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What’s the best steelman argument for them?
I’ve read a bit of Peter Navarro and others who support this line of thinking, but I’m trying to understand: is there a coherent endgame here that benefits the country long-term, or is this just short-term political theater dressed up as strategy?
What would the best possible version of this policy look like if it were smart?
Another theory is that Trump has some complicated plan to reduce the US's debt; again, it involves using tariffs as a "stick" to push our allies into doing what we want. Summarized here:
Unfortunately, Donald Trump doesn't agree with that. Or his handlers don't. Not that the distinction matters anymore. The diplomatic and trade relations that we are destroying right now can't just be fixed by electing a new President. This is the US's Suez Crisis...we are no longer a world leader.
That requires some initial assumptions that simply aren't true. Tariffs can and do serve a vital role to protect a country from one with lower standards of living (eg taken to an extreme, consider trade between county A where slavery is illegal and country B where it isn't)
There are certainly assumptions, but those assumptions are reasonable in nearly every possibly scenario the US has ever encountered.
> Tariffs can and do serve a vital role to protect a country from one with lower standards of living
Protect how? Protect them from lower priced goods? Sorry, but this "idea" originates from mercantilist thought and has been thoroughly dismantled and discredited. Even when one country is less wealthy and less productive, both countries benefit from expanded trade. This is Comparative Advantage...literally Econ 101.
Economics is a social science and has a lot of problems with things being claimed as settled science when they aren't, but this is actually one of them. You'd have a hard time finding any living economist, liberal or conservative, who would agree with you.
> (eg taken to an extreme, consider trade between county A where slavery is illegal and country B where it isn't)
I would hope that in this extreme, we wouldn't use tariffs as a tool, but rather full trade embargo. Because it stops being an economic argument, but rather a human rights argument.
Regardless, reducing or eliminating trade with nations that accept slavery would be a reduction in economic output. It would just be one with a price that we should be willing to pay.
I'd love to see any sort of human rights justification for Tariffs against Canada though.
It'd probably be the opposite - Canada/EU put tariffs on the US to offset their higher standards of living and environmental considerations. But then the US should similarly do that to, say, China for the same reasons
> Sorry, but this "idea" originates from mercantilist thought and has been thoroughly dismantled and discredited. Even when one country is less wealthy and less productive, both countries benefit from expanded trade. This is Comparative Advantage...literally Econ 101.
https://www.thesling.org/the-failed-assumptions-of-free-trad...
Unfortunately for econ 101, just like the spherical cow in physics 101, reality is different and more complicated
From a strategic perspective, the US probably needs to onshore chip manufacturing before China's chip industry reaches parity with Taiwan's. If they don't, China could effectively blockade the island and remain unaffected, while all of its competitors are. The US would lose the initiative, and have to make a reactive decision on whether or not it wants to be in a shooting war, which is a bad place to be.
Econ 101 was nice in theory when the US had no rivals. But it does now, and a country that relies on its military and technological edge as part of its economic strategy (i.e. reserve currency status, exerting soft power through global institutions that are backed up by a credible threat of violence) can't be in a position where it gets outbuilt by its competitors.
> Unfortunately, Donald Trump doesn't agree with that.
I think most countries hit are in active negotiations to reduce or drop the tariffs. Israel has already said they're dropping their tariffs on the US and Argentina is in negotiations to do so.
Hypothetically, if you perceived that the root cause of some foreign policy problems you felt were important to solve was the gap in civil liberties between your country and powerful overseas countries, you could conclude that peace could be achieved by handicapping your own country so that it regresses to match the lower standards of the foreign nations that appear to have a problem with your country and its ideologies.
.
No guarantees that this is the actual belief of the people in power, it would just satisfy your requirement.
However the vastly more likely reason is he's a complete fucking moron that treats all interactions as binary "winning" or "losing". A mindset that helped him bankrupt numberous companies, and now likely a country. So trade deficits are "losing" and he's retaliating with tariffs. This logic befitting a toddler completely fits everything he's demonstrated over the years.
Corruption plain and simple. Now “lobbyists” will rush in offering him favors so that he removes some restrictions
Or if the necessary capital is out of reach for margin trades or options (for his friends it isn't), buy long 3x inverse ETFs as much as you can risk.
If you expect him to play yo-yo some more, rinse and repeat buying either regular or inverse 3x ETFs as needed.
