 |
| EU put tariffs on US Bourbon & a US factory collapsed |
Entire world population of 7.3 billion (out of 7.63b) stands firmly united against the 327m (a paltry 4.28%) US population.
Every nation is against the Trump tantrum of imposing unilateral tariffs against the entire world from whom America imports goods for it’s own survival and growth.
Trump wishes that it was a zero sum game.
His entire career of 71 years is littered with no less than 6 corporate bankruptcies by him between 1991 to as recently as 2009.
If Trump is driving America towards bankruptcy, then he is doing a fantastic job!
I have agreed with Trump (and his policies) so far, even as recently as March when he imposed tariffs on steel and aluminum tariffs whereas China agreed to reduce tariffs instead of hiking them on US imports.
However, the recent episode of tantrums of Trump within the last 2 weeks is a cause of grave concern for every single individual around the world.
For several centuries, starting from remote villages of any continent, way before any economic theories were formulated, any village who specialized in animal husbandry or bullock carts traded with another village for fish or agricultural products.
Some villages comprised of traders, some villages were famous farmers while some villages were experts in artisanship or utensil making.
That is how the entire world had worked for centuries on the premise that one human, one village or one country cannot specialize in everything hence trading has been imbibed in human minds and the best examples are of the currently famous Chinese Silk Road stretching from China all the way to Europe for centuries.
Examples can also be found of Arab traders arriving on the shores of Italy or Indian traders reaching Thailand, Europe and afar.
Religion prospered, business flourished and the world kept on becoming globalised in the centuries gone by, even before the word globalization was coined.
Tariffs were introduced to earn incomes on the River Rhine and Panama Canal while wars and lootings also occurred to generate incomes for the locals in different countries.
However, tariffs need to add value or the country must be strong in self-survival and not depend on exports or imports for making or sales of their manufacturing base whose very definition is about importation, usage in local manufacturing sector and then sell domestically or exports, whatever the expertise maybe.
Some countries have prowess in one item (like oil in OPEC nations) or oil plus commodities (in Canada and Australia) or electronics (until recently in Japan and lately from China).
By the very definition, America and China being the 2 largest economies on the planet cannot be self sufficient, keeping in mind the brief history lesson for context above.
With Trump believing against any common sense or any economic theory and going against his own predecessors and almost all Fortune 500 companies who have run to China/Asia for manufacturing or Mexico/Canada which was for one and one reason alone (lower costs) and secondarily to access those markets (again, on a cost effective basis).
If Trump believes that by a magical pen, he can persuade ALL other nations that he is right and ALL of them collectively are wrong, well, dear President Trump, you are sadly mistaken and grossly wrong.
If any village raises tariffs on another village, the only people who suffer are in that village who implemented the first tariffs.
Let me explain, let’s assume that a village buys food from another village whilst selling clothes to them.
If the first village places 50% tariff on exports from the other village (essentially it's own imports), what will happen?
The residents of the first village will HAVE to pay 50% more for food because it’s a basic necessity or they will buy it from elsewhere or will have to learn to grow own food along with making clothes.
In the short run, being a basic necessity (like a car or a computer or a mobile phone today, even food), Americans will need to pay higher costs in the short term until they can find a solution in the medium to long term (for computers, mobile phones, shoes or electronics etc).
So the loss belongs to the country/village placing the tariffs.
Secondly, the other village, who sells food, will be having a great incentive not to trade with the first village with the food that it produces, thus causing massive shipping, banking, logistical and other issues including tremendous job losses in the importing village.
The exporting village will suddenly find camaraderie with dozens (if not hundreds) of other villages/countries which is exactly what is happening today.
The food will nevertheless be sold elsewhere to another village of which there is no dearth, however, the clothes of the first village won’t find an easy and willing buyer since ALL villages know the “attitude” of this first village and stand UNITED against the first village.
“It’s a bloodbath out there in the U.S. agricultural sector.”
“The Sunshine State’s orange harvest is at a 50-year low, producing just 49.6 million tonnes in the 2016-2017 season.”
President Reagan said this over 30 years ago:
“Instead of protectionism, we should call it destructionism. It destroys jobs, weakens our industries, harms exports, costs billions of dollars to consumers, and damages our overall economy.”
