Free Trade

Market Crashes as Trump Threatens More Tariffs After China Trade Deal Flops

Is the president the only person left in America who doesn't understand that Americans are paying for his tariffs?

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With the prospects of a trade deal with China apparently dimming, President Donald Trump lashed out Sunday in the only two ways he seems to know.

He vented on Twitter. And while he was venting, he tweeted a threat to hit Americans with more tariffs.

That's not exactly what the president said, of course. He's still trying to maintain the illusion that China is somehow paying for the tariffs that his administration has imposed. But he threatened to hike the tariffs on some imported Chinese goods from 10 percent to 25 percent, and he simultaneously threatened to hit the remaining untaxed Chinese imports with a new round of 25 percent tariffs.

The impetus for Trump's Twitter tantrum seems to have been a Sunday meeting with some of his top trade aides, who reportedly delivered a disappointing message. Citing unnamed sources, Reuters says that "significant hurdles" remain in reaching a trade deal with China. Late last year, Trump had threatened to hike tariffs on Chinese imports if a trade deal was not struck by March 1. The president backed away from that threat as the deadline approached and passed. At the time, he seemed pleased with the progress being made, but that seems to no longer be the case.

Trump's tweets may have added to the hurdles. A top Chinese official has cancelled plans to visit Washington next weekend to discuss trade issues, and it remains unclear whether the rest of a planned Chinese trade delegation will make the trip. Meanwhile, the stock market dropped sharply Monday morning as news of a possible escalation of a trade war between the world's two biggest economies seemed to spook investors (again), following a big drop in futures trading on Sunday after Trump's tweet.

It's unclear whether Trump's threats will become reality. It's possible that he's bluffing—though if he is, China doesn't seem to be buying it—or that he's trying to send a political signal to his domestic base. After all, trade negotiations are as much a matter of domestic policy as they are foreign policy.

But if he does follow through on Sunday's threat, that would be the height of folly. The president may love to claim that China is paying for his tariffs, but surely he has realized by now that that's not true. More and higher tariffs will hit the same American consumers and businesses that have already borne the brunt of Trump's ill-conceived trade war.

The tariffs imposed by Trump in 2018 cost the U.S. economy $6.9 billion last year—above and beyond the $12.3 billion paid by American consumers and importers to the federal government.

"We find that the U.S. tariffs were almost completely passed through into U.S. domestic prices, so that the entire incidence of the tariffs fell on domestic consumers and importers," write economists from the Federal Reserve Bank of New York, Princeton University, and Columbia University in a March paper published by the Centre for Economic Policy Research. By the end of last year, Trump's tariffs were costing American consumers and businesses about $1.4 billion each month, they found.

Trump continues to claim that China is paying for the tariffs, but his administration has not published any data to support that claim. Indeed, the president's own Council of Economic Advisors admitted in its year-end report that the estimated $14.4 billion in tariff revenue sent to the U.S. Treasury during 2018 was due to "costs paid by consumers in the form of higher prices."

Hiking tariffs will only make things worse. A February study published by the Trade Partnership estimated that slapping 25 percent tariffs on all remaining non-tariff Chinese imports—which is exactly what Trump threatened to do on Sunday—would cost more than 2.1 million American jobs, reduce the size of the U.S. economy by more than 1 percent, and cost the average family of four about $2,200.

Even as a negotiating tactic, that would be madness.

As difficult as the trade war has been already, worse could lie ahead. Daniel Drezner, a professor of international politics at Tufts University, warned in a recent Reason story that Trump's protectionist policies could lead to World War III—or, at least, to a bifurcated world trade system in which the U.S. and China carve out separate and competing spheres of influence similar to how the U.S. and Soviet Union once did.

Even if things don't get that bad, it's difficult to understand Trump's strategy in the short term. Blowing up planned trade negotiations, tanking the stock market, undermining the U.S. economy, and foisting more and higher taxes on American consumers and businesses is…well, it's an odd thing for a president facing re-election to do.

If you really want to understand just how absurd Trump's latest trade tactic is, just take a look at who's cheering for him:

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  1. Trump tweeted that the U.S. “lost” $500 billion in trade with China last year. Didn’t the U.S. customers get any goods for that $500 billion? If not, the problem is stupid U.S. customers isn’t it? What did China do with that $500 billion? If it never comes back to the U.S. as a demand on U.S. goods and services, then hasn’t the U.S. actually “won” $500 billion?

