Other US companies are equally vulnerable.
Boeing’s airliner business is in a slump. Serial large-scale layoffs of engineers and production workers have been percolating through its operations since early 2016, with another big wave announced a week ago, as net orders have collapsed 53% from 2014, to a seven-year low. The last thing Boeing needs is help from President Elect Trump to speed up the process.
But that’s what might happen next if the trade and investment policies proffered by Trump become reality after his inauguration.
In an interview published on Monday in the German tabloid Bild, Trump threatened BMW, Daimler, and Volkswagen with a 35% tax on imported vehicles, which would make them very expensive for US consumers. The automakers and their dealers would respond by cutting their margins, but it might not be enough to stem a large sales decline.
The three companies already have assembly plants, research & development offices, and logistics operations in the US, including:
- BMW has a manufacturing plant in Spartanburg, South Carolina; with the $1 billion expansion announced in 2014, the plant would become BMW’s largest in the world.
- Daimler has bought into the US heavy truck business (Detroit Diesel, Freightliner, Thomas Built Buses, etc.) and has those manufacturing plants in the US. Plus it has a passenger vehicle assembly plant near Vance, Alabama.
- Volkswagen has a manufacturing plant in Chattanooga, Tennessee.
As global manufacturers, they all have plants scattered around the world. So Trump:
“If you want to build cars in the world, then I wish you all the best. You can build cars for the United States, but for every car that comes to the USA, you will pay 35% tax,” he said, which Bild translated into German, which Reuters translated into English.
And as expected with these Trump interventions, shares of German automakers got hit – along with the overall German stock market. Trump has a way of setting the world atwitter, so to speak.
He has also lashed out repeatedly against Mexico and China, among others. Both are trying to counter. Mexico may be a pushover in that respect, though it’s trying not to be. The peso has crashed, and it doesn’t have enough leverage to trip up the US. But China is responding with the time-honored carrot-and-stick method.
The EU and China know how to fight trade wars. And they’re big enough to cause a lot of damage. When push comes to shove, you retaliate. You take a strategically chosen product and slap a big tariff on it. This might start small, as a shot before the bow. China just did that, sort-of preemptively, to show that it means business.
Last week, the Chinese Commerce Ministry, in its final ruling, slapped punitive anti-dumping duties of 42.2% to 53.7% on US distillers’ dried grains (DDGS), a byproduct of the ethanol industry that is used as an animal feed ingredient. This tariff is up from 33.8% first proposed in September. It also raised the anti-subsidy tariffs to a range between 11.2% and 12%, up from the previously proposed range between 10% and 10.7%. This escalation is a warning.
And the consequences for the US? Reuters:
It also deals a blow to US ethanol manufacturers already bracing for Beijing’s higher import taxes on their main product. DDGS are a byproduct of the corn-based biofuel that have become a key contributor to profits. The industry is pumping out record volumes of biofuel and is facing domestic political uncertainty as they wait for President-elect Donald Trump to take office.
But if trade partners, particularly the EU, really want to send a message to Trump they might send it via passenger jets, and they have a huge and also struggling beneficiary of such a move: Airbus.
Airbus would be happy to compete against jets from Boeing that are priced out of the market by the imposition of, for example, a 35% import tax. If you want to sell Boeings here, you might have to build them here, they might say.
China is already doing some of this. Boeing has agreed last year to build a plant in China for its bestseller, the 737. This joint venture with a Chinese company will install interiors and paint exteriors. It will come along with the requisite technology transfer. In return, Boeing has signed a deal for 300 planes with three Chinese companies. But the plant in China is not helping jobs at Boeing plants in the US.
And if the EU begins playing hardball for the benefit of Airbus, it could cause a jobs massacre at Boeing in the US.
There are plenty of other US companies in a similar position, including US defense contractors with lots of highly-paid jobs in the US that are competing with companies in the EU, Russia, China, and elsewhere. If they have to face punitive measures, it could get very ugly for them.
US agricultural producers are commonly lined up as the potential first targets in a trade war. As China shows, that’s how it may start because it’s small and easily reversible. It’s a shot before the bow that might wipe out some growers and agricultural enterprises and their lenders in the US, and it might hit farmland prices, and equipment sales by Deer and others, but it won’t cause a massive jobs massacre in an expensive urban area that suddenly pops up all over the media.
Targeting Boeing is different. Boeing is to the US what Daimler is to Germany. The commercial aircraft industry is already struggling, and politicians, particularly in France, are just looking for an excuse to prop up Airbus and the jobs it provides by giving it a huge competitive advantage over Boeing.
