US Tariff Implications

The 25% Tariff on $200 billion in Chinese exports will result in more manufacturing jobs returning to the US and a significant reduction in the US Trade Deficit.  US companies who had outsourced their manufacturing to China will either move it to another country or bring it home to the US. The corporate tax rate cut from 35% to 21% added 14% to gross margins, so companies have some room to keep prices close to current levels.

The 25% Tariff on the next $325 billion in Chinese exports will result in even more manufacturing jobs returning to the US and a new supply chains being established that do not include much from China. There is little we buy from China that we can’t make ourselves or buy elsewhere.

US and foreign companies are opening manufacturing operations for goods sold to US consumers. This will continue to accelerate as Tariffs are added. The US trade deficit reduction has begun.

https://www.boston.com/news/politics/2019/04/17/us-trade-deficit-narrows-to-49-4-billion-in-february

Comments

The US economy stalled, in part, because it became overly dependent on government spending. The goal ahead is to restore the private sector economy in the US to lower the US trade deficit and restore middle class jobs.

The decline in household incomes resulted in record high household debt. Unsustainable costs in healthcare, education and government need to be reduced by privatization and a return to pricing to consumer control.

I expect US consumers to divert more of their incomes to reducing unnecessary credit card debt.  I expect consumers to stop buying so much stuff for a while and pay down their debt. This may slow down US GDP growth, but households will benefit from the tariffs as jobs move to rural counties.

Trump believes that each country should produce whatever it consumes where possible and provide these jobs for their citizens. This will have a positive effect on global growth as countries adopt this policy.

Our goal is to reclaim high tech manufacturing in electronics, software, production equipment and durable goods we consume in the US. There are many other low-wage, low cost countries on the planet who will want to make our clothing, shoes, food and other consumer items that rely on manual and touch labor.

We don’t need China, but China needs us. All China needs to do to save their economy is to stop stealing.

Norb Leahy, Dunwoody GA Tea Party Leader