Trump Tweets "Tariffs are the Greatest!" Seeks "One-Time" Aid to Farmers

Trump offers farmers $12B in "one-time" aid to stem allegedly "illegal" trade retaliation by China and the EU.

All Will Be Great!

Showing concern over mid-term elections, the Trump Administration Plans Up to $12 Billion in Farm Aid to Ease Concerns Over Trade Disputes.

The Trump administration on Tuesday announced an emergency-aid package of $12 billion for farmers amid growing concerns that the U.S. agricultural sector could suffer from President Donald Trump’s escalating trade dispute with some of America’s largest trading partners.

The trade rift between the U.S. and some of its closest allies has prompted retaliations and legal actions following President Trump’s decision earlier this year to impose tariffs of 10% on aluminum imports and 25% on steel imports from Canada, Mexico and the EU.

U.S. Agriculture Secretary Sonny Perdue said Tuesday the “one-time” program would help farmers meet losses resulting from “illegal retaliation” to U.S. tariffs, and wouldn’t require congressional approval.

Last week, Mr. Trump threatened “tremendous retribution” if his meeting with the EU officials this week doesn’t lead to what he considers to be a fair auto-trade deal. Mr. Trump said recently he considers the EU “a foe” on trade. Mr. Trump repeatedly complains that the EU imposes 10% tariffs on auto imports, compared with 2.5% imposed by the U.S. He declines to mention the 25% tariffs the U.S. imposes on light trucks, vs. the 10% rate in Europe.

Accurate Summation of Today's Trade News

No Deal

Yesterday, I commented No Deal: Trump Offers Zero-Tariff Deal, EU Refuses

The Washington Times reported "EU Trade Commissioner Cecilia Malmstrom, who will accompany Mr. Juncker to Washington this week, said they will bring a new list of U.S. goods targeted for sanctions if Mr. Trump doesn’t back down."

I created the image yesterday using a Tareyton ad from 1960's and an image of Jean-Claude Juncker.

Negati Net Benefits

I like this Tweet from Pater Tenebrarum (Acting Man) posted in response to the above article.

I will change his comment slightly to "No net benefits" or more precisely "Negative net benefits". There may be small benefits to a protected class but at a greater expense to to population at large. I am certain Pater understands that.

Retribution Cometh

It's an unsolvable problem.

Why?

  1. Because France will never give up its agricultural tariff policy.
  2. Bickering between France and Germany is on the rise. Germany is hurt far more than France over the auto squabble.
  3. This is not just a France-Germany issue. To make a treaty change, and tariffs are a treaty change, every nation in the EU must sign off on it. Re-read point number 1.

It took over a decade for the EU to negotiate a simple trade treaty with Canada. It nearly failed and took as long as it did because one country didn't like it.

Correction: I thought it passed when the Netherlands removed objections. The Italian election may have changed that verdict.

Reuters reports Italy won't ratify EU free-trade deal with Canada.

Here's the current situation. The EU signed the deal, but all 28 members must ratify it. The treaty is not valid until all 28 nations ratify it!

“We will not ratify the free-trade treaty with Canada because it protects only a small part of our PDO (Protected Designation of Origin) and PGI (Protected Geographical Indication) products,” Italian Minister Gian Marco Centinaio told the daily newspaper, La Stampa.

The government’s program pledged to “protect the highest-quality products of Made in Italy”.

Expect Out of Control Escalation

To expect Juncker will agree to remove all tariffs is like expecting vegans to suddenly condone baby back ribs.

Given the above, the most likely course of action is the trade war will escalate out of control.

Related Articles

  1. Trade War With China Morphs Into Currency War: Biggest Loser is the EU
  2. Trump Now Threatens Tariffs on All Goods from China: $450 Billion
  3. Chinese Tariff List Translated, 545 Items: US Farmers and Automakers Clobbered
  4. Trade War Hits Home: Trump's Asinine Protectionism

Trade Wars Unequivocally Bad

Trade wars are unequivocally bad and not easy to win.

No Matter What Any Other Country Does, the Correct Action is to Reduce Tariffs.

This morning, before the emergency "one-time" news came out, I commented Tariff Backlash Could Cost Republicans the Senate.

Trump's action shows concern that I may be correct.

