Trump tariff tantrum targets typical taxpayers—and tomatoes

06-03-19 Trump as tomato 2

June 3, 2019 by David Silverberg

Another day, another tariff and more pocketbook pain for the everyday people who play by the rules and pay their taxes.

This time it’s a 5 percent tariff on all Mexican goods that President Donald Trump is threatening to impose. He announced last Thursday, May 30, that the tariff would go into effect one week from today, on June 10. After that it’s 10 percent on July 1, 15 percent on Aug. 1, 20 percent on Sept. 1 and 25 percent on Oct. 1, after which the 25 percent rate becomes permanent.

The tariffs are intended to force Mexico to stop the movement of Central American migrants to the US border.

As was the case when he last threatened to close the U.S.-Mexican border, Trump may be lashing out at Mexicans and Central American migrants but it’s everyday Americans who will feel the lash.

Prices for everything are going to rise if this latest tariff goes into effect. Tariffs both disrupt international trading relations and serve as an effective tax on the American consumer.

This is the case for Southwest Florida as much as the rest of the country—and indeed, while much of the focus on the tariffs’ impact has been on the states directly adjacent to the southwestern border like California and Texas, Florida has a flourishing trade with the neighbor to the south that stands to take a big hit.

Florida’s trade with Mexico is substantial. In 2018 imports and exports of merchandise were worth $6.8 billion, according to Enterprise Florida, the state’s economic development organization. Top Florida exports to Mexico included civilian aircraft, engines and parts; pleasure boats and yachts; and cars. Top imports from Mexico included cars, trucks and gold. Mexico is the third largest export market for Florida companies after Brazil and Canada.

06-02-19 Florida-Mexico trade trends under NAFTAAlso, Mexicans have been investing in Florida real estate, particularly in the southern part of the state, according to the RealWealth Network.

06-02-19 Florida-Mexico trade as of 2017

As with all his tariffs, a chorus of voices, including many who are traditionally conservative, are speaking out against this latest round of unnecessary trade measures.

One of the most surprising critics was Sen. Chuck Grassley (R-Iowa), a normally staunch conservative and chairman of the powerful Senate Finance Committee. “Trade policy and border security are separate issues. This is a misuse of presidential tariff authority and counter to congressional intent,” Grassley declared in a May 30 statement. “I support nearly every one of President Trump’s immigration policies, but this is not one of them. I urge the president to consider other options.”

Lawmakers, experts and officials are also worried that Trump’s arbitrary tariff imposition will threaten negotiation of the US Mexico Canada Agreement, the successor to the North American Free Trade Agreement, which Trump trumpeted as a vast improvement to its predecessor.

As with all tariffs, it’s consumers—in Southwest Florida and around the nation—who will suffer as prices rise. From fruits, nuts and vegetables to beer and tequila, to home appliances and cars, the cost of all Mexican imports will rise.

Fun interactive activity: Check the “Made in” labels of home appliances like washers and dryers and see how many are made in Mexico.

“Duties are harmful to the American consumers,” Lance Jungmeyer, president of the Fresh Produce Association of the Americas, told NPR. “It’s a tax on consumers. And that’s the wrong way to go with fruits and vegetables.”

Tomatoes are likely to be the first product that Trump’s tariffs will squeeze in the shopping cart. Florida tomato growers had been pushing for restrictions on Mexican tomatoes for some time, as riper Mexican tomatoes grabbed a larger share of the market. Now the growers may get their wish—but it’s everyday shoppers who will get juiced.

Liberty lives in light

© 2019 by David Silverberg

Trump tariffs poised to impoverish seniors, retirees in SWFL and nationwide

RetiredSand and surf may soon be all that’s affordable for SWFL’s seniors.

May 16, 2019 by David Silverberg

Tariffs of 25 percent imposed by President Donald Trump on 5,000 different Chinese goods will likely raise consumer prices across the board, with especially devastating impacts on people with fixed incomes like senior citizens and retirees.

This is likely to be particularly painful in Southwest Florida with its high proportion of fixed-income residents.

According to the US Census Bureau, of Lee County’s 754,610 residents (as of July 1, 2018), 28 percent were 65 years old or older, thus likely to be on a fixed income. Of Collier County’s 378,488 residents in the same period, 31.5 percent were 65 years old or older.

Trump’s escalation of his trade war with China, China’s retaliation and the current impasse in negotiations will likely result in higher prices on all goods, including groceries. A wide variety of goods are affected and product categories include raw materials for manufacturers, cars, electronics (vacuums, televisions), large appliances (washers, driers, air conditioners), clocks and watches, furniture and bedding, glassware and ceramics, precious jewelry and head gear.

Brett Biggs, Walmart’s chief financial officer, warned that consumers would feel the pain. “As we have said before, our goal is to be the low-price leader,” he said on CNBC today.  “We want to manage margins with customers and shareholders in mind. We have mitigation strategies that have been in place for months. But increased tariffs will increase prices for customers.”

Grocery items affected include fruits, nuts, vegetables, meats, pasta and breads.

“As is so often the case, the weak will only get weaker as a result of the higher prices that these tariffs will bring. Lower-income Americans, small businesses and retailers already stressed will feel the pain most,” wrote Pamela Danziger, retail reporter for Forbes.

While Social Security may see a 1.7 percent cost of living adjustment next year, it may not cover the cost of goods if they rise too high. The Senior Citizens League, an advocacy group for senior citizens and Social Security recipients, found in a report released on Monday, May 13, that despite cost of living increases since the year 2000, Social Security benefits have actually lost 33 percent of their buying power since then.

