Business and finance 2 March 2018

A history of the Trump slump

LOOKING back from the vantage point of 2025*, economic historians are starting to write their analyses of the Trump slump. It seemed to appear from nowhere with the economy growing at around the trend rate (2.3% in 2017) and the stockmarket booming. The abrupt change came in March 2018 when President Donald Trump decided to impose tariffs on steel and aluminium imports. "Trade wars are good and easy to win" he said. Both China and the European Union (EU) retaliated in kind without trying to escalate the tensions. It might have ended there.But unfortunately, the president's more mainstream advisers like Gary Cohn had been sidelined by a more aggressive group that saw the trade deficit as the key measure of economic progress. In this mercantilist view, any American deficit was proof of cheating. Unfortunately, the president had also enthusiastically passed a tax-cutting programme which resulted in demand sucking more imports into the country. The trade deficit widened rather than declined. So in late 2018, just before the mid-term Congressional...Continue reading

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Digital money has made it harder to tip the hotel housemaid

Last summer, Uber at last started allowing its customers to tip their drivers. There was nothing actually preventing them from tipping before. At the end of the ride a passenger could have pulled out his wallet, fished around for change and handed the driver a few dollars. But it would have seemed absurd to do so, when everything else about the transaction was handled through a few taps of the app. The app didn’t enable tipping, so riders didn’t tip.All of this highlights the conundrum for hotel housekeepers. Increasingly, people book hotel rooms through their computers or phones. They pay, and often pre-pay, with their credit cards. They get around town with app-based ride-hailing. There’s a good chance they don’t even carry cash. And yet to tip the housekeeper—or the bellhop or concierge—there’s no option but cash.It is probably no coincidence, then, that tips are tight for housekeepers. According to the New York Times, fewer than...Continue reading

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President Donald Trump wants tariffs on steel and aluminium

WHEN President Donald Trump tweeted “We want free, fair and SMART TRADE,” on March 1st, trade-watchers groaned. Later that day, after months of back-and-forth between the protectionists and the globalists in the White House, he appeared to deliver the tariffs he has long been promising. He announced tariffs of 25% on imports of steel and 10% on those of aluminium. He promised protection “for a long time”, adding “you’ll have to grow your industries, that’s all I’m asking.” According to the New York Times, he told the assembled executives from steel and aluminium firms whom he met before the announcement that he did not intend to exclude any country from the tariffs.Mr Trump’s bid to nurse America’s steel and aluminium industries to health could benefit some workers. There is a global glut of both metals, largely driven by an enormous expansion of China’s production capacity since the early 2000s. That created trade flows to America that over 420 separate anti-dumping and countervailing duties could not fully stem.The avowed aim of the tariffs, though, is national security. Dennis Harbath, who manages the only smelter in America that produces the high-purity aluminium used in some fighter jets, is gratefully preparing to restart some idled production lines as soon as the tariffs are brought in.Seen more broadly, the proposals...Continue reading

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