Yesterday was another Axis media freak-out day over Trump Administration II. The first hundred days were officially over, thus it was a fine time for the Trump Deranged pimping for a socialist future and trying to pretend that they hadn’t propped up a fake President for four looooong years to tell us the nation is doomed because this time we know who is President and he is orange Hitler-Satan. It was really quite a spectacle, almost screaming-at-the-sky-level nuts. I regret not posting Chris Marschner‘s excellent Comment of the Day on tariffs then for contrast. It’s clear that the vast, vast, vast number of your progressive friends and mine literally don’t know what the hell they are talking about regarding tariffs, and the news media most people are likely to read as well as broadcast news regard the topic as the equivalent of a public reading of Proust. So all the whiners in the echo chamber know is that tariffs are bad. Then again, today’s doomsday chorus is almost as vocal as yesterday. Let’s see…there are at least eleven “Trump is a monster and going to destroy us” headlines on the New York Times home page if you count cleverly deceptive ones like In an Uncertain Economy, McDonald’s Sees Spending Decline. (McDonald’s has been charging obscenely high prices for crummy food since Democrats inflicted higher minimum wages on their unskilled workforce and inflation spiked during Biden’s presidency, so the “spending decline” has nothing to do with Trump. I’ve declined to go to a nearby Mickey D’s when I want a quick semi-edible meal since in 2022…)
Here is Chris’s Comment of the Day on the post, “Important Note on the Newsmedia’s War on President Trump”:
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Americans in general have become spoiled. They do not seem to want to look beyond the immediate present to consider what is best for the nation in the long term.
[Commenter] Marrissa said “Everyone including people who love Trump want a good economy, low prices, and not have our important information leaked by someone who knows better.”
The question is at what cost? Low prices come at a cost to someone. Every dollar we give to China is one more they use to advance their Belt and Road strategy of global dominance. We fought a war here over the issue of slavery because it was at our doorstep but today we turn a blind eye to factory farms of China on which people are virtually imprisoned so we can get low prices on all sorts of products. I suppose it is not that we are against slavery we just don’t want to see it.
Just ten years ago the MXN Peso was worth about a dime and it is now worth less than a Nickel which means goods produced there cost half as much in terms of dollars. How is that possible if the US trade deficit with Mexico has exploded in that time frame? Demand for Mexican goods drive the value of a countries currency. The answer is foreign government manipulation.
What exactly does a good economy look like? Does it mean full employment even if that employment means part time work in multiple jobs or does it mean a balance between temporal value creation in service work and long term value creation in manufacturing. I say it means the latter even if it requires periodic realignments of resources between industrial production.
[Commenter Extradimensional Cephalopod] stated “People don’t like Trump because he seems almost actively hostile to the idea of demonstrating foresight and conscientiousness, even when it would work out better for his actual goals and his public image.”
How can EC say this? Is EC privy to the President’s deliberations? Trump had four years to develop a strategy and the say that he is hostile to demonstrating foresight and conscientiousness comes only from what he is able to glean from news reports. The exact same argument can be turned around on Trump’s critics because they are only looking toward the next election and not the impact on future generations.
EC questions the use of tariffs but there are few other tools in a presidential arsenal to limit the amount of American wealth being transferred to the CCP. How effective would moral suasion work on the American people with a fireside chat by Trump explaining the need to buy American products to protect our industries? It wouldn’t. Every country believes its consumers are an economic asset. Every dollar they spend on domestic goods and services directly benefits the domestic economy. Imports are treated as wealth leakages. We try to offset our wealth leakages with our exports that brings new wealth to our economy.
Much ink has been spilled condemning the tariffs but very little on some of the positive effects.
U.S.-based investments in President Trump’s second term:
- Project Stargate, led by Japan-based Softbank and U.S.-based OpenAI and Oracle, announced a $500 billion private investment in U.S.-based artificial intelligence infrastructure.
- Apple announced a $500 billion investment in U.S. manufacturing and training.
- NVIDIA, a global chipmaking giant, announced it will invest $500 billion in U.S.-based AI infrastructure over the next four years amid its pledge to manufacture AI supercomputers entirely in the U.S. for the first time.
- IBM announced a $150 billion investment over the next five years in its U.S.-based growth and manufacturing operations.
- Taiwan Semiconductor Manufacturing Company (TSMC) announced a $100 billion investment in U.S.-based chips manufacturing.
