Wall Street Wrong Again – Import Prices Decline During Full Year of Import Tariffs…

The latest set of statistics from the Bureau of Economic Analysis (BEA) shows all of the professional pundit claims of higher prices on imported goods due to Trump tariffs are simply disconnected from reality.  In actuality the year-over-year prices of import products are actually dropping:

U.S. Import prices fell 0.3 percent in May, the first monthly decline since a 1.4-percent drop in December. Import prices advanced 1.8 percent from December to April before the downturn in May. The price index for overall imports decreased 1.5 percent over the past 12 months, matching the drop in January. These were the largest over-the-year declines since the index fell 2.2 percent in August 2016. (See table 1.)

The U.S steel and aluminum tariffs have been in effect globally since 2017. Tariffs on softwood lumber (Canada) & durable appliances (S. Korea), same duration.  Additionally the first set of tariffs on China is now well over a year old; and the second set of expanded tariffs on China began a month ago; again, no material impact to the delivered price.

Despite two years of claims by the professional media that tariffs would lead to higher prices for U.S. consumers, as you can see above the reality is quite different.

In part this is driven by lower fuel and energy costs.  Additionally, China is attempting to subsidize its affected industry; and several nations, including China, are attempting to retain export status by adopting monetary policies that devalue their currency.  All of these efforts at countering the U.S. tariffs are having a deflationary impact.

[…] Imports by Locality of Origin: The price index for imports from China edged down 0.1 percent in May following a 0.2-percent drop the previous month. Import prices from China have not recorded a monthly advance since the index rose 0.1 percent in May 2018. Prices for imports from China declined 1.4 percent over the past year, the largest 12-month drop since a 1.6-percent decrease in February 2017.

Import prices from Japan recorded no change in May, after a 0.1-percent decline in April. Prices for imports from Japan also recorded no change from May 2018 to May 2019.

The price index for imports from Canada declined 1.0 percent in May, driven by lower fuel prices. (Link)

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This entry was posted in Auto Sector, Big Government, Big Stupid Government, China, Donald Trump, Economy, energy, Japan, media bias, President Trump, Taxes, Trade Deal, Uncategorized, US dept of agriculture, US Treasury, USA. Bookmark the permalink.

117 Responses to Wall Street Wrong Again – Import Prices Decline During Full Year of Import Tariffs…

  1. Carson Napier says:

    Wall Street may be challenging the “Intelligence Community”/CIA and FBI in the category of Most Wrong Most Often, even though they still have quite a bit of catching up to do.

    Liked by 16 people

    • Robert Smith says:

      What about the Media?

      Liked by 6 people

    • bertdilbert says:

      I would think that with a booming US economy, that the US dollar would be strong against other currencies. The interest rate increases by the Fed would also be dollar supportive.

      If the dollar is strong, then any tariffs would be offset by that. Having stuck my neck out, I have not looked at any year over year currency charts to see if my initial gut feel of the situation is correct. This is just what my expectation would be

      There would also be dollar demand for investing in the USA which would be even further dollar supportive. Wall Street may not have calculated this into their equation.

      Liked by 6 people

  2. grlangworth says:

    Free trade is a misnomer. I believe this simple story you’ve laid out here needs to be replicated until average people take notice. This is not esoteric, yet in every economic exchange I keep hearing about PDJT’s threat to free trade.

    Liked by 6 people

    • “I believe this simple story you’ve laid out here needs to be replicated until average people take notice.”

      Replicated by whom is the problem. With an agnostic media the story would practically tell itself. However our mass media is run by vested interests that don’t want this story getting out. We’re up against massive false consciousness.

      I take heart from the recent poll showing that fake news poses a larger threat than terrorism. People are looking at their improving financial condition and sensing a disconnect with what they’re being told.

      For 2020, folks are going to have to figure it out for themselves.

      Liked by 4 people

      • grlangworth says:

        In my opinion, CTH is one of many websites that view the truth. There are a growing number of truth-tellers. Did you know that Rush Limbaugh has a daily radio audience of +25 million? More people view the Still Reports than watch CNN right now. Candace Owens is posting interviews a couple of times a week. Brandon Tatum is not far behind. Scott Adams is on every day. These are just a smattering of websites flashing on the truth. Social Media are dying not growing. You can use DUCKDUCKGO to find anything on the web — never mind google, facebook, or twitter. You don’t need youtube to see which way the wind is blowing. Stick up a finger.

        Liked by 1 person

  3. Marygrace Powers says:

    CAN’T STUMP THE VSGPOTUSDJTRUMP!

    Liked by 6 people

  4. Hide the Decline says:

    Do these prices include tariffs or are they the prices before the tariffs are applied?

    Like

    • Tim says:

      including the tarrifs

      Like

      • Barnestormer says:

        Hide the Decline & Tim,
        The imported goods prices appearing in the BLS index exclude tariffs. Following are relevant excerpts from BLS’s FAQ page:

        What prices are used to calculate the Import/Export Price Indexes?

        Answer: The majority of prices used in calculating import price indexes are quoted FOB (Free On Board) Foreign Port * * *; duty is not included. * * *.

        Do Import/Export Price Indexes include import duties?

        Answer: An import duty is a tax or tariff collected on imports, typically by a country’s Customs agency. U.S import duties would be placed on imports coming into the United States whereas other countries’ import duties would be placed on exports from the United States. The prices for the items used to calculate Import/Export Price Indexes exclude duties. * * *. [Emphasis mine]

        Like

        • sweetya says:

          I would like to point out that while this is true, it doesn’t change much. The wall street theory was that we would go elsewhere (somewhere more expensive) for these goods. After-all, a few percent increase in price is much preferable to a 10-25% tax. You’d have to move to inflation to see the effect of tariffs and it to is down. 2018 was down from 2017 and 2019 is down from 2018.

          Like

          • Barnestormer says:

            There was posted disagreement about whether the indexed import prices included tariffs. My comment was for clarification.

            It’s a mystery to me why the import price index is even in a tariff discussion.

            Liked by 1 person

  5. Trent Telenko says:

    There is no such thing as free trade between a capitalist state and a totalitarian state.

    There is only ‘managed trade’ as totalitarian state’s measure all economic deals through the prism of power politics.

    From 1989 through 2016 Chinese Communists managed US-China trade.

    Since Jan. 2017 Pres. Trump has.

    This is why we have the best U.S. Economy in 50 years.

    Liked by 24 people

    • Trent:

      Well stated!

      Previous presidents did a terrible job of just “managing” trade with China. PDT came in with the new idea of not wanting to merely manage trade with China, but to change the dynamics from mere managing to controlling the whole theater of trade.

      He fired the old cast of this stage and drama and went with a whole new cast and play. This is going to be some enjoyable high-drama staging.

      There can be no honest and fair free trade with a totalitarian state because there is no such thing as free anything in such a state.

      Some systems are so diametrically opposed to each other that the only solution for an agreement between the two is the collapse of one of the systems.

      China will not concede any ground that breaks away from or shames the communist doctrine and geo-political position. So they may very well self-destruct, at least to some point. I don’t believe time is on their side.