Is this happening at some scale? Surely. Is it the main purpose? Probably not. I'd expect there are easier ways for corrupt politicians and their cronies to profit.
And even when this is past, those same CEO's - and their successors - will think long and hard about committing to any long-term investment in the US.
I think the obvious thing to do is for manufacturing companies to start strapping Space-X Starships to their factories. Then when the administration changes, or tariffs or taxes become more favorable in another country, they can just Lift Off and move them to the new location.
Alternatively, we could pursue a Waterworld future where all the factories float around in international waters.
All this churn is just an opportunity to think outside the box!
Ok… Then build more pylons…
He also puts tariffs on countries which have a deficit with the US.
They’re not, they’ve been sanctioned to such an extent that tariffs would be meaningless…
In terms of dollars not in terms of goods.
The administration hasn’t explained their logic and haven’t made clear plans — that’s the real problem.
The difference between science and “traditional” beliefs is that the former is not just about convincing others through force, but explaining things to others such that they’ll convince themselves.
It’s also the difference between good political leadership and a ruthless dictator.
One needs only words, the other needs violence.
- Both countries with trade surpluses and deficits were all tariffed -- therefore this is not about re-balancing trade.
- Inputs required for on-shoring were all tariffed -- therefore this isn't about bringing manufacturing on-shore.
- Both geopolitical rivals and allies were all tariffed -- therefore this isn't about defence. (Russia was specifically excluded!)
- Only "goods" were factored into the calculation, services were not, despite being the major US export, making this very unfair to countries that export goods and import services -- therefore this isn't about trade policy becoming more fair.
Etc...
Just yesterday I was debating the supposed benefits of the tariffs with a conservative friend of mine, and it was the same problem: They couldn't draw an arrow between "enact sweeping tariffs" and "... profit".
Every country for the history of the world that has enacted sweeping tariffs has suffered for it, every time.
Protectionism like this causes domestic industries to become inefficient because they don't have to compete on a level playing field against foreign products.
-- The Trump administration's answer to this is simply: "No it won't!", without any stated reason.
Blanket tariffs reduces the efficiency of on-shore businesses, because they are penalised for buying from more efficient foreign sources of inputs that can't be made locally. Here on HN people mentioned coffee, chocolate, olive oil, avocados, and other food products that require specific climates. Similar logic applies to many other inputs, such as industrial robots (Germany), lithography machines (Netherlands), rare earths (China), etc, etc...
-- The Trump administration's answer to this is simply: "No it won't!", without any stated reason.
The people behind this keep drawing a couple of circles and waving their hands while proclaiming that drawing the rest of the owl is easy.
Okay. Show me a drawing of the rest of the fucking owl.
- US needs manufacturing capability to maintain defense capability and boost long term growth.
- tariffs result in pushing some manufacturing (and associated skill set) back to the U.S.
They also tied that to Trump's desire to get out of Europe and deescalate the Middle East, being that if the U.S. was already stretched across Ukraine and say Iran, it would be way to stretched to also wage anything in the far east.
I'm no expert by a long way, but I can see some logic in the argument.
Principally, that a company would need more guarantees on their capital investment that extend beyond a single president’s term. Since tariffs can be revoked at any moment, companies will want more assurances that the long path of capital investment will be worthwhile, or else they might find themselves disadvantaged before even getting off the ground.
They would find themselves lobbying the government to hold back the free market for them within a few years time.
You didn’t ask for counter arguments but I’m sure we will see a wide range below this comment.
A broader picture here is to say neoliberal globalization is bad in that it removes local autonomy by creating a need for peaceful trading partners. Who is it bad for, and what sort of world would be good for those people is an exercise left to the reader.
EDIT: I like the vigorous comments and zero net score on this comment. don't blame the messenger guys, this is a fair statement of the steelman. It does not represent my own views.
Instead, we are seeing countries match with import tariffs in the other direction, and a deterioration of global trust.
I don't think most countries actually want to balance bilateral trade. You can get a hint of this by the fact that the calculation that the US is using right now to determine the tariff rate puts a floor of 10% tariff. If they were truly committed to balancing bilateral trade then you would have expected them to actually have added export tariffs to any countries where the US had a trade surplus. Instead they gave a 10% import tariff still. I'm not sure I've seen any explanation for this 10%.
Not if you want to avoid escalation of a trade war.
