Trump mulls 10% import tariff

CNN:

 President-elect Donald Trump’s transition team is discussing a proposal to impose tariffs as high as 10% on imports, according to multiple sources.

A senior Trump transition official said Thursday the team is mulling up to a 10% tariff aimed at spurring US manufacturing, which could be implemented via executive action or as part of a sweeping tax reform package they would push through Congress.

Incoming White House Chief of Staff Reince Priebus floated a 5% tariff on imports in meetings with key Washington players last week, according to two sources who represent business interests in Washington. But the senior transition official who spoke to CNN Thursday on the condition of anonymity said the higher figure is now in play.

It appears to be on like Donkey Kong.

David Llewellyn-Smith
Latest posts by David Llewellyn-Smith (see all)

Comments

  1. I thought it was going to be 45% Tarif what Trump was promising..
    It is going to be gooood for the Chinese

    • proofreadersMEMBER

      Surely, you’re not wanting Andrew Robb to “suffer” for all the “good” deals that Straya has done?

  2. EU has a 10% import tax on cars. Stupid AUS has only a 5% import tax on EU made cars.

    AUS should immediately have a 20% import tax on polluting cars and a massive import tax on beer/wine in bottles smaller than 2 litres.

    • Don’t forget Federal subsidies for goon-bags, for the non-property owning plebs – of course. The empty bag will also make a good pillow for those homeless nights.

    • “——-and a massive import tax on beer/wine in bottles smaller than 2 litres.”

      What a wank of an idea. I enjoy my 24 Cans of “real Stella” in 500mm Cans from Dan the man. FU 🙂

    • More than happy for the ever suffering EU taxpayer to subsidise my cheap wine drinking….save the big money for Aussie wines

    • “—-It just means that the beer/vodka will be made in EU but bottled in AUS ”

      Foreign Beer Bottled in Australia is a joke ! Anyone paying the fancy prices for those beers has SFB.
      They just don’t taste the same -made under licence is a licence to rip off Australians – -but you know that ?
      Anyway you’re making me thirsty 🙂

    • What’s the fucking point of implementing protectionist measures on something you don’t manufacture anyway i.e. motor vehicles? You protect no one here and dry-root the consumer in the process.

      As for booze, the Wine Equalisation Tax (WET) is 30% (which includes the cost of freight from origin) so is actually much higher. Who loses? The consumer, again. Why should the consumer in Aus subsidise the the living of a few ‘up-their-own-arsehole’ wine makers when we should be exposing these guys to competition (lower prices for all) and allowing greater choice for the consumer? The truth is that such policies exist to protect piss-poor companies from the realities of life i.e. that their product is shit and over-priced. If that wasn’t the case, they wouldn’t need protecting.

      Protectionism is also a roundabout way of of subsidising low paid workers. Why not cut out the middle man and just pay some select group of people a wage subsidy, instead of insulting everyone’s intelligence with bullshit policy.

    • 20% tax on imported beer, wtf? There should be a beer tax based on beer quality so that mass produced Aussie beer is wiped off the map, especially the ‘brewed under licence’ crap!

  3. adelaide_economistMEMBER

    I’ve no doubt we’ll soon be treated to some ‘expert’ opinion piece by Jess Irvine on the horror of tariffs. Invariably it will be the ‘naive’ free-trade (cough) argument we get from her (think of the cheap toasters!) and it will go unchallenged because we’ve all had it drummed into our heads that free-trade (again, cough) is the best possible solution in all cases. She might even dig real deep into her Wikipedia history lessons and give us a throw away reference to Smoot-Hawley and a primitive ‘trade protection caused the Depression’ recap.

    • Yep. The globalists can never explain why it is ok for Japan to have very little immigration.

      And why it is ok for EU to have a 10% import tax on cars but not ok for other nations like AUS and USA to have a 10% import tax on EU made cars.

    • proofreadersMEMBER

      But, you can be reasonably assured that whatever case Jessica decides to run, she’ll probably weave in to it that a lot of the effect is the fault of baby boomers.

    • Dear adelaide_economist.

      Tariffs are not a good solution except for temporary or strategic reasons.

      Tariffs mean that some individuals in their selected job roles are protected by being able to charge higher prices for the products they produce. Everyone who is not in the tariff protected industry then has to pay higher prices for the tariff protected products, This means that people in marginal industries will not be able to sell their products because consumers have had to use their money to pay for the more expensive tariff protected goods and services. That means higher unemployment due to a decline in the marginal industries.

