I've been casting-about for someone; anyone, who can explain to me how the taxation of imported goods will improve your and my prosperity and general lot in life. If the world becomes a safer place, bonus. So, if you're reading this and have a simple elucidation that connects the economic dots you know where to find me. Meanwhile, while the president has promised trillions of dollars of foreign investment in the US I haven't seen anything in particular happening in Wisconsin.
February of this year Apple announced a $500 billion effort to build a new factory in Texas and expand manufacturing in several other states. But according to the Wall Street Journal that plan has been in the works since the Biden era.
Pharmaceutical giant - Roche - pledged $50 billion in domestic expansion; then walked-back the pledge following the president's executive order limiting drug prices.
BMW announced that it was considering additional shifts for US factories. Honda announced they were considering shifting Ontario production of their popular CRV to Indiana. Last month, Stellantis commenced a planned retooling of a previously mothballed plant in Illinois; the earliest opening date is the end of 2027. It takes awhile people.
Sure, the Trump Administration is rather loosey-goosey in claiming credit for stuff that has been in the pipeline for years, conflated or planned changes regardless of tariff policy. I don't have a problem with that. Politicians predictably claim credit for unearned stuff all day long. The reality is that reshoring of manufacturing and assembly operations along with their complex supply lines takes 3 to 6 years to bring to fruition; about the time Trump is preparing to leave office in his Qatari airplane and long after the mid-term elections. I wish I could be a fly on the wall of America's corporate boardrooms. Do you suppose I'd be witness to talk about waiting this guy out? I wonder.
The practical effect of the on-again, off-again, inconsistent tariff and trade policy along with a global trade war has been a freezing of business investment activity. Last Tuesday I listened to Wisconsin Senator Ron Johnson on the Julie Mason Sirius XM POTUS channel as he shared his misgivings over trade taxes and impacts on Wisconsin business. Coming from a private-sector guy his musings over business investment grinding to a halt carry some weight. Business wants and needs predictability and certainty before making outsized investment commitments. Complicating this are recent retailer announcements of price increases as Trump's taxes erode already slim profit margins.
Some have speculated that a case that heard oral arguments just last week in the US Court of International Trade could end all of this nonsense if this obscure federal court grants small business plaintiffs' request for an emergency injunction upending Trump's policy ambitions. Who knows where this shall go. Time will tell.
So, we'll have to wait this out and see what develops. We're already half-way into a 90 day pause with many trade taxes already in place and in full force and effect. What happens after the 90 day pause expires?
Your guess is as good as mine.
What I know for sure is that corporate America is taking a long pause to assess the matter and during this period of wait and see not much is happening. And who can blame them. Last week the president got up on the wrong side of the bed and in a fit of pique threatened the European Union with a 50% tax on their exports to the US. And In a new first; he petulantly singled-out specific companies (Apple and Samsung) with an import tax of 25% if they didn't begin moving their assembly operations to the US before the end of June. This is absolute bananas.
I predict a summer of interesting economic outcomes. And maybe a surprise or two*.
Meanwhile, unlike deep pocket Apple and Samsung, small business owners are taking it on the chin. Beth Benike, an Army vet and owner of the Minnesota based company Busy Baby is just one of the millions of small business owners being impacted by President Trump’s up-and-down, back-and-forth, red light-green light and increasingly petty and impulsive import and curiously personal tax policies. Like I said - bananas.
Small businesses must now contend with the weight of burdensome new costs. “I don’t know how to operate in this new world,” Benike says. Even Trump’s lowered China tariff of “30% is still a lot.” What’s more, she says, “we don’t know what happens after 90 days” when Trump’s pause expires. In this uncertain landscape, Benike asks, “how do you plan anything as a business?”
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