    1. This is an important distinction that the anti-tariff crowd never considers. Every economist knows that tariffs create deadweight loss and interfere with market efficiency in an academic sense, but what we do not consider is the effect of additional spending generated by increased domestic production. Protectionism isn’t efficient globally and taxpayers do pay for tariffs, but taxpayers also have less of a reason to buy foreign goods and the people they buy from spend their money differently. This shouldn’t surprise anyone, but Chinese people aren’t flying to your small American town to eat at a diner or use the laundromat, nor should they. The increased cost of certain goods could potentially be considered more optimal if the result is a stronger economy with more opportunities at every level of employment.

      1. The US economy is so bogged down with regulations, rules, and government licensing that Trump tariffs are a drop in the bucket.

        Its one of the reasons that Trump’s strategy has not “destroyed our economy”.

        1. I don’t even bother to read Boehm’s drivel anymore. Straight to the comments.

          1. Oh yeah. DOW ended Friday, May 3 at 4pm: 26,517.

            DOW on Monday, May 6 at 4pm: 26,436.

            80 point drop for day. Boehm is a moron.

            1. But it was Trump’s fault! Didn’t you read the headline!

    2. We get a bunch of cheap crap that breaks within 6 months (stuff sold at Walmart), and a lot of high priced stuff that gets marked up with profits going into Apple’s coffers

      And no, China doesn’t buy much of our stuff.

  2. Political considerations trump everything (no pun intended).

    Xi is hurting from the trade war far more than the U.S., the U.S. economy is in a much stronger position from a growth and momentum standpoint than China, right now, and while it’s nice to believe that the American voter rewards presidents for making the right choices on the economy, the truth is that Trump may have as much to gain in key swing states come 2020 by bashing the Chinese with tariffs than he has to gain by reaching an agreement with them.

    It’s also possible that an agreement with China can’t be reached without this added leverage.

    Commercial real estate is rife with these kinds of tactics. Whether you’re a buyer or a seller, expect the other party to suddenly bring up a big issue at the last moment that will scuttle the whole transaction unless you make major concessions–and you’ll never be surprised when it happens. And it happens frequently.

    Trump has the advantage of negotiating from a position of strength. If you watched Bloomberg or CNBC on Friday, it was all about the Goldilocks stock market, where everything was just right. Economic growth is high enough to inspire optimism but not so high that it would tempt the Fed to raise rates. Wage growth is 3.2%, but the productivity report is so fantastic, it suggests that won’t lead to inflation.

    China is not dealing with a Goldilocks economy where everything is just right.

    “China’s economic growth began to slow last year as Beijing tried to tame the country’s overreliance on lending. Mr. Trump’s initial tariffs last year hurt Chinese manufacturers and consumer confidence, worsening the slowdown. China’s economic slowdown limited Mr. Xi’s options to retaliate against American tariffs and put pressure on him to reach a deal.”

    https://www.nytimes.com/2019/05/06/business/china-trump-trade-economy-markets.html

    Chinese indexes are 6% lower on this news. The S&P 500 opened down 1.5%.

    What Trump is doing is wrongheaded, but he is doing it from a position of strength, and if he comes out the other end of this with an improvement on what we had before, I suppose Trump will deserve some credit for taking foolish risks for the wrong reasons but winning big.

    1. A trade war has no winners, only losers.

      1. Yeah, that is why the US remained a primitive backwater economy throughout the entire 19th Century. Those protectionist policies doomed it.

        Oh wait, it built the largest and most productive economy in human history to that point. But I am sure the trade Gods were displeased and have taken their revenge in someway.

        1. We also had Jim Crow laws and women couldn’t vote. Want to go 3 for 3?

          Correlation is not causation.

          1. One has nothing to do with the other. If you want to claim there are no winners in protectionism, then explain the 19th Century US economy. The fact that you cannot and don’t even try shows that you see economics as a religion.

            1. Your correlation is no explanation.

              Now you try describing where you get the moral authority to steal my tax dollars to enforce your minding my business.

              I’ll keep asking. You keep ignoring that simple question. It’s much simpler than explaining an economy.

              1. Your correlation is no explanation.

                It sure as hell is. Correlation doesn’t autmatically equal causation but it doesn’t preclude it either and it is pretty strong evidence of it. We protected our industry and it grew. That stands in complete contradiction to your claims.

                1. EXPLAIN the causation then.

                  You cannot. It does not exist.

                  And you still haven’t explained where you get the moral authority to steal my money to enforce your opinions. You cannot do that either.

                  Your are a fucking statist slaver. You won’t admit that either.

                  That’s three things you cannot or will not do.

