You must surely know by now that President Trump has imposed tariffs on goods imported from Canada, Mexico, and China by executive order. Rather than cite external sources, I’ll just provide my reactions.
As a general principle I’m opposed to tariffs. Tariffs tend to reduce the economic growth and welfare of countries that impose them. If you don’t believe me, look it up.
I think that imposing tariffs on goods from Mexico and Canada is a mistake. I presume that President Trump is doing so as a bargaining chip on issues unrelated to trade. The more quickly those issues can be resolved amicably, the less harm they will do. I suspect that more leverage could be exerted on Mexico by imposing a tax on remittances.
China is a completely different case. Dislike tariffs as I might, I’m afraid we really have little choice. China is too big and too mercantilist. My only complaint about the tariffs imposed on Chinese goods is that they’re too low.
As ever with Trump; it isn’t official until it occurs.
Mexico has been delayed until March 1, or beyond, depending on “negotiations”. Canada, they are having “calls” today.
The Chinese are unusually quiet compared to their reaction to the tariffs in 2018/2019. The Wall Street Journal is reporting Beijing is preparing for negotiations and sees the tariffs as part of the opening phases.
I agree that of the negotiations (with Canada, Mexico, soon the EU, UK, Japan, India, and China); negotiations with China will be the hardest.
The elephant in the room is the trade deficits are being driven by the US dollar (which is very over-valued); and an undervaluation of the Chinese Yuan (given a 1 trillion Chinese trade surplus, its very undervalued). Its really in everyone’s interest to move the US dollar down relative to other currencies and increase the value of the Chinese yuan; but that requires the Federal Reserve to lower interest rates — which I think requires the Federal government to trim the deficit — which is a political third rail. For the Chinese to revalue the yuan upwards also touches the equivalent of the third rail in Chinese politics (to give the Chinese people more power to consume).
I haven’t heard that much talk anymore about trade deficits. Tariffs seem to be aimed mostly at immigration and fentanyl. First, fentanyl deaths are way down. Second, illegal immigration is way down. I fully expect Trump to announce that his policies have achieved what has already happened. As I think I wrote here he did the same thing with washing machines. Announcing tariffs on them AFTER Korean companies had already bought land to build new factories in the US. So when the factories finished he claimed it was the result of his tariffs. Of course what he wont announce is that the price of new washing machines increased 20%. If you just remember that Trump is good at marketing, not at accomplishing stuff, it’s easier to see where he is going.
Steve
Is the fentanyl or drug abuse deaths really “way down”?
According to the latest data from the CDC (https://www.cdc.gov/nchs/products/databriefs/db522.htm); the answer is no.
It isn’t getting exponentially worse, but a decrease of 2.2% from the current peak isn’t anywhere near “way down”.
14.5%.
https://www.dea.gov/press-releases/2024/12/16/overdose-deaths-decline-fentanyl-threat-looms
There is a more recent number I saw that I cant find now that showed continued drop from June. There were a couple of interesting papers looking at the history of drug abuse and drug deaths noting that they tend to by cyclical with addiction and overdose deaths bouncing from one drug to the next one. It looks like we are probably in the early stages of fentanyl no longer being the “in” drug. It was just unfortunate that fentanyl became so popular since its “therapeutic” threshold is so low, so we got a lot fo deaths.
Steve
14% is better then 2%.
But to state the size of the problem. That doesn’t get the country back to the numbers pre-pandemic. There is a long way to go; if we keep pushing as hard as we can on both demand and supply; maybe in 10 years it can go back to the numbers when the “wave” started; 10 years was how long it took to peak (so far).
The tariffs on Canada have also been delayed until March 1.
So as it is, we’re looking a tariff increase of 10% on China on Tuesday, and possibly the elimination of the de minimis exemption.
Of course Trump is negotiating with Canada and Mexico. And agree that China’s mercantilism is a bridge too far.
