On the EDge: From Harleys to yogurt, the US will surely lose in a tariff war

Composite image. Tariff bomb by pma2010/iStock/Getty Images Plus. Ships by wildpixel/iStock/Getty Images Plus, St. George News

OPINION – I’m hoping that somewhere, somehow there is a plan.

All I see right now, though, is the nasty tit-for-tat haggling as the first volleys of an international tariff war are launched.

Nobody is really going to win this thing.

In fact, it sets up a classic lose-lose result to an imaginary problem being exacerbated by a lack of understanding of the international market, the fragile interdependency of a league of nations being drawn ever closer in matters of trade and a major player unfamiliar with the subtleties of politics, manufacturing and diplomacy.

It is surprising, I would think, to those who bought into the hype that what this country really needed was a good, solid businessman at the helm.

Business, however, does not seem to be the strength of this administration.

While the guy in the big chair may have some familiarity with the ins and outs of commercial real estate investment and development, he clearly doesn’t have a clue beyond those tight parameters.

And he’s about to get hammered in the marketplace.

Harley-Davidson is the first major player to bail.

The tariff war, as it turns out, would hike the price of a new bike imported to Europe from the United States by more than $2,000 as a result of a 31 percent tariff. The Harley badge may be worth a lot to the weekend warriors who like to kick-start their fun but not an extra $2,000 worth. The bikes are simply not that good in comparison.

But bikes made in Europe will not be subject to the tariff, keeping the playing field somewhat level, which is why company CEO Matt Levatich is moving some manufacturing resources.

This, of course, did not play well in the White House, where the president launched a series of threatening tweets aimed at the company.

Levatich really had no choice, however. He answers to a higher authority, the investors who really don’t care where the bikes are made as long as Levatich keeps increasing their return on investment.

Other companies, however, are not so fortunate.

Those in the business of making lawn mowers, motor boats, ketchup, whiskey and yogurt will feel the initial bite of international tariffs set to counter the president’s unwise and unpopular decision.

Yogurt, you might ask?

Yeah, yogurt.

It is but one of the products Canada will hit with heavy levies.

Now Canada does not import that much yogurt from the United States – somewhere in the ballpark of $3 million a year.

So what message is being sent there?

Well, most of those imports come from a plant in Wisconsin, which happens to be the home state of Speaker of the House Paul Ryan.

The heavy taxes on whiskey are, of course, directed at Senate leader Mitch McConnell, who comes from Kentucky, where Jim Beam, Wild Turkey, Maker’s Mark and Woodford Reserve, to name a few of the most popular brands, are distilled.

And while these may seem like specifically targeted payback, there are many more dollars on the table, specifically auto industry dollars that could severely impact U.S. automakers.

Already GM has said that a 25 percent tariff on foreign-made automobiles brought into the U.S. being considered by the administration would result in blowback that would cause them to either raise prices on Chevys or move manufacturing overseas.

This, company representatives say, could lead to less investment, fewer jobs and lower wages that would in turn delay what they termed as breakthrough technologies that would threaten U.S. leadership in the field.

While there are those who would question U.S. leadership in automobile technology, the specter of less investment, fewer jobs and lower wages is not favorable with voters.

Times have changed and current attitudes most certainly invalidate the thinking of former GM CEO Charles E. Wilson who said, “What’s good for the country is good for General Motors, and vice versa.”

Add to that the trade mess the United States has gotten into with neighbors Canada and Mexico, both of which have new leadership that has already expressed its distrust of the Trump administration, and, well, we’ll find out soon enough just how an economy based on isolationism can survive.

We need the goods and services provided from offshore, whether it is in the form of hardware or intellectual property.

The United States simply does not make enough stuff any more. We don’t make computers or televisions or much of anything else and to try to ramp up and become self-sufficient would be impractical and just plain foolish.

Besides, as any economist will tell you, this whole thing about balance of trade or a trade deficit is terribly misunderstood and misrepresented.

