The Trouble With Tariffs

I try to read a variety of information sources, but I will be the first to admit that–if it weren’t for my architect husband–Engineering News Record would not be among them. It is a print publication that considers itself “the construction resource,” and focuses on matters like the reason for that Italian bridge collapse and the technology of road paving. These are subjects that fascinate my husband, but usually aren’t among my preoccupations.

However, there is a real virtue to reading such publications for a policy person, because they report on the practical implications of what might otherwise be abstract and ideological policy debates. That is exactly what the most recent issue did in its discussion of Trump’s misbegotten tariffs, in an article titled “Equipment Readies for Tariff Fight.”

As the article reported, “the reality of new surcharges on all sorts of imported materials and finished goods has begun to reverberate through the global supply chain for construction equipment.” And that global supply chain is complicated–something a ham-handed and ill-considered policy can disrupt in unexpected ways and with unanticipated consequences.

The (sobering) points made by the article can be summarized by a quote from a vice-president of the Association of Equipment Manufacturers: “Everyone loses in a global trade war. Tariffs are taxes on American consumers and businesses.”

Major manufacturers have already raised their prices in anticipation of the higher up-front costs of steel and other materials. According to Senator Chuck Grassley, tariffs the administration aimed at imports of automobile components have also hit heavy-duty trucks, buses, construction equipment, agricultural equipment and industrial engines. As those prices increase, they’ll be passed along, so prices paid by consumers will rise. (There has already been a 32% rise in the cost of hot-rolled, coiled steel.)

Some 30% of of the construction equipment manufactured in the U.S. is designated for export, and the imposition of tariffs has “upended” the industry, which had been anticipating a period of strong sales. As a consequence, according to industry spokespersons, manufacturers are likely to shift production to “places like China or Brazil.”

These tariffs and retaliatory tariffs will put U.S. manufacturing at a disadvantage, because dozens of OEM’s have facilities around the world. It will tip the balance and they’ll just move out of the U.S. to make the equipment somewhere else.

The decision whether to shift the locus of manufacturing is only one of the consequences that has yet to be felt; as the article quoted one construction industry representative,

The point about tariffs is the effect doesn’t come the day after, it comes the year after. The economic impact, the loss of jobs, the loss of business in the community–that is a very long-term effect.

There is a reason that opposition to tariffs bridges ideological divides. Both conservatives and liberals recognize the negative effects of these sorts of interventions into complex and interrelated markets. Unfortunately, we have a President whose policies (if they can be dignified by the term) do not rest on any theoretical or philosophical framework. Instead, he acts out of bile and petulance, complicated by utter ignorance of the matters he is disrupting.

The Engineering News Record says these tariffs pose a significant threat to the construction equipment industry’s prosperity. But the damage isn’t limited to the construction equipment industry. Tariffs pose a significant threat to job creation, consumption and general American prosperity–a threat that could have been avoided had we elected someone competent, or even someone who had–and heeded– competent advisors.

 

 

 

23 thoughts on “The Trouble With Tariffs

  1. The Republican members of Congress continue to remain silent about the damage that 45 is doing to our country. They seem to be concerned only with self-preservation as they fear upsetting their rabid right wing base if they were to actually speak out against 45.

    Our country has been handed over to complete idiots and by that I am including the people who voted for 45 and continue to support him. Idiots!

  2. Once again, you cannot introduce logic and critical thinking to an narcissistic megalomaniac.

    He takes action on his thoughts because he honestly believes he’s intellectually superior to everyone.

    Therefore, any thought arising between his ears must be brilliant.

    His comments to soybean farmers is also problematic because he indicated the “government would make them whole.”

    That means losers in his market tariffs will be bailed out by us taxpayers. Not sure but I believe that is another tax against Americans. 😉

    Now we know why his administration is operating a soft coup against Trump. They see it first hand.

    Also, why do capitalists always get bailed out with taxpayer dollars while the GOP cuts taxes on capitalists?

    And, why do we not have enough money for universal healthcare when it actually lowers the government costs of providing healthcare?

    This is not free market capitalism. It’s a bastardized version of Fascism with a twist of Theocracy.

  3. For a real eye opener try this exercise. Look closely at the labels on all of your regular household cleaners such as soaps, shampoos, rinses, detergents, creams etc. Note how none are made in the US. When I recently did this I could find only one soap, a favorite face soap, that was not made in China. That soap was made in the UK. For those living on a fixed income an increase across the board on all of these items will hit hard… very hard. But not to worry, the stock market is doing great.

