China’s exports are surging, and there is a strong likelihood that there will be a backlash on a worldwide basis. We are certainly hearing it from Mr. Trump who wants to increase tariffs but other countries including those in Europe and South Asia are all likely to lose jobs which will cause them to take action. The European union has announced that it is preparing to charge tariffs on electric cars from China based upon illegal subsidies and is also looking at wind turbines and solar panels. India announced that it would impose broad tariffs on steel from China, and Turkey is also looking at this trend. The difference between Mr. Trump’s approach and the approach taken by those countries noted above is that those are targeted whereas Mr. Trump is essentially saying everything coming from China will be charged tariffs because the goods are being subsidized but not broadly.
Mr. Biden recently announced that he was going to impose tariffs on steel on the basis that China was flooding the market with cheap steel, in other words subsidizing it. The impact of tariffs which has to be considered is the fact that those costs are passed through to the American consumer, they are not eaten by China as it ships goods to the US, so that has two potential issues associated with it. The first is it may well cause inflation. The second is that prices will increase for many types of products. Again, potentially costing jobs and increasing inflation. I am always curious why, in the articles that are written about this, the reporters never focus on whether or not there is a sufficient quantity of US goods to meet the demand or whether or not these goods that are coming from China are filling a gap. If the former is true, then this makes a great deal of sense because that will cause Americans to purchase from other Americans. If it is not the case, there will still be an unfilled demand which could also have negative consequences to the economy. This is a complex issue that is not well explained and simply goes to the gut, if you will, of American consumers. Let’s hope we get some logic in this process and do this in a way that positively effects American business and American consumers.
More on China. China is making a diligent effort to solicit foreigners to invest in China, and it is a struggle, both as a result of their continuing economic woes, but also the conflicts it is having with the United States and Europe. In addition, China’s joblessness rose for the third straight month hitting 5.3% which reversed earlier declines, a further sign of economic troubles in China.
Mr. Trump was unable to obtain a bond initially to guarantee the payment of his $454 million in his civil judgment; an Appellate Court reduced that to $175 million. The Attorney General is challenging the ability of the Company that put the bond up to pay in the event Mr. Trump loses. There is some irony in all of this as Mr. Trump has for years utilized the court system to cheat his creditors, and now it seems those tactics are coming back to roost. A typical hypocritical claim from Mr. Trump.
Mr. Trump has regularly touted his support for Israel but his criticism is growing sharper. Is that because donations have slowed from the Jewish community or did he have an epiphany about the war in Gaza? Or is this his typical jumbled approach to anything related to foreign affairs? I suspect the latter.
Factory output increased in February and March which is a good sign for the economy. It also means that the economy may still manage to have a soft landing. The Fed faces many counterbalancing factors and is left with an also impossible task of trying to balance inflation concerns because it continues and the good economic results that the economy produces including the addition last month of over 300,000 jobs.
There is interesting reporting coming out of the state of Maine which indicates the immigrant population in Maine is actually sustaining the Maine economy. If this in fact is the case throughout the United States in terms of what immigrants are contributing in terms of employment and production and tax collection and spending, that should drive the Republicans pretty wild.
Scientists have recently reported that for the first time in one billion years, two life forms have merged to create a third. The unusual occurrence is something scientists are studying intensely to determine the why and the how. Science never fails to surprise and educate us.
Bill Owens is a former member of Congress representing the New York 21st, a partner in Stafford, Owens, Piller, Murnane, Kelleher and Trombley in Plattsburgh, NY and a Strategic Advisor at Dentons to Washington, DC.
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