tariffs

Automakers Have a Tough Message for Trump

Written by adminJune 28, 2018

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 19, 2018

Life Style

It almost seems like we write a new article every day about the impending global trade war, as new developments are happening regularly. We cover this extensively as it’s our goal to help all Americans achieve their dream of living their life financially free.

This trade war will impact all of us, from the big streets in New York to the small farming communities who live and die on the agriculture they produce.

Since before he was elected into office, President Trump has made it one of his main goals to protect American workers, revive near-dead industries, and right the wrongs of the trade deficits we have with countries all over the world.

It sounds like a good idea until these countries decide to rebel and retaliate with tariffs of their own. They’re not happy with the president over this issue and threaten to fight back in their own way. This will translate to misery here in the States.

One of the products China says they will tariff are soybeans, which are grown in abundance in Iowa and other Midwest states, but the Chinese tariffs could become an economic disaster for farmers.

Chad Hart, and economist at Iowa State University, has calculated the farmers in his state will lose as much as $620 million this year alone if China tariffs their crop.

“Any tariff or tax put in place will have a significant impact, not only to the U.S. soybean market, but to Iowa’s because we’re such a large producer. It will slow down the market,” he said.

Soybeans are the most widely planted crop in the U.S., so any tariff placed on it would be disastrous for our agriculture. It might not just be a temporary setback either. Senator Chuck Grassley, a republican from Iowa, believes this could lead to a permanent loss for this area.

“It could be devastating for local communities across the Midwest. It’s also important to remember that when trade barriers go up, alternative sources of goods are found, and new trading relationships develop. A temporary setback could quickly develop into a permanent loss,” he said in an interview.

This can be a nightmare scenario for the Midwest. China imports nearly 61% of the U.S. soybean crop, so this type of loss would be devastating.

Soybeans aren’t the only victim, as other commodities like aluminum, lead, cotton, oil, and gold have been losing their value as Mexico, Canada, U.K., India, and the EU have also threatened to retaliate with tariffs.

The U.S. may be the largest economy in the world…and it’s not even close…but the question remains how big of an impact this would make on U.S. consumers as price hikes will assuredly be passed down to them.

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.

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