  4. Todd,

    “This is not free market capitalism. It’s a bastardized version of Fascism with a twist of Theocracy.”

    You’ve got it down to 17 words. Keep working! Ultimately, you will arrive at the real truth; it’s nothing more than FUTURCIDE—- Something worse than GENOCIDE, if that can be imaginable.

  5. Each and every tariff needs to be reduced. I remember when Bush 43 imposed steel import tariffs. He said it was against his ideology to do so. I am sure those in the steel manufacturing sector were happy to see those come, but those using steel we’re certainly upset that they could not get steel at a lower price. What’s really confusing is that so many countries flood our markets to destroy our jobs and kill our factories . It is confusing because it seems like nothing is being made in the US at all. I remember when Walmart touted all of their products are primarily made in the US. Walmart now imports almost all of its products because Wall Street demands it, consumers demand it, and Voters continued to vote in people whose held an ideology that went against the middle class and job protections. When Bill Clinton signed NAFTA I lost it. (When Ronald Reagan cut rid of the civil aeronautics board and the regulations that went with it I knew what was down the pike for so many airline pension holders ). It is more than apparent that we need to keep Trump’s tariffs closely examined. We need to make sure that we ask our Congress to put in advisers to help Mr. Trump’s turn things around in this regard as he tries to bring back jobs, and doesn’t make mistakes as Professor kennedy is noting in certain sectors. He certainly convinced a lot of people to vote for him. Again 2020 is just around the corner and are American jobs on the forefront of the DNCs policies. Is Biden the man, or do we want and need new blood like Booker or someone else. We can’t preach to the choir, we can’t just go thru the motions to destroy but energize Americans to find or vote in the right person to stabilize job loss.

  6. Theresa; the same situation is true regarding almost everything within our homes, our garages and our workplaces, the food we eat and, we are already aware of tariff coverage regarding our vehicles and repair parts which will increase at an advanced rate. The last 2 tomatoes I purchased at Kroger, which did have a small amount of flavor, were grown in Canada. Trump has screwed that up by insulting and fighting with Canada and the UK. It appears this country is exporting not only jobs but what goods we still produce while importing the same items from other countries. Can’t blame all this on Trump; it has gone on for decades but he has raised the action and all costs to ridiculous levels. I am making my grocery list and will head for Kroger this morning with my few coupons and my list; will compare today’s prices with last week’s but will take a closer look at labels.

    Sheila’s mention of “technology of road paving” is an issue I broached to my City Councilor, David Ray, who ignored me totally, has not sent his promised voting record but keeps asking for my vote on Facebook. He will get my vote because he is the Democrat; damn, I hate that. In Warren Township the pot hole problem was basically solved by filling each individual pot hole with tar; the dozens along East 16th Street are ugly and lumpy in addition to the cracks and crevices which are ignored. Leaving Warren Township and driving south on Franklin Road south of Washington Street, you find sections of the road carefully, smoothly and competently patched in neatly marked off sections, making for a smooth drive…a sign of actual “technology” being used in Franklin Township.

  7. I’m sure Mr. Putin smiles every morning when he reads the latest tweets from our “very stable genius.”

    Marv,

    Futurecide is what you get when you continuously ignore science. It does, indeed, seem we are headed that direction.

    VOTE BLUE

  8. Yet another indictment against an administration and a pathetic wretch of a president… YET! And yet, Chuck Grassley has turned the Kavanaugh hearings into a partisan circus, and is dutifully steering it to accepting this deeply flawed nominee into SCOTUS. One might recall that the Troll of the Senate, Mitch McConnell, repeatedly advised Trump to not nominate Kavanaugh. Oh. Right. This creep thinks the President is above the law. This is YET another indication that this president knows he’s committed countless crimes and thinks he can get away with them like the career criminal he is.

    Tariffs? The same wrong-headedness that has run Trump’s ridiculous life is now tearing our nation and the world’s economy apart. How can Republicans just sit there and not act to throttle this damned fool? Are their constituents that stupid? Are THEY that stupid that they can’t educate them about the realities? I guess so. Maybe that’s why this degree of partisanship is so deep and wide; politicians are so busy coddling donors instead of representing their voters, that the country is teetering on the precipice to failure. I guess these guys are all that the donor class is willing to spend to own the government. You get what you pay for still applies.

    As Todd and Marc have stated, this galloping fascism in the White House and on the what-used-to-be conservative right is aiding and abetting a destructive, mindless fool who has been off the rails for a long time. The tariffs are just another symptom of a flailing amateur doing all the wrong things.

