined up to build new business in this country, plus many of the formerly domestic companies that fed offshore are coming back. POTUS didn’t need a magic wand. He needed a seriously large cudgel to persuade competing countries to play fair.

And the tariffs are that cudgel.

ciao,

The Snark

Tariffs:  Good or Bad?

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Author:  R. Alan Harrop, Ph.D

Well, President Trump has done it again– kept his campaign promise about tariffs and putting America first.  This action, was the most dramatic and far-ranging impactful action by any president in quite some time.  Essentially, the whole world will be affected.  Before we can answer the question of whether these tariffs will be good or bad, we need to examine what they are intended to do.  While we cannot read President Trump’s mind as to his intentions, we can get a pretty good idea from his many comments about the problems facing this country.  Let’s check them out.

First, the national debt, currently at $ 36.8 trillion, which amounts to $93,500 for every man, woman, and child in this country, is clearly unsustainable and growing.  No country has ever survived that much debt without a total economic collapse.  How long do we have to address the debt crisis?  Based on their lack of action, according to most of our elected officials, there is no urgency.  Common sense, which is the guiding principle of the Trump administration, tells us otherwise.  Since the trade deficit with other countries is a major contributor to the national debt, the tariffs are a good place to start, since they directly attack the substantial trade deficit we have with other countries, which is now over $1.2 trillion per year.

Second is the loss of wealth creation.  Until recently, America offered the highest standard of living in the world.  How were we able to achieve this?  Through industrial manufacturing–that’s how.  From the mid- 1800s to the end of World War II, the manufacturing capacity of America was without equal.  A cursory examination of what we were able to produce during World War II shows that our label as the “Arsenal of Democracy” was based on our manufacturing capacity.  Not only did we arm ourselves in record fashion, but we were able to supply our allies, who would have been defeated without our arms supplies.  Converting raw materials into usable products using advanced manufacturing processes is the basis of wealth creation in the modern world.  Where are we now?  Over the past 50 years, we have been losing our manufacturing capacity at an alarming rate.  Hundreds of thousands of manufacturing plants have been closed in this country with the loss of millions of good paying jobs.  Looking back to the 1950s and 60s, it was typical that the man was the bread winner, and on his salary could support a family and own a home.  Now it takes two salaries and the cost of housing is beyond the reach of many.  This decline is primarily due to the globalization of the world economy and the policies that encouraged manufacturing to move to other countries where labor is much cheaper.

Third is national security.  In order to defend ourselves, it is necessary to maintain a strong military, which again relies on advanced technology and manufacturing.  For instance, we have 4 ship-building facilities in this country.  Our most immediate adversary, China, has 24 and leads the world in ship construction, both civilian and military.   Does China have the natural resources they need for their manufacturing?  Of course not–they get them from other countries, including us.  Many of the policies of the Left have contributed to the manufacturing demise–such things as excessive regulations, green energy mandates, DEI, etc. have complicated the operation of manufacturing plants, causing them to relocate to other countries to stay in business.  As we learned during Covid, obtaining medicines and essential medical supplies from other countries is potential social suicide especially in the case of war.

Fourth is the demise of the middle class.  The discrepancy between the top earners and lower groups has widened considerably.  The American Dream of economic advancement through hard work is seriously ill and getting sicker.  Excessive wealth disparities can lead to resentment and disillusionment that is not good for the unity of the country.

Fifth is unfair treatment by other countries.  If you were able to watch President Trump’s presentation about tariffs, it was clear that we have allowed ourselves to be taken advantage of by many other countries.  The idea of free trade that many economists have been preaching assumes a level of fair play that currently does not exist with many of our trading partners.  The have value-added taxes, forbid the import of certain items, and manipulate the value of their currency in order to maintain a trading advantage..  They get richer; we get poorer!  Pretty dumb on our part, wouldn’t you say?

