Every game has it’s winners and losers, even in a tariff trade war game. Sometimes in order to understand and view the game you have to turn over a rock to see the game being played.
In the tariff trade war game, it’s not the players that are the losers, it’s the spectators, the American public. Tariffs are nothing more than a tax paid by the consumer. When a country imposes a tariff, the country collects the tariff on the import. That’s a tax!! The consumer pays a higher price for the item, absorbing the cost of the tariff. Now if the consumer has a choice between the tariffed item and a lower cost non tariffed item, it’s easy to make a choice. If the tariff is on a component of the item you need or if there is no choice you pay the tariff.
So what does this all mean? The administration wants to stick a trade deficit tariff to the Chinese, so our government imposes a tariff on their goods and in retaliation they impose a tariff on stuff we sell them. But because our stuff is competitively available elsewhere without a tariff, they stop buying from us and buy elsewhere. Since we don’t manufacture TVs or computers etc. we have no choice but to buy a tariff item.
How does that play out. Let’s talk soybeans. The United States sells 80% of the annual soybean harvest to China. China consumes about 90 million tons of soybeans annually. China imposed a tariff on soybeans and the Chinese stopped buying U.S. soybeans and are now buying from non tariffed sources. As a result, U.S. soybean farmers’ income has dropped 30-50% resulting in the Congress providing special financial aid in billions of dollars from the taxpayers.
One of those new contracted non tariffed soybean sources has seen its sales to China increase of 100% in 2018 and expects another 100% increase over 2018 in 2019. It also reduced shipping costs 15000%! The location of this soybean source is Russia’s Siberia, which has a 2600 mile border with China and a shipping distance of 13 miles!
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Oh yes, just a data fact, the 2018 trade deficit with China was the largest in history!! Nice job correcting the trade deficit, just like Mexico paying for the wall!!
THE FUTURE BEGINS TODAY!
GEISNER 3/7/2019 DOLLARBILLBRIGADE.COM