For the moment, everyone is in a shocked wait-and-see mode. Trade partners are still clinging to the hope that after the inauguration, the rhetoric will stop and some sort of moderation will set in. But they may get disappointed. And then all bets are off.
That great global economy is already doing a job on Boeing. Read… Three More Waves of Layoffs in 2017, as Orders Collapse to 7-Year Low. Boeing Shares Near All-Time High
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Good. The sooner Trump steps on it the sooner he will be reigned in before we pass the point of no return.
What’s next? Carrier fleets anchored up in the south China Sea? An invasion of Tawain by China? Will he strike N Korea when they next test a missle?
Look for resignations by professional military and the intelligence community. Or, look for a deliberate with holding of vital information. Why Cooperate with him? He just attacks when he doesn’t agree.
I don’t think he’ll last too long. When a trade war breaks out some very serious people will set him straight. Maybe some people who work for one of the 8 mentioned in the previous post will do the talking. If he hires private security perhaps the Secret Service will take a few more coffee breaks.
Anything can happen with cheeto head in power.
At least trump can get voted out but those 8 men you can’t they are not democratic they can hold a stick over us because they are to big to fail. They control to much of the economy.I fear them more than trump
Indeed. Emperor Xi is in Davos right now defending globalization from the ignorant/unhinged tweets of the madman about to become POTUS. The EU and China can and will defend global trade against the deplorables from the UK and US currently infecting the political process. As a Canuck, I’m glad we’re back on the world stage as one of the ‘good guys’. Americans of good conscious will need to stand up for themselves now more than ever, or fall into Trump’s abyss.
It always amazes me that opinions are presented without any history or facts. Canada once had the AutoPact with the U.S. For every car sold in Canada, a car had to be built in Canada. Now with NAFTA, American AND Canadian jobs have gone to Mexico.
Canada is not and never has been “a good guy”. Just another useful pawn on the Globalist world stage. And Canada is nearly completely back to hewers of wood (coal and oil) and drawers of water that it was in the 19th century. No manufacturing.
Information technology, biomedical, renewable energy, IT, media production, banking…and much derided ‘services’ are making up an ever greater part of the economy in Canada. Manufacturing is overrated.
Of course China is going to defend globalization, it’s keeping their economy humming and hurting everyone else.
Just think through it – China doesn’t want a war with the US any more than we want one with them, it would destroy their largest Export market, and set them back years.
China is playing a wise game here – the slow elimination of manufacturing capability in this country removes our war making capability, and our wealth. And we have played into it, hook, line, and sinker.
Our society will never be able to survive as a service economy, without the strong bedrock of manufacturing.
I’m still amazed at how many clueless comments above. They still don’t get it. Threats of 35% tariffs are just tough “initial” negotiating positions. That’s how you make good deals: you start by demanding the impossible! China does it!! They’ve been out-negotiating Americans for decades. But no longer. Even labeling China a “currency manipulator” only starts a negotiating process. But I see other folks going full apoplectic above. Jesus people, get a grip.
“China is playing a wise game here – the slow elimination of manufacturing capability in this country removes our war making capability, and our wealth. And we have played into it, hook, line, and sinker.”
This was Maos plan which is Sun Tsu
Destruction from within.
“This was Maos plan which is Sun Tsu. Destruction from within.” Except it wasn’t Mao’s plan, it was Rockefellers.
Good. If US arms makers and ethanol racketeers tank I will cheer.
I’m kind of hoping for a major reactive push against Coca cola, McDonald’s, Domino’s, and all the other american fake food that is polluting the people on this planet.
There is not single industry to protect to begin with but only protecting the low wage jobs do not pay as much. The consumers will be significantly hit. It is like in Soviet Union days where one has too much money, but hardly one can buy any goods at all. Hyperinflation and higher taxes are likely to kill the U.S. economy.
Most likely the rest of the world will skip the U.S. due to ancient scheme of high tariffs and trade barrier. The U.S. industry will suffer the most under autarky which kills innovation and competition against foreign companies. It seems every body has forgotten David Ricardo and his famous work of ‘competitive advantage.’ In the long run, the U.S. will loose from this trade war and not to mention starting new war with China and probably with Russia as well.
So the fact that Asian economies like China, Korea, and Japan already heavily protect their own industries with tariffs and such should mean they’ve been skipped by the rest of the world? Not so, but when Trump wants to do the same back because it isn’t fair, you all freak out…
Yes yes yes Trump will do all that & more, but first he has to get Mexico to pay for that damn Wall, as he based his campaign on.
