aside Canada Is Not Playing Nice As President Trump Announces Imposition Of New Tariffs

On the 31st of May 2018, the republican President Donald Trump pressed forward to enact his planned tariffs on steel and aluminum. Of course the US stock market took a dive.

The market does not react well to the president’s mercurial decision making on this subject where he goes back and forth on whether to enact these sanctions or not. But this is one of his rare core beliefs even if wrong, and he did make this promise to his base at his rallies during the campaign season.

See: Is Trump in a Trade War? – Peterson Institute for International Economics/ PIE.COM

Smoot and Hawley.
SMOOT-HALLEY

As I’ve mentioned in the past, US legislators have avoided this tactic at all costs because our past experience with the SmootHawley Tariff inplemented in 1930  by the US Congress was an unmitigated disaster. As per Wikipedia, At first, the tariff seemed to be a success… (but then) US imports decreased 66% from $4.4 billion (1929) to $1.5 billion (1933), and exports decreased 61% from $5.4 billion to $2.1 billion. GNP fell from $103.1 billion in 1929 to $75.8 billion in 1931 and bottomed out at $55.6 billion in 1933. Imports from Europe decreased from a 1929 high of $1.3 billion to just $390 million during 1932, while US exports to Europe decreased from $2.3 billion in 1929 to $784 million in 1932. Overall, world trade decreased by some 66% between 1929 and 1934.

In May 1930, over a 1000 economists signed a letter addressed to the US Congress, advising about the likelihood of negative consequences if the US Congress passed its tariffs’ bill. That same scenario is playing out today. But the president needs to read his history.

The US Commerce Secretary Wilbur Ross claims that the imposition of the current planned tariffs will only effect the US economy by about 1%. One percent is a big deal when the US president and the GOP in the US Congress were counting on a minimum of 3% GDP growth in 2018 to support the 2017 GOP tax cuts bill. For the 1st quarter in 2018, the US GDP is only 2.2%.

Here is the rest of the story… 

On May 31, 2018, Salvatore Nicholas of the Washington Press penned the following report, “Trump just declared a trade war against Canada. Trudeau’s response is brutal”

Excerpts:

Related image“President “Deals” continues to prove day after day that he knows nothing about making, well, deals. For proof, look no further than Thursday’s stock market dip after Trump placed 25% and 10% tariffs respectively on Canadian steel and aluminum.”

“As our neighbor to the north, Canada has long been an ally of the United States, but years of civility between the two nations is falling apart faster than Donald Trump’s toupee in the wind.”

“After Trump’s disastrous announcement, Canadian Prime Minister Justin Trudeau was forced to respond – and he did so by imposing his own $16.6 billion dollar tariffs on American goods.”

“Deals, deals, deals.”

“Trudeau took the podium today and spoke both in French and English, as he is oft to do when addressing his bilingual country. By contrast, Trump can barely get through one coherent sentence in English.”

Image result for photos of trudeau in canada
PM TRUDEAU

“In closing, I want to be very clear on one thing,” Trudeau explained. “Americans remain our partners, our allies, and our friends. This is not about the American people,” he assured all who were listening.”

“It really says something when a foreign leader has more respect for a nation’s constituents than its actual leader.”

“Trudeau is aware of that as well, as he delivered one last epic burn before passing the mic to Minister of Foreign Affairs Chrystia Freeland.”

“We have to believe at some point common sense will prevail,” Trudeau hoped, “But we see no sign of that in this action today by the U.S. administration.”

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If Trudeau can pull common sense out of Trump, it’s he who deserves a Nobel Peace Prize and maybe an Emmy (just to get under Trump’s skin).

Freeland began her speech in French as well, before switching to English so that even Trump could try to understand. Somehow, her words outdid Trudeau’s fiery speech.

“These tariffs are totally unacceptable,” she began, before delivering the bad news to American consumers:

“In response to these measures, Canada intends to impose tariffs against imports of steel, aluminum, and other products from the United States, representing the total value of 2017 Canadian exports affected by the US measures. That is $16.6 billion dollars. We are imposing dollar for dollar tariffs for every dollar levied against Canadians by the U.S.”

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“Perfection, President Deals! Seems like “MAEA” should be his new slogan – Make America Expensive Again (not that it was cheap to begin with).”

“She continues, informing viewers that the United States has one month left before the changes take effect, effective as of July 1, 2018. She also made sure to warn Trump that, “[the tariffs] will remain in place until the US eliminates its trade-restrictive measures against Canada. Our steel and aluminum workers have our full support.”

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“Eventually, Freeland brought up both the North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO), pointing out that Trump’s tariffs violate rules imposed by both, which will undoubtedly cause a headache for the American president ahead of the WTO summit this summer.”

