So Is The Economy Robust Or Not?

That might be a little confusing if all you are working with is the president’s tweets. Last week the economy was roaring because of the president…great employment rate…record Dow…you know stuff like that. He managed to intimidate the Fed into lowering their benchmark rate. Bigly robust economy. And then?

Any weakness in the economy is directly related to a weakening confidence in the president’s tariff war. Not the Fed who really don’t have room to give ground in case there is a real crisis in our future…and then they won’t have the tools to remediate it.

I put more trust in the economists at the Fed that a president who can barely spell in his tweets and had gone bankrupt how many times in his business life?

btw: other central banks are most likely reactions to the recent change at the Fed.

Are Trump’s Actions Killing Harley-Davidson

Over that past few years, Harley-Davidson has struggled as the market for their heavy duty road motorcycles has languished…because their American audience is aging out. And as they’ve slowly started to restructure…offer new motorcycles that appeal to a younger audience…their marketing efforts are style falling short of the mark.

And then we have candidate Donald Trump promise to restore America’s manufacturing might…and touts icons of American industry like Harley-Davidson on the campaign trail…and then as President Donald Trump…wounds them deeply with tariffs on imported steel and aluminum.

Of course Harley uses those elements in manufacturing their products…but predictably other nations enact retaliatory tariffs of their own. The European Union for instance increased their tariff on Harleys from 6% to 31%. Criminy…I can’t imagine many businesses that can withstand a cost increase of 25 percentage points without taking a hit in sales. And that’s exactly what’s happening to Harley.

Struggling with fallen demand for motorcycles and a steep tariff on its bikes sold in the European Union, Harley-Davidson Inc. on Tuesday reported a 26% drop in quarterly profit and said it would consider assembling bikes in Europe. 


Last summer he (the president) chastised Harley after it announced plans to move production of motorcycles destined for the European Union to Thailand, in response to the EU raising the tariff on American-built bikes from 6% to 31%. 

So what is the president’s response? I bet he dispatched his best trade negotiator to Brussels…right? Well not exactly!


Meanwhile, President Donald Trump threatened to step up the trade war with the European Union over tariffs imposed on Harley and other American companies.


“So unfair to U.S. We will reciprocate!,” Trump tweeted…”

Tuesday, rather than attack Harley, Trump focused his anger on the European Union for its tariffs that came in retaliation after the president placed tariffs on foreign steel and aluminum.

Tit for Tat trade wars are not the answer in a 21st Century world…the president and his advisors continually ignore that and continue to live in 1975. That’s not going to help Harley much…as the EU continues to retaliate against the Trump tariffs:

And with the EU’s tariff, essentially an import tax on Harley that’s scheduled to climb to 56% in June 2021, the company said it was reviewing all options including setting up a motorcycle factory in Europe.

The president isn’t happy about Harley…he’s not happy about their potential European plant. But guess what Mr. President…that’s how business rolls when it needs to maintain its market and its profitability…they don’t want to be a Trump Casino…if you catch my drift.

And by gosh, I’d like to see Harley’s next anniversary gig here in Milwaukee!!!

Sen Johnson sez US becoming Soviet-type economy!

They are ice skating in hell today…I agree with US Senator Ron Johnson (R- WI) for the most part. Senator Johnson has some issues with the president’s tariffs and their effects on the American farmer and the cockamamie fix proposed by the White House:

Republican U.S. Sen. Ron Johnson ripped the Trump administration’s plan to provide $12 billion in trade assistance to farmers hurt by tariffs, likening the measure to a Soviet-style economy.

According to Politico, Johnson told reporters Tuesday: “This is becoming more and more like a Soviet-type of economy here: Commissars deciding who’s going to be granted waivers, commissars in the administration figuring out how they’re going to sprinkle around benefits.”

Johnson has raised concerns with President Donald Trump about tariffs set on steel and aluminum exports. He claimed those tariffs and retaliatory measures by America’s trading partners have hurt businesses in Wisconsin and elsewhere.

