Trump Says Consumers Can "Very Easily" Take a 10% Tariff Hit on Goods from China

Farm bankruptcies are on the rise and Apple is struggling with falling sales but more tariffs are coming says Trump.

Family Farm Bankruptcies On the Rise

Thanks to falling grain prices partially due to trump tariff policies, Family Farm Bankruptcies On the Rise in Upper Midwest States.

The number of farms filing for bankruptcy is increasing across the Upper Midwest. According to a new analysis from the Federal Reserve Bank of Minneapolis, the trend comes on the heels of low prices for corn, soybeans, milk and beef.

The analysis found that 84 farms filed for bankruptcy in Wisconsin, Minnesota, North Dakota, South Dakota and Montana in the 12 months that ended in June. That's more than double the number over the same period in 2013 and 2014.

"Current price levels and the trajectory of the current trends suggest that this trend has not yet seen a peak," said Ron Wirtz, an analyst at the Minneapolis Fed.

The increase in Chapter 12 filings reflect low prices for corn, soybeans, milk and beef, The Star Tribune reported. The situation has gotten worse for farmers since June because of the retaliatory tariffs that have closed the Chinese market for soybeans and held back exports of milk and beef.

Damn the torpedoes.

84 bankruptcies is not a lot. But for every bankruptcy there are a thousand farmers taking an income hit.

Damn the torpedoes, Trump says it's ‘highly unlikely’ that U.S. would hold off on increase to 25% on $200 billion of Chinese imports.

The Wall Street Journal reports Trump Expects to Move Ahead With Boost on China Tariffs.

President Trump, days before a summit with China’s leader, said he expects to move ahead with boosting tariff levels on $200 billion of Chinese goods to 25%, calling it “highly unlikely” that he would accept Beijing’s request to hold off on the increase.

In an interview with The Wall Street Journal, Mr. Trump suggested that if negotiations don’t produce a favorable outcome for the U.S., he would also put tariffs on the rest of Chinese imports that are currently not subject to duties.

“If we don’t make a deal, then I’m going to put the $267 billion additional on” at a tariff rate of either 10% or 25%, Mr. Trump said. He first threatened those duties, and the higher tariffs on the initial $200 billion in goods, in late summer.

Consumers Can Take a 10% Tariff "Very Easily" Says Trump

Despite the fact that technology shares have been hammered and Apple is struggling, the president said tariffs could also be placed on Apple Inc. iPhones and laptop computers imported from China.

“Maybe. Maybe. Depends on what the rate is,” the president said, referring to mobile phones and laptops. “I mean, I can make it 10% and people could stand that very easily.”

Unlike farmers and small manufacturers who use steel and aluminum, Apple is not at financial risk.

However, to suggest that people can "very easily" accommodate a 10% hike in goods from China is complete silliness.

Unless this is some kind of "art of the deal" game, It appears we are about to find out.

By the way, these negotiation tactics aren't doing any US businesses any good.

Excuse me for pointing out that Trump made that deal. He threatens it already.

Neither businesses nor countries have any idea if Trump will honor any deal he makes.

Deals, like promises, are meant to be broken.

Mike "Mish" Shedlock

Comments (37)
No. 1-16
Sechel
Sechel

Trump touts a marginal tax benefit to consumers and then downplays the hit tariffs will have on them. Both statements cannot be true

Webej
Webej

A large proporton of the retail goods bought by average Americans comes from China. A 10% increase in pricing would be devastating. What would be truly devastating is if the dollar loses status (due to weaponizing the dollar via sanctions and extra-territorial claims) and the rest of the world loses interest in exports to the American market. [What Trump calls WINNING.] The dollar would lose purchasing power, the government would have trouble selling debt, and as Americans see their standard of living plumment, the government would have to rein in spending in the face of depression. Housing would become cheaper, though, for those who still have income.

ReadyKilowatt
ReadyKilowatt

Isn't inflation the goal? And besides all that money we're saving on food can go towards Christmas presents.

Keynesians should be loving this. For all the pushing on a string policies from the last administration they couldn't even maintain 2% inflation. Trump comes along and starts a trade war. Need more inflation? Sure, just run up the tariff. Too much? Well, just drop it a little. Problem solved!

(sarcasm)

RonJ
RonJ

"Unless this is some kind of "art of the deal" game..."

Obviously it is a tactic. Are people complaining about the sudden drop in oil prices after Trump said they were too high? Saudi Arabia is supposedly pumping out a record 11 million barrels a day.

Trumps threats got Kim Jong Un to change his tune. Or have people forgotten that already?

Realist
Realist

Trump claims that Tariffs are a tool to solve many problems; he says Tariffs will lower the trade deficit (yet it continues to go up); bring back manufacturing (though by raising costs for US based businesses, he is making them LESS competitive); and allow him to negotiate better trade deals (yet USMCA is virtually identical to NAFTA). Tariffs are a tax that hurt both American businesses and consumers. Tariffs are a lose-lose strategy. Only morons would support such a stupid strategy.

pi314
pi314

The most expensive iPhone 5 released in 2012 was $399. At annual price increase of 10%, today's most expensive iPhone would be $707. Instead, the most expensive iPhone XS Max today is $1,449, more than twice of $707!!

Now explain why a 10% tariff is a big deal on Apple devices.