- Johnson & Johnson announced a $55 billion investment over the next four years in manufacturing, research and development, and technology.
- Roche, a Swiss drug and diagnostics company, announced a $50 billion investment in U.S.-based manufacturing and research and development, which is expected to create more than 1,000 full-time jobs and more than 12,000 jobs including construction.
- Eli Lilly and Company announced a $27 billion investment to more than double its domestic manufacturing capacity.
- United Arab Emirates-based ADQ and U.S.-based Energy Capital Partners announced a $25 billion investment in U.S. data centers and energy infrastructure.
- Novartis, a Swiss drugmaker, announced a $23 billion investment to build or expand ten manufacturing facilities across the U.S., which will create 4,000 new jobs.
- Hyundaiannounced a $21 billion U.S.-based investment — including $5.8 billion for a new steel plant in Louisiana, which will create nearly 1,500 jobs.
- Hyundai also secured an equity investment and agreement from Posco Holdings, South Korea’s top steel maker.
- United Arab Emirates-based DAMAC Properties announced a $20 billion investment in new U.S.-based data centers.
- France-based CMA CGM, a global shipping giant, announced a $20 billion investment in U.S. shipping and logistics, creating 10,000 new jobs.
- Merck announced it will invest $8 billion in the U.S. over the next several years after opening a new $1 billion North Carolina manufacturing facility.
- Clarios announced a $6 billion plan to expand its domestic manufacturing operations.
- Stellantis announced a $5 billion investment in its U.S. manufacturing network, including re-opening its Belvidere, Illinois, manufacturing plant.
- Regeneron Pharmaceuticals, Inc., a leader in biotechnology, announced a $3 billion agreement with Fujifilm Diosynth Biotechnologies to produce drugs at its North Carolina manufacturing facility.
- NorthMark Strategies, a multi-strategy investment firm, announced a $2.8 billion investment to build a supercomputing facility in South Carolina.
- Chobani, a Greek yogurt giant, announced a $1.2 billion investment to build its third U.S. dairy processing plant in New York, which is expected to create more than 1,000 new full-time jobs — adding to the company’s earlier announcement that it will invest $500 million to expand its Idaho manufacturing plant.
- GE Aerospace announced a $1 billion investment in manufacturing across 16 states — creating 5,000 new jobs.
- Amgen announced a $900 million investment in its Ohio-based manufacturing operation.
- Schneider Electric announced it will invest $700 million over the next four years in U.S. energy infrastructure.
- GE Vernova announced it will invest nearly $600 million in U.S. manufacturing over the next two years, which will create more than 1,500 new jobs.
- Abbott Laboratories announced a $500 million investment in its Illinois and Texas facilities.
- AIP Management, a European infrastructure investor, announced a $500 million investment to solar developer Silicon Ranch.
- London-based Diageo announced a $415 million investment in a new Alabama manufacturing facility.
- Dublin-based Eaton Corporation announced a $340 million investment in a new South Carolina-based manufacturing facility for its three-phase transformers.
- Germany-based Siemens announced a $285 million investment in U.S. manufacturing and AI data centers, which will create more than 900 new skilled manufacturing jobs.
- Clasen Quality Chocolate announced a $230 million investment to build a new production facility in Virginia, which will create 250 new jobs.
- Fiserv, Inc., a financial technology provider, announced a $175 million investment to open a new strategic fintech hub in Kansas, which is expected to create 2,000 new high-paying jobs.
- Paris Baguette announced a $160 million investment to construct a manufacturing plant in Texas.
- TS Conductor announced a $134 million investment to build an advanced conductor manufacturing facility in South Carolina, which will create nearly 500 new jobs.
- Switzerland-based ABB announced a $120 million investment to expand production of its low-voltage electrification products in Tennessee and Mississippi.
- Saica Group, a Spain-based corrugated packaging maker, announced plans to build a $110 million new manufacturing facility in Anderson, Indiana.
- Charms, LLC, a subsidiary of candymaker Tootsie Roll Industries, announced a $97.7 million investment to expand its production plant and distribution center in Tennessee.
- Toyota Motor Corporation announced an $88 million investment to boost hybrid vehicle production at its West Virginia factory, securing employment for the 2,000 workers at the factory.
- AeroVironment, a defense contractor, announced a $42.3 million investment to build a new manufacturing facility in Utah.