                  1. The causation is that protected from foreighn competition the industry took off such that the benefits from it outweighed the costs to consumers. Even you are smart enough to understand that. You just refuse to because your are a fanatic.

                    1. And the citizens who had less purchasing power due to governmental goons with guns had less time to enjoy life and less money to invest, and that ALWAYS outweighs any cartel protection a small amount of people “enjoy”.

                      Tariffs are always bad. Read Mises.org if you want to learn more about economics and human action.

                      -An actual Economist.

                    2. ace_m82
                      May.6.2019 at 3:25 pm
                      “…Tariffs are always bad…”

                      Anytime a third party sticks its nose in a transaction between to free actors, one (or both) of them suffer.
                      Tariffs included.

                    3. Purchasing power is only one side of the coin. Yes, increased costs from tariffs decrease purchasing power, but that’s not the only variable. Tariffs also increase domestic production and spending, which can increase revenues for domestic firms, wages for domestic employees, and the real crux of the issue here, decrease effective costs.

                    4. “Tariffs also increase domestic production”

                      False. They increase production of things the country can’t produce efficiently and decrease production of other things the country can.

                      “which can increase revenues for domestic firms”

                      This is true in some cases. It’s the same case that a thief can “increase revenue” by stealing from others, or by buying off politicians so no one can shop anywhere else.

                      “wages for domestic employees”

                      In real terms (purchasing power), only a select few and only in the short term. The rest suffer.

                      “decrease effective costs”

                      Only for a few firms, and only in the short term. It keeps “zombie” businesses alive, and prevents reallocation of their capital to entrepreneurs who can actually more effectively provide what people demand.

                      So, not only is this theory based on government worship and theft, it’s also based only on short term thinking for the benefit of cronies.

                2. It profoundly grew during times when things were a lot less global & not nearly as interrelated with other nations…It is a whole nother ballgame these days!

          2. And we also had much higher immigration — wanna go back to that? I’d like to — guess we are brothers now, eh?

            If you want to look other correlations, look for all the empty land stolen from the Indians. Look at the massive agricultural exports, the several gold and solver rushes, the lack of government oversight. Throw in a Civil War with 1 million dead me which made immigration more tolerable and loosened the reins on women, just as the WW I lost generation correlated with women getting the vote. Discuss the growing progressive movement and its increased government regulation and taxation.

            There are a zillion correlations you could make. Why stop at trade?

            Heck, Donald Trump’s grandfather emigrated from Germany to the US in 1885. The US Navy began its buildup in 1888. Coincidence? Or causation?

            1. None of those things explain the growth. Lots of nations took lands from the Indians. Lots of nations had large influxes of immigrants. But none of those nations produced the kind of economic growth that the US did. Moreover, the US protected its industries specifically so that they could grow without foreign competition. Clarely it worked as intended. It is what it is. And the US isn’t the only country in history to do that. Japan, Korea, and China did the same thing after World War II. So you have to square those facts with your theory. If you are unwilling to do that, then just be honest and call it what it is, a religion.

              1. Your correlation doe snot explain the growth either.

                And for the fifth time — where is your moral authority to steal my tax dollars to use in running my business the way you want?

                You have none. You just won’t admit it.

                1. Your correlation doe snot explain the growth either.

                  Yes it does. I just explained how it worked. If you don’t think it worked that way, offer another explanation. You can’t do that.

                  Let me give you a hint; when you are reduced to saying “sure things worked the opposite of what I am claiming multiple times in history but that is just fake correlation”, you have lost the argument.

                  1. No you did not explain your correlation. Assertions are not proof. Try some proof, John, some actual logic, some actual theory. Not just assertions.

                    And while you’re at it, try coming up with some explanation of what gives you the right to steal my money to tell me how to run my business.

                    1. You are claiming that protectionism harms the economy. I point to numerous real life instances where nations engaged in rapant protectionism and saw enormous growth. Those facts disprove your claim. If what you were saying were true, those economies wouldn’t have grown.

                      Do you even know how evidence and argument work? God damn you are stupid.

                    2. We don’t call him the Alphabet troll for nothing.

                    3. I call him Old Mexican. Because it’s Old Mexican.

                    4. “I point to numerous real life instances where nations engaged in rapant protectionism and saw enormous growth.”

                      And when I point out the opposite, what will you do? Remember, Ceteris Paribus applies.

                      “If what you were saying were true, those economies wouldn’t have grown.”

                      Economies can grow even when the government actively tries to stop them. Evidence: All history of economic growth.

