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How Harley Davidson may expose another problem with tariffs

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How Harley Davidson may expose another problem with tariffs

The logic that many on the right and even some on the left understand about tariffs is the increase cost to overseas producers inevitably falls back on the American consumer. This is the primary argument made by many federalist-minded Libertarians and Republicans who oppose President Trump’s continued embrace of the practice. As we’re now seeing, there’s a potentially bigger problem with these tariffs.

Instead of bringing jobs back to America, they can actually drive jobs overseas. Case-in-point: good ol’ American Harley Davidson.

The motorcycle company that for many embodies the American rebellious spirit is at a crossroads. The European Union has raised its tariffs on American-made motorcycles from 6% to 31% in response to President Trump’s tariffs on steel and aluminum.

US to hit EU with steel and aluminum tariffs, report says

https://www.theguardian.com/us-news/2018/may/30/trump-administration-tariff-steel-aluminum-eu-trade-tensionThe move is likely to bring retaliatory action from European Union trade regulators, who have warned they will target US products as motorcycles, jeans and bourbon if additional US tariffs are imposed.

Signs of increasing friction between the US and Europe over trade came early on Wednesday when Wilbur Ross, the US commerce secretary, drew a sharp line with the EU over Chinese trade negotiations, telling counterparts at a trade development panel in Paris that Europe is using tariffs as an “excuse” to refuse trade negotiations.

Predictably, Harley Davidson is in a precarious situation. They must decide whether to continue exporting to Europe and pay the tariff, which averages around $2,200 per finished motorcycle, or move a portion of their operations to Europe to avoid the tariff. While they’re unwilling to admit it at this point, the latter will almost certainly force the company to cut it’s American workforce and even shut down some of their domestic facilities.

This isn’t the type of result we were promised when the President was selling us on tariffs, but it was easy to foresee.

Free trade works when it’s done right

The President was correct when he bashed NAFTA and TPP. However, his reasoning for doing so was wrong. Free trade empowers the real job creators in US companies to put Americans to work. It also allows for many to move jobs offshore, but the benefits of a freedom in trade greatly outweigh the detriments. As some jobs move offshore, more jobs are subsequently created in America.

NAFTA and TPP were never really free trade agreements. NAFTA was trade redistribution that ended up being detrimental to the whole continent and TPP was a handover of power to multinational companies without the benefit of proper oversight. To use them as the reason for imposing harsh tariffs and abandoning free trade is a farce. As a self-proclaimed master negotiator,Trump should have made better deals and embraced free trade. Let Americans go head-to-head with companies in other nations. Put their cheap workforce against our innovations and financial prowess. That type of free trade is good for them and better for us.

Harley Davidson won’t be the last company forced to make hard decisions because of the tariffs. Our best case scenario is that damage can be mitigated and some jobs truly do come back. Unfortunately, that may be wishful thinking.

Reference

Harley-Davidson offers no further detail on overseas production shift as European tariffs take hold | PennLive.com

https://www.pennlive.com/news/2018/07/harley-davidson_offers_no_furt.html“We never contemplated moving our European volume out of the United States,” Olin said Tuesday.

“Consequently we’re analyzing the capacity options that we have… and we are working on the overall plans, and when we have them we’ll provide more information.”

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Democrats

Bernie’s betting high on Green New Deal to save his campaign

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Bernies betting high on Green New Deal to save his campaign

Around four months ago, Senator Bernie Sanders was on top of most 2020 election polls. Meanwhile, Senator Elizabeth Warren was polling at single-digits, former Vice President Joe Biden hadn’t entered the race, Senator Kamala Harris was still relatively unknown and nobody knew how to pronounce Mayor Pete Buttigieg’s name. That was then. Today, he has slipped to third in many polls and has less of an upside than 4th-place Harris or 5th-place Buttigieg.

Much of this can be attributed to Warren’s two strong debate performances as well as her willingness to throw radical proposals against the wall every week. Sanders has been relying heavily on his old shtick; even some leftist media sources noted that Sanders 2020 sounded exactly like Sanders 2016. His campaign until this week had been heavily reliant on promoting socialist redistribution schemes and vouching for Medicare-for-All, neither of which give him any daylight between Warren and himself. In fact, you can quote one about socialism or healthcare, attribute it to the other, and their supporters couldn’t tell the difference.

