Prospects for a Resolution to the US-Trade Dispute Inferred from Soybean Futures

Asset price movements around “news” regarding policy can illuminate the market’s assessment of the outlook for trade policy. Looking at a small window (say half hour) around an event can allow one to separate other factors (weather, other demand factors) from other. With that, let’s look at soybean futures (September 2019)…

Figure 1: Graph accessed 8/7 8pm Central at barchart.com.

No doubt some of the other fluctuations over the past month can be attributed to weather and market forecasts (WASDE is issued on this coming Monday), but around these events, we can attribute most movement to policy “news”.

The Chinese devaluation seemingly drove the price down from 862 to 850. This is minor compared to the July 2018 experience, when the tariffs were made definite – but the drop since Trump crowed about how the trade war was going well (July 15) is about 7.5%.

55 thoughts on “Prospects for a Resolution to the US-Trade Dispute Inferred from Soybean Futures

  1. Moses Herzog

    I’ve gone through stages in my life when I was pretty strongly anti-Chinese government. Sometimes for good reasons, sometimes for not very valid reasons. As far as the most recent devaluation, China did nothing wrong related to their currency on that issue. It may be slightly risky for them on capital outflows, but China had every right to do what they did, and overall it’s probably the correct move for them. I about halfway wanna cheer it on and applaud to be honest. Now if they could just grow a brain on their HK policy.

    Reply
  2. AS

    Professor Chinn,
    I for one would like more examples of event models, that use regression models if possible. Readers please excuse my ignorance. I read some examples of *Intervention Models* in *Forecasting Time Series and Regression, 4th ed*, Bowerman, O’Connell and Koehler, however, it seemed that the authors were using a special function in SAS software.

    Reply
    1. Moses Herzog

      @ AS
      Menzie has been pretty generous on that actually. Although due to my own laziness I am not as prolific as you on the regressions etc. Where I would look if I was you (other than “finagling” them online, shall we say??) I would look on Amazon or anywhere you can get USED texts on the cheap. You know sometimes the $10 4th edition is not that different than the $180 6th edition text by the same authors. It’s the oldest trick in the book for students that don’t enjoy being a**lly reamed. Of course some academic authors just throw in different problem sets in the new editions because they feel a deep melancholy whenever education becomes more affordable to low-income students. Study Guide books sometimes have a ton of “problem sets” as well. Just tossing that out there.

      Around the mid-’90s when I was a college student I never knew whether to feel bitter towards or applaud all the Asian students who went to the copy shop just outside the campus with 1 copy of text for 200 Asian cohorts and broke down all the copy machines in the shop. I think I just ended up bitterly applauding them, but……..

      Reply
    2. 2slugbaits

      AS There are a lot of papers that use intervention models when examining anti-terrorism policies…a topic of some interest this week. A number of years ago it was a big topic at one of the annual Military Operations Research Society symposiums. You can find publicly available papers that use intervention models in studying the effectiveness of metal detectors at thwarting skyjackings, Reagan’s Libya bombing, etc. Walter Enders and Todd Chandler have written at least a dozen papers on those topics and they used intervention models in several papers. Here’s a paper that uses intervention analysis with respect to Spanish terrorism:
      https://www.tandfonline.com/doi/abs/10.1080/1024269032000085170?src=recsys
      And here’s an intervention analysis on terrorism and tourism:
      https://www.semanticscholar.org/paper/Intervention-Model-for-Analyzing-the-Impact-of-to-Ismail-Suhartono/4b0a0a807183d307f03e498d17efd3940041ff6b

      Reply
      1. AS

        2slugs,
        Thanks for the links. I can follow elements of the paper on terrorism in the hotel tourist industry. What I need is for this article to provide the data and an EViews example of the application of the modeling steps mentioned in the paper. The article mentions the Cincinnati Bell Telephone article described by Bowerman et al in their text. I was not able to transcribe the data into a satisfactory EViews model. As mentioned, Bowerman et al used a special function ins SAS software that EViews does not have per a discussion with EViews staff (as of a couple years ago discussion). I noted that the terrorism article also mentioned the SAS software application for intervention models.