      Liked by 6 people

      • Dutchman says:

        Perxactly, angelle
        There can be no ‘deal’; China can NOT compete, they must cheat.
        Their system is inherently corrupt, they will always adulterate raw materials, because its a STATE RUN operation, not a business.

        And they can NOT innovate. The same mind that would create a new widget, or more streamlined manufacturing process, would question their system, and end up as an organ donor, or at least in a re-education camp.

        They are in a cage of their own making, and they didn’t design it with an escape hatch. They screwed themselves, and they have no one to blame but themselves.

        I feel sorry for the people of China, but its up to them to give CCP the boot, just as with Iran. Freedom isn’t free, nor is liberty.

        Liked by 10 people

        • Dutch:

          You know, you and me have run this discourse consistently here in the Tree House with some good discussion. I engaged in a rather length discussion with Jedi about this and he also clearly understands the issue as such. IIRC, I think BKR was in some of those discussions awhile back.

          China basically has to agree to chop one of its feet or hands off to even begin to fully cooperate with us and sign a real, verifiable trade agreement. I don’t see that happening. Never did. Seems PDT and team didn’t either. That should have surprised no knowledgeable PDT supporter. But our side had to skillful posture somewhat to drive China into a no-win position, and skillfully posture they have! Better than anybody in our federal government that I can recall in my lifetime and further back than that.

          Can be no doubt that Xi and his team were not expecting PDT and our team to have planned things that way. They probably thought our team was going to be a wuss. Turned out that instead of a teddy bear, our team flew into these negotiations like roaring eagle with talons fully stretched out to take the prey! God in Heaven….I love eagles!!!

          I think the Chinese, as human beings with brains, have the capability to innovate, but they have been stealing our stuff for so long, going the cheating and lazy route, they are now acclimated to that and aren’t mentally structured to innovate themselves. What a shame. But it is what it is. The Chinese people are going to have to step up and rebel just like the East Germans, Russians and others did leading up to 1989.

          Totalitarian systems are doomed to fail. Some last longer than others. But they all fall and degrade somewhere down the paths of their history.

          Liked by 7 people

          • Dutchman says:

            Angelle,
            Yes BKR is also one sharing this position. For me it was a revelation one day, after months of reading here at CTH.
            Wasn’t anything specific I read, I just realised “OMG, China will NEVER agree to enforcement, DJT will never agree to no enforcement.

            Then as I posted it, I saw others basically welcoming me to the,club.

            I think its the Conmunist system; chinese, as a people, are as creative and innovative as any other. Its what 70 or so years of Conmunist rule has wrought.

            And THEY want to take over the world? Economy is a mile wide, and an inch deep. OBOR? A belt to hang themselves, to start their journey on the ONE ROAD, to perdition.

            Liked by 3 people

            • I’ve been in my present mindset about China for a long time. I blogged some stuff about China back on old My Space in 2008-2009. So what is happening now, pretty much goes back to much of my thought back then. Just kinda been waiting for a blow-up.

              What I DIDN’T anticipate back then was a PDJT. When he came on the scene, we had to think, okay now, we finally got a fighter who understands China trading dynamics. I mean you can review videos of him complaining about China years and years ago. Now he complained about Japan too, and Japan was eating our lunch, but different dynamics and approach to negotiations in that sphere….as we are witnessing now.

              So DJT comes on the scene in 2015. The perfect non-politician with a business mind-set and great experience. No other candidate came close to his qualifications.

              Can you imagine how great the economy would be if we had more of Congress working with him instead of against him? The wow factor would be off the charts!

              But even if we had no dems, had we had more of the Republicans behind him instead of against him, we could have gotten a lot more done in the Senate and in the House when the Rs controlled it. But alas, the RINOs are enemies and they only aid and abet the dems and MSM. To me, they are more traitorous than the dems, because they hide behind the R factor but keep working to shiv our President.

              Nobody should be fooled at all about Lindsey and Mitch, 2 people I believe would utterly betray him if given the chance and they thought they had enough ammo to do it.

              It’s a shame, but its politics with its many masks….same heart, different masks.

              Liked by 8 people

              • Your Tour Guide says:

                Regarding the RINOs.

                This is something almost everyone here
                figured out a long time ago. But, it’s a useful
                tool for people that we meet that are starting
                to wake up about the media.

                ANY” conservative” that appears regularly
                on NBC, CBS, ABC, CNN (and even on
                most Fox shows) is not our friend.

                Any Republican that appears on any of these
                shows regularly, especially the ones that
                take a “brave, non partisan stand” is not our
                friend.

                Instead, they are more like the kids in class
                who ask the teacher if she’s going to ask for
                our homework before the bell rings. They are
                NOT on these shows to make a principled
                stand. They are on these shows to reinforce
                the propaganda narrative. And they are being
                rewarded in ways that we don’t know to do so.

                Liked by 5 people

                • YTG…

                  Summed up perfectly. And it’s been like that for a long time. Didn’t start yesterday.

                  With the exception of a few like DN, JJ and MM, I can’t stomach these shows of pure bs and posturing that is anything but altruistic.

                  You score this accurately. Thx 👍

                  Liked by 3 people

              • Silver Lining: President Trump has delivered the greatest results of ANY President in history WITHOUT the help of Republicans and DESPITE relentless subterfuge from the UniParty.

                Implications: More and more Americans are awakening to Trump’s contributions, leadership and integrity … in stark contrast to the entire Congress, save the Freedom Caucus. He’s the ONLY top leader who’s earned our TRUST.

                Consequences: We will take Trump’s cues regarding who to Primary and who to Elect!

                Liked by 3 people

            • President Trump’s team of Economic and Trade Wolverines is KILLING it with China.

              [Just as your posts with Angelle are making this one of the longest and most insightful conversations of late. 👍🏼👏👍🏼 ]

              Downright UNCANNY!

              Liked by 3 people

          • Bigbadmike says:

            Of course, the Chinese have beautiful brains and are brilliant artists and design great video games. But that doesn’t put food on the table or design and build things that last. They lack the one thing that truly make a Country Great and that is American Know How.

            Liked by 2 people

          • CountryClassVulgarian says:

            Agree completely. I also think one of the problems for China, the NORKs and now we are seeing with Mexico, is that they are believing the nonesense they hear from American politicians and the US media. The really do believe President Trump is some kind of crazed lunatic who doesn’t know what he is doing. Most importantly they are watching the fake polls that are now coming out regarding the 2020 elections. They are deceiving themselves into thinking they can time him out.

            Our President has been eating them cheat their way into prominent pretty much all his life. He has watched while our “leaders” let it happen. The stop has come.

            Liked by 3 people

            • Absolutely agreed about LSM/MSM…and I have no doubt that PDT understands how evil, lying, corrupt media spins their narrative daily to turn international opinion against him, probably hoping other world leaders will just bide their time and wait his Presidency out.

              MSM is an evil, hideous, wicked dragon itself that would consume and destroy him, us and our whole nation as it was originally founded with the Bill of Rights, the Declaration of independence….and basic rule of law, liberty, freedom and justice for all.

              Like

              • Seems like President Trump has also “allowed” Obama, Kerry, Clinton et al to trot from country to country “advising” them on “How to Beat Trump”.

