Where We're Headed

Tariffs.

The very word provokes anxiety in this ol’ Captain.

Is it two Rs or two Fs?

I never know.

Thank God for “autocorrect”… said no one. Ever.

But it’s a word that is thrown around quite glibly in Trumpfworld.

Only 2 ½ months in and he has already levied some tariffs on other countries, and has threatened our American neighbors and favored trading partners – Mexico and Canada.

But then he postponed them.

A supposedly brilliant negotiating tactic.

He is calling tomorrow “Liberation Day”, in which he will announce more and widespread tariffs on various countries – perhaps even a universal tariff on all imports!

All this is doing is making the stock markets queasy.

For instance, on December 4, 2024, the Dow Jones Industrial Average topped just slightly over 45,000. 

On March 13^th the Dow dropped below 41,000. 

 

Right now it is hovering around 42,000 as investors are trying to figure out his next move.

CAPTAIN’S NOTE: That’s my pension we’re talking about!

Trumpf has argued that tariffs protect U.S. industries from unfair trade competition. To some extent, this is correct.

A tariff is designed to raise the price of imports that are produced cheaper than American-made products, encouraging citizens to buy American-made products (thus, more money staying in the U.S.) and enticing American overseas factories to return to the states (bringing back more jobs).

In theory, it puts more money in the pockets of American workers.

In reality, we end up paying the higher American-made prices – even if we choose to buy foreign-made goods.

That will take more money out of our pockets and lead to rapid inflation.

What we have heard about his tariffs proposed for tomorrow will rival those of President William McKinley.

 

CAPTAIN’S NOTE: I don’t know if anyone else has noticed, but Trumpf seems to idolize McKinley, another president who had two terms in office separated by an election loss. He has renamed Denali to Mt. McKinley, he wants to expand U.S. territory to include Canada and Greenland like McKinley did with the annexation of Puerto Rico, Guam, the Philippines, and Hawaii. He wants to win a war like McKinley did with the Spanish-American War.

Perhaps his presidency will end in the same way as well.

What history records, however, is that McKinley’s tariffs is one factor that led us into The Great Depression.

Despite promises of peace and prosperity during his campaigns, Trumpf has recently come around to admitting that his policies might raise prices, increase inflation, and even bring on a recession – “a little pain” he says.

But that kind of pain rarely affects the top 1%, so it’s okay.

Trumpf also insists his tariffs will raise money for our federal government, enough so, he claims, that he will be able to abolish federal income taxes for everyone!

Woo-Hoo! No more federal income taxes!

Just 25-30% more on everything we buy!

CAPTAIN’S NOTE: The Captain’s 2023 tax rate was only 14.6%.

White House trade adviser Peter Navarro told “Fox News Sunday” that the tariffs could raise $600 billion annually.

$600,000,000,000!

But Trumpf is lying about where that money is coming from.

Or he completely does not understand how tariffs work!

Either is a possibility.

The extra fee – the tariff – functions as a tax on imports. The manufacturer doesn’t pay it, the consumer does!

That $20,000 car you are about to buy will soon cost you $25,000.

You!

Not them!

You!

And Navarro estimates some $600 billion per year will be generated by these tariffs!

From your pocket!

Not theirs!

The only way a tariff will ever damage the other country is if Americans stop buying the cheaper foreign-made products.

Walmart tried the “Made in American” experiment several years ago.

  

It failed.

They quickly, but quietly, returned to cheaper foreign-made goods.

Because that’s what consumers want.

And here’s the kicker: Most of these tariffs are being levied, not because we have been taken advantage of, as Trumpf insists, but because someone pissed off Trumpf.

At some point in his life, someone from that country stood up to him, refused him a concession, or made a derogatory comment about him.

So now, as the most powerful man in the world – with the Legislative and Judicial branches of our government firmly embedded in his posterior region – he is exacting his revenge.

And we are paying for it.

Oh, he thinks he is using tariffs to negotiate with these other countries.

But Canada is not backing down. In fact, he has only pissed off some of the nicest people in the world! They are planning retaliatory tariffs on U.S.-made goods, launching boycotts of U.S.-made products like Kentucky Bourbon, and threatening to shut off Canadian-generated electricity to our northeastern states.

Mexico is likewise unbowed.

The European Union is preparing retaliatory tariffs.

And China is forging alliances with Japan and South Korea to push back against Trumpf’s tariffs.

Frankly, the Captain is amazing at how Trumpf is bringing the world together!

Unfortunately, it is only by making us the enemy!