        Reply
        1. AS

          2Slugs
          Maybe it is ok to respond here to an earlier comment you shared relating to increasing the number of variables in a regression model. As I recall you noted that R square will increase and SSR will decrease if additional variables are added to the model. An additional comment was that one should consider parsimony in design of the model and thus consider using the Schwarz criterion. Your comments were in response to my comment to Professor Chinn as to whether one would compare SSRs from different models to decide upon which model is preferable.
          Two situations somewhat clouded my thoughts. One thought was that if one is using a nonlinear threshold model, Professor Enders in his text, “Applied Economic Time Series 4th ed.”, recommends finding the minimum SSR when deciding which threshold value to use. In this case, each model has the same number of regressors.
          The second situation relates to models that in fact have a different number of regressors. I was not clear in my comments that one still uses SSR as a discriminate, but the discriminate depends upon the comparison of a restricted and unrestricted model. As professor Wooldridge says in his text, “Introductory Econometrics, a Modern Approach, 5th ed.”, “… the factor that will tell us [whether to use the restricted or unrestricted model] is how much the SSR increases [when we drop variables from an unrestricted model.” As he says, “…because the OLS estimates are chosen to minimize the sum of squared residuals, the SSR always increases when variables are dropped from a model…” He then demonstrates how to test the null hypothesis that certain regressors in the unrestricted model are equal to zero.
          What surprised me was that the two of the three regressors he tested in the unrestricted model had very insignificant “t” values, 0.90, 0.90, and 1.50. His test concluded that all three regressors should be retained. His comment is that two of the variables are highly correlated “and this multicollinearity makes it difficult to uncover the partial effect of each variable; this is reflected in the individual “t” statistics.”
          Thus, thank you for forcing me to think about my post and pushing me to re-review what I thought I knew. I was unclear and perhaps muddled.

          Reply
          1. 2slugbaits

            AS Back in the stone age when I took econometrics the trade-off between the risk of multicollinearity and t-stat significance was a bigger topic than it seems to be today. At the time my econometrics prof usually recommended dropping one or two and only keeping significant parameters. He was later on the editorial board of Econometrica and I was young and stupid, so I just accepted that advice and moved on. Today I’m older and (hopefully) wiser, so I’m less mechanical about those kinds of trade-offs. Sometimes economic theory tells us to keep an insignificant variable, especially when the p-value is only a little higher than the conventional level of significance. Forty plus years ago I was also one of Deirdre (then Donald) McCloskey’s students in cliometrics, so I’ve always been a little conflicted about statistical significance.

        2. 2slugbaits

          AS The SAS software mentioned in the terrorism & tourism paper (PROC ARIMA) is part of the SAS ETS product. You have to take the SAS certification course before you can use it (or even buy it). Both the product and the training are expensive. When I took the SAS ETS certification course at Cary, NC many years ago the certification course alone cost the government $25K. User friendly it’s not. For example, here is the PROC ARIMA user manual for the intervention and pulse models used in the paper:
          https://support.sas.com/documentation/onlinedoc/ets/132/arima.pdf
          Go to page 210 of chapter 7.
          But…SAS also has a much simpler GUI version (called Forecast Studio) that is more along the lines of EViews.
          https://support.sas.com/rnd/app/forecast-server/PDFs/forecast_studio_inside.pdf
          Go to page 4 to see how Forecast Studio handles event analysis.

          Reply
          1. AS

            Thanks. The forecast studio version would be my speed. I guess I will need to wait until Eviews adds the module.

      1. don

        “we find strong evidence that sterilised intervention systemically affects the exchange rate in the short run. This result is robust to changes in event window definitions over the short run and to controlling for central bank interest rate changes during events.”

        i doubt if anybody would doubt this result in the short run, and it is almost a certainty if the short run if defined to be short enough. A more interesting question (at least to me) is whether the effect lasts long enough to affect the path of investments, and to allow hysteresis to occur.