      So called tariff ‘protection’ is only a protection for specific industries and specific jobs. An ‘all around” tariff means an all around loss of jobs in marginal industries.

      There is a far better solution and that is the robotization of manufacturing industries (less jobs and cheaper products) and development of a high tech economy by a proactive R & D government.

      As I have previously written:

      Fiscal stimulation (of the right type and that does not mean by lowering taxes) is what is needed.

      As Central Bankers around the world have watched the partial success and the failures of QE and other attempts to thwart the GFC and its after affects they have been learning. The Bank of England has been a real leader in this regard.

      It is probable that, in about 12 months, advanced industrial nations (their central bankers and politicians) will have learnt enough to do a version of the following:

      Take a few minutes to watch this informative and entertaining TED TALK by Mariana Mazzucato

      Titled: Government — investor, risk-taker, innovator

      And see how government economic involvement has been good for us all; from creating the internet to (arguably) creating atomic bombs.

      Here is the link:

      https://www.ted.com/talks/mariana_mazzucato_government_investor_risk_taker_innovator

      The truth is that ‘reasonable’ governments have, in the past, been the driving force behind economic change and innovation.

      We need massive government spending (that means massive deficits) on R&D in potentially deflationary industries including clean alternative energy supplies, nano technology research and development, and medical research (including the effect of lifestyle and diet on diseases such as cardiovascular, diabetes and cancer). A subsequent deflationary effect will then occur in all of these industries and parts of the economy affected and will bring, for example, lower power prices and medical costs. This deflationary effect will pay for the government expansion and will provide employment in a transformed high tech Australia.

      This a a form of QE for the people instead of for the finance and banking industry at a time when new debt cannot be used as a stimulant because private debt is too high.

      Coupling such an approach with ZERO immigration (except for experts who are essential to fill job roles in the areas of expansion) and the end of negative gearing and the end of superannuation advantages for the rich will provide government with additional tax cash to beneficially use to further the expansion. Further, the cost of business and other premises for use in the expansion will fall, as will the cost of homes in which to live, and the expansion will be further fired-up with many more opportunities for entrepreneurism.

      I recommend and suggest that all readers watch this video by Richard Duncan who will help you to understand the approach I am recommending,. My recommended approach will make life more socially enjoyable for you, your family, friends and relatives, raise your income and protect the Australian environment. Tariffs will reduce your well being.

      To watch the video go to this link:

      https://vimeo.com/191592053

      • Tariffs are a great solution when unemployment is high and global demand is weak. The last country to impose tariffs is the first into depression. Tariffs are seriously underrated. But maybe you are right. Maybe macroeconomists all had it wrong for 35 years post WW2.

      • Australia had the best skins in the world up to and in the 90’s. Supple, sweet smelling and a big range. CSIRO had a dozen of the world experts in tanning. Come abolition of tariffs on leather goods the whole Aus tannery business collapsed. Those scientists were sacked and I was told by a Melbourne skin purveyer were pulling coffee in Lygon street. Thereafter try smelling a Chloe bag (for example as I did)$1,500 , stinking of leather which was rotting before tanning and after some months the stink from the still active microorganisms emerged. NO way, can this be removed and I tried. Tried on a 2,500 pale yellow crocodile skin basket bag. Threw it away.
        I have properly tanned leather from years before then and its sweet smelling supple and perfect.

      • Your position and argument is problematic, glo.

        You want high quality fashion items that most people cannot afford. From your comments it appears that price has won over quality in the worldwide leather goods industry. That is consumer choice rather than imposed high prices due to tariffs. And perhaps it is also a poor marketing job by the better leather producers.

        The CSIRO winding down is a tragic result of muddled headed economic and political leaders. If you go to the two links I have provided and read what I have written above you will surely understand that I do not support that winding down of the CSIRO and you will more fully understand the absurdity of applying tariffs under current economic conditions except in the most remote of temporary cases.

  4. SchadenfreudeKing

    The US won’t do well out of a trade war with China if it starts one. China is much more able to substitute US imports than the US is able to substitute Chinese imports. GM sell most of their cars in China, for example… it would be easy for the Chinese to clamp down and buy from companies based in Europe/Japan/China. There would be no increase in local prices for China. Same with Apple, and Boeing, etc…

    However, it would not be easy for the US to stop importing Chinese goods… it would lead to shortages and serious inflation.

    The Chinese have the upper hand here. A decent shot across the bow would be shutting down sales of iPhones in China. Watch Apple’s stock price immediately tank if they did that, which they could do with a stroke of a pen.