If you know that the US is pissed off because you're hoarding dollars because its the reserve currency and its causing the USD to rise too high, leading to their decline in manufacturing competitiveness, then you can solve their problem for them by adding an export tariff. It will make them more competitive. But that way, you get the revenues from the tariff rather than the US. Adding your own import tariffs makes the trade balance worse. Its like the person you're negotiating with is complaining about a knife and you decide to twist it rather than remove it. A 50/50 split of export and import tariffs would mean that both countries can take a cut, the USD can maintain reserve status, and US manufacturing can stay competitive despite a stronger dollar. The fact that noone is doing this means that either they haven't considered it or they aren't happy with this outcome(probably the latter, but you never know...)
But you don’t know that! The explicit US position is that their tariffs are purely retaliatory, based on a formula they invented a few days ago which claims to compute an effective rate consisting of tariffs and non-tariff barriers. Export tariffs would make the formula as currently constructed go down, but the US would clearly see you’re juking the stats rather than actually removing trade barriers, and adjust the formula to account for it.
Perhaps you think the US is being strategically deceptive about its motivations? I do see a lot of people offer that as a “defense” of the US position, although I don’t clearly understand how this is meant to make things better. How should foreign trade negotiators know which HN commenters are telling them the real position and which ones have been taken in by the misdirection?
So the orange idiot can make a "deal".
Right, because e.g. if Canada has no tariff on car imports and the USA has tariffs, then the logical course of action for car manufacturers is to move all of their manufacturing for Canadian-sold cars to the US, because it's more flexible to have manufacturing in the place that incurs fewer tariffs overall. Canadian import tariffs take that incentive away.
Export tariffs make more sense for resources where the manufacturing base can't be moved.
> it is better for a country to have a diverse manufacturing base
A country can exist and be wealthy without diverse manufacturing base.
> a net positive balance of trade
A country can have stable and growing economy with negative balance of trade, as long as certain conditions are met. In short, this country may offer something else to compensate trade deficit, i.e. there can be a price tag on military and political power.
And what about services the US provides? Google and Microsoft are some of the biggest companies and bring a ton of money to the US, but this doesn't seem to be included in the calculation because they don't sell physical goods.
Are they? Or do they keep their profits overseas?
Trade deficit in physical goods: $1.2T
Total services exports, including finance and IT: $1.1T
Trade surplus in services: $295B (just 25% of what is needed)
This theory has yet to be tested in a peer war.
It's interesting to see how the U.S. could make it happen though, given that there is already a shortage of labor and materials. It will be a long, long road.
I'd contrast this with the Obama energy policy, which was a significant change in US policy toward energy independence, consistently and fairly quietly applied without generating a worldwide recession or trade war.
https://www.investing.com/news/politics-news/investment-comm...
It doesn't cost the UAE a penny to do Trump a favor by announcing a $1.4T investment. Let's see if they actually spend a penny.
It depends extremely on what your actual goals are, but if we suppose the goal is to increase US manufacturing capacity and economic independence with minimal pain, you'd enact this on a time-table over a period of years, after building enough support across the political spectrum to make it look like this policy will be essentially, if perhaps with some occasional tweaks, be maintained across administrations for some time. You'd also probably not significantly tariff the whole world, at any point.
The biggest problem with this approach is investor confidence. It's hard to sign on the dotted line to spend billions building factories when it's difficult to say with any certainty that these tariffs will still be around by the end of the year, let alone in five years. This was doomed to be way more painful than necessary when he started flip-flopping on this over the last couple months, regardless of whether it's even fundamentally any sort of a good idea.
If the goal's to replace large portions of income tax, as has been suggested by some including by Trump, uh... the math just don't work even with a drastically smaller federal government, it's nonsense, there's no "best possible" version there.
We ignored them
Now we are doing it and yes it upsets the world order
There is no precedent where this has been beneficial for the US, but we can try again. The last time it was tried was 1930, and our fortunes vastly changed since then
The incentive is for entrepreneurially minded people to try to provide services in the US and fix the supply chain here. This theoretically means more people employed and more people able to afford the prices of things produced here. Keeps velocity of money in the economy high.
We will learn how resilient a coalition of other countries are, as they try to only trade with each other
A smarter version of this policy would be country by country and industry by industry negotiations. But, given that some countries are dropping their own blanket tariffs, and others like Vietnam already coming to the negotiating table, time will tell.