        Reply
      2. AS

        Professor Chinn,
        Thanks for the link. However, it did not open for me, unless I am not seeing the proper link to click-on.

        Reply
  3. pgl

    ‘No doubt some of the other fluctuations over the past month can be attributed to weather and market forecasts (WASDE is issued on this coming Monday), but around these events, we can attribute most movement to policy “news”.’

    At the risk of going all CoRev on you – it seems you missed the big news noted on Trevor Noah’s show the other night. Oprah is doing all she can do to increase soybean prices by telling her viewers to eat lots and lots of soybeans.

    Reply
  4. pgl

    Kelly Anne Conway called out as a liar but …. drum roll …. Fox News!

    https://talkingpointsmemo.com/news/kellyanne-trump-bait-shootings-he-has

    “Kellyanne claims Trump hasn’t taken the “bait” when it comes to attacking his political foes over the mass shootings”.
    Really?

    “But Hemmer pushed back, pointing out that Trump had, in fact, responded just last night to Democratic presidential candidate Beto O’Rourke’s blunt criticism of Trump’s rhetoric. “Well, he’s a counter-puncher,” Conway said in defense.”

    This account continues with:

    “Trump’s also seized on reports that the gunman in Dayton, Ohio held left-leaning political views and tweeted out a quote from a far-right news outlet on Wednesday morning, linking the shooter to presidential hopefuls Sens. Bernie Sanders (I-VT) and Elizabeth Warren (D-MA).”

    In other words – Team Trump has been looking for other murders so they can gleefully try to pin them on LIBERALS. I would say how ghoulish but then we have seen Bruce Hall doing this ever since the El Paso massacre. Other people have died so what happened in El Paso is no biggie if one wears a MAGA hat 24/7!

    Reply
    1. ilsm

      Was she talking soy bean trade, trade wars and currency interventions?

      Some observers are dismayed by the dem candidates’ gross politicization of the mass murders…….

      Shameful Booker and Biden. While having to listen to Biden talk far too long (CNN posed campaign lecture) about grieving is not only political it is dismaying to many who have gone through more than he! He was talking to millennials and children!

      The congresswoman from El Paso got her too many minutes of fame politicizing the event.

      While white nationalists are the new racists!

      Reply
      1. pgl

        ilsm objects to someone not confining themselves to the headline? Seriously? Come on ilsm – you do this all the time especially when in your ever ending defense of Herr Trump!

        Reply
      2. Dave

        ILSM, you are a quite the peach. Dem candidates gross politicization? Are you kidding me? Our white nationalist (i.e., racist) terrorist in chief has politicized the ever loving heck out of these shootings. Do you remember his shameful presser after Stoneman Douglas where he said he would have run in a hero and saved all the kids unarmed? Do you remember when he had the televised “negotiation” where he promised to take the guns and worry about due process later (and then did no such thing)? And look at his speech from Dayton. What an evil person.

        Reply
  5. Julian Silk

    Dear Menzie and others,

    The tariffs are likely to increase, so this may be a forecast of that. Meanwhile, has it been made clear – publicly – what the Chinese want and what the Administration is offering in terms of “a deal”?

    J.

    Reply
    1. macroduck

      Trade negotiations are never fully transparent, and the terms each side seeks is an obvious sticking point, but at least equally important is reliability.

      Chinese negotiators have been shocked (says my China guy who is paid to know such things) by U.S. failure to stick to already-agreed portions of a deal. Yes, you can re-open a particular point in negotiating some other point, but that is apparently not what happened. U.S. negotiators agreed to (thought Chinese negotiators) particular points, then came back and said those points were not settled. Not a re-opening as a balance for some other offer, just a change of mind.

      China has always seen the option of waiting for another president, but was willing to negotiate anyway, in the hope of a settlement they could live with. Now, with Trump possibly running out of time, unable to trust that the U.S. is negotiating in good faith and unhappy with what is on offer, China has little motivation to negotiate.