America is the biggest exporter of soyabeans in the world and majority to China. This will be totally destroyed and sales should drop 50% instantly. China imports US soyabeans 3 times more than all the rest of 9 combined nations.
China buys 69% of US exports of soyabeans.
Even the industry experts suggest a 29% drop if tariffs remain. I guesstimate, at least a 50% decline due to a market glut.
The impact is already here since last month
Since ALL countries are UNITED against the US (read: Trump), therefore, sales will plunge simultaneously everywhere that is proven here with a 22% decline so far in first 5 months of 2018 (before the tariffs were escalated this week).
The price of Trump policy tantrum will be directly and immediately felt by individuals and companies but not by Trump.
Thousands of jobs have already been cut and millions more at risk in the months ahead.
Largest nail producer of US, just fired 60 employees in Kentucky and is close to bankruptcy if the tariffs don’t get removed urgently, placing total of 500 jobs at risk.
They have lost 50% of their business in the THREE WEEKS!
They are not alone, another very large nail producer also lost 50% business in TWO WEEKS in Missouri!
This company could shut by Labor Day in Sept 2018, according to the local US Senator.
“The Beer Institute, a national trade association for the American brewing industry, estimates that the industry could lose 20,291 jobs because of the aluminium tariffs and increased cost of aluminium.”
Iconic Harley Davidson is being forced out of US!
There has been an AVALANCHE of 20,000 requests to the US Congress to grant exemptions to US companies from import tariffs and to request not to place tariffs.
This is not making the news.
This is UNPRECDENTED in the history of US or any country’s history!
“Commerce said Wednesday that it has processed fewer than 100 of more than 20,000 requests for product-specific exclusions — a number that amounts to less than half a percent.”
This is one of the most fantastic articles on this entire subject:
Steel prices are up 38% in 1 year and 13% since March, which is not the best for the American economy. From beer to real estate to Coca Cola, all will lose massive business due to sudden hike in the price of steel and aluminum.
Trump is touting steel as triumph in America, however, the steelmakers themslves are calling for the removal of tariffs.
“A Florida boat builder absorbs $4 million in lost business and expects more pain. An Ohio pork producer is losing access to a vital export market and fears the damage will last years. A motorcycle shop near Cologne, Germany, wonders if it even has a future.”
The news is bad in almost all aspects of the US eocnomy.
Bank of America has already warned of a recession.
“A full-fledged trade war, economists at Bank of America Merrill Lynch warn, risks tipping the U.S. economy into recession.”
All the big states of US will hurt because they export massively just to China, not to mention the rest of the WORLD.
There are eight states that exported more than $1 billion worth of tariff-eligible goods to China in 2017:
- Texas: $8,022,380,040
- Louisiana: $6,627,390,388
- Washington: $5,231,988,100
- California: $4,560,897,434
- Alabama: $2,620,256,485
- South Carolina: $2,588,390,677
- Illinois: $2,123,222,976
- Kentucky: $1,006,565,148
Aside from soyabeans, wheat, almonds, oranges etc, where US is the global leader in exports, millions of jobs are at risk at the leading ports and related industries in LA and Long Beach.
“Last year, $173 billion in Chinese imports flowed through the ports, said Jock O’Connell, an economist with Beacon Economics.”
And then there is the China perspective.
This is what CFR, an American think tank has to say:
Guess what, 2 of the world’s largest trading blocs (EU and China) have already started working together.
The pain has already started and ALL the countries are working collectively to teach America a lesson.
Let’s pray and hope that Trump can back off, else the costs will be paid by the tens of millions of gullible workers around the world, who are already hurting with various other economic crises of the last decade and jobs are impossible to find worldwide.
Trump will demolish the US dollar, US economy and almost the entire world economy just within a few months, unless someone stops the Trump wrecking ball.
This is not how it was supposed to work.
Trump was doing so well in defeating ISIS, controlling crime, deporting illegals, creating jobs, arresting perverts and rapists from Hollywood and CEO ranks, negotiating a deal with North Korea, demolishing gangs but now suddenly everything is in shambles.
Someone should tell this billionaire President, that the glue that keeps the world together and intact is a lot of (and more of) employed people otherwise, we all turn into a Venezuela/Zimbabwe/Somalia type nightmare.
The pain and the shock that we all feel due to this tantrum of Trump is very real and is just the beginning.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.