Trump’s Egomaniacal Economics
If someone asked you if it’s possible to solve an economic problem by creating a trade war with another country, you might have to ask, “Can such a war be won?” and, of course, “How much would that war cost?” These are things that we elect our representatives in Congress to investigate and debate.
I found a very well written web site, Council on Foreign Relations. They state clearly, “A tariff is a tax imposed on goods imported from a foreign country. Tariffs are paid by an importing business to its home country’s government, most commonly as a fixed percentage of the value of the imports. Tariffs can serve several goals. Like all taxes, they provide a modest source of government revenue. Several countries have also used tariffs to help their infant industries at home, hoping to shelter local firms from foreign competitors. Some tariffs are also meant to address unfair practices that other countries have used to make their exports artificially cheap.”
Let’s consider a real-life scenario. You want to buy a brand-new iPhone. The cost of the iPhone XS Max has a suggested retail price of $1,099. Now if a 25% tariff is placed on the item, the Ajax importer company will have to pay $274.75 to the treasury for each phone it brings into the US. Most importers will cover themselves by increasing the unit price of phone they sell. So, the Sprint store will have to give the importer more than $1300.00 for each phone, and the local tax a consumer might pay will drive the price even higher. In New York state, you would have to pay $114 in taxes. Yes, the treasury gets the tariff, but at what cost to the consumer? The Trade war with China makes you pay $1400 for a phone that cost $1100 last month. In most cases, higher prices also mean fewer phones will be ordered.
When soybeans were shipped to China by American farmers at $13.83 per bushel in November of 2012, their profit margins were tight. Now, in April 2019, the price of soybeans has sunk to $8.59 per bushel. Why would the price go down? President Trump’s tariffs on steel and aluminum caused the Chinese to retaliate and charge US farmers a tariff. The price of soybeans went down because China found cheaper suppliers in the world and much of the US crops that were to be sent to China now sits in warehouses. This lowered demand for soybeans. To help the farmers, the Trump administration is giving farmers a $6 billion bailout so they can weather his trade war, but wasn’t there a better way to achieve a workable trade deal with China?
Trump, along with a lot of blowhard politicians, said that the TPP agreement the US was in the middle of negotiation with many Pacific Rim countries was a bad idea. This agreement was an attempt to protect smaller nations like New Zealand and to check China’s more aggressive trade activities. The TPP was set to become the world’s largest free trade deal, covering 40 percent of the global economy. It was opposed by China and Trump declared it a bad deal because Obama was involved, but I’m fairly sure he never read the agreement and has no idea what it would have done. Most people in the world who were against it saw it as a way for the US to broaden its trade efficiency. I’m not sure why Trump opposed it.
If a candidate for President of the United States promised that under their administration prices on most goods imported into America would cost 10 to 25% more, hardly anyone would vote for him or her. That is exactly what happened with Trump. If you are trying to comprehend how much money you did or didn’t get back in your 2018 tax return, you need to factor in the rising costs of many goods. It’s likely that whatever you gained by the tax cut will not cover the increases coming to your budget shortly.
The New York Times reported today (5-20-2019) that “Anti-money-laundering specialists at Deutsche Bank recommended in 2016 and 2017 that multiple transactions involving legal entities controlled by Donald J. Trump and his son-in-law, Jared Kushner, be reported to a federal financial-crimes watchdog.” Trump is suing that same bank to keep them from releasing financial information about his companies and business interests. One must ask if he is attempting to game the system by being nice to Russian loan suppliers and covering up ethical and legal misdeeds with banks.
We know that one of the key elements of the Trump Doctrine is eliminating regulations to the detriment of valuable oversight that, as investors, we all appreciate. We don’t want banks to launder or manipulate money, we want them to be legal players and honest brokers.
The Department of Labor’s “Conflict of Interest” rule stated that advisers had to give conflict-free advice on retirement accounts, putting their clients’ needs ahead of their own potential income. It was eliminated in June of 2018. WHY? What sense does it make to remove a law that declares money managers must put your interest above theirs? This is so wrong in so many ways, but it’s a true reflection of who Trump is.
This person sitting in the White House doesn’t care about you paying more for things just so he can look tough. He isn’t smart enough to know that a country with the power of the USA can get things done in trade without hurting our own economy. The Donald doesn’t really care if a stockbroker cheats you out of money. By blowing away the “Conflict of Interest” rule, Trump has just paved the way for the next Bernie Madoff. I am totally convinced the man knows nothing about global economies. The conflicts Trump creates are all for his own benefit. He has no long-term planning.
Tariffs are taxes and Trump is toxic.
BRAND NEW BOOK ON AMERICA
Gold, God, Guns & Goofballs shows how we’ve wasted our GOLD on bad wars and corruption. While GOD is there for many people as a spiritual enrichment and the provider of glowing feelings, the truth is just praying and believing will not change our major arc. We don’t determine who gets a GUN. We aren’t sure if we have paramilitary groups ready to storm the White House or a White Castle. There is no control of weapons. The GOOFBALLS with the power constantly try to manipulate us into spending more money on bombs and tanks and wars. When all of our institutions are infected with neglect and fall in disrepair, we will only have ourselves to blame. This book is not an antidote for the left or right, it’s an accelerant to move the middle off their collective asses to go do something positive for America.