$200bn? Make that $467bn: Trump threatens to balloon proposed bonus China tech tariffs US President Donald Trump is threatening to tack import duties on $267bn of imported Chinese tech gear and other goods – on top of the $200bn already planned. The President told reporters aboard Air Force One on Friday that he may expand his proposed tariffs as part of his ongoing trade war with China in which the two nations …
One problem is that a huge number of US citizens do not understand that THEY (and US manufacturing, etc.) are the ones paying the tariffs. The same group that kept screaming for killing Obama care; and never realized that that was essentially Medicare. Nor do they understand the concept of an insurance pool. I don't have days to list everything.
Trump's new tariff can only work as he thinks it will if there's another, partly idle source of similar items, with the spare capacity to seamlessly take over from Chinese suppliers and is one that is guaranteed not to be nuked by a sudden extension of the Tariff.
Does such a source exist?
If not, then, as others have said, this new Tariff is just a tax on American consumers[1]. The importers don't give a toss because they'll just pass the Tariff cost on to the next guy along with the imported items.
[1] I really hate the term 'consumer'. Have we all really no other use than to mindlessly gobble up everything the producers, advertisers and vendors of 'stuff' want us to?
RE: "I really hate the term 'consumer'"
I'm not fond of the term either, but what I really hate in modern economics is the concept of constant growth, where if you hit a plateau of constant use, but no longer grow, then confidence in your company falls as does your stock price and other abstract concepts only visible on bits of paper and numbers in digital bank accounts. What's wrong in finding a nice comfy niche and just maintaining it where it is?
Its worse than that, there was a lot of polling that showed much higher unfavorability for Obamacare compared to the ACA. The drooling idiots who like one but not the other don't even realize they are the same, they've just been brainwashed by Fox News to hate Obamacare, or reflexively hate anything "Obama".
If Trump's tax cuts had been tagged with Obama's name there are probably enough similar drooling morons in the house's "freedom caucus" that it would have been voted down by accident.
In theory, it's exactly what you want - sustainable businesses generating steady income.
True, but the stock market insists on rising share prices for a "return on their investment ". Look at the number of companies that have sucked up and destroyed by the vultures (Icahn for one) and many were just cruising along with steady income, minimal growth as the market was pretty saturated.
Thanks for pointing out the difference between economics and commerce. There are plenty of people that think that because they took economics 102 and they are good at commerce that they must be experts at economics. So they are only looking at the bottom line of the last quarter. Like Agent Orange.
It's a dog and pony show for investors (each other), not for customers.
"I think, from what I've been reading, constant growth is not a demand of modern economics ( which hasn't really changed that much) but of modern commerce . i.e. bean counters who value companies on an index of growth rather than earnings."
Broadly correct. I've written elsewhere about the appalling damage done by allowing bean-counters to have management responsibilties, but in truth, in this case, they are merely a symptom of a much larger problem wherein everyone focuses on what can be crudely measured instead of looking at more subtle, nuanced indicators of "goodness".
A brief story. Late 90s, IT boom, Yrs Truly is "Director, CRM and EAI" (actually one step below Board level) for a youngish consultancy in the City of <100 pretty good, skilled developers, architects, technologists etc. (Job title sounds bigger than the responsibilities.) Lots of recent senior recruiting, two utter first-rate Mongs have found their way into the Board, for Marketing and Finance. Founders consideirng IPO, got starry-eyed at recruiting "credible, heavyweight, highly-paid individuals" and fell prey to propaganda instead of shrewd assessment of past performance.
A certain level of IPO greed is kicking in so lots of poeple can become rich overnight. Many fancily printed potentially lucrative share entitlements are printed and distributed. But the problems (not least, inevitable bubble bursting) are in sight, for those with the wit to see it.
