Confused about the Trade War? Think NAFTA, and it all makes sense.

Yesterday, Trump announced that he is considering substantial tariffs to help the steel and aluminum industry in the USA.  While the final details are expected to be discussed next week, the proposed tariffs are 25% for steel, and 10% for aluminum.

Watch President Trump discussing the proposed tariffs:

It didn’t take more than a few nanoseconds for everyone to freak out… not only the expected MSM anchors and pundits, but some of his ardent supporters freaked out as well.

According to MSM and all of the pundits, we will all go broke buying things now, because of these proposed tariffs.  The talking points on various things kept escalating as the hours ticked on in the day.  For instance, using a new car as the example, the talking points went from a car being much more expensive, to a car being completely unaffordable and out of reach for most Americans.  It was almost as if every anchor and pundit kept trying to out-do the previous anchor/pundit,  to create the most panic possible.

Peter Navarro, Assistant to the President, and Director of the WH Trade Council, explains it quite differently than all of the pundits, who seem to be running around with their hair on fire.  Watch Peter Navarro below, on Fox Business with Maria Bartiromo:

If you watched the video, you would have come away with a few very important points:

  1. Cost of a 6-pack of beer (or anything else produced in aluminum cans) = + $0.01
  2. Cost of a new car = + $45.00

These are obviously not completely obscene additional costs, to the average consumer.  And while it’s true that every penny counts, it is certainly a worthwhile expense to save our dying (and critically important) steel and aluminum industries…. especially if the end game is to have a self-sustaining country.

Another important point in the video was a breakdown on the largest exporters of aluminum (i.e. who we import our aluminum from, right now.)  Did you catch it??  Canada was the largest exporter, by FAR, at 43.2%.  That’s interesting, isn’t it?

So now let’s look at the Steel exports (or rather, who we buy our steel from.) Take a look at the numbers from the US Census, for fiscal years 2016 and 2017.  The first numbers on the list are North America (Mexico and Canada) and what looks like 8.8 Million, is really 8.8 BILLION (the chart stipulates the values are per in 1,000 dollar amounts) – which is a number toppled only by the entirety of European countries.

SO, let’s all sit back and look at the chess board for a moment, shall we?  We know that renegotiating NAFTA is a high priority issue for President Trump, and we also have been hearing rumors that the renegotiations have not been going all that well… mostly because the 2 other countries involved in NAFTA (Canada & Mexico) don’t want things to change.  They have been living high on the hog for a very long time, thanks to NAFTA.

With renegotiations at a stalemate for NAFTA, and with Mexico upset with companies leaving Mexico to return to the US, and with Justin Trudeau making a FOOL of himself in India and other countries right now… NOW is the time to shake things up and create leverage for the renegotiations of NAFTA.

In my opinion, this also creates a position of strength for the renegotiations of trade with all of the OTHER countries that have a huge trade deficit with the USA.  They won’t want tariffs imposed on them either (even though they have had tariffs on USA products for a very long time.)

In my opinion, things will get really tricky with China, when it comes to the trade deficit.  Not only do we still need China’s help with “Little Rocket Man” in North Korea, but tariffs on Chinese products WILL have a big impact on Americans.  We don’t want that.  However, with tariffs slapped on other countries, China will be more apt to discuss changes to the trade deficit with China… so the long-term goal has a chance this way.

Feeling better yet about the whole tariff situation now?  I sure hope so!  Things will certainly be more tense next week, as the details are ironed out…. but please remember that President Trump is usually at least 5 chess moves ahead, all while his chess board is chock full of much more complicated issues than our own chess boards!  I don’t know how he does it… I really don’t!

So please stop worrying, and please stop listening to all the pundits running around with their hair on fire. If paying a penny more for aluminum canned products has you upset, get products in glass bottles instead – it’s better for you anyways!!  🙂

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