Politics

Trump’s Second Round of Tax Cuts are Coming. Here’s What We Know

Written by adminJuly 19, 2018

If you were worried that the tax cuts implemented this year didn’t do enough to help middle class workers, worry no more.

Yesterday, President Donald Trump met with the Republican House Ways and Means Committee to start work on what he considers the second phase of his tax cut plan.

President Trump received a lot of flak from democrats over his first round of cuts that they say went solely to the rich. Even though 80% of the country saw some type of tax cut, it was intended to help spur business and improve economic growth. It’s done exactly as intended.

Over 430 U.S. companies announced one type of bonus, pay increase, or even 401(k) hikes that have impacted over 4 million Americans thanks to the first round of cuts.

This time around, Trump hopes to focus on the middle-class in what should be a packaged deal of multiple bills. One of those bills involves making all the tax cuts permanent, something the democrats also blasted Trump over.

“That’s very high on everybody’s list and I think you’ll get more bang for the buck on these tax cuts if you do make them permanent,” said Trump’s Economic Director Larry Kudlow

The hope is to boost the average American income by as much as $4,000 per year.

This second round of bills might also help businesses even further by slashing the corporate tax rate even further by dropping it another percentage point, down to 20%. The extra percentage, Trump says, is ‘great stimulus’ to keep the job growth roaring.

While most of us are cheering additional tax cuts, the GOP hopes to do more than put money in American’s pockets. They also want to promote saving.

The report from Northwestern Mutual revealed that 21% of Americans haven’t saved a dime for their retirement and two-thirds simply don’t have enough saved and are expected to run out in the near future.

Republican Kevin Brady of Texas, the House Ways and Means Committee Chair, believes it’s important for the government to help its people be better prepared for their retirement, and it’s an issue that will hopefully be addressed in September with the rest of the tax cuts.

“We are looking at ways where it’s easier for families to save earlier in life and more over time, whether it’s for health care or for retirement,” Brady said. “We think America is not a nation of savers; we want it to be.”

The idea is to potentially create some type of universal savings account designed to grow over time and be tax-free, as well as simplifying the process of withdrawing the money and even making HSAs easier to use.

Pensions are another consideration.

“We want to make sure they’re adequate and they’re secure for the long term. Workers count on that. Businesses count on that to recruit good workers as well,” Brady added in an interview.

There’s still a long way to go between now and actually having the bill passed that is sure too impact the midterm elections. We’ll keep you up to date as this story develops.

Written by adminJune 28, 2018

Politics

As countries across the world continue to play a nasty game of tariff tug-of-war, industries in nearly every sector are crying for mercy.

We reported last week that not everyone suffering, as steel industry in the U.S. is now booming. But what about the companies that use steel in their products? Mid-Continent Nail in Poplar Bluff, Missouri, decided to lay off 60 workers to help fight back against sluggish sales directly linked to Trump’s tariff that put a 25% tax on imported steel.

The company says orders for nails dropped and astounding 50%. Mid-Continent Nail is now pleading with the Commerce Department for an exclusion on paying tariffs if they hope to stay operational by Labor Day. They feel their only options at this point is to get an exemption, move operations to Mexico to stay afloat, or shut down altogether.

Now that President Trump is looking to retaliate against China’s retaliation of the first tariff, he’s eyeballing foreign-made cars as the next plan of attack. The problem is, automakers in the U.S. are trying to convince Trump that such a move would be horrible for the already fragile auto industry here in the States.

A 25% tariff on imported cars would be equal to taxing them $45 billion, increasing the cost of a new car by nearly $6,000. This higher cost would undoubtedly lead to job cuts and even plant closures.

“Tariffs will lead to increased producer costs, increased producer costs will lead to increased vehicle costs, increased vehicle costs will lead to fewer sales and less tax receipts, fewer sales will lead to fewer jobs, and those fewer jobs will significantly impact many communities and families across the country,” said the Alliance of Automobile Manufacturers in a letter.

Right now, Trump is waiting on word from the Commerce Department to determine if foreign cars can be considered a national security threat, giving him the justification he needs to slap a hefty tariff on imports.

President Trump has also threatened to do the same to the EU if they retaliated against U.S. tariffs.

Trump said in a tweet: “Based on the Tariffs and Trade Barriers long placed on the U.S. and it great companies and workers by the European Union, if these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20 percent tariff on all of their cars coming into the U.S. Build them here!”

