My 5 cents on tariffs


There’s been a raging debate on whether tariffs and protectionism is good or bad for the U.S economy and the stocks. I do not want to make this a political debate, as i have a distrust for politicians in general., whether left or right, democrats or republicans. 

I keep hearing this argument that our politicians sold America, by allowing China to practise it’s protectionist policies and let the trade-deficit balloon.  Really ? But the elephant in the room that nobody wants to talk about is how capitalism and free markets work. Profits is GOD when it comes to capitalism and social costs take a backseat. So when there is a wage arbitrage to be exploited, the corporations are going to exploit it. Trump’s own family has manufacturing interests in China. That’s how capitalism works and you have to live with the consequences, if capitalism and free markets are your religion. It’s not the politicians, but the businessman who moved the jobs overseas in pursuit of profits, which is a noble American ideal. It’s not the poor immigrants who took away your jobs, but the corporations who outsourced them to other cheap-labor countries, for profits. We can’t blame our businessman, because they are practising and worshipping the free-market ideal. 

I think America has reached a point where it has started to realise that profits are not GOD and trickle down economics ain’t working. But to say anything against the free-markets is a heresy. So what do you do, when you are conflicted against your own ideal ? - blame other countries, blame the immigrants, blame the foreigners, start a war. Who better then Trump to engage in this kind of activity ? But is it going to solve the problem of inequality or trade deficit or jobs ? Hell no !. There's going to be a lot of sabre-rattling, but when it comes to the net effect of tariffs and counter-tariffs, it’s going to be a wash. 

There is only one way to bring the outsourced jobs back. If the American public is willing to bite the bullet, they could pass a legislation to stop outsourcing and take a hit on rising prices. Sorry folks, you can’t have both jobs and cheap goods. If you wan’t your manufacturing jobs back, you need to be prepared for some serious inflation and you have to abandon the principles of free market. But isn't that what the commies do ? America is stuck in a idealogical trap, while the Chinese are wedded to no ideologies and playing the game more practically.

As far as the stock market is concerned, i think it’s a non-issue, as the economic effects of the tariffs and counter-tariffs are going to be a wash. There will be a few knee-jerk short term reactions, but longer term trend is not going to be affected by the tariffs issue, in my opinion.

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