But Warren’s climate change plan fell flat with the leftest of the leftists. At a “modest” $2 trillion, it was seen as a band-aid for a sliced jugular in the eyes of many climate change activists. This was it. This was Bernie’s opportunity to pounce, and pounce he did. His recently unveiled $16.3 trillion Green New Deal package is a massive amount of pouncing.

How massive? Let’s start from the year 1 AD and write a check every day to pay for it. How much would that check need to be?

Sanders has been receiving praise from some of the most radical progressive groups out there since unveiling his plan. It is much more “woke” than Warren’s and may serve Sanders in his quest to lead the hyper-leftist wing of the party once again in the primaries. Currently, Warren holds that mantle. Will the Green New Deal be enough?

If it isn’t, Sanders is done. This is his only differentiating factor against Warren, which is why his Twitter account and campaign mailers have been in overdrive trying to make the Green New Deal the talking point for progressives. He needs them to look at his plan and Warren’s and believe Bernie is the most radical of the radicals.

It could backfire. This may be a way for Warren to appear more mainstream than Sanders. She has already conspicuously declined to take on the label of being a Democratic Socialist and has gone so far as to speak like a capitalist even if her policies are socialistic. Sanders doesn’t share her embarrassment for labels. He’s a socialist and never try to deny him of this “honor.”

Sanders is throwing up a hail mary even though the Democratic primary match is still in the first quarter. He recognizes this race could slip away from him quickly if he doesn’t do something different. He hopes the Green New Deal is his Warren-buster.

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Economy

Do we need China? Nope.

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Do we need China Nope

My first reaction to news that China was planning on imposing tariffs on $75 billion in American imports was to contemplate whether or not we could actually just stop trading with China altogether. As a free trade hawk, the notion is obtuse to me. But as a patriot who recognizes the multiple threats China represents to our nation and much of the world, I wondered if the economic risks of breaking away from the Chinese flow of products and resources were worth it.

Anyone who claims to know the answer to this question is lying or delusional. You could do a comprehensive study on the pros and cons of elevating other trade partners and dumping China and still not know with a certainty all of the effects. But we have numbers. We have analyses. We have common sense. All three tell us dumping China as a trade partner altogether would be rocky at first, but the end result for American consumers and businesses would be negligible while the crises brought about in China would be catastrophic.

In other words, this might actually be the best way to eventually return to a free trade atmosphere on the world market. Pressure is slow in working against China. Between their own tariffs and devaluing the Yuan, China seems to be preparing for the long battle in hopes the Democrats win the 2020 election. We may need to fundamentally rethink our entire trade infrastructure, one that is more spread around the world instead of reliant so heavily on one Asian nation.

As if President Trump has been reading my mind (new NSA tech?), he Tweeted what can only be perceived as total agreement with my speculation. Okay, so it’s possible he and his staff came up with it without digging into my head, but it eerily coincides with what I’ve been thinking about since yesterday.

The wording of the President’s Tweet is poor. We can’t be “hereby ordered” by the President to do anything outside of the confines of Article 2. But wording aside, the sentiment of the President’s Tweet is sound. We really don’t need China, and while it would be nice if we really could just bring everything home and build it in America, that’s not really what would happen. Some would be brought back to U.S. manufacturing sectors, but much of it will still need to be imported.

But here’s why the President is correct that we might be better off without China. They’ve held the lion’s share of products and resources we import for decades. This is an antiquated and false concept propped up by fears that if we eliminate things with the “Made in China” mark, Walmart’s shelves would be empty and Amazon would have to go back to primarily selling books. Our reliance on Chinese imports is an artificial need in the 21st century. There are plenty of ways to instantly replace China as a producer.

More importantly, there are plenty of countries who will gladly sign free trade agreements with us if China will not.

There’s a secondary, albeit exceedingly important consideration in this equation as well. China is the other world superpower. For years following the fall of the Soviet Union, America enjoyed exclusive status at the top. But over the lest decade, China has emerged as comparable and in many ways superior to us when it comes to specific seats of worldwide power. They have the manpower and natural resources we do not, and in the 21st century they’ve finally learned how to wield this power.

