As president Donald Trump Golf in Florida during the weekend, its huge new tariff, which is targeted everywhere from China to the Falkland Islands, began to enter into force, and companies began to respond to it. Jaguar Land Rover, the Anglo-Indian auto manufacturer, has announced that it stops shipping to the United States. The American company, however, said that it may cut off products that are affected by new duties.
In Wall Street, where the shares decreased by ten percent on Thursday and Friday, analysts and investors have been willing to sell. VIX is widely followed, expected scale VolatilityIt has risen to levels that have not been seen from the first days of Corona virus disease. Financial markets often exaggerate their reaction, but this recession is completely rational and explained. Customs duties are taxes on goods, and their imposition reduces the extra purchase strength in the economy. On Friday, Jerome Powell, head of the Federal Reserve, indicated that the new customs tariff is “much larger than expected”, so “it is likely that it is true in economic effects, which will include higher inflation and slower growth.” It is very unusual for the Federal Reserve Chairman to say loudly that management policies are bad for the economy. Also on Friday, JPMorgan Chase, the largest bank in America, expected a recession later this year, although the March employment report in March showed strong growth. “We are now expecting that the real GDP will shrink under the weight of definitions,” said Michael Ferroli, the bank’s chief economist at the bank, in a note for customers.
To some extent, investors simply expect the negative impact of slow growth, or frank stagnation, on corporate profits. But there is more than that. Many people in Wall Street suffer from Jupiter’s remorse. From August to December of last year, the market rose by about 20 percent. Investors, analysts and executives of business bought the idea that the Trump presidency will strengthen the economy that was already growing faster than the rest of the developed world, with a The unemployment rate is very low. After the elections, Jimmy Damon, CEO of JPMorgan Chase, said the bankers were “dancing on the street.” They were also ignoring Trump’s long record of recklessness in his commercial dealings and repeated pledges to raise the global trading system, which he has now followed.
In recent years, political analysts on the left and right have called for a retreat from the excessive misinformation that prevailed from 1990 to almost 2016, who had harmful side effects, including hollows of many industrial areas, and relying on fragile global supply chains. Trump’s first term, which he imposed on some commodities, including steel, aluminum and washing machines, and a wide range of products from China, is the end of the free trade age. The Biden administration has left the definitions that Trump imposed on China and Complement With an ambitious industrial policy aimed at strengthening future industries, including green energy, EVS, and semi -conductors. Despite Trump Reject As a “new green fraud”, some conservatives, such Mit RomneyElements supported by them. (in condition to Financial times Last year, Cass referred to “the primary role of public financing, subsidies and purchases in raising innovation and production on a large scale.”
However, even if these developments were distinguished by the revival of the parties of what some described as “new sugar”-the strategic use of the state authority to form trade relations for the national advantage-is the new tariff for Trump, a radical exit from previous policies, including. Instead of progressing to countries that impose specific commercial barriers on American goods, it targets any nation that runs a trade surplus with the United States, regardless of how this surplus appears. The mathematical formula used by the administration to determine the customs tariff rates simply take the bilateral surplus in the goods from a specific country. This number is divided into the amount of goods imported from that country, and the resulting fracture is doubled by half. Vagically, it also includes some Greek symbols to make them look scientific, but anywhere includes the level of definitions imposed by the country on American goods.
In other words, this is not a “mutual” tariff. Treatment similarly involves giving and equal. According to the World Trade Organization, the European Union imposes a five percent tariff on foreign commodities, on average; Japan imposes a four percent tariff; Cambodia imposes definitions of nineteen percent. Under Trump’s policy, the customs tariff for goods from these places is 20 percent, twenty -four percent, and forty -nine percent, respectively. Steve also noticed SMAM connectedTrump “was lying directly when he said that the United States is now receiving definitions with half of the fees of other countries.”
After Trump announced directly from his definitions, I noticed that they did not represent new Miranitella, but a emission From the absolute approach that was adopted during the sixteenth and seventeenth centuries by European contestants who looked at any mall as a muddling. In addition to influencing well -known industrial forces, including China, Japan and the European Union, the customs tariff struck Asian economic success stories, such as Vietnam and Bangladesh, and poor African countries, such as Lesoto and Malawi. The main reason for Lesoto runs a trade surplus with the United States has nothing to do with commercial restrictions; It is due to poverty. With an annual income for each hooks less than a thousand dollars a year, Lesothans cannot buy many iPhone or Catpeler trucks. The new definitions threaten one of the main income sources in the country: factories that make textiles for Western companies Levi and other Western companies.
Trump’s reasonable goal is to reshape American factories and enhance employment in long -term manufacturing, but will it even work on their own conditions? By making millions of dollars in capital investment decisions, such as building a new factory in the United States that can work for decades, companies must be completely sure of the future. With Trump, the only certainty is that things can change. Another factor that must be observed is that many imports are components of locally produced goods, and that the customs fees on them raise the costs to American companies that depend on these parts. The FBI’s study on the definitions imposed by Trump in China in 2018 found that when this factor was taken into account, the duties did not lead to any increase in manufacturing functions. In fact, they led to a 1.4 percent decrease.
Trump’s new tariff is so high and wide that estimating its final impact, assuming that it remains in place, will be largely guessy. We know with certainty that they are an unprecedented shock to the economy, accompanied by policies that are directly inconsistent with the goal of enhancing American economic hegemony. Guidance Elon Musk And Dodge The colleagues and the Trump administration are busy making discounts in the National Science and National Institutes of Health, which funds Basic scientific research On which American companies depend to develop their products. It also abolishes grants for clean energy projects and undermines investments in the manufacture of EV, for example, reflecting the rules of Biden administration on reducing tail pollution. Last week, I withdrew the funding of a federal program that enhances technical progress and the growth of productivity in small and medium -sized manufacturing companies throughout the country. If this is commercial trials, they avoid the brings.
In modern history, Britain’s exit from the European Union represents the only similar act of Economic self -harm. But the repercussions of the UK vote, in 2016, to withdraw from the European Union were largely limited to its residents. This is different. Since the end of World War II, the United States has been global economic dominance. While disposing of its own interest, sometimes without mercy, he saw that strengthening international trade and development would benefit the Americans as well as people abroad. The Trump administration has now officially gave up this leadership role as an open trade champion, but it did not stop there. At least in the short term, he committed to the policy of damage not only to itself but on the rest of the world, including some of the poorest countries. This is bad in itself, but it is also bad to work. No wonder the markets everywhere flow. ♦
