Trump-en-omics

May 13, 2019

Trump has formally signaled his mastery of global economics and some of the ways he believes U.S. trade policies will help guide the world economy toward optimum performance.

Some have said our president seems to be really out of control, that he must have skipped all of the courses on economics and finance when he was in school (he did go to school, right?).

I believe some further research is in order.

Although Trump continues his infatuation with Twitter where he openly shares classified information with the world, he also has his thumbs on the Tariff Buttons.

Most alarming?  He apparently has the nuclear codes.

Meanwhile, since mid-April, the actions of our president have cost me a significant amount of my accumulated and hard earned savings.  And, it could be worse!  If I was fully invested in traditional equities, it would have been even more painful!

But, enough about me.

The most recent abrupt and unjustified increase of U.S. tariffs on $200 Billion of Chinese goods from 10 percent to 25 percent triggered a response from China which predictably exacerbates continued economic damage to the U.S. agricultural sector, and compounds spillover impacts to related industries.

The Trump Trade War has been extremely harsh on farmers.  Over time, our farmers learned to deal with unpredictable weather; wind storms; disease outbreaks; hordes of locusts; crop loss during storage; and wildly fluctuating prices of both inputs and crops.

It seems clear they never anticipated having a White House which would use them as sacrificial pawns to engage in quixotic battles against imaginary foes.

Longer term and behind the curtain, tariff increases on Chinese imports will drive up domestic prices on a broad array of consumer products, finished goods, and intermediate goods – even some raw materials used in basic manufacturing in the U.S.

The good news:  the effects of these most recent tariff increases probably won’t show up for 90 days, or so.

The bad news:  the costs of the these tariff increases will be fully borne by U.S. consumers, and the effects of tariff increases will result in price increases which will temper domestic economic growth while concurrently sending signals of an increase in core inflation, likely resulting in interest rate increases by the Fed.

And, it just gets worse from there…..

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