Bits and Pieces – 20180302, Friday

Commentary: There’s enough material on Trump’s trade war to warrant a small release of Bits and Pieces.

WWIII: The current state of the game’s board: Endgame Russia: NATO Sprawl Invades Eastern Europe, No More Illusions.

Bits and Pieces: As Trump tweeted: When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy! His education is about to begin. In fact, here is lesson #1: Europe To Retaliate With Tariffs On Harley, Bourbon & Blue Jeans; HOG Tumbles. The benefits to the steel industry in terms of production and jobs is now reduced by the steel that Harley-Davidson won’t be using and the subsequent layoffs there. I don’t know how many Harleys the EU buys but I’m sure they do and they want to send a strong message to trump, not just a token flipped bird. Stand by for lesson #2 from the country nearest you.

Also consider: In 2002, President Bush Imposed 30% Steel Tariffs; This Is What Happened Next, and the Smoot-Hawley Tariff Act of 1930 which is considered to be one of the causes of the severity of theGeat Depression. Wikipedia states, about this act (emphasis added):

The Tariff Act of 1930 (codified at … was an act implementing protectionist trade policies sponsored by Senator Reed Smoot and Representative Willis C. Hawley and was signed into law on June 17, 1930. The act raised U.S. tariffs on over 20,000 imported goods.

The tariffs … under the act were the second-highest in the U.S. in 100 years … The Act and following retaliatory tariffs by America’s trading partners were major factors of the reduction of American exports and imports by more than half during the Depression. Although economists disagree by how much, the consensus view among economists and economic historians is that “The passage of the Smoot–Hawley Tariff exacerbated the Great Depression.”

The EU bureaucrats must have missed US administration officials’ comments: Ross Warns Of “Some Casualties” In Trump Trade War But Navarro Expects “No Retaliation”. The US has been fighting wars for too long, apparently, against countries that don’t push back significantly, so that they fail to understand that wars can be symmetric in response. Come to think of it, they may have the same blind spot on the nuclear front which is the third phase of the war cycle after trade wars according to Jim Rickards.

Canada Corner: This presents our government with a problem: Canada Will be the Most Impact by a Steel Tariff. A trade war with the US that Trump has started, will have to be managed skillfully since we enjoy a sizeable trade surplus with the US. I’m sure trudeau is up to the task. He probably is buying a top hat bedecked with stars and stipes. The biggest problem in any trade negotiations with the US will be, when he dresses in the morning, to wear the new top hat and not thA Sikh turan, a feathered head dress, or one of those things Saudi Princes wear. A major negotiating point that Justin will not realize he is holding is NATO. No nation ither than the US poses any real threat to Canada so we do not need to be in NATO. We should improve relations with Chinma and Russia, starting with not lecturing them on how they run their countries. Then we should move to a declared neutral staance like Switerland. We can argue that Trump’s tariffs have negatively impacted our economy and we have to exit NATO as an economic measure.

This article puts a number on the percent of US aluminum imports that come from Canada – 40%: Five takeaways on Trump’s tariffs. Canada’s economy will be hurt by these tariffs and retaliatory tariffs won’t help the industries and jobs affected but will simply go into government coffers. The latter isn’t all that bad since Justin won’t have to scramble so hard the next time he wants to give someone else a few hundred million. Another strategy for Justin would be to identify states in which Republican incumbents are in trouble, identify their major exports to Canada and target those industries with tariffs.

From a personal perspective, prepare yourself: GMO: “A Global Trade War Would Lead To a 40% Market Crash”.

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