- Paris-based Saint-Gobain announced a new $40 million NorPro manufacturing facility in Wheatfield, New York.
- India-based Sygene International announced a $36.5 million acquisition of a Baltimore biologics manufacturing facility.
- Asahi Group Holdings, one of the largest Japanese beverage makers, announced a $35 million investment to boost production at its Wisconsin plant.
- Cyclic Materials, a Canadian advanced recycling company for rare earth elements, announced a $20 million investment in its first U.S.-based commercial facility, located in Mesa, Arizona.
- Guardian Bikes announced a $19 million investment to build the first U.S.-based large-scale bicycle frame manufacturing operation in Indiana.
- Amsterdam-based AMG Critical Minerals announced a $15 million investment to build a chrome manufacturing facility in Pennsylvania.
- NOVONIX Limited, an Australia-based battery technology company, announced a $4.6 million investment to build a synthetic graphite manufacturing facility in Tennessee.
- LGM Pharma announced a $6 million investment to expand its manufacturing facility in Rosenberg, Texas.
- ViDARR Inc., a defense optical equipment manufacturer, announced a $2.69 million investment to open a new facility in Virginia.
That doesn’t even include the U.S. investments pledged by foreign countries:
- United Arab Emirates announced a $1.4 trillion investment in the U.S. over the next decade.
- Saudi Arabia announced it intends to invest $600 billion in the U.S. over the next four years.
- Japan announced a $1 trillion investment in the U.S.
- Taiwan announced a pledge to boost its U.S.-based investment.
I don’t recall the media making much about this at all.
I challenge those who believe that Trump is leading us down a road to ruin with tariffs to put forth an alternative. If we would have recommended that all goods imported into the United States meet our stricter environmental and workplace safety standards in lieu of tariffs it would mean that virtually no Chinese goods could enter our consumption stream. Electric vehicles would become impossible to produce because the costs of extracting the raw materials would be prohibitively expensive without the child labor employed. Global workers would have to be paid in accordance to our minimum wage laws. We can’t have that either because we all want more stuff at the lowest possible price. Our grandkids be damned. Let them pay the bill.
Ethics Alarms 
As one who received minimum education in either micro or macro econmics I appreciat all efforts to explain. I am still a bit befuddled but seeing the list of future investment promised I see positive outcomes for this. However, those outcomes will not come to fruition for years. How long, foor example, will it take for Hyundia to build its plant.?
So my question, How do we keep these promiser”s feet to the fire? In three years another adminsitration can wipe out the incenitves that have driven these promises.
Can anyone expalin that to me?
As one who received minimum education in either micro or macro econmics I appreciat all efforts to explain. I am still a bit befuddled but seeing the list of future investment promised I see positive outcomes for this. However, those outcomes will not come to fruition for years. How long, foor example, will it take for Hyundia to build its plant.?
So my question, How do we keep these promiser”s feet to the fire? In three years another adminsitration can wipe out the incenitves that have driven these promises.
Can anyone expalin that to me?
Congrats on the COTD, Chris! I noticed Schneider Electric in there. My three years in Ohio were spent working for Schneider Electric, so I’m happy to see them pledging to invest $700 million to help with the power infrastructure in the US. The only aspect of this that I question is how much of this money is actually due to Trump’s policies, and how much can be claimed to be due to Trump’s policies, but was going to be invested anyway. For example, the supply-chain issues that struck in the aftermath of the pandemic lingered for years and caused Schneider, at least, to reconsider its just-in-time manufacturing that largely occurred overseas. Trump’s tariffs at this point might be more reinforcement of Schneider’s interest in local sourcing of manufacturing than its true motivation.
From your host: [“A Friend” hit the jackpot this time: he sent one of his long, obnoxious Times-licking comments while I was actually doing ethics work at a downtown meeting, as I embark on a major project to clean up the rot in the legal profession. I’m gratified that no one replied to his unauthorized comment, which I normally would have sent entirely to Spam hell but instead hollowed out. That’s so I could note, in response to his first line (which is all that I read), that McDonald’s sales are plummeting for the reasons I noted that have nothing to do with Trump’s economy at all. I just had a terrific, big cheeseburger and fries at a D.C. bar and grill for 7 bucks, while the same at Mickey D’s would have cost me just under $10.00 and been about 34% as tasty and filling.]
Chris,
I am curious what you think of Thomas Sowell’s view on tariffs and the trade balance? I have an interview clip attached, which is highly illuminating.
