When Is A Tariff Not A Tariff?

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?

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

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?

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?

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

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

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

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.

Beginning To Level The Playing Field In Trade

CNBC reported yesterday that China will lower tariffs on products ranging from frozen pork and avocado to some types of semiconductors next year.  The Chinese economy is slowing down, and lowering tariffs is seen as a way to bring back previous growth.

The article also notes:

 

  • Next year, China will implement temporary import tariffs, which are lower than the most-favored-nation tariffs, on more than 850 products, the finance ministry said on Monday.
  • That compared with 706 products that were taxed at temporary rates in 2019.

The article cites a few significant tariff cuts:

The finance ministry said the tariff rate for frozen pork will be cut to 8% from the most-favored-nation duty of 12%, as China copes to plug a huge supply gap after a severe pig disease decimated its hog herd.

…China will also lower temporary import tariffs for ferroniobium — used as an additive to high strength low alloy steel and stainless steel for oil and gas pipelines, cars and trucks — from 1% to zero in 2020 to support its high-tech development.

…The tariff rate for frozen avocado was cut to 7% from the most-favored-nation duty of 30%, the ministry said.

…Tariffs for some asthma and diabetes medications will be set at zero, the ministry said, while duties on some wood and paper products will be lowered too.

Import tariffs on multi-component semiconductors will be cut to zero.

China will also further lower most-favored-nation import tariffs on some information technology products from July 1, the ministry said.

China has long been an unfair trading partner–manipulating their currency, disregarding intellectual property, and generally behaving badly. Hopefully President Trump’s ‘trade war’ will bring some balance into our trade relationship with China.

 

Tariffs Work

No one likes trade wars, but we continue to see evidence that tariffs (combined with economic strength) work. Bloomberg posted an article on Thursday (updated Friday) about the recent trade agreement reached between the United States and China.The article notes that the tentative agreement was reached just as more tariffs were due to go into effect against China on December 15th. Because of the tentative agreement, the tariffs are postponed.

The article reports:

President Donald Trump signed off on a phase-one trade deal with China, averting the Dec. 15 introduction of a new wave of U.S. tariffs on about $160 billion of consumer goods from the Asian nation, according to people familiar with the matter.

The deal presented to Trump by trade advisers Thursday included a promise by the Chinese to buy more U.S. agricultural goods, according to the people. Officials also discussed possible reductions of existing duties on Chinese products, they said. The terms have been agreed but the legal text has not yet been finalized, the people said. A White House spokesperson declined to comment.

While there was no official confirmation from the government in Beijing on Friday, an announcement is expected in Washington as early as today, according to people familiar with the Americans’ plans. One possible option is for U.S. Trade Representative Robert Lighthizer to sign the agreement with Chinese Ambassador Cui Tiankai, according to people briefed on the matter.

When the agreement was announced, global stocks soared to record highs.

The article concludes:

In addition to a significant increase in Chinese agricultural purchases in exchange for tariff relief, officials have also said a phase-one pact would include Chinese commitments to do more to stop intellectual-property theft and an agreement by both sides not to manipulate their currencies.

Put off for later discussions are knotty issues such as longstanding U.S. complaints over the vast web of subsidies ranging from cheap electricity to low-cost loans that China has used to build its industrial might.

Nothing is at yet cast in stone. Stay tuned.

Playing Chess With World Trade

America has been on the wrong end of bad trade deals for a long time. We watched our manufacturing jobs leave America after NAFTA. We watched the steel industry disappear after being undercut by Chinese steel held up by subsidies by the Chinese government. President Trump is a businessman. As a businessman, he is trying to level the trade playing field. In some areas he is getting cooperation at home and abroad; in some areas he is not. China has been a difficult country to deal with regarding trade. The uneven playing field they have enjoyed for years has been very profitable for them. Because their economy is based on an uneven playing field, they are reluctant to make changes. Their economy is currently struggling, and if President Trump stands his ground, the Chinese economy could face serious challenges. That’s where we are. There is, however, some positive news about where we might be headed.

Ed Morrissey at Hot Air posted an article today about a possible breakthrough in the talks with China.

