Quantcast
Connect with us

Mix Trump’s fear and loathing of China with his tariffs and you’ve got a recipe for toxic stew that will kill the economy

Published

on

- Commentary
Thanks for your support!
This article was paid for by reader donations to Raw Story Investigates.
David Cay Johnston
David Cay Johnston

Donald Trump tweeted in May that by imposing a 25% tariff on $250 billion of Chinese goods “China would greatly slow down, and we would automatically speed up!”

But that’s not what’s happening, the Organization for Economic Cooperation and Development (OECD) reported today. Economic growth is easing in developed countries with one big exception – China.

In a report released today, the OECD provided four revealing graphics covering the United States, the 32 OECD countries from New Zealand to Austria, the Euro zone which uses a common currency and China.

Notice that each line ends on the right pointing down except for China, which is trending up.

The blue triangles above indicate the start of clear trends showing either improved economic growth or slowing growth. Triangles without shading indicate trends that are not so clear and may reverse.

ADVERTISEMENT

There are signs aplenty that the American economy is slowing down. In May just 75,000 new jobs were added, bringing the average so far this year down to 164,000 jobs, well below the kind of job growth since the recovery from the Great Recession started in early 2010.

Manufacturing jobs, which Trump said would blossom on his watch, were flat in May. Give that U.S. exports of goods fell by 4.2% in April the outlook for manufacturing jobs this summer is not good.

Don’t expect Trump to speak of this, however, at least not in any logical and structured way. The self-proclaimed “very stable genius” demonstrates again and again that he doesn’t understand economics even though in 1968 Penn gave him a degree in the dismal science.

ADVERTISEMENT

While Trump claims to be a world class expert on tariffs, his own words show he does not even understand the basics. Consider this tweet:

Wrong. Totally, completely, 100% wrong.

Tariffs are paid to Treasury by American companies that import goods, not China.

ADVERTISEMENT

Companies that import Chinese goods must either absorb the cost of the tariffs, which makes them less profitable, or pass the cost on to consumers by raising prices. Guess which option is overwhelmingly more likely.

Raising prices on imported goods to cover the cost of the Trump tariffs means that domestic companies can raise their prices, too. Generally, domestic companies can hike prices up to the level of the imported goods plus tariffs.

That means American consumers pay more even if they buy American made products instead of imports from China.

Companies that import goods from China could move production ere. The problem is that this is not just expensive, and takes time, but the money would be wasted if Trump suddenly ends the tariffs.

ADVERTISEMENT

That is exactly what we say with Trump’s vow to impose a 5% tariff on goods imported from Mexico starting Monday June 10. Trump reversed himself before the Mexican tariffs would have taken effect, claiming he had just made a great deal with Mexico.

Trouble is, Mexico agreed to some Trump demands late last year, as the Trump administration told Congress in December.

The smart money holds that Trump never intended to impose those tariffs, which were part of a ploy to proclaim himself a great negotiator who got Mexico to change its policies.

And the claim by Trump and Pence that they just reached a secret deal with Mexico that will soon become public? The Mexican government says that’s sheer fantasy.

ADVERTISEMENT

TRUMP TAX HIKES

While Trump proclaims himself the greatest ever tax-cutting president his administration has nearly doubled tariffs on imports.

Tariffs are taxes. They function like the retail sales tax added to your purchases at the cash register except that they are invisible to you since no law mandates listing tariffs on receipts. Think of Trump’s tariffs as a stealth tax hike on consumers.

Since the start of the 2019 federal budget year, which began Oct. 1, tariffs totaled just shy of $40 billion, Treasury data shows. That’s almost double the tariffs imposed during the same period three years ago under President Obama.

ADVERTISEMENT

Trump insisted Monday June 10 that he will soon have a great trade deal with China.

“China will, in my opinion, based on a lot of facts and a lot of knowledge, China’s going to make a deal because they’re going to have to make a deal,” Trump told Joe Kernen of CNBC.

Then Trump veered off into nonsense. “If you look at China, China, as great as they are and they are great, they are near the capability of our geniuses in Silicon Valley that walk around in undershirts and they were not $2 billion a piece.”

Even Trump can’t have meant what he said, talking of underwear that costs $2 billion per piece. Let’s hope so.

ADVERTISEMENT

But delusional statements, which I’ve watched Trump make for three decades, permeate much of what he says.

In the past Trump has told lurid tales of imaginary lovers and imaginary executives, as I documented in my biography The Making of Donald Trump. On CNBC Monday Trump called upon his imaginary “they” to invent a conversation with the paramount leader in Beijing:

President Xi, we have a great relationship.

I say, “How is it possible that you got away with this for so long?”

ADVERTISEMENT

And he said, “Because nobody ever asked us to change.”

It’s true.

And they said to me, “We expected that somebody would call and say, ‘You cannot do that.’ Nobody called so we left it.”

And I don’t blame them. We should have been doing the same thing to them. But we didn’t.