What matters more than a trade deficit or surplus is the total level of trade, which is a far better indicator in this realm. That’s why free trade is more beneficial. The upper class will seldom be restricted in its consumerism, but the difference will be demonstrated by the middle and lower economic classes because free trade makes everything much more affordable, thus stimulating more trade, which leads to a healthier economy.

When the country is in economic recession it is desirable to export more than you import because it creates a greater revenue stream and more jobs. When times are good, an increase in imports serves as a form of price controls and a hedge on inflation.

Historically, inflation plagues Republican presidents, particularly during their first terms, as every one of them since Teddy Roosevelt has been responsible for a recession during their first terms. This could be why the president is pushing so hard for this, although I doubt that the administration and its minions have wrapped their arms around that fact and are definitely not prescient enough to actually do something to prevent it.

The overarching problem is that because U.S. consumerism is so high, there is no way to back up the president’s bluff.

Imposing major tariffs on imports will do nothing but hit us in the pocketbook, cost us more jobs and do little to keep investor dollars flowing.

This isn’t real estate, where prices and values can be manipulated and inflated to suit the high rollers who trade amongst themselves in some little insider’s boy’s club. This is global trading, where the stakes are higher and the players much more skilled.

I just hope the president knows when to hold ‘em and most importantly, when to fold ‘em.

I’m not holding my breath.

No bad days!

Ed Kociela is an opinion columnist for St. George News. The opinions stated in this article are his own and may not be representative of St. George News.

Email: edkociela.mx@gmail.com

Twitter: @STGnews, @EdKociela

Copyright St. George News, SaintGeorgeUtah.com LLC, 2018, all rights reserved.

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39 Comments

  • Real Life July 3, 2018 at 4:23 pm

    Your hatred for Trump just oozes from every pore of your body Ed. I often wonder if you, and others on the extreme left, would still hate Trump if he eliminated all nuclear arms or found the cure for cancer. Sometimes I think you should end your columns with “no good days, as long as a Republican is in office”.

    • IPFreely July 3, 2018 at 4:53 pm

      It’s always going to be a pity party for Ed until he gets what he wants. I imagine he was like this as a child. Throwing a tantrum every chance he got.

    • John July 3, 2018 at 5:27 pm

      Trump just introduced a bill to make the air clean… now the libtards will have to hold their breath..resist you morons, resist! hahahahahahahahaha!

    • Bender July 4, 2018 at 12:46 am

      I know Real Life! What is up with these guys who can’t get on board with our dear strong very stable President? You know how Putin likes to get out shirtless and ride horses and do man stuff? Trump would totally do that too if it wasn’t for the Deep State who are really a nanny state who won’t let a strong man be a real man. Completely disgusting how the lamestream media photoshops every Trump picture to make him look like a pudgy dough boy. You go back and look at every episode of the Apprentice and dude, you just know, how smart Trump is. Totally killing it now with the N Korea ( missiles and bombs gone), NATO (very bad), NAFTA (very bad), trade war (easily won) etc. And what an example of manliness — THREE wives, porn star hookups, grabbin ’em where ever. Trump dude drips testosterone. Totally agree with you.

      • Real Life July 4, 2018 at 4:29 pm

        FYI Bender, not a Trump fan. But I am certainly not a Hillary fan either. I don’t agree with every Trump policy. He is right on immigration (like it or not), and wrong on the environment. My point, which you obviously missed, is that Ed and the rest of the extreme left are blinded by their own anger. Got it?

  • IPFreely July 3, 2018 at 4:51 pm

    Hahaha… why do they keep publishing this stoners comments?

  • IPFreely July 3, 2018 at 4:59 pm

    Pot head Eddy is quite the hypocrite. Don’t believe me just check him out on Facebook. “Spread love not hate” “Value others opinions” I guess this only counts if he agrees with you. Gotta love the libtards.

