Tag: International Trade

How Do Tariffs Work?

The popular meme these days is the word ‘tariffs’….it is the weapon of choice by the president in his economic war with trading partners…some will applaud these actions and others, including myself, do not think it is the save all that we are told almost daily.

Donny the Man has upped the tariffs on 3 of our trading partners….and many Americans are confused.

Purely as an FYI post for those that do not completely understand what is involved with tariffs I offer this explanation….

Like the Townshend Acts and Bacon’s Rebellion, tariffs are one of those topics you may vaguely remember from high school history class. Let’s take another look at how tariffs work—and what happens to the economy when they don’t.

Tariffs are taxes imposed on imports or exports. If the U.S. government imposes a 25 percent tariff on imports of, say, Canadian timber, it means that American companies buying timber from Canada will have to pay a quarter of the price of timber to the U.S. government.

Tariffs can be imposed for a number of reasons, not all of them economic. Because they make importing more expensive, they can be used to promote the development of domestic industries. They can also be used as a geopolitical weapon to exert pressure on trading partners or to punish non-allies. Like all kinds of taxes, they are also a means of generating government revenue.

Crucially, none of these measures is foolproof. If the U.S. imposes tariffs on Canada, for example, Canada may simply start trading with countries that don’t impose tariffs, cutting the U.S. out of the equation. That could then weaken the U.S. economy and its ability to engage in international trade.

Tariffs impact companies that rely on imports as well as ordinary consumers. If a country that imposes tariffs fails to develop domestic production and find new trade partners—a process that can take years, if not decades—tariffs are bound to raise consumer prices, because the importers will need to recuperate the additional costs they pay to the government through higher markups on the products they sell. As a result, tariffs have often resulted in economic recessions in the countries that impose them.

https://www.mentalfloss.com/how-do-tariffs-work

I hope this article will everyone understand what is at risk by imposing them….and make up your mind (if that is possible) on whether you support or oppose these actions by the president.

Please read it carefully and just the parts that you think you know….

I Read, I Write, You Know

“lego ergo scribo”

Tariff Retaliation

Tuesday Trump’s big scheme of tariffs went into effect and all the chest thumping during his speech about the tariffs and now a couple of targets will retaliate….

There was no last-minute reprieve this time in regard to President Trump’s tariffs as three new ones took effect at midnight Eastern. A look:

  • Canada: Trump imposed a 25% tariff on most imports. Canada responded by imposing 25% tariffs on $30 billion worth of American goods immediately, a total it plans to increase to $125 billion by month’s end. Details on which goods are affected are still to come, reports the New York Times.
  • China: Trump imposed an additional 10% tariff on products from China, on top of the 10% that went into effect last month. Beijing retaliated with tariffs ranging from 10% to 15% on a slew of American food and farm imports, including soybeans, meat, and grains, per the AP and the Washington Post. They take effect in a week. China also put new business restrictions in place against US companies, including the military-linked Leidos and General Dynamics Land Systems.
  • Mexico: Trump imposed a 25% tariff on most Mexican imports. Mexican President Claudia Sheinbaum is expected to lay out her nation’s response later on Tuesday morning, reports NBC News.
  • Markets: US markets cratered Monday afternoon in anticipation of the news, and futures trading was “muted” ahead of Tuesday’s open, reports the Wall Street Journal. Europeans indexes dropped, as did Japan’s Nikkei, but China’s markets didn’t move much. Global auto stocks retreated, including Stellantis, Volkswagen, Volvo, Toyota, and Hyundai.

I remember just before the tariffs went into effect Trump told us the was no other option for there was ‘no room for negotiation’….and yet….

After two days of steep stock market drops, President Trump might be preparing to pull back on his 25% tariffs on imports from Canada and Mexico. Commerce Secretary Howard Lutnick said Tuesday that Trump plans to “meet in the middle” with the two countries and an announcement will probably be made Wednesday, the Wall Street Journal reports. Lutnick told Fox Business that he thinks Trump is “going to work something out with them,” but “it’s not going to be a pause.”