                Paradoxically plays right into his hand under the Trump Maxim to “Take the Money”, as they can narcissistically neither recognize he’s outwitted them nor publicly reverse course.

                Liked by 4 people

                • Razor sharp comment, entertaining actually.

                  See, this is the kind of witty commenting I miss when you are off for awhile. Refreshing!

                  But a bottom line is that these narcissists are seditionists and traitors who work against everything good about our nation, our President, our Constitution, our Rule of Law, liberty, justice…all of that.

                  Liked by 4 people

        • And yes, the fear factor of exercising self-innovation is a killer and keeps capable brains and independent thinking imprisoned.

          When I said they have the capability to innovate, I’m saying the human brain can do it. But it is true, they have state sponsored chains wrapped around their potential intellect. What a waste!

          No wonder some Chinese students want to stay here and not return to China. They get a taste of free thinking. But there are other students here as planted spies to get what they can from America and go back to China with it.

          Liked by 2 people

          • Ghost says:

            Observations from a smaller limb.

            @ Dutchman
            @ Angelle

            Now that was a first class discussion.
            👏👏👏👏👏👏

            Liked by 7 people

          • Your Tour Guide says:

            Angelle, Dutchman:

            Hearing your discussions about “uniform thought.
            or else” reminds me of how similar what the Chinese
            government practices is to leftist thought. You either
            agree with the approved statements, overview of
            “what’s acceptable” or you’re gone. To the gulag,
            to the cornfield, to unemployment. To ridicule, to
            pariah status.

            Until the early 90s, I was quite the little leftist. Hated
            Reagan ( although I didn’t know why, other then everybody
            around me did). Also hated Bush 1 ( was right on that one).

            Anyway, what made me start to breakaway was the
            uniformity. I attended some of the meetings some of my
            artsy fartsy heavily involved friends and acquantances
            asked me to go to. About meaningful things. Nicaraugua,
            The Equal Rights Amendment, and so on. Every. Single.
            Meeting. Left me entirely cold. Only went to 3 total.
            And, it was only to shut them up.

            Every. Single. Meeting had a bunch of heavily involved
            people show up . Every. Single. Meeting had most of them
            come in from Little Five Points or Lake Claire areas of
            Atlanta. Every. Single. Meeting had someone get up and
            get all impassioned about whatever they had show up to
            discuss. Every. Single. Meeting had everyone drive across
            town to get in a room and agree with whatever it was they
            were all impassioned about. Every. Single. Meeting had
            basically no discussion. They all took the time out of their
            days to get all worked up about things that were going on
            thousands of miles to entire continents away.

            Basically, I started to back away from being leftist because
            I was tired of wasting my time being in a room where everyone
            was there to agree with everyone else. The “or else” time
            didn’t start kicking in until a few decades later, with the advent
            of political correctness.

            So…. if you see your kids being sucked in by leftism,
            throw this thought out.

            “Did you happen to notice that everyone there is saying
            the same thing? And that they agree with that? Don’t you
            find that a little bit strange?”

            Liked by 4 people

            • TheLastDemocrat says:

              “Unified Thought:”
              I was helping review applicants for graduate-level opportunities. One applicant was here on student visa from China. I read their transcript.

              Fall 2005 (or whenever): “Thoughts of Chairman Mao, Part I.”
              Spring 2006: “Thoughts of Chairman Mao, Part II.”

              I don’t know if this is still the case, but in recent, modern times, you could not get a college degree in China without mandatory Communism classes.

              I know a missionary from a country that, as he got his grad degree, was Soviet Bloc. Of course he was atheist before hearing the Good News. The shocking thing he told me was that they TAUGHT him “Atheism” as part of his engineering degree. What?

              Again, reviewing college transcripts of educated applicants, I came across someone who graduated in the old USSR. Fall 1982 (or whenever): “Atheism I.” Spring 1983: “Atheism II.” I kid you not. This person was a physician. This person has escaped the Soviet mindset a good deal, although it is still in there to some degree. This person has a belief in a vague, distant kind of God, but would have to make a major step to overcome brainwashing to know the Real God. Very sad. The missionary has taken that step, and has build it in as part of his missionary work.

              If any of you happen to have the opportunity to legitimately look over college transcripts of people from China or USSR, or Soviet satellites, see if you see the same thing.

              I believe in recent years, China, with the plan of sending MANY students over here, no longer has the “Mao I” and “Mao II” thing; this is too off-putting to American reviewers of grad school and post doc applications and such.

              Here, we have done the same, but less obvious. If you look at curricula across the years, and across universities, you will notice something.

              Do this with your own transcript, and those of peers and the younger generations.

              Somewhere along the line from mid-1980s to mid-1990s, it became normal for ALL undergrads to be REQUIRED to take one or two of a certain type of class. A “humanities” or “modern world” type class. In these classes, the Communist philosophy was fed to students, in a subtle way. In these classes, they discuss things such as international conflicts, and/or “social” issues such as homelessness, poverty, or racism.

              All of that is just fine.

              The end game, though, is that the mandatory courses are taught to give a message: there is a cadre of wealthy, influential people, and they are bad. They are white, Christian, and capitalist. For “us” educated people to “solve” the problems of the world, we have to work for “justice” against the noted evil forces.

              When I went through college, there was no specific required course or courses. You had to select from the various areas. I could do “American Lit,” English Lit,” or “World Lit.”

              There was a prescribed American History 2-course sequence, but you could opt for an alternate. I took the first required, and it was OK. I opted for an alternative History (basically on Am West / cowboys and Indians) for the second.

              Looking back, this is funny. My History I course did not brainwash me to these Communist ideas. However, there was another Am Hist I course in the same room, just before mine, in the Hist Building. That course was taught by a more boisterous, energetic, persuasive instructor. At the end of the final class day, he gave a barn-burner. The class applauded him as a salute to his influential, fiery, thought-provoking style.

              Looking back, I now am sure he gave them the Full Sermon – full Communism, America-Bad, go-home-and-spoil-family-holiday instruction. I believe that is now required of nearly any and all undergrad programs.

              This is our “Unified Thought.”

              Liked by 2 people

              • Your Tour Guide says:

                Last Democrat:

                If it’s not too nosy:

                When did you graduate high school?

                The reason I ask is this. My brother in law
                graduated from High School in 1970. Same
                high school that I went to. When I graduated
                in 1974 the curriculum had already entirely
                changed. The requirements had entirely changed.

                You no longer had to have 2 years of a language
                by 1974. You could pick and choose your courses.
                So, instead of “English Lit” most picked “Film
                Explorations”. The dumbing down, the politicization
                had started a little in 1970 when my brother in law
                graduated. A big part of their year book was in
                attending and marching in the first Earth Day.

                But, the standards, the requirements, the effort
                needed had drastically changed by the time I
                squeeked through high school. To this day, I still
                have better discussions about most topics with
                people that were born on or prior to 1952. More
                rounded.

                Liked by 2 people

                • TheLastDemocrat says:

                  Much later in the 1970s.

                  My school and district were not really on the cutting edge of progressivism. But a few teachers were. You could get one social studies teacher distracted by getting her to discuss whether prostitution should be illegal, seeing as how there might not be a victim, just two consenting adults in a deal. Progressive stuff like that.

