Trump’s Trade War Torpedoes Growth

We reap what we sow.  And that is making investors, and those who have a stake in the stock market, feel dizzy.

Stocks slid again today, continuing the unease that investors feel after assessing new evidence that the world’s industrial sector is weakening in the face of  Donald Trump’s trade war.

The S&P 500 dropped 1.8 percent, its worst day since late August. The Dow Jones lost 494 points. Stocks in Europe tumbled.  Let us be honest and just say the world is trembling in anticipation of what is coming.

The selling this week began after a report on manufacturing activity showed that factory output in the United States slowed in September to levels last seen at the end of the financial crisis a decade ago.   That alone was unsettling.  Added to the manufacturing concern was the quarterly corporate reports which underscored concern in the auto industry.

The data was a fresh indication that the trade conflict between Washington and Beijing is chipping away at the industrial base in the United States.  The damage of the trade war has already impacted factories in Japan, Germany, and cleary in China.

Trump has long told the gullible in the United States that trade wars are easy to win.  So I ask those supporters of Trump if we are winning that war?

For long term investors, these bumps and blips can and will be weathered.  But the larger concern is the plight of the national economy due to reckless and needless trade wars.  While China and the U.S. at times indicate there would be future trade discussions, that is not enough to soothe markets or allow producers to feel any sense of calm concerning the future fate of their businesses.  There is now a hot trade war underway.

There are many ways to view this mess, and ponder how we got here, and how to back away from the cliff.

One matter I have long argued on this blog, as a free trader and internationalist, is that what is happening now could have been handled far differently had we not precipitously and stupidly withdrawn from the TPP.  That was one of the first major bone-headed decisions from the Trump White House.  Had we not jettisoned ourselves from TPP we would be allied with many Pacific Rim countries that represent a larger fraction of Chinese trade.  Now we are waging this battle alone.  Needlessly so.  Let me repeat, TPP was a good plan.

The TPP treaty addressed the issues of intellectual property rights–one of the pressing and nettlesome issues with China–along with foreign companies’ access to markets without resorting to tariffs.   That Trump trashed TPP in favor of 19th-century tariffs is nothing short of the most unenlightened and backward thinking imaginable.

This is what happens when one elects a severely under-educated president.  Thanks, Trump supporters, for the downturn for investors!

American Values Need To Be Stressed On Behalf Of Hong Kong Protesters

The White House is far more than just the place a president lives and works.  It is far more than a policy-driven operation that seeks to remedy domestic and international problems.  It must always be more than just about the nuts and bolts of governing.  It must also be the place where American values are promoted for a worldwide audience.

But over the past two and a half years there has been a most noticeable absence of statements and vision about the essential bedrock foundations that have proven to enhance our nation, and would aid places around the world.  The turmoil in Hong Kong is ramping up and there seems no good end to the correct decision by protesters to seek redress regarding Chinese government overreach.  The demonstrations began weeks ago in response to a since-suspended bill that would allow some citizens to be extradited to China.

But Donald Trump seems unfazed by this international event and unaware that American values about liberty and freedom are needing to be stressed to China.  In words, and ways, they will not be able to miss.

One can almost hear how President Reagan would call out those who would undermine the protesters.  One can almost see him at a cabinet meeting to plan a series of steps to rebuke Beijing for their actions.

But one can not hear or see Trump do anything other than to line up as close to absurdity as one can–without totally embracing it.  “We’ll see what happens but I’m sure it’ll work out. I hope it works out for everybody — including China, by the way. I hope it works out for everybody.”

There is no way not to grimace over his lack of awareness of the situation or the pivotal role a president plays on the world stage during a crisis of this magnitude.  Consider the scope of the issue.

There are roughly 7 million people in Hong Kong, and over the past weeks on any given day about 2 million of them are on the streets fighting for their rights.  And Trump is wishing that it “work out for everybody”.

Good Lord!  Earth to Trump—we do not want China to win this battle.

I am not a fan of Republican House Minority Leader Kevin McCarthy.  But while reading the newspapers this morning I noted–with much pleasure–that he correctly, and strongly, signaled his support for the protesters.

“To the thousands of young people in Hong Kong who are speaking up for human rights and speaking out against the Communist Party of China: we see you waving the American flag, and we hear you singing our national anthem.  America stands for freedom. America stands with Hong Kong.”

I understand that in Trump’s world nationalism beats out democracy.  But from my understanding of history that is not the way the arc of progress bends.   Strong words and effective push-back against those who undermine the benchmarks of democracy need to be heard and seen from this White House.

And let us be clear as to why words and actions matter from our side of the world. Because we believe in what the Hong Kong protesters are fighting for.

