E Trump May Shrink Shipping And Air Shipping Capacity Utilization

While investors are banking on total increases in US exports, there is simply no guarantee that this increase will be met with no resistance. These nations mentioned above are not going to welcome US goods and those who own ships like South Korea are certainly not going to want to pay for US infrastructure, as Donald Trump is likely to demand. 

And China has already threatened to stop selling IPhones if tariffs are imposed. This could be a serious mistake, because, while the US imports more from China than it exports to China, the Chinese market is massive. The Chinese publication said this about IPhones, other products, and tariffs:

China will take a tit-for-tat approach then. A batch of Boeing orders will be replaced by Airbus. US auto and IPhone sales in China will suffer a setback, and US soybean and maize imports will be halted. China can also limit the number of Chinese students studying in the US.

It appears that Donald Trump seemingly wants to socialize trade. Yes, it appears his minions also support socialized trade, where the US controls this and that about trade, through tariffs and other means. This attempt to return to the old days could be fraught with danger. And this policy can't be a legitimate Republican principle. 

And yet, the Republicans sided with Obama when he slapped a large tariff on Chinese tires in 2009. Yet these tariffs did nothing to increase employment in tire manufacturing in the USA:

What is also clear is that the tariffs did not turn the tide in employment for the U.S. tire-making industry. Data from the Commerce Department show that domestic tire-manufacturing employment has continued a long and steady decline — to 43,197 in 2012 from 49,715 in 2007 and 63,842 in 2002, reflecting in part productivity gains as well as declines in total output.

And, as we know, the price of tires has soared. While foreign tire manufacturers may come to the US under Trump rules, and a South Korean company has established a tire plant in Macon, Georgia, these nations could be put off by a trade war. 

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Disclosure: I am not an investment counselor nor am I an attorney so my views are not to be considered investment advice.

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Comments

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Norman Mogil 2 years ago Contributor's comment

#Trump will rue the day he decides to take on the world on trade issues. With over 100 countries individually running a trade surplus with the US, it will be impossible for the Administration to have any meaningful turnaround in the US current account. Lots of bluster with no real impact.

Gary Anderson 1 year ago Author's comment

Here we are a year later, prof., and our POTUS is really attempting to control world trade, not just China trade. He is warring against everyone, and is taking a big risk with the economy.

Norman Mogil 1 year ago Contributor's comment

Gary, there is the whole other side of the international trade issue with China and the US. The international capital account is starting to draw attention. China can devalue the yuan to offset the US tariffs, although that might lead to an outflow of capital from China. But it is a very effective weapon.Or, China can sell US Treasuries, drive up yields and mess with the US financial markets. This is less likely scenario, but one that should not be discounted.