The City, it appears, will magic a successful IPO if quarterly revenue and profits steadily increase. There can be only a steady rise. Nothing else is tolerable. Abruptly, management types like me are being pressed to put in lots of billable hours. Abruptly, further hires are stalled. Abruptly, investment in training, research, in-house dev and anything else of long-term value is stopped. Personally I cannot properly manage, motivate and look after a young and eager team if I am also putting in too many billable hours—so my team's morale, coherence and performance—their belief—immediately starts to suffer. To Board I submit presentations predicting how and why this will hurt us badly in the months to come, as project quality degrades, deadines are missed, mistakes made, people leave. I actually show one slide showing the collapse in revenues for the next quarter. (Later turns out to be bang on, sadly.) Barely any reaction. No one cares. Maybe no one believes it. The only goal is "More revenue, by any means, and cut costs to keep profits 'growing'".
A few months later many staff (the better ones, of course) are leaving almost daily. Contributory factors include widespread incredulity about Marketing Idiot's mouth and foot problem, and the Finance Fool picking ill-informed fights with clients, who then decline to pay (and I didn't blame them). One of Finance Fool's favourite sayings, always glibly thrown out there, about staff who might not be billing maximum hours next month: "Can 'em. Just can 'em." (None of the people he wishes to "can" have less than a 30-point IQ advantage on him.) But the worst damage is done by the abrupt short term obsession with quarterly figures, which damages absolutely everything in the operation, including the morale of what used to be good, future-oriented teams of expert young developers.
Older, wiser, collecting my embarrasingly fat redundancy payment many months later, I pointed out neutrally that this was all entirely predictable. The answer: "Why didn't you say so?"
No IPO. Company blown away like a tumbleweed nearly 20 years ago. It could have survived well, grown slowly and spasmodically, learned along the way, probably eventually sold out handsomely to one of the BigX consultancies ... where, admittedly, it would have been infected by their own brand of greed and incompetence, but the founders would have got their payoff.
Instead, shortsighted greed and a moronically counterproductive obsession with just a couple of numbers, completely destroyed it.
"a symptom of a much larger problem wherein everyone focuses on what can be crudely measured instead of looking at more subtle, nuanced indicators of "goodness". "
Related issue - using GDP growth as a measure of a country's advancement even though
(a) GDP whether absolute or per capita doesn't take into account that all or most of the increase could be going into the pockets of a select few while the plebs are stuck in a status quo and
(b) some factors correlating with higher GDP can include more traffic, longer commutes, more expensive housing, more polluted air and water, overcrowding, more pressure on infrastructure and other common resources etc etc. In other words, quality of life can be tanking and the bureaucracy doesn't care because Yay! GDP growth!
Whatever is being measured is what will get optimised for (see also chip speed benchmarking, diesel emissions measurements... )
- nothing. There are plenty businesses which don't need continuous growth. At the small end of the scale there are self-employed people who would rather be in control of their own time and not answerable to anyone. At the large end, some investors prefer stocks with a reliable dividend yield over growth. Underlying it all, however, is a long-term trend of increasing wealth and life expectancy across the world, so economic growth is normal. The progress that has been made is under-reported and quite staggering... if you Google the late, great Hans Rosling and watch some of his presentations you'll see what I mean.
"a huge number of US citizens do not understand that"
a) socialism ultimately fails because it runs out of "other people's money"
b) high tax rates on "the rich" are actually on those trying to BECOME the rich [thus they keep middle class in their place, and lower class on the dole]
c) one-sided trade deals ultimately favor your competitors, especially if they engage in predatory economic practices such _AS_ government subsidized 'competitive' pricing and deliberate "dumping" to drive domestic industries out of business
d) Oba[k,m]acare is a COMPLETE fiasco, because it DOUBLED insurance costs and empowered government to "make choices for you", is anti-freedom, etc.
e) China is attempting to force U.S. businesses OUT of business so that it won't have any competition, and THIS is why they're behaving "that way". If they were so great, how come they pay their workers CRAP wages in order to corner the world market on everything? It's because they [their neo-communist government, anyway] think they CAN.
And I think the American people very MUCH understand the concept of an insurance pool. Many of us, however, don't want to participate in something that costs THAT MUCH, but has no real benefit. Example, you only care about emergency hospitalization, but are forced to pay for HMO-like coverage, except it has a deductible that is SO high, you never exceed that amount in a year. So what's the point of paying for "all of that" when you could get "just emergency care" coverage for WAY LESS??? And that's why Oba[k,m]a-"care" *FAILS*.