Derivatives Derivatives Derivatives=Weapons of Gobal financial Mass- destruction!!!
First it was Greece, couldn’t get out of the clutches of the EU. Bailed out , what 2 times?! Now UK is getting out with a hard Brexit!! Great for them. Brussels you’re are screwed!!!! Next up is France, with Marine LePen. Then the Netherlands and then Italy, Gremany bye bye Merkel and then then Brussels you are done doling out your stupid orders to all the Sovereign Nations of Europe and then….the EU is done. Now the Derivatives by now have been raging and the world is in a tornado of financial fire!!!! Goodbye big TBTF banks!
Isn’t it great to have mistresses and multiple homes and jets while the rest of the world burns due to your insatiable greed?! Now you will be financially destroyed. Rome is burning!!!!
IMHO the nations of Europe that let go of their fiat currency to be replaced by the euro have abdicated their sovereignty. Some of the EU’s nation’s citizens had a chance to vote on referendums of the Maastricht Treaty of ’89 and ‘EU enlargement’ of ’95 to decide wether or not to hand over control to Brussels.
I wonder how those voters feel about their decision.
Bad, because a majority (NL) voted NO.
So the corrupt techno’s changed a couple of paragraphs in the treaty and passed it anyway.
So swallow your sarcasm
RvC: I meant no sarcasm.
Let’s look at three nations.
In Italy, on 18 May 1989, the ‘Italian advisory referendum’ was passed with 88% voting yes, and an 81% turnout.
In Ireland, on 20 September 1992, the ‘Eleventh Amendment to the Constitution of Ireland’ passed with 69% voting yes, and a 57% turnout.
In France, on 20 September 1992, the ‘French Maastricht Treaty’ passed with a close 51% voting yes, and a 70% turnout.
As Lord Acton warned, “The one pervading evil of democracy is the tyranny of the majority …” History is full of examples where what was once thought to be proper and just by the majority of citizens, is now looked at in disbelief.
“As Lord Acton warned, “The one pervading evil of democracy is the tyranny of the majority …” History is full of examples where what was once thought to be proper and just by the majority of citizens, is now looked at in disbelief.”
Its got worse as the leftist now uses untenable handout’s and promises of more untenable handouts. Paid for by the evil rich, to buy the allegiance of the majority.
Hence the system becomes bloated and stagnant, with the corruption of socialism. And those who wish to clean it, can never retain power for long enough to completely do so.
Us tariff should be based on our trade deficit with each country. No deficit, no tariff. Big deficit, big tariff. So if china imposes tariff on Boeing or anything else, our exports go down and deficit rises, resulting on higher tariff on all Chinese goods.
In the thirties we were the big exporter. Trade wars hit us hard. Now china is in that position, their exports higher as a fraction of their economy as ours was then, very vulnerable.
But open hostility may make negotiation more difficult.
I have been thinking the same exact thing. If we count inflows and outflows including remittances, we can come up with a balanced trade system. We can also add in a coefficient based upon the GDP (ppp) of the country we are trading with.
“In the thirties we were the big exporter. Trade wars hit us hard. Now china is in that position, their exports higher as a fraction of their economy as ours was then, very vulnerable.” True enough. Trade is just not as big a fraction of the U.S. economy as it is for others. We’re insulated in some respects. Not to say that some firms (BA is the best example) wouldn’t be materially hurt by a trade war.
Yes China has more exports and is the workshop of the world. One of the reasons that the economy in the US has done so “well” is that it doesn’t manufacture, but it can only do “well” so long as China and other countries accept dollar hegemony. When we lose that we can’t print and if we do the dollar falls and imports become expensive and inflation gets out of control. Then the deplobles can’t consume and get more bigger pitchforks. There are no perfect answers. Too many bubbles for too long. Too Mach malinvestment like Elon musk. I live in Brazil half the year andtheir economists are talking that trumps investment is like what Lula and films did. Except brazil doesn’t have the printing press
Seriously he is the Bully in Chief.
Someone shut down his twitter account. If he keeps dissing the media, he will talk and talk and there will be no one to report anything he says. At this point, that would be a good thing.
I think we are in a post-media age. The media is obsolete.
I agree. The MSM wrote off half of the population with its left wing bias. They seemed to be taken unawares when the right stopped watching, subscribing, and buying their biased propaganda. They also lost the next generation in those households. Now they have no idea what the other half thinks.
