Sunday, September 15, 2019

Why the Stock Market Went Up On Trump's Tariff Delay

As I have detailed in the EPJ Daily Alert, there are many reasons for the stock market to be climbing at the present time. One of the secondary reasons that the stock market went up last week is because of news on the tariff front.

Last week, the economically ignorant President Trump did something positive when he said he would be delaying a 5% tariff hike on $250 billion in Chinese goods by two weeks as a “gesture of goodwill” as negotiations between the two nations continue.

The tariffs were set to rise from 25% to 30% on Oct. 1, but will now remain at their current levels until Oct. 15.

Tariffs are just a very bad thing. They do nothing but lower the standard of living for consumers in the countries that impose tariffs.

Earlier this year, I explained how and why this occurs:



  1. It is not all about standard of living in the current moment. It is also about national security. China is a communist country and the US has basically been financing them through trade. Just look at the grand injustices the CCP is doing to the Uighurs for example. The CCP wants to take over the world and submit everyone to their totalitarian regime.

  2. Tariffs can't fix the problems created when the Bushes and Clinton made one way free trade with China however Trump thinks they can. Allowing China one way free trade left little to no leverage to get China's government to drop protectionist practices. Why should they? Tariffs are too little too late. China now has the manufacturing capital for many industries. Bringing manufacturing capital within the borders of China is the goal.

    It would be difficult for Trump to create things like domestic content laws and such that only apply to China. That is play the game as China's government has played it. The Bushes and Clinton should have required China drop domestic partner requirements, domestic content requirements, and so on as a condition for free trade into the USA.

    The question to find an answer to is how to get China to give up its protectionism at this point.