      Reply
      1. Dave

        BINGO BANGO BONGO. Ding Ding Ding. One of the worst foreign policy blunders of this administration is the way they have made it clear that the U.S. simply cannot be trusted. There is no point in negotiating with someone who is not going to stick to the deal. Look what happened to Iran. Look at Mexico. It may be a generation before the damage is repaired.

        Reply
        1. baffling

          you expected otherwise from trump? this is how he does business in private, why would that change as president? ever notice why people only do business with he man once? most folks learn their lesson, the hard way. there was never a contract trump wasn’t willing to rewrite on the fly.

          Reply
  6. pgl

    Is Tucker Carlson really THIS stupid? Or does he treat his viewers as stupid little know nothings who he has a right to lie to?
    https://www.thedailybeast.com/tucker-carlson-responds-to-critics-after-calling-white-supremacy-a-hoax-calm-down
    ‘During his primetime Fox News broadcast on Tuesday night, Carlson took aim at critics of President Donald Trump who say his anti-immigrant rhetoric emboldened the El Paso shooter accused of killing 22 people. Claiming it was “just a lie” that Trump ever “endorsed white supremacy or came close to endorsing white supremacy,” Carlson, who’s repeatedly used the same Hispanic “invasion” rhetoric found in the manifesto the suspected shooter apparently posted, went on to say white supremacy is “actually not a real problem in America.” “It’s a hoax,” he added. “Just like the Russia hoax, it’s a conspiracy theory used to divide the country and keep a hold on power.”’

    OK! I guess Carlson was taken aback by the outrage at his remarks. He tweeted this:

    “There’s been a tremendous response to last night’s show. The left wants to silence us.”

    Get real Tucker! What a whiny little boy.

    ‘In his response on Wednesday, Carlson briefly acknowledged that racism is indeed a problem in America before going on to list off other problems he feels are much worse, such as the national debt and a “fading middle class.” After having told everyone to calm down, Carlson said that “people know” that America “is in decline” and are therefore terrified, which is the reason they voted for Trump and are turning to new leaders.’

    I see – a massive tax cut for the rich is leadership to address the national debt issue and help the middle class? Seriously Tucker?

    Reply
    1. Anonymous

      “white supremacy” whatever that is…. so many terms so many definitions.

      Going to be fun to watch again: the democrats run against the evil, deplorable “racists and white nationalism” to cover the failure of the house to do anything aside from threaten impeachment (except pass a massive bill for the war profiteers) and the lack of other choice coming from the democrats.

      So many reasons for no results!

      Reply
      1. pgl

        Anonymous? You sound a lot like Tucker Carlson. Why not admit it. Oh wait – you were just forced to take a vacation for denial of anything like “white !supremacy”

        Reply
      2. Barkley Rosser

        Anonymous,

        The House has passed a large number of generally admirable bills. However, nearly all of them have simply been sat on by McConnnell in the Senate, not even considered, much less voted on or passed.

        It is a third rate partisan lie to say that the only thing the House has dome is consider impeachment. Do you watch any other news source besides Fox?

        Reply
  7. PAUL MATHIS

    While Trump is obviously desperate to make a deal, the Chinese are content to wait 15 months until Trump is voted out of office. Trump would never allow the Chinese to save face if any deal were reached, so they are not interested in any deal at this point, even a good one for them. China has many cards to play and plenty of time to play them. Trump is quickly running out of time and the Chinese know it.

    Reply
    1. Willie

      It would be ironic if a president that the Russians helped elect was run out of office with the help of Chinese policies. The difference is that the Russians were waging what amounts to cyberwarfare and a propaganda attack in support of Trump. The Chinese are simply responding to the trade war Trump started against them. Trump was never a bright guy, and he’s one of the world’s greatest – at losing. I don’t have much doubt that there’s a downturn on the horizon, and that Trump will be the first one-term president since George Herbert Hoover Bush. Whoever follows Trump is going to have a mess to clean up, just as Obama did. When will we learn to stop electing these clowns?