“One would think that a higher cost-of-living adjustment in 2019, combined with relatively low inflation, would lead to an improvement of buying power in Social Security benefits,” Mary Johnson, a Social Security policy analyst for the League and the study’s author explained in a statement accompanying the report.  “But any improvement was offset by spiking costs of essentials, including out-of-pocket spending on prescription drugs.”

Those expenditures will likely soon include anything manufactured or imported from China.

Liberty lives in light

© 2019 by David Silverberg

Analysis: Trump’s border shutdown will mean pain in the pocketbook for SWFL

04-03-19 surprised-grocery-shopping-woman

April 3, 2019 by David Silverberg

The big, immediate headline after President Donald Trump threatened to close the US border with Mexico was that the American avocado supply would dry up in three weeks.

That would certainly hit Southwest Florida, even though the state is a major avocado producer. Still, although an avocado shortage would hurt a lot of local restaurant menus, most Southwest Floridians could live a few weeks without guacamole.

But more seriously, the local impact of a border shutdown would depend on its extent and its duration.

For consumers, it would immediately be felt most keenly in the grocery shopping cart, later at the gas pump and possibly in a recession.

The closing

Trump announced the possible border closing during his visit to Lake Okeechobee on Friday, March 29, managing to divert national media attention from his supposedly great efforts on behalf of the Hoover Dike and the Everglades.

Since the offhand announcement, the administration, facing an uproar over its implications, has clarified that it would not apply to truck traffic (which is also one of the major means of drug smuggling into the United States).

Precise details of the closing remain sparse because the possible closing was hardly a carefully considered or vetted policy. Its nature and extent continue to rest on the whims and moods of Donald Trump. On Tuesday he reiterated his threat. “If they don’t stop them [migrants], we are closing the border. We’ll close it. And we’ll keep it closed for a long time. I’m not playing games,” Trump said.

Having lost the battle of the US government shutdown, it seems he’s seeking to shut down something new.

This prompted a rare dissent from even so staunch a Trump enabler as Sen. Mitch McConnell (R-Ky.), the Senate majority leader. “Closing down the border would have potentially catastrophic economic impact on our country,” said McConnell on Tuesday. “I would hope we would not be doing that sort of thing.”

Even conservative economist Arthur Laffer, inventor of the “Laffer curve” during the administration of President Ronald Reagan, said that a border shutdown “will hurt us a lot.” US-Mexican trade is “a win-win game on trade,” he said during an interview on Fox News.

Pain in the produce aisle

Mexico is currently the US’ third largest goods trading partner, according to the US Trade Representative. As of 2017, the most recent year for which statistics are available, US and Mexican two-way goods trade totaled $557.6 billion. Goods exports totaled $243.3 billion; goods imports totaled $314.3 billion. The U.S. goods trade deficit with Mexico was $71 billion in 2017.

The primary goods imported from Mexico were vehicles, electrical machinery and machinery, optical and medical instruments and mineral fuels like oil.

Since Southwest Florida is not a center of commerce or immigration and has no cross-border transportation, a border shutdown would not initially be felt by businesses here.

But a border shutdown would be felt by every American consumer and Southwest Floridians are no exception. Costs would rise exponentially, particularly for foodstuffs.

Mexico is the largest supplier of agricultural imports to the United States. In 2017 that trade totaled $25 billion. Leading categories included fresh fruit ($6 billion), fresh vegetables ($5.5 billion), wine and beer ($3.3 billion), snack foods ($2.1 billion), and processed fruit and vegetables ($1.5 billion).

Suddenly, these goods would become scarcer and prices would rise for all foods, even those produced in Southwest Florida like tomatoes and strawberries. Southwest Floridians would be facing substantially higher food bills.

Pain at the pump

A border shutdown would have big implications for oil and gas, both for consumers and for Southwest Florida itself.

There would be substantial pain at the pump. The US imported $11 billion in mineral fuels from Mexico in 2017. A US-Mexico border closing, coming on top of sanctions placed on Venezuelan oil would drive up gas prices even further than the significant increases felt over the past month. Southwest Floridians would know that there’s a border shutdown every time they filled the gas tank.

But then, with oil prices rising, exploring, exploiting and extracting Florida’s oil, both in the Everglades and offshore, would become much more attractive and urgent to oil companies. The combination of oil industry profit-seeking and the Trump administration’s environmental indifference would nearly guarantee drilling off Southwest Florida’s coast and in the Everglades, although that would take several years to implement.

Southwest Florida would feel a double whammy from a border shutdown: both high gasoline prices in the short term and a degraded environment in the long term.

Pain in the pocketbook

As stated at the outset, the full impact of a Mexico border shutdown would depend on its extent and duration. The longer the shutdown, the greater the pain and expense and the deeper the effects would be.

What can be stated with certainty is that Trump is systematically impoverishing the United States just as he bankrupted his gambling casinos. The US national debt has now ballooned 77 percent in the first four months of fiscal year 2019 to $310 billion, up from $176 billion the previous year. Under Trump the trade deficit has reached over $100 billion, going from $502 billion in 2016 to $621 billion in 2018, an increase of 19 percent. Particularly hard hit is the once healthy and thriving US agriculture sector, with previously prosperous farmers now having to rely on government aid due to an unnecessary trade war with China.

A border shutdown would deliver a blow to the economy as a whole and consumers across the nation and would be particularly painful in Southwest Florida with its population of retirees, seniors and people on fixed incomes who would have difficulty coping with skyrocketing food and gas costs.

Even the threat of a shutdown is proving disruptive and disturbing to commerce and consumers.

The conclusion is clear: an unnecessary and absurd border shutdown is no way to make America great “again.”

Liberty lives in light

To read more about the impact of Trump trade policy on Mexican beer imports, see: “Farewell, my little Coronitas!”

©2019 by David Silverberg