What Imports Into the U.S.

 

As the president-elect prepares to enter the White House, foreign imports into the U.S. have become a leading agenda item.  According to the Commerce Department, the top imports into the U.S. include electronic devices such as mobile phones, computers and TVs, followed by machinery and automobiles.  The onset of additional tariffs and import duties might change the makeup of imports dramatically, as consumers tackle higher prices along with some manufacturing possibly shifting to the U.S.

 

The biggest question everyone has is how will higher tariffs affect U.S. consumers and the economy.  The most dominant imports currently tend to be high margin products such as mobile phones, laptops, and computers.  Any additional tariffs might either be partially absorbed by the exporters or passed along to consumers in the form of higher prices.

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U.S. Has Among Highest Corporate Tax Rates

 

One of Trump’s fiscal proposals is to reduce the inherently high U.S. corporate tax rate from 35% to 15%. The United States currently has one of the highest corporate tax rates of any country worldwide at 35%.  The average corporate rate globally is just over 23%.

Some countries maintain low tax rates or no corporate tax at all, such as Cayman Islands and Bermuda, in order to encourage companies to invest and hire within their countries.  Some believe that if U.S. corporate tax rates drop, it might discourage U.S. companies from seeking tax havens overseas, such as tax inversions.

Inversions occur when a U.S. company buys or merges with a foreign domiciled company in order to adopt a lower tax rate.  A report released by the OECD raises a concern that some European countries are being used as tax havens, but with little or no benefits achieved by the underlying workforce or economy. (Source:  OECD)

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Election Voter Turnout Lowest In 20 Years

Even though election results were still being tabulated at the end of November, the 2016 election has so far had the lowest voter turnout since the 1996 election. The 126 million votes counted means that about 55% of voting age citizens cast ballots for the 2016 election, compared to the 2008 election when nearly 64% of eligible voters cast ballots.

Voter turnout is determined by the number of eligible voters who cast a ballot during an election.  Some voters are individuals while others are members of larger families, thus creating social economic dynamics. Social economic factors significantly affect whether or not individuals and family members develop a discipline of voting in future elections.

It is suggested that the most important social economic factor affecting voter turnout is education. That is, the more educated an individual is, the higher the probability that he or she will vote during any given election. Hence, it’s no surprise that all political parties strongly support a strong educational base in this country. (Sources: U.S. Census Bureau, Bipartisan Policy Center, electionproject.org)

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Oil Industry Update - OPEC Caves In & Cuts Oil Production

 

OPEC agreed to cut production among its 13 members by 1.2 million barrels a day from the current 33.6 million barrels. The agreed upon reduction would reduce global output by about 1%, easing high levels of supplies. Domestically, the U.S. Energy Administration reported that U.S. stockpiles of oil shrank by 884,000 barrels in the final week of November. The price of WTI, the benchmark for domestic crude oil, ended last month at $49.17 per barrel.

Since supply and demand are the primary determinants in setting oil prices, OPEC’s production cuts along with less supply in the U.S. are expected to shore up the price of oil. In addition, the anticipated growth generated from any economic expansion in the U.S. and abroad may increase demand for the commodity, adding pricing pressure as well. The crude oil benchmark WTI was up over 50% at the end of November from January 2016.

Saudi Arabia, OPEC’s largest oil producer, launched an aggressive campaign against U.S. oil drillers two years ago by continuing to produce oil at record levels in order to maintain and build upon its market share. Saudi Arabia’s relentless approach to put U.S. shale drillers out of business is an indication of how serious a threat U.S. oil production has become to OPEC and its members. The U.S. shale industry, known for its fracking technology to extract oil from shale rock formations, has continued to surprise the world oil markets with its resistance to low prices. U.S. drillers have thus far been able to beat Saudi Arabia’s “pump and dump” strategy of lower oil prices in order to maintain market share. (Sources: EIA, Worldbank, OPEC)

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International Reaction To Election Results

 


 

International leaders responded differently to Trump’s victory, with sanguine responses from Mexico, Venezuela, and Iran. Russia’s Putin was more upbeat as he welcomed a restoration of ties with the U.S., which have faltered over the past few years.

 

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