                      Ceteris Paribus.

                      You do know that the Father of Economics wrote a book against Mercantilists like you? It was “The Wealth of Nations” by Adam Smith.

                    5. John’s logic is not only ridiculously bad, but it betrays his socialist mentality. Your response to the alphabet guy is basically: “well, you can’t prove protectionism didn’t help the economy grow!” As with any claim of causation; which is what you are making, the burden of proof is on you to prove the causal connection, not on everyone else to prove there is no causal connection. Logic demonstrates a priori, that tariffs are a violation of individual liberty to trade with whomever one pleases. Since you wish to restrict that liberty, the burden of proof is on you to make a compelling argument as to why. So far you have not even come close.

                2. doe snot is the stickiest.

                3. Alphabet troll, here is YOUR moral authority to allow the current one sided trade arrangement that steals billions from American businesses to the benefit of bad faith trading partners like China?

                  You act as if Trump imposed tariffs in a free market arrangement, and that is not what happened. On your way, YOU are the statist slaver for tolerating this status quo no matter what.

                  Fools like you are really to blame.

            2. We had much higher immigration that let in people that actually wanted to work & not suck Govt. teats for all they can get!

          3. Things have gone downhill slowly then rapidly since the 19th amendment… Could argue causation.

            1. ANd you would have a good argument.

            2. Take one look at the electoral map by sex and I think you have a pretty strong case against the 19th amendment.

              1. Bitches shouldn’t be voting.

                1. As the whiniest bitch here, you should reconsider your position.

            3. You’d be wrong then. It ain’t ‘women’s vote’ that has created a problem. It was the failure then to immediately double the size of the House in response to the doubling in the population of eligible voters.

              Once we destroyed representation – and made it a zero-sum game; we enabled divide et impera and made it highly profitable for elites/money/parties to entrench incumbents.

          4. it former can imply the latter is likely

      2. A trade war has no winners, only losers.

        Same thing for golf but people play it all the time.

        1. Yes but not with my balls

      3. “A trade war has no winners, only losers.”

        Because trade wars are generally a bad idea doesn’t mean that there aren’t any winners or losers. It’s hard to imagine that Trump can’t claim victory if he wins some major concessions from China anyway. If the agreement we end up with is better than the old one, why wouldn’t that be considered a win?

        Yeah, trade wars are generally a bad idea. So is betting your life savings on a single roll of the dice. That doesn’t mean you can’t win or that there are no winners or losers. Sometimes people get lucky despite pursuing foolish strategies. That’s the real world.

        1. Early on in one of Trump’s early G-7 or G-20 type meetings with other nations. Trump asked the following: “Why do we need tariffs at all? Why can’t we just trade without them?”…They said there was complete silence for like a minute until someone babbled something which did not really answer the question!…So, Trump is for truly free trade, but, until that pipe dream happens, he will try to level the playing field for America!

          1. And all the phony libertarians and anarchists here like Alphabet troll and Chip will condemn him for it.

      4. Trade wars against hostile nations that weaponize trade and violate the tenets of free trade always have winners.

        1. +1000000

    2. Methinks Schumer might be cheering on Trump hoping this tariff BS ends in a recession…If there is a recession, Trump is toast, for even with a pretty good economy & great de-regulation & unemployment he might lose anyways!

      Wall St. did come roaring back & only ended down.4%….So, I think many feel this might be just some negotiating bluster by Trump!

  3. China is paying for the tariffs, but his administration has not published any data to support that claim

    China ain’t paying for the tariffs – but the reality is that free trade does not deliver universal benefits unless the winners compensate the losers and they haven’t been. The free trade mantra has been purely a utilitarian game – some winners and some losers – just like everything else FYTW in modern life.

    Our trade with China has NOT been based on comparative advantage of the market. It has been based on them using our monetary policy to goose (and distort) their economy, acquiring reserve dollars which are based on our willingness to spend a ton of money securing intl waters and trade routes and other military, and a VERY small amount of actual arms-length imports (grains and garbage mostly).

    Except for farmers, those who voted for Trump are likely to be the beneficiaries of this trade upheaval – as long as it is restricted mainly to China.

    1. All of that is true. But what the trade believers do is claim that anyone who loses under trade deserves it and has no moral claim for redress. That way they can avoid the inconvience of actually defending their policy.

      1. What trade believers believe is that government fucks things up. My business dealings are no one’s business but mine and my trading partners. What gives you the moral right to steal my tax dollars to enforce your opinions on who I should do business with?

