If you need to keep some manufacturing around for national security reasons you could and do subsidize them.

That's actually the argumentation behind a lot of the food importation restrictions that are in place between Canada and the US, dairy product for example, or with any other country for that matter. It would not be wise to outsource part of your basic food production, so you have to protect it or else you surrender your sovereignty to someone else. As you said, Covid did teach everyone about the importance of having local supply of some critical stuff.

I guess, the whole issue is about just how much local production you need to protect per sectors based on your available raw resources, etc. Just how reliable are your trade partners in the long term is also a big deal in all of this.

Mine, too. I do think that ideologies and politics from the macro to the micro cause immeasurable and unnecessary suffering.

It certainly appears that redundancy is necessary, though...in this and other things, and thank goodness (and good planning) it was there!

Glad to be able to read your thoughts here in forums again, Brad.

Messing around with trade/tariff restrictions means stock exchange/investment uncertainty.

What America has done in one day wiped $45,000 AUD off my superannuation.  Money I had worked for for half a century.

My choices will be simple.  I need to die earlier than expected.

I am finding the back and forth on tariffs pretty annoying.  

Fmr. Treasury Secretary Yellen: Patterns suggest loss of confidence in U.S. economic policy

I think the World is.

Life might be a 'box of chocolates' but it's not someone's Monopoly game ...

I totally agree. I am fed up with this "shoot from the hip style" of governing!

pelaird

reply 8

Quoting Jafo,

reply 7

Quoting Frogboy,

reply 5

I am finding the back and forth on tariffs pretty annoying.  

I think the World is.
Life might be a 'box of chocolates' but it's not someone's Monopoly game ...

I totally agree. I am fed up with this "shoot from the hip style" of governing!

First, the bold font is mine. I agree with it entirely. I also agree with the need for redundancy in production to prevent that Monopoly mindset.

The largest minus in redundancy is heat and chemical pollution which are destroying the only planet we have.

There clearly is no simple solution to any of this, and we will not be the ones to solve it by ourselves here, but if I've learned anything in 77 years, extreme views and actions will not produce anything but more extremism and ascending hostilities, both on the micro and macro scales.

Here's hoping the Messiah comes, or returns, whichever you believe in...but I suspect we're all going to have to learn to work together on this and learn that the middle road and moderation in all things are the better, if far more difficult path, are the way to go while waiting for Him.

Just my geriatric $0.02. Thanks for your patience with an old guy. 

This is so true and tragic.  For a long stretch it seemed like we were making progress, but at the moment the world seems to be backing away from the lessons of the world wars.  I hope it is short-lived.

These kinds of large broad-based tariffs raise prices on everyone.  So, people living paycheck to paycheck, retired people, and disabled people feel it the most.  The back forth now it's on now it's off doesn't help because the overall message is the tariffs are not going away.  This is just a temporary reprieve in payment for your support.

Protectionism at this scale raises prices too greatly and will not be offset by new investment.  Currency valuations are the economic mechanism by which trade should rebalance itself.  The old adage we are sending them pictures of dead presidents in exchange for trade goods comes to mind.  The value of dollars will decrease relative to the foreign currency.

Strategic direct subsidy of key resources and products would be better.  The goal isn't economic growth.  It is instead strength, self-sufficiency, and reduced cost.

I also am a firm believer in development.  I would like to see us develop hydrogen for energy.  It is feasible today. 

Power generation can be developed using offshore generators that use tidal currents for the needed mechanical energy.  The tides are completely reliable and predictable.  The electricity could then be used inland for hydrogen generation and collection in targeted water basins (man-made and natural).  The natural gas pipeline infrastructure already exists to transport hydrogen everywhere in the US.

I also would like to see an end to government retribution to critics of the government.

It's going to happen.......

Today's announcement.  According to the White House, 'China now faces a tariff of up to 245% on imports to the United States as a result of its retaliatory actions.' 

And, China's official policy is they are not afraid of a trade war.

The tit for tat will likely continue.

The latest higher tariffs will cause higher inflation and slower growth.

Fed Chair Jerome Powell addressed Economic Club of Chicago today.

The full speech from Wall Street Journal

Say good-bye to all the small businesses that were using China for their products and cannot find another source.

I thought I would share some insight into trade, fiscal policy, and monetary policy dynamics.  The free hand of supply and demand will always win out in the end.  I will give an overview of why this is the reality.

Let's say there are two countries, the US and China.  The US produces apples and oranges and uses dollars.  China produces apples and oranges and uses the yen.

The current value of the dollar and yen are 1 dollar equals 1 yen.  China has many oranges but not quite enough apples.  The US has lots of apples but craves many more oranges.  The trade between the two countries will be made in dollars and yen.  Let's see what happens.

The current world price is apples and oranges are each worth 1 dollar and 1 yen.

China wants 500 thousand apples.  The US wants 1 million oranges.  The US sends China 1 million dollars for 1 million oranges and China sends the US 500 thousand yen for 500 thousand apples.

But China does not want 1 million dollars because it has to pay its companies in yen, and the US has the same problem it does not want yen since it pays its companies in dollars.

So, if the US and China then swap currencies 1 million dollars is worth 500 thousand yen making the new currency equilibrium 2 dollars are equal to 1 yen.  This trading dynamic is back in balance with no trade deficit due to currency valuation.  This is a simple example of how the free hand of supply and demand for oranges, apples, dollars and yen achieve balance all on their own.

However, for years China has been buying US debt with its excess dollars.  So, in this regard there is no trade imbalance. China has been buying some US goods and the rest spent buying US debt with all the dollars the US has been spending in China.  However, even though in terms of physical goods alone there has been a substantial trade imbalance, China solved its problem of too many dollars (pictures of dead presidents) by buying the US debt.

Yet this result is largely of the US's making because it has been running large budget deficits for years.  Afterall, what is China to do with all the excess dollars it received over the years? It both facilitated the US demand for Chinese goods and preserved the value of its monetary holdings by buying US debt which pays interest.

The supply of US debt would decrease if the US would once again balance its budget.  During the Clinton administration there was a great deal more cooperation between Democrats and Republicans and that made a balanced budget happen.

If the US were to do this again, it would cause the dollar to weaken relative to the yen since China would accumulate more dollars, and with there being no more US bonds for China to purchase the dollar would weaken relative to the yen.

So, what would happen if the Fed were to lower interest rates right now.  It could increase the money supply by buying US debt.  That would increase US debt prices and lower interest rates.  Doing this during times of inflation increase inflation further it would also increase the value of US debt that China holds (its war chest to survive the trade war).

The tariffs are not a free market activity.  They will cause severe disruptions to trade, investment and inflation.  The free markets will apply its own pressures on supply and demand in all the markets for goods services (GNP), prices, interest rates, investments and jobs.