Rick's December 016 issue of the Oriental Economist covers following topics, Rust Belt voters won’t like the consequences of trade war - Be careful what you wish for, Putin ‘flips the table’ -Trepidation over Trump, NAFTA and Commerce Secretary Wilbur Ross - Can Ross restrain Trump? Japan auto parts firm relies on NAFTA, Proposals to increase electoral power of the young - ‘Silver democracy’.
Key points: - Trump’s dilemma is that withdrawal from NAFTA and high tariffs against China would cause enormous dislocation for American firms producing in the US; 40% of all US imports from Mexico consist of US content embodied in Mexican-assembled of Mexican-finished goods - US exports are highly dependent on imported inputs, e.g. a fifth of every dollar of manufactured exports consists of foreign inputs - US production of manufactured goods in general, and transport equipment in particular, are highly dependent on imported parts and supplies - The countries that send these goods to the US, whether it be Mexico or China or Canada, are themselves part of intricate international supply chains in which their exports contain lots of foreign content, including US content - The global ripple effects from a trade war would be enormous
In his latest alert, Richard reports that Trump’s dilemma is that voters won’t like consequences of what they asked for: withdrawal from NAFTA and high tariffs against China would cause enormous dislocation for firms producing in the US; 40% of all US imports from Mexico consists of US content embodied in Mexican goods and the blue states that Trump turned red in this election, some by very thin margins, are very dependent on both exports to NAFTA and China, and imports from them.