        1. Govt may fuck things up but borders and currency EXIST. And your ‘trading decisions’ in this world are NOT based purely on willing-buyer-willing seller – even with no-other-govt-involvement. They are based on both of them – AND each of their banks – AND the central banks between those banks. And it is those financial intermediaries that determine the prices of all those goods because they control the cost of money and prices of different currencies relative to each other. Both the buyer and seller are simply price-takers in that ‘trade’.

          1. Go on John. Third time I ask — where is your moral authority to steal my tax dollars to enforce your opinions on who I do business with?

            Can’t do it, can you? Admit it — Trump is your moral authority.

            Fuck off, slaver. Hands off my money and my business.

            1. Fuck off, slaver. Hands off my money and my business.

              Here we have Libertarian for I have completely lost the argument but I am too much of a fanatic to admit it and too stupid to make a coherent point.

              Thanks for playing.

              1. Well there goes the count up again — you refuse to play. You refuse to tell where you get the moral authority to steal from me to tell me what to do.

                Can’t do it, can you? Can’t bring yourself to admit you are a Trumpista.

                Yes, fuck off slaver. That’s what statists are — slavers. Fuck off.

                1. Hey faggot, I answered your question upthread. And you should know that it is VERY generous of me to straighten you out.

                  Feel free to thank me.

            2. Oops — you are not John — I better take one off my count!

              But you can’t answer it either. By what moral authority do you justify stealing my tax dollars to tell me who I can trade with?

              1. “By what moral authority do you justify stealing my tax dollars to tell me who I can trade with?”

                Who the fuck cares?

            3. I’m not John. And ‘moral authority’ is in the realm of religion. Every country on Earth has a govt-issued currency — and ALWAYS will even if in some future time they allow private currencies as well. As long as govts have a currency – which is the unit of account for the market – then they will also play a role in the market. Same as courts.

              There is no ancap. It’s sophomoric bullshit. Even Ricardo built comparative advantage around a currency based on GOLD – not a floating rate sovereign currency. DEAL WITH REALITY AS IT IS.

              1. So your moral authority comes down to Trump.

                Good. Now why not actually say so?

              2. You are missing the point. The point is neither said has any authority over the other. It is just two sets of interests competing. Which side should win depends on how you look at it.

                I don’t understand why you people can’t seem to grasp that. I need to stop wasting my time arguing with people who can’t grasp anything beyond simple statements.

      2. And the people who lost due to trade tariffs- do they have no moral redress?

        Tell me, does Chevy have some sort of moral claim because you choose to buy a Ford instead? That is what American consumers are doing- choosing to buy cheaper Chinese goods instead of more expensive american goods. But for some reason, you care more about the hurt american steel workers, than the millions of consumers who are hurt when you call for tariffs.

        1. And the people who lost due to trade tariffs- do they have no moral redress?

          They absolutely do. To work out some solution to competing claims is why we have politics and a democratic Republic. Neither side has any moral superiority over the other. It is a question of values and circumstances.

          You completely miss the point and just restate the same tired bullshit as it is responsive.

          1. You completely miss the point — you have no moral authority to steal my tax dollars to force me to run my business the way you want.

            Fourth time — answer if you think you can. The magic word is “Trump”. I know that, you know that, but you are afraid to admit it in public.

            1. That is not even coherent. Come back after you take your meds and calm down.

              1. What, you don’t understand what “moral authority” means? Over your head?

                Explains a lot.

            2. Poor Alphabet troll.

              The magic word is “Trump”.

              Once you see or hear it, your TDS really kicks in. Same problem with most Lefties.

          2. “To work out some solution to competing claims is why we have politics and a democratic Republic.”

            Oh come on- this is bullshit, where you try to have it both ways. When the “democratic Republic solution” was free-er trade with China, you wail about the losers. But when the “solution” is tariffs, it’s all part of the democratic process.

            You are avoiding the question, because it is inconvenient to you. We both acknowledge that trade policy is set in this democratic process. *You* specifically said that one of the reasons for tariffs is that free-er trade subsumes the moral claims of manufacturers. So as the person holding that up as some reason to adopt tariffs, I am asking *you* why you think the claims of those relatively small number of manufacturers is so much more important than the larger number of consumers who have to pay more.

            1. Oh come on- this is bullshit, where you try to have it both ways. When the “democratic Republic solution” was free-er trade with China, you wail about the losers. But when the “solution” is tariffs, it’s all part of the democratic process.

              No. I think it is bad policy. But saying it is bad policy is not the same as saying it is morally illegitimate policy which is what you idiots forever claim because you can’t win an argument and can’t explain how economies actually work rather than how you imagine they should work in some idealized state.