The right has moved so far right that the centrist MSM now seems leftist to people on the right.
CNN isn’t exactly Mother Jones. I wish there was a left wing counter to Fox News and conservative radio. Air America was the only thing that came close.
I’m a moderate republican, CNN, Mother Jones, Rolling Stone and NBC are as far left as you can go. Even RT is more conservative. The reason there is no effective counter to Fox and conservative radio is because liberal policies don’t sell in the mainstream of America. Who’s fault is that?
“I’m a moderate republican”
No. You see, words mean things. You can’t just take a word you like (moderate) and fit it to your meaning.
“CNN, Mother Jones, Rolling Stone and NBC are as far left as you can go”
This is laughable. You have no idea what you’re talking about if you think CNN is “as far left as you can go.” This also proves my point above, that you are not a moderate Republican. First, just in terms of major media outlets, Fox News is the only outlet that is more conservative than CNN. To the left of CNN, you’ve got entities like the New York Times, Washington Post, NPR, etc. Of course, there’s Breitbart and other conservative outlets, but I don’t consider them mainstream (similarly to Mother Jones, Huffington Post, etc.).
“The reason there is no effective counter to Fox and conservative radio is because liberal policies don’t sell in the mainstream of America.”
Once again, you have no idea what you’re talking about.
In terms of ideology and policy, the US has been drifting left for a while now. Look at polls for support for ‘liberal’ issues like gay marriage and marijuana legalization. Can you name a single issue that the country has become more conservative on in the last 10 or 20 years?
And prey tell, what do you think is going to continue to happen as America’s most conservative generation withers on the vine? Millennials overtook baby boomers as the largest generation in 2016.
I’d also add that Democrats have won four of the last six popular votes for President, including this most recent one… by almost 3 million votes… with possibly the most disliked candidate in the last 40 years.
“I’d also add that Democrats have won four of the last six popular votes for President, including this most recent one… by almost 3 million votes… with possibly the most disliked candidate in the last 40 years.”
And who has had the majority of control, in congress and the house.
There is a right wing back lash coming, globally.
The question is how bad will it be, as the left has had to much control, for way to long.
CNN has always been a liberal station, going back to its founder, who was married to Jane Fonda. If you don’t understand that there is nothing moderate about them, you are in the bubble.
Instead of censorship why can’t the left learn to defend their ideas? Oh, they can’t.
That should get the left squawking, truth always hurts.
This isn’t about right and left. Heck, Sanders and Trump have similar opinions on globalism. It’s simply about a person unfit for the job.
He won. That’s what makes him fit for the job.
Trump recently stated the He would open up the press pool to a wider audience ,, including the so-called ‘Fake Press’ … bloggers and such ….
Now THAT would be a hoot ! … I would watch those pressers just for the fireworks alone …..
as a plus … Dianne Feinstein having a grand maul caniption … due to all the .. ‘cough’ non-credentialed blogger ‘non-news folk’ ‘cough’ .. likely to be in attendance !
He’s the plummer that shows you his ass while unblocking the shithouse of globalist, cia, clinton dung
Bombardier had a face recognition order from Delta, taking losses.
Despite introducing the most advance airplane of it’s class,
the C-Series jet line had no new, profitable order for 2 years.
Management shakeout followed by some kind of fusion to
the government and 14,500 job cut in 2016.
BA troubles are every civilian aircraft mfg. troubles.
Defense contractors are suffering government cut back and they
are forced to compete globally with a growing number of very good and capable competitors.
It’s a cut throat competition and clients can dictate knowledge
transfer and production sharing.
In a short period of time, a new competitor arrives, after
being nourished by an American defense co., and he is selling
similar products at a discount and even to hostile countries.
Trying to dictate terms will shrink you fast, or push you out
of the global market.
But the US is by far in number one spot. They have some of
the most advance products, the best financing and the strongest
In many ways Sweden’s SAAB Gripen is the most advanced fighter aircraft on the planet. The US F-35 is designed to quietly sneak up and fire off it missiles from a distance then sneak away. Good idea, but if the missiles miss, and the Gripen sees you, you’re dead.
Why don’t we treat countries the way they treat us.
As in China. You can’t even import into their country without a Chinese equal partner.
Or Japan and Korea with nearly 100% tariffs on imported cars.
Or India that requires 100% of all products to be built in India with their “Make in India” program…
Now that our president is no longer bought and paid for, perhaps these facts will finally be included in trade negotiations.
