The Case For Trump's Tariffs

Seeking Alpha ^ | 01/13/2025 | Wall Street Breakfast

[SeekAndFind]

Tariff talk

It's just a week away before President-elect Trump takes office, and many investors are talking about the policies that will be enacted under the new administration. The most controversial economic approach has clearly been tariffs, which may be leveled against China, Canada, Mexico, the EU, or other blocs and nations. Here's a rundown of what Team Trump is looking to get out of tariffs, and why they might be the best tool or bargaining chip to deal with everything from manufacturing and trade to the fiscal deficit. Agree? Disagree? Comment here.

Treasury Secretary Scott Bessent: "The truth is that tariffs have a long and storied history as both a revenue-raising tool and a way of protecting strategically important industries in the U.S. President-elect Trump has added a third leg to the stool: tariffs as a negotiating tool with our trading partners. Our size gives us market power and the ability to dictate terms - other countries need us more than we need them. We have but to use that power."

Commerce Secretary Howard Lutnick: "When you're running for office, you make broad statements so that people will understand you. Tariffs are an amazing tool for President Trump to use, and he understands 'don't tariff stuff we don't make' and 'Build In America.' We can't sell a Ford (F) or GM (GM) in Europe because there are 100% tariffs. In Japan, [also] 100% tariffs [stemming from the Marshall plan]. How about we say, 'we are going to tariff you like you are going to tariff us.' Of course, they're going to come in and negotiate, and their tariffs are going to come down."

U.S. Trade Representative Jamieson Greer: "Tariffs can help support U.S. manufacturing jobs in particular, especially to the extent that they're remediating an unfair trade practice.

[SeekAndFind]

White House Senior Trade Counselor Peter Navarro:

"We put on significant tariffs on China, steel, aluminum, dishwashers, solar, a lot of increased countervailing duties to stop the dumping [in Trump's first administration]. We had zero inflation from any of that. It never happened, and it's the same movie this time. Inflation is a monetary phenomenon, where we run a Federal Reserve that prints too much money, and they do that to accommodate fiscal irresponsibility."

National Economic Council Chair Kevin Hassett:

"If you look at the Republican platform, the first listed trade policy is the Reciprocal Trade Act, which takes U.S. tariffs to the levels that our trading partners charge us... What happens to inflation? Well, what's the next best supplier? What's the cost ratio between them? And if we bring new stuff to the U.S., what's the marginal effect of the marginal cost? Don't forget that the tariff affects the price level when it goes in, not the long-run inflation rate... Basically, it's a level adjustment."

[Fai Mao]

China is beginning to hit rt economically.

There are reports beginning to surface that they’ve been inflating the population and it is actually about 850,000,000 not 1.4 Billion. That has a huge effect on real estate and labor prices.

They also have a quiet, passive-aggressive protest by many of the younger workers who are refusing to work 90 hours a week.

[DIRTYSECRET]

My idea: Our country should not have more than a 10% trade deficit with any country. Make them write out a check for the difference.

[vmpolesov]

hit `em hard

ignore the egghead econ types.

[Brian Griffin]

I’m in favor of tariffs to help financially balance trade initially, then domestic production requirements and a blocked currency.

The tariffs might be based on:
1. product necessity [0% (drug, raw material, industrial level component of product with no domestic source) total, or 10%],
2. industry wage differential [0-20%, 2% per dollar, as estimated by Secretary of Commerce, levied if country not poor],
3. latest 12-month cash flow imbalance computation [by percent, 0-10% all country, 0-20% source country industrialized],
4. 12-month exchange rate change [proportional to 10%, up to 10% reduction, but to not less than 10% tariff],
5. domestic producer profitability [percentage less than 10%; excess above 10%, up to 5% reduction, but to not less than 10% tariff], and
6. trade imbalance [0-20%] with a country.

The most important reform is a blocked currency like India has. The Chinese stuff would get paid for by US dollars that would be lent to the federal government at 0% interest until the Chinese use those dollars to pay American workers or buy American goods.