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Companies Scrambling To Respond To Trump’s ‘Beautiful’ Tariff Hikes

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From the Daily Caller News Foundation 

By Adam Pack

Companies are scrambling to respond to President-elect Donald Trump’s “beautiful” tariff proposals that his administration may seek to enact early in his second term.

Proactive steps that companies are taking to evade anticipated price increases include stockpiling inventory in U.S. warehouses and weighing whether they need to completely eliminate China from their supply chains and raise the price of imported goods affected by tariff hikes, whose costs will be passed onto consumers.

Free-trade skeptics are touting companies’ anticipatory actions as delivering a clear sign that Trump’s proposed tariff hikes are already achieving their intended effect of pressuring retailers to eliminate China from their supply chains. However, some policy experts are warning that higher tariffs will be a regressive tax for America’s lower and middle-income families and make inflation worse, according to retailers and economists who spoke to the Daily Caller News Foundation.

On the campaign trail, Trump proposed a universal tariff of up to 20% on all imports coming into the U.S. and a 60% or higher tariff on all imports from China. Trump is considering Robert Lighthizer, the former U.S. trade representative during his administration’s first term who is well-known for favoring high tariffs, to serve as his second administration’s trade czar, the Wall Street Journal first reported.

‘Mitigation Strategies To Lessen The Impact’

Companies are taking preemptive measures, such as stockpiling goods in U.S. warehouses, to work proactively against anticipated price increases that higher tariffs would inflict, Jonathan Gold, vice president of supply chains and customs policy for the National Retail Federation, told the DCNF during an interview.

“They’re looking at different mitigation strategies to lessen the impact that they might feel from the tariffs,” Gold told the DCNF. “One of those strategies is to start looking at potentially bringing in cargo, bringing products earlier to get ahead of potential tariffs that Trump might put in place.”

Importing goods into the U.S. ahead of schedule leads to additional costs for retailers that will likely be passed onto consumers, but waiting to import goods from China after a 60% or higher tariff on Chinese imports goes into effect would be substantially more expensive, according to Gold.

A recent NRF study projected that Trump’s proposed tariff hikes on consumer products would cost American consumers an additional $46 billion to $78 billion a year.

“A tariff is a tax paid by the U.S. importer, not a foreign country or the exporter,” Gold said in a press release accompanying the study. “This tax ultimately comes out of consumers’ pockets through higher prices.”

Decoupling From China

Part of the rationale behind Trump’s tariff proposals is to force manufacturing jobs to return to the United States and pressure companies to completely eliminate China from their supply chains, according to Mark DiPlacido, policy advisor at American Compass.

“I hope in addition to stockpiling, they’re also looking at actually moving their supply chains out of China and ideally back to the United States,” DiPlacido told the DCNF.

“For a long time, the framing has been what is best for just increasing trade flows, regardless of the direction those flows are going. What that’s resulted in for the last 25 years is a flow of manufacturing, a flow of factories and a flow of jobs, especially solid middle class jobs out of the United States and across the world,” DiPlacido added.

But completely shifting production outside of China is not feasible for some retailers even if companies have taken further steps to diversify their supply chain for the past decade, according to Gold.

“It takes a while to make those shifts and not everyone is able to do that, Gold acknowledged. “Nobody has the [production] capacity that China does. Trying to find that within multiple countries is a challenge. And it’s not just the capacity, but the skilled workforce as well.”

In addition, companies who move production out of China to avoid a 60% tariff on imported goods from the nation could still get hit by a 20% across the board tariff if they move their supply chain to countries other than the United States, Gold and several economists told the DCNF.

“They’re talking about tariffs on imports for which there’s not a domestic producer to switch to,” Clark Packard, a research fellow on trade policy at the CATO institute, told the DCNF in an interview. “For example, we don’t make coffee in the United States, so why are we going to impose a tariff on coffee?”

“Who are we trying to protect?” he added.

Some economists are also pessimistic that the president-elect’s planned tariff hikes will ultimately bring jobs that moved overseas to cheaper labor markets back to the United States.

“What we actually saw from the 2018-2019 trade war was a decrease in manufacturing output and employment because of the tariffs,” Erica York, senior economist and research director of the Tax Foundation’s Center for Federal Tax Policy, told the DCNF in an interview. “It played out just like every economist predicted: higher costs for U.S. consumers, reduced output, reduced incomes for American workers, foreign retaliation that’s harmful.”