There are other problems that President Trump hopes to address through the implementation of this ambitious tariff plan.  Obviously, these problems have existed for many years and addressing them is long overdue and will take time to accomplish.  Will there be some pain involved?  Of course–an omelet cannot be made without cracking the egg.   As the Left attacks him for his plan, I have not seen any of them present their own plan to solve this economic crisis.  The Left is quick to criticize, but presenting effective solutions is not something the Leftists ever do.  That is part of the reason we are in this fix.  So, let’s give President Trump’s plan a chance to succeed and support his efforts.  Doing nothing is not acceptable, and thank God we have a President who is dedicated, courageous, and willing to fight for this country he loves.  Many of our other presidents were not.

 

The Impact Of The Tariffs

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On Friday, Townhall reported that Vietnam, after talking with President Trump, has agreed to eliminate tariffs on all U.S. goods if the two parties can negotiate a deal. That’s a good place to start.

The article reports:

This could be some good news – especially on the tariff front. It might mean that American product could become more competitive in Vietnam, which will benefit U.S.-based corporations. Vietnam is seeing a growth of its middle class, which could open new doors for trade.

It would also mean lower prices for American consumers purchasing products manufactured in Vietnam. This would include apparel, furniture, electronics, and several others. Other major corporation have used Vietnam as a significant manufacturing hub, which suggests cheaper imports might. Lower production expenses while boosting profit margins.

A tariff reduction of this type could also strengthen the economic relationship between the U.S. and Vietnam. This might be especially critical if the U.S. seeks to diversify its supply chains away from China. Less reliance on the Chinese Communist Party (CCP) could bolster Washington’s negotiating position.

There is also the possibility that other nations might follow Vietnam’s lead – especially if the deal benefits the country over the long term.

Of course, there is no deal just yet. But it appears that Vietnam is willing to make some important concessions. Either way, this is a promising sign.

According to the Office of the United States Trade Representative:

U.S. goods trade with Vietnam totaled an estimated $149.6 billion in 2024. U.S. goods exports to Vietnam in 2024 were $13.1 billion, up 32.9 percent ($3.2 billion) from 2023. U.S. goods imports from Vietnam totaled $136.6 billion in 2024, up 19.3 percent ($22.1 billion) from 2023. The U.S. goods trade deficit with Vietnam was $123.5 billion in 2024, an 18.1 percent increase ($18.9 billion) over 2023.

Since the amount of trade we are doing with Vietnam is increasing, a tariff agreement between the two countries would be a good deal for everyone involved.

 

Leveling The Playing Field

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On Wednesday, Townhall posted an article about one result of President Trump’s tariffs.

The article reports:

Ontario Premier Doug Ford on Wednesday suggested that Canada would drop its tariffs on U.S. goods if President Donald Trump eased up on his tariffs on Canadian goods.

During an appearance with CNBC’s Ross Sorkin, he stated that the impending tariff war is “just going to hurt American jobs” and that Trump “said he was going to create jobs, create wealth, reduce inflation.”

Sorkin asked whether Ford believed it was fair that Canada has “tariffs on a whole number of products.”

Ford replied, “And we’d be willing to take those off tomorrow if he took all the tariffs off” and suggested that “China is the problem.”

The host asked why Canada wouldn’t have these negotiations before Trump imposed his tariffs.

The premier responded:

Well, we’ve had this conversation for over the last month. We don’t want tariffs. We have another $65 billion dollars with a tariff to launch today. That’s the last thing we want to do because it’s just, again, it’s going to hurt both countries. It’s going to hurt American workers. That’s the last thing I want.

That statement is a very diplomatic way of saying nothing.

America has been paying tariffs on its exports to other countries for years. It is not unreasonable to expect that at some point the playing field would be made more level. It is not up to us to bankroll the rest of the world by letting other countries impose tariffs on us without imposing tariffs on them. I suspect that President Trump’s tariffs are not yet set in stone and are still in the negotiating stage. We do need to put tariffs on other countries, but the final details may be different from what we are currently hearing.