Lutnick and other officials have said the tariffs are linked to fentanyl coming across the border. “Both the Mexicans and the Canadians were on the phone with me all day today trying to show that they’ll do better, and the president’s listening, because you know he’s very, very fair and very reasonable,” Lutnick said. He cited the US-Mexico-Canada trade pact from Trump’s first term, Bloomberg reports. “If you live under those rules, then the president is considering giving you relief,” Lutnick said. “If you haven’t lived under those rules, well, then you have to pay the tariff.”

Trump paused the tariffs for a month after they were unveiled in February, but he said Monday, before the tariffs kicked in at midnight, that was “no room left” for negotiations. Canada and Mexico announced retaliatory tariffs on Tuesday, with Canadian Prime Minister Justin Trudeau calling Trump’s tariffs “a very dumb thing to do.” Trump also doubled his earlier 10% tariff on imports from China, and Beijing responded with tariffs of up to 15% on American food imports. Lutnick, pointing to the country’s role in fentanyl production, said he didn’t expect immediate tariff relief for China, Politico reports.

The whole fentanyl is pure BS….tariffs are the only trick Trump has in his bag of whimsy….it is his excuse to use the only tool he has…..

When President Donald Trump imposed his long-threatened 25 percent tariffs on most goods from Canada and Mexico last night, the White House declared the trade barriers are necessary “to combat the extraordinary threat to U.S. national security, including our public health,” caused by “the flow of contraband drugs like fentanyl into the United States.”

The stock market promptly plummeted. Prime Minister Justin Trudeau announced that Canada would respond with 25 percent tariffs of its own on $155 billion worth of goods from the U.S. (In a post on Truth Social, Trump fired back: “our Reciprocal Tariff will immediately increase by a like amount!”) China declared that it would impose tariffs of up to 15 percent on U.S. agricultural imports, and President Claudia Sheinbaum of Mexico said her country would impose retaliatory tariffs as well.

Trump originally announced the new tariffs last month, but he agreed to pause their implementation when Canada and Mexico agreed to step up their border enforcement. (That order also imposed tariffs on China, which were not paused.) The White House noted in this week’s announcement, “While President Trump gave both Canada and Mexico ample opportunity to curb the dangerous cartel activity and influx of lethal drugs flowing into our country, they have failed to adequately address the situation.”

https://reason.com/2025/03/04/trump-loves-tariffs-fentanyl-is-just-an-excuse/

Fun times, huh?

I Read, I Write, You Know

“lego ergo scribo”

Closing Thought–03Jan20

A new year, a new decade and a new trade agreement and this time it does not involve the US…..this agreement is between Japan, China and South Korea……a bloc that could challenge the US….on the trade front.

The trade ministers of China, Japan and South Korea agreed to work towards a regional trade pact and a trilateral free-trade deal on Sunday.

The agreement was reached despite the recent bitter quarrel between Tokyo and Seoul and the uncertainty caused by China’s ongoing trade negotiations with the United States, as well as the threat of North Korea resuming nuclear tests.

The ministers did not announce any concrete results after Sunday’s talks in Beijing, but they voiced their willingness to continue discussions on the
Regional Comprehensive Economic Partnership (RCEP)
– which also includes the Asean group of countries, Australia, India and New Zealand – as well as the three-way free-trade deal.
 
Will this trade bloc go unnoticed by Trump or will he use the power of sanctions (his preferred technique to punish other countries) to retaliate?
 
Watch This Blog!
 
I Read, I Wrote, You Know
 
“lego ergo scribo”

A New “Free Trade” Agreement

Once again I return to my small expertise….foreign affairs….I have gotten caught up in the drama we call politics here in the US….it is a train wreck that one cannot look away from or miss the best part.

