09/3/19

Tariffs — The Tariffs Are Working

A lot of folks whose opinions I respect have been saying that the Trump admin tariffs against China will simply impact our lives in the form of increased prices.

I have maintained otherwise. I have consistently said the imposition of tariffs will create structural changes in the way American importers source and deliver goods to the US economy; and, they will change the way individuals buy/boycott Chinese goods.

As a personal example, I no longer buy any Chinese goods. None. I check everything to see where it was made. Made in China? Adios!

Now, we are seeing the truth of that. I was right. <<< Obnoxious utterance ALERT!

Allow me to rub your nose in it, may I, please?

Comes now the story of the American dollar store industry in the specific exemplars of Dollar General and Dollar Tree who were literally created by their ability to access low cost foreign made goods and to sell them to a slice of America who not only wants a bargain, but desperately needs one.

These stores are ground zero when it comes to selling foreign sourced goods. They are the canary in the mine shaft. The canary has begun to sing.

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07/28/19

Tech, Taxes, Tariffs, Trade — And French Wine

France has imposed/threatened a “digital services tax” on the likes of Amazon, Apple, Facebook, and Google — all American companies.

The tax is 3% of gross revenues from digital services earned in France, but only for companies with more than 25MM Euros in French revenue and 750MM Euros in worldwide gross revenue. The tax money goes to France.

When you work through the math it puts a bullseye on Amazon, Apple, Facebook, and Google while giving a pass to many European companies who collectively are just as big as these digital behemoths. This is not an accident.

This tax was discussed for some time period, but its enactment caught a lot of folks by surprise. One who was not caught by surprise was President Donald J Trump.

President Trump had spoken to the French President Emmanuel Macron cautioning him that such a tax would be met with an American response.

Image result for images macron

President Trump, in his inimitable fashion said, “Don’t do it because if you do it, I’m going to tax your wine.” Macron blew him off. French wine is a huge industry.

The French Finance Minister, Bruno Le Maire, sniffing at the ruffian DJ Trump, suggested that taxes and tariffs were completely unrelated. Good luck with that, Bruno.

Taxes and tariffs are core elements of trade while technology, digital services are a critical element of American commerce.

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07/16/19

Eyes on China

The US – China relationship was kicked into gear by President Trump on many levels. When he took office, the Chinese had just seized a dozen reefs and atolls in the South China Sea, fortified them, and installed advanced weaponry that could control sea lanes through which 40% of international commerce flowed. Every step of the way, the Chinese lied as to their intentions.

The Chinese said the initial sand reclamation programs were to stabilize the atolls, not to build 12,000 foot long runways capable of receiving or launching every plane in the Chinese military inventory.

President Trump and President-For-Life Xi met face-to-face and our President said things to Xi, things that had been left unsaid for decades.

“Hey, President-For-Life Xi, you Chinese are cheaters in the trade game. You’re stealing our tech, you’re manipulating your currency, and you’re blocking access to your markets to great American companies, all the while enjoying unfettered access to the American market. That isn’t right.”

“So what, Orange Man?” President-For-Life Xi retorted. “What are you going to do about it?”

“I’m going to talk shit at you — something I am very good at. I’m going to give you a chance to negotiate a trade treaty to fix these problems. Then, I am going to slap tariffs on you if we can’t make a deal. You need us a lot more than we need you.”

“Why don’t we negotiate about this, Mr. President Donald J Trump?” President-For-Life Xi asked, hoping the negotiations would be long and the status quo could be maintained. Maybe President-For-Life Xi hoped President Trump would not be re-elected. Who knows?

See the source image

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05/31/19

Mexican Tariffs

We woke up today to find out that Free Range, Free Trading, Fair Trading President Trump had imposed a 5% tariff on Mexican goods imported into the United States that will grow to 25%. We imported almost $400,000,000,000 of Mexican goods into the US in 2018.

Do the math — 5% equals $20,000,000,000 while 25% equals $100,000,000,000 in tariff revenue.

I have one thing to say — “What took you so damn long?”

Related image

I will spare you the factual basis for why the US should punish Mexico other than to say that Mexico is the launching pad for illegal immigration into the United States.

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05/28/19

Tariffs Fallout

Everybody is an expert on tariffs, right? We talked about them when we discussed the Canadian Softwoods Lumber Tariffs and how it worked to American advantage. I’ll put a link at the bottom of this blog post.

Here’s some good news — Fiat Chrysler is going to build one of the largest automobile production facilities in the US joining other foreign manufacturers who are making huge investments in the Carolinas (talking to you, BMW and Mercedes).

This new plant has a price tag of $1.6B and will be accompanied by a $0.9B expansion of an adjoining facility.

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05/15/19

Tariffs — Some Straight Talk

If you read the current drivel on the imposition of tariffs on the Chinese — notorious thieves of intellectual property, currency manipulators, erectors of hurdles to access to their market, a despotic Communist regime — you would think the entire economy is about to explode. Let me give you some facts.

Here’s President Trump putting the squeeze on President-for-Life Xi. Ouch!

Image result for images trump xi

Tariffs are taxes, right, Big Red Car?

Yes, dear reader, a tariff is a tax. The USA depended primarily on tariffs from its formation until the first income tax.

The first income tax imposed in the US was enacted in 1861 — 3% on all incomes over $800. It was rescinded in 1872.

In 1874, the US Congress enacted a flat rate Federal income tax that was promptly found to be unconstitutional by the Supreme Court.

The Sixteenth Amendment to the US Constitution, passed in July 1909, papered over this defect, but it wasn’t ratified until February 1913.

A Federal income tax was enacted immediately after ratification and has been enshrined in the funding of the Federal government since then.

Big takeaway — we didn’t really have an income tax until 1913.

So, we lived on tariffs.

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10/24/18

Canadian Softwood Lumber Tariff Revisited

Canadian Softwood Lumber Tariff — what ever happened?

Big Red Car here on a drippy and rainy gray ATX day. It has been raining for almost a month.

Today, we talk about what really happened by the imposition of the Canadian Softwood Lumber 20.8% tariff back in May 2017.

Of course, the Canadians and the Americans – National Association of Home Builders – immediately began to cry foul predicting that the price of a US home would go up by $9000.

The business press said “Trump is an idiot. This will cause a huge trade war.”

Now, of course, we have some firm evidence as to what did happen. In fact, after hitting a peak of $653 per thousand board feet, the current price of lumber is $313.40/thousand board feet.

That’s right lumber has gone DOWN after the imposition of the tariff. Here is the price of a thousand board feet of lumber from the inception of the tariff until today.

Chart

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06/21/18

China, Tariffs, Trade War

China, tariffs, trade war – hello, America!

Big Red Car here on a gloriously sunny Thursday contemplating recent developments in regard to China, tariffs, and a trade war.

China is a bad actor and has been for years. They have been stealing American technology – both from an espionage perspective and an industrial/commercial perspective – for half a century.

But, it is not just the “big stuff” like software, hardware and military gear.

If you are going to be the King of the Jungle, you have to act like a lion.

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