Or like me, say "F-that" to insurance, and just buy what you need, because THAT is what _I_ want to do. It's _MY_ life, not anyone else's, and the rest of the universe can PACK SAND if they *FEEL* I should do differently. They're not ME. _I_ run _MY_ life. *FREEDOM*
Yes, but when only a few people are able to hoard most money leaving little to others, suddenly some kind of "socialism" becomes appealing to the large number of people left with too little to live well enough, especially when they can't pay for basic needs like healthcare or education.
Sure, socialism usually doesn't solve those problems because it again creates an elite which hoards the money and leave little to others as well, so it will ultimately fail.
There's a third way, of course, but it anyway requires powerful, rich people to be less greedy, and understand some wealth has to be shared to create a functioning society. They can choose to share it through labour and wages, or through taxes, or a mix of them - usually, the best solution to avoid "socialism".
Americans ( and many others) have been taught that Socialism = Communism.
It does not. This may, according to the definition used, be a matter of degree. But they are not the same. And of course some extreme political parties - of extreme left and extreme right- have adopted the word, on the basis that it implies something much more moderate and friendly than they really stand for. But it doesn't make them socialist and it doesn't make socialism what any of them stand for.
Communism is, in simple terms, the central ownership of everything on behalf of the people.
Socialism is the direction of resources so that incomes are spread equitably among the people.Which could mean communism. Marxist thinkers would define Socialism as a step on the path to Communism. As would the conservative right; though with much less appetite.And both Communists on the left and radical free-marketeers on the right would both have you think it is the same. Both have a vested interest in diverting society away from any system that manages the economy to be more equitable.
In a sense the extreme right and extreme left have a convergence of views. Because neither can bare the thought of a fair and equitable society. (And arguably the top echelon of both are just the same as each other anyway. See Orwell's Animal farm).
Well said, Terry 6. A nice description of the distinctions between political philosophies, but please, allow me to simplify it for some of the more hard of thinking types we have screaming about their freedumbs…
Dear Trump Voter:
Capitalism = Put the money first, above and beyond everything else, including people, collectively known as society.
Socialism = Put society, the people, first, above and beyond everything else, including the creation of wealth, known as capital.
Money, sat in a bank, holds no power in and of itself. Only when money is used to benefit society, does its true power become manifest.
If you are going to lecture people you should get your facts straight first. Capitalism and socialism is about ownership of the means for production.
Also, companies are amoral (not immoral) which means they have to follow the law irrespective of the moral standards and personalities of the board of directors. It is therefore the law that is engineered to put the people in the right order of priorities.
It is this that makes it possible to even have state capitalism.
Sure, socialism usually doesn't solve those problems because it again creates an elite which hoards the money and leave little to others as well, so it will ultimately fail.
Thank you for confusing socialism with yet another corrupt oligarchy.
The fault lies not in the system, but in the flawed implementation.
Same with everything, the selfish and self-important do their utmost to game a system for the benefit of them and their little clique.
e) China is attempting to force U.S. businesses OUT of business so that it won't have any competition,
Many niche manufacturers are getting hurt and going out of business particularly in the hobby field. China looks the other way on piracy of products. The big guys shake it off, the little ones go under. Once the little ones go under, there's no competition or innovation level outside of China. Sadly, the US government won't pay attention until the big corporations get hurt and start collapsing or get sucked up by the Chinese and their campaign contributions start dropping (both parties BTW not just your target of choice). The rot and problem starts at the bottom, never at the top.
"Sadly, the US government won't pay attention until the big corporations get hurt"
Yes. The US government stop giving a shit about small businesses quite a while ago. If you want a laugh (and evidence), just take a look at how big a business can be to count as a "small business".
"high tax rates on "the rich" are actually on those trying to BECOME the rich [thus they keep middle class in their place, and lower class on the dole]"
Wow, one thing I actually agree with you on!
