Thursday, April 03, 2025
PMT: It's Tariff Time Again!
Yesterday, President Trump imposed a new round of tariffs, largely directed at our top trading partners (though not, this time, Canada and Mexico). I have some thoughts:
-- I DO think we need to capture some of the manufacturing that has shifted wholesale to China. This is one way to do that-- but it is going to produce a shock to the system we may not be ready to handle, because of Chinese products our own manufacturers need, and the low-value products we are not good at producing.
-- One anomaly is that if we really wanted to restrict China, we would probably not also smack around the alternative low-cost producing countries, like Vietnam and India. What this combination of actions will spell is the end of $5 shirts at Wal-Mart and cheap toys at Target. That's fine with me, but it will matter to a lot of people.
-- It might be surprising to some that the EU makes up a higher percentage of imports than China. I suspect there are two core causes of that: (1) that products from the EU, like cars, tend to have high value; and (2) it could be that much of what comes from the EU is not manufactured goods but services.
-- The point of this, according to Trump, is to encourage manufacturing in the US. Some of that might happen-- but it will take a while. And in the meantime, a slew of side-effects (including inflation) will be something we have to deal with....
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