Walmart and Tariffs

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President Trump announced his tariff plan yesterday. Generally speaking, liberals are crying, “The sky is falling.” The stock market is down today, but will probably be back up in a week or so after the impact of the tariffs is calculated. One indication of how things might go is what is happening with Walmart.

A friend of mine summed it up:

“U.S. retailing giant Walmart,” Reuters reported, “is continuing to push Chinese suppliers to cut prices to offset President Donald Trump’s tariffs.” In other words, to stay competitive, foreign governments must cut their prices, to stay competitive. They must cut prices to precisely offset the tariffs. That is why foreign suppliers actually pay for tariffs, and not Americans.

To put it differently, it is true the tariff is charged at the port of entry. But if Chinese factories want to keep selling here, they must lower their prices to absorb the hit, because consumers won’t pay. Foreign producers indirectly pay the tariff through lowered prices, or they lose market share.

It’s that simple.

Here’s how it works in real life: If a Chinese plasma TV costs $1,000 and there’s a 10% tariff, the U.S. government collects $100. Walmart tells the Chinese supplier, “We’re not eating that cost. Cut your price to $900 or we’ll stop buying.” So the Chinese factory promptly cuts its price to stay in business.

The result is that the U.S. Treasury gets paid, Chinese exporters take the loss, and American consumers barely notice.

On Wednesday, Yahoo Finance reported:

Walmart is reportedly standing firm in its demands that Chinese suppliers absorb the costs of U.S. tariffs.

Bloomberg, citing sources with knowledge of the situation, said Walmart (WMT) is asking suppliers to reduce prices by up to 10% for every new round of tariffs, effectively shifting the financial burden onto manufacturers. Last month, Chinese officials met with Walmart executives to discuss the request, calling it irresponsible and unfair. Despite this, Walmart appears unfazed and has doubled down on its demands.

…Walmart isn’t alone in pushing suppliers to absorb some of the tariff costs. Other major retailers, including Target and Costco, are following suit. Target (TGT), for instance, asked a supplier of hairpins and claw clips to take on “half the costs of the tariffs.” The supplier said the failed negotiation led to delayed orders, eventually losing the business. Target has not responded to Quartz’s multiple requests for comment.

Tariffs are a very efficient way to deal with uneven trade practices and with import/export imbalances.

 

The Impact Of Proposed Tariffs

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On Monday, The Daily Caller reported that Honda will be moving some of its manufacturing from Mexico to Indiana as a result of President Trump’s tariff plans for Mexico,

The article reports:

Honda intends to move production of one of its best-selling car models to the U.S. from Mexico in an attempt to avoid potential tariffs, Reuters reported on Monday.

The major automaker decided to shift production of its next-generation Civic hybrid car to Indiana, three anonymous sources told Reuters. The news comes after President Donald Trump on Feb. 1 imposed 25% tariffs on imports from Canada and Mexico alongside 10% tariffs on imported goods from China in an attempt to stop deadly drugs and illegal migrants coming into the U.S. from the countries.

The article concludes:

Ahead of Trump’s recent return to the White House, there were a growing number of reports of U.S.-based companies gearing up to shift their production out of foreign countries such as China in anticipation of the incoming Trump administration implementing new tariffs. Notably, Trump signaled on Feb. 19 that reaching a trade deal with Beijing was “possible.”

A spokesperson for Honda did not immediately respond to a request for comment from the Daily Caller News Foundation.

There are other reasons for moving manufacturing back to the U.S. under the Trump Presidency. President Trump has shown in the past that he wants to reduce regulations and increase energy production. Less regulation and cheaper (and stable) energy attract manufacturing. Also, the corporate tax under President Trump (if Congress cooperates) will remain low. In the last Trump administration, many corporations brought their manufacturing back to America. If the Trump administration policies are put in place, that will happen again.

When Is A Tariff Not A Tariff?

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Yesterday various news sources reported that President Biden would be placing tariffs on Chinese electric vehicles and some other products coming into America from China.