                  Like

            • TheLastDemocrat says:

              YTG: good observation.
              I have had similar experiences. We called Reagan a Nazi and a Fascist. Not me, since I am not big into name-calling. Looking back, these colleagues of mine were not American Democrats, but really were across the line into Communism.

              A big break I had was mulling over the concept of Public Housing. If we Dems are so clever, why is Public Housing such as terrible basket, all the way around? Public Housing is an obvious risk factor for drug use, crime, poor health, etc. If it were any other risk factor, we would wage full public health war. But we want more of it!!!

              My brain took te turn of focusing on OUTCOMES. Sure, some people need help with housing, or with poverty. But if the “cure” is worse than the disease, maybe we need to go back to the drawing board.

              Having red-pilled myself, I could not go back. I do hold Democrat ideas about a lot of stuff, but I think in terms of results, plus also of civil rights.

              The next big break. In my 20s, my wife and I were planning to do what many do: get their careers going, enjoy young adult life, and have kids “later.” My wife asked me one day: “what would we do if we got pregnant?” I said that I am OK with people getting abortions, but myself I would be against it for us, and we would have the kid.

              This set me to mulling over “abortion.” Like this: “if I think it is bad for me, why would I say it is OK for someone else? On what basis do I think it is bad? I guess because the baby is actually alive. Is it really alive?…..” The only eventual answer to an honest thinker is: It is alive; abortion is killing another human being.

              Having red-pilled myself again, I really have been able to look at issues from a distance, as it were. I may generally go by the “party line,” but I do not simply buy the Party Line.

              But I a speaking of Party Line of the 1970s and maybe 1980s. I believe there was, and could still be, an American Democratic Party, a Constitutional Democratic Party, but that is not what we have now they have gone Red.

              Having realized this, I have studied how this has happened. This has been an amazing journey to see how a party I strongly and actively supported got taken over in practice and in philosophy. What you describe is a great example. I know my Democrat friends and colleagues do not donate money and volunteer in their own worlds in any measure matching the way they foam at the mouth about “Bodily Integrity” and “Structural Racism.”

              At my church, where many are Republican (a lot of the women can go either way), I am in a group where I factually know many who give money and time to various causes. Some, a little, and some a lot. I know people who have supported single moms, orphans, taken in kids, etc. Almost to a person these families are doing this.

              This election season, I am thinking about getting my school-age kids to “volunteer” with some democratic presidential candidate campaign, after giving my kids the 4-11. I want them to understand these “Democrats” in full. Folks, I am preaching to the choir but these “Democrats” are bona fide Dangerous. Cult level Charles Manson Dangerous.

              I appreciate getting to throw my two cents out here at CTH.

              Liked by 2 people

              • Your Tour Guide says:

                Last Democrat:

                I’m not going to high jack the thread. But, at a
                later date, and in another forum (Open discussion,
                because it’s less lengthy), would love to discuss
                “The Lucrative Lie”. That would be any and all things
                public housing, HUD, Low Interest Housing Tax Credits,
                Community Reinvestment and the like.

                Did a lottttttt of research about it decades ago.
                It was strike 2 on my dying liberalism. Strike one
                was everyone agreeing on meaningful issues.
                Never made it to strike 3.

                Pop up sometime and post after me when you’re
                ready. It won’t be today. And happy father’s day
                if you so qualify. I’m preparing to celebrate with
                beer and bbq at the pool.

                Liked by 3 people

                • So glad you and TheLastDemocrat have posted your experiences and the elements involved that led to a major shift in thinking. Good points from both of you. See my reply to TheLastDemocrat.

                  Been a great discussion here. It’s all tied together.

                  Hope both of you had a great day today!

                  Like

              • TheLastDemocrat:

                “A big break I had was mulling over the concept of Public Housing. If we Dems are so clever, why is Public Housing such as terrible basket, all the way around? Public Housing is an obvious risk factor for drug use, crime, poor health, etc. If it were any other risk factor, we would wage full public health war. But we want more of it!!!

                My brain took te turn of focusing on OUTCOMES. Sure, some people need help with housing, or with poverty. But if the “cure” is worse than the disease, maybe we need to go back to the drawing board.”

                This, THIS…that is, turning to OUTCOMES…is the very thing that caused the great conservative thinker, Thomas Sowell, to convert from liberalism to conservatism. He said that what got him turned around was that he began to plainly observe that liberal government policies didn’t work. Simple as that. And HUD, etc, are perfect examples of what moved him to jettison liberalism and chart a different course of better outcomes.

                So yeah, if policy and political-think do not produce better OUTCOMES, then it’s time to leave them behind and travel a new road. But the leftists keep beating their drums, numbing the minds of the naive, ignorant and complacent through the mediums of academia, culture and media, so those people cannot interpret the difference between presentation and real, actual outcomes. It really is enslaving of minds with liberal iron chains.

                Great comment and discussion!

                Liked by 1 person

            • budklatsch says:

              Yes, like MSM, the EXACT SAME rhetoric is used day after day after day. Regardless of the media selection, the same buzzword of the day is used.

              Liked by 3 people

            • Post of the Day, YTG. 👍🏼👍🏼👍🏼

              Liked by 1 person

            • Awesome comment. And thanks for sharing your history with us here.

              That uniform language is a red flag in several theaters. Politics of course. Communism, etc. But also, in an area I have deeply researched, the cults. All of these areas have this common ground of uniform language and even mind control. I especially liked your phrase….to the gulag. Ouch, but true.

              Did you know that the great conservative thinker, Thomas Sowell, was a liberal? One of the things that woke him up, according to his own words, was that he began to plainly observe and understand that liberal government policies and programs simply don’t work.
              He became a true wise man and his words are words of vast and deep wisdom and understanding.

              There are signs that can be observed in young people when they begin to lean liberal just like there are signs that can be seen in young people when they begin to be sucked in and conditioned by a cult. Even their persona changes and becomes more stiff and dark. Different theaters, but same elements of uniformity, control, fear and far less freedom of thought.

              Liked by 1 person

        • Best part, Dutchman, is the worse POTUS makes things for China the more they cheat, degrade materials and manipulate their currency to “compensate”.

          Now they’ve got the Hong Kong Billionaires fleeing in droves.

          RE:
          • China can NOT compete, they must cheat.
          • Their system is inherently corrupt, they will always adulterate raw materials, because its a STATE RUN operation, not a business.
          • And they can NOT innovate.

          Liked by 3 people

      • The amazing backstory to President Trump’s strategy is his tactical skills in exacting USA BENEFITS from China’s malevolent actions … in such a brilliantly measured and un-provoking way as to constrain China from going MASSIVELY ROGUE.

        POTUS has created the proverbial Chinese Frog in Boiling Water.

        Keep raising the temperature, Mr. President.

        NOTE his letter to Congressional leaders Friday, “reminding” them that he’s directed Wilburine to inform him of actions to protect our national security interests against eroding Auto Industry capabilities, market share and R&D capacity.

        Liked by 3 people

  6. chojun says:

    ” Additionally, China is attempting to subsidize its affected industry; and several nations, including China, are attempting to retain export status by adopting monetary policies that devalue their currency. All of these efforts at countering the U.S. tariffs are having a deflationary impact.”