Our president is playing the trade war card these days…..everyone is in his sights……his policies reflect ideas from the 1950s not the 21st century….but that is not what this post is about……

There is a new “Free Trade” agreement now…..it is the continent of Africa…..

In a nutshell, it means a single market of goods and services for 1.2 billion people with an aggregate GDP of over $2 trillion. UNCTAD, the UN’s trade body, predicts reducing intra-African tariffs under AfCFTA“could bring $3.6 billion in welfare gains to the continent through a boost in production and cheaper goods.”

One of the more stark economic data points about Africa is just how little African countries trade with each other—just 16% of total continental trade in 2014. The UN Economic Commission for Africa thinks AfCFTA has the potential to raise intra-African trade by 15% to 25%, or $50 billion to $70 billion, by 2040.

Brookings’s analyst Landry Signé estimates that if AfCFTA works as intended, Africa will have a combined consumer and business spending of $6.7 trillion in 2030.

https://qz.com/africa/1633022/africa-free-trade-deal-will-boost-continent-economy/

It is good to see that Africa is trying to protect itself and to make a better economy for the people of the region.

It Is About “Rare Earth”……

Not the rock group from the 70s (Get Ready and Celebrate)….I am referring to those minerals that are a major component in some electronics….and guess who has control of much of these elements?   Wait for it……..China!

Rare Earth Minerals?  What the Hell is that all about?

Many applications of REE are characterized by high specificity and high unit value. For example, color cathode-ray tubes and liquid-crystal displays used in computer monitors and televisions employ europium as the red phosphor; no substitute is known. Owing to relatively low abundance and high demand, Eu is quite valuable—$250 to $1,700/kg (for Eu2O3) over the past decade.

Fiber-optic telecommunication cables provide much greater bandwidth than the copper wires and cables they have largely replaced. Fiber-optic cables can transmit signals over long distances because they incorporate periodically spaced lengths of erbium-doped fiber that function as laser amplifiers. Er is used in these laser repeaters, despite its high cost (~$700/kg), because it alone possesses the required optical properties.

Specificity is not limited to the more exotic REE, such as Eu or Er. Cerium, the most abundant and least expensive REE, has dozens of applications, some highly specific. For example, Ce oxide is uniquely suited as a polishing agent for glass. The polishing action of CeO2 depends on both its physical and chemical properties, including the two accessible oxidation states of cerium, Ce,3+ and Ce4+, in aqueous solution. Virtually all polished glass products, from ordinary mirrors and eyeglasses to precision lenses, are finished with CeO2.

https://pubs.usgs.gov/fs/2002/fs087-02/

Plus the Rare Earth Minerals are used in our military……

A lack of these minerals could force a national security risk……and that would increase the use of the military (cause and effect)…….

I would say the possibility of a war with China is more so than with Iran.

Thoughts?

And now they, China,  have issued a threat over the Trump tariffs……

Facing new trade sanctions and a US clampdown on its top telecommunications company, China issued a pointed reminder Wednesday that it has yet to unleash all its weapons in its trade war with the Trump administration. Chinese state media warned that Beijing could cut America off from exotic minerals that are widely used in electric cars and mobile phones. The threat to use China’s rich supply of so-called rare earths as leverage in the conflict has contributed to sharp losses in US stocks and sliding long-term bond yields, the AP reports. The nationalistic Chinese newspaper Global Times warned that China has plenty of ways to retaliate against the United States, including the threat of cutting off supplies of rare earth minerals. China last year produced 78% of the world’s rare earths, according to researchers at Bank of America Merrill Lynch.

If the US fails to exercise restraint, it will see that “China is far from running out of cards, and we have the will and determination to fight the US to the end,” the paper’s editorial said. China has used rare earths as a cudgel before. Five years ago, the World Trade Organization slapped down China’s attempt to restrict the export of rare earths during a dispute with Japan, rejecting its claim that it just wanted to conserve supplies. Scott Kennedy at the Center for Strategic and International Studies, however, says the threat has lost much of its power. First, users of rare earths have stockpiled the minerals for a “rainy day,” he says. Second, they also have figured out how to “use less rare earth to achieve the same results” in products like lasers and magnets. And third, different minerals and chemicals are increasingly being used as rare earth substitutes.

