No Trade Retaliation — No War

It seems like the experts are always wrong. Especially the lefty mainstream so-called conventional wisdom experts.By this time six months into President Trump’s second term, we were supposed to have a continuous stock market crash, with sky-high tariff inflation and bottomless tariff recession.And none of it has happened. The single most important reason why it hasn’t happened is that there has been no trade retaliation against Mr. Trump’s reciprocal fair trade policy, and no trade war.The opposite is occurring.Feature Mr. Trump’s comments this morning to reporters about his meeting yesterday with the Fed head, Jay Powell, at the Taj Mahal on the Potomac.“I think we had a very good meeting, forgetting about the building that’s out of control and all that. But I think we had a very good meeting on interest rates.”Mr. Trump added that Mr. Powell “said to me very strongly, the country is doing well. He said, congratulations. The country is doing really well. And I got that to mean that I think he’s going to start recommending lower rates.”This morning’s Wall Street Journal poll shows that nearly half of voters rate the economy as good or excellent under Mr. Trump. With a huge increase of 11 points over the past four months alone.The S&P 500 stock market index is up 28 percent in the last four months.There’s probably some kind of linkage between the two measures — since the vast majority of voters own shares in the stock market.Here’s the key point: There has been no trade retaliation, and therefore no trade war.This is where the experts were completely wrong.Instead of a trade war, countries around the world want to do business with the United States and its largest economy in the world. And they want to do business with Mr. Trump — who is a man of action, who will defend America, and is not afraid to make a deal.We are getting a peaceful resolution of trade differences and a peaceful resolution of a broken world trading system. And this is an enormously positive contribution by Mr. Trump. And. of course, the experts completely missed it.Recent trade deals with Japan, Indonesia, the Philippines, and the United Kingdom confirm what the president has been saying all along — that he is going to stand up for American economic interests, but he’s more than willing to make a fair and reciprocal deal with our trading partner.There’s still a lot more to be done.Yet the master dealmaker might have a couple of new cards up his sleeve.The European Commission president, Ursula von der Leyen, is going to meet him in Scotland this weekend. Something very good can happen there.Communist China is still the biggest unresolved issue, and probably one that concerns investors the most. Yet that situation was calmed after a rocky start.And Treasury man Scott Bessent will meet with the Chinese at Stockholm this coming week to try and make further progress.A headline in today’s Journal: “Trump’s tariffs are being picked up by corporate America. Neither consumers nor foreign countries are assuming much of the tariff burden.”I’d say that’s a partial truth, but an interesting one.Although there’s plenty more work to be done, it looks like a trade deal template with a 15 percent tariff on our trading partners is where Mr. Trump is headed.Using back of the envelope numbers, 15 percent of $3.3 trillion of goods imports gets you to almost $500 billion in tariff revenues per year, or $5 trillion in tariff revenues over 10 years.That’s a sizeable piece of change.It should not be wasted on temporary tax rebates, but should instead be part of a full-scale flat tax reform and simplification plan.Whatever the final outcome of Mr. Trump’s new pro-America first trade policy — which is asking foreign countries to pay up a modest sum for the privilege of doing business in America or tapping into our consumer market — contrary to what the so-called experts told us, that policy is doing very well.From Mr. Kudlow’s broadcast on Fox Business Network.

No Trade Retaliation — No War

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