While the collective corridor of New York to DC freaks out that anyone would dare challenge the status quo of bad trade deals for America, some wiser investors are seeing through the smokescreen and explaining the potential long-term gains.
In the latest round of tariff wars, President Trump is allowing higher charges on Chinese goods to move forward as of today:
China will combat President Donald Trump’s latest tariff blitz by imposing 84% tariffs on U.S. goods starting Thursday, up from the 34% previously announced, the finance ministry said Wednesday.
“If the U.S. insists on further escalating its economic and trade restrictions, China has the firm will and abundant means to take necessary countermeasures and fight to the end,” the Ministry of Commerce wrote in a document released Wednesday.
Trump has rolled out a flurry of reciprocal levies on trading partners, including one sky-high fee: a tax on Chinese goods of 104%. This after implementing a sweeping tariffs plan that imposed 10% levies on almost all imports. Targeted U.S. tariffs of up to 50% on more than 50 nations went into effect Wednesday at 12:01 a.m.
China has remained defiant as the two nations seem locked in a tit-for-tat standoff amid a surging trade war.
Sure, it’s a “trade war” by a loose definition, but it’s far more akin to creating a position of leverage to eliminate trade barriers and deficits with a host of countries. As Trump has already stated, countries are now lining up to cut deals and ensure they have unfettered access to American markets.
China is a still an open-ended question for when and how some kind of mutual deal can be crafted, but it will happen in due time.
In the meantime, however, some are saying it’s about time that someone took it to China for a variety of reasons. Joining a CNN panel on Tuesday, famed investor and Shark Tank favorite Kevin O’Leary explained that a 104% tariff on Chinese-made goods might not be enough. According to O’Leary, it will take upwards of 400% to bring President Xi to the bargaining table:
If you stay inside the DC bubble or watch any kind of broadcast news, the sky is falling, and Trump is wrecking the economy. There’s no doubt some short-term pain will ensue, but this has been a part of Trump’s platform from the very beginning. This isn’t about Wall Street or investment banks watching their portfolio lag, it’s about restoring power to Main Street and doing something to bring more manufacturing back to the United States.
What’s becoming clear in his second term is that President Trump is now unshackled to push his agenda as quickly as possible compared to taking a more timid road back in 2016. The goal is to avoid being bogged down in midterm elections. Instead, push everything now as fast and hard as possible to achieve greater success in a shorter amount of time. If Congressional Republicans could just hold themselves together, they’d win in the long term.
Trump’s tariffs will ultimately create a more level field, economically speaking, and most of his voters understand and fully support these measures.
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