Not to worry……we have troops in a country that is sitting on about $1 trillion (that is trillion with a “T”) worth of rare earth minerals……

Afghanistan, a country nearly the size of Texas, is loaded with minerals deposited by the violent collision of the Indian subcontinent with Asia. The U.S. Geological Survey (USGS) began inspecting what mineral resources Afghanistan had after U.S.-led forces drove the Taliban from power in the country in 2004. As it turns out, the Afghanistan Geological Survey staff had kept Soviet geological maps and reports up to 50 years old or more that hinted at a geological gold mine.

https://www.livescience.com/47682-rare-earth-minerals-found-under-afghanistan.html

That is right…out longest war EVER is in a country that is loaded with rare earth minerals……could that explain why we are hanging on in the spot?

It is not like we have never fought a war for a resource……think OIL……

A New Cold War?

Our Dear Leader went to the UN and made his feelings known.  First was the humor that was unintended but he made it sound like it was a humor set-up…..anything to make it look like it was his idea…..after his chuckle he then went before the UN Security Council and made another threat……

President Trump on Wednesday accused China of trying to meddle in the 2018 elections in a bid to keep him down. While opening a UN Security Council meeting, Trump put it like so, per the BBC: “In my remarks yesterday to the United Nations General Assembly, I laid out my administration’s commitment to building a more just and peaceful future. Regrettably, we found that China has been attempting to interfere in our upcoming 2018 election coming up in November against my administration. They do not want me or us to win because I am the first president ever to challenge China on trade. We are winning on trade. We are winning at every level. We don’t want them to meddle or interfere in our upcoming election.”

Foreign Minister Wang Yi, China’s representative on the Security Council, responded with a denial, reports CNN: “We do not and will not interfere in any countries’ domestic affairs. We refuse to accept any unwarranted accusations against China, and we call on other countries to also observe the purposes of the UN charter and not interfere in other countries’ internal affairs.” Trump was later asked what proof he had. “Plenty of evidence,” he replied, though he didn’t offer any. The AP reports a Chinese delegate “shrugged” when the remarks were translated in the General Assembly.

It will be China this time…..will it be the talk of the town as the Russian thing for the 2016 election?  Somehow I doubt it.

But as long as we are talking China.

Our Dear Leader has a massive hard-on for China and just keeps poking the dragon in the eye about trade…..

resident Donald Trump is making good on his pledge to escalate the trade war with China by imposing tariffs on US$200 billion of Chinese goods. The Chinese government, for its part, is already retaliating with new taxes on $60 billion of American imports.

If you’re curious why China’s sanctions don’t match Trump’s, there’s an easy explanation. As a number of commentators have correctly pointed out, Beijing is running out of American products to target. Americans bought $375 billion more stuff from China than the Chinese bought from the U.S. last year, which means Trump has a lot more to punish.

While this may mean that China’s leverage on trade is limited, it doesn’t mean that Trump can easily win this confrontation.

https://theantimedia.com/trump-trade-war-china-cold-war/

I do believe this situation will get uglier before it gets better….if ever.

If It Is Monday It Must Be WTO!

First, this is not some post about some moronic wrestling federation extravaganza….no I am talking about the World Trade Organization (WTO)….or some of you old farts might remember it as GATT (General Agreement on Tariffs and Trade)…..but what the Hell is it?

The WTO was born out of negotiations, and everything the WTO does is the result of negotiations. The bulk of the WTO’s current work comes from the 1986–94 negotiations called the Uruguay Round and earlier negotiations under the General Agreement on Tariffs and Trade (GATT). The WTO is currently the host to new negotiations, under the ‘Doha Development Agenda’ launched in 2001.

