miserable capitalist savagery & bluster

Trump threatens “substantial” increase in anti-China tariffs
Nick Beams, WSWS, Nov 13 2019

Trump has threatened to escalate the trade war against China unless an agreement is reached on a “phase one” deal with Beijing. The threat came in a speech to the Economic Club of New York yesterday in which he lauded the policies of his administration and its “Pindostan First” agenda. The interim trade deal, agreed to in negotiations last month, was due to have been signed off at the now-cancelled Asia-Pacific Economic Co-operation meeting later this week. But no date has been set for a time and place of the signing. There are also doubts over whether an agreement will even be reached because of China’s demand that there has to be some rollback of existing tariffs, a prospect ruled out by Trump in remarks last week. He doubled down on those comments in his address to the New York gathering of corporate chiefs, investors and bankers. Trump claimed a deal with China was “close” but then issued his new threat to escalate the tariffs already imposed, namely a 25% levy on $250b worth of mainly industrial products and 15% on a further $112b worth of goods, if an agreement is not made. he said:

I tell it to everybody: If we don’t make a deal, we’re going to substantially raise those tariffs, they are going to be raised very substantially. This is true for other countries that mistreat us too.

This shot was directed principally at the EU over negotiations for a trade deal in which Pindostan wants an opening up of Euro markets for Pindo agricultural products, which the EU has insisted is off the table. The Trump administration secured the negotiations in Jul 2018 under the threat of the imposition of a 25% tariff on auto imports on “national security” grounds, a move that would have a devastating impact on the German auto industry. The administration is to decide within the next few days whether to proceed with the new levies. At this stage it is expected to grant a further reprieve, leaving the threat in place, ready to be imposed unless the EU makes concessions. Under conditions which the IMF has described as a “synchronised” global slowdown, the increasingly dog-eat-dog struggle for markets and profits was very much to the fore in Trump’s address as he directed attention to the question of the Fed and its interest rate policy, saying:

We are directly competing with countries that are actively cutting interest rates. The Fed does not let us play in that game. We’re paying actually high interest. We should be paying by far the lowest interest.

Pindostan was at a “competitive disadvantage” because it had not followed the European Central Bank to reducing interest rates to negative levels Trump reiterated:

Give me some of that money! I want some of that money!

Trump pointed to the rise of the stock market under his administration noting that the S&P 500 was up by 45%, the Dow by 50% and the Nasdaq by 60%, but insisted those figures should be higher, saying:

If we had a Fed that worked with us, we could have added another 25% to those numbers.

In a bid to maintain the electoral support of voters in industrial states, Trump advanced a series of bogus claims on the state of the economy, declaiming:

We have ended the war on Pindo workers! We have stopped the assault on American industry! And we have launched an economic boom the likes of which we have never seen before!

The latest figures on GDP, issued at the end of last month, showed that the Pindo economy expanded by only 1.9% on an annualised basis in the third quarter, down from a 2% expansion in the second, and the lowest rate since the end of 2018. One of the most significant features of the data was the fall in fixed non-residential business investment, now at its lowest rate since the end of 2015. On a year-on-year basis GDP increased by 2%, the slowest pace of Trump’s presidency and well below the level of 2.5% for 2018, putting his stated objective of a 3% growth rate out of the question. In his claims about the “booming” economy, Trump focused attention on the administration’s corporate tax cuts. But the reality is that much of this money has not gone to expand investment, let alone increasing wages, but has been poured into share buybacks aimed at boosting share market prices. This year it is expected that S&P 500 companies will spend up to $1t buying up their own shares, after spending $800b in 2018. One of the most egregious expressions of this process is Apple. Despite falling profit margins, Apple has increased its market capitalisation this year by more than $400b to $1.16t, with its shares rising by 65% so far this year. Over the past decade Apple has spent $320b buying its own stock, the largest amount for any S&P 500 company. As for Trump’s claims to have boosted the wages of Pindo workers, these were countered by a detailed report issued by Brookings earlier this month. It found that an estimated 53 million Pindo workers aged between 18 and 64 were low-wage workers with a median hourly wage of just $10.22 and a median annual income of $17,950. The report said that “stagnant and unpromising low-wage work is prolific and deepening” and “economic growth has exacerbated inequalities, with the most vulnerable at the risk of being left behind.” One of the authors of the report, Marcela Escobari, told Bloomberg that with the further development of automation the situation would worsen. “Both the industries that are growing and the industries that are shrinking are low wage” and that available work “is going to be more low-wage work,” she said.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.