We have screwed up for many years, at great cost and pain to people, primarily industrial people. To unwind this will also cause cost and pain. But it must be done. Things don’t get better with just candy canes and fairy tales. It must be done.
This is just an observation on partisanship: So left leaners have suddenly discovered that tariffs could be a “tax” on consumers. My, my. But not taxes on “big” (evil, awful) corporations.
1. Corporations pay no taxes. They are stacks of paper filed often in Delaware for legal reasons. That’s not a trite rhetorical flash. Its true.
2. The people who might bear the effects of corporate taxes are capital (owners), consumers, labor, or suppliers. Those are the parties incident to the economic effect of a corporate tax.
Its a negotiation, and product/market and very situational issue.
3. The corporate management will react to taxation, just as it will any other cost. Its hard to imagine suppliers will bear the tax cost, reducing prices, as they and the corporation beat the shit out of each other every day.
4. I would say the same about labor, as they generally have fully negotiated their terms. But who knows?
5. Now to the meat. Does a corporate tax fall on the consumer, or the owner (capital)?? Its situational. No one knows. Take any view otherwise with a grain of salt. Consumers may accept a price increase on certain goods and services, on others not. Ultimately, they may not buy. A point I’ve made for years but just doesn’t resonate. Capital may have to accept (for awhile) the income tax burden, just like a light bill or real estate tax. But, another point that just doesn’t seem to resonate, most capital can move in a flash. Maybe not Ma and Pa businesses. But large corporate. Don’t fool yourselves, progressives. Its all situational.
Trump has simply decided we are no longer going to be the bitches of other country’s mercantilist policies. It will be messy. We should all support it if we desire a balanced economy.
Shorter Drew- Lets all support a planned economy run by an authoritarian.
“The tariffs on Canada have also been delayed until March 1.”
It’s all about the messaging/marketing. Trump or some sycophant will announce they got major concessions, like the announcement that Mexico moved 10,000 troops to the border. That of course ignores the fact that Mexico also moved 10,000 troops there when Biden asked them in 2021. How well did that work? Anyway, its not about the results, its the messaging.
Steve
IMO in a Trump administration it’s damned hard to figure out what ISN’T about messaging/marketing.
“Shorter Drew- Lets all support a planned economy run by an authoritarian.”
That’s just a dumb comment. Under the weather?
“IMO in a Trump administration it’s damned hard to figure out what ISN’T about messaging/marketing.”
Policy free, eh. Show me your work. And it’s odd, for months now all I’ve heard is that the real problem with the Dems is messaging. Heh.
Here is what’s going on. The change agents have been let loose. The entrenched are horrified, arguing Armageddon to preserve their unwarranted schemes.
We are a bankrupt country, financially, efficacy of government, and policy. Long live the change agents. No. It won’t be pretty. Ever been through a corporate workout? Sausage and such…..
Not so much free as emergent. I do not believe that Trump operates from closely-held beliefs but that he tries to get the best outcome from every deal that he can. As I have said before, I lack insight into how he evaluates “best outcome”.
If only our bankruptcy were limited to the factors you list! I think we’re bankrupt in principles, too.
Not from me. I think that the Democratic Party is too much under the thumb of progressives. The problem isn’t messaging or turnout or any of the factors the leadership has been claiming. It’s that the approaches the leadership promotes don’t work. They are too far from what most Americans believe.
It’s late. I’m tired. I think you terribly underestimate Trump. He is all about policy. And not procedure. The “transactional” meme I have always thought light. Results. It’s all results.
As far as the state of the Democrat party, I think I might be a Democrat if it was circa Kennedy. But the current Dem Party is bat shit crazy. And I say that with no reservation. No worry about hyperbole. They are fucking nuts.
Brilliant Trump says we should take over and run Gaza. After all, it’s just a piece of real estate. What could go wrong?
https://www.newsweek.com/trump-palestinians-will-thrilled-get-relocated-gaza-homeland-2026136
Steve