How To Watch News

I found myself talking back to the CBS Evening News a couple of nights ago. Usually they are pretty good, although like most of their competitors they don’t seem to be working as hard as they used to – over trusting anonymous sources, not confirming stories in a rush to be the first to bring us breaking news and presenting a dismal view – until the end when they throw in the obligatory heartwarming story. So critical thinking dictates that I treat their information skeptically.

The story that got me going was about tariffs. Now generally, I am for free trade and against tariffs. American tariffs are merely an indirect tax on us. They raise the prices of imported goods that we all buy and make the trading relationship with other countries less efficient – we don’t get the best goods for the best price. It’s basic economics. When they say something negative about tariffs I’m totally on board, but it’s not what they said but how they said it.

Jeff Glor started by saying, “Many Americans are already feeling the effects” of the $34 billion in tariffs on Chinese goods, the ones that went into effect less than 5 days earlier – really? That's a very fast supply chain. “The US is now threatening tariffs on thousands more Chinese products.” Then he turns to Jill Schlesinger who “looks at the impact” – the impact of what, imposing tariffs that he characterized as “threatened” just seconds before? Are they jumping the gun?

We learn that the next round of Trump tariffs, 10% on $200 billion of Chinese goods, “could hurt consumers.” Wait a minute. We were just told that many were already feeling the effect – now we are told the next round could hurt. They show a list of sample products: shampoo, baseball gloves, refrigerators, soap and cameras. Some are frequent purchases and inexpensive, while others are expensive but might be put off until a “trade war” is over.

“Already the lumber tariffs have added about $9000 to home prices”, Jill continues. I had a few problems here. Lumber tariffs are between the US and Canada, not China. Prices are not the same as costs. Are builders taking advantage of trade war news to boost prices like gas stations raise prices in anticipation of holiday demand? Besides, home prices are not uniform across the US, so any estimate will have different effects in different locations. 

“The North American Food Equipment Manufacturers said tariffs could raise prices at Chick-fil-A simply by increasing the cost of a pressure cooker used by the restaurant.” It makes me wonder how many pressure cookers they buy per year, what they cost, how much food they prepare before a pressure cooker has to be replaced, and what that comes down to on a per meal basis – I’m betting it’s mere pennies. (Not unlike the beer can story I told back in April.)

Finally, jobs could be impacted. They gave examples of Harley-Davidson and BMW saying that they would move more US production overseas. Do companies of this size hear about tariffs in April and 3 months later pull the trigger on an overseas move? This is very doubtful. It takes a lot of planning and many decisions. If they do move, it’s likely they had something in the works  a long time ago and the timing just happened to be coincidental (making the bosses look pretty smart).

But what can small businesses do? Jeff asks. “They can’t just move overseas and don’t have enough money to absorb price increases...” Wait another minute! What is this talk about absorbing increases? If any absorbing is going on, the consumer will be hurt less. How does this statement fit in at all with the rest of the piece?

All those unanswered questions and apparent discrepancies happened in a minute and a half. They don’t take any responsibility. (Jill Schlesinger is a financial planner, not an economist.) It’s up to us to be skeptical and think about what they are feeding us before swallowing it as indisputable fact. We must force them to do better than this as they try to make us panic.