“Time and time again I’ve heard from farmers that they want trade, not aid,” Johnson said in a statement. “Instead of throwing money at a problem we’ve helped create, the better option is to take action to make it easier for our farmers — and manufacturers —to sell their goods at fair prices to consumers around the world.”

Well…I agree…the tariffs have complicated world trade…not solved any of the actual issues concerning the president…in the meantime real Americans of every stripe are being harmed. Its usually best to leave long term agreements in place and start tweaking around the edges instead of creating crises you can’t manage…with unintended consequences galore (although economists would tell you that these aren’t unforeseen consequences from their perspectives).

I will also give Sen. Johnson credit for meeting with Wisconsin businessmen and farmers and listening to their concerns…and then taking the next step and voicing those concerns in Washington. Maybe he can finally leverage his self proclaimed businessman cred and get the tariffs removed.

additional reading if you are so inclined: Trump offers help to farmers hit by escalating China trade war

Where Is Governor Walker On Tariffs And International Trade?

While the White House spins out tariffs and threatening rhetoric against our allies and other trading partners, some Wisconsinites are going to be hard hit by the retaliatory tariffs and actions from our aggrieved partners.

But meanwhile back at the state that is open for business, we have actual businesses concerned and complaining about the effects that the tariffs will have on their…well their business.

For instance:

“I do recognize this is probably a negotiating tactic … the administration is using, but in the meantime real families are being crushed by these tariffs right now,” said Doug Reigle of Regal Ware, a company with 200 employees in West Bend that makes cookware and small kitchen appliances.

“We ship our products all over the world — 65 percent of our revenue comes from outside the United States … and the tariffs are hitting us especially hard,” said Reigle, who said his firm has already spent about $150,000 this year to cover the tariffs.

All of Regal Ware’s aluminum comes from Canada.

“We can’t even buy it in the United States,” Reigle said. “Our competitors, which come from all over the world, aren’t subject to these tariffs. … So I’m now at a 25 percent disadvantage immediately on all those products.”

Or:

U.S. agriculture is bearing the brunt of the countermeasures already imposed by Mexico, equivalent to $2.62 billion of the targeted products.

That includes $387 million in tariffs on U.S. cheese, according to a report from S&P Global Market Intelligence, which tracks global commerce.

About 90 percent of Wisconsin milk is turned into cheese, and 90 percent of that cheese is sold outside of the state’s borders.

“Dairy farmers and processors simply cannot afford a trade war that will choke off access to major partners,” said Brody Stapel, a dairy farmer from Cedar Grove and board president of Edge Dairy Farmer Cooperative.

Mexico buys nearly a quarter of all dairy products exported by the U.S.

And earlier this week, we have the report that area builders can’t build in demand starter houses because costs are rising…and only more expensive houses ($300,000 and up) are being built.

Last year, the federal Commerce Department concluded that Canada is subsidizing its forestry industry and exporting lumber to the U.S. at prices that are unfairly low. As a result, the U.S. put tariffs of more than 20 percent on Canadian lumber.

About a third of lumber used in the U.S. is imported, and about 95 percent of that is Canadian softwood lumber, said Dietz (Robert Dietz, chief economist for the National Association of Home Builders).

“So the result is that lumber prices have skyrocketed,” Dietz said. “In fact, since the start of 2017, lumber prices are up 63 percent. That’s adding about $8,000 per single-family home and almost $3,000 per multifamily unit.”

So where is our governor? Don’t tell me hie isn’t involved with trade. He’s taken his share of overseas trips to promote trade for Wisconsin…both for exports of Wisconsin products and finding sources for investments in Wisconsin. And then of course there’s the Foxconn thing.

But really…he’s running for re-election. If US Representative James Sensenbrenner (from the first linked article above) is getting an earful on tariffs and trade issues, I would imagine the governor is too. But nary a peep. Wouldn’t bringing these issues up be good for his campaign? Won’t it play well with small manufacturers all over the state who may be affected by this? Won’t it play well with family dairy farms? Even some of his big money donors have to be concerned on how a trade war will affect them. But not a peep. Or are we so mired in tribal politics now, that it isn’t the economy, stupid?