Keep in mind North Korea has had even stricter trade restrictions, and they don't have any functioning modern industry at all. Trade restrictions reduce export market size, insulate companies from competitive pressures, and those problems only serve to reduce capability, not increase it. Maybe there is some sort of happy medium of protectionist policies, but I've never seen any sort of framework for understanding how you could derive where that happy medium lies.
If trade restrictions only ever made countries more competitive, we wouldn't use them as a punishment.
Oh wow you got a developing country to agree to lower their tariffs on their fairly minor import capacity from the US.
so Nike and fast fashion companies with exposure have been the best plays, up and down
Which countries are these? In general, if you look at the list of countries with >5% effective tariff rate, it’s all developing world. Vietnam, FWIW, has an effective tariff rate of a little over 1%, in a similar range to the EU and to the US pre-Trump II.
Some countries _do_ have high blanket tariff rates, but you’re generally talking about very poor countries with limited secondary industry; these are, as a general rule, not big exporters to the US. None of the US’s biggest trading partners have high tariffs.
https://www.npr.org/2025/04/02/1242229719/planet-money-the-c...
IMO, tariffs are bad for the economy, but could be great for workers and the middle class. Regardless, implementing them this was is absolutely nuts.
China got our manufacturing because they didn't care about pollution. Now, they've developed cleaner industrial methods and built out fantastic infrastructure (e.g. massive industrial complexes right next to shipping ports). Meanwhile, we did nothing and we're a good ten to twenty years behind assuming perfect infrastructure development starting today with tariffs that are immediately in effect.
Combine that with the fact that infrastructure development in the US costs many multiples more than other developed nations, and you have a recipe for complete failure.
Meanwhile, what are we doing? Apparently green energy is evil, and we're going to go all-in on domestic energy production from something that's expensive, very polluting, and finite.
1. Bring jobs back on-shore. Lots of US companies shut down factories over the last several decades and shipped jobs to Mexico and other countries. The UAW supports the tariffs.
2. Bring manufacturing back on-shore. If we have to fight a war, we need a strong manufacturing base (see #1). If it's a war with China, or with a country where China decides not to sell to us, we wouldn't have the manufacturing base to supply the war effort.
3. These are mostly reciprocal tariffs. The countries that were are putting tariffs on already have tariffs on our goods.
4. Additional treasury income.
5. Combat unfair practices like dumping.
https://economictimes.indiatimes.com/definition/reciprocal-t...
I think you are arguing that they aren't equal tariffs. I would agree with that. They do seem to be reciprocal though, because the countries imposed tariffs on our goods of some sort.
They aren't reciprocal tariffs because the other countries don't have anything like comparable tariffs in place already.
They change practically by the hour; first they're on, then they're off, then they're on, then they change, thne they're bigger than anyone expected.
That doesn't make companies say "well, let's expand!" It makes them hunker down. Kill off the least profitable products, cut overhead, etc.
There's time needed to build the necessary manufacturing, train a workforce, etc.
There's prices skyrocketing when suddenly American manufacturers have less competition.
There's also the plunge in sales of goods we sell to other countries.
This is the sort of thing you change over a generation. Not in a day, year, or even four years.
You can't just snap your fingers and say "you'll buy all your CNC machines from AMERICAN companies!" - even if we had enough manufacturing capacity, where are you going to get the workers from, particularly as literacy and education levels have been falling, and the whole education system is getting torn up?
...and where are you going to get all the semiconductors from?
The US famously had to buy titanium for the SR-71 from Russia through shell companies because the US lacked the mining capacity, the refining capacity, and know-how.
They would invest domestically to evade the tariffs. They invested heavily in Mexico since NAFTA to increase profits, the tariffs (hopefully) make it more profitable to manufacture domestically.
>The tariffs aren't based on any sort of sound strategy, just one poorly educated person's black and white, simplistic worldview full of insecurity.
I'm not going to reply to that since it is an emotional argument.
>They change practically by the hour; first they're on, then they're off, then they're on, then they change, thne they're bigger than anyone expected.
I agree it should have been much more predictable and steady. I suspect the fluctuation is due to the countries in question capitulated to what Trump wanted (higher security at the border, removed tariffs on US goods, allowing the CIA to hunt down cartels in Mexico, etc)
>That doesn't make companies say "well, let's expand!" It makes them hunker down. Kill off the least profitable products, cut overhead, etc.
Not expand, relocate. Relocate building new factories with US labor on US soil, run by US workers.
>There's time needed to build the necessary manufacturing, train a workforce, etc.