      Reply
      1. ilsm

        Russians along with dozens of competing “interests” (likely google, facebook et al) were perpetrating “cyberwarfare and a propaganda attacks” for both/either.

        Far more detrimental is the role of money and the shaded “news”………

        See NYTimes slanted attack pieces on Gabbard. It is happening this cycle.

        Reply
    2. baffling

      i am afraid trump will resort to real conflict, either military or economically, in order to distract from this particular failure. he does not have the patience or self control to allow the chinese to wait it out. i am afraid he is going to take action that will result in a great deal of displacement/discontinuity amongst the chinese nationals living here and americans living in china. i think you will see the anti-chinese immigration rhetoric rise in a similar way that we see it with the hispanic community today. they will be the new target until the next election. travel between china and the us will be significantly reduced. just my gut feeling on how this will play out. trump would rather commit a murder/suicide than admit an inability to defeat china.

      Reply
      1. Willie

        I sure hope you are wrong. I expect a diversionary conflict with Iran, not China, but with the ultimate loser in charge, anything is possible. We can only hope that Trump’s demonstrated cowardice wins the day, and he avoids armed conflict. Economic? Maybe. Rhetoric? Likely. But, I sure hope not. That said, I just flat don’t understand what’s so threatening about Latin American people. I also don’t see Chinese or other Asian people as threatening. I don’t see people from the Middle East or other Islamic countries as a threat. Which makes me the wrong person to figure out what a person like Trump might do.

        Reply
        1. baffling

          i don’t think iran provides the needed amount of distraction. i am afraid trump will choose those of chinese background to facilitate a new war. he needs a new target, not one we have focused on over several presidents.

          Reply
          1. David Goetz

            “i don’t think iran provides the needed amount of distraction.” I think you underestimate Iran. It is a very large country in terms of size and population. 82 million people and >600k square miles. Ballistic missile technology. Chemical and nuclear (not H-bomb) capabilities. They also have a sophisticated spy/saboteur network and are well-positioned to disrupt oil supplies. Sure, NATO/U.S./west, whatever would win any real war. But Iran is not the paper tiger Iraq always was.

          2. baffling

            david, i don’t dispute your characterization of iran. in fact, my old man used to tell me back in the 90’s that the key to middle east success lies with iran. they have a large and educated population. i still think he is correct.
            but by distraction, i mean a rallying point for trump to galvanize his supporters and others. i do not think iran is that tool. we already are in an economic war, and his war on muslims in this country has already peaked in popularity. this is why he moved onto hispanics. even if we had a military confrontation with iran, politically, i don’t think that moves the needle much in trumps favor. he needs a new target, one that can possibly gather some additional “troops” in his rhetorical war. the chinese will fill this need. i am mot sure it would be a successful venture, but i am sure it would be destructive to our nation.

    1. pgl

      The story did focus on college educated voters. I would argue that in light of El Paso, the Latino factor will pay a larger role than it did in 2014. Cruz is not exactly the champion of Latino rights but he is not utterly hated the way Trump has become.

      Reply
      1. baffling

        cruz has been much quieter in texas lately. it seems he is noticing that every time he opens his mouth, he loses more support. not of his ardent supporters, who like trump would support him after shooting somebody in broad daylight. but the swing crowd has been tiring of the drama he brings to texas, and i think cruz has noticed this as well. this is why his last election was so much closer. the broader population in texas, particularly in the urban areas, has begun to realize it is not the republican stronghold the media makes it out to be. a charismatic centrist democrat could easily win texas next election. but does one exist? republicans won the last white house not because of a good candidate, but because the democrats lack a younger, charismatic and intelligent option. that was obama prior. but the cabinets are bare, and current candidates do not really excite the base like obama did. had my hopes up for beto, but he may be too far left and has not quite demonstrated the portrayal of intelligence needed to overcome his young age.

