Why tariffs and import taxes are a stupid idiotic idea

Import taxes of any kind are a stupid idea, we will succinctly explain why.  Until this idea, Trump has had a fairly good track record if judged only by the correlation to the stock market.  The import tax is the first major mistake, and shows that he really doesn’t understand international finance and has not been able to hire a decent advisor to explain him that the world has changed in the last 50 years.  We explain this and more in our ground breaking work Splitting Pennies. 

Trade Wars are not a new thing in fact they’ve been a tool of state sponsored mercantilism since the beginning of time; tax or ban foreign goods in order to spur the domestic economy.  There’s a small problem though.  The world is today completely intertwined, interconnected, and intermingled.

Did you know, that Budweiser, a company which is more American than apple pie, is owned by InBev, a Belgian company?  Did you also know that of the 15 Budweiser breweries outside of the United States, 14 of them are in China?  So what does that make Budweiser – American, Chinese, or European?

Regarding the car industry, nearly every Asian manufacturer makes cars right here in USA.  Kia, Hyundai, Toyota, the list goes on and on.  So we all know that Toyota is Japanese.  Or is it?  Land Rover is British, but it was bought by Ford, a US publicly traded company (F).  Ford’s most complex robotic factory is in Brazil.  Ford operates in nearly every country in the world, and their business is sustained by a sophisticated foreign exchange operation managed on their treasury desk.  Ford notoriously hired Muslims, Blacks, and other workers that had trouble finding jobs at other companies.  Who owns Ford now is a global mix of citizens from every country in the world, foreign governments, and you can rest assured municipal pension funds, state pension funds, all own a piece of this American icon (F).  So what is American, anyway?

Trump’s heart is in the right place, the idea of rebuilding USA’s manufacturing base, creating jobs at home, reducing ‘offshoring’ – should be a priority of America first and it makes economic sense.  But the way to accomplish it is not through import taxes or to start a trade war.  Companies like Apple (AAPL) need to be incentivized in other ways to move their factories from China to Kansas.  Grants, tax incentives, government if then contracts (for example if Apple moved its phone manufacturing to USA the government could require USG employees to use iPhone for Security reasons.)  Or another solution, we can cut the military budget in half, and instead of building missiles and bombs, we can build technology parks in places like Kansas where there is plenty of cheap land.  We can build factories and retask soldiers to do non-military functions like planting trees or building the useless wall with Mexico.  We should invest in robotic factories and state of the art design organizations, like they have in Europe and Korea.  Farming can be hydroponic and automated.  There are thousands of ideas, and thousands of people who have thousands of ideas and who are capable of implementing them.  But we are not listening to those people, or supporting them.  USA has plenty of natural resources, real estate, and most importantly business innovation motivation to act as a natural global incubator for global business.

Instead of import taxes we should incentivize more foreign businesses to move here, such as by creating foreign ‘tax havens’ like Delaware, and providing privacy to foreign entities who would otherwise go to Switzerland or the Cayman islands.

The tax reduction plan was a huge win for Wall St. and Main St.  The idea of import taxes is the opposite.  We should encourage business growth not stifle it.  There are other more intelligent ways to spur the domestic economy.  We explain this and more in our ground breaking work Splitting Pennies. 

Comments

TeethVillage88s Stuck on Zero Sat, 03/10/2018 - 10:16 Permalink

I heard US has 1200 Excise/Tariffs, including for 300% on Tobacco and significant on Peanuts.

- Web search is tough so far. 

2401.20  Tobacco, partly or wholly stemmed/stripped:  https://hts.usitc.gov/?query=tobacco%20excise

0106.11.0000  Primates   https://hts.usitc.gov/?query=Primate

2204.21.2000  Effervescent wine  https://hts.usitc.gov/?query=effervescent%20wine

In reply to by Stuck on Zero

FoggyWorld Fri, 03/09/2018 - 14:09 Permalink

Strategically we just cannot rely on other countries to provide us with steel and aluminum.

My father, a Canadian, worked with Australians sometimes in the US, from 1938 through the end of the war.  They were allied chemists who developed synthetic rubber for jeeps and trucks that ended up in Europe.  Access to rubber trees was cut off and so what they worked on contributed to a reasonable conclusion to WW2.

Should we ever get into a wartime situation we need the ability to at the very least defend ourselves short of using nuclear weapons.  