Agree.
>There's prices skyrocketing when suddenly American manufacturers have less competition.
Short term yes, but tariffs are deflationary long term in advanced economies.
https://onlinelibrary.wiley.com/doi/abs/10.1111/1467-9396.00...
>There's also the plunge in sales of goods we sell to other countries. This is the sort of thing you change over a generation. Not in a day, year, or even four years.
I agree it's very agressive. I don't recall any politicians trying to get manufacturing on shore in earnest in my lifetime (and I'm old), but I'm happy to see an attempt. Drive anywhere down main street in middle America, you'll see a lot of boarded up ghost towns that used to be propserous. Lobbyists spend a lot of money to keep their clients' costs down by using cheap offshore labor. Their clients are of course corporations.
>You can't just snap your fingers and say "you'll buy all your CNC machines from AMERICAN companies!" -
You can offer price incentives. If US CNC machines are $100K and Chinese are $110K with tariffs, they will buy US CNC machines.
>even if we had enough manufacturing capacity, where are you going to get the workers from, particularly as literacy and education levels have been falling, and the whole education system is getting torn up?
Many of these jobs don't require a college degree. On the job training used to be an effective way to do this. It's not going to be easy, but it's possible. There are plenty of people in middle America looking for work.
>...and where are you going to get all the semiconductors from? The US famously had to buy titanium for the SR-71 from Russia through shell companies because the US lacked the mining capacity, the refining capacity, and know-how.
Well if China invades Taiwan, which they have been promising to do and did with Hong Kong, we won't have any modern semiconductors. The US economy and military can't survive without modern semiconductors. TSMC (Taiwan) and Intel just made a deal where TSMC will run Intel's fabs in the US using their manufacturing expertise.
https://www.tomshardware.com/tech-industry/intel-and-tsmc-ag...
There are definitely long term upsides to this if the tariffs stay intact and there are long term upsides if other countries remove tariffs on us. It's certainly rewiring the global trade network, hopefully in our favor. We have one ace up our sleeve, we have the largest market in the world by 2x. That's a lot of negotiating power.
(1) The state has a compelling interest in regulating market risk tolerance. When the FED sets the risk-free interest rate, it controls the price of risk, and thereby the risk of the entire market. It is often advisable to temper the risk-eager market for long-term stability.
(2) Likewise, when the POTUS enacts tariffs, it is similarly setting the market's risk tolerance--namely against the risks concomitant of economic dependency on foreign nations.
(3) This will inoculate the economy against external supply chain shocks (at the extreme: war) by reducing our liability. It's not just consumers who are price-sensitive; given goods within a class will not be affected equally, natural price advantages will emerge, shifting demand and consumption as all levels of economy begin to price-in these tariffs.
The "economic consensus" against these tariffs just isn't real? It's exceedingly likely that the US likely will be better off because of them :)
How so? There's hardly enough unemployment and there's also no incentive towards increasing the number of immigrant workers.
Either suppliers eat the cost of the tariffs as the US administration says, or they don't and then everything becomes more expensive, but either way you have the exact same supply chain.
https://www.newsweek.com/donald-trump-tariffs-chatgpt-205520...
[1]: https://www.tiktok.com/@destinygnome/video/74891340165247337...
(1) Much like a carbon tax, when the economy becomes accountable for an externality (risk in this case, rather than carbon) it is priced in at every level, ending with consumers, whose demand is price-sensitive. Not all consumer goods of the same class will be impacted equally, creating a natural price advantage.
(2) Once the economy adjusts to these new risk-adjusted prices, POTUS can always offer clemency for specific goods and industries to respond to global supply shocks, providing a large buffer for the now-adjusted American consumer.
(3) Narrowly: it is exceedingly unlikely we won't see production onshoring in any capacity like you suggest. Economic analysis of the first-term Trump tariffs, for example, did indeed find production onshoring.
(And by the way, if tariffs stay, brace for deflation due to waiting until after the election in 2028).
The lead time required to set up realistic domestic production will mostly exceed this government's term. Setting up brand new supply chains doesn't happen overnight, does it?
(1) Tariffs will not affect all commodities in the same class equally, creating a natural price advantage, even at the level of consumers. While not absolute autarky, demand will continue to shift to less externally-dependent goods, which has and will continue to reduce our liability.
(2) Ideally congress would codify the tariffs to prevent that. That said, it seems the first Trump term tariffs did induce production onshoring, despite that uncertainty.
