I was trying to imagine what will be the result if China is hit with a 50% tariff.\u00a0 Now China is not Vietnam.\u00a0 China\u2019s labor is no longer strictly speaking third world.\u00a0 It\u2019s probably \u201csecond world.\u201d\u00a0 Will a two dollar \u201chammer\u201d still sell if it costs three dollars?\u00a0 It\u2019s a fair question.\u00a0 How about a fifty-dollar tool that now costs seventy-five dollars.\u00a0 Well, maybe you say, \u201cSure because the American tool costs one hundred dollars.\u201d\u00a0 But what if I remind you that it\u2019s a really awful tool that doesn\u2019t work very well and only lasts a third of the life; like those things you buy at Harbor Freight.\u00a0 Well, now you have something to think about.<\/p>\n
Maybe that\u2019s what Trump is doing.\u00a0 The only thing I can\u2019t figure out is if the correct number is 50% or 100% or 300%.\u00a0 I really don\u2019t have a good feel for what the equivalence point is.\u00a0 And it can\u2019t be the same for every different item out there.\u00a0 How exactly does he make this work.<\/p>\n
The funny thing is I\u2019m excited about the prospect of closing the \u201cChina valve.\u201d\u00a0 I\u2019d love to see nothing exported from China to America.\u00a0 I witnessed first-hand American companies building the industrial capacity in China needed to replace American jobs by the million.\u00a0 They gladly partnered with the Chinese government and they got their thirty pieces of silver in the process only it was probably ten pieces of silver.\u00a0 The Chinese were always cheap.<\/p>\n
I listened to Pete Navarro talk about how tariffs are just a small part of the trade picture.\u00a0 Europe and other places have a value added tax (VAT) that they use to keep out imports.\u00a0 And places like Vietnam (and China) infamously steal intellectual property without any concern for consequences.\u00a0 They bootleg everything from clothing to toys to handbags to you name it.\u00a0 And nothing is done.\u00a0 From what I can tell we\u2019re not trying to fix these things.\u00a0 We\u2019re trying to quarantine the merchandise coming from this whole side of the world.\u00a0 Wow.<\/p>\n
So, I\u2019m all for this.<\/p>\n
But can it be done?<\/p>\n
I\u2019m assuming there will be an enormous disruption to commerce.\u00a0 After all, these products are shipped across the Pacific on boats that take weeks to reach here.\u00a0 Now all of this product costs a lot more.\u00a0 What if the people who bought it to sell it to Americans can\u2019t get people to buy it at the higher prices?\u00a0 What happens at Christmas when I can\u2019t buy all that crappy branded merchandise associated with the latest crappy Hollywood kid movie?\u00a0 Mass hysteria!<\/p>\n
And what about all those American companies that buy parts for their products from China and the rest of Asia?\u00a0 Will this change their pricing?\u00a0 Yes.\u00a0 But now they\u2019ll also be competing against foreign manufacturers whose products will really get expensive.\u00a0 German and Japanese cars are excellent.\u00a0 But will they be worth a significantly higher price tag?\u00a0 That will have to be decided on the merits.\u00a0 And will that mean that Toyota and Mercedes will start making more of their cars here?\u00a0 I hope so.\u00a0 That is where we get a win\/win.<\/p>\n
Well, the stock market seemed to steady today.\u00a0 I\u2019m following all of this and it\u2019s wild stuff.\u00a0 That crazy Trump.\u00a0 He\u2019s the greatest show on Earth.<\/p>\n","protected":false},"excerpt":{"rendered":"
I was trying to imagine what will be the result if China is hit with a 50% tariff.\u00a0 Now China is not Vietnam.\u00a0 China\u2019s labor<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[5,6],"tags":[4791,381,16,2680],"class_list":["post-32852","post","type-post","status-publish","format-standard","hentry","category-current-events","category-trump","tag-tariffs","tag-trade","tag-trump","tag-trumps-second-term"],"yoast_head":"\n