Decision Time: Will The US Impose Tariffs Or Not?

Authored by M.K.Matthews via The Organic Prepper blog,

A few things you need to watch for economically this week could very well set the table for what comes next week and beyond.  The influencers will be both geopolitical and earnings driven.  It’s important to note that Trump’s decision about the looming tariffs will not just affect Russia and China, but also, our allies in Europe.

Here’s what to look out for this week.

Watch for reactions to the tariff decision on the geopolitical front

The midnight hour when Trump has to deliver his decision on tariffs arrives 12:01 Tuesday.  He has set intentions to impose a 25% tariff on steel and a 10% tariff on aluminum on the companies that obtained a temporary exemption.  This list includes and affects some of our closest allies.   The temporary exemptions extended to the EU, Canada, Mexico, Australia, Brazil and Argentina, which if revoked would throw the global markets into turmoil and international supply chains into a deep well of uncertainty, as the exemptions add up to almost half of the U.S. steel imports.

There is a slight possibility that the date will be extended but that won’t erase the uncertainty that will remain in the interim. It is still unknown if some countries can negotiate limited quotas, make deals on goodwill, or if all countries will be slapped with tariffs.

Europe

The New York Times reports that Ms. Merkel (Germany), Mr. Macron (France) and Ms. May (U.K.) released a joint statement that if the U.S. tariffs go into effect, “The European Union should be ready to decisively defend its interests within the framework of multilateral trade rules.”  It is possible that if the tariffs go into effect ships carrying steel could be barred from entering U.S. ports of delivery.  This would definitely interrupt the international supply chain and the global economy as the U.S. and E.U. account for fully one-third of world trade.

If the tariffs are imposed this would be asking our trade partners to break World Trade Organization rules.  If favored E.U. countries are released from the tariffs that would break E.U. Treaty Rules.

NAFTA

For Canada and Mexico, the tariffs are being tied to the NAFTA negotiations, which in their current form set forth a trilateral agreement that the three countries share in the preferential tariff agreement.  Negotiators from the three countries are scheduled to meet again May 7th to further hammer out the final agreement.

The TPP

May 12th is the next cliffhanger date to mark on your calendars as that is the date we will know whether the U.S. stays in the T.P.P. or not.

“Commonly known as the TPP, the trade agreement was a key policy for the Obama administration. Until Trump pulled the country out, the United States had been a signatory along with 11 other countries including Japan, Vietnam, and Australia. The deal aimed to lower tariffs among the countries and counter Chinese influence in the region.”

I strongly encourage all to read here to gain understanding on the current administrations wavering positions on the TPP.

Comments

boostedhorse Mon, 04/30/2018 - 14:15 Permalink

Yes, ofcourse, whats the alternative? Its not like the US trade deficit is going to improve if both sides were to cut the current tariffs/taxes to zero. In all likelyhood the US would import even more.

Griffin Mon, 04/30/2018 - 14:20 Permalink

I would absolutely impose tariffs on Europe.

There is no reason not to.  I am sure Macron is a good kisser, but its time to re negotiate trade between Europe and USA.

zvzzt Mon, 04/30/2018 - 14:36 Permalink

My 2 cents, US needs to start making things (quality things preferably) before any tariffs are imposed. Currently, the only suckers are the US consumers who will end up paying more for the same goods. 

I have this new and strange habit of looking where things are produced. Without exception, haven't seen "made in the US" for many, many years.  

BritBob Mon, 04/30/2018 - 14:53 Permalink

US - China trade The U.S. trade deficit with China was $347 billion in 2016. The trade deficit exists because U.S. exports to China were only $116 billion while imports from China were $463 billion. Only one winner.

Russia - what does the US need from Russia?

Europe - go easy on the Brits please Donald. 

  • Together the UK and US have around $1 trillion invested in each other's economies
  • The trading relationship between the UK and the US supports over a millions jobs in both countries

 

CashMcCall BritBob Mon, 04/30/2018 - 16:03 Permalink

Bob, next life get a good English Public School Education...  [I should clarify for the TrumpStupids... In Britain Public School is private school, in Merica, Public School is Socialist Marxist indoctrination education. Bob has that kind of indoctrination brainwashing as every TrumpStupid.]

 

Trade Deficits are not ledger deficit transactions. 

 

You live in New Jersey and buy a car made in Michigan? Trade Deficit? Yes. Ledger Deficit? No. The Transaction is clean and even. You pay cash and you get a car. Even trade.

Same applies to a Japanese made car. You pay dollars and get a nice car. Even trade. But what you call a trade deficit happens after the transaction. 