    I agree wholeheartedly. The “experts” have warned that the US consumer is going to bear the burden of the tariffs. I’m not an “expert”, but I couldn’t disagree more. The economies subjected to tariffs are doing so due to the unfair (and oftentimes unethical and illegal) subsidies they are using to gain an advantage over US manufacturers. The sole goal of these subsidies is to cause the export of American dollars into the foreign economies.

    My first thought was that these economies (China especially), in order to maintain their competitive advantage over the US economy, would eat the tariffs and increase subsidy to continue to maintain their advantage.

    The only reasonable result of this is that China is likely bleeding cash at an astounding rate, likely as Sundance indicated approaching deflationary conditions in their economy, in an effort to wait out President Trump and hopefully see him leave office in 2021.

    There is *no* strategy that is beneficial to the status-quo in China, that China can implement to get out of this mess. Trump has backed them into a no-win situation. Either they fundamentally reform their economy or collapse under the weight of free enterprise. So far, they’ve chosen the totalitarian grip, to squeeze the life out of their economy.

    Liked by 6 people

  7. Frank says:

    This must be a very anxious time for the financial parasite class. Changing-up trade policies and encouraging domestic industriousness and creativity is akin to a host’s body chemistry changing. The ticks can’t adapt to something as radical as that, so they will be forced to detach and wither away. They’re still fighting right now, of course, but the changes have only just begun.

    Liked by 5 people

  8. FL_GUY says:

    I really appreciate these economic reports. Simplifies complex dynamics.

    One thing is certain, the pundits and academics don’t know a damn thing about economics or how the real world works. President Trump certainly knows how it works and is making it work for the USA! President Trump has made every American’s life better even though there is a percentage that doesn’t deserve it(D-Rats, Rinos, Media-Rats, etc).

    I’d say it’s past time for new pundits and new academicians.

    Liked by 9 people

    • Pundits & academics reside in “Ivory Towers” where thought processes are promulgated without ANY treatise or scintilla of proof of theory…Economics is taught as a SYSTEM when no such thing exists. Mathematical Models are one thing but their models have to be proven in real life…

      Anyway, Happy Father’s Day to all…Off to Mass!!!

      Liked by 3 people

  9. Query says:

    Poor ‘ol George Will must shrivel another inch when he hears this stuff.
    He believes there is no alternative to his pretend version of free trade.
    Free trade to a free trader means the ability to export US jobs and wealth without comment from the media or UniParty or great mass of the marginalised unwashed. The destruction of the US middle class they regard as unimportant.
    Then there was Trump.

    Liked by 7 people

    • starfcker says:

      Will was one of the first conservatives bought by the multinationals ( his wife had some deal with Asian cars, I don’t remember exactly what it was). Economic traitors, as Pat Buchanan called them.

      Liked by 3 people

      • starfcker says:

        Had to Google it. “George Will, probably the most persistently pro-Zionist non-Jewish media figure in the United States. His first wife was Jewish but his present wife is Mari Maseng Will, a registered foreign agent for the Japan Automobile Manufacturers Association. Her firm, Maseng Communications, was paid $198,721 last year to lobby for the Japanese automobile industry according to Washington Postmedia reporter Howard Kurtz.”

        Liked by 3 people

    • desperatelyseekingmelania says:

      There has never been any such thing as free trade. It is a lie. Whenever you catch some economic discussion on this tariff issue on your local MSM propaganda outlet and some guy says “I favor free trade” then you instantly know he is a lying gaslighting POS with an agenda.

      Liked by 3 people

    • vfm#7634 says:

      Who’s George Will?

      Like

  10. Petrel says:

    Sundance — What is the result of President Trump’s attempt to dismantle “managed trade” by multinationals designed to exfiltrate wealth from the USA?

    Like

  11. dallasdan says:

    This is not surprising. Much of the Wall Street profiteering cabal is at war with the President. Their spokespersons are paid to rant against him, knowing they will be proven wrong when the final numbers are reported.

    Of course, they hope the actual numbers, whether reported long after their dire predictions, or are revised in the short-term and printed on page 62 of some msm rag, will not cause those who initially read their garbage to remember/realize how inaccurate it was.

    Liked by 3 people

  12. ParteaGirl says:

    It’s not just Wall Street that got tariffs wrong, but a lot of “conservative” think tanks too. Or maybe a money trail that explains their misunderstanding.

    Liked by 7 people

    • Spoken like a true, watchful suspicious cat!

      Lots of money trails can expose lots of agendas and political presentations, even by some so-called consevative think-tanks.

      Liked by 5 people

    • Query says:

      The answer is there.
      Lobbyists are just purveyors of US legalised bribery.
      To get an idea how our “Representatives” are owned look at their capital wealth before they are elected to Senate/Congress and wealth when they retire or are defeated. The originally independently wealthy aside.

      Congress even voted itself the right again to insider trade. You go to jail, they regard it as an investment technique.

      Liked by 9 people

  13. PS says:

    Vocal “conservative” Republicans (like Beck-favored Justin Amash) often have undisclosed conflicts of interests, where their personal wealth is in foreign investments. Pelosi’s husband invests in shipyards.

    https://humanevents.com/2019/05/20/does-impeach-trump-amash-have-financial-interests-in-china

    Liked by 4 people

  14. WSB says:

    So, I am getting eblasts from furniture companies that they will be increasing wholesale prices due to the tariffs. Some have said they will not increase the wholesale price but only add a percentage on to the current price, so if anything reverses all will understand the tarriff tack-on.

    I often respond with a comment to bring fabrication back to the US.

    And am always looking for MFRs who are stateside.

    Liked by 2 people

    • Beenthere says:

      Stickley Furniture and Pompanoosuc Mills are just 2 American made, furniture makers that I know of.

      Liked by 3 people

      • WSB says:

        I am starting to see others come back. Stickley has new ads out, their new line looks great, and they are doing a fine job.

        The issue in my world is that I cannot only use Stickley because they have only one
        type of that aesthetic.

        We need the rest of the US to think critically. Wink.

        Liked by 1 person

        • The Boss says:

          WSB – which other manufacturers are coming back? And to where? Thanks.

          Like

          • WSB says:

            Renaissance Lighting, and a few others.

            Like

            • The Boss says:

              Thanks again. I’m proposing a project to bring manufacturers back to the mid-Atlantic states. The harvesters and sawmills would love to curtail exports of tree trunks and planks to China, and instead have higher value-added wood products like furniture be exported.

              I looked up the other two companies you mentioned above. Very interesting that Stickley has stayed in NY over 200 years. Not exactly a business-friendly location.

              Liked by 2 people

      • slowcobra says:

        La-Z-Boy has been American brand for about 75 yrs. Also keep Amish made in mind, if you like the wood furniture.

        Liked by 1 person

    • Esperanza says:

      Proves they manufacture in China. I needed to buy a guitar case, famous Floridian brand, had to ask where made wasn’t on website. Wrote back and said I was suspending my purchase till they built stateside. I don’t see the point of paying extra euros for American when it’s the same Chinese tat I can get here. Plus with the intellectual property theft, I could probably get the same thing half the price.