Asked by Fox News’ Peter Doocy whether the White House could shift strategy if its tariff plan fails, Karoline Leavitt, the press secretary, rejected the question. Listen carefully to her response:

“They’re not going to be wrong,” Leavitt said. “It is going to work, and the president has a brilliant team of advisers who have been studying these issues for decades, and we are focused on restoring the Golden Age of America and making America a manufacturing superpower.” (Source: CNN)

“Restoring the Golden Age of America”, she said.

The Golden Age of America…

Here’s the thing, mates.

There was no “Golden Age of America”.

This is a reference to post-Civil War reconstruction, 1865-1902, when people dreamed eloquently of building a better America.

CAPTAIN’S NOTE: Yes, McKinley presided over the tail end of that era.

As Mark Twain rightly pointed out, it was more of a “Gilded Age” than a “Golden Age”; that is, there might have been a slight gold veneer covering some parts.

To be sure, it was a glorious time.

For some.

Engineers were utilizing steel to create soaring skyscrapers, which helped create great metropolitan centers like Chicago and New York.  

An influx of unskilled immigrants also contributed, lending their labor to building infrastructure like the inter-continental railroad.

All of this unregulated growth gave us monopolies and a concentration of wealth, creating the “Captains of Industry” like Rockefeller, Mellon, Carnegie, and Vanderbilt.

Indeed, this period demonstrated the fastest economic growth in U.S. history.

Industrialization led to real wage growth of as much as 40%.

And it demanded higher-paid skilled labor.

Unfortunately, unskilled labor wages did not keep up. 

And rural areas lagged behind.

The rich got richer and the poor got poorer.

CAPTAIN’S NOTE: For a vivid, if fictional, account of this time period, watch the 2013 movie version of F. Scott Fitzgerald’s “The Great Gatsby”. (The book is set in 1922, twenty years after the Gilded Age, but I think you’ll get my point.)

 

By all appearances, campaign rhetoric, and public comments made by Trumpf and his regime, this is their goal when they proclaim “Make America Great Again”!

They plan to recreate the late 1900s as it pertains to the top 1%.

The rest of us – including most of those wearing the red MAGA hats and waving Trumpf flags? Well, to be quite honest…

We’re screwed!

Post Script: this from the Associated Press:

Which tariffs have already gone into effect?

Trump imposed a 10% tariff on all Chinese imports beginning Feb. 4, a levy he later doubled to 20% from March 4 onward. And China has hit back with retaliatory tariffs covering a range of U.S. goods, including a 15% tariff on coal and liquefied natural gas products and 10% tariff on crude oil from the U.S. that took effect Feb 10. China also imposed tariffs of up to 15% on key U.S. farm exports starting March 10.

Trump’s expanded steel and aluminum tariffs went into effect earlier this month, too. Both metals are now taxed at 25% across the board — with Trump’s order to remove steel exemptions and raise aluminum’s levy from his previously-imposed 2018 import taxes taking effect March 12.

Canada and Mexico, America’s two largest trading partners, have also faced steep tariffs. Earlier this month, Trump implemented a partial, month-long delay of his 25% tariffs on both countries — delaying taxes for auto-related imports as well as goods that comply with the 2020 US-Mexico-Canada Agreement until early April.

But other imports are still levied, as well as a lower 10% duty on potash and Canadian energy products.

In response to these tariffs, as well as the new steel and aluminum import taxes, Canada has rolled out a series of counter measures amounting to billions of dollars on U.S. goods. Mexico, meanwhile, has yet to formally impose new levies — signaling it may still hope to de-escalate the trade war, although the country previously promised retaliation to Trump’s actions. (AP)

 ***

"Let Them Eat Cake!"

So, today the Captain was doing a little reading.

By no coincidence I was researching the infamous Marie Antoinette.

 

Born Maria Antonia Josefa Johanna (November 2, 1755), she was the archduchess of Austria.

Born into privilege.

For the sake of a political alliance, at age 14 she was married to Louis Auguste, dauphin of France. Later that same month Louis ascended to the throne of France as Louis XVI, making the young Marie Antoinette queen of France.

Now, Louis XVI was not the smartest of kings; he reportedly had difficulties making decisions.

CAPTAIN’S NOTE: The couple didn’t consummate their marriage for quite a while after their wedding because apparently Louis either didn’t know how to do it or didn’t want to put forth the effort!

That didn’t stop Marie. Throughout her adult life she was accused of promiscuity, with both men and women. 

Several of her pregnancies were suspected of being not the offspring of the King.

She was also (perhaps rightly) known for her lavish spending - on clothing, hairdos, and decorating her living space(s). 

She was also accused of espionage - sending aid and state secrets back home to Austria.