The article reports:

Did China finally blink in Donald Trump’s trade war? Trump himself seems to think so. At the G-7 summit, Trump told reporters that a statement earlier in the day from a top official in Beijing showed that China had finally expressed a real interest in redefining the trade relationship between the world’s top two economies. It’s “the first time” that Trump sees China acting in good faith, he said

The article continues:

After rapid-fire escalations in tariffs by both sides, China’s vice premiere called for “calm.” Liu He also declared Beijing’s willingness to conclude a trade agreement and called for talks to begin immediately:

“We are willing to resolve the issue through consultations and cooperation in a calm attitude and resolutely oppose the escalation of the trade war,” Liu, who is President Xi Jinping’s top economic adviser, said, according to a government transcript.

“We believe that the escalation of the trade war is not beneficial for China, the United States, nor to the interests of the people of the world,” he added.

U.S. companies are especially welcome in China, and will be treated well, Liu said.

“We welcome enterprises from all over the world, including the United States, to invest and operate in China,” he added.

“We will continue to create a good investment environment, protect intellectual property rights, promote the development of smart intelligent industries with our market open, resolutely oppose technological blockades and protectionism, and strive to protect the completeness of the supply chain.”

The last time we thought we had a deal, the person who made the deal was executed when he returned home. Hopefully this time will turn out better for everyone.

Trying To Level The Playing Field Has Its Challenges

Fox Business posted an article today about the devaluing of the Chinese yuan. The devaluing of the Chinese currency (currency manipulation) has been used by China for decades to grow their economy at the expense of America. It has been used to lure manufacturing away from America, impact our trade balance, and generally work against the American economy. We have needed to combat this practice for decades, but no President had the courage.

The article reports:

The onshore Chinese yuan weakened to worse than seven per U.S. dollar, hitting its lowest level since 2008, as Beijing looks to cushion the blow from Trump’s tariffs. A weaker yuan makes Chinese goods cheaper for overseas buyers, which may be necessary as China just lost its spot as the US’s biggest trading partner.

Trade data released Friday by the Department of Commerce showed U.S. imports from China fell by 12% in the first six months of the year, allowing Mexico to supplant it as the U.S.’s biggest trade partner.

“China dropped the price of their currency to an almost a historic low,” Trump tweeted Opens a New Window. on Monday. “It’s called “currency manipulation.” Are you listening Federal Reserve? This is a major violation which will greatly weaken China over time!”

Last week, Trump said beginning Sept. 1 the U.S. would place a 10% tariff on the remaining $300 billion of Chinese goods. He went ahead with the announcement despite objections from his advisers.

The president warned he could “always do much more” with respect to tariffs, adding the 10 percent tax could go “well beyond 25 percent” if necessary. Earlier this year, the administration placed a 25% tariff on $250 billion worth of Chinese goods.

Weakening the yuan isn’t the only form of retaliation Beijing took on Monday. It also ordered state-owned enterprises to stop purchases of U.S. agricultural products, according to a Bloomberg report, citing people familiar with the situation.

That is a reversal from just last week, when Beijing said it had purchased several tons of U.S. soybeans Opens a New Window. as a gesture of a goodwill amid trade negotitations. Before the trade war began, China was the largest buyer of U.S. soybeans, accounting for 70% of all purchases, but their imports have fallen by 97% since the trade war began.

The article notes:

Over the weekened, The Trump administration pushed back against the idea the trade war was hitting the wallets of U.S. consumers.

“China has strategically gamed the tariffs by slashing their prices and by devaluing their currency,” White House trade advisor Peter Navarro told “Fox News Sunday.”

This trade dust-up with China may get ugly, but it is something that has to be done.

The Coming Election Impacts Foreign Policy

Yesterday The Washington Free Beacon posted an article about China’s plans to influence the 2020 presidential election.

The article reports:

In his conversation with Levin, Gertz (Washington Free Beacon senior writer Bill Gertz) reflected on his interview with Guo, who told Gertz earlier this week that the Chinese government has been deploying a prolonged campaign to defeat President Donald Trump in 2020. Gertz asserted the Chinese government may try to wait out Trump’s time in office so it can negotiate trade deals with a new Democratic president if Trump loses in 2020.

Trump announced Thursday he would impose an additional 10-percent tariff on certain Chinese exports as a trade agreement between the United States and China has yet to materialize.

“The China threat to me is the most serious threat facing the country,” Gertz told Levin.

He pointed to the economic integration between the U.S and China and how those relationships make it difficult for lawmakers and military officials to address Chinese aggression head-on, which he referred to as “an existential threat.”

