The big Politico headline early yesterday morning, Trump disputes impact of tariffs on American consumers, but warns China not to retaliate, was instantly controversial on two levels. First... well, just watch the chief Trumpanzee economic advisor, Larry Kudlow, on Fox News Sunday with Chris Wallace, admitting that his boss, Señor Trumpanzee, doesn't know shit from shinola about the impact of the trade war he's waging against China and American consumers and producers.The second part of the Politico headline-- his absurd warning to China about not retaliating-- went down in flames as well. Washington Post: China said it will raise tariffs on $60 billion of U.S. goods effective June 1. That's what happens in a trade war-- tit for tatted everyone suffers as it inevitably escalates. The announcement of the retaliation by China sent world stock markets plummeting. The Dow was almost instantly down 600 points.China is targeting U.S. agriculture, which has already been bearing the brunt of Trump's trade war. China knows that if Trump's support in rural areas starts to dissipate, his reelection bid is over. It's not just farmers in Minnesota, Wisconsin and Iowa who can swing the 2020 election; peanut farmers in Georgia, wheat farmers in Kansas and Nebraska, poultry farmers in North Carolina and Arkansas are getting fed up-- and not seeing any of the financial relief Trump promised months ago.What a terrible day for the news to break that former Illinois congressman, Bobby Schilling (R) is going to run for the open Iowa seat (IA-02) being given up by Democrat Dave Loebsack! "I'm a business man," Schilling said. "I won't make a decision to run unless I'm absolutely sure I can win it. ... I'm 98 percent there." The district, which includes Iowa City, Davenport and Burlington is 60% rural and hurting badly from the Trump trade wars. Obama had won the district twice but Hillary was the completely wrong candidate for the voters there and Trump took it 49.1% to 45.0%. Last year Loebsack was reelected 54.8-42.6% and won the 3 biggest counties in the district-- Scott, Johnson and Clinton-- with margins big enough to overcome big GOP majorities in the small, rural counties-- Wayne, Decatur, Lucas, Keokuk, Mahaska-- counties that are likely to react badly to Republicans next year with Trump on the top of the ticket. These are also exactly the kind of counties that Republican Joni Ernst will be depending on for her Senate race.Meanwhile, it looks like the ignoramus is stumbling into a two-front war. His trade war now is against the whole world-- not Russia, of course. By the end of the week he's expected to announce a 25% tariff against European-made cars, not just exotic brands like Rolls Royce, Porsche, Lamborghini, Bentley, Ferrari, and Bugatti, but also against more commonly U.S.-sold cars by Volkswagen, Mercedes, BMW, Fiat, Volvo, Land Rover, Audi and Jaguar. Our allies--or at least our pre-Trump allies-- in the E.U are putting the finishing touches on a list of American goods to target with retaliatory tariffs, likely designed to hurt Trump politically in red states.Trump's response to China yesterday was to threaten more tariffs. This kind of thing is inevitable when you elect-- or Putin installs-- a dim-witted, unread school yard bully as "president." ZeroHedge:
Trump must be confused about who pays custom duties (or maybe he can't break the news to the deadbeat consumer ahead of an election year), as the US imposes increased tariff rates on Chinese goods. The tax is levied at the time of import and is paid by the American importer of record, and then passed onto consumers.A new report from Oxford Economics, revealed that the 25% tariff rate on $200 billion in goods imports from China would cost the economy $62 billion in economic output by next year, which translates to an equivalent loss of $490 per household.The research firm estimates that a tariff on all imports from China would cost the economy about $100 billion by 2020, which translates to an equivalent loss of $800 per household.The announced tariffs have come at a somewhat inconvenient time for the economy.Economic growth is rapidly decelerating besides Kudlow's bullish propaganda remarks, and the US faces continued headwinds from monetary policy tightening and actual fiscal drag in 2020.Trump has stated that trade wars are "good and easy to win" and believes tariffs are the only solution to force China to make a deal.The effects of the trade war are being felt by industries across the country, from farmers in the Midwest to auto manufacturers in the Rust Belt.Senator Rand Paul told host George Stephanopoulos on Sunday that he's "very concerned" that the trade war will depend and end up hurting consumers, farmers, and manufacturers."I know of a big company that told me that the tax cuts specifically helped them but that the tariffs are almost equal in punishing them," Paul said, referring to the Republican-led tax overhaul passed in 2017. "The farmers in Kentucky are concerned about the tariffs, and I've talked to the administration about this. . . . The longer we're involved in a tariff battle or a trade war, the better chance there is that we could actually enter into a recession because of it."Henry M. Paulson Jr., who was treasury secretary under President George W. Bush, spoke with "Face the Nation" on Sunday and said, "we don't have many good tools" to pressure China into a deal but warned tariffs aren't an ideal choice.
"They're a tax on the American consumer," said Paulson. He added: "Will it hurt us? If this persists too long, it will. There'll be a cost to it."If President Trump ever admitted to his base that they were the ones paying the tariffs, not the Chinese, well, his base would be in an uproar, could jeopardize his 2020 run. So in the meantime, President Trump is keeping the American people content with fake news tweets while slowly pushing out Kudlow to spill the beans.
This is part of the note my financial advisor sent me yesterday evening: "Escalations in trade tensions between the U.S. and China continued to startle the markets. A trade deal was not reached Friday, and as a result, higher tariffs on $200 billion worth of Chinese goods went into effect. As expected, China announced that it will retaliate by raising tariffs on $60 billion of U.S. goods effective June 1... The markets reacted to the continuing uncertainty, and the major indices tumbled Monday on fears that higher tariffs will limit economic and corporate growth. Not only was there disappointment of no deal, but the growing size of potential tariffs appears to have changed the direction of the discussion. The risk that this could be a harbinger of more challenging discussions with Japan and Europe over auto imports increases uncertainty... The next move is likely the official initiation of a 25% tariff on an additional $325 billion of Chinese imports by the U.S., which will likely invite an additional Chinese response and more negative headlines. As a result, the equity markets may see more volatility in the foreseeable future." So... yesterday, the Dow closed down 617 points down. The NASDAQ was down 269.9 points. Watch CNN's take on Trumpanzee's "false economics" and how his trade war is going to hurt Sen. Susan Collins' reelection chances next year:
