President Trump says he is “winning big time, against China.” But his trade war is causing measurable damage to the U.S. economy, with the pain likely to worsen.
Forecasting firm Moody’s Analytics estimates that Trump’s trade war with China has already reduced U.S. employment by 300,000 jobs, compared with likely employment levels absent the trade war. That’s a combination of jobs eliminated by firms struggling with tariffs and other elements of the trade war, and jobs that would have been created but haven’t because of reduced economic activity.
The firm’s chief economist, Mark Zandi, told Yahoo Finance that the job toll from the trade war will hit about 450,000 by the end of the year, if there’s no change in policy. By the end of 2020, the trade war will have killed 900,000 jobs, on its current course. The hardest-hit sectors are manufacturing, warehousing, distribution and retail.
Other data back up the Moody’s Analytics numbers. Employers have created 1.3 million jobs so far this year, down from 1.9 million during the same period in 2018. The manufacturing sector has actually contracted, with many producers struggling with higher prices caused by Trump’s tariffs. Business investment is growing by the smallest amount since late 2016.
Beginning last year, Trump has hiked tariffs on about half of all imports from China. The average tariff on Chinese imports has risen from 3.1% before Trump got tariff-happy, to 21.2% now, according to Chad Bown of the Petersen Institute for International Economics. Those are taxes paid by American importers, who do their best to pass the added cost on to their own customers. Sometimes they can’t, and have to absorb the tariffs as a higher cost that lowers profits. And sometimes they can force their Chinese vendors to lower prices, to help offset the higher cost of the tariffs.
On Sept. 1, Trump imposed a 15% tariff for the first time on finished consumer goods imported from China, including clothing, shoes, appliances and food. A similar tariff is due to go into effect Dec. 15 on a deeper set of consumer goods, including electronics and smartphones. At that point, the average tariff would have risen to 24.3% and Trump would have hiked taxes on virtually everything imported from China.
An ‘escalation’ scenario
China has done the same to American exports, and simply refused to buy some American products, such as agricultural goods. Negotiators will restart trade talks soon, but many analysts are skeptical of a deal between two egocentric presidents insistent on saving face. “We remain skeptical that [Chinese President] Xi will be willing to accept any deal, even one that is limited in scope, with Trump going forward,” Beacon Policy Advisors told clients recently.
Trump is in denial, if his public comments are any indication. He says repeatedly, and falsely, that China is paying the tariffs, rather than Americans. He says the economy is doing great even though it’s clearly slowing down. Growth is only around 1.6% at the moment, and it could slow to 1% or worse by the end of the year.
Nobody knows where the trade war is headed. Moody’s Analytics examined an “escalation” scenario with even higher tariffs and other trade hostilities between China and the United States. The Federal Reserve tries to intervene by rapidly cutting interest rates to zero, but there’s still a deep recession in the U.S. and Europe. In a de-escalation scenario, Trump makes a deal with China by the end of 2019 and gradually removes the existing tariffs. The economy stabilizes and stocks rally.
Many investors assume Trump has no choice but to hammer out a trade deal with China, because his reelection depends on it. But many of those same investors thought there’d be a trade deal by now, and never foresaw Trump going as far as taxing consumer imports. The key factor may be whether Trump believes his own fictitious spin, or can actually see the harm his trade war is causing.
Trump’s Economic Miracle
Bloomberg: Trump claims that he’s presiding over the strongest economy ever. The growth is debt-based. By Shawn Tully, Richard Wolffe
As a candidate, Donald Trump said he could eliminate the national debt in eight years, largely by focusing on better trade deals. But in office, Trump has presided over a considerable increase in red ink, with annual deficits expected to surpass $1 trillion as soon as 2019.
Total debt outstanding is now approaching $22 trillion.
Even the prayer people are happy to set aside their morals. They know that Trump’s kind of magical thinking is precisely what the world needs right now, otherwise everybody would get very upset at the way the planet is warming, the threat of nuclear war, and the global refugee crisis. Right now we obviously need the kind of leader who is completely ignorant about the consequences, and just lives in the moment.
The economy is, in fact, expanding pretty fast –- but not necessarily for the reasons Trump said it would. The president promised to squeeze more American growth out of businesses and foreigners. Instead it’s the government, deploying its balance sheet via deficit-spending, that’s doing the work.
Citing numbers spinning out of the USDebtClock.org website, the U.S.’s unfunded liabilities are $122 trillion — or six times GDP.
Prolific sales of junk bonds and significant growth in investment grade corporate debt, coupled with the Federal Reserve weaning the market off quantitative easing, have resulted in “an ocean of debt.”
TheGuardian: Interest in travel to the US has “fallen off a cliff” since Donald Trump’s election, according to travel companies who have reported a significant drop in flight searches and bookings since his inauguration and controversial travel ban.
Data released this week by travel search engine Kayak reported a 58% decline in searches for flights to Tampa and Orlando from the UK, and a 52% decline in searches for Miami. Searches for San Diego were also down 43%, Las Vegas by 36% and Los Angeles 32%.
It is the latest in a string of reports from the travel industry that suggests a “Trump slump”, with the Global Business Travel Association (GBTA) estimating that since being elected President Trump has cost the US travel industry $185m in lost revenue.
Esquire: This One Trump Tweet Cost Amazon $5.7 Billion By Olivia Ovenden
The Independent reports that, “Amazon’s shares lost 1.2 per cent of their value in two hours of pre-market trading after Mr Trump’s comments.“
The swipe comes after Trump’s criticism of Amazon owner Jeff Bezos, who also owns the Washington Post in a separate holding company. In 2015 Trump accused the newspaper of being a tax shelter to reduce Amazon’s tax bill.
Amazon.com have announced they will add over 50,000 jobs in America to help with customer orders and have pointed out that they collect state sale taxes (as brick and mortar retailers are obliged to) in 45 states.
Perhaps a little rich coming from the POTUS whose tax returns we are still yet to see.
3.) TAX CUTS:
VanityFair: “It’s a Ponzi Scheme”: Wall Street Fears Trump’s Deranged Tax Plan Could Kick Off Economic Euthanasia By William Cohan
Elimination of the deductibility of state and local taxes. That is obviously a cynical, politically motivated ploy on Donald Trump’s part to penalize voters who didn’t vote for him (for good reason) in high-tax blue states, such as New York and California, and to give a benefit to the red-state voters who did vote for him. (I get it, elections have consequences.) Eliminating the deductibility of state and local taxes is an incredibly divisive plan.
It’s leading to another housing crisis.
The National Association of Realtors commissioned a recent study that shows that the elimination of the deduction for state and local taxes will result in a decrease in home valuations of between 10 percent and 17 percent.
Wait, there’s more. Trump’s tax cuts of course do not pay for themselves. According to the non-partisan Congressional Budget Office, it will add around $1.5 trillion to the federal debt over 10 years.
It’s a sugar high that extended the market rally temporarily, but has deepened the rot in our economic cavity.
Newsweek: Donald Trump’s Trade Wars Have Cost Nebraska Farmers Over $1 Billion and Counting, Farm Bureau Says By Jason Hall
Farmers in the Cornhusker State have lost more than $1 billion in revenue due to the retaliatory tariffs as foreign customers decline to pay higher prices for goods, according to a new report issued by the Nebraska Farm Bureau.
“Retaliatory tariffs make our U.S. products more expensive for international customers, meaning they buy less or buy from someplace else,” Nebraska Farm Bureau President Steve Nelson said in a press release. “This report provides a clear picture of how much we’ve lost due to those tariffs and the need to improve our trade relations.”
President Trump continues to praise the imposed tariffs, claiming they have benefited American steel interests and denied the notion that they have created problems for the U.S. automobile industry.
