Tag: Trading

Do Trump’s Tariffs Really Protect Anybody At All?

By Kaycee Ikeonu | Canada

In a 1978 talk, the great economist, Milton Friedman, famously stated that tariffs protect consumers from one thing: “it protects the consumer against low prices!” Friedman, of course, could not have been more right, but his words are ignored with today’s trade wars and tariffs.

Such words of wisdom are essential today amid harsh criticism of free trade from the Trump administration. Some of these critiques include that the United States is losing jobs overseas to countries like Mexico, that the United States has large deficits compared to her trade partners, and most significantly, the need to protect steel and aluminium industries in the United States from going out of business.

An in-depth economic rebuttal of all of these proposals exists. Yet, it is not fully necessary, as the basic rules of economics outline the clear benefits of free trade. Adam Smith, in his famous book, The Wealth of Nations, declares it perfectly. It is in people of any nation’s interest to buy whatever they want from whomever sells it the cheapest.

This is a concept that could not be easier to grasp. When people buy products at lower prices, they then have more money to spend on other goods in the economy.

Now, let’s take a case that is about to happen: The U.S. imposes a tariff on Chinese imports, and now China threatens to put a tariff of $60B on U.S. goods. So, who benefits? The American economy? The American and Chinese consumers now pay a tax on goods. Without the taxes and subsidies on both sides, both countries would strengthen their economies. But instead, they are resorting to subsidizing the hurt regions after hurting them in the first place.

Thus, very few people benefit from this policy. Perhaps, exceptions exist in a few big manufacturers and the ego of the President of the United States.


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President Trump’s Turbulent Trade Tomfoolery

By Indri Schaelicke | United States

Over the past week, much confusion has surrounded the future of the US-China trade war that Trump has moved to start. Just a few days ago, all signs were pointing toward a de-escalation of trade tensions as both China and the US seemed ready to come to the table to make a deal.

But only 2 days later, it appears that the US will be starting this trade war after all. On Tuesday, the Trump Administration announced it would enact 25 percent tariffs on $50 billion in imports by June 15. The White House will also announce investment restrictions on Chinese purchases of U.S. technology two weeks later. The administration’s inability to present a clear, coherent plan threatens the stability of the market as people speculate about the future of  America’s trade policy. Over the past 5 days, the stock price of America’s largest steel producer, Nucor, has fluctuated between $62.50 and $64.50 as instability rocks the steel market. People are unsure about the fate of steel prices and are hesitant to invest in the steel industry.

Beyond instability however, there are several other issues that protectionism fails to consider. Tariffs are put into place in an effort to protect domestic companies and workers from competition from abroad. By placing import tariffs on Chinese products, the Trump administration is hoping that they can promote increased purchases on American produced products. The administration is specifically targeting protecting the steel industry, but the tariffs imposed will affect a multitude of others.

Take a look around you and notice how many things you use everyday are made of steel. The device you are using right now to read this article contains steel components. The car you drive, the tools you use, the appliances in our homes, all have important steel parts. Tariffs on steel will drive up the price of American steel and make it more difficult for companies who create products with steel components to price their own products at an affordable price. When a cost of an input in production rises, so does the final product itself. Steel tariffs will impact many industries and jack up prices across the economy.

Throughout his campaign, Trump was committed to protecting American jobs and making it a global economic force. His solution of imposing protectionist policies is not one that will lead to the greatest economic growth. Rather than isolating the US and hurting our economy, he should be looking to expand it and make it competitive in the global markets.

President Trump has already enacted large scale regulatory reform, a move that will surely help the economy boom. The corporate tax cuts introduced and signed in December 2017 have also reduced the tax strain on corporations and given them greater ability to invest and build their business. Enacting protectionist policies will only reverse the good being done for the economy.

Instead of driving up the prices of US products, which will decrease our net exports as other nations cannot afford our goods and services, Trump should aim to do just the opposite- steps should be taken to lower production costs and therefore lower the costs of final goods and services. Tariffs and other protectionist policies hike up the prices of our goods and services and make them unable to compete in the global economy.

Reducing barriers to trade is one simple way to decrease the cost of production of goods and services in the US. If the White House embraces free trade, it will see America prosper and little loss of jobs.