Hopefully the insane globalist elite gravy train comes to an abrupt end.
So it’s starting to dawn- this guy is a train wreck. But on so many fronts -where to begin??? Domestic, international. economic, military?
NATO is obsolete? Jees, maybe Putin does have something on him.
Strangely, the oddest and scariest thing so far comes from the guy who you would think would be ‘the adult in the room’
(In desperation the Trumpettes keep looking for one)
I mean Tillerson, who right out of the gate, actually before the gate, is calling for war with China.
This raise not only called by China, they went all in, saying that Tillerson had better bone up on nuclear war.
What did he say? He said he would deny China access to its man- made islands.
Now, it’s one thing to ignore China’s grandiose claims- it’s another to interdict its ships.
Lesson one: make an energy guy head of energy not Secretary of State.
BTW: if the US does get in a shooting spat with China it will be the first time the US has tussled with a big guy since Korea. The US is very good at picking gun boat (modern read: air force) battles with third world countries. Big guys, not so much.
Moving on to economics.
It’s easy, (actually hard) to confuse a real estate and branding guy with someone who has invented or built a complex product like a car, airplane, computer etc. As in almost all areas of knowledge, Trump is a simpleton about manufacturing.
He thinks Boeing ‘makes’ airplanes in the way a pottery makes a pot.
It does the frame and sheet metal work and assembles the rest contributed by thousands of specialized sub-contractors, some domestic some not.
He thinks he’s going to help US auto cos by taxing Canadian built cars and parts. He’ll hurt the US outfits that own both sides, because it’s the most integrated industry in the world.
Again, a car plant is not where most of the manufacturing takes place-it’s where the components are assembled. Plants on both sides of the border send and receive parts and assemblies all day.
But this is all debatable. How about something that isn’t.
Trump wants a tariff on Chinese imports, in the mistaken belief that China competes with the US.
Largest category of Chinese imports: consumer electronics: 27%
Next largest: budget apparel- 19%
You think tariffs on China is going to have Americans sewing clothing panels in New York sweat shops circa 1955?
Or soldering consumer electronics? (The US was out before China was in; last US TV- Zenith 1995)
NOT GOING TO HAPPEN.
What is going to happen (it may have started) is the Trump Recession as these tariffs create negligible new jobs but destroy existing ones and RAISE PRICES to the US shopper least able to afford them.
Nice to read a sensible comment. Some of our Trump supporters here and some commenters, whom I think are just anarchists, are spoiling for a fight, without regard for the consequences. I don’t know why anyone thinks that Trump isn’t exactly who he says he is. He is dangerous. Glad my run is all downhill now. It has been a good one. You younger folks are going to have one hell of a mess to deal with in the post-Trump world. Good luck to you.
Nick and Night….Great comments. This is a very scary time. One way or another it will end. There is no way this can continue for 4 years. The country…nay, the world is already on edge.
How well do familes run when they are continually attacked and denigrated by a powerful parent? Look what happens. It never works out, ever. Perhaps this is a silly analogy, but if our trade system is complex and needs lurication to keep together, this war of words and threats won’t help anything or anyone.
Complex organizations need stability. When they are sick they need help. Amputations by sword and bloodletting were discarded generations ago.
Since the foreign policy of the entire world has been dictated by energy for the last hundred years. I think an energy guy is a better choice than a person who was married to a person who was president.
You have no idea what complexity is until you try to do anything big in NYC or NJ. Trump knows how to manage complexity. One of his observations was that he needed to do business around the world, just to decorate hotels rooms, so he also knows outsourcing.
My aunt made a living sewing in the garment district. It was hard work but it wasn’t slavery. She actually had a lot of control over how much she could earn doing piece work. She could work as many hours as she wanted, if the work was available.
Good for your aunt. One of my aunts made some money milking cows- by hand.
So you think a return to those days is feasible? Because that is my point, not that they once existed. Work regs that were normal back then wouldn’t be tolerated today. But maybe Trump can help out on that.
In your calculations, be sure to adjust the retail price of the items she made to today’s prices. Because you have to replace Asian budget apparel with comparable prices.
As we go back not all that far in time (but before your aunt) clothing and shoes become very expensive compared to today. I’m not sure when the biz died out, but less than a hundred years ago- you could pawn clothing.
Outsourcing never reduced the prices of the clothing I was buying. The shoes were already imported back then. That is one of the points lost in the outsourcing debate. I’m not saving anything while the quality is declining. No where is this more evident than in the high end clothing stores, where dresses sell for $1K+ and are still made in Asia.