What would it take to change your mind on these tariffs?
The cure for this type of wishful thinking is nothing else but reality itself. Still, it’s not the premise that’s wrong here, but the argument that the US society is capable to make this type of shift. It just isn’t gonna happen.
If there was a positive outcome? US citizens financially better off in 4 years than they are today?
I don't think most MAGA voters would see it as a win if US was slightly less dependent on imports, but they personally are considerably worse off financially, which seems the likely outcome.
p.s. Trump did this before in 2018-2019, giving us some hard data about the economic effects of tariffs on modern america that are guiding the economic consensus.
In the grand scheme of things, the market movement we saw in response to these tariffs is dwarfed by the sustained market downturn throughout much of 2022. Fueled by persistent inflation concerns and the FED's aggressive interest rate hikes, the S&P 500 index shed approximately 25% from its peak in January 2022 to its low in October 2022, a far more significant and prolonged decline than a single day's reaction to tariff news.
We recovered from those. We will recover from the short-term effects of these tariffs as our economy begins to price in the risk of external dependency.
- Tariffs are not a lever, they distort risk tolerance.
- Tariffs are crude, they are like a huge hammer hitting everyone, including allies
- Tariffs cause loss of confidence and loss of credit
To (2):
- Blanket tariffs target allies; they're isolating us and we're creating blocks polarized to us and weaning themselves off our economic output.
- Tariffs only reduce dependency if there is internal capacity, of which there is none. We'll best case shift our dependency via third-party countries
- We're concentrating our risk on fewer countries where tariffs are lower
To (3):
- We're reducing our efficiency and increasing prices, job losses are coming, productivity will stagnate. We're reducing our agility and our headroom
- Historically, autarky has lead to stagnation.
The economic consensus against these tariffs is real. It's exceedingly likely the US will destroy its economy, alienate itself and isolate itself because of them :)
> To conceptualize reciprocal tariffs, the tariff rates that would drive bilateral trade deficits to zero were computed. While models of international trade generally assume that trade will balance itself over time, the United States has run persistent current account deficits for five decades, indicating that the core premise of most trade models is incorrect.
> The failure of trade deficits to balance has many causes, with tariff and non-tariff economic fundamentals as major contributors. Regulatory barriers to American products, environmental reviews, differences in consumption tax rates, compliance hurdles and costs, currency manipulation and undervaluation all serve to deter American goods and keep trade balances distorted. As a result, U.S. consumer demand has been siphoned out of the U.S. economy into the global economy, leading to the closure of more than 90,000 American factories since 1997, and a decline in our manufacturing workforce of more than 6.6 million jobs, more than a third from its peak.
> While individually computing the trade deficit effects of tens of thousands of tariff, regulatory, tax and other policies in each country is complex, if not impossible, their combined effects can be proxied by computing the tariff level consistent with driving bilateral trade deficits to zero. If trade deficits are persistent because of tariff and non-tariff policies and fundamentals, then the tariff rate consistent with offsetting these policies and fundamentals is reciprocal and fair.
[1]: https://ustr.gov/issue-areas/reciprocal-tariff-calculations
> Tariffs are not a lever, they distort risk tolerance.
The "distortion" / divergence from market trends is exactly the point. This is no different from the FED setting the risk-free interest rate, or a carbon tax being levied. The government is holding actors accountable for an externality (trade deficit).
> Tariffs are crude, they are like a huge hammer hitting everyone, including allies
The intrinsically bad part is the trade imbalance, not adversarial nation status; these tariffs are structured such that if adhered to, ceteris paribus, we will have zero trade imbalance. See the OTR report. These tariffs are anything but crude, rather calculated and surgical. Countries with little deficit will be changed little tariff; those with large deficit a proportional, calculated tariff.
> Tariffs cause loss of confidence and loss of credit
This has yet to be shown in the long term.
> Blanket tariffs target allies; they're isolating us and we're creating blocks polarized to us and weaning themselves off our economic output.
Again, these are not "blanket tariffs." They are strategic, surgical and calculated, based directly on the particular trade deficit--especially indicated for allies who have gone unchecked for far too long. It's unclear if adversarial BLOCs have much to do with tariffs, and the US's economic exports (especially key exports like oil and LNG) have only increased amidst recently increasing strategic import controls.
> Tariffs only reduce dependency if there is internal capacity, of which there is none.