MSN reported:

President Joe Biden on Tuesday announced new tariffs on $18 billion worth of Chinese imports, including a sharp tax hike on electric vehicles, to help protect his administration’s investments in key sectors in the United States.

The targets of the tariffs include EVs, solar cells, steel, aluminum, semiconductors, advanced batteries, critical minerals, solar and medical products.

“American workers can outwork and outcompete anyone, as long as the competition is fair,” President Biden said in remarks delivered from the White House Rose Garden. “But for too long it hasn’t been fair.”

Hitting China’s trade policies, Biden said “it’s not competition, it’s cheating.”

“China heavily subsidized all these products, pushing Chinese companies to produce far more than the rest of the world can absorb and then dumping excess products onto the market at unfairly low prices, driving other manufacturers around the world out of business,” he said.

It all sounds very good, but what does it do?

The Conservative Treehouse reports:

Biden might as well be announcing tariffs on Chinese swimming pools flown into the USA via hot air balloon.  There will be more Chinese swimming pools delivered from China than Chinese EVs.  The Chinese EVs come from Mexico.  The tariff is fake.

WHITE HOUSE […] To further encourage China to eliminate the acts, policies, and practices at issue – and to counteract the burden or restriction of these acts, policies, and practices – the Trade Representative shall modify the two actions to increase section 301 ad valorem rates of duty for the following products from China:

    • Battery parts (non-lithium-ion batteries):  Increase rate to 25 percent in 2024
    • Electric vehicles:  Increase rate to 100 percent in 2024
    • Lithium-ion electrical vehicle batteries:  Increase rate to 25 percent in 2024
    • Lithium-ion non-electrical vehicle batteries:  Increase rate to 25 percent in 2026
    • Natural graphite:  Increase rate to 25 percent in 2026
    • Other critical minerals:  Increase rate to 25 percent in 2024 (read more)

None of this stuff is coming from China. It is all coming from Mexico via transnational shipping and Chinese manufacturing in Mexico.

The article notes:

On the EV issue, this tariff approach is politically duplicitous by Biden against the backdrop of massive investment in Mexico by the three largest Chinese EV automakers. Last December, the three Chinese auto manufacturers, MG, BYD, and Chery, announced they were going to spend billions building new EV manufacturing plants in Mexico.  Each Chinese auto manufacturer was going to spend between $1.5 to $2.0 billion.

Those Mexican built Chinese EVs would pass into the USA market under current USMCA trade rules and regulations, as long as they technically meet the material origination rules.  This can make tariffs against the Chinese imported EVs a moot point, because China will be making them in Mexico (North American trade agreement).

One of the reasons President Trump said the U.S. auto industry would suffer a “bloodbath,” is specifically because the current Chinese auto companies are targeting these EVs in the $10,000 or less range.  If you want to see what it looks like when cheap Chinese EVs start to flood a consumer market, visit Russia – the Western sanctions have only increased this flow.  I can see it clear as day.

This is political sleight of hand to encourage voters to vote for Joe Biden. I don’t know if the American voters are really that dumb.

Where Do The Parts For Green Energy Come From?

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On Sunday, Breitbart reported that Democrats and Republicans in the House of Representatives want to reverse President Biden’s tariff waivers for suspected Chinese companies that are reportedly funneling their solar panels through other countries to evade United States trade rules.

The article notes:

In June 2022, Biden announced a 24-month tariff moratorium on solar panel imports from Cambodia, Thailand, Vietnam, and Malaysia. Commerce Department officials suspect that the solar panels are actually made in China or by Chinese companies but have been routed through the four southeast Asian nations to evade tariffs.

The tariff moratorium came even as Biden’s Commerce Department found that BYD Hong Kong rerouted its production through Cambodia, Canadian Solar and Trina through Thailand, and Vina Solar through Vietnam to specifically evade U.S. tariffs on China-made solar panels.

Already, about 80 percent of solar panels installed in the U.S. are made in China or by Chinese companies.

