The following comments regarding Trump's tariffs were excerpted from an AP article published on Oct. 27, 2020.
Although the situation is different this time, historical information is useful in providing some context.
Please limit comments to how tariffs may impact the economy or investing.
This thread is not intended for political diatribes - please use Off Topic for that. "Trump set his sights on shrinking America’s vast trade deficits, portraying them as evidence
of economic weakness, misbegotten deals and abusive practices committed by other countries.
He pledged to boost exports and to curb imports by imposing tariffs — import taxes — on many foreign goods.""America’s deficit in goods and services now exceeds what it was under President Barack Obama.
Steel and aluminum makers have cut jobs despite Trump’s protectionist policies on their behalf.
His deals made scarcely a ripple in a $20 trillion economy.
For most Americans, Trump’s drastic trade policy ultimately meant little, good or bad, for their financial health.""Yet the belligerent approach has made scant difference in the number he cares about most:
The overall trade deficit in goods and services.
It barely dipped last year — by 0.5% to $577 billion, still higher than in any year of the Obama administration.
This year, the gap has widened nearly 6%, with the coronavirus pandemic having crushed tourism, education
and other service 'exports.'”"Contrary to his assertions, too, Trump’s tariffs have been paid by American importers, not foreign countries.
And their cost is typically passed on to consumers in the form of higher prices.
Researchers from the Federal Reserve Bank of New York and Princeton and Columbia universities
have estimated that the president’s tariffs cost $831 per U.S. household annually."“His administration’s approach has delivered few tangible benefits to the U.S. economy while undercutting
the multilateral trading system, disrupting long-standing alliances with U.S. trading partners
and fomenting uncertainty, said Eswar Prasad, a Cornell University economist who formerly
led the International Monetary Fund’s China division."https://apnews.com/article/donald-trump-virus-outbreak-global-trade-trade-policy-mexico-39aadae9a6d18de2b91889f1e552b605
Comments
This belongs in the Off Topic one. It's obviously a political one.
Can you show me the high correlation between this article and our portfolios?
As stated in the OP, the thread was created to discuss how tariffs may impact investing or the economy.
It is perfectly acceptable to include this thread in the Other Investing
forum so long as overt political commentary is avoided.
Tariffs will have economic repercussions regardless if some individuals refuse to acknowledge this fact.
And if you don't like it, too damn bad.
I posted several times today on a parallel, appropriately placed tariff thread, about the significant impact his asinine tariff strategy has had on my investment strategy and thinking, and cited it as THEE reason I broke a golden rule of portfolio strategy.
So there's that.
On a macro level, anyone not understanding how tariffs may impact investing or the economy, or how tariffs, you know, have been THEE biggest market mover since he started spewing about them months ago, probably shouldn't be taken seriously on an investment forum.
"President Trump’s plans to impose 25% tariffs on imported vehicles will hike the average price of cars by as little as $5,000 and as much as $10,000 to $15,000, Wedbush analysts say in a research note. The analysts say the tariffs will wreak havoc on auto supply chains, since even automakers that make cars in the U.S. source around half of their parts from abroad. That means it will take around three years to move 10% of the auto supply chain to the U.S., costing hundreds of billions that will be passed directly to the consumer and push down demand, the analysts say."
"European equity prices have not fully priced in the risk of tariffs escalation and they therefore risk falling further, UBS strategists say in a note. Stocks in sectors likely to be impacted by tariffs could decline by a further 10% as earnings outlooks are revised lower, the strategists say. 'A lot of this will depend on the price elasticity of demand given the most sensitive stocks tend to be in areas with lower competition.' These include pharmaceuticals and higher-end consumer sectors such as luxury and high-end vehicles, UBS says."
https://www.foxnews.com/video/6370809982112
Time will tell if he has truly delivered "common sense."
University of London trade economist Ha-Joon Chang
"It is going to take a lot of time, and you don't have that time. You have run down the industrial base over the last four decades. It cannot be built up in two years or whatever tariff policies that you have. In the meantime, things will be very expensive, especially if you are putting tariffs on the main trading partners like Mexico and Canada.
And can people tolerate any more inflation?"
Harvard Business School, Professor Willy Shih
"Let's say you wanted offshore production from the U.S. to China. You had to set up a new factory. You had to hire the work force. You had to train the work force. You had to bring in suppliers. You had to set up your logistics. And what paid for that was, you got lower cost of product."