Where countries have faced trade barriers and wanted them lowered, the negotiations have helped to open markets for trade. But the WTO is not just about opening markets, and in some circumstances its rules support maintaining trade barriers — for example, to protect consumers or prevent the spread of disease.

https://www.wto.org/english/thewto_e/whatis_e/who_we_are_e.htm

I know you are probably thinking that this has nothing to do with you…well you would be wrong for Our Dear Leader if successful could make your living a lot more expensive than today……

He, Dear Leader, has declared a possible war on the WTO……

Shape up or we’ll ship out. That was essentially the message President Trump had for the World Trade Organization in an interview with Bloomberg on Thursday. Trump described the 1994 agreement that formed the WTO as “the single worst trade deal ever made” and issued his threat: “If they don’t shape up, I would withdraw from the WTO.” The body sets rules for global trade and serves as a forum for handling trade disputes, and Trump complained about the historical outcome of those complaints. He had this to say: “We rarely won a lawsuit except for last year. In the last year, we’re starting to win a lot. You know why? Because they know if we don’t, I’m out of there.”

The BBC cites a study that shows the reality is more like 90/90: We win about 90% of the cases we bring, and lose just shy of 90% of those filed against us. As for the cases filed against us, ones from China have made recent headlines. The AP reports Beijing on Monday formally sought “dispute consultations” over the latest round of tariffs—$16 billion of them—imposed last week on Chinese goods. China is a thorn, per US Trade Representative Robert Lighthizer, who views China’s 2001 entry into the body as a mistake. Bloomberg’s take: “A US withdrawal from the WTO potentially would be far more significant for the global economy than even Trump’s growing trade war with China.” In the meantime, the US has been blocking the appointment of new judges, which could ultimately put the WTO’s ability to issue judgments on ice. Click for more on Trump’s wide-ranging interview.

As this policy expands items will becoming more expensive and in some cases more difficult to obtain and that could influence the production in this country…and for what?

Some minor machismo for the news cycle…….for he must be the talk of the town whether good or bad…..

More Tariffs On The Way

Closing Thought–20Jul18

Our Dear Leader has decided that his newest round of tariffs will be the auto industry…….seeing how his other tariffs have been so successful and widely loved…….

Having tangled with China on trade and angered US allies with steel tariffs, President Trump is primed for his next fight: autos. Trump’s latest plan is to consider slapping tariffs on imported autos and auto parts—a move he says would aid American workers but that could inflate car prices, make US manufacturers less competitive, and draw retaliation from other nations, the AP reports. The action has also begun to provoke a backlash among members of Congress. On Thursday, manufacturers, suppliers, car dealers, and foreign diplomats will line up to testify at a Washington hearing to try to head off auto tariffs.

After the hearing, the Commerce Department will decide whether to label imported vehicles and auto parts a threat to America’s national security and whether to recommend tariffs to the president. In announcing the auto investigation in May, Commerce Secretary Wilbur Ross had said, “There is evidence that, for decades, imports from abroad have eroded our domestic auto industry.” Yet even General Motors and other companies that build cars in America are opposed. They rely on imported parts that would be subject to the tariffs, thereby raising automakers’ costs. “There is no automaker that has 100% exclusively US-sourced parts,” says Brian Krinock, Toyota’s senior vice president for North American factories. “It is a global business with global operations.”

He, Trump, fired the first shot earlier when he put luxury German cars on a list to be banned…..and now this…..

Nothing more fun than a trade war…..nothing is more effective than a trade war (that is sarcasm)……

Agriculture Secretary Sonny Perdue belittled American farmers on Wednesday.

“It’s a little bit like weight loss,” Perdue said of the tariffs that are damaging the bottom line for lots of red state, U.S. farmers. “It’s going to be good to get there but it is a little painful in the meantime.”

Perdue referred to Trump’s reckless tariffs as “trade disruptions we’re experiencing,” as if they weren’t specifically manufactured and imposed by the Trump administration. His remarks echoed Trump’s dismissive rhetoric about how trade wars are “easy to win.”

