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Trump: Tweets and Trade

Twitter isn’t a very good source of information, but lately there are some posts that cannot be ignored, especially from Donald Trump.  As I have written in previous posts, Trump’s policies are great in the long run.  What is very alarming is what can happen in the short term and the severity of it.  Not even elected yet, Trump continues to fire warning shots across the bow, and perhaps this following tweet could be the first real one to actually hit something:

This is the beginning of the trade war that will begin on January 20th 2017.  Toyota plans to manufacture Corollas with cheap labor in Mexico to send to us for bargain prices.  Trump plans to levy high import taxes on cheap products manufactured overseas coming into the United States.  And so the problem begins.  The average consumer is already feeling the pinch of low wages and inflation, and now imports are going to be more expensive to buy with high import taxes.  The corporate tax rate to produce within the United States is too high to begin with.  It doesn’t look attractive to other corporations wanting to come in, so the tax rate needs to be lowered.  Sounds simple enough, just lower the tax rate and bring jobs here.  But that raises another problem.  The dollar is too strong, which means our exports are too expensive for other countries.  Other countries are devaluing their currencies nearly every month in order to combat a strong dollar.  At the surface his policies look decent, but look further and you will see that many problems lie ahead.


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