And Chinese steel is infamous at this point for being sub par and to that they can make it even less acceptable for our use.  And while people like Theresa May complain, she in fact put hefty tariffs on the UK's import of Chinese steel in 2016 and they are still there.

The One... PrivetHedge Fri, 03/09/2018 - 15:07 Permalink

War is just a Bankster trick designed to keep all the sheep running in the same direction. Read The Report From Iron Mountain to fully understand the concepts of perpetual warfare and low intensity conflicts. Also read "Behold a Pale Horse" by William Cooper. Then read Tragedy and Hope By Carroll Quigley and see what they have planned for us serfs... 

In reply to by PrivetHedge

Conax Fri, 03/09/2018 - 14:09 Permalink

Ok, no high tariffs on those countries that put high tariffs on our exports.

We just ban the importation of their crap until their tariffs are lowered or removed.

Cash me ousside, how bout dat?

Blame_Goats Fri, 03/09/2018 - 14:12 Permalink

He really is obsolete.  Free trade was a rubric used to sell our over production around the world from 1900 to 1965.  It ran out of steam as Japanese cars began to flood our markets.

 

And then jobs left USA following cheap labor.

 

All so we could enrichen the international bankster class.  How wonderful for people like him.

 

He needs to read more how in the 1870-1900 local markets and labor pools were obsoleted by national and international ones.

 

And of course, after WWII, 'free trade got rolled into one of our cold war weapons.

 

Those days are gone for good. 

 

His memes, ideas, gods, and economic theories are obsolete.

Kayman Blame_Goats Fri, 03/09/2018 - 14:33 Permalink

There was no such thing as "free trade" after WWII. Our crony corporations want all the protection and good product name of the U.S. as they sell out the country chasing short term profit as the country dies a slow and painful death.

Let's have "free trade" in money and credit.  Let the market set interest rates and end the Fed.

In reply to by Blame_Goats

Duc888 Fri, 03/09/2018 - 14:12 Permalink

 

 

Un-intellihub moron.  Trumps tariffs are an ANSWER to the tariffs placed on US goods.  This brings the other countries to the bargaining table.  Tariffs are both a hammer and a fucking pry bar to work a better deal.

globalintelhub Duc888 Fri, 03/09/2018 - 14:31 Permalink

If that were true, then it would be a good strategy, a lot of these half thoughts are only part of the picture.  American products are big sellers overseas, there are only a few niche markets we have problems to get into.  Not sure that this is the play here.  He's thinking like it was the 70s.  But what Nixon did included hiking rates to 10% too.  That's not happening.

In reply to by Duc888

Justin Case Duc888 Fri, 03/09/2018 - 17:32 Permalink

Nucor just re-opened up a mothballed steel plant here in USA

Higher tariffs and zero rate interest will definitely open those inefficient bloated, poor productivity and old technology factories no problem.

IBM has invested billions of dollars in share buy backs. That works good for the upper management. As sales fall the earnings per share rises and it's bonus time for the upper management fellers.

Murica has created the most millionaires in the last decade than in it's entire history. Any ideas why, if there are all these tariffs and lay-offs and people out of work? Murican market for imported steel from China is about 1%. Trump's ratings, up 30%? It's a great win for him by the morons that don't know much about the real impact of the steel. Minuscule really.

With all aspects America is the epicenter of world public and private corruption and gangsterism - a kleptocracy run by criminals complicit with corporate crooks, headquartered on Wall Street, profiting at the public’s expense.

Monied interests transformed the nation into an unprecedented money making racket, scamming ordinary people of their savings, jobs, homes and futures so privileged elites can get richer and more powerful.

From inception, the business of America has always been business - meaning license to pillage, defraud and benefit extralegally, including tax avoidance more than anywhere else worldwide, encouraging high-net-worth foreign individuals to shift funds to the US free from taxation.

Government of, by, and for its privileged few allows grand theft on an unprecedented scale. Markets are manipulated up or down for profit, scamming the unwary.

Authorities permitted the greatest ever wealth shift from ordinary people to its rich and powerful, the grandest of grand theft, facilitated by Fed controlled money, credit and debt - Wall Street owned and operated.

America’s dark legacy is largely concealed from view. Enormous wealth is hidden in tax havens or investments at home and abroad, free from taxation.

Wall Street banks and other giant US financial institutions are at the center of unprecedented criminality, aided by government co-conspirators.