“She finished up by laughing off the White House’s ridiculous assertion that the tariffs are in some way meant to bolster national security, as she points out that Canada has never been a threat to America.”

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“I want Canadians to know that their government will always defend Canadian workers and Canadian businesses,” Freeland closes.

“Remember the days when the American president wasn’t a self-serving bigot who supported American interests while maintaining foreign diplomacy? It feels so foreign now.”

Link to entire article: Trump just declared a trade war against Canada. Trudeau’s response

See: Trudeau says NAFTA talks broke down after Pence made ultimatum /Washington Post

See: U.S. allies hit back at Washington’s steel, aluminum tariffs | Reuters

See: Mexico retaliates against U.S. tariffs, aims at Trump country | Reuters

See: Allies in G7 vow to fight U.S. tariffs, see threat to growth | Reuters

See: As Trump talks of trade losses, China is a win for U.S. East Coast ports / Reuters

10 comments

  1. Dear Mz. Gronda,

    It seems that King Donnie needs a war badly, any kind of war. For some reason he seem to feel that a war will take the eyes of the nation off his despicable deeds long enough for him to sweep them under the carpet. The real question is, will it work? For about 30% of the nation it will, as they are so enamored with him, that they would walk a mile over broken glass all the while singing his praises. Time to buckle up and hang on as the ride is about to get a little rough for all of us..

    Liked by 1 person

  2. Dear Crustyolemothman,

    He had a bad news day when Michael Cohen went to court on the 30th of May and so on the 31st day, he is lashing out.

    The presidential pardon was a FU to the FBI, the DOJ and the “rule of law.” The tariffs were a FU to our friends and allies.

    A lot of this is deflection, a need to cater to his base and a FU to all his critics. That day in court was a bigger event than the news are reflecting in the coverage of this event.

    Hugs, Gronda

    Like

  3. Gronda, Wilbur Ross’ comment is before the retaliation from other countries which will ratchet up the impact. Tariffs will cost more jobs than they save, that is why they are dilutive to growth. I mentioned yesterday that the US ports have invested a great deal to dig deeper channels to accommodate bigger ships. The port leaders are worried about the return on these investments being watered down. Then, there are the upstream and downstream trucking and distribution jobs.

    But, the far greater impact of tariffs is the devaluation of our relationships with allies and trading partners. These short-sighted tariffs will hurt us long term more so with the breach of trust.

    Keith

    Liked by 1 person

    • Dear Keith,

      Going after a bad actor China is one thing even though I am convinced that the imposition of tariffs is a last resort, not the first.

      To place tariffs on our neighbors and allies is unconscionable. Canada plans to file an action against the USA with the World Trade Organization. I do believe that the WTO will not rule in the favor of the USA because the justification that the president is using in that, this action is based on US national security interests does not pass the smell test.

      According to PM Trudeau, the parties to a new NAFTA deal had reached an agreement until VP Pence had to insert another caveat of a 5 yr. sunset agreement. This is when the deal went south.

      The press was wondering why the president announced a good news job report before the markets opened when he is barred from doing this. He was trying to prop up the stock market to counter the inevitable downturn because of the tariff news.

      Hugs, Gronda

      Like

      • Gronda, either you or a news source told me about the Pence intrusion. I have a tariff post coming that speaks of the ports angle. As for the tweet to violate embargoed financial announcements, Trump likely does not realize why he must not do that. People can trade off that information. Now, when he does not tweet, that may mean bad news and people can trade off that. The best, but hardest thing for him to do, is to shut up and not reveal embargoed information. Keith

        Liked by 1 person

  4. In the past, tariff never helped to create more US jobs for the long term. It only brought unnecessary inflation and hardship for all, except the few special interest groups who benefited in the short term at everyone else’s expense. Republicans tend to make this same mistake over and over to appease their “base”.

    Come midterm elections… we the ppl will have our say!

    Like

    • Dear 1EarthUnited,

      This time most republicans legislators who have to be responsive to their business community are against these tariffs. Also while the public may have forgotten the economic disaster created by the 1930 Smoot-Halley Tariff bill, most law makers are aware of this history. President Trump is not one of them.

      Hugs, Gronda

      Liked by 1 person

  5. Undoubtedly, this whole tariff thing is a disaster … but to me, this comment in your post really stood out:

    “Trudeau took the podium today and spoke both in French and English, as he is oft to do when addressing his bilingual country. By contrast, Trump can barely get through one coherent sentence in English.” (Emphasis added)

    Boy oh boy … ain’t that the truth!

    Liked by 1 person

    • Dear Nan,

      I still laugh when I think about how quickly President Trump tried to send PM Trudeau back to Canada when he came to visit the president at the White House. Our US president is not used to sharing the spotlight or attention. PM Ttudeau has a lot of star power and he presents himself so well.

      Hugs, Gronda

      Like

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