“The total loss in Nebraska farm revenues due to the retaliatory tariffs ranges from $695 million to $1.026 billion so far in 2018,” Rempe said. “That’s roughly 11 to 16 percent of the export values of Nebraska agriculture goods in 2017.”
“To put a $1.2 billion loss into perspective, every person in the state of Nebraska would need to contribute $632 to cover that volume of lost dollars,” Rempe said. “That’s a significant hit to our state’s economy.”
ModernFarmer: Trump’s Renewal of Cuba Embargo Cost Farmers $125 Million Annually By Dan Nosowitz
Trump’s embargo essentially takes Cuba off the table for American agricultural exports, and many of the country’s biggest trade groups have spoken out against it.
Trump has not been notable for prioritizing the agricultural industry, either during the campaign (when he gave only a single policy speech about agriculture) or as president (he took months to even bother appointing a USDA secretary). But actions to curb trade for one of the country’s biggest industries – even aside from the geopolitical and human rights problems with a Cuban embargo – is unexpected. Is this just one more piece of evidence that farmers could not be further from the top of Trump’s priority list?
Newsweek: Taxpayers Will Pay for $12 Billion in Aid to Farmers to Cover Losses Caused by Trump’s Tariffs By Nicole Goodkind
The Trump administration announced Tuesday a $12 billion emergency aid package for farmers caught in the middle of his ongoing and escalating trade wars with China, Europe, Canada and Mexico.
The White House will use a Depression-era program called Commodity Credit Corporation which allows the administration to borrow up to $30 billion from the Treasury Department in order to protect farmers’ incomes without Congressional approval.
Farmers are being hit hard by Trump’s trade war. Corn and soybean crop prices have dropped dramatically since the U.S. began implementing new tariffs on its allies. Pork farmers, who typically export pig hoofs and heads to China, have also been hit after China added a 50 percent tariff on the animal parts.
AutoNews: How my president’s tariffs would cripple my company — and U.S. manufacturing By Mary Buchzeiger
I am a business owner, a proud Republican and a voter who supports President Donald Trump’s campaign to level U.S. trade imbalances.
I am also angry, frustrated and a little scared, because the unintended consequences of the president’s $50 billion tariffs on China will cripple my business in Auburn Hills, Mich., and strip my 50 employees of their good-paying jobs.
Newsmax: US Business Group: Trump’s China Tariffs Cost $1.4 Billion a Month
A coalition of U.S. business groups fighting President Donald Trump’s trade tariffs has launched an advertisement aimed at telling voters ahead of the midterm elections that the measures are costing American businesses and consumers $1.4 billion a month.
The group, which branded itself “Tariffs Hurt the Heartland,” crunched tariff payment data by state and nationally and provided the findings first to Reuters.
“These tariffs are taxes on American businesses and consumers,” said group spokeswoman Angela Hofmann. “They aren’t paid by other countries. They are paid here at home.”
The business coalition includes groups representing some of the nation’s largest companies, including members of the National Retail Federation and the Retail Industry Leaders Association. Among groups to join are the American Petroleum Institute, which represents major oil companies like Exxon Mobil and Chevron, and the Retail Industry Leaders Association, which represents retail chains like Target and Autozone.
DailySignal: Trump Tariffs Cost 5 Jobs for Single Job Gained, Analysis Finds By Fred Lucas
The job losses will be direct and indirect, as price hikes will hit American companies that buy international steel to make screws, wires, and machines, Laura M. Baughman, president of the Trade Partnership, said during a Heritage Foundation event.
The Trade Partnership anticipates a net loss of 146,000 U.S. jobs, Baughman said.
The tariffs will increase U.S. employment for the iron and steel sector—mainly for aluminum, according to the Trade Partnership study.
However, the consumer price hikes and price increases for business will cost 179,334 American jobs for the rest of the economy.
There would be more than 36,000 American jobs lost in the manufacturing sectors, including a loss of more than 12,000 jobs for fabricated metals, more than 5,000 lost for motor vehicles and parts, and more than 2,100 in transportation equipment makers, according to the report.