In reply to by Duc888

TeethVillage88s globalintelhub Sat, 03/10/2018 - 10:10 Permalink

Confused on your position.  Did you define your terminology?

https://www.google.com/url?q=https://ustr.gov/sites/default/files/2013%…

Tariffs on a number of processed and high value food products, including poultry meat, range from 20 percent to 30 percent. There is a 300 percent duty on alcoholic beverages for use in the tourism sector, including for hotels, plus a 40 percent sales tax. The general tariff for alcoholic beverages ranges from 1,200 percent ...

overall weighted tariff average from 14.6 percent to 10.1 percent. Tariffs on the vast ... Tariffs on most U.S. agricultural product exports to Egypt are no higher than 5 percent; however, a number of processed and high ... The general tariff for alcoholic beverages ranges from 1,200 percent on beer to 1,800 percent on wine and ... to 1800 percent on wine to 3000 percent on sparkling wine and spirits.

https://www.google.com/url?q=https://ustr.gov/archive/assets/Trade_Deve…

Sep 1, 2006 ... generated by tobacco in theses farms represents 73 % of total farmer's income. Average Size .... It is our hope that U.S.T.R. and the U.S. Congress will continue GSP tariff treatment for the Eucatex ...... the world dairy market (e.g., EU export subsidies, 300% tariffs in Canada and Japan) and hinder ability to ...

https://ustr.gov/issue-areas/industry-manufacturing/industrial-tariffs

Approximately 96 percent of U.S. merchandise imports are industrial (non-agricultural) goods. The United States currently has a trade-weighted average import tariff rate of 2.0 percent on industrial goods. One-half of all industrial goods entering the United States enter duty free. (Would that be $400 Billion at most?)

Negative - 780 Billion Trade Balance

http://www.economist.com/node/21604509  (Tab to Data, then to Trade Data)

 

In reply to by globalintelhub

RonBananas Fri, 03/09/2018 - 14:15 Permalink

Shipping a truckload from say, St. Louis to Tampa is going to be much less than from China to Tampa. BILLIONS saved in trucker fees from the west coast ports, BILLIONS in fuel savings.

Who knows, now that those workers in St. Louis have a job, they may buy stuff from people in Tampa and so on.

China didn't build an empire in the past 20 years from imports, they did it from exports, which kind of trashes your theory.

China is heavily invested into the west coast ports via long term leases, compliments of Bill Clinton, they are not going to be happy campers if volume drops 10% or 20%

 

 

Apeon Fri, 03/09/2018 - 14:17 Permalink

A.....  Ford’s most complex robotic factory is in Brazil.  Ford operates in nearly every country in the world, and their business is sustained by a sophisticated foreign exchange operation managed on their treasury desk.

-----------------by way of NOT hiring Americans, in America----AND manipulatinbg foreign exchange to avoid paying American Taxes.

 

 B....Or another solution, we can cut the military budget in half---------------------------Let's Cut YOUR Salary in half.

 

C.....Instead of import taxes we should incentivize more foreign businesses to move here--------------Which is precisely What Pr. Trump is doing

 

STOOPID ARTICLE, BY STOOPID PEOPLE.

 

 

RonBananas Fri, 03/09/2018 - 14:24 Permalink

This is actually a brilliant idea by Trump and here's why...China is doing everything they can to trash the dollar and create hyperinflation here.

By buying domestically, China can't manipulate the exchange rate if we don't buy anything from them.

Prices are going up regardless, might as well give the money to ourselves rather than let China bend us over the desk.

TeethVillage88s globalintelhub Sat, 03/10/2018 - 10:34 Permalink

Foreigners own over $32 Trillion in US Assets (Liabilities) including over $6 Trillion in US Treasuries.

- but I disagree about wanting to trash USD, China has enjoyed a kind of Currency War all along by keeping the Yuan valued low

http://www.bea.gov/newsreleases/international/intinv/iip_glance.htm ($32 Trillion in Foreign Ownership in Property in the US compared to $26 Trillion of US Ownership in foreign countries)

http://www.treasury.gov/ticdata/Publish/shl2002r.pdf (short term & Long term investments in Treasuries and Stocks)
http://www.treasury.gov/ticdata/Publish/shla2013r.pdf
http://ticdata.treasury.gov/Publish/mfh.txt

Total Current Account Balance for the United States (BPBLTT01USA637S) (2006 = - $800 Billion from Oil Price Crash)
https://fred.stlouisfed.org/series/BPBLTT01USA637S

In reply to by globalintelhub

PrivetHedge Fri, 03/09/2018 - 14:51 Permalink

Tariffs and import taxes are an EXCELLENT idea if you are to protect your own workers.