It was none other than Thomas Jefferson who wrote in 1821,

“Her inordinate gambling and dissipations, with those of the Count d'Artois, and others of her clique, had been a sensible item in the exhaustion of the treasury, which called into action the reforming hand of the nation; and her opposition to it, her inflexible perverseness, and dauntless spirit, led herself to the Guillotine."

Jefferson’s conclusion was damning: "I have ever believed that, had there been no Queen, there would have been no revolution."

Because Louis frequently dithered, Marie took an active hand in her husband’s political affairs, so when the French Revolution came and the monarchy was abolished, she was arrested, tried, and beheaded nine months after the king.

 

Marie Antoinette has gone down in history as the epitome of privilege, showing no compassion for the peasants citizens of France, even when food and bread were in short supply.

However, after considerable research, the Captain discovered there is no evidence she ever uttered the words “Let them eat cake!”

CAPTAIN’S NOTE: This line was taken from Jean-Jacques Rousseau’s autobiography, in which he writes, “Finally I recalled the stopgap solution of a great princess who was told that the peasants had no bread, and who responded, ‘Let them eat brioche’.”

Rousseau never named the “great princess”, but the timeline doesn’t fit Marie Antoinette’s history.

So why is any of that relevant?

Last week, U.S. Commerce Secretary Howard Lutnick had a “Let them eat cake” moment on a podcast.

The topic was Social Security.

 

Originally called “Old Age, Survivors, and Disability Insurance” (OASI), the Social Security Act was passed in 1935 as part of FDR’s “New Deal” following the Great Depression. It created a social safety net for the working poor in America.

Employers and employees are each taxed at 6.2% percentage of the employee’s wages, which go into the OASI Trust Fund. Upon retirement, you receive a monthly stipend to help you in your old age. 

Effectively, what the Captain contributes into OASI pays the current retirees while the next generation's contributions will pay mine. 

Between 1983 and 2009, revenue exceeded expenditures. That changed with the onset of retiring Baby Boomers, and now some are saying the OASI funds will be depleted by 2033, a concern that has been discussed at least since the Reagan era.

The current administration in Washington D.C. is working hard to convince the American people that not only is Social Security running out of money, the system is rife with fraud and waste. The poorly-named Department of Government Efficiency is right now sifting through the records of the Social Security Administration (SSA), firing employees, closing local offices - quite literally moving toward shutting down SSA completely.

So what about the more than 70 million Americans currently receiving Social Security benefits? And those of us on the cusp of retirement?

CAPTAIN’S NOTE: According to SSA, of all beneficiaries over age 65, 12% of men and 15% of women get at least 90% of their monthly income from Social Security.

Enter Secretary Lutnick, who thinks shutting down SSA wouldn’t be so bad. In his mind, only those receiving checks fraudulently would complain:

"Let's say Social Security didn't send out their checks this month. My mother-in-law, who's 94, she wouldn't call and complain… She just wouldn't. She'd think something got messed up, and she'll get it next month. A fraudster always makes the loudest noise, screaming, yelling and complaining."

In short, Lutnik, formerly the CEO of a prestigious Wall Street equity investment firm, just had his “Let them eat cake!” moment.

Mates, the Captain has worked with poor folks on many occasions. I have dealt with widows who live solely on their $600 per month Social Security check; a simple thing like a flat car tire can throw their meager budget completely out of whack.

So missing a whole check would be significant.

No. Devastating.

Think about rent. If you miss a month, you could be evicted. And without the resources to pull together a deposit of first-and-last month’s rent, you probably won’t find another place to live.

Think about utilities. If you miss a month, your electricity/water/gas could be shut off. Most utility companies apply a hefty “re-connect fee” after you’ve paid what you owe.

I’m guessing neither Mr. Lutnick nor his 94-year-old mother-in-law have ever had that problem.

I’ll make it personal. The Captain’s own dear mother (who also happens to be 94) is totally dependent on her Social Security check. A small pension and whatever she was able to save while raising four children have evaporated over the 24 years since she was forced aged into retirement. She worked full-time for 28 years, plus some part-time jobs along the way, faithfully paying into OASI to insure a sustainable retirement.

Now that might be taken from her. 

Mr. Lutnick says she won't even notice.

Contrary to popular opinion, your Captain is not a wealthy CEO who can simply give her “a little cash” to tide her over until the checks started arriving again.

“Let them eat cake!” 

Indeed!

Does anyone else remember when President George H.W. Bush was running for a second term in office? A child of privilege, do you remember how he was widely ridiculed because he was so out of touch with the common man/woman? 

Because he did not know how much a gallon of milk cost! 

That was a pivotal moment that cost him the election.

I miss those days.