Glad I Didn’t Say That! The Epic Fail of Tariff Fear-Mongering

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aluminum, China, consumer price index, consumers, core inflation, Glad I Didn't Say That!, inflation, manufacturing, metals, metals-using industries, Producer Price Index, steel, tariffs, Trade, trade war, Trump

“Trump’s trade war may soon hit consumers’ wallets and paychecks.”

–NBC News, July 18, 2018

“Tariffs will surely lead to higher prices for imported goods and, to a lesser extent, prices for non-imported goods that use imported materials.”

–Wharton School of Business, University of Pennsylvania, July 18, 2018

“Tariffs are about to hit consumers, and it won’t be pretty.”

–CNBC, July 25, 2018

“Trade restrictions, by their nature, result in price increases for the goods in question. If the price of steel and aluminum goes up, manufacturers will be forced to pass those costs onto American consumers.”

–The Heritage Foundation, March 2, 2018

U.S. core consumer price* index year on year, November: +0.1 percent

U.S. core producer price index** year on year, November: +0.5 percent

*commodities less food and energy

**final demand goods less food and energy

(Sources: “Trump’s trade war may soon hit consumers’ wallets and paychecks,” by Ben Popken, NBC News, July 18, 2018, https://www.nbcnews.com/business/economy/trump-s-trade-war-may-soon-impact-consumers-wallets-paychecks-n890576: “Tariff Troubles: Will Consumers Feel the Pinch?” Public Policy, Knowledge@Wharton, Wharton School of Business, University of Pennsylvania, July 30, 2018, https://knowledge.wharton.upenn.edu/article/trumps-tariffs-will-impact-average-consumer/; “Tariffs are about to hit consumers, and it won’t be pretty,” by Jeff Cox, CNBC, July 25, 2018, https://www.cnbc.com/2018/07/25/tariffs-are-about-to-hit-consumers-and-it-wont-be-pretty.html; “3 Reasons Why Trump’s Tariffs Would Hurt American Workers,” by Tori K. Smith and Jay Van Andel, Commentary, The Heritage Foundation, March 2, 2018, https://www.heritage.org/trade/commentary/3-reasons-why-trumps-tariffs-would-hurt-american-workers. All compiled in “Christmas Miracle: Rising Wages and Low Inflation Promise a Very Merry Holiday Season,” by John Carney, Breitbart.com, December 11, 2018, https://www.breitbart.com/economy/2019/12/11/low-inflation-christmas/. “Consumer Price Index – November 2019, USDL-19-2144, News Release, Bureau of Labor Statistics, U.S. Department of Labor, December 11, 2018, https://www.bls.gov/news.release/pdf/cpi.pdf; and “Producer Price Indexes – November, 2019, USDL 19-2146, News Release, Bureau of Labor Statistics, U.S. Department of Labor, December 12, 2018, https://www.bls.gov/news.release/pdf/ppi.pdf)

Glad I Didn’t Say That! Politico Shoots Itself in the Foot on Foreign Meddling

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Democrats, election 2016, election interference, Glad I Didn't Say That!, Mainstream Media, MSM, Politico, Trump, Ukraine

“…acting White House chief of staff Mick Mulvaney told reporters the U.S. aid was withheld at least in part because of a request to have Ukraine investigate unfounded allegations that foreign countries assisted Democrats in the 2016 election.”

–Politico, October 17, 2019

“Ukrainian government officials tried to help Hillary Clinton and undermine Trump by publicly questioning his fitness for office. They also disseminated documents implicating a top Trump aide in corruption and suggested they were investigating the matter, only to back away after the election. And they helped Clinton’s allies research damaging information on Trump and his advisers, a Politico investigation found.”