      Liked by 1 person

  15. Robster says:

    …unfortunately this will change when the dollar drops like a rock.

    Like

    • Dennis Leonard says:

      So what is going to cause that,a theory or do we see into the future.

      Like

      • Query says:

        A shift to IMF drawing rights as the world’s settlement “currency” will do it.
        $US will be part of the basket but the ability of US to create $100 for the ‘price of the ink’ is then over. Then the US can’t finance deficit spending by printing, QE, etc. without effecting the value of the $US.
        You will still use the $US in everyday life.

        Like

        • Muthaucker says:

          Not gonna happen. There is no other currency with the stability of the dollar. International trades will continue to use the dollar as the settlement currency. What choice is there? The Yuan? A communist currency? Don’t make me laugh.

          Liked by 2 people

  16. A2 says:

    Fact 👇👇

    China’s Food Is Only Going to Get Pricier
    African swine fever is threatening the country’s pork supply. Rising food prices may become more of a headache than the trade war.

    https://www.bloomberg.com/opinion/articles/2019-06-16/african-swine-fever-is-killing-china-s-pigs-and-stoking-inflation?utm_source=twitter&utm_medium=social&utm_content=nextchina&utm_campaign=socialflow-organic

    Liked by 2 people

    • The Boss says:

      Good article. We’ll have to keep an eye on Chinese-owned Smithfield Foods and its exports. My sense is the Chicoms are already exporting from the US in a sneaky way, and causing some upticks in pork prices here. I’ve noticed increases at Costco recently.

      Like

      • A2 says:

        I seriously doubt Smithfield can even export sneakily. Too many export controls.mabe they are getting premium prices from China, but I have no data.

        As for pork prices rising in your area, may be related to other factors, like transport etc.

        What is-clear in the aggregate is that due to ASF, China has a serious shortage of pigs and pork products and their reserves are running low. There are not enough surplus porkers in the world to resupply them now that their herds are dying and have to culled.

        Liked by 1 person

    • genjake says:

      Sundance: Have you got any data on the Export side of the equation. I get it that the Chicoms are eating the tariffs and import costs are steady and/or dropping but how about the other side of the trade coin?? I read where the Dems claim Main Street and the farmers are hurting because of reciprocal Chinese tariffs on our exports but I haven’t seen any data from a source I trust.

      China will need to buy food and there is only so much out there so if they buy heavily from someone else, that just opens up another market for us. However, haven’t seen any reporting on the numbers…..

      Like

  17. A2 says:

    Fact, this has been happening before the so-called trade war👇👇

    Chinese auto sales post worst-ever monthly decline as trade war intensifies
    https://www.reuters.com/article/us-china-autos-idUSKCN1TD0IQ

    Liked by 1 person

  18. Lester Smith says:

    Business are branching out to other countries and are bring work and better standards of living to more and more of the world’s peoples. The best way to spread peace in the world is through prosperity. Work is good for the soul.

    Like

  19. Pyrthroes says:

    We simply think that Sundance has it right: China is in an unaccustomed lose-lose bind (either Hsi suffers major lose-of-face or the Party’s dirigiste economy heads south for decades, borne as on eagle wings of America’s Trump Prosperity– a wholly unanticipated return to economic/fiscal reality, leveraging free-market, entrepreneurial risk/reward five-to-one against Hsi’s commissars.

    Our sense is that, due to 10 – 15 years of lurking-menace Congressional, Federal Reserve, and K Street / CoC manipulation, U.S. equities from late January 2017 will essentially flatline within +/- 15% or so through the mid 2020s and beyond. This 20-year discount-correction pattern held from Summer 1962 through 1982, when no major index broke above its Kennedy Era peak; in retrospect, the so-called Go-Go Years were no such thing.

    Born 1969, the “participation trophy” Gen X cohort will peak at age 58 in 2026; born 1991, succeeding “safe space” Millennials due to peak in 2048 are already being called “Generation Screwed”– debt-ridden, generally low-skilled, raised to a shrinking-violet, feministical Dependency Syndrome the polar opposite of Keynes’ venturesome “animal spirits”.

    Per Pareto and J.E. Pournelle, this means that through mid-century from c. 2026, Millennials’ functional Upper Quintile will have things their own way, exploiting cosmically lucrative opportunities that leave sadsack “Studies” majors in the dust. As usual, dreadlocked academics will have a mindless “income inequality” field day, complaining bitterly that “capitalism failed” (these tomfools failed themselves); that re-distributive collectivist/Statism will “right your wrongs” by force-and-fraud, using predictable degradation to excuse ever-escalating skew-factors driven by penultimately false-pretense, self-dealing, mealworm interests [see Brussels plus the EU’s entire Southern Tier].

    Alas for Grand Theft Enarques, from c. AD 2030 the info-tech/societal ball will have bounced off their court. Without belaboring the point, let’s just say that, as ye ole Holocene Interglacial Epoch ended in AD 1350, engendering a 500-year Little Ice Age (LIA) through 1850/1890, a pending 70+ year Grand Solar Minimum plus completion of Earth’s 140-year “amplitude compression” (warming) rebound, will incite en masse off-Earth migrations to vast intrasolar refugia orbiting beyond reach of geophysical/terrestrial trauma.

    As the hoary “shaggy dog” tale has it, “When Martin comes, tell him ah jus’ couldn’t wait.”

    Liked by 1 person

  20. SoCal Patriot says:

    All of this baying about immediate price increases didn’t factor in market share. Companies are not just going to increase prices as a result of tariffs. They are going to protect their market share while looking to offset price increases through reducing spend in different areas while looking for alternative sourcing. If EVERY company imported 100% or their goods from China, things would be different, but every company doesn’t source from China, so you cannot increase prices without losing significant market share. Companies don’t believe that the tariffs are permanent, so they do not want to risk losing their hard-earned share of market by raising prices.

    The other fallacy is that if your cost of goods is $25 and you retail it for $100 ($50 wholesale), that a 25% tariff will result in a new retail price of $125. It just doesn’t work that way…the 25% tariff on the cost of goods is $5…everyone in the supply chain will look to cut $5 out of their P&L in order to not pass on the price increase. Why? Because the consumer has choices. Not every company sources from China. Those that do not will not increase their prices – they want to grow market share. That places great pressure on the Chinese-sourced companies to hold the line on their pricing. And guess what? That is exactly what is going on here.

    My company sources components from China and other markets. The tariffs have disrupted the supply chain, but there has been ZERO discussion on raising prices. It is not going to happen as long as companies believe the tariffs are temporary. What is happening is the destruction of the Chinese economy. We are changing where we source from – other countries are stepping in to replace China. This won’t happen overnight, but within two years, most companies will have alternative sourcing solutions. Once the tariff war ends, China will be fighting like hell to regain market share. It won’t be easy for them to do. While they can reduce pricing to regain share, companies will be reluctant to go back to the same levels of sourcing from China.

    Bottom line…the tariffs are a loser for China and disruptive for companies, but there are alternative sourcing solutions that force companies to hold the line on pricing. The world is watching Trump leverage China like no one ever has and while quietly in awe, they must be scared out of their minds that he will do the same to them. If you don’t believe me, just ask Mexico, South Korea and Japan. And now, the golden boy from Canada is coming down to the White House to “kiss and make up”.