Mike "Mish" Shedlock

Comments (28)
No. 1-28
ML1
ML1

The EU-Canada trade deal is still NOT guaranteed to pass because only about half of EU countries have ratified it so far so for example Italian populists 5 stars or League could still decide to stop it because they are apparently not happy that EU-Canada trade deal does NOT give naming protection to all foods that are naming protected under EU rules. Example Parma ham aka Prosciutto can be only ham made in Parma and not ham made the same way elsewhere like Parma ham is made in Parma.

ML1
ML1

It is 99% sure that it goes through but in EU one can be 100% sure only after each EU country's parliament has ratified what has been agreed. Also many EU countries use situations like this to get EU commissions ear about things that are important to them and get something they want through because it is easier to get Juncker's ear when some issue is still pending and EU commission needs something (like ratification of EU-Canada trade deal) from an EU country. . Some EU countries are naive honor students always doing quickly what Juncker or Merkel tell them to do and other EU countries take everything they can from EU.

Mike Mish Shedlock
Mike Mish Shedlock

Editor

I am not sure this will ever be ratified. Take a look at the concerns of Italy expressed in direct quotes. I just updated my article in response to your correct observation.

Mike Mish Shedlock
Mike Mish Shedlock

Editor

Regardless, it shows how hopeless the situation is for Trump to expect Juncker to agree to anything. He can't. It would take a decade or more to form a deal. This is another example of why the UK needs to leave the EU.

Carlos_
Carlos_

My guess is the trade war escalates and tariffs will go up everywhere (isn't that what always happens during or after a balance sheet recession?). Once Trump sees that his support erodes he starts a real war with Iran. Americans rally to commander in chief Trump and re-elect him (isn't that the way it always happens?)

Brother
Brother

New topic, If Trump is trying to level the playing field he would be much better holding the companies like Apple and Amazon to use ethical labor practices rather than using slave labor to make their gadgets nobody will need in 4 years. Why? To maybe bring some mfg. back to the states. The labor practices they out source don’t pay living wages and are in remote China outside of population centers all to make the richest people on the planet richer until your cash money is replaced by a device.

