With the discussions between and officials about the two sides being complete and with the extension of the truce between them after August 12 waiting for the final approval from the point of view, it is offered a first assessment of the US President’s decision to convert commercial policy into a means of enforcement.
US Imposibility Duties
Regardless of whether Trump is convinced of what was discussed and by the particularly “constructive” climate in Stockholm talks – according to both teams – to give the truce the 90 -day extension of non -resettling duties with China, he has taken steps.
In recent times, the US president has managed to get positive – at least politically – agreements from the European Union, Japan, Great Britain, Indonesia, Vietnam and the Philippines. In all these cases, Trump managed to put America “first” and the other side to accept duties of 10% to 20% on their products, and to sign billions of dollars.
These “successes”, which were essentially the result of a political and economic blackmail – in the light that if the agreements with these high duties (and a decrease in US trade deficits) were not signed, things would be worse for all than Friday and then the US duties and the US deadline expires. US power.
America again with duties …
This is an important step to impose its economic policy both internally and externally. But at this point there are quite a few questions, at least by economists, both in terms of implementation of his policy and its outcome.
It is assumed that the declared goal of Trump’s economic policy is to… return to its old glory (as he perceives them) by the American economy. That is to say, America again (Maga), which means that its policy will bring about the production of more companies in the US, bring invested and create many factories.
He and his staff believe that this will not burden consumers and businesses in the US, since as monotonous duties will not be paid by the Americans, but the trade partners.
… But who pays?
Most economists, of course, argue that this is a fallacy, as duties increase prices in goods and burden businesses. In addition, the impact of duties on an economy are starting to appear after a few months, and although the duties have not been implemented with the “back and forth” by Trump (at the beginning of the year total duties in the US reached around 2.5% while in June, they reached 17.5%). 2.7% increased in June.
According to estimates by analysts by Morgan Stanley “the most likely result (duties) will be slow growth and steady inflation but not recession”. Moreover, as the 15% duties imposed on the EU and Japan notes, they are a slight increase compared to the 10% that Trump began imposing in April during the negotiations.
This… slow growth that American consumers and businesses have not yet felt in their pocket, but this is also due to the way they are announced, which gives the market time to adapt.
For example, after the Japan and EU agreements, cars manufactured on European and Japanese territory will no longer be subject to 25% duties announced by Trump, but a 15% tax. The tax has not yet passed on the prices of dealerships in the US. This gives the US government to argue that cars remain about the same because foreign manufacturers absorb costs, but it is probably the result of the accumulation of commodity in order to save tax payment when it enforces.
The elements
Last week, more than 100 of the largest US companies published their quarterly financial results, informing investors of their profits (or loss) and their expectations for the rest of the year.
Of these, some large companies, especially automakers and consumption -based companies, have had financial problems due to the duties that Trump has imposed so far. On the other hand, technology companies and financial companies that depend less on imports, did extremely well.
For example, the General Motors car industry has announced that its duties cost more than $ 1 billion in the last three months, despite the fact that it had gained profits. Correspondingly, the Chipotle restaurant chain said that customers are worried about the economy and buy less … burritos, while the company is preparing to pay more expensive materials it is using.
On the other hand, Google did so well that it announced that it was investing another $ 10 billion in the field of artificial intelligence, while on Wall Street, large banks took advantage of market volatility this spring and recorded an excellent quarter.
Air agreements and rare land
All this is happening while in essence the agreements that have been concluded have not yet been flesh and bones and there are gaps in tariff policy because of the back and forth that the Trump government is doing.
It follows from the above that generalized optimism in markets and the marginal indifference with which they dealt with the Trump trade agreements is because the picture of who will ultimately affect the duties in the long run has begun to clarify. At least as long as China appears willing to work with the US on the issue of rare land and the truce between the two is kept.
