In what started off as a normal day for me, I’m now going on Leventhal to discuss, you guessed it, tariffs. This will be my third appearance on NewsMax today alone. This time, there are notes in the calendar invite from Leventhal’s people, though I suspect that they’ll change in light of the recent announcement that tariffs on/from Canada are being paused for at least 30 days.
Here are the two talking points I want to drive home on tonight’s show:
The Cost of Increased US Investment
Many people are pointing to a study from KPMG that many Canadian firms are looking to move some of their operations to the US to avoid paying the tariffs.
But the question we need to ask ourselves is, “why weren’t they doing this before?”
And the answer is simple: it was too expensive. When business save money, those savings get passed on to their customers. This could be American consumers but also American producers buying intermediate goods.
It’s only after the tariffs that these companies are considering moving to the US.
That tells me that it’s cheaper for them to move to the US than it is to pay the tariffs, but this is still an increase in cost for them, just not as big of one.
So now, manufacturing has gotten more expensive not less. You don’t make things cheaper by making it more expensive to produce them.
We also don’t know how many or what kinds of jobs are going to be created in the US from this.
It could easily be the case that the only thing being done in the US is what’s called “final assembly.” A lot of this can be done by robots with minimal human involvement.
So now, we’ve got a situation where very few jobs have been created and, because they’re avoiding the tariffs, very little revenue is being generated.
That’s a lose-lose for the American people.
Regime Uncertainty Breeds Chaos
We also have the problem that this is now the third time that Trump has reneged on enacting tariffs.
Recall that he promised that universal tariffs would be a Day One accomplishment.
Then, he announced that he was going to impose a tariff on Canada and Mexico, two of our closest trading partners, over the weekend and that there was “nothing” Canada and Mexico could do to avoid them.
Turns out, that was not true.
All of this raises uncertainty in the eyes of businesses around the world.
Will there be tariffs?
If so, when, how severe, against which countries, and on what products?
This uncertainty does not bode well for American businesses and certainly not for the American workers.
And now he’s saying that he’s going to go after the UK and the EU.
So all he’s doing now is creating even more uncertainty!
What Happened
It’s always fun going on Rick Leventhal’s show. I don’t know what it is, but he and I always have a great time together and I really just love doing his show in particular.
I was able to hit almost everything in my second set of points on air, electing to skip out on the first point as it’s too nuanced and it would have been awkward to shoehorn it in there. I’ll leave that for another writing project.