– Politico, January 11, 2017

 

(Sources: “Mulvaney acknowledges Ukraine aid was withheld to boost political probe,” by Quint Forgey, Politico, October 17, 2019, https://www.politico.com/news/2019/10/17/mulvaney-confirms-ukraine-aid-2016-probe-050156 and “Ukrainian efforts to sabotage Trump backfire,” by Kenneth P. Vogel and David Stern, Ibid., https://www.politico.com/story/2017/01/ukraine-sabotage-trump-backfire-233446)

Glad I Didn’t Say That: Intel Struggling to Handle the Truth on the Trade War

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China, Glad I Didn't Say That!, global value chains, Intel, manufacturing, semiconductors, sourcing, supply chain, tariffs, tech, trade war, Trump

“Intel Corp. is reviewing its global supply chain amid the growing trade war between the U.S. and China, Chief Executive Officer Bob Swan said.”

–Bloomberg.com, June 16, 2019 

“‘Intel doesn’t believe tariffs are an ‘effective way to drive global trade,’ Swan said.”

– Bloomberg.com, June 16, 2019

 

(Source: “Trade War Has Intel Reviewing Global Supply Chain, CEO Says,” by Gwen Ackerman, Bloomberg.com, June 16, 2019, https://www.bloomberg.com/news/articles/2019-06-16/trade-war-has-intel-reviewing-global-supply-chain-ceo-says )

Glad I Didn’t Say That! The IMF’s Muddled Message on Trade and Productivity Growth

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Christine LaGarde, Glad I Didn't Say That!, globalization, IMF, International Monetary Fund, productivity, tariffs, Trade

“[S]ince the mid-1990s….declining tariffs have lifted [worldwide] productivity ….”

–International Monetary Fund, April, 2019

“Over the past decade, there have been sharp slowdowns in [worldwide] measured output per worker and total factor productivity….Even before the global financial crisis, productivity growth was slowing in many advanced economies, such as the United States….”

– International Monetary Fund Managing Director Christine LaGarde, April 3, 2017

 

(Sources Chapter 4, “The Drivers of Bilateral Trade and the Spillovers from Tariffs,” p. 103, World Economic Outlook, April, 2019, International Monetary Fund, https://www.imf.org/en/Publications/WEO/Issues/2019/03/28/world-economic-outlook-april-2019#Chapter%204 and “Reinvigorating Productivity Growth,” by Christine Lagarde, Managing Director, International Monetary Fund, American Enterprise Institute, April 3, 2017, https://www.imf.org/en/News/Articles/2017/04/03/sp040317-reinvigorating-productivity-growth )

 

(What’s Left of) Our Economy: Bullish Signals from Manufacturing About the U.S. Economy

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machine tools, manufacturing, Trade, Trump, {What's Left of) Our Economy

U.S. machine tool orders – for anyone who’s not a manufacturing junkie, could anything sound more boring? And yet, because machine tools of various kinds are what manufacturers use to make a wide range of industrial products, their sales are a key indicator of the sector’s health, and especially its future prospects. After all, if manufacturing companies aren’t feeling optimistic about their businesses, they’re not likely to be ordering many of these generally expensive devices, either to replace worn out equipment or add capacity. If orders are rising strongly, that’s strong evidence that industrial production is likely to strengthen or at least remain strong.

And even if you don’t care much about manufacturing, machine tool orders data speak volumes about whether the economy as a whole is thriving or not – a subject that’s attracted unusual attention lately because the current American recovery has lasted so long, and because some recent statistics are pointing to a growth slowdown – or worse. More specifically, these statistics can reveal whether President Trump’s trade policies are succeeding or failing to achieve one of their prime stated goals – bolstering domestic industry.

The January numbers were released today by the machine tool trade association that tracks them, and the verdict? Thumbs up on all counts. Year-on-year, new business grew by five percent, and there was even a silver lining in the 10.5 percent monthly decline from December levels: January figures almost always fall on a monthly basis (because manufacturers tend to bunch their new orders markedly toward the end of each calendar year), and this January’s decline was half the post-1998 average. In fact, the $396 million figure was the second largest January total in the 22 years during which the industry has been compiling these statistics. Particularly noteworthy: January was the month when most of the last partial federal government shutdown took place. That’s when it was hard to find many Americans optimistic about anything.

