I do not have an MBA, but having gone to school on a math scholarship, I cannot let the “business argument” about the effectiveness of tariffs go uncontested. Like gravity to physics, mathematics has basic laws. The simple mathematical reality for the U.S. economy is that all tariffs, at any time and in any country, will inhibit economic growth, eliminate net jobs, and reduce the standard of living for the protectionist country, because they generate additional costs to consumers that outweigh the benefits to producers. Thousands of years of recorded history show this tactic to be offensively ineffective, but almost unilaterally detrimental. Nowadays, as a defensive tool, it’s a great bargaining chip, because if implemented it represents a no-win scenario. Enactment basically announces, “I may not win, but make me go this way and I’m not losing alone.”
International organizations have been created to improve free trade, which at this point only adds an additional layer of bureaucracy to the mix, making it more difficult for a country to levy tariffs and taxes on imported goods, but hopefully reducing the likelihood of retaliatory taxes. However, when you’re talking about the two biggest economies on the planet, both with leaders hell-bent on impressing their public, it becomes a difficult challenge to keep one or both off the soapbox long enough to make realistic accomplishments. Other countries, for the most part, resort to the more popular use of non-tariff barriers, such as quotas and export restraints. But President Trump has doubled down on his global, chest pounding presentation, stating to French President Emmanuel Macron that he wants to, “maintain his trade policy until no Mercedes models rolled on Fifth Avenue in New York.”
Non-partisan economists, global business leaders and international allies have vociferously condemned the tariff implementation, as well as the Trump Administration’s general trade isolation policy. At a time when the world legitimately needs to come together more than ever, American citizens are hearing that like the Paris Accord and Iran Nuclear Deal before, the Trump Administration has NAFTA ready to join the scrap heap. Even House Speaker and reluctant Trump critic Paul Ryan wrote, “I disagree with this decision…Instead of addressing the real problems in the international trade of these products, today’s actions target American allies when we should be working with them to address the unfair trading practices of countries like China. There are better ways to help American workers and consumers. I intend to keep working with the President on those better options.”
As a result of recent Trump Administration decisions, imported steel and aluminum products will increase. The White House claims that the uptick will be “negligible.” Business experts predict that hundreds of thousands of jobs will be cut in industries that rely on imported steel and aluminum alone. About 50% of imported steel and aluminum come from Canada and they were not prepared to fill the void created. Canada is retaliating with $12.8 billion in tariffs on American steel, orange juice, aluminum, whiskey and other products, representing the “strongest trade action Canada has taken in the post-war era,” according to Chrystia Freeland, Canadian Minister of Foreign Affairs. Sounds like it’s time to duck and cover with the world’s greatest economic hedge, GOLD! Call American Bullion now, at (800) 563-GOLD (4653), to protect your portfolio, retirement, and legacy. Today’s support-level prices are just another bonus.