        2. Those people who are currently losing have been winning for 30+ years now – without compensating the losers. And regular folks – esp near the bottom – are smarter than you think. They know when their ‘gains’ of cheap Chinese crap at Wal-Mart are more than offset by their job/income insecurity created because the companies they worked for have moved jobs overseas to China cuz ‘no tariffs now’.

          At least I hope those folks voted for Trump for those reasons – and not the overtly racist scapegoating crap that he threw out there. I’m still not sure about that though since those who are merely racist have crawled out of their sewers like cockroaches since the election.

          1. Oh please. If I choose one day care over another or one TV manufacturer over another, I am supposed to compensate the one I didn’t choose? Really? Should we be compensating Microsoft for all their losses on windows mobile phones because everyone chose iPhones and Android phones instead? If not, why not?

            “They know when their ‘gains’ of cheap Chinese crap at Wal-Mart are more than offset by their job/income insecurity created because the companies they worked for have moved jobs overseas to China cuz ‘no tariffs now’.”

            If they know this, then why are they still buying cheap crap from China? “Oh lordy, please help me government! I can’t help myself from going to WalMart and buying the cheap washer instead of that one that is more expensive! Please make everything more expensive for me so that I still have a job!”

            1. You don’t owe anyone anything. But no one owes you access to cheap shit from China either. Suppose you wanted to sell China nuclear weapons. Do you have a right to do that too? That is free trade you know. There are more values and interests at play here than your insatiable desire for cheap shit.

            2. You are misunderstanding the point and don’t understand either comparative advantage or international (cross-currency trade).

              When you want to ‘buy’ cheap Chinese crap, that is nothing but a brain fart. All you have is dollars. They want yuan. the trade CANNOT occur until the dollar-yuan exchange is first arranged for. And the terms of THAT trade which you are not even aware of are what determine the price of that Chinese thing in DOLLARS. Which is then the FIRST time you can actually make an economic decision to ‘buy’ that Chinese thing rather than another thing altogether or nothing at all.

              And comparative advantage is about cross-national trade in stuff (goods/services) not about ‘how to pay for stuff’. And it is not absolute advantage (where China can produce near everything cheaper than here).

          2. Yeah better to hurt construction workers with lower pay since material costs are increasing. Those bastards have been living on easy street for too long. Time for them to pay their fair share! Libertarians for equality of outcome!

            1. Actually construction has been a net gainer from the ‘free trade’ thang cuz one of the major impacts of China pegging itself in a dollar zone is that our monetary policy gets ‘globalized’ – where China gets the ‘production’ benefits of lower interest rates/supply and the US get the benefits of ‘asset inflation’. But the biggest domestic asset that benefits from that money skew is res/comm/office property which is funded thru that creation of money.

              The question is more – what would that labor skill group have done as alternative/prior employment. And did that pay more or less or more steady than construction.

  4. A 200-point drop in the DJIA does not a crash make. But this is the Age of Trump, during which history began, so it is the Worst Ever Day on the Stock Market.

    1. I came to post the same thing.

      A market crash would be 40%, not 1%. Look at 2008. That is a market crash. Today’s decline is a mere fluctuation. I do think the market is LONG overdue for a significant decline, but who knows when that will happen.

      1. Reason is a few weeks away from becoming HuffPo.

      2. Gave up a tiny fraction of last weeks gains. Oooh, the pain!

      3. Likewise. Hyperbole doesn’t suit a place that calls itself Reason.

      4. Me too – the article was fine, but the headline was stupid. As I type this, the market is down 0.79%.

    2. when Obama took office the market jumped up 200 and the media rejoiced and claimed it was because of Obama. the very next day it dropped 300 but the media was silent.

      1. Yup. Funny how they never explained that supposed correlation.

    3. Strange then how Trumpistas point to similar gains and credit Trump.

      Works both ways.

      1. No they don’t. Why do you insist on lying and socking Old Mexican?

    4. Derp-o-matic 6000

      +100

  5. How many times in the past 5 years have we seen the same “market crash” of ~1%? It’s not even a correction. Irresponsible journalism.

    1. So you level the same claims on commenters who brag about Trump raising the stock indexes the same amount?

      1. There stock indexes did rise. No one is saying the market didn’t fall. They are saying it didn’t crash, however you want to define it.

  6. More good economic news. DOW Jones at 26,206.

    Dow drops more than 350 points after staring at 19,827 on Jan 20, 2017

    Obama started Jan 20, 2009 with a DOW at 8,281.
    W. Bush started around 10,659.