The president-elect’s proposed tariff hikes could also eliminate more jobs than those saved or created as a result of protecting domestic industries, such as the U.S. steel or solar manufacturing industries, that may benefit from higher tariffs on foreign competitors, Packard told the DCNF.

“It’s disproportionate — the cost that is passed onto the broader economy to protect a very small slice of U.S. employment,” Packard said. Trump’s 25% tariff on imported steel enacted during his first administration slightly increased employment in the U.S. steel industry, but each job that was maintained or created came at a cost of roughly $650,000 that likely killed jobs in other sectors forced to buy more expensive steel, according to Packard.

‘Bipartisan Recognition’

Despite tariffs’ potential to force companies to raise the price of goods they import into the United States, DiPlacido defended Trump’s proposed tariff hikes as essential to eliminating U.S. dependence on China for a variety of strategic goods and consumer products.

“We need to be able to manufacture a broad range of goods in the United States. And we need the job security and the economic security that a strong manufacturing industrial base provides,” DiPlacido said. “That’s going to be important to any future conflict or emergency that the United States may have with China or with anyone else.”

DiPlacido, citing Trump’s dominant electoral performance, also believes Trump has the “mandate” to carry out the tariff proposals he floated during the campaign.

“There’s a sort of a bipartisan recognition of the problem. Even the Biden administration kept almost all of Trump’s tariffs in place,” DiPlacido told the DCNF. “I think he has the political mandate, and that’s often a harder thing to get.”

However, some economists are questioning whether the thousands of dollars of projected costs that American families would be forced to pay as a result of these tariff hikes could create political backlash that has so far failed to materialize against Trump and Biden’s relatively similar trade policies.

“Voters were rightly pretty upset about price increases and inflation,” Packard told the DCNF. “We’re talking about utilizing a tool in tariffs that will increase relative prices.”

“Tariffs as a whole are a regressive tax,” Gold told the DCNF. “They certainly hit low and middle income consumers the hardest.”

Retailers are forecasting a decrease in demand for consumer products as a result of Trump’s tariff proposals, according to Gold.

The incoming Senate Republican leader has also notably criticized Trump’s proposed tariff hikes.

“I get concerned when I hear we just want to uniformly impose a 10% or 20% tariff on everything that comes into the United States,” Republican South Dakota Sen. John Thune, Senate GOP leader, said in August during a panel on agriculture policy in his home state. “Generally, that’s a recipe for increased inflation.”

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Trudeau leaves office with worst economic growth record in recent Canadian history

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From the Fraser Institute

By Ben Eisen

In the days following Prime Minister Justin Trudeau’s resignation as leader of the Liberal Party, there has been much ink spilt about his legacy. One effusively positive review of Trudeau’s tenure claimed that his successors “will be hard-pressed to improve on his economic track record.”

But this claim is difficult to square with the historical record, which shows the economic story of the Trudeau years has been one of dismal growth. Indeed, when the growth performance of Canada’s economy is properly measured, Trudeau has the worst record of any prime minister in recent history.

There’s no single perfect measure of economic success. However, growth in inflation-adjusted per-person GDP—an indicator of living standards and incomes—remains an important and broad measure. In short, it measures how quickly the economy is growing while adjusting for inflation and population growth.

Back when he was first running for prime minister in 2015, Trudeau recognized the importance of long-term economic growth, often pointing to slow growth under his predecessor Stephen Harper. On the campaign trail, Trudeau blasted Harper for having the “worst record on economic growth since R.B. Bennett in the depths of the Great Depression.”

And growth during the Harper years was indeed slow. The Harper government endured the 2008/09 global financial crisis and subsequent weak recovery, particularly in Ontario. During Harper’s tenure as prime minister, per-person GDP growth was 0.5 per cent annually—which is lower than his predecessors Brian Mulroney (0.8 per cent) and Jean Chrétien (2.4 per cent).

So, growth was weak under Harper, but Trudeau misdiagnosed the causes. Shortly after taking office, Trudeau said looser fiscal policy—with more spending, borrowing and bigger deficits—would help spur growth in Canada (and indeed around the world).

Trudeau’s government acted on this premise, boosting spending and running deficits—but Trudeau’s approach did not move the needle on growth. In fact, things went from bad to worse. Annual per-person GDP growth under Trudeau (0.3 per cent) was even worse than under Harper.

The reasons for weak economic growth (under Harper and Trudeau) are complicated. But when it comes to performance, there’s no disputing that Trudeau’s record is worse than any long-serving prime minister in recent history. According to our recent study published by the Fraser Institute, which compared the growth performance of the five most recent long-serving prime ministers, annual per-person GDP growth was highest under Chrétien followed by Martin, Mulroney, Harper and Justin Trudeau.

