Tariffs and the Oscars

Just a couple of thoughts on some issues that are arising this week.

TARIFFS

President Trump has announced that he is willing to engage in a trade war with several nations.  The first one is China.  The Chinese have long benefitted by our trade policies which allowed them to become a major manufacturing center for goods sold in the United States.  The President has correctly pointed out that manufacturing in China means companies do not have to comply with the same regulations that would be imposed if they did the same manufacturing in the United States.  Particularly environmental and health and safety of workers.  Couple this with a much lower wage and the advantages it gives to manufacturing in China are too much of a lure for companies to pass up.   But the effect of these tariffs will be higher prices on goods being shipped to the United States from these manufacturers.  I am not sure how the American public will react to these increases.  The goal, apparently, of the Administration is to somehow level the playing field and encourage more companies to manufacture in the United States.  This can become a complicated issue if consumers rebel against the higher prices and political adversaries of the President use this against him.

Traditionally Republicans have been free traders and Democrats more xenophobic on this issue.  But you can be sure Democrats will pounce on this issue if they see some political gain for them and they will certainly point out that certain products now cost the average American more than they would absent the tariffs.  Republicans are caught between a rock and a hard spot because they want to support the President but they remain free traders.

Specifically with respect to China the Administration is calling for a 25% tariff on steel imported into the United States and a 10% tariff on aluminum.  Since the Chinese only account for 2% of the steel used in the United States it will not have a major impact but the Administration is pointing out that the increase in Chinese steel worldwide has suppressed prices and hurt U.S. domestic producers.  Trump has cited national security concerns on these two tariffs and that has triggered a Section 232 investigation. This is an investigation under the authority of the Trade Expansion Act of 1962 to determine the effects of imports on national security.  Secretary Ross has already submitted to the President the effects of imported steel and aluminum on national security.

President Trump is correct when he says that many of the nations engaging in trade with the United States are not doing it fairly.  They erect trade barriers that are both based in tariffs and in other regulatory methods.  Years ago the advent of the electric toaster oven became a big hit in Japan.  American manufacturers dominated the market and were selling millions of dollars of the product in Japan.  The Japanese companies, behind the curve in development and market share, got the Japanese regulators to issue new specifications for toaster ovens sold in Japan.  Of course the Japanese manufacturers were ready with the new ones immediately and their American competitors had to redesign and retool their toaster ovens.  By the time they accomplished this they were now the ones lagging in market share.

The second trade issue being raised by President Trump is trade between the United States and Mexico and Canada.  Trump has long criticized the NAFTA agreement that was signed in the 1990s.  He has felt that it gave clear advantages to our neighboring countries at the expense of U.S. companies.  After some initial feedback Trump has now said that he will reconsider the tariffs if Mexico and Canada are willing to renegotiate the agreement and allow it to become more fair, according to Trump, to the United States.  It should be pointed out that in 2016 the United States ran a $55.6 billion deficit with Mexico.  The trade deficit with Canada was smaller.  In Mexico they charge a 16% VAT on all business sales whether it is to other businesses or to consumers.  If the product is shipped to the United States the VAT is rebated.  But U.S. products coming into Mexico must pay the VAT.  That is something the administration does not like.

What all this comes down to is the United States is the largest consumer market in the world and we buy more from other countries than we sell to them.  This puts trade deficits as a major issue.  But the flip side of that will result in higher prices for American consumers and that can become a political football as well.  You can bet both sides of the aisle are trying to figure out how to maximize their message on this decision.

 

HOLLYWOOD AND THE OSCARS

I will admit that I did not watch the Oscars but I have read many of the statements and comments made by the luminaria from the entertainment industry.  Once again these self- professed experts on subjects showed their clear disdain for President Trump and anything that might be considered conservative.  Jimmy Kimmel once again hosted the awards show and he called for a positive show and then jumped the shark immediately with a comment “We don’t make films like ‘Call Me By Your Name’ for money, “We make them to upset Mike Pence.”  He kept it up and sent jabs at Trump, Pence and Fox News.

Now I have no problem with these entertainment types having opinions on issues but they seem to confuse us with people that actually care what they think about these issues.  Most of them try to identify with some social or political issue but in reality they don’t know much in the way of details on the issue.  In my time as Congressional staffer we had numerous stars come to testify on their pet issue.  The members were kind to them and allowed them to make their statement and then leave.  As staff we always had a list of tough questions to ask but after a few embarrassing moments the decision was made not to put them on the spot.

I admire these entertainment people for the talent they have in making movies, TV shows and music.  I certainly lack any skill in that arena.  But just being famous for their craft does not make them an expert on other issues.  Using that platform to push their own political agenda, which I believe most would agree is decidedly liberal, tends to turn people off.  The initial numbers showed viewership down about 15%.  I suspect much of the American public, from all political persuasions, are getting tired of these self-righteous hypocrites pontificating and trying to lecture us in their efforts to appear socially acceptable among their peers.

My final thought on the Oscars and the industry in general is they no longer give awards based on talent and achievement.  They look for diversity and attempt to show they are not shunning any political agenda of the left.  Let’s be honest, how many of you find the story line of “The Shape of Water” to be a bit disturbing.  He is a mute janitor having sex with some godly-fish man and that is supposed to be entertainment.  I say it is Hollywood seeing how far they can stretch the bounds of decency.  Would this not be called bestiality?  And then the director comes on stage and calls for an end to national borders in an effort to make a statement about immigration policy.  All in all, I will still go to see movies to be entertained but I will also ignore what they think on other issues since they really don’t know much.

 

 

 

 

 

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