QUESTION: Mr. Armstrong, You are not against Trump negotiating using tariffs. You argue that they cannot replace the income tax. The 25% tariffs on Mexico and Canada was what you called his Art of the Deal. You are more concerned about Europe. Am I correct?
Bob
ANSWER: Correct. I maintain we do not need income taxes anyhow. They should be eliminated. Do that, and all the companies left will return even if a corporate income tax should be no greater than 15%. I testified on all of that before the House Ways & Means Committee.
My concern is that the real trade war will be with Europe, and they are going to come out of this with the short stick. The EU is unfair in its trade, and they are way too Marxist. Just look at what they have done to Apple, and then they want all sorts of restrictions on Tech. They are the source of Cancel Culture, and this is a postwar problem. As I have explained, my firm became the biggest in the world on foreign exchange advisory mainly because there was this cancel culture in Europe with analysis postwar. An analyst could not say their currency would decline because it was a political statement, and postwar European politicians touted how high their currencies rose against the greenback as proof that they were doing a good job. If you said the currency would crash that was seen as a political statement, and you would be fired.
The European politicians were taking credit for the flow of American capital reinvesting in Europe after the war. The decline in the dollar was aided by the outflow of dollars for (1) military expansion under the Neocons and (2) investment. In 1960, President Kennedy set off a mini-Gold Panic by explaining that the decline in the dollar was because of funding all of these military bases around the world.
The EU has committed economic suicide between its Net Zero policy on CO2 and sanctions against Russia. Our computer warns that the EU is headed into a major recession, if not a depression, between 2024 and 2028, and their beating of the war drums will end up destroying the European Union, which is already fragmenting as they attempt to impose dictatorial control over all member states in direct opposition to their people such as in Hungary.
My concern is that the tariffs that Trump SHOULD impose on the EU will allow them to blame him rather than their own insane and Marxist policies since postwar. The EU is the master chess player when it comes to trade barriers. The likelihood of the EU lasting beyond 2029 is a long shot.
Trump is correct when it comes to tariffs in Europe. The 25% tariffs on Mexico and Canada were NOT a trade war – but were more about drugs and illegal aliens. The tariff of China is really more about the cost of production. It is just cheaper. Back in the 1980s, my accountant had a client who ended up with a loss and a major tax credit of about $25 million. They had no way to make that money back. He asked me to make it for them inside their company. It was in the garment industry, and they made clothes in China and put name-brand names on the items like sweaters. The cost to make a sweater in China was $3. The cost to get it into the USA was $5. They would sell it wholesale to a distributor for $16-$20. They would sell it to a wholesaler or to a major department store for, say, $30, and they would price it for the public at $75+. I learned a lot about import/export back then. That helped tremendously when I had to advise in shipping and even eventually was called in to deal with Onasis’ Estate – yes, the later husband of Jackie Kennedy.
Let’s be honest here. Europe is the MOST trade-restricted partner of the US. They are 10 times worse than China. Why? Because trade barriers are not just tariffs. They also deliberately imposed regulations to frustrate trade and prevent it whenever possible. Even when a European client buys an ancient coin, we have to list where the coin’s origin and its value, all for restrictions and taxes. I had sent a Roman coin to a friend, and they had to go to customs and pay a tax there in Germany. They said thank you very much. Please do not send anything again. That was just a gift.
Trade barriers
Barriers to trade can take many forms. They can relate to:
tariffs
customs procedures
administrative burden
import licensing
standards and conformity assessment
labeling or packaging requirements
unjustified trade defense measures
inadequate protection of intellectual property rights
discriminatory treatment compared to national treatment.