Moreover, although these numbers are incredibly volatile month-to-month, the strong surge in machine tool orders that began in early 2017 (coinciding, incidentally, with the advent of the Trump administration) continued apace through 2018 (when he began tariff-ing imports in earnest).

Since manufacturing still only makes up a little less than 11.5 percent of the whole U.S. economy (though it punches way above its weight as a jobs creator), robust machine tool orders are hardly a guarantee against a slowdown – even a significant one. And the future of the President’s trade policy, especially regarding China, remains highly uncertain. But at best, domestic manufacturers’ interest in continuing to buy the stuff that’s used to make other stuff signals that current economic pessimism is a stretch — and that if the economy does run into trouble, neither manufacturing nor President Trump’s approach to trade (which is dominated both ways by industrial goods) will deserve much blame.

Glad I Didn’t Say That! A Mixed Media Message on U.S. Farm Labor Shortages

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agriculture, automation, farm workers, Glad I Didn't Say That!, illegal aliens, Immigration, Jobs, labor shortages, Mainstream Media, robots

“With fewer undocumented workers to hire, U.S. farmers are fueling a surge in the number of legal guest workers”

– The Washington Post, February 21, 2019

 

“One February afternoon, they work about an acre apart on a farm the size of 454 football fields: dozens of pickers collecting produce the way people have for centuries — and a robot that engineers say could replace most of them as soon as next year.”

– The Washington Post, February 17, 2019

 

(Sources: “With fewer undocumented workers to hire, U.S. farmers are fueling a surve in the number of legal guest workers,” by Kevin Sieff and Annie Gowen, The Washington Post, February 21, 2019, https://www.washingtonpost.com/world/the_americas/with-fewer-undocumented-workers-to-hire-us-farmers-are-fueling-a-surge-in-the-number-of-legal-guest-workers/2019/02/21/2b066876-1e5f-11e9-a759-2b8541bbbe20_story.html?utm_term=.225cc2cc55fe; and “Farmworker vs Robot,” by Danielle Paquette, The Washington Post, February 17, 2019, https://www.washingtonpost.com/news/national/wp/2019/02/17/feature/inside-the-race-to-replace-farmworkers-with-robots/?utm_term=.24166019b5dc)

Glad I Didn’t Say That! U.S. Automakers Debunk Their Own Tariff Fear-Mongering

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automotive, China tariffs, FCA, Financial Times, General Motors, Glad I Didn't Say That!, metals tariffs, msn.com, Patti Waldmeir, tariffs, Trade, trade war

“The auto industry…fears that new tariffs, on top of those already enacted on Chinese-made vehicles and imported aluminum and steel, could have a major negative impact on the American new car market.”

–MSN.com, November 18, 2018

 

General Motors’ “head of US sales, said on Thursday: ‘We feel confident heading into 2019 because we have more major truck and crossover launches coming during the year and the US economy is strong.’”

–Financial Times, January 3, 2019

 

FCA’s head of US sales “also predicted a ‘solid’ 2019, attributing the company’s strength in 2018 to ‘the efforts we undertook to realign our production to give US consumers more Jeep vehicles and Ram pick-up trucks.’”

–Financial Times, January 3, 2019

 

(Sources “Hit hard by trade war, automakers hoping Trump will hold off on new round of tariffs,” Money, MSN.com, November 18, 2018, https://www.msn.com/en-us/money/markets/hit-hard-by-trade-war-automakers-hoping-trump-will-hold-off-on-new-round-of-tariffs/ar-BBPOjRn & “US car sales defied predictions of a slowdown in 2018,” by Patti Waldmeir, Financial Times, January 3, 2019, https://www.ft.com/content/e538e316-0f52-11e9-a3aa-118c761d2745)

Glad I Didn’t Say That! Fuzzy Math on Trump Tariffs and Tax Cuts

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Glad I Didn't Say That!, middle class, tariffs, tax cuts, taxes, Trade, Trump

“If the administration is serious about further reducing the tax burden on the middle class, the easiest and most effective solution is to walk back…misguided tariffs and avoid imposing additional trade policies that would further increase taxes and destroy jobs.”