I hear what you’re saying about trade. Tariffs in the short term will only raise prices because we gave up those industries years ago. But in the long term those industries can be rebuilt here. And given that the labor component of much of these goods is small (something like $5 for an iPhone) paying American wages won’t drastically increase prices in the long run (once new factories are built).
The bigger concern is whether those factories will employ many people regardless of where they’re located. The rise of automaton means manufacturing may go the way of agriculture: a very small proportion of Americans producing everything the country needs.
IOW, a trade war focused on preserving manufacturing jobs may become a pyrrhic victory.
“IOW, a trade war focused on preserving manufacturing jobs may become a pyrrhic victory.”
IOW, a trade war focused on preserving manufacturing jobs may become a pyrrhic victory for the American worker.
It would however save the world from the enslavement to china and the massive implosion then social upheaval that a short term dominant china as the reserve currency will cause.
Historically chinese trade practices and hoarding. Have caused several massive global financial and social implosion’s. That make anything America has caused, irrelevant blips in history.
chinas trade practices and hoarding. Caused a global silver shortage, that lead to financial mayhem in the west, and the west entering the existing chinese opium trade, to recover their silver which at the time, was their money.
Which lead to the opium wars.
china has learnt nothing, again it is deliberately running huge trade surpluses,hoarding. And deliberately bleeding the west dry. Whilst at the same time, again. It has massive fundamental financial, and social flaw’s, within itself, that will tear it apart.
Just like: imploding dynasty, Boxer rebellion, civil war, and rise of ccp, last time. All of which china blames on the west.
Lazy greedy human’s still haven’t learnt, killing rich people, and taking their cash/Silver and gold.
Is a short term fix, for the basic problems. Of the inability of the have less, to work with the have more, so both benefit.
Have less always gets greedy and aggressive, so have more turn’s off the tap and stops playing, as they dont like the aggression. Then there is conflict and both loose.
Then have more gets blamed for all the problem’s, caused, by have less.
How many more times, before have less learns, violent revolution’s, dont work, Long term.
Big pharma had better watch out too. We all knew Hilary wasn’t serious about negotiating anything but manipulating a low entry for her friends and family during the campaign but I bet Trump will actually negotiate, allow competiton from Canada, etc.
Your faith in Trump is inspiring. I mean misplaced. What’s your take on the Tooth Fairy?
BTW Wolf: Full disclosure, we also have an Airbus plant in Mobile, Alabama.
Most of the problematics and contradictions appear to arise because of attempts to “micro optimize” trade policy for a particular economic sector or even an individual company, without including all costs (e. g. tax preferences, subsidies), rather than considering the aggregate or holistic effects on the entire US economy, US socioeconomic structure, US culture and all US citizens, which is another way to say the greatest long term good for the greatest number at the lowest cost.
While such hard and objective, mainly financial, data is difficult to acquire and correlate, this is what we pay the government grandees the big bucks for. For example:
* How much of Boeing’s operations are subsidized by the U. S. taxpayer including the cost to train educate the aerospace engineers and production technicians? What is their actual net profit?
* How much does Boeing pay in taxes and non-tax benefits to the communities in which they are sited? How many high wage STEM jobs do they supply? What is their return (ROI/ROC)? How much training will they supply their workforce? In Boeing’s case much of their work is already subcontracted to firms in other countries.
* How much would BMW (and the other vehicle manufacturers) pay in taxes and non-tax benefits to the communities in which they are sited? How many high wage STEM jobs would they supply? What is their return on investment? How much training will they supply their workforce?
When this data is analyzed, it is rather straightforward to decide between them in the holistic sense, if a choice must indeed be made.
* As for the “threat” to our agricultural sector, the major portion of the grain/cereal export earnings are “skimmed” by two companies and not received by the farmers; i. e. ADM and Cargill. These exports, many of which are below cost and aided/abetted by large tax payer subsidies, are the direct cause of the deluge of Latin American emigrants, which in large part have been driven off their farms and cannot find work in their home country, even as the food security of these countries is placed at risk because of the whims of the U.S. Agricultural Mafia.
Another example is the pauperization of the Haitian rice farmers, and the resulting collapse of the Haitian economy, when Haiti was forced to allow the duty-free importation of subsidized Arkansas rice, which was sold below cost of production because of subsidies.
U.S. Agricultural Mafia is so true, and one element of this is sugar subsidies and import restrictions.