Pulling back heavily on trading with China will adversely affect their government power and international clout. It’s hard to imagine they’d be able to sustain themselves in a real trade war with the United States. They’re simply too reliant on Americans buying their cheap products. Diminishing or eliminating them as a trade partner would rock the financial markets and cause instant turmoil, but it would be a much shorter experience than some believe it will be. Capitalists know how to rebound. We know how to react when the status quo is shaken. China, by its nature as an exporting nation and its cultural adherence to the status quo, will not react as well. They could collapse in a matter of weeks.

China relies on exports. The United States relies on imports. It’s a heck of a lot easier to find sellers than buyers. Other countries will step up to fill our import void if we stop trading with China. But China cannot replace us as consumers.

Update:  And so it begins…

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Democrats

Bernie’s $16.3 trillion Green New Deal is NOT about climate change

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Bernies 163 trillion Green New Deal is NOT about climate change

The world will end in a decade, or something like that. This massively debunked claim is still circulating through radical progressive circles for one reason and one reason only: To terrify the gullible into willfully handing over the power of choice to a redesigned version of Washington DC. This is manifested in part by the Green New Deal, a variation of which Senator Bernie Sanders unveiled yesterday to the giddy excitement of leftists across the nation.

Much of their glee came from his declaration that it will only cost $16.3 trillion. “Only.” Non-partisan estimates have calculated the actual costs of the massive government overhaul as requiring between $50-$110 trillion, so hearing that Bernie’s plan only costs $16.3 trillion is wonderful news to his supporters.

“Only.”

Many Republicans and most Democrats (other than the ones “in the know”) have made the mistake of believing the Green New Deal is a plan to tackle climate change. In reality, climate change is the backdrop upon which apocalyptic changes are to be made to nearly every facet of American life. From how we travel to what we eat to how we build to where we get our power is part of the plan, and as is often the case, the devil is in the details. Daniel Turner, Executive Director of Power the Future, broke down the lunacy behind Sanders’s plan on Fox News.

Bernie Sanders’ Green New Deal is an impossible dream that would be a nightmare

Sanders said Thursday that his plan is designed to battle climate change. But a thorough reading of the document makes it clear that the real goal of the proposal by the self-described democratic socialist is a Big Government takeover of America’s economy.

That’s because the real root of climate change for environmental extremists and socialist radicals like Sanders goes much deeper than our actions and lifestyle choices. They believe our free-market economic system and America itself are at fault – and think a second American Revolution is needed.

Sanders’ plan calls for a complete transition to electric vehicles and green energy by 2030. This deadline is impossible – not because of opposition by the “evil” fossil fuel industry that Sanders demonizes, but because of physics.

As the old saying goes, “facts are stubborn things.” Sanders can’t simply wish them away, nor can anyone else.

There are common sense ways to address climate change, particularly at the local level, that can be achieved sensibly to make communities cleaner. One of the ways the federal government can participate (though their participation is about as unnecessary as the EPA itself) would be to incentivize energy companies to commit to researching affordable ways to harness clean energy. Rather than demonize the oil, coal, and natural gas industries, we should be taking advantage of their energy expertise. Make it worth their while to explore transitioning away from fossil fuels when it makes sense to do so instead of forcing the issue with arbitrary deadlines manufactured through fake science for progressive political expediency. If we harness the energy understanding of these industries to strive for incremental replacements, it will make for a much easier transition when clean energy becomes practical.

Today, as nice as it is to imagine everyone driving a Prius, it’s not realistic. Until clean energy technology becomes much less expensive and logistically feasible, we mustn’t try to force an issue to solve a problem that has been blown out of proportions.

Sanders’s Green New Deal proposal is economic shock and awe. We’re supposed to be shocked by its ambitious (and unnecessary) scope and in awe at the audacity of radical progressives to propose it. They want us to believe it’s transformative. What they don’t want us to know is that it will transform everything, especially the capitalistic principles that have made our nation strong.

The Green New Deal is a pathway to socialism that has been painted green so the gullible will believe it’s about preventing Greenland from melting away. The only things that will melt away if it ever sees the legislative light of day are are freedoms and prosperity.

Make no mistake about it: Bernie Sanders’s “climate change” plan is 100% about establishing a government takeover (takedown?) of the entire United States economy. It will not save the whales. It will make DC a bigger whale than it already is.

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