  • dogmatic July 3, 2018 at 5:56 pm

    I don’t read Eddy Boys articles anymore. I go straight to the bottom and enjoy reading the comments.
    Stay away for negative people. they have a problem for every solution.
    Albert Einstein

    • Bender July 4, 2018 at 12:34 am

      Dogmatic — pure respect man. Really. A Trump man like you don’t need to read. In this case Ed espouses mainstream Republican views on trade but you don’t care cause he’s stupid and MAGA and USA USA USA. Ain’t it liberating to be able to say whatever you want to the weak and effeminate Libs now that Trump’s in charge? Our dear president is a strong, domineering man and if we would all just believe, submit and obey we would make billions and billions. I’m guessing you like the submitting part the best. Trump, what a beautiful, beautiful man.

  • DesertBill July 3, 2018 at 6:34 pm

    I have never voted democratic. In fact, I have always voted republican, until 2016. I simply could not vote for a person as bad as Trump. So I’m no libtard. Anyway, one can call Kociela names, which I don’t think furthers a meaningful discussion, but as I read his article it is very consistent with what I have read in other venues. And basic business and economic principles.

    • IPFreely July 3, 2018 at 7:07 pm

      You need to go back to school…

      • John July 3, 2018 at 10:55 pm

        and desertbill wonders why he is broke.. probably wants to pay higher taxes and have open borders too. go smoke some more of that crap with crayon eddy!

        • Bender July 4, 2018 at 12:17 am

          John, I get the feeling that you are still conflicted about your embrace of Trump. Don’t sweat it man. Men like you are just plain happier when being dominated by a stronger personality. Your buy in of the Orange Mouth needs to be complete. Don’t hesitate. A pretend billionaire, reality TV personality who makes you both scared and angry needs your complete allegiance. Give it to him.

          • John July 4, 2018 at 12:59 am

            nobody cares bent one.. nobody friggin cares.. you tired of losing yet?.. you are just as clueless as clogged filter..looks like your mommy raised you to be a PUTZ too!

          • IPFreely July 4, 2018 at 1:09 am

            Hahahaha… sounds like you and Trump need to get a room Bender.

  • tcrider July 3, 2018 at 6:50 pm

    You are exactly right Ed,
    Not only is the U.S. unable to compete on a global basis,
    but there is also a reason many foreign autos are also
    favored by many Americans, its because they hold their value better
    and are more durable.
    In the mean time ignore the pos potus worshipers, and
    it takes a pos to worship a pos.

    • John July 3, 2018 at 7:41 pm

      “It takes a pos to worship a pos.”That’s exactly you worshipping eddy,, takes one to know one big wheeler rider

    • tcrider July 3, 2018 at 7:43 pm

      There is one good U.S. auto maker, that being Ford

      • John July 3, 2018 at 9:17 pm

        Found On Road Dead,, hahahahahahaha!

    • IPFreely July 3, 2018 at 8:01 pm

      Hahahaha… maybe you should move to a more European climate.

      • John July 3, 2018 at 9:18 pm

        rider isn’t allowed to take his big wheel out of the yard!

  • mesaman July 3, 2018 at 8:27 pm

    I don’t read Mr Ed’s crapola. The comments section tells me all I need to know about his meandering and whimpering histrionics.

    • John July 3, 2018 at 9:46 pm

      He wrote this weeks piece with dull crayons and absolutely no research. He is one clueless loudmouth leftwinger! If he actually used any facts his poor little pot addled mind would explode! hahahahahahaha!

    • Bender July 4, 2018 at 12:07 am

      You’re certainly in like company here in the “pile on Ed” comment sewer. Not a reader eh? In your defense it’s tough to struggle through a few paragraphs of well reasoned commentary when your preferred media diet is a strict intake of Fox News blowhards, AM hate radio and Alex Jones. You just do the best you can and we’ll all still be real proud of you. Maybe Ed can put more pictures in his next column!

      • John July 4, 2018 at 1:05 am

        hey bent one, if eddy used a fact in one of his pieces all the libtard heads in St George would explode. All he does is write fictional nonsense that has absolutely NO FACTUAL evidence to back it up. You want to buy it? Go ahead, keep chasing that carrot, you must like losing, because that’s all you are going to get..special ed writes Well reasoned commentary.. hahahahahaha! In crayon written for three year olds,, you are a funny one bent one.. libtards like you are way too easy to trigger and I love the fact that TRUMP lives in your head 24/7 rent free.. LOSER..