        Reply
    2. noneconomist

      When Texas decided to diversify its economy to avoid oil boom and bust pitfalls, it set in motion diversification of its population. Attracting the likes of Samsung, Apple, Toyota and plenty of other companies with diverse work forces meant, among other obvious changes, that there were not nearly enough educated white Southern Baptists/other evangelicals to supply workers for a changing economy. Add them to the burgeoning Latino population and you’re looking at a state that will change sooner than previously imagined.
      Same has happened in Virginia and is happening in both North Carolina and Georgia. In the west, Nevada is at the forefront of change, and Arizona likely soon will be. (No surprise Nevada topped Texas for the big Tesla megafactory and no surprise either that the influx of newcomers there are far more diverse and far less ideologically rigid. Trump toady Dean Heller handily won 17 of 19 counties but lost his senate seat by 5%; he was beaten badly in both Clark and Washoe counties, i.e., Las Vegas and Reno-Sparks. Old Nevada–and three visits from Trump– couldn’t save him)
      BTW, just checked today. Median home sale prices in Austin top those in Sacramento. Those in Reno are close. Times, indeed are a changin’.

      Reply
      1. baffling

        “Median home sale prices in Austin top those in Sacramento. ”
        have you ever been to austin? great city and location. why would somebody rather live in sacramento? on the other hand, as the texas cities become more expensive (and they are), this will affect the rate of change. you cannot afford housing inside the loop in houston anymore. it will change exactly where the young educated texans actually choose to live. eventually they may even migrate out of state due to costs. houses are up, but pay is still quite a ways off of east and west coast levels.

        Reply
        1. noneconomist

          Was attempting a comparison of two capital cities, not a preference of one over the other. (Youngest and spouse spent a week in Austin-work related– in February and really enjoyed their time there, They live in–and are homeowners in– Boise, which is another capital city witnessing rapidly increasing home prices. Median there has now topped $300K)
          Of course, we all know California is more expensive in most respects, but looking at Austin RE is interesting. One glaring difference with Sacramento is property tax rates. That $390K home in Austin would require a yearly property tax of almost $7900. That $390K in Sacramento would have a baseline property tax (before any add-ons) of $3900 .
          The common perception is that almost any California RE in desirable areas is much more expensive than any RE in Texas. Not so, of course. Although, wouldn’t you know, that lower RE prices in Bakersfield–and a diversifying job market there–are attracting more young, educated professionals. Home prices are also surging.

          Reply
          1. baffling

            Property taxes are tricky. I have lived in two states with no income tax, Florida and Texas. Both had what I would characterize as outsized property taxes. Low/no tax states do not really exist. Texas May have some cheap housing, but it’s one plus hour drive from a city center. Desirable neighborhoods are expensive-maybe not LA expensive, but exceeding the limits of affordability.

  8. Moses Herzog

    “The HIll” is another source of news that I have vacillated on whether they are solid or not. I have seen things I like a lot from “The Hill”, and other things that strongly upset me to the point I kind of put a self-ban on clicking on their website. I think Menzie may have even done commentary there once (???) which obviously goes in the plus category. I have kind of peripherally followed Michael Tracey for awhile now (it’s hard to follow these type cats since I left Twitter) and have really liked some of the things he has done, and what he says kind of follows along with many of the points Jimmy Dore has been making, minus the vulgarity.
    https://www.youtube.com/watch?v=K22fnFk5kq8

    https://theintercept.com/2017/01/05/kamala-harris-fails-to-explain-why-she-didnt-prosecute-steven-mnuchins-bank/

    https://theintercept.com/2019/03/13/kamala-harris-mortage-crisis/

    https://theintercept.com/2019/01/20/a-problem-for-kamala-harris-can-a-prosecutor-become-president-in-the-age-of-black-lives-matter/

    The bottom line on Tulsi Gabbard, if she can’t find her way into the 3rd September debate, it is (in my opinion, sadly) going to be hard for her to get enough traction to be a competitive candidate. But I will be extremely happy to be wrong about that.