American Crystal Sugar of Moorhead MN is case in point. 2,800 ‘shareholders’ are granted the right to grow sugar beets under contract up in the Red River Valley of the north. There’s no way, in a truly free market, that sugar beets grown in Grand Forks could compete with sugarcane grown south of the US’s border when consumers buy a bag of refined sugar in the grocery store.
Same thing with corn based versus sugarcane based ethanol.
In Florida there is a substantial sugarcane operation in the Everglades. Every year large, extremely wealthy landowners bring in thousands of workers from Haiti and the Bahamas to plant and cut sugarcane. It is then sent to local plants, operated by Mexicans, where it is milled into the white stuff.
And tons of fertilizers are siphoned off into the river basins and Lake Okeechobee destroying a wide variety of fish and birds.
Almost no jobs are created for native American citizens and none of this would happen without government subsidies and trade restrictions.
In the Palm Beach area, the land where the sugar is grown in the Everglades, is county/state property which was leased to a rich Cuban family for a very low rent. The workers in the surrounding towns were either Dominicans brought in to work the land, or African Americans living in the surrounding areas. At least that was the official story.
I’d rather see subsidies diverted towards healthy foods such as encouraging fruit growers. But instead we get sugar for ethanol and processed food, a waste of taxpayer money, IMO.
I try not to be a sanctimonious person, but ethanol is economic derangement and moral degeneracy: public subsidies for the diversion of food into fuel, resulting in net energy loss.
If there are any historians and theologians in the future, they’ll go to town on that one, in a Rise-and-Fall-of-the-Roman-Empire kind of way.
Dating myself here but I can remember when Coke was sweetened with cane sugar. It had a crisper taste.
Question: I’m not a foodie who sweats small stuff (sea salt etc.) but can you get a better price for cane sugar?
Economic warfare also maims and kills and subjugates foreign populations, and has far more victims.
The U.S. has long since repudiated international law without due process, even though its treaties are the law of the land, only less than its own Constitution, which it has also repudiated without due process.
Other countries can do the same, and will have to, in the vain attempt to save themselves.
Here is there, and high is low.
All has been undone.
What is true, no two men know.
What is gone, is gone.
Who has choices need not choose.
We must, who have none.
All we have is all we lose.
And what is gone, is gone.
Heavy-handed threats and intimidation of corporations by the president-elect have no place in our trade policy. Gyrations of share prices every time he tweets something regarding a corporation has an undue influence on the markets. Take away the 10-year old’s twitter account before he does more damage.
Heavy-handed threats, intimidation, and undeclared war on behalf of favored corporations, foreign and domestic, has been U.S. foreign policy since the Monroe Doctrine.
Yes, but the difference now is that US imperialism has come home to roost, since it’s in retreat most everywhere else.
Trump is the perfect representation of that, since only a banana republic needs a Strongman.
His election represents tremendous weakness (as Putin recognizes, whatever he did or didn’t do regarding the election), not strength.
Now you folks just stop undermining Donald… look at all his achievements, it simply cannot be easy to turn a meager 40 million inheritance into a 1.4 – 1.8 billion dollar debt.
Pepper Spray Davos. What’s good for UC-Davis students is good for crony capitalists. Halt the rape of taxpayers and consumers across the globe.
Just looking at the comments here and I can see the left coming to dominate. That’s not a good sign for viewership. The rightists love to flock to sights where they can all say the same things to each other. They love the echo chamber effect. Lefties not so much.
Not to mention, the death threats are a classy touch.
As long as wolf’s postings are balanced, centrist, I’ll keep coming back. Will the comments section fall prey to the regular hijacking by nutcases or partisans? Perhaps, but we can always ignore comments. ;)
On the whole, the comments in here are enlightening and continue to surprise in the diverse knowledge of the posters.
It’s going to be a crazy insane next few years, wolfstreet needs to be a sanctuary for centrist, good sense.
I wish everyone stopped politicking on my site. This is not a political site.
It’s too bad you deleted his post. See my reply to him.
True it’s an economic site. But as your lead article abundantly demonstrates the two are now completely intertwined.
Trump ran on a program of massive political disruption of the economic status quo.
I distinctly recall he said he was going to drain the swamp. The establishment is launching CIA and MSM campaigns in their defense, as if they can win.
I’m pretty sure Russia has no interest in reigniting the cold war but the establishment sure does.