The article concludes:

Those massive job losses have coincided with a booming U.S.-China trade deficit. In 1985, before China entered the WTO, the U.S. trade deficit with China totaled $6 billion. In 2019, the U.S. trade deficit with China totaled more than $345 billion.

While skyrocketing U.S. trade deficits have led to devastation across America’s working and middle-class communities over the last two decades, tariffs would be a boon for reshoring jobs and boosting wages, studies show.

A recent study from economists at the Coalition for a Prosperous America, for instance, finds that tariffs on nearly all foreign imports would create about 10 million American jobs while boosting domestic output.

I have very mixed emotions on tariffs. I will concede that tariffs are probably needed on the large amount of Chinese goods that make their way into America. However, looking at history, we can’t ignore the impact of The Smoot-Hawley Tariff Act of 1930, which raised the United States’s already high tariff rates. That tariff contributed to the early loss of confidence on Wall Street and signaled U.S. isolationism. By raising the average tariff by some 20 percent, it also prompted retaliation from foreign governments, and many overseas banks began to fail. It planted the seeds for the Great Depression. The world’s economy is not in a really good place right now, and we need to consider carefully the impact of any tariff we pass.

How To Restore The American Economy

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On Friday, The Daily Signal posted an article listing three basic ways to restore the American economy.

The article reports:

1) Make the 2017 tax cuts permanent: The Tax Cuts and Jobs Act has been one of the most successful pieces of legislation in recent years. Despite that, many of its critical provisions are set to expire in 2025 if Congress does not act soon.

For most Americans, the most important aspect of the Tax Cuts and Jobs Act that is set to retire is the individual income-tax cuts. That provision cut taxes for 80% of Americans, saving individuals an estimated $1,400 annually, with lower- and middle-income Americans benefiting the most.

If Congress lets this provision of the act expire, middle-class families are likely to pay over $1,000 more in taxes annually.

…2) Eliminate special tariffs: Politicians continually peddle the falsehood that tariffs help working-class Americans, but that couldn’t be further from the truth. Tariffs are an inherently regressive form of tax that places an undue burden on lower- and middle-income families.

Since 2018, Americans have paid more than $280 million in extra taxes to buy washing machines and washing machine parts from abroad. That has directly contributed to the steep rise in prices of laundry equipment, which was up 7.9% year-over-year in January.

Unfortunately, that was not the only sector negatively affected by tariffs. Americans have paid more than $12 billion in tariffs on imports of aluminum and steel since 2018.

Steel and aluminum are crucial inputs for countless manufactured goods, but the automotive industry has been one of the hardest hit. The price of new vehicles rose more than 12% year-over-year in January.

…3) End the war on conventional fuels: The damaging effects of bad policy might not be more obvious in any other area of the economy than in the energy sector.

Energy prices rose nearly 27% year-over-year in January, based on the Consumer Price Index, with gasoline and natural gas rising 40% and 23.9%, respectively.

Washington’s war on conventional fuels is clearly contributing to the rapid increase in prices of basic sources of energy that Americans use every day to heat their homes and get to work.

Not only has Washington made it harder to transport fuel (for example, by canceling or slow-walking new pipeline construction), but it has also made it more difficult and expensive to produce natural gas, coal, and oil here in the United States, creating an avoidable reliance on foreign imports.

The administration has proposed or issued new regulations burdening nearly every aspect of conventional energy markets, from financing to consumer use.

Other holdover policies—some decades or even a century old—are increasing costs and inefficiency in energy markets. For example, unnecessary regulations and mandates have increased the costs of gasoline and have put economic pressure on refineries, some of which have had to close or downsize.

Please follow the link to the article for further information.

Where Did The Jobs Go?

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Today Fox Business posted an article that included some comments White House trade adviser Peter Navarro made on “Sunday Morning Futures.”