Economics is a dismal science; we can do make policies with the best of intentions, however there are always unintended consequences. I am afraid that the Trump tariffs are based on wishful thinking instead of reality, after listening to Sowell.
I appreciate the call out but most of what I did was simply report what was easily available to those wanting to assess the merit or demerit of the tariff policy.
CVB, I will never put myself on the same intellectual level of Thomas Sowell, he is a giant among great thinkers. I do think his analysis is flawed because the playing field changed dramatically after WW2 and then again in 1970.
With that said, he stated up front that if the tactic is being used to gain a strategic objective in his words he said “that’s fine”. That is exactly what is happening. He is unfortunately comparing apples to oranges when he basically states that history will repeat itself by comparing that occurring now to pre WW2 trade policy in which we had not yet had to rebuild Europe and Asia.
After WW2 we allowed the war devastated nations to be given trade protections to facilitate the rebuilding of those nations. There was no WTO until after WW2 and despite the success of the Marshall plan and trade protections there has been no real effort to rebalance the terms we allowed so that those nations would be able to protect its industry so that those nations had a chance to prosper.
In another part he talks about trade imbalances being inconsequential. All trade is ultimately balanced. If we run a merchandise account deficit we can offset that with services surpluses. After that, we get into rather technical accounting machinations. However, merchandise accounts for goods of lasting value while services provide temporal value. We price things based on what perceived value the good or service brings to us. An accountant can charge more than a janitor per hour because we perceive that the accountant will make us far better off for a longer term than the janitor. We can pay a person making cars 50 bucks an hour but are only willing to pay a Wal Mart greeter $15/hour. Services do not require significant capital to enter relative to building or making things. Low barriers to entry make those industries far more competitive than heavy industry. That means that services export trade can evaporate far more rapidly through mere training in the buying country. Or in the case of China, theft of other’s IP.
We must also recognize that trade imbalances cause wealth transfers from one nation to another. Progressives like AOC and Sanders are touring the country now lambasting the oligarchs. Well at least our oligarchs pay taxes here. How did an oligarch become one? Well, they spend less of their income than they get from consumers who readily trade their currency for desired products and services.
We have an unequal distribution of wealth in the US because we have an unequal level of percent of income consumed and invested among its citizens. The wealthy spend their money on income producing assets while the average Joe or Jane spend virtually all of their income on current consumption. These decisions are made by individuals who decide to get happiness – satisfaction – utility whatever the term used right now versus those who decide to risk a larger percentage of their money on the potential for greater incomes later. As time goes by, and incomes do not rise at the same pace as inflation consumption oriented people become poorer while those who chose to not to spend on current consumption and instead invest in things that provide additional income the wealth and income gap grows which creates a greater demand for “free” or subsidized government services driving prices up farther which drives up profits because wages lag and investor wealth grows because the stock market reflect higher inflated profits. Every expansionary government program results in more rules and controls on the individual. It is an insidious way of losing one’s real liberty. Politicians use this to scare constituencies. He’s taking away Social Security, Medicaid, food programs for children. The list is endless.
If we apply the same circumstances to trade imbalances and continue on a path of ever increasing trade imbalances as we have with our national debt the results will be similar but instead of being in control of what choices one has people will be beholden to what another nation dictates to us. Do we want China to be the oligarch or one of our many billionaires that are too often chastised
I would like to point out that just today, Mercedes Benz is expanding production of additional vehicles here at its Tuscaloosa TN facility. Here are some others announced today:
In addition, Trump placed sanctions on nations that buy any petrochemicals or oil from the terrorist state of Iran. Any nation that buys products from Iran cannot sell in the American marketplace. Guess who buys 90% of its oil from Iran. That’s right China. China was never mentioned but this gives China a way to buy itself out of its outrageous trade imbalance by buying energy and petrochemicals from us while at the same time takes a revenue stream from Iran that it uses to fund proxies in its war against the west.
Deacon Dan above asked about timeline. Some of this can occur rapidly but sure, a new administration could scuttle the whole thing by requiring extended pre-construction studies and progressive groups might try to tie up the planned investment in the courts for years but that is not a reason to poo poo the announced plans. Quite the contrary, it is why those seeking to undermine the administration’s efforts to rebuild our manufacturing capacity to create high value jobs should be called out for what they are trying to accomplish which is centralized government with certain people being leaders for life like North Korea and China.