Of course, it wouldn’t be easy for any company or industry to just pull up stakes and move to the U.S., especially when the labor costs are much more expensive to run a plant here. Rather, the automakers are hoping they can convince the president NOT to start a trade war over cars.

The Peterson Institute for International Economics released a report revealing that such tariffs would go deeper than a few jobs lost. We would be looking at a 1.5% decline in overall production over a 3-year period, which could cost nearly 200,000 jobs.

That’s only if Europe and China don’t retaliate with tariffs of their own. If that happens, the job losses could soar to nearly 625,000 in a scenario that would completely devastate the auto industry.

All we can do now is wait on the Commerce Department’s findings on the issue. It’s difficult to understand how foreign cars could be considered a national security risk, but that didn’t stop them from coming to that same conclusion with foreign steel

We will continue to cover this story as it develops.

Written by adminJune 21, 2018

Politics

Not everyone likes the idea of a tariff. If you’re a consumer of products, you might think of the tariff as a tax on you. If products (or the ingredients used to make a product, like steel) become more expensive, it often results in the loss of jobs and higher costs deferred to the customer.

To stay competitive, industries seek out cheaper stuff from foreign markets. China’s labor, for example, makes steel extremely cheap to produce compared to American steel, so it’s highly favored in industries trying to stay competitive. Why would you buy more expensive steel?

President Trump is attempting to combat that problem while hopefully spurring job growth in key industries. Many business groups and even Republican allies are upset at the tariffs and potential pending trade war that grows in intensity with each passing day, but it’s not all bad news for everyone.

Yesterday, President Trump visited one of the states who is feeling the positive impact of tariffs. Minnesota is one of the major iron producers in the country. Iron is used to make steel and Minnesota’s iron accounts for nearly 80% of all the first production steel made here.

As you can imagine, the iron industry in Minnesota is extremely happy about the tariffs. President of the Iron Mining Association of Minnesota, Kelsey Johnson, will tell you the same.

“He’s been fantastic on our issue and really, this has changed the dynamic in the economy in northeastern Minnesota so we’re really supportive. In 2015, we had a significant economic downturn due to high levels of imported steel and unfortunately, that really affected our iron mines in Northeast Minnesota.”

The Political Impact

It’s not just the people of Minnesota who love the tariffs. You can find states like Ohio, Michigan, Pennsylvania, and others, specifically in the rust belt, who felt left behind by the government. Blue-collar workers came out in droves to vote for President Trump, a candidate they believed would help get industry moving in the country again.

The problem is, the GOP is, by standard, free trade advocates. They often side against protectionist arguments. The democrats are always against Trump no matter what, so while both sides of the aisle hate this move, Trump is scoring political victories and support.

Krystal Ball, a liberal writer for The Hill, wrote a supportive message about the tariffs in her article, “I Hate Trump, but I Love These Tariffs.” The overall message is that Trump’s policies show care and concern for the forgotten workers and industries of America, which have been dying out for decades.

She’s not wrong. With unprecedented growth in nearly every economic sector, employment numbers at record levels, and once near-dead industries hiring again, there is somewhat of a positive story to tell about tariffs. It almost makes up for having to pay extra for products knowing the good it does.

Written by adminJune 18, 2018

Politics

When people talk about World War 3 happening, they didn’t realize it would be in the form of a global trade war that threatened to impact the world’s economies.

So far, we’ve extensively covered President Trump and his attempts to gain fairer trade and the retaliation of China and Europe, but now India is jumping into the fight as well.

This week, India has announced retaliatory tariffs of their own on 30 U.S. products ranging anywhere from apples and almonds to metals and chemicals. These tariffs total around $241 million, which is on par with what India is expected to lose once Trump’s tariff on steel and aluminum goes into effect.

India also plans to increase its already large tariff on U.S. motorcycles like Harley Davidson, an issue Trump has complained about in the past. It seems unfair that countries can have tariffs on U.S. products, but if the U.S. sets a tariff, it’s met with retaliation, so the move speaks volumes.

These new rounds of tariffs are due to take effect on June 21^st and India says they’re open to adding more if necessary.

“India reserves the right to adjust the specific products for which [tariffs would apply], and its right to adjust the additional rate of duty imposed on such products,” they said in a filing to the World Trade Organization.