The article reports:

“We lost over 70,000 factories, over 5 million manufacturing jobs, and it was because Joe Biden likes made in China,” Navarro said. “Donald Trump came along. … He said, ‘Hey, that’s not good. That’s not right. I’m going to fix that.’ And so what President Trump has been carefully doing is putting in place a wide range of policies, whether it’s lowering the corporate income tax to bring investment on-shore, steel and aluminum tariffs, or buy American.”

The U.S. lost 5 million manufacturing jobs between January 2000 and December 2014 because of “growing trade deficits in manufacturing products prior to the Great Recession and then the massive output collapse during the Great Recession,” according to a 2015 report from the Economic Policy Institute.

The article notes:

China’s state-run tabloid Global Times deemed Biden “smoother to deal with” than President Trump in August.

I don’t doubt that!

The article concludes:

“Economic security is national security. That’s one of the principles of the Trump Administration and what we learned from this China virus pandemic,” Navarro said. “If we bring those jobs back onshore as we have been doing, we will create great jobs at great wages but also protect the American people from the Chinese communist party.”

Navarro touted Trump’s stance on U.S. manufacturing, but the president has repeatedly taken criticism for manufacturing his branded products in other countries, including China.

The goal should be to make it cheaper and more practical to manufacture things in America. That goal can be achieved through lower corporate taxes, tariffs on foreign goods, and reliable and inexpensive energy. President Trump has worked in all three of these areas to bring manufacturing back to America. Because of Hunter Biden’s continuing investments in China, it is unlikely that Joe Biden would continue policies that would move jobs away from China.

Do You Think They Knew Something?

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The American Thinker posted an article today about the recent trade agreement with China and the impact the coronavirus might have on that agreement.

The article notes:

Yet another indication that China knew it was about to release a deadly and destructive pandemic on the world is seen in its last minute insertion into the Phase 1 trade deal of a clause releasing it from its obligations under the deal in the event of a natural disaster. It is another reason why China pushes the wet markets story about the origin of the Wuhan virus and dismisses a leak from or accident at the Wuhan Institute of Virology as some tinfoil-hat conspiracy theory. If the lab origin for the Wuhan virus is officially confirmed, China’s economy is fatally screwed. 

The article quotes  K.T. McFarland, who served as Deputy National Security Advisor under Michael Flynn for the first four months of the Trump administration:

One of the reasons that they keep insisting, despite mounting evidence that it came from a lab in Wuhan, they keep insisting, no, no, it came from a wet market, or maybe it was America who did it.  They cannot admit culpability for the following reason, if they do, then there’s a clause that they put into the Phase 1 US-China Trade Deal, where in essence in this trade deal it said we would lift sanctions, we would lift the tariffs on them and then they would buy a lot of agriculture and other goods from us.

But there’s a clause that’s in there, a get out of jail free clause, which says, however, if there is a natural occurring disaster, the two parties will renegotiate.  In other words, China doesn’t necessarily want to keep the terms of the deal.  And so it’s very important for everybody, for them, to say, well, it’s a naturally occurring disaster coming out of the wet lab.  It wasn’t China who did that.

So not only do they give themselves an out for the trade deal, that they were pressured into signing, but they also will give themselves an out if companies and countries and individuals, all come to the International Courts and try to sue China.

The article notes that tariffs may be one way to force China to pay for its negligence in misinforming the world about the virus. I think that is a good idea.

When Personal Interests Overrule Good Legislation

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Yesterday The Gateway Pundit reported that two House of Representatives Democrats have proposed lifting tariffs on imported Chinese goods. The two Democrats are Florida Congresswoman Stephanie Murphy and Democrat Joe Cunningham of South Carolina. Oddly enough, Representative Murphy’s husband manufactures sportswear in Chinese factories. She also owns a patent on one of the products manufactured by her husband. What an amazing coincidence.

The article reports:

Murphy and Cunningham’s plan does not provide any insight or plans on how they would make sure said imports, which include everything from food to construction supplies, would be properly tested to make sure they are not carrying the Wuhan Virus. Furthermore, the individuals involved in loading, shipping, and unloading said imports have no requirements to be tested by American officials to determine if they are also carrying the Wuhan Virus. To say that this is reckless would be an understatement.