ML1
ML1

EU situation: . Germany: boohoohoo, you put BAD BAD tariffs on products made in Germany . France: Hell no you are NOT bringing some US produced food with GMO or hormones or unculinary mass production to our France where farmers block the streets and drive manure to centers of cities if things do not go their way. EU farm subsidies are FOREVER and UK has to pay them even after leaving EU. . Germany: What you mean you want to open a cafe selling cupcakes. You need to study it for years at least and get a permit and then we will think about it. . Same Germany: Free movement of workers is great look at those poles working in German auto factories. . France: Look at our beautiful football team made of French people from mostly immigrant backgrounds. . Same France: Damn Italy, why are they trying to push asylum seekers and migrants to France. Send more border police to the border to stop migrants, pepper spray them if you need to, catch them if they get inside France and put them in a van and drive them back to Italy, if they keep coming start sending them to southern Italy in buses so they get the hint, inspect ALL the trains coming from Italy by the first station in France and drag migrants out, If they yell "asylum" laugh at their face and give them a paper that states in French that they have no right to seek asylum and send them back to Italy (one can NOT ask for asylum in France at the border or from border police or from authorities inside France, One can only ask asylum in France if one gets to the correct office in some of French cities and fulfils an application written in french and only in certain time period after coming to France so one day late and you are ineligible.) France has had border controls and lots of border police in the Italy-France border since summer of 2015, the policy was started by leftist Hollande and continued by centrist Macron. . Germany: It is so good to sell German made QUALITY products to all our European partners since we are all in Euro and there is no currency risk. German products are better than theirs. . Same Germany: Why are those dirt poor Italian, Greeks and Spanish complaining that they are not competitive anymore and why are they crying for more EU funds while they have spent hundreds of billions of Euros and German TARGET balance is out of whack due to those no good lazy people spending debt money irresponsibly. Send more EU bureaucrats there to straighten things out. . Germany with Merkel still in her crazy phase regarding immigration: Borders must NOT be closed. Refugees are welcome. We will manage. There is NO LIMIT to the amount of asylum seekers Germany will take. There must be burden sharing to every EU country from Greece and Italy so all asylum seekers do not come to Germany and our buddy Sweden due to our generous welfare and free apartments after asylum application has been accepted and due to our large asylum application rates. We even have our own category of "humanitarian protection" that is NOT required by EU directives so BAMF can give "humanitarian protection" to tens of thousands of asylum seekers each year that would be REJECTED in most EU countries and sent back home. There is NO problems, anyone saying there are problems is bad bad far-right nasty. There was no problems in the new years eve since there are NO reports of this in the media, those are just some facebook rumors by racists. 6 days later when Media was forced to report since millions of germans knew the truth thanks to facebook posts: There was mass sexual harrassment of hundreds of women and lots of rapes and robberies. However these are isolated things and the fault was with police so fire some police chiefs. Also make a law that forces Facebook to quickly remove irresponsible and untrue postings when German authorities think they are irresponsible or untrue, no no this is not any kind of censorship . . Germany now: Everyone must share the burden. OK some EU countries can voluntarily share the burden. Keep borders closed to the Greek route. Stop people in Germany's borders that are already registered elsewhere because that Seehofer talks about nothing else... Make other EU countries register everyone. Stop the smugglers. Dis-embarkation platforms outside of EU. Merkel had a success when Greece promised to take back people already registered in Greece, She is a genious and AfD could NEVER achieve anything like this!!! . Reality: Greece would in reality be forced to take registered asylum seekers back under the current EU Dublin Agreement but Germany's bureaucrats were too slow and disorganised to ask for Dublin returns in the timetable included in the Dublin agreement so Germany became responsible for tens of thousands of extra asylum seekers 2015-2017 that had first come to Italy and Greece. Other EU countries do the Dublin agreement check through the EU asylum seeker fingerprints database immediately and Germany foolishly only does that in the asylum seeker interview 3-12 months after the asylum seeker has come to Germany. However the main problem in 2015 was that Greece did NOT register asylum seekers and just PUSHED over 1 million people north while registering only 11 000 as asylum seekers. Greece agreed to take back registered asylum seekers even beyond the timetable set in EU Dublin agreement for Dublin returns since Merkel BEGGED for it but this only causes miniscule amount of Dublin returns while as a reward Greece can PUSH anyone who comes to Greece and has relatives in Germany straight to Germany. . So in her incompetence and political desperation Merkel has opened a new route from Greece to Germany. Let's see how long it takes for EVERYONE who has relatives in Germany to learn about this agreement and run to Greece to get to Germany and get welfare and free apartment. Oh it has started already and arrivals to Greece are up over 100% compared to the same time year ago... Italy refused Merkel's special Dublin agreement deal to take back everyone registered because Italy has registered about 50% of migrants going through Italy as asylum seekers while Greece has registered under 1%. . Germany and France: Trump is a nasty guy in trade and immigration. We Germany and France are so wise and pure as snow and did not do anything irresponsible or stupid like Trump. la-la-laaa..... . Question: What kind of a freakout would USA media have if Trump copied policies and practices used by France in France-Italy border to the USA-Mexico border?

stillCJ
stillCJ

Editor

Those who think Trump does not know what he's doing (hello Mish) would do well to read this:

Webej
Webej

My recollection is that it was hung up in the Wallonian Parliament, hostage to byzantine intrigues of Belgian federal politics.

Webej
Webej

USDA subsidies is one of the main reasons the EU is intransigent on agricultural tarifs. Canadian dairy tarifs is what keeps the Cdn dairy sector from having suicidal farmers like the US has. Note that Canada has no subsidies on dairy farming, in contrast to the USA where they have have subsidies, low prices, suicidal farmers (the small operators they say they are protecting), and a growing mountain of cheese and milk powder. Subsidies are worse than tarifs, because they are less transparent and subvert market forces in pernicious ways. Disputes about a level playing field (subsidies, labour & human rights, pollution & regulation, tax and infrastructure facilities) are the rationale for introducing tarifs. Discussions about the slope of the playing field are pretty much guaranteed to be endless. Note that Trump and most commentators persist in the crazy idea that other countries are stealing the US piggy bank by subsidizing American consumers with tax money from their own citizens, or worse, shipping tangible stuff to US consumers in exchange for pieces of paper called treasury bonds. The whole world has ganged up on the nation that throws a bomb every 12 minutes, all because Americans are too trusting and gullible. Poor victims.