    Wait…Trump’s policies had the DOW move 7,000 points up in only 2.5 years and Obama only had gains of 11,500 in 8 years?

    Poor Boehm. He Cannot get people onboard his TDS train to save his life.

    1. >>>get people onboard his TDS train

      everyone’s @work have you seen the numbers?

    2. If you think LC that Trump Is the economy or the market you are a bigger idiot than I thought.

      The clown in the chair, this one or the the last one. They can screw it up but the economy is getting our individual butts up and producing.

      Trump is a grifter real estate fake reality TV golden toilets piece of crap. All he cares about is adulation.

      Despite him the losses today will recover, eventually.

  7. crashes.

  8. Isn’t it disturbing that Congress has given presidents the power to do this?

  9. Damn.

    No one?

  10. The headline for this column is 100% hyperbolic drivel.

    Which is disappointing, because the column makes several good points. Nobody wins a trade war; they cost both trading partners.

    And if Chuck Schumer’s in your corner, you’ve almost certainly fucked up.

    1. And if Chuck Schumer’s in your corner, you’ve almost certainly fucked up.

      I LOL’ed.

    2. “Nobody wins a trade war”

      Adam Smith:

      There may be good policy in retaliations of this kind, when there is a probability that they will procure the repeal of the high duties or prohibitions complained of. The recovery of a great foreign market will generally more than compensate the transitory inconveniency of paying dearer during a short time for some sorts of goods. To judge whether such retaliations are likely to produce such an effect, does not, perhaps, belong so much to the science of a legislator, whose deliberations ought to be governed by general principles, which are always the same, as to the skill of that insidious and crafty animal vulgarly called a statesman or politician, whose councils are directed by the momentary fluctuations of affairs.

  11. “Market Crashes as Trump Threatens More Tariffs After China Trade Deal Flops”

    In the other thread, we were talking about people who seem to want to see the American economy take a hit just so that it will look bad for Trump.

    Regardless of whether that’s what this is, it is by no means clear that the trade deal is a flop. It looks more like Trump is raising the costs for China not signing a deal.

    I guess this is how they teach people to do journalism these days? This place is supposed to be different. If it isn’t different because of philosophy or the writers, maybe it can be different because the readers look at this kind of sloppy thinking with contempt.

  12. “Market Crashes” !! Dow is down 0.62%, 165 pts. Calm down and stop your lying propaganda.

    Reason is full of IDIOTS who know NOTHING about trade.

    1. +100

  13. For those who truly want protectionist tariffs, and not just threaten imposition as a negotiating tactic, what is the desired magic outcome? I can see three options, at least for the masses:

    1. Production picks up in the US, leading to more jobs and/or higher wages. More people have more to buy with, but costs and prices will also increase.

    2. Production does not significantly increase, for market or regulatory reasons. Consumers still want those foreign goods, but have to pay higher prices to subsidize the tariffs. To maintain the same material quality of life, people pay more.

    3. Production also remains flat, but since many people already spend most of what they earn, higher prices mean they can afford less, and their material lives degrade.

    Option 1 seems least bad, but will still be negative for most people. I lived in France in the 80s, and while it was marvelous to see all the mundane goods made in-country (and the various protectionist agreements cooked up by the vocal sectors and their government buddies), those same goods were hideously expensive. Not to mention that some things were just not available except as imports, with stiff tariffs and duties applied.

    1. Adam Smith:

      It will generally be advantageous to lay some burden upon foreign industry for the encouragement of domestic industry, when some tax is imposed at home upon the produce of the latter. In this case, it seems reasonable that an equal tax should be imposed upon the like produce of the former. This would not give the monopoly of the borne market to domestic industry, nor turn towards a particular employment a greater share of the stock and labour of the country, than what would naturally go to it. It would only hinder any part of what would naturally go to it from being turned away by the tax into a less natural direction, and would leave the competition between foreign and domestic industry, after the tax, as nearly as possible upon the same footing as before it.

      1. So more taxes on everything?

        1. Equal playing field and less distortion, yes.

  14. I wish Reason was above bullshit clickbait headlines which aren’t supported by an otherwise reasonable article.

  15. […] podcast topics include: Trump’s latest trade threats, three new entrants in the 2020 Democratic presidential race (no peeking!), and that costume drama […]

  16. […] podcast topics include: Trump’s latest trade threats, three new entrants in the 2020 Democratic presidential race (no peeking!), and that costume drama […]

  17. America needs more embargoes and tariffs like it needs the clap.

  18. No, he’s not. As of today, according to 538, 43.7 percent of Americans don’t understand it. Or they do understand it, but they don’t give a shit.