Small business will be the hardest hit, said Vanessa P. Sciarra, a vice president with the National Foreign Trade Council.
Refinery29: She Lost Her Job In The Shutdown. Now She Has A Message For Trump. By Natalie Gontcharova
As an active National Air Traffic Controllers’ Union member, Trisha Pesiri-Dybvik said she’s deeply honored to be able to speak up on her colleagues’ behalf. During the shutdown, her job was deemed non-essential, and her husband’s workload increased to make up for the furloughed staff. Neither of them were receiving paychecks.
Her husband, a Navy veteran who is also an air traffic controller, worked without pay.
Because of the nature of air traffic controllers’ jobs, shutdown-related stress had the added layer of being a risk to people’s safety. “Every single day the shutdown continued, the system was a lot less safe than the day before,” Pesiri-Dybvik said.
Quartz: The US government shutdown cost Booz Allen Hamilton $20 million in revenue By Justin Rohrlich
Booz Allen Hamilton, the Virginia consulting firm and defense contractor that Bloomberg once called “the world’s most profitable spy operation,” suffered a $20 million hit to revenue in the recent quarter, as a result of the recent US government shutdown.
“It’s hard to say…whether we’ll completely make it up,” chief financial officer Lloyd Howell told analysts on a Feb. 1 earnings call, adding that the company “aspire[s] to get back on track as quickly as possible.”
Howell also said Booz Allen is dealing with a $100 million reduction in operating cash flow because of the shutdown—the impact of stalled receivables he is “very confident” the firm will collect, including a $30 million tax refund from the now-reopened IRS.
More than 97% of Booz Allen’s revenue comes from government contracts, and 69% of its workforce holds a security clearance. The company’s total revenue for the full fiscal 2018 year was $6.2 billion.
USA Today: Donald Trump jeopardizes national security By Karen Hobert Flynn
Donald J Trump has stepped all over the men and women who sacrifice their lives for our nation. Add that his treatment of General Mattis is a shame. If he won’t listen to our intelligence and our military, who will he listen to?
U.S. intelligence officials alerted the country that China and Russia are working together to challenge U.S. leadership. Whereas Trump has indicated that we are headed for peace with North Korea, U.S. intelligence officials reported that North Korea isn’t giving up nuclear weapons.
Intelligence leaders have not identified a security crisis at the U.S. border, even as the president has said that he is considering an emergency declaration forcing the military to build his border wall.
Intelligence has warned that the Islamic State is capable of attacking America despite Trump’s declaration that ISIS has been defeated.
Lastly, U.S. officials have said that Iran is actually not trying to build a nuclear weapon in violation of an international agreement with the United States, which is the opposite of what the Trump administration has stated and then walked back.
One read of these circumstances is that Trump wishes to be allies with the very countries U.S. intelligence is most concerned about. Whether the president wishes to acknowledge it or not, U.S. intelligence has made it clear that the U.S. role in the world is on the cusp of being seriously challenged. He is making us less safe.
NBC: President Trump’s travel costs now total over $13 million, right-leaning Judicial Watch reports By Ali Montag
The total cost of President Donald Trump’s travel expenses — including trips to his Mar-a-Lago estate in Florida, and Bedminster, N.J. golf club — has now surpassed $13.5 million, according to a report by Judical Watch.
Through Freedom of Information Act requests, the conservative watchdog group accessed documents from the U.S. Department of the Air Force. Those data show that the president’s non-official travel to rallies and vacations have cost $3.2 million alone since June of 2017.
All told, the president has amassed $13,533,937.28 in total first-year travel costs, the organization found.
AP Trump rollbacks for fossil fuel industries carry steep cost
As the Trump administration rolls back environmental and safety rules for the energy sector, government projections show billions of dollars in savings reaped by companies will come at a steep cost: more premature deaths and illnesses from air pollution, a jump in climate-warming emissions and more severe derailments of trains carrying explosive fuels.