D. U. M. P. its spreading everywhere. In a big way.
This is nothing new. Boeing has always been on a roller coaster-a boom or bust business. In 1965 I was 17 and my best friend moved to the Seattle area because his father was starting his own business there. Boeing was the main employer and everybody was working, working good jobs. He had hardly opened the doors when Boeing lost a few contracts and had massive layoffs. The entire area was pitched into a recession. My friend and his family limped back a year later, broke and bankrupt.
More than 50 years later, history repeats itself.
Slap-slap. Slap slap boom!
There are alternatives to the current agenda of TBTF bunch and their politicians (hard not to imagine whose side current POTUS-elect is on with prices for inauguration!)
Your post is illustrative of why the accusations against Trump don’t stick. I could say worst things about Bill Clinton and the woman who defended his disgusting behaviors and crimes. Instead, I will discount your rant as the rant of a rabid leftist, who can say nothing to influence me because he is too biased.
Who are you responding to?
I was responding to the nasty guy you deleted. Yes, it was offensive, but it illustrated a theme the left doesn’t/didn’t grasp. All the name calling is now totally ineffective.
Petunia: Just a quick question. Why do you think we non-Trumpers would not name call and do everything possible to derail the Trump after the way you wingers went after Obama for 8 years? I’m just getting warmed up.
How about you both take it somewhere else.
And your posts are illustrative of why we are in a post-truth world, where actual debate and conversation are pointless. You’ve made up your mind about issues X, Y, and Z, and no amount of facts or polite discourse will change your mind.
No, what you will do instead is continue to take random potshots at the left, and then cry like a baby when someone insults the right.
My point in response to the deleted comment was that he called Trump a list of names, which could have equally applied to Bill Clinton, and his wife. If you attack Trump for sexual misconduct, you cannot disregard the sexual misconduct of the Clintons. So if you attack one and not the other, I will disregard the attack. In the bizarro world of liberal politics this is not a moderate position.
I see this blog is becoming increasingly political and I see that as a reflection of the real economy. Like it or not, we all live in the intersection of govt policy and the economy. Everything is now both political and economic, there are no shibboleths. Most of the commenters here are well informed or well intended. It is almost impossible to focus on one to the exclusion of the other.
The Boeing story is a perfect foil. I don’t know anything about planes or how they are sold. But I know about govt contracting and know that selling to govts is totally different then selling to businesses. They are actually two different lines of business with different selling and pricing models. Selling a plane to Delta and selling the same plane to a govt agency is not the same deal. The differences would fill an article.
My humble opinion, but “economics” used to be called “political economy”. Because in the old days everyone knew that the economy was a construct of government protection and regulations.
So I don’t believe that you can possibly separate the two. However, as a group to whom Wolf is gracious enough to provide a comment section, we should make every effort to show respect to each other’s opinions. Whether we agree or not. And when someone is only capable of rudeness remember the old maxim that you can control yourself, not other people.
Petunia: I see this blog is becoming increasingly political…
No as Kent pointed out, there is no economics without politics. To think otherwise is, well, delusional.
Instead, I think your angst is more about folks calling you out on your desperate defense of the indefensible Trump.
I predict you’re going to become increasingly more desperate — and despondent — as the glo wears off and the horror of the Trump regime comes into focus.
As Harry Truman famously said when he was exhorted to give ’em Hell!: “I just tell the truth and they think it’s Hell!”
PS: Trump’s made a bunch of promises, obvious contradictory blather that varies on the context or the last person he talks to.
But take note: Trump is impeachable on Day 1. The only thing between Trump and impeachment is the R congress. It matters not what he SAYS, they will tolerate him only as long as he goes along. If he doesn’t, they’ll be rid of him and get someone who’ll compliantly wield a pen, i.e., Pence.
I’m only glad the other side didn’t win.
Getting the people to fight over puppets is a long used deep state diversion that maintains control.
To stay on topic; Boeing is diversifying production of it’s bestselling 737, and so did Airbus with with 320 plane. There might be some business reason, but mainly China demanded it. And now it gained experience and building a competitor to both. And these are just a few examples. Shouldn’t there be some reciprocity asked from China – or tariffs?
As I told my wife when Rex Tillerson’s name was floated for State: Well, he knows all the despots in power and has bribed them all.
Y’all reckon WWIII will be quick or long and drawn out?
As to Boeing, I would not worry too much. Europena airlines are no longer their significnat customers. It will sell to Asia (Arabs, Singapore, India and alike, countries like Britain and Russia – political deals may help that). What Boeign has been sufering from is strong Dollar and overproduction in previous years. In fact, Airbus may feel much more squeezed, if they lose US orders and orders from outside of Europe for political reasons.