    Only Trump could have done this…only he was not dependent on corporate funding.

    Liked by 6 people

    • meow4me2 says:

      SoCal, I was in a meeting this week to do a supplier risk analysis and brought up the Chinese tariff issue. The global sourcing folks said that they were starting to see charges on invoices for tariffs. I asked what if anything are we doing about that. These are the folks that set up a strong CMO relationship with Chinese manufacturers. They said they’re working on it, no details. Because of this group, our supply chain is heavily dependent on China. We have other options though. I’m going to keep pounding the risks of putting too many eggs into the Chinese basket.

      Liked by 1 person

  21. I have a small retail side business and many of the items I sell come directly from China. Thus far my costs on these imports have not increased and they still include free shipping thanks to some big mistakes on the part of our own US Postal Service that gives the Chinese the wonderful benefit of using our tax dollars to subsidize small packages mailed from China.

    However- what IS costing me more is the damn SALES TAX that NEW F*********G YORK is now charging on every single item I buy through Ebay (for example). How is it that NY is now taxing us on things we buy from overseas as well as items purchased from US vendors? This just started in the past month or so- I noticed it on my invoices.

    It turns out that it’s not China that’s screwing me- it’s the corrupt, disgusting POLITICIANS and their insatiable GREED for my hard earned money.

    Liked by 1 person

  22. TradeBait says:

    The long game is higher tax revenues for America while eliminating trade deficits as well as budget deficits over time. Simply – PDT/admin are building a wider base of revenue streams for us while having his cabinet cutting the moochers/cash drainers loose inside the agencies that are unnecessary. The leftists hate this as it undermines their power bases, which is why they are doing everything in their power to disrupt and discredit. WS hates it because they are ultra greedy and could care less about Americans outside of their elitist selves who can afford to live anywhere. It destroys the whole BS “free trade” rhetoric they have sold to the masses. Chicoms and their cronies hate it because their totalitarian designs are being taken apart systematically, which will take them back to the dark ages if they do not change their ways.

    All the people being triggered are the right people to no longer inhabit this earth. Oh well…

    Liked by 2 people

  23. Ghost says:

    Observations from a smaller limb.

    I categorize economist into two groups. Pre and post FDR. 99% are post

    Post FDR state all tariffs bad because they get to blame Smoot/Hawley tariffs on creating the “great depression”. This way they can continue to say how great FDR was and don’t have to blame his policies or the FED’s actions at the time for creating the “great depression.”

    My favorite set of tariffs were the ones instituted in 1824. The pro-slave South (democrats) called them “the tariffs of the abominations”. South Carolina had a vote to succeed the Union over them in 1824 that failed by one vote.

    In my view it was the start of the civil war and the reason the north won. I always counter the tariffs bad argument using the 1824 tariffs as a counter point. Most have to sit there and look stupid because they never studied them or any other actual implementation of tariffs or the positive effects they have had on a historical basis.

    😎

    Liked by 3 people

  24. TheLastDemocrat says:

    Regarding the lack of rise in import prices:
    I was lecturing a son yesterday on basic economics. Specifically, about where a “price” comes from.

    Myself included, most people believe the “price” of an item is determined by taking the production cost and adding some “reasonable” amount of profit. Say, add 10%. Then, you go to the marketplace with your item at its “price.” If you look at things for sale, this kind of makes sense. You can see that the labor and materials for a $10 item might be around $10 while you can see the labor and materials for a $100 item might be round about $100.

    But no. The “price,” we know, is “what the market will bear.” If you make a $10 item, and people will buy it for $100, then you post the price as $100. I sure the heck will. I have had the garage sale finds. I bought an item at a garage sale for $8 and sold for $90. Darn right I did. I priced it at what the market would bear. The original seller could have, if he knew what he was sitting on.

    To get back to the topic of the post:

    It may be the case that the prices China was charging for things were not determined by such fierce competition. There may have been things in place propping up a price above where it otherwise would be. There are not really many steel producers – difficult market entry – this can allow a producer to edge that price up a bit. Plus, our politicians may have built in some market protections of one kind or another.

    So, when the tariffs got added, the producers / sellers could adjust. They could drop prices correspondingly.

    when the Yeti came out, we were paying Top Dollar. The success of the Yeti brought in competition, and now you can get something similar for a lot less. Yeti can either try to sustain the price by its reputation and cache, or they will have to drop their price a bit.

    Same with Chinese imports. They were charging what the market would bear, and now things have changed and they have had to drop prices, and there has been the “room to drop prices: they are still willing to make and sell at this new price. Thus far…

    Like

    • Lester Smith says:

      Prices may go even go lower. England does a lot of business with Vietnam one is Vox at least some of their amplifiers are manufactured there. Point is there are many countries that can and will replace China..
      For example, I was stationed in South Korea in the early 80s I went back their in 86 and the country was completely changed, from poor third world to a fast growing industrial power house. What a change in just a few years. Prosperity is good for the soul of a country and rewarding to the people that live thier. Prosperity is the seed of freedom.

      Like

      • TheLastDemocrat says:

        The price of a Vox amp includes the vanity of having a “Vox” amp. I am not saying they are not great. I am just saying there is wiggle room in the price, since a portion depends on the cache, the status, as well as reputation-based quality.

        Like

  25. Trent Telenko says:

    This is from Strategypage.com and is on-point to Sundance’s piece:

    China – The Dreaded Two Front War

    https://www.strategypage.com/qnd/china/articles/20190604.aspx

    June 4, 2019: The American trade war with China is escalating and that has included an open discussion of grievances that, at the insistence of the Chinese, were never acted on or even discussed openly. That is why this trade war is about more than unfair trade practices. It is also about decades of getting away with stealing trade secrets, violating patents and illegal restrictions on foreign firms entering the Chinese market. Chinese rulers believed no American government would risk the voter backlash, because of short-term damage to the American economy, which would ensue if the U.S. sought to curb unfair or illegal Chinese trade and IP (Intellectual Property) practices. That Chinese assessment was correct until 2018 when it suddenly wasn’t. The worst nightmare suddenly became a reality and at a particularly bad time for China. That was because for the last few years China had been going through a painful economic readjustment from a “growth at any cost” policy to a more prudent “clean up the corruption and accounting fraud before there is a major economic collapse” approach. The Chinese leaders were not just deceiving foreign trading partners but their own people and each other about economic issues. Senior Chinese leaders saw this change in economic direction coming a decade ago and have been trying to clean up their domestic mistakes without triggering a major recession or worse. But now, with the Americans trying to deliver “an offer you can’t refuse” to China, the Chinese find themselves ill-prepared to ignore (as in the past) the foreign threat.

    China has several potential weapons to use against the Americans, but none of them are having the desired effect. Rare Earths and telecommunications dominance, two trade war weapons China was depending on to help them out are suddenly becoming Chinese vulnerabilities. Neither of these items is a new threat for the rest of the world and many foreign victims have been quietly preparing for years to retaliate.