You're putting the cart before the horse. We need demand before we see an increase in production.
> We'll best case shift our dependency via third-party countries > We're concentrating our risk on fewer countries where tariffs are lower
Reciprocal tariffs are calculated and recalculated based on current trade deficit--this won't happen. Intrinsically, the "bucketing" of trade along geopolitical borders (we sum all exports and imports along national lines), actually incentives nation-heterogeneity, not nation-homogeneity, in imports, which is directly in line with national security interest.
> We're reducing our efficiency and increasing prices, job losses are coming, productivity will stagnate. We're reducing our agility and our headroom
Prices will increase, naturally. That's the entire point. See the OTR report. Jobs likely won't decrease, though, given the cost of labor will be relatively cheaper than the cost of goods, incentivizing hiring. Additionally, the FED is likely to lower interest rates, which will put further demand on the labor market. :> We certainly have a lot more negotiating power and agility and headroom now that we can strategically peel away tariffs to absorb supply shocks, once the economy adjusts to the new status quo.
> Historically, autarky has lead to stagnation.
When has the US ever been in autarky?
Ultimately, like the FED setting the risk-free interest rates, the POTUS is tempering the market's risk-taking behavior by internalizing the externality of trade deficit for economic agents.
> The intrinsically bad part is the trade imbalance,
The basis of your comment appears to be recieved wisdom from an uncredited source, what many regard as an opinion of dubious standing.
eg:
Back on the goods side, when the US economy is robust and people have disposable income, imports naturally increase. Ultimately, while trade deficits indicate economic dynamics, they are not inherently negative nor do they signify economic weakness.
Rather, they often reflect a nation’s economic structure and consumer preference for diverse global products. After all, Australia has run trade deficits for decades, including with the US, and is one of the wealthiest countries in the world.
and numerous other professional opinions from economics and trade.
Trump is a textbook Mercantilist (positive trade balance inherently good [2]). Rather than magazine articles, see the Palgrave (the definitive encyclopedic reference for Econ) entry [1] and the Wikipedia page [2] for the arguments and history.
I always find reading the highest quality material leads to the highest quality thinking—there’s certainly a reason why modern LLM training mixtures might weight wikipedia tokens 5x and webtext 0.5x. :>
[1]: https://link.springer.com/referenceworkentry/10.1057/978-1-3...
There are many sources .. I linked to an opinion from two national economic advisors with careers in trade and economics.
You haven't countered their opinon or backed up your opinion, in fact you've strengthen my position that your axiomatic foundation is just another opinion of some.
See:
* When disagreeing, please reply to the argument instead of calling names.
* Please don't post shallow dismissals, especially of other people's work.
Be charitable. I provided encyclopedic reference out of a mutual discovery interest. Magazine articles[/opeds] may—in your words—present “opinions of some,” whereas reference-grade material provides a broad and citable foundation—ostensibly what you are looking for (“your axiomatic foundation is just another opinion of some”).
> You haven't [..] backed up your opinion
In the spirit of “respond to the strongest plausible interpretation” and good faith, I think you may have missed the argument I was making above. :>
I am positing a reformulation/distillation of “positive trade balance preference” as “preference for foreign investment,” drawing on Palgrave, although perhaps controversially. The former is controversial, especially if seen as a-priori; the latter mundane.
:>
The question that really matters to most people is, "What will these tariffs do to the prices of these things that actually matter?" And that it actually rather hard to predict.
The economists who claim that tariffs will harm normal Americans were also the economists who claimed that sanctions would destroy the Russian economy. They had the opposite effect, for reasons that still remain somewhat unclear. It may be that global trade makes certain classes of society very very wealthy, while not necessarily being such a positive for the middle class.
It is also notable that Chinese competitiveness has only increased as they have engaged in decades of state economic planning and market barriers. The economists who have told us since Reagan that this is inefficient and stupid might be ... wrong.
It is somewhat unclear to me that sanctions had the opposite effect to destroying Russian economy.
Does that mean it is doing great? I don't think so.
They didn’t have the opposite effect. They were ineffective in general, because Russia has large trade partners not aligned with the West and it has been preparing for it, optimizing the government apparatus for 20 years (financial bloc for 30 years). There are plenty of A-players (head of central bank, minister of finance etc), working industrial policy and digitalized processes, and they can make decisions very fast both politically and bureaucratically.
