The Trump surplus

Tariffs led the way to the first June surplus since 2017

CNBC reported, “With government red ink swelling throughout the year, June saw a surplus of just over $27 billion, following a $316 billion deficit in May.

“Customs duties totaled about $27 billion for the month, up from $23 billion in May and a 301% gain from June 2024.”

How unusual is that? The report said, “The government last posted a June surplus in 2017, during President Donald Trump’s first term. Increasing tariff collections are helping shore up the government finances.”

MAGA-nomics works.

CNBC reported earlier, “Trump sends more letters dictating high tariff rates around the world.”

Boo, hoo, hoo. Congress and every country in the world gave him the power to run the world economy.

Congress long ago bestowed upon the presidency the power to set tariffs, which makes sense. No previous president has used that power to take on the entire world but Donald Trump wants to reset the U.S. economy.

The power of his tariffs reflects how dependent on the U.S. consumer the world is.

Three-quarters of the goods Canada and Mexico export go to the USA.

Red China sends 15% of its exports to the USA.

The world’s nations have cut-and-pasted the same economic model: make shit to sell to America but don’t buy much from the USA. Now the world is so dependent on trade surpluses from 4% of the world’s population that Trump now can—as CNBC observed—dictate the terms of any economic engagement.

The Brits created the model when we were colonies. How’d that work out for them?

In May, AP said, “Long-threatened tariffs from U.S. President Donald Trump have plunged the country into trade wars abroad—all while on-again, off-again new levies continue to escalate uncertainty.”

Long threatened? He’d been in office less than 3 months when he announced his tariff demands, subject to negotiation.

AP’s story said, “Fast-forward to today, and economists stress there could be greater consequences on businesses and economies worldwide under Trump’s more sweeping tariffs this time around—and that higher prices will likely leave consumers footing the bill. There’s also been a sense of whiplash from Trump’s back-and-forth tariff threats and responding retaliation seen over the last few months.”

CBS preached gloom and doom in April, saying, “If the fresh U.S. tariffs spur retaliatory measures from other nations, serious recessions could emerge both in the U.S. and globally, Mark Zandi, chief economist at Moody's Analytics, said in an email to CBS MoneyWatch. A U.S. recession would likely reduce GDP by 2% and boost unemployment next year to 7.5%, up from its current rate of 4.1%, he estimated.”

But wait, there’s more!

CBS said, “More certain is that Mr. Trump's tariffs will boost inflation, noted Gregory Daco, chief economist at EY. Consumer prices could accelerate by 1 percentage point by year-end, he added, which would boost the inflation rate close to 4% from its current level.”

FJB said 4% inflation? Those are rookie numbers. He had it up to 9% at one point.

CNBC reported with sadness on Tuesday, “Fears earlier this year that President Donald Trump’s tariffs would result in a sharp inflation spike have completely receded, according to a New York Federal Reserve survey released Tuesday.”

As for unemployment, the Bureau of Labor Statistics said in releasing its numbers for June, “Both the unemployment rate, at 4.1%, and the number of unemployed people, at 7.0 million, changed little in June. The unemployment rate has remained in a narrow range of 4.0% to 4.2% since May 2024.”

Which brings me to deportations, which are the second pole in this three-pole tent called MAGAnomics. Closing the border and getting illegal aliens to leave has had a positive impact on employment.

Fox reported, “The latest workforce data suggests that American workers have been the main beneficiaries in the labor market amid the Trump administration's crackdown on illegal immigration.

“The Labor Department’s jobs report for the month of June showed that the number of foreign-born workers declined by 348,000 from May—while the number of foreign-born workers has declined by more than 543,000 jobs since January.

“By contrast, the number of U.S.-born workers increased by 830,000 from May to June, and is also over 2 million higher than when the second Trump administration began in January.”

Trump did float the idea of giving farmers an exemption.

MAGA nation shot that idea down like a B-2 bombing an Iranian nuke plant.

Thursday, Trump responded by raiding a pot farm that exploited underage illegal aliens. MAGA asked, MAGA got.

So far, Trump has not called for reining in H-1B visas, which allow companies to replace American workers with foreigners. I wish he would.

Tariffs and deportations are only two of the three tent polls. Tax cuts matter.

While most attention in the Big Beautiful Bill understandably was on reducing taxes on tips, overtime and Social Security, making the 2017 tax cuts permanent will really goose the economy because it keeps the corporate income tax rate at 21%—down from the 35% it was before the first Trump presidency.

Tom Kertscher of Wisconsin Watch wrote last July, “In mid-2017, U.S. companies held about $3 trillion in profits overseas. That averted paying the U.S. corporate tax rate of 35%, one of the world’s highest.

“Trump signed a law that cut individual income tax rates essentially across the board and reduced the corporate rate to 21% in December 2017.

“Firms repatriated $777 billion in 2018 alone.”

The tax cuts will be offset by tariff revenue, which in six months has already beat collections for any calendar year.

Trump’s tax policy is changing the world for the better by bringing employment to millions of Americans. He is doing that by penalizing the purchase of goods not made in the USA and then using that money to offset the tax cut that brings American companies home.

By deporting illegal aliens, Trump gives Americans the jobs they should have had all along. They will pay taxes on their earnings, unlike the illegal aliens.

Finally, the deportations will reduce expenditures by the government at all levels because we won’t have to house, feed and clothe invaders—and many actual Americans will be able to job and leave welfare behind.