Currently, the deficit of trade between the U.S. and India sits at $30.8 billion with India getting the advantage. These tariffs are an attempt by the Trump administration for the U.S. to cut the trade deficits that happen worldwide, but our allies won’t have it, which means that the storm clouds are gathering over further economic prosperity worldwide.

Last week, we reported China’s move since a 25% tariff was slapped on Chinese products and Canada’s frustration with the U.S. as well.

The U.S. implementing tariffs to recoup money lost in trade deals seems like a fair deal, but with countries worldwide promising to retaliate (and refusing to back down), industry all across the board will suffer.

If the cost of these products goes up, then that means jobs will be cut and economic production within these industries will slow to a crawl. Losing jobs, especially in recently-hit sectors like the auto industry, would stop the unprecedented growth we’ve seen in recent months.

One can only hope that this situation gets taken care of before a global trade war goes too far and hurts everyone in the process.

Written by adminJune 15, 2018

Politics

Another chapter of this story has been written, as President Donald Trump announced on Friday that the U.S. will indeed impose more tariffs on China. Specifically, a 25% tariff on a variety of Chinese exports number over 1,100 products totaling around $50 billion.

China immediately said they would retaliate with tariffs of their own before accusing the U.S. of starting a trade war.

The justification from the Trump administration? They had it coming. These tariffs are designed to work as a punishment on China for their espionage against us, stealing trade secrets and technology.

“(Trade) has been very unfair, for a very long time. This situation is no longer sustainable,” Trump said later in a statement.

This decision has been in the works for several weeks now, as we previously reported that Trump was looking into different tariffs against China. This came after both sides seemed to come to a deal that had China buying billions in U.S. agriculture. Neither side is looking to back down.

China already has a list of products they claimed to impose tariff’s on if Trump went through with his threat, including transportation and agriculture. They also said they would immediately cancel any recent trade deals made.

“In this day and age, launching a trade war is not in the interest of the world. We call on all countries to act together to firmly stop such an outdated and backward move, and to firmly safeguard the common interest of all mankind,” said China’s Commerce Ministry.

All of this comes not even a week removed from the G7 Summit held in Canada. After fighting with our closest allies over trade, Trump seemed to have angered everyone, including the entirety of the European Union.

Every country has vowed retaliation.

These particular tariffs are set to hit in two waves. The first will come in July and will cover about $34 billion worth of products. The second will come later, so it would seem to be undecided just yet.

Perhaps the time given before these tariffs take hold is a good sign that Trump is holding out hope that a new trade deal will be signed for the betterment of both countries.

Trump has touted unfair trade practices against China and the rest of the world during his campaign. He promised he would put America back on top of trade dominance, hoping it would give a boost to U.S. industries.

“We have a tremendous intellectual property theft problem. It’s going to make us a much stronger, much richer nation,” Trump said in March when he first brought up imposing tariffs this year.

As a citizen, it can be difficult to see how taxing foreign goods will make us a stronger country. This tit-for-tat retaliation will end up forcing the world’s top economic powers to engage in a trade war that threatens to not only hurt jobs, but the extra costs will translate down to the consumer, making products we use every day much more expensive.

Update: As I wrote up this article, China announced their own 25% tariff on about 695 U.S. goods worth near $50, which will hit on July 6^th.

Written by adminJune 12, 2018

Politics

America First. It’s a bold idea that helped win the White House.

During his campaign, President Trump promised Americans that he would fix the trade deficit between countries. It was vastly unfair, in the minds of Trump and the millions who voted for him, that other countries got billions more in goods than we received.

Not only that, the U.S. military was footing the bill for defense, aid, and a lot of other things other countries just don’t seem to want to pay for. To millions of struggling Americans, riddled with doubt, debt, and fear over their futures, the ‘America First’ campaign was a breath of fresh air that could bring our economy back to dominance.

Just ask the people of Michigan who lost thousands upon thousands of factory jobs as a result of their main employers deciding to pull up stakes and head to Mexico. Other states, like West Virginia and Pennsylvania, have a proud history of rolling up their sleeves and providing as the backbone of our country during a crucial time of unprecedented growth. Then came the cheaper steel.

Look at the blue wall that used to have a lock on democratic votes. This year, they all went red, and it was because of Candidate Trump’s message. He promised to get jobs back. He guaranteed he would revive near-dead industry. His bold proclamations demanded justice for decades of unfair trade practices that cost the U.S. billions.