Carlos_
Carlos_

Well if you spend all your life in an echo chamber hearing your opinions being enforced by one of the most intellectually week article ever then not surprise you have become a lemming. The whole premise is that Trump is great because 1) He was elected and 2) He is a billionaire (Billionaire BTW Jeff . Trump not so much).

Quatloo
Quatloo

It was Belgium actually, the Walloons tied it up.

Realist
Realist

Trumps supporters are convinced that Trump is a genius who is making all the right moves. They are as delusional as he is. Tariffs are a self-inflicted wound. The more tariffs Trump implements, the more he hurts American workers and consumers. The idea that other countries will suddenly ”give in” to Trumps demands are ludicrous. The US already had higher tariffs than any industrialized country that it trades with. US. 1.61% Europe 1.60% Japan 1.35% New Zealand 1.27% Australia 1.17% Norway 1.02% Canada 0.85%

stillCJ
stillCJ

Editor

"The US already had higher tariffs than any industrialized country that it trades with." I do not know your source "Realist" but I found this map from the World Bank of tariff rates which has some interesting data. Move the cursor on any country to see the average tariff rate. The US seems to be about lower middle on tariffs.

Realist
Realist

The tariffs need to be weight adjusted. Anything else like ”average tariff” is meaningless. The data is from the world bank.

Realist
Realist

Try clicking on this map.

Realist
Realist

You will see the proper numbers .

stillCJ
stillCJ

Editor

Did you not notice that both sets of data are weight adjusted and from the World Bank, Realist? The data you posted is from Investopedia but sourced from World Bank, although slightly different than the other World Bank tariff data. There is some same data, and some differing data there. Interesting that some countries like Mexico, Pakistan and India have tariffs much higher than the US. Trump has made it very clear that his goal is to reduce tariffs as much as possible. Not sure why you & Mish don't get that.

Stuki
Stuki

Every time I make a junkie wealthier by giving him a buck, I make him so much smarter that he then goes out and invests his newfound wealth in another hit.

And, there is simply no education institution as magnificent as a Las Vegas slot machine. Keep pulling long enough, and one day you'll get really, really smart!!!

Realist
Realist

StillCJ. Did you notice that both sets of data display that the US is not being taken advantage by Europe, Japan, Canada, Australia etc. This is true of all developed/industrialized countries that the US trades with. Trump is starting trade wars with these countries when there is no need. In the case of China, if he wanted more more leverage over them, he should have stayed in TPP which was designed to be a joint effort to impact trade with China.

Realist
Realist

Trumps goal is to appeal to his base by inventing enemies to blame. It is the politics of hate. It is a very common strategy. I'm not sure why you don't see it. Believers are blind.

Carl_R
Carl_R

Here is another example of what happens when you put a tariff on manufacturing inputs: https://www.newsweek.com/trump-steel-tariff-nail-industry-992834 The tariffs may be the final nail for he US nail industry.

Sechel
Sechel

Reminds me how easy Trump thought getting Mexico to pay for a wall would be. Then when he meets with the Mexican President he pleads with him not to contradict and embarrass him. Sounds very much like Trump got in over his head on this one. He can't back down because Trump never does so he's trying to pay the farmers off. But no Congressional monies were sought. This can't go on long.

EndOFBabylon
EndOFBabylon

These Trump-humpers (including Mish) will go down with the Trump ship no matter how much water it takes...The same "states rights" sycophants are all in a conniption fit over sovereign governments refusal to bend to the whims of the US..aka "The benevolent EMPIRE". The hypocrisy and political flatulence of the FAKE LIBERTARIANS (flibertarians) and the fascist leaning Christofascists masquerading as CON-servatives has been exposed. Thank ANTI CHRIST TRUMP....Dont take the MARK folks....'Shes a queen...she'll breed..and you'll die' (Alien Resurrection).

ML1
ML1

The problem with the US nail factory was caused by NOT enough tariffs. -Trump put tariffs on steel -steel prices rose about what the amount of tariffs was and producing steel in USA became profitable again -The nail company tried raising their prices the same amount that steel prices rose. -Because Trump had NOT put tariffs equal to the steel tariffs on products made from steel many customers of the nail company decided to use CHEAPER imported nails instead. . How to fix: When putting tariffs on steel also put same kind of tariff increases on products made from steel so US nail companies are not hurt.