Hyundai

When Hyundai started its new plant in Georgia in 2022 to build electric cars, many people wondered about such a decision. The future of EV’s was in question at the time and even more so today. At the grand opening this week, the talk was slightly different with no mention of EV’s but talk about hybrids. Will this change again and move toward gasoline cars? If the US introduces tariffs on imported cars, Hyundai will be encouraged to produce gas power cars here in the states. The demand for Hyundai will be high, at least at the start, as other companies try to build new production plants here in the US. This plant is designed to produce 500,000 cars per year and the demand will be there if imports slow down because of tariffs.

France

This week, after a nine-week trial, Marie Le Pen and 24 others from her campaign were convicted of misusing $3 million dollars of European Parliament funds to pay for party staff between 2004 and 2016. All have denied the charges. It was established that these people were working for the party but had no specific task. Until this week Le Pen, the leader of the far-right party, The National Front, was the likely winner in France’s next presidential election set for 2027. She was banned from holding public office for the next five years.

Cars

Those who profited from globalization are concerned as Trump leads the world away from the old established ways and into the make America great world. The news is predicting a downturn in the world economy as one of the first changes takes place this week. Trump is introducing reciprocal tariffs. This means that if any country charges tariffs on US goods the US will charge an equal tariff on that country’s goods. This shows how dependent the established order is on current tariff practices of discriminating against the US. The US is merely promoting the concept of free and fair trade. The world likes the free part but not the fair part. For many decades Europe has had a 10% tariff on US auto imports while the US has a 2.5% tariff on auto imports from Europe. Trump is about to change that and here is the response from Europe. “I deeply regret the US decision to impose tariffs on European automotive exports,” von der Leyen said in a statement released late Wednesday evening. “Tariffs are taxes — bad for businesses [and] worse for consumers equally in the US and the European Union.” A much better approach would be for Europe to reduce their tariff to match those of the US at 2.5%. When both sides are charging the same, they can take the next step and remove the tariffs. In 2024 8 million cars were imported to the US mostly from Europe and Asia. In contrast 300,000 US cars were exported to Europe. Less than 1% of cars sold in Japan are US imports. This is just cars but almost all other products are similarly treated. That is why the world is upset.

Biden tariffs

In his first term, Trump's tariffs were an about-face from decades of free trade policy. Economists warned that American consumers would pay the price, U.S. companies complained they would lose money to foreign competitors, and Democrats piled on Trump for a shift they criticized as haphazard. Biden came in and not only kept the tariffs on China but added to them increasing the rate on EV’s to 100%, 50% on solar cells and 25% on EV batteries, critical mineral, steel, aluminum, face masks and ship to shore cranes. The press was quiet. Now Trump is once again increasing Tariffs and the press is speaking out. This back and forth gives the impression that tariffs are more about politics than economics.

Tariffs on EV's

The Chinese have a history of using cheap labor sometimes slave labor along with minimal regulation for safety and the environment and government subsidies to produce low-cost items. They then flood the world markets with lower priced merchandise and run competitors out of business. Over a 40-year period they were able to turn the great manufacturing middle American into the rust belt. Before Trump became president in his first term, he promoted the idea of tariffs. While in office he placed a 25% tariff on Chinese cars and later Biden increased it to 100% and the result has meant no Chinese cars in the US. Europe was slow to react and they are now in a panic. EU imports of Chinese EV’s jumped from $1.6 billion in 2020 to $11.5 billion in 2023. The Chinese car sells for $21,500 and the EU equivalent sells for $45,000. On October 4, 2024 EU member states approved tariffs on Chinese electric vehicles (EVs). The move follows a historic rise in imports from China, which spurred an in-depth investigation by the European Commission that found widespread state-support for China’s EV industry. The EU imposed tariffs on China-made EVs at the end of October after an anti-subsidy investigation, including 17.0% for BYD, 18.8% for Geely and 35.3% for SAIC, on top of the EU's standard car import duty of 10%. Jan 24, 2025 These tariffs saved the US auto industry and the UAW understands that. The result is that the US consumer will pay a higher price for EV’s but there is now much in the news about this.

Opinions

The news is filled with articles about how polarized the country is and this is only because people refuse to consider other opinions. Shortly after 9-11, I joined a Muslim chat room so I could better understand their view points. One thing I quickly discovered is that they expected me to defend the US in all areas. I quickly pointed out to them that while I felt the US was the best country ever, I understood that many mistakes had been made and I had no intention of trying to justify those mistakes. This is the way people should look at the political party they support. You do not have to defend every thing your party does. Each party has members who are far away from center and often times they have ideas that are difficult to swallow so don’t. Evaluate the party positions and go along with those that seem reasonable and discard the others. When the far-out groups in your party make, what you consider outlandish statements, feel free to disagree. It will give you more credibility on the issues that are important to you.

Growth

Everyone agrees that the national debt presents a serious problem to the long-term health of the economy. There are four ways to reduce the debt or at least keep it from rising faster than inflation. The first two are obvious. Increase taxes or decrease spending. Neither of these are effective. Experience has shown that when government revenues increase the money is not used to pay down debt but to initiate new programs to gather new votes. Congress is unable to reduce spending for fear of losing votes so that leaves two ways. The best way is to grow the economy by increasing productivity. This provides new revenue without increasing inflation. The other way is to increase government spending at a slightly lower rate than inflation. Both of these ways are long term solutions taking as many years to bring the debt to zero as it took to get the debt we have today, which means about 75 years. Right now, the government is trying to grow the economy by bringing jobs back home. Whether this will work remains to be seen.