HopalongPetrovski
I'm Spartacus!
Hi Larry.
This may be wrong and only a simplified version, but it's my take as I understand it.
Any tariff paid, will be a tax, which will directly strengthen the US economy as a direct input.
By effectively increasing the price of foreign goods for its citizens, it makes US produced product more competitively priced, and hence more attractive within America.
This artificial impost is designed to promote manufacturing within USA, effectively turning back the clock to a time when America was still producing 'on shore' rather than importing virtually everything, as we do, from China, and other countries where labour can be had at a cheaper cost.
So, this is designed to promote full employment with a wider range of jobs and more companies producing locally, without having to artificially repress the cost of local production and lower the local standard of living.
This effectively "hurts" China and other current manufacturers (and their suppliers) by effectively reducing demand for their product.
If they wish to retain the volume of their sales, they have to reduce their prices, effectively transferring a portion of their profit margin directly into America's coffers.
Australia and many other countries systematically removed tariffs and adopted various versions of "free trade"during the last century in a bid to help the third world catch up and in the understanding that it would have a beneficial impact on all participants.
That was the theory anyway and we all have witnessed the great strides China (for example) has taken in modernising their infrastructure and increasing the living standards of its people.
However, it was widely expected that other western norms (democratic freedoms and a strong free press) would arise concurrently making these countries foreign versions of us or friendly clones, but strong crackdowns by the extent regimes have prevented this from occurring thus far.
So, in essence, Trump's (make America great again) strategy is designed to reverse the flow of both capital and economic influence from outwards back to inwards for American companies and as a way to reestablish American pride.
America is a large enough economy to be self sustaining so it may well have a short term positive effect, but the longer term repercussions of America's isolationism, both at home and for the rest of the world, are yet to be revealed.
see you tomorrow