The problem is with taxing 'earned' income different (and higher) from capital gains and dividend income. The wealthy middle class (doctors, lawyers, top tech talent etc) are the ones paying the highest %age of tax, while the true rich make most of their income not from a job or profession but from assets they own, which are taxed less than earned income or (through various loopholes) not at all.
The solution is for all income to be considered as income and taxed in the same way, whether it's capital gains, dividends, income from employment or anything else. Then you could reduce tax rates without bankrupting teh country, a Trump's recent tax cuts are going to do
It's a back door tax on profitable tech companies like Apple and Amazon.
It's actually quite clever....must be a side effect of a Trump policy.
Tech manufacturing is already starting to move away from China so it's a double win for Trump...though can't see it moving on shore...more likely to SE Asia and then Africa.
@robidy
And therein lies the problem with globalization. The promise of globalization was that it would increase competition and lower prices on many products and it has definitely lower prices on many products. The problem comes from Corporations abandoning local production to take advantage of extremely low labour costs with little or no health care cost or other benefits often setting up shop, maybe even preferring despotic regimes as they'll be less resistance to bad employment policy. Once a country gives up the means of production of important or even vital equipment it has decided to cede its sovereignty. In a complex economy there is a place for some governmental control over the price of manufactured products and even what is manufactured. For instance, there should be manufacturing capability in NA and or Europe for networking equipment, computers, etc... and although perhaps there'll be a dominant architecture Government should always be pushing R&D in case there turns out to a significant issue with that architecture. I suspect that you all know of what I speak. The above is true of any product of any real value to a society.
Nice reply, although I would add...
It is highly unlikely either at a local or global level that trade will be broadly equal at any given point in time.
There will be underlying reasons that the USA consumes more from China than it exports. You are should find, at least in principle, to find that the USA exports somewhere else that balances it, and that country has a trade surplus with China. This may not be the reality but it makes the point.
Is the USA simply over-consuming regardless of where stuff comes from? Is it ready and capable to take advantage if the tables turn? I am not convinced of this either.
As an aside economics doesn't necessarily do a good job when looking at non-manufactured resources e.g. Timber, meat, fruit etc that takes TIME to produce. There are natural timescales for trees to grow and fruit to ripen etc. Expecting relatively volatile global markets to deal with farmed produce leads to massive swings in prices, demand, and availability. In the long term it also seems to reduce capacity as farmers cannot cope with the price/demand volatility. You can't just plant another orchard for next year even if you know there will be demand. This is however going off topic...
"Tech manufacturing is already starting to move away from China so it's a double win for Trump...though can't see it moving on shore...more likely to SE Asia and then Africa.""
An unintended consequence of Trumps Trade War might be to accelerate the growth of other 3rd world nations trade and technology. China is already off-shoring, out sourcing and investing in other countries because wages in China are rising. If The US puts punitive tariffs onto imports from China, the most obvious way for China to side-step the tariffs is to build and export from other countries.
It could well end up being painful for the US, at least initially, but might actually be better for the world as a whole with a bit of wealth being spread more widely. (well, I can dream, can't I?)
>One problem is that a huge number of US citizens do not understand that THEY (and US manufacturing, etc.) are the ones paying the tariffs.
"THEY" are the only ones who pay tax in any scenario.
As someone said, "The government doesn't have money of its own, it only has your money."
The real question is, "Who is affected and how?"
My personal thought is that being large enough to become a multinational should not allow you to gain either short or long-term tax benefits relative to domestic companies.
"Being told that we have to buy something is anathema"
You ever heard of taxation?
You pay an amount of taxes, decided upon by someone else, democratically elected. Some of those taxes go into a defence budget that is then used to maintain a military to keep all Americans safe from things that might harm them.
Try replacing the words "Defence" and "Military" with the words "Healthcare" and "Medical service".