The only people who don't want them are greedy globalists who should be either a) ignored or b) deported.

American Snipper Fri, 03/09/2018 - 15:20 Permalink

A stupid idiotic idea is allowing chinky to flood our country with cheap, low grade steel below the cost to make it, putting our businesses out of business. Is this Cuntstlers new handle?

TeethVillage88s Sat, 03/10/2018 - 10:26 Permalink

EU Subsidies Airbus, Canadian Subsidies for lumber,...

Smuggling & Dumping

Auto Industry Foreign duties

  1. U.S. finds China aluminum foil imports dumped, subsidized - Reuters

    https://www.reuters.com/article/us-usa-trade-alumi... 

    Feb 27, 2018 ... The U.S. Commerce Department said on Tuesday it had made a final determination that imports of aluminum foil from China are being sold in the United States at less than their fair value and producers are benefiting from subsidies from Beijing.

  2. Chinese Billionaire Linked to Giant Aluminum Stockpile in Mexican ...

    www.wsj.com/articles/chinese-billionaire-linked-to..

    Sep 9, 2016 ... U.S. aluminum executives claim Liu Zhongtian, the billionaire founder of Chinese metals giant China Zhongwang, used a factory in Mexico to game the ... with the Commerce Department alleging that Mr. Liu and his family are using a network of affiliated companies to evade U.S. antidumping prohibitions.

  3. California Firm Is Accused of Illegally Importing Aluminum From China

    https://www.wsj.com/articles/california-firm-is-ac... 

    Sep 14, 2017 ... It says Perfectus illegally imported more than 2.1 million aluminum pallets from China into the U.S. between 2011 and 2014, violating a 2010 Commerce Department ban on certain aluminum imports from ... Appeared in the September 15, 2017, print edition as 'U.S. Firm Accused of Smuggling Aluminum.' ...

  4. IEN NOW: NJ Factory Accused of Smuggling Tariff-Free Aluminum ...

    https://www.youtube.com/watch?v=27POPKt5Je0 

    Sep 21, 2016 ... The company is allegedly disguising metal as shipping pallets that are then re- melted for other uses. The Wall Street Journal is reporting that the U.S. Comm...

  5. Part of Aluminum Stockpile Seized; US Opens WTO Case Against ...

    https://agmetalminer.com/2017/01/13/part-of-alumin... 

    Jan 13, 2017 ... The seized aluminum is in the form of pallets and court records don't state which company manufactured the aluminum. The WJ saw shipping records which show that a separate company called Peng Cheng — which later became part of Perfectus in a merger—imported the metal from an affiliate of China ...

  6. Aluminum Shapes Under Investigation by US for Connections with ...

    www.aluminiuminsider.com/aluminum-shapes-under-inv... 

    Sep 17, 2016 ... A China Zhongwang spokesperson indicated to the WSJ that the pallets manufactured by Zhongwang “are not under the scope of anti-dumping rules. Therefore, there is no such situation as circumventing tariffs.” She went on to say that Zhongwang doesn't have a business relationship with Aluminum ...

  7. Feds Seize $25M Of Aluminum In Probe Of Chinese Billionaire

    https://www.manufacturing.net/news/2017/01/feds-se... 

    Jan 17, 2017 ... Commerce officials also looked into a New Jersey metals company that allegedly housed aluminum pallets from China in order to melt them down for others uses. The tariffs were imposed after the Commerce Department determined that Zhongwang improperly dumped subsidized metal on the U.S. market ...

  8. Stop China's Stealth Invasion | HuffPost

    https://www.huffingtonpost.com/entry/stop-chinas-s...

    May 15, 2017 ... For more than a decade, the Chinese have ramped up their own aluminum production and dumped the excess on the world market, depressing prices and ... Firms associated with Liu Zhongtian, a Chinese billionaire who controls Zhongwang, shipped thousands of tons of pallets made of aluminum ...

  9. About AEC: Fair Trade - Aluminum Extruders Council

    www.aec.org/?page=about_fairtrade 

    Conservatively, AEC estimates 800 million pounds per year of extrusions are being produced in the U. S. that would have otherwise been lost to China. Your Support .... September 15, 2017 - U.S. DOJ Alleges Zhongwan