Donald Trump’s return to the White House may be good for the West. As expected, the stock markets approved and appear to be prospering. Gold has lost a bit of lustre, whilst Bitcoin soared from $68,000 to $89,000—about 30% for no economic reason.
Trump is very much about making America great again. He is pro-business and against socialism and free trade. He is all for imposing tariffs where necessary.
Is he right?
Humanity is faced with many differences. It is within these differences that each citizen of every country across the world is allowed to be dynamic and not stayed.
Here is an old joke about the European Union:
In Heaven:
The car mechanics are German.
The police are English.
The lovers are Italian.
The chefs are French.
And it is all organised by the Swiss.
In Hell:
The police are German.
The car mechanics are French.
The chefs are English.
The lovers are Swiss.
And it is all organised by the Italians.
There may be a bit of truth in the above.
Each country has a different background of land prices, cultures, languages, and cost of living. Even though this is not perfect, it is very effective in keeping the diverse culture of humanity alive. It is this diverse culture that makes this world worth living.
Per Adam Smith, the Scottish economist and philosopher, free trade allows for the more efficient production of goods by a country that has a competitive advantage over another.
In the old days, free trade was very beneficial, but in current times, nearly all countries can produce most things.
Trade has become more political. There are some places on earth that are real sweatshops, capable of producing anything for next to nothing—almost slave labour. These goods find their way into countries where more respectable wages are paid and inevitably undermine their industries.
Tariffs are vital to all economies so that their cost of living can be taken into account, and all goods on sale in that country are sold on a more level playing field. Choice of purchase then becomes a matter of taste rather than unfair prices.
The current free trade crisis involves China and electric cars. China’s cost of living is relatively low compared to the USA. Therefore, the cost of producing goods in China will be cheaper. These days, China can also manufacture anything that the USA can, and vice versa.
To impose or not to impose tariffs on Chinese electric vehicle imports into America is the Trump question. Some are of the opinion that it would be bad to impose sanctions on imports to the USA from China, as this would drive up car prices and inflation, making life more difficult for the American consumer.
But on the other hand, at least the consumer still has a job!
Today, wars are not only fought on the battlefields but also in trade meetings between politicians. Weak politicians give too many concessions and lower tariffs in the name of free trade.
Life is never perfect, but it can be successful.
We wish you a Merry Christmas and all the best for 2025.
Nick Russell
and all at Pinto Russell
Certified Financial Planner CFP®
Please note: This article does not constitute advice