The article concludes:

“There’s a major push right now to try and build up of American courses in Asia so we won’t have to go to war with China,” Gertz said of the government’s efforts to deter a war hypothetical war with China.

Looking towards the presidential race, Gertz warned the Chinese government would prefer to have a Democrat in the White House.

“It’s going to be a huge problem if the Democrats retake the administration,” Gertz said, pointing to former Vice President Joe Biden’s recent downplaying of threat China poses to the United States.

Gertz pointed out that during the Obama presidency the Chinese government expanded their presence in Asian waterways, in addition to ramping up their theft of intellectual property from American companies and entrepreneurs.

This may be the reason the negotiations with China have become so difficult–China is waiting for a President who will cave into their demands. It is obvious that President Trump is not that person.

By undermining President Trump since he was elected, the Democrat party has made international trade negotiations much more difficult. Creating an even playing field in trade with China would result in continued growth of the United States economy. It is time to repair the damage bad trade deals have done in the past.

Yes, The President’s Border Policies Have Changed Things

One America News posted an article today with the following title, “Border apprehensions nosedive after President Trump’s Mexico deal.”

The article reports:

Apprehensions on the southern border have plummeted, following President Trump’s historic deal with Mexico. According to leaked Department of Homeland Security data, apprehensions at the southern border dropped by 25-percent between May and June.

This drop was corroborated by acting Department of Homeland Security Secretary Kevin McAleenan on Friday, who attributed the change to President Trump’s deal with Mexico in June. The deal called on Mexican officials to do more to stop the flow of illegal migration to the U.S. southern border.

“It’s become clear that over the past three weeks, since the administration reached a new agreement with Mexico, that we’ve seen a substantial increase in the number of interdictions on the Mexican southern border and a sincere effort to address the transportation networks coming through Mexico,” stated McAleenan.

While the month of June typically sees a decline in border apprehensions, a 25-percent decrease is unprecedented compared to previous years.

The article concludes:

“While it’s been many weeks coming, I think we should pause to note the significance of the strong bipartisan votes to respond the administrations request and provide the over $4.5 billion in total to support these humanitarian missions,” said the DHS secretary. “Although we did not get everything we asked for, including — importantly — additional ICE beds for single adults, the bill substantially addresses our request.”

Despite the decline, McAleenan admited there’s still a lot of work that needs to be done to stop the flow of migrants from central America. He also said he believes we should wait to see if the drop in apprehensions continues in the coming months to assess just how much more work needs to be done to combat the migrant crisis.

One of the advantages of having a businessman as President, is that President Trump understands that money (tariffs) can be used as leverage. The change in the situation at our southern border is an example of that. Hopefully, the decrease in illegal immigrants attempting to enter America illegally will continue.

Wrong Again

Remember when the talking heads on television told us that because of the tariffs President Trump had placed on China, the cost of imports would go up. Well, they misread the tea leaves again.

The Gateway Pundit posted the following from the Bureau of Labor Statistics:

Prices for U.S. imports declined 0.3 percent in May, the U.S. Bureau of Labor Statistics reported today, following an increase of 0.1 percent the previous month. Lower fuel and nonfuel prices contributed to the May decline in import prices. U.S. export prices fell 0.2 percent in May, after advancing 0.1 percent in April, 0.8 percent in March, and 0.6 percent in February.

Imports

U.S. Import prices fell 0.3 percent in May, the first monthly decline since a 1.4-percent drop in December. Import prices advanced 1.8 percent from December to April before the downturn in May. The price index for overall imports decreased 1.5 percent over the past 12 months, matching the drop in January. These were the largest over-the-year declines since the index fell 2.2 percent in August 2016.

Fuel Imports: Import fuel prices declined 1.0 percent in May, after rising 25.4 percent over the previous 4 months. Lower prices for both petroleum and natural gas contributed to the May decline. Petroleum prices fell 0.9 percent in May, after a 4.7-percent advance in April. The May decrease was the first monthly decline since a 15.3-percent drop in December. Natural gas prices fell 6.8 percent in May following a 51.1-percent decline the previous month. Overall fuel prices decreased 1.1 percent over the past year. The decline was driven by a 1.9-percent drop in petroleum prices which more than offset a 2.5-percent rise in natural gas prices.