One would expect that with the currency exchange and the Japanese car that the Dollar would be reduced incrementally and the Yen would rise. This is how a fair floating capital market increments the next transaction. In essence, it lowers the dollar to improve US exports and raised the Yen to encourage foreign Imports. BUT BUT BUT the opposite happens due to Gov Manipulation and Central bank meddling.

 

The US is the worst manipulator by far with the US Dollar Reserve Currency. 

So instead of falling, the US dollar rises as the Fed increases rates and speculators buy dollars due to geopolitical tensions and the US High dollar policy. The Japanese devalue the Yen to encourage more exports because they are in competition with other countries that are forced to trade in dollars as the dollar is rising. The US High Dollar policy is forcing devaluation. 

 

Why? The US exports its inflation in this way. It makes foreign products cheaper. So you buy an import car you get more for your money. But you also export your inflation to other countries on the next transaction. US exports shrink when the dollar rises because they are too costly to compete. 

The US has used this system of the Dollar Reserve as a weapon since 1944 when the US installed it with the Bretton Woods and the Anglo American Loan displacing the British Pound. 

 

Thus, the US exports its inflation and Japan exports its deflation. Thus the "Trade Deficit" is not a deficit at all. It is an inflation/deflation index. The greater the "Trade Deficit" the more inflation is exported. Thus, the loser is really the foreign countries shackled with the Dollar Reserve Currency. The country with the highest Trade Deficit has the highest standard of living because they import deflation and export inflation. Thus Britain has a much lower standard of living than the USA.

Explaining economic reality to TrumpStupids is like trying to explain that 55% of all births of America Children, now born out of wedlock is not a good thing. For Blackie that number is 97% then it's off to the Welfare office and sign up for Food Stamps and Wic. Yup, roughly 4000 parasites born a day. That is your MERICAN Socialist Marxist economic reality coming home to roost from your Brain dead public school brainwashing centers. 

 

This will change that is why the US is so aggressively pushing its own Trade Tariff Suicide buttons. Trump mind is invalid. He has destroyed the metals markets global and the US Agricultural markets with his surprise attack tariffs idiotcy. 

Trump claims this is a negotiating strategy to renege on contracts. He has done it his whole life. He cheats on his wife; that's a contract. The only trouble with that strategy is that it is illegal in every court in the United States. Interference of contract which is a tort. Around the world, metal suppliers are backing out of contracts using force majeure. It hasn't protected a single job in America. Steel And Aluminum Manufacturers in the USA are Opposed to this. Prices now are so high, they can't sell their products. The military can't get the alloys that the US doesn't make for their Defense Contracts. So Trump is jeopardizing national security which opposes his claim to be doing it for national security. Trump blew it because he doesn't cognize. His judgment and his mental capacity and knowledge are stunted. Trump serves one purpose... He is the Stupidest person that you know... He is the intellectual bottom rung.

 

In reply to by BritBob

ConanTheContrarian1 Mon, 04/30/2018 - 15:19 Permalink

Leftwing OppoTrump garbage here. Trump's "wavering" opposition to the TPP is simply him waiting for the foreigners to negotiate on even terms. We've been shafted by globalists in DC for decades now, and he actually seems to be working to benefit OUR country instead of theirs. Let's not forget, also, that TPP put the international corporations above the laws of each nation, including ours.

CashMcCall Mon, 04/30/2018 - 15:42 Permalink

Ah, the dumb TrumpStupids still running their mouths about wanting a trade war. The damage has already been done you, morons. Look at the US Agricultural Futures. The Ameican farmer has been decimated. Its over. China has already second sourced their ag needs. Trump killed the farms. 

Further the aluminum and steel tariff is opposed by every aluminum and steel maker in American and the DOD. But just as with you uneducated louts, Trump knows more than anyone. After all "Trade wars are good and easy to win". Sure they are and each time somebody stupid tried this the US was plunged into a recession. 

What you TrumpStupids don't grasp is that contracts must be upheld. Trade Tariffs are a repudiation of ALL FUTURES CONTRACTS through Force Majeure. All futures contracts so affected are rendered voidable. Trump doesn't care because he breaches contracts all the time to squeeze little contractors like plumber or lawn mowers landscapers. Most of the time he just doesn't pay them and the little guy has to go to small claims courts to get paid. Trump settles for 50 cents on the dollar or less. He's a prick. Little guys can't afford to fight in court. 

With Trade tariffs you all lose because of Trump's big blowhard mouth. He's so stupid when he applied the Russian Sanctions to show he didn't PP on that bed in Moscow Ritz, he hit RUSAL but then next day the DOD had to inform the orange know it all that only RUSAL made certainly alloys the US DOD needed and RUSAL owned all the patents. So the Rusal corp was given and fast quiet exemption. 