HT and I went round and round on the issue of tariffs in a much earlier post and I must admit I was not on my game that day.
Below is a response I tried to make to EC to a comment he made to my original comment when he questioned the idea of just trying stuff without forethought. Important Note on the Newsmedia’s War on President Trump | Ethics Alarms WP would not let me post it for some reason. He felt that leaders need to explain the good the bad and the ugly to the public to gain trust. What was interesting was that the current administration actually televised its most recent cabinet meeting and for two hours the public got to see the deliberations going on. I don’t recall any administration being that open to public scrutiny. Maybe it is necessary because it’s the only way the public will see exactly what transpired without being forced to evaluate it through the lens of some parochial interest.
Anyway, here was attempted response to EC
Thanks for the reply EC. I always enjoy your commentary.
You said “I hope that a significant portion of that money makes its way to the workers who make the economy possible.”
Every dime invested pays for things produced whether it is in the form of new property, plant, and equipment or wages and salaries of personnel who will be producing domestic goods and services. Consumption spending could not be the leading driver of economic growth if the lion’s share of business income did not go out in the form of wages and benefits.
It should be pointed out that when gross private domestic investment occurs it does so without the need to tax the households to pay for it as it does when government “invests” in projects.
I’m not sure why you put this as a quote – “I’m going to take drastic action because we’re going to win in the global economy!” I put that phrase into Google and it returned no results so it is not an actual quote by Trump.
Most politicians speak in broad generalizations and simplifications because the more information they provide, the more likely they will have to spend an enormous amount of time defending every aspect of the decision process. No politician will give his or her detractors the ammunition to kill a plan. We are not a pure democracy in which we all get to vote on everything.
How much foresight and conscientiousness went into border policy during the prior administration? All we heard was that our immigration system was broken and we needed people to work in the fields. Where was the discussion on the good and the bad for unfettered migrations of un-vetted people? When the American Rescue Plan was announced did Biden take the time to explain how pumping huge sums of money into the economy during a period in which supplies were low would cause prices to rise exponentially? No. He knew that giving money away would not be challenged by the electorate because they are greedy.
I can say the same thing about Obama Care. All we heard was that our health care system was broken and this was going to be the fix. What part was broken and how does increasing the number of buyers help lower health care costs? Did we ask? Did we care? The answer was no because American consumer want someone else to pay their costs. Did that program go off without a hitch? No and we are still feeling the effects of federal policy expansion of Medicaid at the state level. At this point, I should ask did LBJ and his team even consider the potential detriment to the American psyche by making so many dependent on government largesse that came with the Great Society program. I think he did but he was not going to say it publicly.
Did anyone tell us that the war in Afghanistan was going to last almost twenty years using the tactics of minimal contact with the enemy? Despite two terms of Bush and Obama it took Trump with his decision to eliminate the ISIS diaspora to get it done. Unfortunately, the Biden administration allowed a new group of Iranian proxies to emerge. None of his strategies were ever discussed. I really don’t recall being given a seat at the table to hear that rationale and strategy of those negotiating the JCPOA.
My point is that leaders don’t need to tell people about what they should already know. Generals don’t tell their soldiers the cost benefit analysis that went into taking Hamburger Hill. Anyone with a bit of understanding of the economy knows that tariffs are an avoidable tax designed to make domestic goods more competitive. American, consumers want cheap prices and are willing to turn a blind eye to the conditions workers are forced to work in some countries. Sure, Canada is not one of those but I ask the same question of the Canadian dollar I asked about the MXN peso. If you are running a sizable trade imbalance – even if you are punching above your weight because of a resource base – why is the US dollar valued higher than the Canadian dollar. I can buy Canadian goods for 77 cents that cost me a full dollar here. The value of any currency is predicated on what that currency can be exchanged for. A price conscious consumer or distributor knows an arbitrage opportunity when it presents itself.
There are problems with global trade that put us at a disadvantage. Some of it is of our own making as we worked to rebuild much of Europe and Asia after wars. Times have changed and those nations no longer need to protections we gave them yet they are unwilling to give them up. Other problems are more geopolitical in scope and require non-military economic interventions that include making the US less dependent on certain countries.
I would love to know which president or Congress has ever offered to discuss the rationale, pro and con for the significant decisions they make.
What you are asking for is that Trump defies another governmental norm by explaining his reasoning behind every significant decision he and his team makes.