      • IPFreely July 4, 2018 at 1:11 am

        I had high hopes for you Bender… but you are too much like Eddy

  • Carpe Diem July 4, 2018 at 7:32 am

    In other news, tariff retaliating Justin Trudeau got himself karma slapped, as he sucks down a large latte of sexual assault charges shortly after he tries to ride the #MeToo movement wave reverberating out of the USA. OOOPS

    Anyway, you can now relax folks. You personally won’t notice ANY of this. Canada farts, and liberals choke. What we need to worry about is liberals having suicides and heart attacks from all the WINNING. Currently the NFL is in the ER. Fixing that puppy up as we speak, but all is not well. Too much TDS is making them all sick.

    My favorite anecdote from all the TDS illness is @KeithOlbermann – who went full rabid with TDS, however since his shrink has given him the cure, he now wont touch Trump on Twitter. Sadly, I guess for her, @Rosie is frothing at the mouth daily and I see bad days ahead for her as Trump will be banging drums in her head for the next 7 years. OMG the humanity.

    • IPFreely July 4, 2018 at 3:50 pm

      Carpe.. Way to be! I salute you!

  • Craig July 4, 2018 at 8:39 am

    We will have to wait and see the outcome. However, looking back Trump makes very few errors, especially with economics.

    Remember, people like you predicted WWIII when Trump took on N Korea. He had the courage to do what no president has ever done. He’s gotten more from N Korea than all the diplomats of the past.

    It would be nice if those on the sidelines simply acknowledged what’s he’s done rather than constantly being wrong predicting a future failure.

    • Steve July 4, 2018 at 4:56 pm

      Craig, maybe you should read the latest headlines about NK’s ongoing nuclear fuel production. Yea, Trumps a real genius and you’re definitely not very observant.

      • IPFreely July 4, 2018 at 9:16 pm

        Steve… I knew a Steve once. You remind me of him. Pompous, blowhard, and really annoying

        • John July 5, 2018 at 12:57 am

          Steve is really bikeandfish..pompous, blowhard and really annoying

  • dodgers July 4, 2018 at 9:00 am

    Despite what Ed says, the trade imbalance is real and is a legitimate problem for our country. And it’s a perfect example of what happens when an issue is ignored by our government, the can kicked down the road; the problem grows larger and the fix becomes more painful. At least our current president is attempting to address this very real problem, which was one of his campaign pledges. And it’s extremely refreshing to finally see someone carry through on their campaign promises. It’s one of the many reasons why he was elected. As for the tariffs, it’s plainly obvious that our president’s goal is fairer trade, including a reduction of the unfair/unequal tariffs imposed on many of our exports. As one example, the EU’s tariffs imposed on imported U.S. manufactured vehicles must be greatly reduced so they’re in line with our tariffs on their vehicles. Of course, they don’t want to give up their cash-cow. There will be some short-term pain, but longer-term we will end up with fairer trade. The EU, China, they have much more to lose. Remember the slogan Buy American, we’ll be doing much more of that and our country will become more self-reliant. Great days ahead Ed!

  • Carpe Diem July 4, 2018 at 1:20 pm

    “No Bad Days” unless you were a free living African America, who then had Barack Obama come by and slap you upside the head telling you that you need to suffer your new found pain loudly.

  • RadRabbit July 5, 2018 at 12:35 pm

    If Americans would simply buy American it would do a lot to help our own. Personally I do my best to buy USA made products whenever possible. My Vacuum is a Riccar made in Missouri, Wallet by Spec Ops Brand of Texas, Hand tools by Snap-on also USA made. I’ve come to find over the years many of these items that are US made are far superior in durability and function compared to the lowest bidder Chinese made junk thats out there and you get the satisfaction of knowing you helped to employ one of your own.

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