Well this week’s “huge” news was we signed a “great” trade agreement with the U.K. Except it wasn’t really a comprehensive agreement by any means, and it appeared that Donald was surprised when a reporter pointed out the U.K. doesn’t purchase much (or is it any?) U.S. beef because of the use of hormones. Remember, opening the U.K. beef market was one of the big “gets” for America in the “deal”. Let’s see, what else did we get- hmmm, oh that’s right, tariffs are waived on all those Rolls Royces and other everyday vehicles that normal working class Americans purchase all the time. Actually, the only real success I saw was a handout to Boeing, who really needs one, since they are so incompetent running their own business.
However, it was made apparent in the U.L. announcement that the 10% across the board tariffs are here to stay, which increased our average tariff rate substantially, and represents roughly a $1200/yr tax on all Americans, not evenly distributed of course. So the goal of tariffs is not necessarily to negotiate “great deals” (we’re zero for one now), or to replace the federal income tax (10% across the roughly $3.3 billion in imported goods = $330 billion, which is a nice number but far less than the roughly $2.45 trillion collected in individual income taxes in 2024). It also isn’t going to drive restoring of U.S. manufacturing since any company with a brain isn’t about to make a long term investment based on the on again, off again, now we’re on pause, oh look here’s a new tariff we can do, etc helter skelter implementation of tariffs thus far. Plus, who thinks we’re going to invest in labor intensive industries like toys or apparel for example? That’s why those industries went overseas to begin with. Explain how we’re going to build coffee or banana “factories” in America, since neither item grows here to begin with. Stupid, that’s the answer on tariffs. We have a president who doesn’t understand trade deficits (we don’t “lose” money on every import), lives in an imaginary world where the countries shipping us goods pay the tariffs directly (they don’t) and who doesn’t understand the impact of tariffs is people will buy less of those items, thereby continually reducing the “revenue” aspect of the whole charade. Are there legitimate economic strategies that utilize tariffs? Sure. Is there any real chance that our clown car cabinet of sycophants and our functionally illiterate president will achieve that? Well, accidents do happen but that is about the only way.
So we, the American people will pay higher prices for things from overseas, just because we think the world owes us a premium to trade with us, forgetting all the while that the $ flowing overseas to buy foreign goods have been mostly been used to purchase U.S. debt, financing our continued spending above our means. Is there an end game to this madness? Who knows, the man running this disaster certainly hasn’t expressed a coherent one and I don’t think he can.
But never fear, in true billionaire tone deaf fashion, Donald Trump, Howard Lutnick, Scott Bessent and their merry band of misfits have the answer for your price worries! Silly you America, you don’t really need or want those things anyways. Your kids don’t need dolls, or pencils, and you don’t need any of that cheap lifestyle stuff. Just do without. Now of course, no one said the billionaires are doing without, but don’t worry about that, we’re just talking about you “little” people here. Feel better yet? Isn’t “winning” fun?
June 4 Update
Taco Man is back! In another stroke of pure genius, Trump signed an executive order (who needs legislation?), doubling the steel and aluminum tariffs to 50%. Oh and today is Reminder day, which is the day that all those countries with all those trade deals are supposed to have their “best offers” in, or else we go back to reciprocal tariffs (or maybe some other nonsense who know?). A couple of points: For every steel worker in the U.S., 80 other people work in industries that use steel. I’m sure all of those industries are really looking forward to ANOTHER price increase in a key raw material. Looking at you auto industry. Aluminum is even more ridiculous. We import almost 50% of our aluminum, almost all of it from……wait for it – That’s right Canada! We don’t make more aluminum here because it requires cheap electrical power, usually hydropower, and you can kiss any cheaper electricity goodby in America. The “big, beautiful bill” kills off all the incentives on solar, wind, batteries, etc which have all been providing lower cost electricity than new fossil fuel plants. The solution? Keep running ancient (50 year old) coal fired and oil fired plants that produce the highest cost power and most pollution possible, while we go drill in the arctic wilderness for more oil we don’t need. Brilliant!
A trade deal is imminent with India any moment now. Of course, Trump just threw a huge wringer into that with the whole bashing Apple for making iPhones outside of the U.S. attack. After all, Americans are just itching to pay $3500 (the estimated cost), for a U.S. produced iPhone say 5-10 years from now when all the facilities required to do so can be constructed at billions of dollars. Apple was moving production out of China to India, but Trump threw up all over that idea, so if I’m India, I make that leverage point number one. No iPhone production in India for the U.S., no trade deal. We’ll see. Meanwhile the European Union talks have gotten nowhere, and I’m sure the latest steel barrage has really helped those chances (the tariffs will stifle imports from Europe, making their price for steel go down locally and ours go up). Very helpful. Meanwhile, we’re at it with China again, Trump and others predicting phone calls that won’t happen, while China sits back and prepares for a long battle. They are used to living in pain, Americans can’t stand economic pain for more than about ten minutes so wonder how that will turn out? Notice all the “a phone call is happening with Xi any time now” announcements are all coming from Washington? From China- nothing but crickets. Good luck Donald. I predict few or no trade deals will be announced by the deadline, followed by another spurt of tariff anger and the cold , hard reality that tariff costs will sink into the economy here in the upcoming 3rd quarter. Wall Street keeps shrugging it off, while manufacturing indexes continue to drop, travel is very slow going into summer, food prices are clearly rising regardless of what mister “groceries” says and no gas is NOT $1.99/gallon anywhere. Buckle up America the fun is just getting ready to start. Hope you don’t want any toys for the kids this Christmas.