Those young men and women are opposed to the Chinese Communist courts that uses a  system which is opposite of justice and fairness, one which legitimizes seizing Hong Kong citizens and taking them to mainland China for trial.  A trial, it needs to be noted, in which the guilt of the accused, and probably the punishment, is decided before the trial begins.

Trump fears saying anything negative against China out of fear of economic backlashes–but he has made such a complete bumble out of trade talks there is nothing more he could say to make it worse.  So Trump should just stand up and speak out for American values and lessons from our history.  (Once someone explains all that to him.)

Bible Tax

There are times when justice comes in strange ways. 

As a free trader I have voiced my concerns over tariffs.  Mindful of what China has done, and continues to do with currency manipulation and technological espionage, means there are policy moves which need to be taken to remedy justified concerns.  But trade wars are not the answer.

Needless to say evangelicals have salivated over Trump even though he has publicly demonstrated his worst character time and again.  Those types of people are not in favor on CP.  So this news makes for a bit of Karma that even those who play with snakes during services can not miss.

Religious publishers say Donald Trump’s most recent proposed tariffs on Chinese imports could result in a Bible shortage.

That’s because millions of Bibles — some estimates put it at 150 million or more — are printed in China each year. Critics of a proposed tariff say it would make the Bible more expensive for consumers and hurt the evangelism efforts of Christian organizations that give away Bibles as part of their ministry.

The two largest Bible publishers in the United States, Zondervan and Thomas Nelson, are owned by HarperCollins, and they incur close to 75% of their Bible manufacturing expenses in China, Schoenwald said. Together, they command 38% of the American Bible market, he said.

Trump Plays Old Game With Mexico ‘Win’

What we have read and heard about the ‘Mexico deal’ follows a pattern from Donald Trump.  He creates a crisis–recall the caravans! He creates hype and bombast, but then has some sort of a fairly general resolution, always without any details and then declares victory. His supporters are conned and coo over ‘the win’. The rest of us have memories and recall this type of behavior from Trump is what he did with the North Korean nuclear crisis in Singapore.

This weekend, and this crisis, and this resolution are no different.

“Trump boasted of ‘large’ agricultural sales to Mexico as part of a deal reached Friday on border security and illegal immigration that averted the threat of U.S. tariffs, but the deal as released had none, and three Mexican officials say they’re not aware of any side accord,” Bloomberg reports.

“Trump told his 61 million Twitter followers in an all-caps message that Mexico had agreed to ‘immediately begin buying large quantities of agricultural product from our great patriot farmers.’”

Three Mexican officials said Saturday they were not aware of any side accord in the works, and that agricultural trade hadn’t been discussed during three days of negotiations in Washington that culminated in a joint communique late Friday.

The State Department communique issued late Friday — entitled the U.S.-Mexico Joint Declaration — also made no mention of agricultural trade as part of the agreement.

The State Department didn’t respond to an inquiry made through its press department. The White House declined to comment or offer proof to back up Trump’s tweet. The Mexican foreign ministry’s press office declined to comment.

But as long as Trump supporters are calmed for a weekend…….

And so it goes.

As Stock Market Tumbles…..

Stock market in a free fall as I post–down over 600 points. China has retaliated against Trump tariffs by raising tariffs on $60 billion worth of US goods sold in China.  As expected.  This is what happens in a trade war.

And I know my readers are smart enough to already know this, but just in case, let’s clear up another of Trump’s Big Lies: China does not pay the massive tariffs Trump just imposed on more Chinese-made goods; US companies and consumers do.  It’s essentially a sales tax, except on imported goods.  Just ask Larry Kudlow, his economic adviser, who was forced to admit it when pressed by Fox News anchor Chris Wallace.  That was a rare moment of honesty on that network.

And taxpayers are getting slammed a second time: Trump wants to give another $15 billion of their money to farmers being hurt by his tariffs, which is on top of the $12 billion already earmarked for farmers.  But none of that money will go to the businesses and consumers buying more expensive items like baseball gloves, network routers, seafood, vegetables, nuts, fruits, metals, chemicals, luggage, and fabrics…..

Trade Wars Are Not Easy—Unlike What Trump Thinks

In March 2018 Donald Trump tweeted (another) very stupid remark.

When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. When we are down $100 billion with a certain country and they get cute, don’t trade anymore – we win big. It’s easy!

I can not underscore how much I miss the intellect and rationality of President Obama.  The diarrhea of Trump’s mouth and fingers is a constant source of embarrassment for our nation.  The above example is a perfect reason why he must be removed from office.

Now at the start of May 2019, Trump’s reckless and stupefying comment about trade wars, proves to be an even more colossal indictment of his lack of education and ability to reason.