The Associated Press analyzed 11 major rules targeted for repeal or relaxation under Trump, using the administration’s own estimates to tally how its actions would boost businesses and harm society.
The AP identified up to $11.6 billion in potential future savings for companies that extract, burn and transport fossil fuels. Industry windfalls of billions of dollars more could come from a freeze in vehicle efficiency standards that will yield an estimated 79 billion-gallon (300 million-liter) increase in fuel consumption.
On the opposite side of the government’s ledger, buried in thousands of pages of analyses, are the “social costs” of rolling back the regulations. Among them:
— Up to 1,400 additional premature deaths annually due to the pending repeal of a rule to cut coal plant pollution.
— An increase in greenhouse gas emissions by about 1 billion tons (907 million metric tons) from vehicles produced over the next decade — a figure equivalent to annual emissions of almost 200 million vehicles.
— Increased risk of water contamination from a drilling technique known as “fracking.”
— Fewer safety checks to prevent offshore oil spills.
For the Trump administration and its supporters, the rule changes examined by AP mark a much-needed pivot away from heavy regulations that threatened to hold back the Republican president’s goal of increasing U.S. energy production. But the AP’s findings also underscore the administration’s willingness to put company profits ahead of safety considerations and pollution effects.
In another instance, the Environmental Protection Agency wants to stop considering secondary benefits of controlling mercury emissions — namely reductions in other pollutants projected to prevent up to 11,000 premature deaths.
Last month, the AP revealed that the administration understated the advantages of installing better brakes on trains carrying crude oil and ethanol. Transportation Department officials acknowledged they miscalculated potential benefits by up to $117 million because they failed to include some projected future derailments.
Trump’s administration has stressed that savings for companies were greater than any increased perils to safety or the environment.
Critics say the impact on public health and the environment will be even worse than projected.
“I don’t think it’s well understood what the death toll of these policies will be for the American people,” said Paul Billings, of the American Lung Association.
NYPost: Goldman Sachs: Trump’s tax cuts could cause recession By Kevin Dugan
A large part of the problem is debt. The Trump’s policies, from huge tax breaks to unprecedented mass deportations, cost a lot.
Also expanding military spending and border patrols outlays, that will not be financed and will add to the government’s already large debt. That will crowd out other economic activity and raise interest rates.
President Trump’s $1.4 trillion tax cut will have painful consequences for the economy down the road — including a recession and a ballooning deficit, according to Goldman Sachs.
“The US fiscal outlook is not good,” Goldman’s chief economist Jan Hatzius said.
Goldman doesn’t believe that Congress is likely to do anything about the runaway deficits “in the near-term,” thanks to the election cycle.
The Wall Street powerhouse — whose former president Gary Cohn helped engineer the tax package as the White House economic adviser — dismissed economic projections by the Congressional Budget Office as too “optimistic,” and said that the deficit could spike by about 2.5 times, to $2.05 trillion.
MercuryNews: Trump cost California’s Republican Party — big time By George Skeltob
The crucial misstep for the Republican losers was voting for Trump’s tax cuts — which actually were tax hikes for many of their constituents — and to kill popular Obamacare.
We’re actually in trouble in California. The homeless population is going through the roof, we’ve got the highest poverty rate in the country.
Look at the two biggest policy initiatives of his presidency.
By forcing borrowing costs up, the Trump deficit contributes to rising interest rates. That makes it much harder for working families to buy homes.
Indeed, the $5 trillion that President Donald Trump said his tax cuts would bring back into the country has, according to the Wall Street Journal, been more like $143 billion so far – or 97 percent short of his stated goal. Which is why it should be no surprise that the investment boom all this money was supposed to set off hasn’t materialized either.
Republicans were quite open about the fact that they had to cut corporate taxes or their moneymen would cut them off. “The financial contributions will stop,” Sen. Lindsey Graham, R-S.C., bluntly put it, if they let their tax bill get derailed like their health-care plan had.