    Reply
    1. Barkley Rosser

      As a homophobe who went to Aleppo with Assad and praised what he did there, she will be no loss. The sooner gone, the better.B

      Reply
  9. pgl

    Someone had to say it – and Mother Jones did:
    https://www.motherjones.com/politics/2019/08/trump-el-paso-dayton-shootings-both-sides/
    “On His Way to Commemorate Shootings, Trump Evokes His “Both Sides” Defense of White Supremacists – In the wake of two massacres, the president resurrects a familiar and incendiary moment.”

    What precisely are they referencing?

    ‘The remarks came shortly after the president noted reports that the shooter in Dayton, Ohio had a history of supporting left-wing lawmakers. “He was a fan of Bernie Sanders and Elizabeth Warren, nothing to do with Trump. Nobody ever mentions that.”

    Well Kelly Anne Conway has been talking about this nonstop as has Bruce Hall. It is intellectual garbage and they all know it. But the real message – why blame Trump as BROWN people really don’t count. MAGA!

    Reply
  10. Moses Herzog

    These numbers would leave Gabbard 0.7% short on getting into the September debate if I am understanding the rules correctly. Although sometimes you need to poll above “X percent” (here 2%) in “only” say 3 polls. So theoretically you could have a candidate polling below the 2% in a weighted poll, but then could snag 3 “namebrand” individual polls where he/she was above the 2%.
    https://fivethirtyeight.com/features/polls-since-the-second-debate-show-kamala-harris-slipping/

    Reply
  11. don

    I continue to think that the main purpose of the measures being taken against China is protection of the supernormal profits that make up the bulk of U.S. equity valuations – these companies are afraid that international competition will do the same thing it did to the U.S. auto industry. And they are very persuasive with our politicians. The recent corporate tax ‘reform,’ purportedly done to increase competitiveness of U.S. companies, actually did little more than transfer money from the U.S. treasury to shareholders. (Treasury Department research on the extent of supernormal profits was taken down from its website.) These guys really knew what they were doing. As an example, the retroactive nature of the changes in tax treatment of income that had been shifted to tax havens over a period of decades effectively prevented the U.S. states from taxing this income, even though it should have been in the state’s tax bases. Now, though the income was brought into the U.S. corporate income tax base, it will it never will be part of the state corporate tax bases. Of course, the states could have taxed the income if they had the knowledge and could respond quickly enough, but they were too slow in both departments. In a word, they were ‘slickered.’

    Reply
    1. pgl

      “I continue to think that the main purpose of the measures being taken against China is protection of the supernormal profits that make up the bulk of U.S. equity valuations – these companies are afraid that international competition will do the same thing it did to the U.S. auto industry.”

      I agree. This whole stealing our IP canard strikes me as an attempt to keep prices to consumers – both here and in China – at monopoly levels. It is funny that TPP was about making sure other Asian nations respected U.S. monopoly rights which is why some progressives hated Obama’s TPP. So Trump trashes TPP but then pursues similar goals with his trade war. Go figure!

      Reply
  12. pgl

    MSNBC is reporting on U.S. exports of all food products to China by year:

    $19.5 billion in 2017
    Only $9.1 billion in 2018

    WINNING?!

    Reply
    1. noneconomist

      Mea culpa: I erred recently when writing that California farmers have not benefitted from bailouts to ease the pain associated with Trump tariffs. The Fresno Bee has reported that California farmers have received about $76 million in subsidy bailouts connected to tariffs and the trade war. The “lion’s share” went to growers in the southern Central Valley, much of which is represented in the House by Trump toady Devin Nunes.
      But warranting further consideration is this data from the Almond Board of California:
      The whole almond industry generates about 104,000 jobs statewide, 3/4 of which are outside the almond industry
      Over 97,000 jobs are generated in the Central Valley…–vital in a region that has long had high unemployment (currently about 3X that of the “socialist” Bay area)
      Yes, winning?

      Reply
      1. Moses Herzog

        I like cold canned spinach—which my understanding is, mostly comes from California and a little bit from Arizona.

        <bPro-tip: It helps to wash down cold canned spinach with a citrusy soda.

        Reply

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