  19. Is Eric Boehm the only one in America who doesn’t understand that Americans are paying for subsidized trade with china? Who does he think pays for that “Free Shipping” from China anyways – the shipping fairy?

  20. OMG, the NYSE was down a quarter-point at the close.
    What A Fucking Disaster!

  21. The market “crashes”?

    The S&P 500 index was down 0.45% on the day.

    I’m not a fan of Trump’s tariff schemes, but claiming the market “crashed” is over the top.

    1. Yep:
      “Market Crashes…”
      Dow closed down 1/4 of 1% . At its worst, I think the Dow was down 350 points; maybe 1-1/4%. A rounding error.
      Agreed; tariffs are bad everywhere, but let’s use facts rather than wild claims to make the point. I get enough of those from the Chron every morning.

    2. I saw the headline and approached the article like I would turning on NPR. I was right.

  22. Cheap goods can actually end up hurting the poor.

    You spend $20 on a pair of Chinese shoes from Walmart. They will last maybe 2 months. You spend $100 on better quality shoes (probably not made in America, but not China) and they last a year or more.

    Poor people get locked into a cycle of buying cheaper goods, because that’s all they can afford, but the cheap goods don’t last nearly as long as the expensive stuff. So they end up paying more in the long run.

    1. This can be the case.

      On the other hand, some expensive stuff is not any better than cheap stuff.

      I always use cheap hand-operated can openers as an example. They usually rust or dont work within a year or two.

      I bought a $45 hand-operated can opener 30 years ago and it works perfectly to this day.

      1. Your can opener is your investment?

        You are gonna need it.

      2. A P-38 which you can get for a buck works just fine. We used to get them for a quarter.

        You spent $45 for a hand operated can opener? The best kitchen aid one sells for $12 bucks.

        Must be a really good can opener.

  23. “Is the president the only person left in America who doesn’t understand that Americans are paying for his tariffs?”

    Are Reason writers the only people left in America who don’t understand that Americans have the lowest unemployment rates since ever, and wages are finally rising for the bottom of the wage scale?

    Then again, maybe that’s what they *do* understand, and why they’re so vociferously opposed to Trump’s policies. It makes it more expensive to hire orphans to polish their monocles.

  24. “Is the president the only person left in America who doesn’t understand that Americans are paying for his tariffs?”

    Nah, I’m certain there’re roughly 60 million Trump supporters who have no clue they’re paying Trump’s tariffs, also. If Trump says China is filling our coffers by paying tariffs, who are they to argue? After all, he has a lot of money so he must be smart.

  25. DOW ended Friday, May 3 at 4pm: 26,517.

    DOW on Monday, May 6 at 4pm: 26,436.

    80 point drop for day. Boehm is a moron.

    1. Today nasdaq down today another -2.5% wiping out most gains for the past 6 months.

      Dow down -2.3%

      S&P down – 2%

      Those are small numbers to you. They are very much important to someone who has worked 40 years and invested in the US economy. All because of your idiot president’s tweet.

      I don’t know how Trump morons sleep at night.

      How in are you?

      1. actually your sub points argue the opposite…the move would be utterly unimportant

        1. No. It will take months to regain the losses.

          The market is betting on any deal. Anything to stabilize trade.

          Trump is doubling down to destabilize. The rest of government wants to go back.

          He is betting with other people’s money. Nothing to lose.

          Gold is up. That is always a marker for a bear market.

          How in are you?

  26. […] as Trump threatens to escalate the trade war with another round of tariffs on Chinese-made goods, possibly before the end of the week, Lix says […]

  27. […] as Trump threatens to escalate the trade war with another round of tariffs on Chinese-made goods, possibly before the end of the week, Lix says […]

  28. […] as Trump threatens to escalate the trade war with another round of tariffs on Chinese-made goods, possibly before the end of the week, Lix says […]

  29. of course we know from economic theory that the incidence of tariffs does not fall entirely on consumers and a 400 point move in 26K dow is hardly a crash…intellectual dilettante is too kind a description for Eric

  30. […] as Trump threatens to escalate the trade war with another round of tariffs on Chinese-made goods, possibly before the end of the week, Lix says […]

  31. […] as Trump threatens to escalate the trade war with another round of tariffs on Chinese-made goods, possibly before the end of the week, Lix says […]

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