Trump’s Latest Tax Increases (i.e. Tariffs)
Today, President Trump tweeted a 10% tariff on an additional $300 billion of Chinese goods. So that likely increases the prices you will pay for most I-phones, clothes, shoes and kids toys by 10%. He later said that tariffs would go up to 25% if he does not get his way in trade talks. Think of that like a 25% sales tax.
Just last month Presidents Xi and Trump agreed to a truce on retaliatory tariffs. Earlier this week, American and Chinese trade negotiators reported they were making progress. Yesterday, the Federal Reserve cut interest rates by 25 basis points due to fears of an economic slowdown (recession) because of Trump’s persisting trade wars with other countries.
Meanwhile, the Chinese retaliated with tariffs on US agricultural products. US farmers are being very badly hurt by the double whammy of the President’s trade wars and his immigration policies. https://www.cnbc.com/2019/07/10/farm-states-slammed-by-us-china-trade-war-and-immigration-woes.html Net farm income is down 50% as compared to 2013. Exactly why the farm belt still supports the President is totally unclear – at least to me. The President has ordered farm subsidies that are going to the largest agribusinesses, as opposed to the family farmers who are piling up debt just to stay in business.
We don’t yet know whether the President was just tired of bashing minority lawmakers and decided to bash China instead, or whether he woke up on the wrong side of his bed, or whether there is some grand scheme (create a crisis, then solve it) leading to a major trade deal with China in September. The stock markets fell by 600 points after the President’s tariff tweet, so investors are not thrilled by the President’s latest actions.
US business investment is lagging due to trade uncertainties. Chinese investments in the US have fallen precipitously. Other nations in Europe and Asia no longer trust us due to Trump’s behavior towards them and his rampant disregard of the treaties they had earlier entered into with us. The last I saw was that the US economy grew a bit over 2% in the second quarter of 2019 while China’s grew by 6.5%. This does not look to me as if the President’s trade policies are bringing China to its knees, quite the opposite. https://www.bloomberg.com/graphics/2016-us-vs-china-economy
Prepared by: Lucien Wulsin