    Rare Earths are a Chinese monopoly that backfired when China earlier tried to exploit their market dominance. In early 2014 the WTO (World Trade Organization) ruled that China had violated trade rules with its 2010 restrictions on rare earth exports. Back in 2010, China tried to use its near-monopoly on the production of “rare earth” metals to jack up prices. The reaction from the rest of the world was widespread, vigorous and hostile.

    “Rare earths” are 18 different ores that are found in tiny quantities all over the world. Because they are expensive to extract and refine, many mining companies don’t bother. But in the last century, more and more rare earths have been found to have useful applications in metallurgy, electronics and other areas. In the last few decades, China has extracted rare earths more cheaply than anyone else and driven nearly all foreign rare earth mining operations out of business. But because of the 2010 Chinese threat, other countries began reviving their rare earth mining operations, even if it required government subsidies. In 2012 many of these nations asked the WTO to examine the situation and decide if China’s rare earths policies had violated WTO rules. The WTO concluded that China was guilty but China did not accept this assessment and basically ignored the WTO. The 2019 American trade war brought forth Chinese threats to halt rare earth exports. That fell flat as the Americans said they would cope and are resuming domestic rare earths production while using stockpiles and other suppliers to get by in the meantime.

    Then the Americans doubled down by going after one of the largest Chinese trade practice offenders; Huawei. For many American and other Western firms, this is a long-sought retaliation against Chinese smartphone and telecommunications giant Huawei. Founded in 1987 by military veterans who still had connections in high places, Huawei used that form of protection to plunder Western tech secrets and ignore foreign patents whenever possible. Many foreign competitors were told if they wanted access to the growing Chinese market, they had to keep quiet about what Huawei had “borrowed” from them. Most foreign companies complied, but none forgot. Now decades of grievances against Huawei are suddenly threatening the very existence of Huawei, or at least greatly reduce its power and potential. The Americans put sanctions on Huawei specifically, cutting it off from American tech. That means Huawei smartphones can no longer use Android (or at least not the most current versions, or receive updates). American suppliers of microchips are also halting shipments. China says it can produce the needed components domestically and has been developing another operating system for their smartphones. But ramping up the domestic production of needed microchips and getting a new operating system accepted by the market takes time. Actually, getting a new operating system accepted by the export markets will be particularly difficult and even getting domestic users to accept it will not be easy. In theory it can be done but in practice, it is one of many desperate measures the normally prudent Chinese are being forced to fall back on.

    The retaliation against Huawei actually began in late 2018 when Huawei executive Meng Wanzhou was arrested in Canada at the request of the United States. Meng Wanzhou is the 46 years old daughter of a former Chinese army officer who was one of the founders of Huawei. Meng was arrested while she was at a Canadian airport transferring from an arriving flight to a connecting one. The Americans have been investigating Huawei for illegally exporting smartphones to Iran and engaging in bank fraud to enable Iran to facilitate foreign trade despite American sanctions against it. Meng Wanzhou, the Huawei CFO (Chief Financial Officer) will be extradited to the U.S. for prosecution if Meng is unable to get a Canadian court to rule against the extradition request. Canadian leaders insist that the law will be strictly observed and justice done. Her lawyers are trying to delay the extradition but her father recently said that he expects his daughter to be convicted and go to jail. Her next court date is in late September.

    Huawei has close ties with the Chinese military and government intel agencies and many Western nations are refusing to use any Huawei equipment in their networks because of the potential for hidden features in Huawei gear that facilitates Chinese espionage or military operations in general. Many victims of Huawei dirty tricks are now going public with the details since it is safe to do so with Huawei and the Chinese government on the defensive. Huawei has ordered production cuts as foreign customers realize that importing Huawei is, at least for the moment, not a wise business decision.

    The rest of the Chinese economy is also fearful of what comes next. There should no surprise as other nations in Asia have already been taking Chinese manufacturing jobs as China has a growing labor shortage because of the smaller generations of Chinese produced after the “one child per family” program was instituted in the 1980s. The government recently eased up that policy but it was too late. Many more affluent (than 30 years ago) Chinese women do not want to have more than one or two (or any) children. This is a common problem with affluence and has already hit Japan and South Korea. Make a lot of enemies on the way up and you can expect others to hurt you rather help you when you are on the way down, and that is what China faces now.

    However, this trade war plays out, China will remain a formidable industrial power, even if forced to play by the rules everyone else does. Even without the trade war, China is faced with the problem of shifting from an economy largely dependent on exports to one that relies more on Chinese consumers. The problem with Chinese consumers is that, despite China still being a communist police state, the new wealth has been achieved by allowing a free economy to thrive. Chinese consumers are not easily manipulated because, unlike foreign suppliers and customers, the Chinese live with whatever China is doing to the foreigners. Chinese are already angry about the mistreatment they have received from the government, like air and water pollution, corruption, abuse of power and so on. While China will eventually come out of all this in one piece, for the moment the government is fighting a two-front war and victory, or survival of the current government is by no means certain.

    Liked by 3 people

  26. Moe Grimm says:

    Indeed. Surely this will main topic for the serpent’s Sunday “talk shows” today, no? Hadn’t made my way to this and likely would have missed. Thanks Sundance. If you are not the next recipient of a Pulitzer for investigative journalism, no one should ever be again. The rest of YOU… we missed the last nomination process, but the next one is squarely ahead with ample time though this time will give way quickly. THINK. Start here: https://www.pulitzer.org/page/frequently-asked-questions. This will take a very doable amount of coordination. Somebody here with a website would do just fine…

    Liked by 1 person

  27. archie says:

    There are probably about five people in the professional economist cadre that believed what Trump is doing was correct. I know Larry Kudlow was not a supporter of Trumps economic policies in the decades before Trump was elected. Trump is doing something so foreign to the training economists receive that they have a hard time understanding the rationale and theory.

    Like

  28. Moe Grimm says:

    EVERY-ONE should keep close the fact our Country shaped the industrial revolution and all that we became, fully, while the gumint was funded with import tariffs. Then in 1913 the 16th amendment brought the fed tax. And rest assured this is, per “pedigree”, never mentioned by the likes of Tom Donohue or his like ilk the Koch Bros. Take anyone opposing what PDT is doing – take that name and check their background let alone the lobbied activities for specific congressional serpents. It actually makes me crazy i breath the same air they do. I always wonder if they have kids, grand children. That they’d abdicate wholesale their future with this and much more tells one who and what they precisely are. THeir is pure truth in the term “Enemies foreign and domestic”.

    Liked by 1 person

  29. Alan Reasin says:

    China’s warnings to foreign businesses and their heavy handedness in Hong Kong will further spook the investment in their country. They apparently don’t understand risk factors in business decisions about where to invest and when to terminate investment. Some investment is apparently presently moving out of China and their threats only make it worse. I thought they were smarter than that, but I guess when you have had a free hand for decades, totalitarian counties have problems adapting to a new reality.

    Liked by 2 people

  30. Wall Street was NOT wrong- they were lying to protect the internationals and the exfiltration gravytrain.

    Liked by 1 person

  31. 6x47 says:

    China’s response to Trump’s holding a knife to their throat with tariffs: Slit their own throat!

    Well played, Mr. President.

    Like

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