Eleven Observations on All Those Tariffs

As mentioned in a recent post, I have not been covering the day-in, day-out activity with the Trump Administration’s proposed, threatened, scheduled, started, stopped, and discontinued tariffs, as they have changed too quickly to put in a weekly blog with posts that will not be read immediately.  Most if not all seemed to me like negotiation efforts more than parts of any real economic policy. 

Now, though, they seem more permanent.  Reactions from other countries, from Canada and Europe to especially China, have changed from quick concessions to their own levies and threats.  Some may still be withdrawn, and some agreements will certainly take place, but we can’t count on that anymore.

As of Wednesday morning’s “Live Updates:  Asia Grapples With Punishing Tariffs as Its Stocks Sink Again” in The New York Times, “U.S. tariffs on its largest trading partners” listed the following effective or to be effective April 9^th:  China 84%, Mexico 25%, Canada 25%, European Union 20%, Japan 24%, Vietnam 46%, South Korea 26%, Taiwan 32%, India 27%, United Kingdom 10%,  Switzerland 32%, Thailand 37%, Malaysia 24%, Singapore 10%, Brazil 10%, Indonesia 32%, Israel 17%, Colombia 10%, Turkey 10%, Australia 10%.  There are others.  By the time you read this, there will be differences – I recommend either the New York Times or Fox Business for keeping up with changes too frequent for my reporting.

So what do I have to say?  Here are my views.

First, I am against all tariffs.  Not only do they go directly to the bottom lines of consumers, they prompt retaliatory ones which hurt our employment though reduced business profitability, and decrease product quality by reducing or eliminating healthy foreign competition.  Virtually all economists agree.

Second, the end does not justify the means.  That is a solid principle, with few if any exceptions.  Even if the administration knows something vast numbers of knowledgeable people on both political sides do not, which I have no reason to think, there should not be any tariffs.

Third, presidential overreach, here and in general, should be checked and balanced by the legislative and judicial branches.  If either one is unwilling to do that, we have a structural problem, or, more likely, the national lack of will has reached people we need to trust the most.  Either requires our attention and action.

Fourth, we still don’t know how long these tariffs will last.

Fifth, for top management at large businesses, uncertainty is as bad as poor business results.  That will pull down their stocks under this administration even if the tariffs go away.

Sixth, Trump has refused to use blind trusts or make his financial moves public.  Is it possible that he or his agents are selling stocks short before announcing tariffs or other moves certain to hurt the market?

Seventh, trade deficits are meaningless when considering tariffs.  They reflect relative richness and number of customers, at which the United States almost always outranks its trading partners.

Eighth, the April 5^th protests were better attended than many expected.  As the tariffs continue, and the administration does other things to attack prosperity, they should continue.

Ninth, maybe the strongest point against gun control is that any invaders would have to conquer not one government but over 100 million armed households, making that in effect impossible with today’s technology.  The same thing goes for people speaking up against our government – the more who do that, the safer they will be.

Tenth, when this is over, and it will end sometime, there will be a reckoning.  Those who did not resist Trump when they had the opportunity and capability will be identified and possibly punished, formally or informally.

Eleventh, my personal investment decision now is to sit tight.  As The Motley Fool said in a recent Facebook message, bear markets don’t destroy wealth – panic selling in bear markets does.  I will not make any stock trades, indefinitely.  If you choose that course too and it turns out to be wrong, at least you won’t die alone. 

The time will come when we have a better government.  In the meantime, keep living, do what you can and have to, keep the faith, and look at least to 2026 and 2028.

March Jobs Data Showed More New Positions Than Expected, with AJSN Giving Latent Demand Down 400,000 to 16.7 Million – No Clear Tariff Effect Yet

A combined published estimate for today’s number of net new nonfarm payroll positions was 138,000.  The result in this morning’s Bureau of Labor Statistics Employment Situation Summary exceeded that by 90,000, a welcome surprise.  Except for one area, the other numbers, though, changed in light and variable ways.  Both seasonally adjusted and unadjusted unemployment were 4.2%, the former up 0.1% and the latter, as we moved to an average employment month, down 0.3%.  The adjusted counts of those unemployed in general and those out for 27 weeks or longer stayed the same, at 7.1 million and 1.5 million.  Those working part-time for economic reasons, or looking for a full-time position while temporarily keeping a shorter-hours one, lost 100,000 of last time’s 400,000 gain to reach 4.8 million.  The two measures showing how likely it is for Americans to be working or one step away, the employment-population ratio and the labor force participation rate, stayed the same and gained 0.1%, to 59.9% and 62.5%.  Average hourly private nonfarm payroll wages rose 7 cents, or close to the inflation rate, to get to $36.00.

The area with the clearest pattern was partial labor force attachment, the second through eighth rows on the chart below.  While the count of those claiming temporary unavailability was up, the other six were down, some substantially, with the group of people saying they wanted work but were not looking for it for the past year showing the largest loss.

The American Job Shortage Number or AJSN, the metric showing how many fresh positions could be quickly filled if all knew they were easy to get, improved by 404,000 to reach the following:

About 300,000 of the loss was from official joblessness, and almost all the rest was from the categories of marginal attachment.  The share of the AJSN from unemployment edged down from 39.8% to 39.0%.  Compared with a year before, the AJSN gained about 400,000, with increases in those unemployed, discouraged, not wanting work, and not looking for a year or more mostly offset by fewer expatriates. 

What does the overall picture look like?  Except for the higher-than-expected number of new jobs, and the mostly seasonal increase in employment, up 868,000, not much happened.  Lower figures in the marginal attachment statuses may start a trend, but they are only down to about where they were a year before.  As it usually does during increased employment months, whether seasonally caused or not, the labor force grew, with 362,000 fewer out of the labor force and 153,000 fewer not interested.  Next time we will see the effect of Wednesday’s announced tariffs, if they are still in place, and other labor-affecting presidential moves.  For now, though, I saw the turtle take a tiny step forward.  I hope that the May report will not be worse.