I hear the pain of the impacts of the Trump tariffs and believe every pain is worth exploring to expand the manufacturing sector in the USA.
The monies coming into the federal government is pure government profit. The government spends nothing to achieve the bankroll that shows up with imports. The Trump tariffs are especially expansive. I firmly believe the tariffs are being used to close the income tax gap with all the tax cuts to the wealthiest citizens and larger companies.
As I thought these tariffs are hitting small businesses with profound damage. This is pure folly. Why? Because when the 2008 global economic collapse occurred it was the small businesses that took the least economic hit and was quickest to rebound and back into the profit range from the losses they initially sustained. All other businesses in the USA took far longer to recover. The bigger the business the longer it took for it to recover to profitability. Kindly remember 2008 were losses. Simply because businesses recovered doesn't mean there weren't losses across the spectrum in the USA and abroad. Yes, some businesses that could not recover went out of business.
The tariffs are being misused in my opinion. Tariffs are supposed to be used to add EQUITY to the domestic market. In other words, the Chinese can produce products American consumers buy or use in their manufacturing far cheaper than any domestic product. A tariff is supposed to add cost to the consumer to move the domestic product into a reasonable range to American consumption either direct sales of a product or materials used in American manufacturing.
The Trump Tariffs are about paying for the expansive tax cuts. That is becoming more and more clear as the US Treasury Department is adding US Bonds that can be cashed within two months. Those two-month bonds are used to FLOAT LIQUIDITY in the USA cash flow. That screams out loud to me. The Trump Budget does not have the economic income to continue the function of the US government. The very short-term bonds alleviate that cash flow congestion.
So, as to what to do:
First and foremost Americans have to put COMPETENT legislators into the federal government. I do not consider the Trump White House and its pressure on Congress to comply with its demands competent.
Secondly, Americans have to look beyond the protest and upcoming elections to change the course of the peril when tariffs are causing job loss and business closures.
The way I see this is for small business owners to work with the Small Business Administration to network within the country to find the supplies they need in their manufacturing. Those domestic supplies are not carrying tariffs. In realizing the businesses were viable before the tariffs is to realize there needs to be a shoring up of the manufacturing process in the USA. I think that can be a good thing. Small businesses will carry a great deal of pain for these paradigm shifts, but, in the long run they will be offering consumers products that are completely manufactured in the USA.
Thirdly, consider any downturn in a business seriously. I don't think these tariffs are going to disappear AND that means the countries that normally exported their products to the USA are already looking for new and different markets. I strongly believe the damage is done. While American business persons are hopeful of turning this around in January when a new Congress is seated, there is a chance the other countries have strategized away from the USA and they are not coming back. A war is a war and there are casualties. The idea is to intercede as soon as possible to move into this paradigm shift.
Kindly realize these tariffs are expansive and are having an impact in other countries, however, a country like China is already involved with the Third World and ready to develop these countries to move what was once the USA exports to other countries. All of this mess can be beneficial to the global economy in the long run, but, as the imports become a trickle to the USA economy there are dire consequences.
So, if I may?
If one accepts the fact the Trump Tax Cuts are supported by the Trump Tariffs what happens to the USA economy as it's income to the USA Treasury trickles to a halt. Now, the national budget deficit will grow as the tariffs no longer support the Trump Tax Cuts. As the budget deficit grows and the national debt adds up, the USA will be forced to seek more and more loans through sale of USA Bonds (which still TODAY have a good rating). The knowledge of the national deficit and debt to the American electorate is vital, because, the falling tariff income can be hidden by the sales of US Treasury bonds and low and behold all of a sudden a national debt of $21 trillion will double in a short period of time without a return to taxes that support the USA government.
I think this scenario is very possible and probably is already underway because of Mnurchins new two-month US treasury bonds.
Placing a new Congress in January is important and will cause a second look at the USA in relation to trade. Countries do watch what occurs with the USA government and where their interests are either protected or penalized. This change is vital to allies. It is important the American people realize how important they are to these countries of people. We can't disappoint them. The world is still dangerous and the USA needs allies. We are lucky to have wonderful allies that forgive the ups and downs of elections, but, this time the country really needs to let our allies know we believe something is very array.
Americans have a lot of work to do in securing the domestic economy and placing US and State Congresses that are benevolent and prudent in their decisions when it comes to trade, supporting small business in this paradigm shift and reaching out to trading partners.
Get busy.