  9. Vernon,

    What alarms me the most is that the Grassleys in the government fail to see that in order to govern they NEED the trust of the governed. With this latest display of extreme partisanship in the Kavanaugh hearings the people plainly see that the hearing was unfair and the fix was in. What happens the first time this new court hands down a right wing ruling that destroys what was thought to be settled law? What happens when all trust in the government is gone?

    Those of us who study history know what is coming…. and it ain’t pretty.

  10. Peggy,

    “Marv,

    Futurecide is what you get when you continuously ignore science. It does, indeed, seem we are headed that direction.

    VOTE BLUE”

    VOTE BLUE! Prevent FUTURECIDE! [We have around 60 days, for the FUTURECIDE PROJECT to prove it SCIENTIFICALLY]

  11. Theresa,

    You are correct. I’m hoping that these Constitution-shattering events happen after I’m dead. Add to this debacle, the packing of the appellate courts with right-wing ideologues by the McConnell Senate and HIS rubber stamp, Trump. The Federal bench will be a conduit to SCOTUS to overturn so many people-oriented laws.

    Sickening.

  12. I grew up in the South Chicago and witnessed the gutting of our industrial base there. Figuratively, it was as destructive as an actual bombing campaign. We bombed ourselves in this case – friendly fire so to speak. Very little was written or aired on TV by the McMega-Media about the families who suffered from this destruction.

    I voted for Ross Perot in 1992.
    Perot said: In the second 1992 Presidential Debate, Ross Perot argued:

    We have got to stop sending jobs overseas. It’s pretty simple: If you’re paying $12, $13, $14 an hour for factory workers and you can move your factory South of the border, pay a dollar an hour for labor,…have no health care—that’s the most expensive single element in making a car— have no environmental controls, no pollution controls and no retirement, and you don’t care about anything but making money, there will be a giant sucking sound going south.
    …when [Mexico’s] jobs come up from a dollar an hour to six dollars an hour, and ours go down to six dollars an hour, and then it’s leveled again. But in the meantime, you’ve wrecked the country with these kinds of deals.

    Perot ultimately lost the election, and the winner, Bill Clinton, supported NAFTA, which went into effect on January 1, 1994.
    *******************************
    Ross Perot was correct, not only on NAFTA, but we also heard the “sucking sound” of jobs going overseas, especially to China. Trade has always been a complex issue. It does seem for a certainty though the American Worker has always been at the bottom, neither political party has demonstrated a willingness to protect us from Steroid Capitalism.

  13. Marv, I like the term futurcide because it’s at the bottom of what’s at risk. Unless it can be successfully halted that’s exactly the problem we will be facing; we’ll be at odds with the reality that we live within. Another name for futurcide is extinction, what reality does to species and cultures unable to adapt to it.

    Just one example is the belief that the US somehow can avoid the reality of world markets. That’s crazy talk and it’s coming from those who are responsible to maintain a country with systems and infrastructure that bolster our business competitiveness within the world.

    I still remember the days following the 2016 election when the mood of the country was that there is simply no way for this travesty to work. If anything we underestimated the level of corruption and incompetence we would be dealing with as a result of Trump’s Cabinet Selections and now Justice nominations. And we didn’t yet know that the cancer was incorrigable, simply unable to learn from their mistakes.

    I think also that those who voted the problem in thought then that well, the GOP will babysit our mistake and prevent any real lasting damage. Hello, is anyone home at the RNC?

    We have November 6 and we have Mueller standing between us and the abyss. We simply cannot afford failure.

  14. imagine the small welding shop, a your local steel supply, machine shop, having to deal with what ever thier suppliers decide,and will supply thier market… unknown ,also, did the supplier have a contract,with the wholesale,or,main supply chain,and is commited to buying,a higher priced steel? as i seen this,and work with it in my side line… but,be aware,no one mentioned that most every steel mill in America was already at 95% capacity before trump went off the rail. also, the main reason why,steel mills closed,were,the foreign steel trade,and unions.. no slant,fact,the corps like u,s, steel deliberately ran those mills into the ground to shut them down, push the unions out. new and better tech was already being used to process steel cheaper, and they delibertly ignored it..this was prevalent across the socalled rust belt,at the time i was hauling steel between milwaukee to buffalo,n.y. and l.a. to bay area calif. trumps buisness mind might be great for his failing empire, but it damn sure isnt helping the American worker,.. NPR today, they allowed wells fargo to spew a congradilitory pat on our back for the 2.9% higher wages against a year ago.. where the hell does a bank have the right to pat anything on the back with such weak growth…. seems the congressionial hearings on scotus nom, has its day, Cory Booker said he was releasing a conf memo, sounds like to me some backbone is present,and being done.. i feel, this whole mandate by republicans is just a testamonial to giving corprate america the whole country,and its profits. maybe we should demand a real conversation with these minions of slavery,to tell us once and for all thier plan and be done with it… trumps is fargo today, my FK TRUMP lic plate is in full view…

  15. “Unfortunately, we have a President whose policies (if they can be dignified by the term) do not rest on any theoretical or philosophical framework.”