“Wait a minute, ‘Trade disruptions we’re experiencing.’ That sounds very passive,” stressed Axios editor Mike Allen, as he interviewed Perdue. “In fact, it’s your president, it’s your administration, that’s disrupting trade.”

Trump has also suggested it’s the patriotic duty of U.S. farmers to bear the burden of an unnecessary trade war.

“They want to hit the farmers because they think it hits me — I wouldn’t say that’s nice,” Trump said of China, as it readied its response to Trump’s sweeping tariffs. “But I’ll tell you, our farmers are great patriots. These are great patriots. They understand that they’re doing this for the country,” he added.

“We’ll make it up to them. And in the end, they’re going to be much stronger than they are now.”

(shareblue.com)

So far the only people that see any benefits for these trade things are the President and his Boyz…..the rest of the economic sector does not see the same benefits as Our Dear Leader.

A New Round Of Tariffs

Here we go!

It is not over and promises to get worse……

The trade war has started……Trump’s admin has placed tariffs on China and our European friends…..and a new round has been put into place against China….

The US-China trade war is here—and it’s escalating rapidly. US authorities rolled out a list Tuesday of some $200 billion in Chinese goods that could be hit with 10% tariffs by September, Deutsche Welle reports. The list of more than 6,000 product lines includes food products and many consumer goods, raising fears that the escalation could raise prices significantly for American shoppers, the Wall Street Journal reports. China hit back with its own tariffs on $34 billion in American goods after the US brought in tariffs on the same amount of Chinese goods last week, and Beijing has signalled that it will continue raising tariffs dollar for dollar. No talks are scheduled to resolve the dispute, which the US side blames on unfair Chinese practices.

The latest US tariffs were condemned by Senate Finance Committee Chairman Orrin Hatch, among others, who called the move “reckless.” China Ministry of Commerce said it was shocked by the escalation, the South China Morning Post reports. “China is shocked by the US move and the Chinese government, as always, will have to react to defend the core interests of our nation and people,” the ministry said. Li Chenggang, assistant minister of commerce, likened the US to a “bull in a China shop” and said tit-for-tat tariffs would “inevitably destroy” US-China trade.

The predictions are that these tariffs will now effect every room of one’s house from the windows and doors to kitchen to bath room….so many household things are made in China and now it will be expensive…..

Something to think about……the attacks on China by Trump could be behind the NK flipping on the “deal” that was supposedly struck in Singapore.

Just a thought.

Closing Thought–25Jun18

The past week the screaming and yelling on the news and in most so-called conserv blogs has been about the border situation….if I need to catch you up then try Google I will not waste my time…..but the news that the corporate Americans would be watching have very little to do with the border…..

Following tariffs recently imposed on steel and aluminum, U.S. businesses have been forced to pay more than $110 million in tariffs in just 13 days according to the Customs and Border Patrol. The U.S. took in $82.2 million in steel tariffs and $28.3 million in aluminum tariffs between June 1-14.

The unintended consequences of tariffs are vast, and have a harmful ripple effect throughout our economy. In just two weeks, U.S. businesses could have spent $110 million in a much different way. Consider the following:

$110 million is enough to hire 2,000 out of work Americans at $55k salaries for an entire year.

$110 million is enough to purchase 4,000 brand new, American made, Jeep Wranglers using the MSRP of $27,495.

https://freedompartners.org/press/report-tariffs-cost-u-s-businesses-more-than-100-million-in-just-two-weeks/

Apparently “Freedom Partners” is not here to cover the horrible policies to this man we call “president”….

I realize that economics is not something most conservs can get a grip on…but all the yelling about the border has done nothing to strengthen our economy and neither has the policies of the dude in the White House.  (Please do not taunt the stock market as proof….there is more to an economy than the markets….if you need a quick refresher course on economics…..https://www.cliffsnotes.com/study-guides/economics)

Time for a change…..period!