Trade talks between China and the United States ended today with no deal of any sort.  Trump had yet another tantrum this week and raised tariffs on $200 billion worth of Chinese imports.  China, obviously, will not stand idly by, so repercussions will be forthcoming.

While both sides indicated there would be future discussions, that is not enough to soothe markets or allow producers to feel any sense of calm concerning the future fate of their businesses.  There is now a hot trade war underway.

There are many ways to view this mess, and ponder how we got here, and how to back away from the cliff.

One matter I have long argued on this blog, being a free trader and internationalist, is that what is happening now could have been handled far differently had we not precipitously and stupidly withdrawn from the TPP.  That was one of the first major bone-headed decisions from the Trump White House.  Had we not jettisoned ourselves from TPP we would be allied with many Pacific Rim countries that represent a larger fraction of Chinese trade.

Now we are waging this battle alone.  Needlessly so.  Let me repeat, TPP was a good plan.

The TPP treaty addressed the issues of intellectual property rights–one of the pressing and nettlesome issues with China–along with foreign companies’ access to markets without resorting to tariffs.   That Trump trashed TPP in favor of 19th Century tariffs is nothing short of the most unenlightened and backwards thinking imaginable.

This is what happen when one elects a severely under-educated president.

Trade War Roils Markets

Donald Trump’s threat to increase tariffs on $200 billion worth of Chinese goods on Friday morning has shaken the markets and roiled international brokerages.

Trump’s last-minute warning highlights the difficult political position facing his administration as it tries to convince businesses, lawmakers and consumers that the deal it strikes with China will truly level the playing field and put the United States in a better economic position. He is also facing pressure to show that the pain of his trade war will be worth it for the companies, farmers and consumers caught in the middle.

The problem is of course that Trump doesn’t understand international trade in any way, shape, or form and he will not listen to the true experts that he has to call on because his ego is way too big to admit that there’s somebody out there who knows more then him.

And that is just about everybody!

Prediction: Trump Does Not Close Mexican Border

Far be it for me to predict Donald Trump will act in a rational manner.  But that is exactly what I will do concerning the bombastic and dangerous talk of closing down the border with Mexico.  The economic stakes are too high for anyone sitting in the Oval Office to do otherwise.   Even Trump.

There is no shortage of economic data to support the damage done to the economy from the 35-day US government shutdown in December and January caused by Donald Trump, and prolonged by the Republican majority in the senate.  It was a painful reminder that rash and overly partisan moves results in dire economic consequences.  Now consider that the threat over shutting down the southern border would be akin to the shutdown, but this time on steroids.

Trump blustered and fumed last week but once his spittle had dried the facts remained.  Suspending “all trade” with Mexico, as he threatened, would mean bringing one of the world’s largest trade relationships to a standstill.   Such a move would short-circuit Wall Street with stocks taking a sucker-punch, severely constrict commerce as freezing the movement of traffic across the planet’s busiest international border would stun customers and start moving prices higher on some items.  Such as avocados!  Long-term consequences are not things Trump ponders as he is a day-trader in American politics.  But many grasp should the US sabotage its relationship with Mexico it allows for an opening with both China and the EU to step in and prove to be more reliable partners.

Trump is fixated with his polls and knows he will be the first victim of such a ridiculous power play.  Trump’s poll numbers will sink as they did over the shutdown when his disapproval rating scored an an all-time high.  But a border closing would rock his numbers even more severely.

Trump is not to be taken seriously about closing the border when one takes a complete view of the matter at hand.  Even with current month-to-month numbers higher for migrants seeking asylum, the full weight of the economic relationship with Mexico far exceeds the xenophobia which controls much of his words and actions.

While some think that roughly 75,000 migrants taken into custody each month is high consider the estimated 1 million people who legally move across the border every day.  That is a stunning number which then adds to the roughly $1.7 billion in merchandise that is traded each day between Mexico and the United States, according to the US Chamber of Commerce.  Consider that over 13,000 trucks and 1,000 rail cars pass over the border each day.  They carry nearly half of all fresh fruits and vegetables consumed in the United States.

Even with Trump’s lack of reasoning, and dislike of reading and learning there is no way Trump would jeopardize this economic engine.  What would his GOP corporate board friends do when parts for their factories languish at the border?  What happens to the meat in the trucks?  And if those Trump supporters who dislike brown people do not care about the cargo in the trucks and trains what might they feel for the roughly 5 million American jobs that are directly dependent on US-Mexico trade?

There is no way Trump closes the complete border just so to stop 2,500 or so Central Americans, desperate for a better life, who daily approach to seek asylum.  Not even Trump is so idiotic to create such HUGE disaster.

And so it goes.