Of course, some defenders will blame COVID for Trudeau’s poor economic growth record, but you can’t reasonably blame the steep but relatively short pandemic-related recession for nearly a decade of stagnation.

There’s no single perfect measure of economic performance, but per-person inflation-adjusted economic growth is an important and widely-used measure of economic success and prosperity. Despite any claims to the contrary, Justin Trudeau’s legacy on economic growth is—in historical terms—dismal. All Canadians should hope that his successor has more success and oversees faster growth in the years ahead.

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Greenland Is A Strategic Goldmine

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From the Daily Caller News Foundation

By John Teichert

President-elect Donald Trump recently snapped the gaze of the national security establishment to an often-overlooked geographical feature — Greenland.

Trump’s comments have been enough to start a long-overdue conversation about the semi-autonomous territory owned by Denmark, a landmass that retired Admiral James Stavridis, who served as the Supreme Allied Commander for NATO, has called “a strategic goldmine for the United States.” Stavridis was speaking both literally and figuratively.

Trump has likely done something that many of the so-called national security experts have never considered: He has looked down on a globe from the top. The traditional U.S.-centric view does not tell the full story nor provide the proper perspective. A top-down glance unveils key observations that reveal the wisdom of focusing on a geographic feature that has been brushed aside for far too long. 

Greenland and the entire Arctic region are typically considered simply rugged and quaint. Yet, their significance must be properly elevated as a fundamental component of U.S. national security and economic interests. Trump has done just that.

A North-Pole-centered perspective reveals that Greenland is the largest geographical feature in the Arctic region. As a result, it holds oversized strategic significance in controlling land, sea, air, undersea and space domains for a substantial part of the planet. Proper utilization of the Greenland landmass creates opportunities for multi-faceted dominance of the entire region.

This same perspective reveals a massive trade route, given the right climatic conditions and ice-breaking capabilities. It provides a maritime shortcut between the East Coast and the West Coast of the United States, and similarly for trade between Europe and Asia.

The Houthis in Yemen have reminded the world of an important economic truth — the ability to shut down transit through a key trade route can have ripple effects on the global economy. Suffocating transit through the Red Sea has tripled the cost of shipping from Asia to the East Coast of the United States, enacting huge global inflationary pressures. These negative impacts would be dwarfed by a nation that could control and restrict transit through the Arctic Ocean.

The view from the North Pole also enlightens the viewer about the closer-than-expected proximity between Russia and North America. The protective buffer of the Atlantic Ocean does not tell the full story, and the distances between the United States and Canada and their Russian adversary are much shorter than would otherwise be understood.

Through this literal worldview, Greenland looms large in its significance. This is especially true when it is properly viewed as the primary barrier between Russia and the east coast of the United States. Such positioning provides the rationale for the United States Space Force’s posture on the island with its early warning radars and space control systems – situated to protect against strategic surprise.

Trump’s strong statements about proper economic and strategic utilization of Greenland have been informed by such strategic orientation. These statements are also a natural extension of his rightful insistence that European NATO members pay their fair share to meet collective defense requirements.

While the United States has a commendable 75-year history of supporting European and collective security, fair share also means that America’s European allies must support North American security. That starts with Greenland and continues with a robust strategic focus on the Arctic region.

None of this addresses the largely untapped and abundant natural resources in the Arctic region, from oil and natural gas to precious metals and rare earth minerals, which are desperately needed to sustain a thriving modern global economy. Calling it a goldmine is not hyperbole.

Not only have Trump’s comments gained our attention, but they have also captured the attention of Greenland’s Prime Minister Múte Egede. Egede has eagerly proclaimed that his territory is poised to enhance its collaboration with the United States regarding natural resources and security efforts.

Thus, with just a few words informed by a properly oriented security perspective, Trump has already motivated and cultivated a collaboration that could strike gold for American interests.

United States Air Force Brigadier General John Teichert (ret) is a prolific author and leading expert on foreign affairs and military strategy. He served as commander of Joint Base Andrews and Edwards Air Force Base, was the U.S. senior defense official to Iraq, and recently retired as the assistant deputy undersecretary of the Air Force, international affairs. General Teichert maintains a robust schedule of media engagements, and his activities can best be followed at johnteichert.com and on LinkedIn. General Teichert can be reached at [email protected].

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