More Tariffs on China: 1,300 Product Categories

Trump is stepping up his attack on China. Us consumers and businesses will pay the price.

In his effort to "win" a trade war Trump Announces Tariffs on $50 Billion of China Imports.

The Trump administration detailed plans for steep tariffs it will impose on some $50 billion of imports from China unless it makes big trade and investment concessions soon, a broadside that represents the U.S.’s most powerful challenge in decades to Beijing’s economic practices.

The imports targeted for 25% levies reached across the U.S. economy, from high-tech industries like medicine, aviation and semiconductor machinery to intermediate goods like machinery and chemicals, as well as such consumer standards as dishwashers, snow plows and motorcycles, according to the U.S. Trade Representative.

Early reaction from the high-tech industry was negative. “If history is any indication, these proposed tariffs will not work and will be entirely counterproductive,” said Dean Garfield, president of the Information Technology Industry Council. “Tariffs penalize U.S. consumers by increasing prices on technology products and will not change China’s behavior.”

Hooray! Consumers and businesses will pay more, not for 1,300 products but rather 1,300 product categories. The tariffs start May 22. In the interim, businesses have a chance to respond. They will promptly be ignored.

When consumers pay more, Trump calls it "winning".

Mike "Mish" Shedlock

Look, you didn't read the article: I understand, this finance jargon can make for dense reading. However there's a couple of case study examples at the bottom that are more accessible to everyone, let me quote them to you directly here.

Case studies: How current accounts misled markets in 2008/09

“In the mid-2000s, the US dollar depreciated against major currencies even as the US current account deficit widened to an historically large share of output. In an influential paper…[Paul] Krugman warned of an impending collapse in the value of the dollar, fretting that the dollar would fall abruptly when the currency market met its… [crisis] moment…In the event, the US dollar rose sharply with the onset of the global financial crisis in 2008. Its strong appreciation was associated with the deleveraging of financial market participants outside the United States, such as the European banks…who had used short-term dollar funding to invest in risky long-term dollar assets. As the crisis erupted and risky US mortgage bonds fell in value, these financial market participants found themselves overleveraged and with dollar liabilities in excess of depreciating dollar assets. This forced them to bid aggressively for dollars to repay their dollar debts, pushing up the dollar’s value in the process.”

“Korea was running current account surpluses in the run-up to the 2008 crisis, and had a positive net external asset position vis-à-vis the rest of the world. That is to say, the value of its claims on foreigners in debt instruments exceeded the value of its debt liabilities to foreigners. Furthermore…an appreciating dollar is a positive wealth shock for a country such as Korea. Nevertheless, Korea was one of the countries worst hit by the 2008 crisis, with GDP growth slowing sharply in 2009…A closer look at the sectoral decomposition of the international investment position sheds light on why Korea was hit so hard in 2009…There was considerable disparity across sectors. In particular, the corporate sector was a large net debtor vis-à-vis the rest of the world…The capital gains seen on the central bank balance sheet will not help the corporate borrowers who face a surge in the dollar’s value and a resulting bank credit crunch.”

@Kinuachdrach Tell yourself before you go to sleep at night thirty three times this sentence: "The banks are owed everything in the world."

Then while your dreaming, wonder where these banks are and just exactly how the trickle down effect really works.

Although my investments are well diversified in many areas, banks are some of my favourite long-term investments. And among banks, the Canadian banks are at the top of my list. Rather than putting my money in the bank, I would rather own the bank and share in its profits.

"The banks are owed everything in the world". So what is it? Are banks financially shaky Too Big To Fail imposters? Or are banks the rulers of the world?

There are complex claims on the productive capacity of the world -- some of which claims are mediated by banks -- but the key is productive capacity. We human beings need a real chicken to put in a pot, and a real pot to put it in, and a real stove to cook it on. What drives the world is our capacity to produce the real goods & services we require or desire.

The West's problems stem in part from becoming enamored of the "clean" financial world instead of the "icky" productive economy. In War & Peace, there is an analogy of the steam locomotive charging along the tracks, leaving a trail of smoke. Is it the trail of smoke which drives the locomotive forward? It is that mistake of effect for cause which so misleads many of us -- resulting in otherwise intelligent people failing to realize that they have been on the losing end of a Trade War for decades.

Banks are both Too Big To Fail imposters and the rulers of the world. It sounds illogical I know, but that's because treating "IOU" money as money pure and simple is illogical and all banking follows from that absurd principle.

Everything else you said I passionately agree with: I'm with you on the diagnosis of the disease but break with you on the cure. You preach a more productive nation, I preach a more productive and self-sufficient household. The reason for the difference likely being in my conviction that we have some very dark days ahead of us.

Honestly save your family, save your town and community, but just forget about the United States of America. It's far far far beyond the point of repair. The time to save America ended in the 1960s for crying out loud. All this Trump based optimism is in my analysis one laughable comedic send off for the nation.

And whilst you still have dollars with international supreme purchasing power you'd do well to buy farming machines, solar panels, water filters and such like from China.

every country has its comparative advantage if another country can make it cheaper we should buy it, if the other country wants to sell it at a loss we should buy more of it and use it to our advantage. somehow this fact escapes Trump's logic or more importantly the American people's . Cheap steal is just a benefit for our car companies