ADVERTISEMENT

What’s going on here? Fear. Trump lives in fear. He fears people will see his tax returns and bank records, exposing his claims of being worth billions as pure fantasy. He fears what those around him may say so he makes them sign lifetime nondisclosure agreements.

How fear of China consumes Trump was revealed in a story that did not get much attention in April.

Flying back from China on Air Force One, Trump telephoned former President Jimmy Carter, who in 1979 normalized diplomatic relations with Beijing.

Trump expressed fears about China overtaking the United States as an economic and political power, Carter told his Sunday School class at Maranatha Baptist Church in Plains, Georgia. “China is getting ahead of us,” Carter quoted Trump as saying.

Carter then made an interesting point, noting that the United States has been in wars for all but 16 years since its founding 242 years ago.

Wars are a costly drain on an economy, diverting money that could go to productive civilian use into financing the death and destruction caused by bombs and other weapons. Much of the cost of war is spending overseas rather than at home, exactly what Trump claims is the reason he imposed tariffs on Chinese goods.

Emma Hurt, a reporter for WABE public radio in Atlanta who broke the story, quoted Carter as saying China is not engaged in war anywhere and has not been for decades:

Carter suggested that instead of war, China has been investing in its own infrastructure, mentioning that China has 18,000 miles of high-speed railroad.

“How many miles of high-speed railroad do we have in this country?”

Zero, the congregation answered.

“We have wasted I think $3 trillion,” Carter said of American military spending. “… It’s more than you can imagine. China has not wasted a single penny on war and that’s why they’re ahead of us. In almost every way.

Trump just sent ships and troops to the Middle East in what he said he hopes will not become a war with Iran. That is a reversal of his campaign promise to get America out of Middle East combat.

But, hey, Trump tariffs are sure to make China poor and all that money Trump imagines is flowing into the Treasury Department will pay for any new wars, right?

Only in Donald’s jumbled mind. Meanwhile, hold fast to your wallet if you can because Trump’s tax increases, euphemistically called tariffs, are going to make it thinner.

Report typos and corrections to [email protected].
READ COMMENTS - JOIN THE DISCUSSION
Continue Reading

Breaking Banner

Trump’s fans think he’s a macho he-man — he’s really a moral weakling who preys on women and kids

Published

on

Donald Trump's fans are obsessed with the idea that their hero is the pinnacle of manliness, here to restore the supposed greatness of American masculinity after its alleged assault at the hands of feminism and "political correctness." His fans paint semi-erotic art portraying Trump as handsome and virile, either with a couple of dozen pounds shaved off his waistline or as an over-muscular he-man. They are so sure that Trump radiates a vibrant masculinity that Trump fanboy and convicted criminal Dinesh D'Souza recently posted a picture of Trump sitting next to Canadian Prime Minister Justin Trudeau with the caption, "Masculinity in the twenty first century: which one is YOU?" The implicit assumption was that the orange-tinted primate, hunched over in a poorly-fitted suit was obviously more of a studly macho man than the suave young Canadian.

Continue Reading

2020 Election

Why I’m waging info warfare against the GOP while most Democrats still prefer to ‘go high’ and lose

Published

on

The ground shifted under Democrats during the 2016 election, but many refuse to acknowledge just how, or in what direction. Some are still content to lose close elections gracefully, even when the stakes for American democracy are the highest they have ever been. Others are so bent on proving that their electoral strategy is sound that they refuse to acknowledge Mark Zuckerberg has broken the traditional models of voter persuasion.

Nevertheless, a small group of Democratic operatives is no longer afraid to get their hands dirty. I am one of them.

I never intended to become a political operative. I wasn’t even thinking about the possibility when I set out to affect the 2017 special election for the US Senate in Alabama. I wanted to push back against the social media shenanigans that had helped elect Donald Trump and gather some data on their relative effectiveness because we were debating the impact of these tactics in a total vacuum of hard evidence either way. So when a documentarian recently asked me what it felt like to be a “political operative,” I was momentarily stunned by the realization that I had accidentally carved out a new career in white hat ratf*kery.

Continue Reading
 

Commentary

Trump’s sneak attack on social security — and how the president thinks he can quietly get away with it

Published

on

Donald Trump’s recent budget proposal included billions of dollars in Social Security cuts. The proposed cuts were a huge betrayal of his campaign promise to protect our Social Security system. Fortunately for Social Security’s current and future beneficiaries, he has little chance of getting these cuts past the House of Representatives, which is controlled by Democrats.

Continue Reading
 
 

Copyright © 2019 Raw Story Media, Inc. PO Box 21050, Washington, D.C. 20009 | Masthead | Privacy Policy | For corrections or concerns, please email [email protected]

 ENOUGH IS ENOUGH 

Trump endorses killing journalists, like Washington Post columnist Jamal Khashoggi. Online ad networks are now targeting sites that cover acts of violence against dissidents, LGBTQ people and people of color.

Learn how you can help.
close-link