TheGreatMiginty
TheGreatMiginty

Few here in importing business otherwise they would understand the free for all China has had on US markets. I watched china go from primitive to way past USA in 25 years. China workers earning a mere $40 a month selling product at high profits with no tariffs. Trump does not want tariffs either he just wants equal access to China market. Chinese people desperately want USA products but the 100-300% import duty stops USA product cold. Hey :) I made a ton of many importing :) Zero exporting even though much demand due to China taxes. 1.3 billion customers there

Runner Dan
Runner Dan

Doesn’t it suck when you have to pay way more for something than you otherwise should? Kind of like for housing, healthcare, higher education, insurance, pharmaceuticals, law services, and public sector services? However, Its not so bad if you are in those moated/subsidized industries since you get the benefit of higher pay. Well, now Trump comes along and is trying to get a deal for the “productive sector” workers who have been abused for the last 30+ years and boo-hoo! That’s not fair and will hurt!

I agree. Let’s all make a deal where we get rid of every government intervention/subsidy, remove all industry moats, and allow global competition for everyone’s employment, like low wage labor and the technical sector is today. Any takers?

KidHorn
KidHorn

The Chinese have been trading unfairly for years. We should have done something decades ago, but, better now than never. I expect some short term pain and maybe it will help in the long term. We can always roll back the tariffs if need be.

Stuki
Stuki

@runner Dan:

Touche!

Except Trump isn't helping anyone by making it more expensive for them. He may be trying, but his attempts are about as painful to watch, and as well founded, as a dog trying to catch his tail.

But as far as magnitude of theft is concerned, you're absolutely right. I can't think of any San Franciscan not directly benefiting from the theft rackets, who wouldn't happily accept a 10% increase in the price of an IPhone, in exchange for a 95% reduction in the price of dwelling in his home town. As well as a 100% reduction in income and sales taxes, and insurance mandates of all and any kind. And a 95% reduction in potential legal "liability." And 1950s era medical bills. Largely free drugs etc., etc....

What's fleecing people, isn't the cost of electronics. In large part because anyone wanting to into the fleecing rackets by way of the electronics route, are kept honest by Chinese guys. Instead, the fleecing is done by people who already have the government "protecting" them from free and unfettered competition.

Trump going out of his way to add "incompetent idiot friends of his in the PE trade, who have bought inefficient, uncompetitive manufacturers for a song and want to flip them for a subsidized fortune" to the deadweight protected by government, is most certainly s step in the wrong direction. Adding anything to a government bigger than Jefferson's always is. But until the people aghast over Trumps tariffs realize they are only the tiniest tip of the almost all encompassing iceberg of theft and handouts which is all that's now left of the US, Trumps follies are just roundoffs.

Casual_Observer
Casual_Observer

The broader story is the additional economic growth created since 2017 is now waning. I'm not sure when or how this will end but I'm 100% certain a recession happens in the next 12 months when we hit stall speed. I still expect Trump to resign once the full nature of his transgressions are revealed.

Casual_Observer
Casual_Observer

Btw once unemployment starts rising again and the growth story ends, no one will be fooled by Trump-speak. He hung his hat on the economy and once that goes it will take Trump with it. I actually voted for the guy but I see nothing but bad in the corporate bond and stock market ahead. That will trigger a recession of epic proportions with little the Fed and white house can do. The pain is coming for many and there is nothing people will be able to do about it.

Deter_Naturalist
Deter_Naturalist

Shipping manufacturing to cheap export-mercantilist nations hid the unprecedented credit inflation of the last 40 years. The real price of a pair of shoes or bluejeans cratered, so Joe Sixpack didn't notice the inflation. His boss didn't notice it either, since it flowed into asset prices. Rising prices for (mostly intangible) assets was Wealth, baby!! Or was it?

John Mauldin recently called buying on debt a means of pulling future purchases into the present. He's wrong. Credit inflation was the engine of floating the ocean of IOU's that filled these past 40 years. Buying by issuing debt simply meant that savings (accumulated in the form of holding bonds) was put straight into consumption. The last 40 years have witnessed the largest instance of capital consumption in history.

People hold hundreds of trillions of dollars of IOU's now, but most of the stuff bought with the debt was consumables (including college degrees in "womyns studies," etc.) The paper isn't wealth...or at least it won't be once Rip Van Winkle awakens to how impossible is servicing it all.

The pathological trust (and pathological complacency) that underwrote globalism's baloney sandwich is eroding. Trusting China to make "our" circuit boards for communications got "us" spy chips and hacking, courtesy of the Peoples Liberation Army. As trust drains away, the urge to "buy chinese" will evaporate, too.

Trump's tariffs are but a signal. Not a cause.

Realist
Realist

I have gone on record here for several years saying that there is no recession on the horizon. However, I always qualify this by saying that my prediction can always be wrong if a “black swan” event happens. One of these black swan events could certainly occur if Trump keeps pushing for a full-blown trade war. If this happens, then a recession IS coming soon. However, I keep believing that cooler heads will prevail, and stop Trump from going full-on stupid.

TomKathQld
TomKathQld

I find the Trump bashing here a bit small minded. Criticising POLICIES is great, but the personalities no. We must consider REALISTIC alternatives to Trump, which is not me, Putin, or Mish, but Clinton. Do we seriously believe that she could have kept the debt bubble fraud going longer than Trump has? Would we want to?