EconAir

    SUMMARY   The Trump tariff offensive is couched in domestic economic terms and objectives – to reduce the trade deficit, to reduce the fiscal deficit, to increase domestic manufacturing, especially in technologies with good growth potential or necessary for national security. The economic issues used to justify the higher tariffs, however, are part of a larger challenge - the geopolitical rivalry between the United States and China, and part of a broader objective – to weaken China’s domestic economy.   The economic issues used to justify the higher tariffs are less important than the geopolitical issues - the geopolitical rivalry between the United States and China - and part of a broader objective – to weaken China’s domestic economy.       BACKGROUND   The conflict with China has been recognized as far back as the Obama administration. Even before then, the United States has used economic tools as political weapons – sanctions, denying othe...

  AMERICAN AUTOMOBILE INDUSTRY Tariffs on imported cars should help  American car companies. But it is more complicated. Tariffs on "Mexico" will hit American car companies and their suppliers particular hard. Trump has   threatened to raise tariffs on Canadian car imports in order to "permanently shut down the automobile manufacturing business in Canada." Most of the imported cars from Canada are made by American car manufactures.  Almost half the cars sold in the United States are imports. About 23% of cars sold in America come from Mexico; another 10% come from Canada. Most of them are assembled by American car companies.  About $100 billion in parts and subassemblies cross the border and will have to pay the tariff, in addition to the tariff on completed cars that are imported. Price of cars in America will go up and possibly car sales will go down. American car manufacturers are in poor financial shape and  cannot afford to absorb the cost increases. O...