    • Exports to China as % of US GDP = .8%
      Exports to US as % of China GDP = 5%
      China has far more to lose in this equation
      China could retaliate and ban all US imports and the US still wouldn’t go into recession.

      • SchadenfreudeKing

        A very good point. However, trade affects the importer as well as the exporter. My point is that the goods that the US imports from China aren’t very substitutable. China could clamp down on imports from the US, and the US would be fairly limited in its ability to retaliate in my opinion. Large scale retaliation would result in price rises and shortages in the US.

        I suspect we’re both right depending on scenario. If both nations went nuts and placed huge tarriffs on imports from the other, it would probably hurt Chinese workers more. However, under a more limited scenario China could effectively ban Apple and GM, and the US would do… what exactly? If the US did anything effective to China, they’re risking local inflation and internal political backlash as all the junk at Walmart and Amazon would instantly jump in price.

        All the Trump voters would be apopleptic. Most of them aren’t rolling in cash to begin with. They’d be raging and looking for someone to blame if the price of anything goes up.

    • Agreed,SchadenfreudeKing.

      What I would hope to see from Trump is an equalizing tariff that takes account of lower wages and less environmental compliance in exporting countries. Such criteria are justified (and retaliatory tariffs are not) and will amount to cleaning up the (natural environment) of the world at the same time as creating an ostensibly fair level playing field market place.

      • “What I would hope to see from Trump is an equalizing tariff that takes account of lower wages and less environmental compliance in exporting countries. ”

        I could support this I think. I’d need to know more, but it seems reasonable to me. As a customer I’d also like better access to information around the wages, working conditions and environmental standards associated with the overseas products I buy. That way I can make an informed decision.

  5. – The problem for “The Donald” is that the USD will appreciate more than 10% in the coming weeks/months.

  6. 10% as an trial/experiment is a good move by Trump. No one really knows how things will pan out due to China being so corrupt etc. At least he is having a go as opposed to that paralysed little twerp Turnball.

  7. Fantastic, lets’ end all “FTAs” and go back to the era of tarrifs – where the middle class was at it’s biggest, and equality was at it’s highest.

  8. Trump’s too erratic to believe he’ll deliver on what he says, nothing more than showman looking to deliver the perfect line. I’ll believe it when it happens.

    • I think he’s half mad but will wait and see what happens, at least shit is getting a good shake up. Happy to see what falls out and if it crashes Aussie real estate with it. Good…

  9. Australia should not give any thought to erecting a tariff wall UNTIL it has removed the Great Reverse Tariff Wall represented by the massive unproductive capital inflows into Australia that inflate our exchange rate above what our current trade performance warrants.

    Unproductive capital inflows are inflows that do not clearly and directly add to the productive capacity of the Australian economy.

    1. Selling Australian govt bonds to foreigners

    2. Taxpayer guaranteed ADI borrowing offshore to support residential mortgage operations (i.e. to support lower mortgage rates)

    3. Mere transfer of ownership of major / significant land, industrial and infrastructure assets offshore.

    Heavily restrict the unproductive capital inflows and the exchange rate will fall significantly.

    The above 3 items represent hundreds of BILLIONS worth of capital flow trasactions that maintain upward pressure on the $AUD.

    It is likely that action will be more than enough without the need for a new tariff wall.

    In any event it is clearly the FIRST action that should be taken.

    Fiddling with tariffs without restricting unproductive capital inflows is likely to be a waste of time. Explicit quotas are likely to be more useful in terms of driving local production but again we should start with simplest and lowest hanging fruit first.

    RESTRICT MOST UNPRODUCTIVE CAPITAL INFLOWS

    As quickly as is possible – say over 5 years.

    Do that and the $AUD will decline to a level that reflects our trade performance. We start producing more stuff the world wants to buy and that replaces some of what we currently import the $AUD may then start to rise but it will be doing so because our trade performance has improved.

    • +1 Shouldn’t you be compiling a nice policy proposal whitepaper with the guys from MB … ? To see what party eventually might support sanity?

    • Why not do a policy paper to end tax deduction of interest payments by foreign owned entities operating in Australia.

      This is a key issue to end the takeover of our assets, stop the flow of foreign money and to actually get foreign companies to start paying some tax on their Oz operations.

      There is simply no reason why we should continue to subsidise foreign companies through the tax system, except perhaps in the elaborate manufacturing sector, eg motor car production as this has local spin off effects.