…Jamison Johnson, who is a graduate of the The Citadel in South Carolina, also served three tours of duty as a marine in the Middle East. He is running for the GOP nomination in South Carolina’s 1st District to take on incumbent Congressman Joe Cunningham, the co-sponsor of Murphy’s pro-China legislation.

“The Wuhan Virus came from China. If they would’ve been open and honest with us from the beginning, far less people would’ve gotten sick and far less people would have died. As a marine with three combat tours, I understand all too well how to deal with bullies like China. You have to show resolve and not back down,  just like how President Trump is remaining firm and steadfast in handling them. At the end of the day, it is quite clear that “Smoking Joe Cunningham” simply lacks the moral compass or courage to unite and lead us in any capacity,” Johnson told TGP in an exclusive statement Wednesday afternoon.

It is unclear how much support this effort has, but Murphy and Cunningham are pushing to have this placed in the Coronavirus aid package being considered and developed by President Trump. This is a breaking news story and we will update you as more happens.

I suspect that the obvious conflict of interest Congresswomen Murphy has between the interests of her husband’s business and the well being of America is only one example of something that is rampant in Washington. It is time to look at the business interests of both our Congressmen and their spouses. Some of their business interests may be in conflict with the interests of America. When that is the case, they need to be removed from office.

President Trump And His Trade Policies

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Yesterday Fox News reported that the US trade deficit has dropped for first time in 6 years because of the taxes President Trump has placed on China.

The article reports:

The U.S. trade deficit fell for the first time in six years in 2019 as President Donald Trump hammered China with import taxes.

The Commerce Department said Wednesday that the gap between what the United States sells and what it buys abroad fell 1.7 percent last year to $616.8 billion. U.S. exports fell 0.1 percent to $2.5 trillion. But imports fell more, slipping 0.4 percent to $3.1 trillion. Imports of crude oil plunged 19.3% to $126.6 billion.

The deficit in the trade of goods with China narrowed last year by 17.6 percent to $345.6 billion. Trump has imposed tariffs on $360 billion worth of Chinese imports in a battle over Beijing’s aggressive drive to challenge American technological dominance. The world’s two biggest economies reached an interim trade deal last month, and Trump dropped plans to extend the tariffs to another $160 billion in Chinese goods.

The article notes:

Overall, the United States posted a $866 billion deficit in the trade of goods such as cars and appliances, down from $887.3 billion in 2018. But it ran a $249.2 billion surplus in the trade of services such as tourism and banking, down from $260 billion in 2018.

America is a nation of consumers, so I suspect trade deficits are something that will always be with us, but as the manufacturing base in America expands and our trade policies become more balanced, I believe we will see lower trade deficits.

Good Economic News Created By Good Leadership

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Trading Economics reported the following:

The US trade deficit narrowed to $43.1 billion in November 2019 from a downwardly revised $46.9 billion gap in the previous month. It compares with market expectations of a $43.8 billion shortfall. The trade gap shrank for the third straight month to the lowest since October 2016. Imports slumped 1% to the lowest value in 2 years due to falling purchases of aircraft, computers and cell phones. Exports increased 0.7% to $209 billion, boosted by sales of drilling and oilfield equipment, jewellery, autos, diamonds and aircraft engines. The goods trade deficit with China narrowed 15.7% to $26.4 billion, with imports dropping 9.2% and exports jumping 13.7%. Year-to-date, the total deficit decreased $3.9 billion. The trade war with China seems to be the main cause behind the lowest trade gap. Although a lower trade deficit is likely to impact positively on GDP growth, concerns remain over the impact of falling imports in consumer spending, the largest component of GDP. Balance of Trade in the United States averaged -15090.59 USD Million from 1950 until 2019, reaching an all time high of 1946 USD Million in June of 1975 and a record low of -67823 USD Million in August of 2006.

This is the result of the tariffs and trade negotiations of President Trump.