– Scott Hodge, President, Tax Foundation, October 30, 2018

 

Size of proposed Trump administration middle-class tax cut: 10 percent

Tax Foundation estimate of bite on after-tax middle-class incomes from all current and threatened Trump tariffs: 1.37 percent

 

(Sources: “Trump wants to cut middle-clas taxes. The easiest solution? Repeal Tariffs,” by Scott Hodge, Washington Examiner, October 30, 2018, https://www.washingtonexaminer.com/opinion/trump-wants-to-cut-middle-class-taxes-the-easiest-solution-repeal-tariffs)

Glad I Didn’t Say That! Alcoa Flip-Flops on Aluminum Tariffs

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Alcoa, aluminum, Glad I Didn't Say That!, tariffs, Trade, Trump

“For investors who thought the 10% tariff on aluminum imports was supposed to be good for U.S. aluminum producers, Alcoa Chief Executive Roy Harvey explained on the post-earnings conference call with analysts why it’s actually the opposite. ‘First, because tariffs are driving only a limited increase in supply, U.S. imports will remain essential,’ Harvey said….”

– Marketwatch.com, July 22, 2018

 

“Alcoa actually benefited from the trade war, as CFO William Oplinger explained, ‘Our smelters benefited from tariffs pushing up the Midwest regional premiums, so the impact of tariffs was a net benefit to Alcoa of $27 million.’”

– Benzinga.com, October 18, 2018

 

(Sources: “Alcoa CEO explains why aluminum tariffs are hurting, not helping,” by Tomi Kilgore, Marketwatch.com, July 22, 2018, https://www.marketwatch.com/story/why-trump-administrations-aluminum-tariffs-are-hurting-alcoa-more-than-helping-2018-07-19 & “Alcoa Rises After Crushing Earnings, But Market Cycles Point In The Other Direction,” by Steve Miller, Benzinga.com, October 18,  2018, https://www.benzinga.com/news/earnings/18/10/12530003/alcoa-rises-after-crushing-earnings-but-market-cycles-point-in-the-othe)

Glad I Didn’t Say That: More Fake News on Trump Tariffs Fallout

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business spending, Catherine Rampell, core capex, Glad I Didn't Say That!, tariffs, Trade, Trump, uncertainty

“Threats of additional tariffs and lingering uncertainty over trade policy are also causing firms to reevaluate or delay investment, as University of Chicago Booth School of Business professor Steven J. Davis noted recently.”

– Catherine Rampell, The Washington Post, September 3, 2018

U.S. “core capex”* spending since first Trump non-trade law tariffs (late March): +0.92 percent

U.S. “core capex” spending during comparable (April-June) period, 2017:  -0.03 percent

U.S. “core capex” spending during same period, 2016: -1.63 percent

U.S. “core capex” spending, advance reading, June-July, 2018: +1.40 percent

*business spending on non-defense capital goods excluding aircraft

(Sources: “Trump promised farmers ‘smarter’ trade deals. Now he has to bail them out,” by Catherine Rampell, The Washington Post, September 3, 2018; New Orders, Nondefense Capital Goods Excluding Aircraft; Manufacturers’ Shipments, Inventories, and Orders, Time Series/Trend Charts, Business and Industry, U.S. Census Bureau; “Monthly Advance Report on Manufacturers’ Shipments, Inventories, and Orders,” Release Number: CB 18-118 M3-1 (18)-07, U.S. Census Bureau, August 24, 2018, https://www.census.gov/manufacturing/m3/adv/pdf/durgd.pdf)