BANKRUPTING AMERICA: The daily security costs for Trump Tower alone are estimated to be between $127,000 and $146,000, or roughly $50 million per year.
Trump’s decision to charge the Secret Service $60,000 for the use of Mar-a-Lago golf carts is a direct transfer of money from the public to the Trumps’ pockets.
The president is wasting the taxpayer’s money at a time when the country is too broke to properly fix health care, repair infrastructure, reform the tax system, adequately educate children, appropriately fund research, and, yes, even build Trump’s wall.
Six decades of deceitful accounting by both parties are to blame.
DRAINING THE SWAMP:
• The pro-democracy rhetoric is still dutifully spouted by politicians and mass-media mouthpieces, but in practice the US is no longer a democracy. It has been turned into a lobbyist’s paradise in which the lobbyists are no longer confined to the lobby but have installed themselves in congressional offices and are drafting prodigious quantities of legislation to suit the private interests of corporations and oligarchs. Nor is the American penchant for democracy traceable in the support the US lavishes on dictatorships around the world or in its increasing tendency to enact and enforce extraterritorial laws without international consent.
• Laissez-faire capitalism is also very much dead, supplanted by crony capitalism nurtured by a thorough melding of Washington and Wall Street elites. Private enterprise is no longer free but concentrated in a handful of giant corporations while about a third of the employed population in the US works in the public sector. The US Department of Defense is the largest single employer in the country as well as in the whole world. About 100 million of working-age able-bodied Americans do not work. Most of the rest work in service jobs, producing nothing durable. An increasing number of people is holding onto a precarious livelihood by working sporadic gigs. The whole system is fueled—including parts of it that actually produce the fuel, such as the fracking industry—by debt. No sane person, if asked to provide a workable description of capitalism, would come up with such a derelict scheme.
• Free trade was talked up until very recently, if not actually implemented. Unimpeded trade over great distances is the sine qua non of all empires, the US empire included. In the past, warships and the threat of occupation were used to force countries, such as Japan, to open themselves up to international trade. Quite recently, the Obama administration was quite active in its attempts to push through various transoceanic partnerships, but none of them have succeeded. And now Trump has set about wrecking what free trade there was by a combination of sanctions and tariffs, in a misguided attempt to rekindle America’s lost greatness by turning inward. Along the way, sanctions on the use of the US dollar in international trade, especially with key energy exporting nations such as Iran and Venezuela, are accelerating the process by which the US dollar is being dethroned as the world’s reserve currency, demolishing America’s exorbitant privilege of endless money-printing.
The US military is still huge, but it is quite flaccid. It is no longer able to field a ground force of any size and confines itself to aerial bombardment, training and arming of “moderate terrorists” and mercenaries, and pointless steaming about the oceans. None of the recent military adventures have resulted in anything resembling peace on terms that the American planners had originally envisioned or have ever considered desirable: Afghanistan has been turned into a terrorist incubator and a heroin factory; Iraq has been absorbed into a continuous Shia crescent that now runs from the Indian Ocean to the Mediterranean Sea.
US military bases are still found throughout the world. They were meant to project American power over both hemispheres of the globe, but they have been largely neutralized by the advent of new long-range precision weapons, potent air defense technology and electronic warfare wizardry. These numerous “lily pads,” as they are sometimes called, are the opposite of military assets: they are useless but expensive targets located in places that are hard to defend but easy for potential adversaries to attack. They can only be used for pretend-combat, and the endless series of military training exercises, such as the ones in the Baltic statelets, right on the Russian border, or the ones in South Korea, that are meant to be provocative.
Around the world, the US is still loathed, but it is feared less and less: a fatal trend for an empire. But America has done quite well in militarizing its local police departments, so that when the time comes it will be ready to go to war… against itself.
Homeless U.S. Veterans
Child homelessness in U.S. hit all-time high in recent years, new report says
2.5 million homeless children in America today
40% of homeless have jobs – vets homeless too