The Gateway Pundit article concludes:

The lower costs on fuel allowed the overall import costs to go down for the month.  This is in the face of tariffs the Trump Administration put on China as a result of inaction from the Chinese in coming together on a trade agreement with the US.

Despite what all the liberal naysayers said about increasing tariffs costing Americans millions, the costs of imports are actually down.

Overall the US economy is in very solid shape –

The experts seem to be having a very difficult time getting things right under the Trump administration.

An Obvious Conflict Of Interest

Senator Mitch McConnell does not like tariffs. He does not like them on China where they are levied in an attempt to level the playing field on trade, and he does not like them on Mexico where they are being levied in an attempt to stop the flow of illegals and drugs over our southern border.

Unfortunately, the meme below is not a joke:

An article posted at Breitbart today explains the problem. Senator McConnell is married to Transportation Secretary Elaine Chao.

In the article, Peter Schweizer explains why that is important:

Schweizer highlighted Transportation Secretary Elaine Chao, who is married to McConnell, as illustrative of what he described as widespread political conflicts of interest between sitting American officials and foreign governments.

“The Chao family are deeply embedded commercially and financially with the Chinese government,” explained McConnell. “The Chinese government essentially set them up in the shipping business. Their ships — these are large cargo ships that transport a large amount of goods around the Pacific.”

Schweizer added, “The Chinese government is financing the building of these ships for the Chao family business. They provide crews for these chips, and they provide contracts to ship steel and other products around the Pacific.”

The Foremost Group is a shipping business founded by James Chao, Elaine Chao’s father. The Chao family business primarily revolves around China, necessitating “deep ties to the economic and political elite in China,” according to a Sunday-published New York Times report.

“[The Chao family’s shipping business] started out in the early 1990s with just a couple of vessels, a couple of large cargo ships,” said Schweizer. “They now have, by some estimates, 35 or 36, many of those built by the Chinese government. The estimates are that hundreds of millions of dollars in financing is done by the Chinese to build these ships, and that they give them preferential treatment.”

Schweizer explained, “Business in China is done with a political purpose. The China State Shipbuilding Corporation is controlled by the government, by the Communist Party, and they do business deals with people in the West with the expectation that they will get things in return.”

That is called a conflict of interest. So what is Senator McConnell’s problem with the Mexican tariffs? Many Republicans have aligned themselves with the U.S. Chamber of Commerce which supports our porous southern border as a source of cheap labor. There has never been a border wall because Republican business men who contribute to political campaigns want cheap labor and Democrats want future voters.

Tariffs And Trade Negotiations

John Hinderaker posted an article at Power Line today about the ongoing trade negotiations with China. It is an open secret that China has been stealing American intellectual property for years. They have also engaged in other unfair trade practices such as manipulating their currency. What is happening now is that President Trump is trying to make the playing field more level. There will be opposition. There also may be some short-term losses for Americans, but the President is doing what needs to be done.

The article includes the following cartoon:

That about sums it up.

President Trump Has Reached A Trade Deal With Canada And Mexico

America has not done well in trade deals in the recent past. Our manufacturing sector has suffered for a variety of reasons–high taxes, bad trade agreements, energy costs, etc. The Trump administration has begun to address these issues, sometimes more successfully than others.

This past weekend, Fox Business announced that the United States and Canada confirmed that they had reached a deal on a “new, modernized trade agreement,” which is designed to replace the 1994 NAFTA pact.

The article reports:

In a joint statement the two nations said the new deal would be called the United States-Mexico-Canada Agreement (USMCA).

Canadian Prime Minister Justin Trudeau said following a cabinet meeting, “It’s a good day for Canada.”

…The agreements reportedly boost U.S. access to Canada’s dairy market and protect Canada from possible U.S. autos tariffs.

Trump’s administration has said Canada must sign on to the text of the updated NAFTA by a midnight Sunday deadline or face exclusion from the pact. Washington has already reached a bilateral deal with Mexico, the third NAFTA member.

If Canada did not sign a new deal, Trump had threatened to impose steep tariffs on all automotive imports.

…Trump blames NAFTA for the loss of American manufacturing jobs and wants major changes to the pact, which underpins $1.2 trillion in annual trade. Markets fear its demise would cause major economic disruption.

Negotiators from both sides spent two days talking by phone as they tried to settle a range of difficult issues such as access to Canada’s dairy market and U.S. tariffs.