"That's going from a high-cost country to a low-cost country. Now, if you want to bring stuff from a low-cost country to a high-cost country, and you have to set up a factory and you have to hire the work force, and you have to train the work force and bring in your suppliers, what's going to pay for it? Your product cost is going to be higher."
Robert Zoellick, U.S. trade representative under George W. Bush, economic adviser under Bush I
"So, the problem with Trump's approach is, it combines incoherence and protectionism. And you have to look at both parts. So the protectionism will add costs. And then you also have the retaliation."
"We tried this in the 1930s. We raised tariffs to an average of 59 percent, and other people hit back. We had a trade surplus, but we also had unemployment at 25 percent. So it's a policy that reverses 70 years of America's international economic leadership."
https://www.pbs.org/newshour/show/examining-trumps-claims-that-tariffs-will-revitalize-american-manufacturing
Or do still you have your nose stuck too far somewhere to see anything clearly?
In all seriousness, I'm hereby nominating your questions/post on this thread as the dumbest investment/economy post I've ever read. And I do mean ever.
Surprise, all your rude assessments have been wrong, way wrong.
The board has been discussing tariffs since 2018. YTD, we have seen hundreds of posts about tariffs. Most of these posts were political and rude ones; even Dems on the board admit it.
For years, nothing happened. I just proved no high correlation for years and why these threads should be on the OP board.
Sure, it finally happened this week.
"The scope, speed and magnitude of the Trump administration’s tariff blitz left investors with a lot of questions.
But one point came through crystal clear: The post–World War II global world economic order is no longer."
"That is forcing a reassessment by countries on how to respond and pushing investors to reassess long-held assumptions about profit margins, investments, and inflation."
https://www.msn.com/en-us/money/economy/why-the-tariff-damage-can-t-be-undone/ar-AA1CgMzM
Tariffs have always and will always have a direct effect on national and world economies. And, taking it slow here, national and world economies have a direct effect on world financial markets. (Links supporting these facts below.)
If they are significant enough, or if they are so insanely ridiculous that it appears they were pulled out of a punch bowl, they will have a HUGE effect on world stock, bond and FX markets. (See US & world market activity, 04/03/25-Current.)
https://pmc.ncbi.nlm.nih.gov/articles/PMC7255316/
Excerpt:
The findings suggest that tariffs have a detrimental effect on output, with the negative effect larger for higher tariff increases and persisting over time, at least over the next four years or so. The residualized growth tends to be in negative territory in all four years following an increase in protectionism. For example, after the second year, the residualized output growth is −0.4/−0.8 for one/three standard deviation(s) increases in tariffs, respectively. After four years, tariff increases are associated with an annual negative output growth of 1.5 percent when tariff increase is above three standard deviations.
https://www.epi.org/publication/tariffs-everything-you-need-to-know-but-were-afraid-to-ask/
Excerpt:
These uses are not trivial: Tariffs are absolutely a key tool of smart industrial and trade policy. But on their own, tariffs cannot and should not be the centerpiece of a national economic strategy. Doing so would represent a gross overuse of a tool for a task it’s not suited for and would cause damage to the wider economy.
Reducing damaging trade deficits cannot be achieved solely through trade policy—except in the extreme case where trade policy measures are so severe that they essentially shut down all international trade, which would cause radical disruption to the U.S. economy. Instead, more balanced trade will only result from macroeconomic policies that are consistent with lower trade deficits—including exchange rate management to realign an overvalued U.S. dollar and a reasonable mix of fiscal and monetary policies.
https://www.oxfordeconomics.com/resource/tariffs-101-what-are-they-and-how-do-they-work/
Pretty basic stuff for anyone who has ever extended their financial knowledge base as far as Econ 101.
https://open.substack.com/pub/paulkrugman/p/a-primer-on-trade-wars?r=tcpky&utm_medium=ios
President Reagan's short radio broadcast speech from 1987, regarding the major problems with tariffs. This is 2 minutes, of the 5 minute speech. Select CC for larger text, for those who are hearing impaired.
LINK HERE.
Wayback: In 1987, Ronald Reagan Spoke About Tariffs, Too
Comment: "inefficiency and poor management"- the hallmark of the Trump kingdom.
Thanks for sharing!
By the way, Copper River king and sockeye salmon is highly sought after and is reputed to be very delicious.
On Sunday, Mr. Ackman recommended a 90-day pause on the implementation of tariffs.
https://x.com/BillAckman/status/1908992002366292286
https://x.com/BillAckman/status/1909023242536570991