How is that going too fly in an increasingly globalised world? Well, judging by this past weekend’s G7 summit, not very well. While many feel thankful that Trump stood up our country, there are plenty opponents who felt Trump embarrassed the United States.

Regardless of whatever side you’re on, these tariffs can have a real impact on us, the citizens.

Sure, by making Chinese steel more expensive, the U.S. steel industry is roaring back to life. Jobs are flooding back to places where the industry seemed nearly dead. That’s a major positive, but consider how it will negatively impact every company who uses steel. If it’s more expensive for the manufacturer, then that cost will transfer to the consumer.

President Trump has picked economic fights with China, Mexico, Canada, and 28 countries within the European Union. Each one promises retaliatory tariffs if the U.S. goes through with tariffs of his own. This will trickle down to thousands of U.S. and foreign companies, challenging economic efficiency and threaten jobs.

The Council on Foreign Relations came out with a report that stated Trump’s tariffs on steel and aluminum will create some jobs within those industries, but it risks killing 40,000 jobs within the auto industry simply due to the higher cost of making cars. If cars are more expensive to buy, then less people will buy them.

If Trump slaps a 25% levy on cars imported from China, which is his latest threat, it could end up cutting production by 1.5% and kill 295,000 jobs. If the other nations follow through with retaliatory tariffs of their own, it could slow production by as much as 4% and over 600,000 jobs would disappear. These aren’t the type of job losses that would make Trump look good.

Trump’s threats of a trade war have gotten China to back down and come to the table to reach a new trade agreement. Perhaps that’s the goal here. All he has to do is apply a bit of pressure to other countries to get what he wants. No one wants to a trade war with the largest economy in the world.

The problem is not knowing how far Trump will take this.

Written by adminJune 4, 2018

Politics

Just when we thought we had a happy ending to this story regarding China and a potential trade war, both sides seemed to have hardened their positions and waiting for the other side to move.

President Trump has continued his talk of tariffs, which is really angering a lot of our allies, who all threaten to retaliate with tariffs and taxes of their own.

To ease tensions and prevent a trade war, China agreed to purchase billions of dollars of American products, including agriculture, and lower the trade deficit between the two countries. But, as of right now, it would appear Trump is not happy with the deal. He’s still threatening the Chinese with a tax on billions of dollars of imports from China.

“Both sides appear to have hardened their negotiating stances and are waiting for the other side to blink. Despite the potential negative repercussions for both economies, the risk of a full-blown China-U.S. trade war, with tariffs and other trade sanctions being imposed by both sides, has risen significantly,” said Cornell professor Eswar Prasad.

Is President Trump really willing hurt our relationship with a prominent ally in China, who has the second largest economy in the world? The answer appears to be yes. He seems more than willing to wreck whatever relationship is necessary to keep American industry at the forefront and recover some of the billions of dollars lost in unfair deals.

Peter Navarro, who is the director of the White House National Trade Council, confirmed as much on Fox News when he stated China hasn’t been that good of a friend to us.

They’ve been aggressive in the South China Sea, threatened to steal intellectual property, went behind our backs to supply North Korea with goods after committing, in public, to join in the sanctions, and according to the president, has raked us over the coals in regard to trade for many decades.

“That’s a relationship with China that structurally has to change. We would love to have a peaceful, friendly relationship with China. But we’re also standing firm that the president is the leader on this,” said Navarro on “Sunday Morning Futures.”

Trump is still considering more tariffs on $50 billion worth of China’s exports and another $100 billion they would consider taxing to make up for the massive deficit. If this goes through, China threatens taxes and tariffs of their own and to cancel any of the new trade deals that have been hammered out.

It appears to be a tit for tat stare down between the two world’s economic superpowers. No one knows if Trump is serious about imposing tariffs or is just using the tactic for positioning. So far, he has been able to successfully get many countries to come to the table willing to renegotiate deals just to stay in the good graces of the U.S.

President Trump has long believed that other countries have taken advantage of American industry and reap far more benefits from trade than we get in return. It was one of many economic promises he made during the campaign.

Tariffs and a trade war would be bad for the world’s economy and for consumers, who would be required to pay more for tariffed items to cover the increased cost.

We’ll continue to cover this story as it develops.

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