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Jun 142018
 

Trump is outdoing himself in stupidity by starting a trade war with the strongest allies of the US. He imposed unilateral tariffs on steel and aluminium (supposedly to protect US workers although it won’t do that), and acts surprised when allies respond with tariffs of their own.

Which is a bit like a child being surprised when they throw a ball in the air and it falls back on their head.

So what effect will the tariffs on steel and aluminium have? For a start, the US producers of steel and aluminium are not going to suddenly pick up the slack – the US imports in the region of $2 billion worth of steel products per month, and whilst US steel manufacturers can increase production it won’t be able to increase it that quickly.

So the US will continue to import foreign steel, but importers will pay more for it. That means the goods produced by imported steel will cost more. Consumers will pay more for those goods or switch to foreign producers who produce it cheaper (the later will cost US jobs).

So Trump has chosen to implement tariffs that will harm the US.

And assumed that those countries Trump has imposed tariffs on will meekly accept their punishment; which obviously hasn’t happened..

The EU has imposed retaliatory tariffs on motorcycles, cranberry juice, denim, peanut butter, and cigarettes. Notice something interesting about those products? They are all finished products with easily sourced alternative suppliers, or luxury goods that aren’t necessary.

In other words the EU tariffs are going to have a minimal impact on the EU economy.

So Trump will blame the damage to the US economy on his own trade war, and point to the lack of damage to the EU’s economy as ‘evidence’.

Expect more temper tantrum Trump ‘policies’ shortly.

 

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