Or do you think that being forced to pay for a military that may never defend you is a similar waste of your money? After all, some of that defence may be used to defend people who can't afford to defend themselves, and you're clearly being forced to pay for that. Perhaps the defence budget should be scrapped and every American should decide what level of defence they want for themselves, then source it and finance it independently, and if someone can't afford it then that's their problem. You'll only defend yourself if and when someone attacks your country, right?
Perhaps education should be the same? Or civil infrastructure?
Your argument doesn't hold water.
Far too sensible, and has no direct benefit for trump or his cronies. None of this lot actually care about the average US citizen. They just want to appear to care, and blaming others usually does the trick.
China, India etc. benefit from cheap labour. This is a playing field that nobody is attempting to level. Funny that, isn't it?
Well actually AC there are plenty in the UK and USA etc. trying to level that playing field. The ones who want to abolish minimum wage, job security and health and safety rules. Those who encourage zero hours contracts and welfare "reforms" that push people to destitution if they don't accept poverty-level pay.
If you put a tariff on every overseas employee of a US based company, they'll simply create a subsidiary to employ them. If they try to get around that by tariffing employees of wholly owned subsidiaries they'll outsource them to an independent third party.
Some that employed more people overseas than in the US might just feel it is easier to pull up stakes and move their HQ elsewhere. You think Trump rages against Twitter and Facebook now, imagine if they re-domiciled in our greatest enemy, Canada?
I've been saying this for ages. Otherwise it goes from "US/EU research, US/EU design, Asia made, US/EU/Asian consumer" to "Asian research, Asian design, Asian manufacture, Asian consumer". Maybe with some limited access to stuff China is OK with the US still having, at a suitable delay from their own cutting edge stuff of course to make sure the West never catches back up.
Anyone remember the period in history where Germany held all the "IP"/"know-how" (I hate that latter term!). How did that work out for England, anyway?
Just when the American economy was recovered after their self inflicted 2008 crises, the Orange Idiot and his economic advisers who, from my reading, also don't understand economics, are destroying what was being built up. But he, the words of Golden Boy were, "Trade wars are easy to win". He's not even going to learn that you can't just under pay a contractor or materials supplier like he does when he was giving the appearance of building, err buildings.
With all these tariffs being imposed, you really will see Reagan's "trickle down" economics in action.
You would have thought that being made Bankwupt how many times is it? Five? well, a good few that he'd have learnt at least the basics of economics...
He really needs to learn that the USA can't win a trade war with the rest of the world. The ROW economy is far bigger than that of the USA.
Perhaps he should go on TV and smoke some dope and say to his critics... Cool it Man! (only joking)
Unfortunately he knew what he was doing with those bank-whoopsies, and didn't lose a penny. He risked other peoples money in his scheming shenanigans, and made sure he'd fully consumed a large slice of the pie before the waiter took the dish away.
Seems the tactic of playing footloose with other peoples livelihoods is his mo.
In his mind he's had the greatest first year and a half of any president. If he can believe that he can believe anything. No matter what happens, he'll claim he "won" on his tariffs, and any negative impacts that are pointed out will be declared either "fake news" or somehow be Obama's fault.
Some Americans view bankruptcy as a form of economic gain.
I have known people who go bankrupt every 8 or so years. The key thing is to work your finances and finical security in such a way that you don't need to live off of credit. The American system fails because it allows people who are older with good pay to build up credit really fast even if it is clear that they were previously bankrupt.
Trump is one of these such people. His team has gone one step above however. They would push out payments to those (small non-Chinese) suppliers/builders who they owe money to in such a slow drip feed and tie up what was owed with legal paperwork. Those suppliers would go bankrupt, and then that debt would never be chased again.
What is also highly laughable is that the losses that allow trump to not pay tax was likely all based off of foreign loans to build US buildings. So he pays no tax in the US due to defaulting on Foreign loans.
Protectionism is bad, he is not the first person to try this hard for it. Some people benefit, those being protected, but everyone else has to pay the cost. Yes you can save jobs mining coal - at the expense of the solar industry. Yes you can bring back car manufacturing jobs - at the expense of car company profit, final product cost, and a larger risk to the finance sector. Protectionism is bad, but if it helps you then you like it.
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