Trump has lost on every level so far. Steel and Aluminum prices are up on geopolitical fears, not demand. So the actual demand for US made aluminum and Steel have tanked. He has now got Europe in a Trade war and he is pushing at Japan. What does he intend to achieve? Nothing beneficial for the USA who is now seen as an unreliable trader. Trump cheats on wife. Contracts mean nothing to him. His words and his promises mean nothing to anyone intelligent. He has damaged the country irreparably. 

Bush did this previously with Steel and the result was that the US Steel production was cut in half. Nobody in Steelmaking benefited by going broke then slamming into a big recession. Don't you think domestic steelmakers see this happening again?

Then some stooge TrumpStupid out here suggested that American Consumers should suffer higher prices because it would benefit the country. NO. That is corporate welfare. I won't benefit the US in any way. Why should any consumer buy higher cost inferior steel so as to pay for some UNIONers Bar tab? Laughable. Capitalism says you compete or you go broke.

Socialism and Marxism is what the TrumpStupids advocate. They want corporate Welfare, they want consumers to have a lower standard of living so the Socialist parasites can be fed. I want the lowest cost producer of the highest quality products. I buy Japanese cars not that garbage made in Detroit. 

Where do the Tariffs go? To Gubberment. Not a dime goes to the so-called struggling company in need of corporate welfare. The Taxpayer and Consumer pays the freight on all of this idiocy. 

Trump is a disaster for business and agriculture. He's a grifter on the take. $110 million taxpayer dollars paid to Trump organization last year for Trump's "working vacations" as his resorts. The White House has a staff equipped to handle visiting heads of state but Trump has found a backdoor way to siphon off hundreds of millions to Trump Organization from the taxpayer. 23% of the population are TrumpStupids which is exactly the same as the 23% that were ObamaStupids. In both case,s you had an idiot in the White House meddling and destroying global trade and commerce making America unreliable. Trump is garbage and his followers are ignorant parasites. 

 

 

CashMcCall Angry Panda Mon, 04/30/2018 - 16:28 Permalink

FK you. I never copy paste. We are Jeffersonians and abhor large gov, the MIC, massive debt. These are my own words and we publish our own blog on matters of finance and markets. We support balanced budgets, stopping the POliceman of the world insanity,  Term limits, and small gov as minimal as possible. 

But you are a punk so I have to humor you. You need to learn to read you pissant. 

In reply to by Angry Panda

True Blue CashMcCall Mon, 04/30/2018 - 17:40 Permalink

If you support term limits, then you support looting on a schedule.

That is the only 'stick' the voters have with which to punish politicians who fail to represent us.

Goldman Sachs (e.g.) pays bonuses to employees who run for office and guarantee them their job will be waiting when they leave office -for the express purpose of having one of their looters in a position of power. Term limits will only encourage that behavior, as they can 'quit' to take a 'temp job' fucking the American taxpayer before returning to their regularly scheduled employment.

In reply to by CashMcCall

Blue Steel 309 Mon, 04/30/2018 - 16:07 Permalink

How it affects our allies is not our concern. If we have conflicting interests, they should not be allies. Something about foreign entanglements and America First.

 

The premise is ridiculous, but that people can say it with a straight face is indicative of some severe propaganda programming since WW2.

CashMcCall Blue Steel 309 Mon, 04/30/2018 - 16:23 Permalink

Speaking of WWII are you aware that the US has 800 military bases worldwide, with standing armies in Japan and Germany. The US uses this and the phony NATO thrust to secure the US Dollar Reserve. If they don't like you, they assassinate you or they sanction you like Hitler with sieges like Stalingrad to starve out women and children as if that will alter the political conduct of the rulers. 

The entire remaining members of the UN Security Council have just 20 military bases all tolled to the US 800 bases... I mean 801 now that Trump has moved a new military base inside Israel. From the looks of things, you are already entangled and I don't mean that in the quantum way, but in the demigod globalist way. The US is the True Globalist foisting their views and economics on the world. 

Read my post on Trade Deficits. You could use some education beyond your public school Marxist indoctrination. 

In reply to by Blue Steel 309

Joiningupthedots Mon, 04/30/2018 - 16:41 Permalink

Europe, Eurasia and China are big enough to cut America economically loose.

The truth is out-with some Euro neurosis that Russia will invade them (why would it?) America is not required this side of the Atlantic.

America needs the rest of the world much more than the world needs America.

America can always barter bananas with Guatemala at MAGA rates I suppose.