    Is Trump even aware of the concept of frameworks? If so, he very cleverly conceals it. In some ways Trumpism is a form of violent anti-intellectualism. He’s attempting to prove that “knowing” in the sense of having acquired knowledge, is not necessary to perform the most difficult job in the world, and he has convinced 44% of the electorate (largely those who share his rejection of knowledge as something worth possessing) that he has made his case. Trump’s deep ignorance is less disturbing than his attitude that “my gut tells me everything I need to know” and his utter lack of interest in subjects that might inform his policy decisions. He has chosen to dominate through physical and verbal bullying rather than through intellectual power. Maybe that was the only option open to him.

    Anonymous, what ever his/her position or personal qualities, has proven him/her/self a master of understatement in assessing Trump’s danger to America. Rubio and Cruz and the servile sycophants that make up the Republican Senate caucus can talk for hours about DJT’s “successes.” One wonders (if only a little) if they would, given the same facts and under similar circumstances, make those same comments about a Democratic president. If but a single servile sycophant decides to defend America against the dangers Trump poses, this house of cards will come crashing down with a louder thud than an Italian bridge. Not all Republicans are permanently obsequious. One of these days a patriotic Republican Senator is bound to speak out about his loathing for the orange obscenity. And he won’t do so anonymously.

  16. I have written several blogs on Trump’s tariff games and have (ahem!) designated him as the tariff sheriff. I will not go on the costs and market distortions arguments here but will note an area not discussed in this tariff war where Trump only acts via delegated powers (since the Constitution gives all trade powers to the Congress). My point is that Trump thinks that with ,a huge import market he can dictate his trade bullying via tariffs. Wrong. He can only control tariffs begun here; he has no power over the choices our trading partners make, and they can and have chosen to counter-tariff in sensitive domestic industries here (see soy beans, motorcycles etc.) to maximize their counter-clout. In order to protect such counter tariff-harassed industries, Trump now proposes to make welfare cases out of their production via raising our taxes to subsidize their industries (which were doing well with the market as is), so this is actually an authoritarian act in disguise since Trump can adjust the subsidy to fit his whim down the road, which hardly fits the pretended Republican claim to be for free trade in market economies.

  17. Terry,

    Well said, and spot on. But don’t hold your breath. The Republican bench is very short and even shorter on true patriots.

  18. Perhaps those that actually argue in favor of tariffs should find a history book or hit the Wiki and read about the Tariff Act of 1930, commonly referred to as the Smoot-Hawley Act, which made the Great Depression infinitely worse in this country and made things also infinitely worse in Europe. That mistake led to out of control inflation, economic collapse, and ultimately the rise of fascism in Europe (Hitler and National Socialism) that led to the Second World War and death and destruction on a cataclysmic level. I don’t think anyone really needs to look much further than that to see just how dangerous tariffs can be and what their possible impact can be and if we really want to commit what Marv refers to as futuricide I can’t think of a better way of accomplishing exactly that.

    Free trade is an essential ingredient in the management of the global economy and the global order which we all benefit from. For us to start anything that is contrary to that would be sheer stupidity, today just as it was during the Hoover Administration. This, just like all the other maniacal rantings of the goofball in chief, needs to be disregarded as so many other things that he either says or suggests also should be.

    Who knows, perhaps he thinks that Bretton Woods is a camping facility.

  19. Peggy, Peter, and Tom,

    FUTURCIDE is meant to be more than a term, for me it represents a DAMNING DIAGNOSIS of the present state of the BODY POLITIC here in the U.S. based on my TRACKING, at its deepest level, since 1967. FUTURCIDE is not based on conjecture, but hard EVIDENCE based on the constant collecting of STRATEGIC or WARNING INTELLIGENCE.

    FUTURCIDE, like GENOCIDE and DEMOCRACIDE, a term which I first coined in 1992, all involve mass, Nazi-like, racial hatred, caused by a MIND VIRUS, which has now spread with the help of the INTERNET from being an EPIDEMIC in the U.S. to a world-wide PANDEMIC.

    Consequently, the whole PLANET is now at risk.

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