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The Great Coinbase “Disaster” Of 2017: Bitcoin Cash Murders The Blockchain

By Spencer Kellogg | USA

What the hell just happened? Alleged insider trading at Coinbase, Roger Ver blasted for having practical visions of the future of cryptocurrency and Charlie Lee attacked as a parasite for cashing in (rightfully) his stack of Litecoin. What a mess the past few days have been leaving some in the Bitcoin and cryptocurrency community feeling shell-shocked from a new presence of egoism and narcissism in the once generally positive community. Furthermore, hard questions are arising about Bitcoin’s dominance as ‘king of crypto’ leaving many consumers upset in its wake. Money is a bastard and the past 48 hours have been a shining example of how greed and playground groupthink have diluted the overarching philosophical goals of the space and split a massive userbase into argumentative factions while leading even the most sophisticated lemmings straight off the cliff.

Bitcoin has a problem. For all of the talk about it being the world’s new reserve currency, it doesn’t move very well. It requires an expensive fee and the time delay for receiving the coin has been virtually eradicated by other competing digital currencies in recent years. The strongest thing Bitcoin has going for it at the moment is its first mover advantage in the space and its dominating presence on every major exchange in the world. Bitcoin Cash is a ‘fork’ of Bitcoin meaning that Bitcoin Cash is of the same origin as Bitcoin but possesses functional and technological differences. Just like a forked path presents two new roads so too does a forked currency and the route that users choose to take determines the viability of the product. Bitcoin Cash promotes faster payments, lower fees and secure development from a centralized leadership. It also has Roger Ver, aka ‘Bitcoin Jesus’ (or Judas depending on your opinion), one of the great controversial figures in all of cryptocurrency. Ver sent the currency and overall markets into a feeding frenzy as he appeared on CNBC yesterday to discuss Bitcoin Cash as the currency entered into the connected crypto exchanges GDAX and Coinbase.

With Bitcoin Cash coming online at Coinbase (the major exchange in the USA) markets and consumers around the world flooded in to purchase the asset before its listing. Allegations of insider trading were rife leading to Coinbase halting the trading of the currency as they investigated their employee’s purchases leading up to the event. In the greater community, opinions were split with some users pointing at the “disaster” and using this event to call for greater regulation and even lawsuits for what they perceived to be cheating while others grinned and accepted the practice for what it is; a fully free, unregulated market that does not play by your grandfather’s Wall Street rules. All Bitcoin wallet addresses that held BTC during the August fork were given the exact same amount in Bitcoin Cash and in the month’s leading up to the New Year, there had been confusion regarding whether or not Coinbase would add Bitcoin Cash as a trading option with many believing that Coinbase would only provide withdrawal of the currency from its website. The decision regarding whether or not Coinbase would allow active trading of the commodity is important because it has a major effect on the wider adoption of the currency. As it stands now, the continued shenanigans from Coinbase is leading to a loss of faith from its consumers who suspect manipulation and lies on the part of the leadership. Until a better option is available many US-based crypto customers will have no choice but to use the major on-ramp platform for enter/exit trading.

In the world of Litecoin, founder Charlie Lee laid out his reasons for selling off his portfolio of Litecoin in a Reddit post that can be read here: Charlie Lee Sells His Litecoin. He pointed to his presence as a social and cultural figure in the cryptocurrency market overall and his interest in divesting from the coin that he has such an immense influence upon. This led to fingerpointing insinuating that Charlie Lee was using Litecoin simply to get rich or even that this had been done to take advantage of the Bitcoin Cash listing on Coinbase. Lee also made clear that the currency has seen a remarkable run up from four dollars in the springtime and that many investors should be careful in this new high-risk and unstable territory. In the past year, I have witnessed Charlie Lee act as an agent of good over and over again and I was surprised by the level of hostility aimed at Lee in the following days. The aggression towards one of the true white knights of the space speaks to the level of mistrust and resentment that some consumers are feeling in this grey area of ‘bubble’ uncertainty.

The Wild West of crypto is an enthralling business but the ailments of big money and uninformed speculators are beginning to rear their ugly head. I always thought the major hurdle of crypto’s mainstream adoption would be a belligerent Congress but after what I’ve witnessed this week I am beginning to believe it will be the low IQ newcomers who demand greater centralization and regulation to protect their interests. I suppose the trending backlash can be seen as a bullish sign because it signals that a mass userbase has collected with desires and opinions and a real stake in the game. The bickering, however, is difficult to listen to and reminds me most of the Sunday’s I spent as a child watching grown men smash into each other on the football field. We are still years away from true adoption of these services and much can be changed in the proceeding time. Do your own research, form your own opinions, strap in and get ready for the moon, just be careful which rocket you choose.


Image credits go to @Crypto_God