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Monday, August 20, 2018

Dow up under Trump's tariffs

On March 1, President Donald John Trump said he would slap a 25% tariff on steel, and a 10% tariff on aluminum. This was a bargaining chip for his re-negotiations of the one-sided trade deals that favor foreigners and that Washington likes.

The New World Order Takers in the media immediately pounced on The Donald.

"Trade War Could Trigger Global Recession, China and Europe Warn," Bloomberg News reported.

Its story said, "China and the European Union vowed to oppose trade protectionism in an apparent rebuke to the U.S., saying unilateral actions risked pushing the world into a recession."

The argument was retaliatory tariffs would cause this recession.

But who said the European Union and Red China had to retaliate?

The press never pressed the question.

Teresa Ghilarducci, an economics professor, wrote in Forbes, "Trump is not listening to women much, but the voice of economist Joan Robinson in 1937 might be quoted back to him. Banning imports and increasing exports may increase the employment of workers in your country in the short term. But, before long, an increase in the exports of one country leads to a decline in exports of other countries. At the very best 'it leaves the level of employment for the world as a whole unaffected' and probably reduces it.

"Reducing employment worldwide, including the United States, could be Trump’s legacy."

President Trump doesn't listen to women? That's news to Kellyanne Conway, Sarah Sanders, and both Ivanka and Melania.

In the 81 years since Robinson said it, has anyone bothered to prove her right?

Rachel Layne at CBS wrote, "8 reasons why Trump's tariffs may push the U.S. into a recession."

Topping her list was "Trump's tariffs may erase last year's tax cut benefits."

She wrote, "The conservative-leaning Tax Foundation calculates the tariffs already enacted by the Trump administration will lead to 48,585 lost jobs. Add in tariffs on autos and auto parts that the president threatened last week and the China tariffs slated to take effect July 6, and another 255,283 jobs may be lost as wages shrink 0.2 percent."

She left out the part where since we elected him president, the United States has had a net gain of 3.9 million jobs.

Not to be outdone, CNN had economist Larry Summers explain "How a trade war could turn into a recession."

Summers helped Obama craft that $787 billion stimulus that did not add a single job.

So what has happened since March 1?

The economy took off. The economy grew by 4.1% in the second quarter (April, May and June).

Unemployment is at 3.9%.

And the Dow Jones Industrial Average is up 4.7%

The S and P 500 is up 6.7%.

By the way, he has not really imposed the tariffs on all countries. He used his threat of tariffs to cut deals with South Korea and other nations. The European Union is now discussing an end to all tariffs between the EU and the USA.

It's called the Art of the Deal.

He wrote the book on it.

UPDATE:

"I've laid pipe all over this country and seen pipe from all over the world. But the last 3 jobs this is what I see!"

###

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Trump the Press covers the nomination.

Trump the Establishment covers the election.

Fake News Follies of 2017 covers his first year as president.

For autographed copies, write me at DonSurber@gmail.com

8 comments:

  1. Trump made money by being a fool? How many of these oh-so-smart econo-missed-its have made a billion bucks?
    Heck, the only way they could become millionaires is to start out as multi-millionaires.

    ReplyDelete
  2. Amen, Brother Surber.

    To put things into a broader historical context, the Dow Jones Industrial Average was 18k during the first week of November 2016 and now it is up to roughly 26k, a roughly 44% increase. Surely nobody in the investing world thought Trump was going to win so 100% of that increase is due to actions or expected actions by Trump. Maybe half of that increase was due to the cut in the U.S. Federal Corporate income tax rate, bringing the U.S. rate down to something comparable with the rest of the world. But the other half of the increase is due to Donald J. Trump and his deregulation and his aggressive defense of American industry and expectations of further improvements.

    Now cast your mind back to the summer of 2008. In July 2008, the DJIA was roughly 11k. During that benighted summer, it became clear that the U.S. would elect Barack Hussein Obama, a commie with zero allegiance to the United States, but we would elect him solely because he was black, out of a sense of white guilt. By July 2009, the DJIA was roughly 8k, a roughly 30% decline. I sold out 100% in 2008 and avoided most of the loss, but most people did not.

    For those of you with stock portfolios, you should keep these perspectives in mind.

    ReplyDelete
    Replies
    1. I stayed in and over doubled my money on the rebound. Actually bought extra at the bottom. If you simply take a graph of any index and follow it out after downturns it almost always returns to the path it would have been on if there had been no downturn at all.

      Staying in and actually buying extra at the bottom allowed me to retire early.

      Delete
  3. Sorry Ms. Ghilarducci, our President's job is to improve the US of A, not create jobs around the world.

    ReplyDelete
    Replies
    1. I remember reading about Ghilarducci before. She's a hard-core lefty:

      "...Her alternative is bold: She'd chuck the tax break people receive when they put money into the retirement accounts known as 401(k)s and use the savings to create an entirely new system run by the government. Terms like "government run" and "eliminate tax breaks" are catnip to the right, and Ghilarducci became, for a time, its favorite scratch pole: The woman who wants to "nationalize" 401(k)s, and the like."

      https://www.usatoday.com/story/money/2015/03/16/ozy-teresa-ghilarducci-revamp-retirement-savings/24842705/

      Delete
  4. I had to borrow DeadRinger's comment. And he was not the first to notice.

    ReplyDelete
  5. I went to my car dealer today and traded a car in and purchased another one.I had a Trump/Pence sticker on the back window.The owner of the dealership came and said he added $500 onto my trade for the sticker.We talked about POTUS Trump and shared pictures off his phone,he is tickled pink with POTUS Trump and the economy.I had to go home to get a check to pay for the car ,and when I got back he had a new sticker there for me.

    ReplyDelete
  6. Only a semi-honest (=semi-dishonest) news story on trade will fail to mention the current levels of tariffs AND current balance of trade.

    There has long been a "trade war" of tariff & non-tariff barriers against the USA. Trump is, in fact, doing the "retaliatory" tariff increases that the Trump-haters say they fear the others will do.

    If trade goes down by 20%, it will hurt the other guys exports a lot more than the US exports, 'cause we have the trade gap.

    But speculation about effects based on only Trump's announced change is silly -- he has called for total Free Trade. His own retaliatory tariffs are to push the others to make a deal.

    It's working. Total tariffs are going down, and both sides will be a bit better off, but the USA will be gaining more.

    ReplyDelete