As part of any agreement, Canada looks set to offer increased access to its highly protected dairy market, as it did in separate pacts with the European Union and Pacific nations.

Access to Canada’s dairy market was one of the sticking points of the negotiations. Canada places high tariffs on imported dairy products in order to protect its dairy farmers.

This agreement is another indication of the Trump administration’s desire to protect the interests of America. America is simply looking for a level playing field in trade agreements. This treaty is one more step in that direction.

An Interesting Take On Tariffs

Real Clear Politics posted an article today titled, “Why Trump’s Tariffs Won’t Cost Consumers a Nickel.” I’m not sure I totally agree with that, but the ideas behind the statement were interesting.

The article states:

Critics also contend that President Trump’s tariffs will inevitably lead to higher prices for consumers.  We’ve heard this before. They said aluminum tariffs would spike the cost of a six-pack. But soda and beer prices have remained flat.

Now Walmart has joined the chorus. But we have no more reason to believe officials there than other boys who cried wolf. To understand why, let’s review how tariffs work, and how specifically the president’s tariffs work.

…Tariffs aren’t imposed on the final retail price the way a sales tax is. They are also not imposed on the wholesale price. They are not even imposed on what the importer pays at the dock when the goods enter the U.S.  The duties are imposed on an even lower price than that – and that’s a scandal in itself.

Let’s say Black & Decker wants to sell a line of toaster ovens with a $60 retail price in the U.S.  It goes to a Hong Kong middleman who deals with Chinese manufacturers. The Hong King middleman pays his cousin at a Chinese toaster oven factory $10 for toaster ovens. Black & Decker agrees to pay the Hong Kong middleman $20 for the toaster ovens, and picks them up off the boat in Long Beach, Calif.

Let’s say there’s a 10 percent tariff on toaster ovens from China. (There isn’t.)  The tariff would only be $1 because it’s calculated on what the Hong Kong middleman (says he) paid his cousin at the toaster factory – the first sale — not what Black & Decker pays to take delivery at the port – what’s known in the jargon of the trade world as the last sale. 

As a result of this accounting flim-flam, Hong Kong middlemen and the importers who love them are getting rich while taxpayers are getting hosed for untold billions of dollars the U.S. Treasury is not collecting.

The article concludes with information that shows the wisdom of what President Trump is doing:

And here’s the beauty part, how the tariffs are designed to hurt China: The Trump tariffs target items available from sources outside China.  Buy from a supplier outside China, avoid the tariff.

President Trump’s surgical strike tariffs are sending companies a clear message: Do business anywhere but China.  

And the message is getting through. Companies no longer see China as a safe space.  China needs a continued influx of foreign investment to feed its economic growth, and the president’s trade policy encourages companies to look elsewhere.

This is the reason it is good to have a businessman in the White House instead of a politician.

Good News For Indiana

Yesterday Breitbart reported the following:

U.S. Steel has announced that they will invest $750 million at their 110-year-old steel manufacturing plant known as Gary Works in Gary, Indiana, crediting President Trump’s protective tariffs on steel imports.

…“We are pleased to be making this significant investment at Gary Works, which will improve the facility’s environmental performance, bolster our competitiveness and benefit the local community for years to come,” Burritt said in a statement.

“We are experiencing a renaissance at U.S. Steel,” Burritt said.

That manufacturing renaissance for U.S. Steel comes after decades of free trade policies which incentivized American companies to readily outsource their labor force to foreign countries.

…Already, though, Trump’s tariffs have created 11,100 American jobs in six months. There have been 20 times as many U.S. jobs created because of the tariffs than those jobs that have been lost.

This illustrates why it is good to have a political outsider who is a businessman in the White House. The political establishment and the State Department would never have had the courage to reverse bad trade agreements. America cannot afford to support the world by making bad trade deals–we have serious deficits that we still have to deal with. We need to remember that when more Americans that are working, fewer Americans are depending on the government to support them. That alone cuts government spending.

The economic growth we are experiencing under President Trump is a vivid example of the fact that economic (and trade) policies matter. The elimination of unnecessary regulations combined with a tax code that is friendly to business have resulted in a degree of economic growth that Democrats told us was impossible. We need to remember who said that this couldn’t be done and vote them out of office. We then need to vote people into office who will support economic policies that result in economic growth.