New trade routes and spinning up local production will take time (likely longer five years) so the consumer will pay a price. Question is how high it will be.
To purely imported goods (a lot of tech for example): cost will go up substantially.
To Russia: They are currently in a war economy. You will likely not really see a collapse coming until it is to late. Banks have been forced to give far to cheap loans to the arms industry complex which are unlikely to ever pay them back. This partially masks the true cost of the war.
Let's so how this proceeds.
New trade routes and spinning up local production will take time (likely longer five years) so the consumer will pay a price.
That seems backwards. A trade deficit (more goods coming into the country) should be balanced by a capital outflow (money leaving the country). We've sustained that for decades by printing more money and sending it around the world.
Some people think that's a good deal, because we get real stuff in exchange for money we create for nothing. But what will have left when other countries no longer want our money?
Edit: As the comment below points out, I should technically ask what happens when they no longer want U.S. government debt?
Make no mistake, these countries are getting something in return for the extra goods and services they give to us. It is not for free. One of the big things trade to China to make up this deficit is an investment in the US government (treasury notes) or assets. That is, they are taking the dollars they get and then parking it in the US as investment . The deficit is they're choosing us to invest in rather than themselves!
>The U.S. trade balance has been in a deficit position since the 1970s. This means that the total value of imported goods has been greater than the total value of exported goods. This means the U.S. is a “debtor” nation, running a merchandise trade deficit. However, the merchandise trade deficit refers only to imports and exports of goods and services. It shows that imports are greater than exports, hence the “deficit.” But, think about it for a minute, why does the world keep giving us goods, without getting goods from us in return? Is this a good deal or what? Well, clearly, this can’t be the whole story.
>What is happening is that the people from whom we buy goods abroad are taking our dollars investing in the U.S. economy. They may buy U.S. government debt (securities issued by the U.S. government to finance past federal budget deficits) or other assets in the U.S. For example, they may invest in U.S. companies.
If I were to be as generous as possible, I might say that's why Trump is being so chaotic with the tariffs? If you turn everyone against us and no one is willing to trade with us, it may force people's hand to build locally and then 4 years from now, there's still no appetite to resume our normal trade patterns.
And many other countries, e.g. Canada, won’t just make up with the US after Trump is gone.
So now you have a lower skill low pay job and paying more than before.
I cannot make sense of it other than as a few others posted here that Trump is preparing for war and wants to soften the blow of the interruption to international trade by making sure we are more prepared for isolation.
The Ruble was on it's way to complete devaluation before Trump propped up the Russian economy by signaling he's willing to give them everything in exchange for nothing.
But it's also true that the west never really fully committed to the sanctions, the fact that you still had Russian oligrarchs traveling around Europe with relative ease was a pretty strong tell.
It's clear that Russia redirected most of its exports. Just look at how much oil India is now buying from Russia — before the war, it was around 5%, and now it's over 40%. They rerouted a large part of their trade, created shadow fleets, and many EU exports still end up in Russia, but through proxy countries like Kazakhstan. (You can see this in the trade statistics between the EU and former Soviet bloc countries before and after the war.)
But the situation here is entirely different. The US has placed tariffs on much of Asia, the EU, and several other regions. There's nowhere for the US to reroute trade in a way that allows it to import the same goods at the same or lower prices.
Nobody can predict the future, least of all economists. Having said that I think economists were not wrong on the headwinds that Russian economy would face. They just failed to account for extraordinary measures that dictatorship could take.
And even with said measures there had been a steady deterioration of the economic situation... The real question is what is the state of their mineral (cough gold cough) production rates and reserves. They might just be able to buy their way out of the current situationship.
You don't shoot a hole in the bottom of your life raft because the person pleading with you not to was wrong about how many people it could hold.
> The economists who claim that tariffs will harm normal Americans were also the economists who claimed that sanctions would destroy the Russian economy. They had the opposite effect, for reasons that still remain somewhat unclear.
> It is also notable that Chinese competitiveness has only increased as they have engaged in decades of state economic planning and market barriers. The economists who have told us since Reagan that this is inefficient and stupid might be ... wrong.
You are quite wrong there with all of those three points.
#1. a lot of food items come from Mexico, South America, Asia also. Housing material from Canada and China. A lot of meds come from Asia especially India. Majority of Stationary is manufactured in China as well.
#2. Russia is struggling with economy. But remember it has a lot of help from China, Iran, N Korea, and India. That offset a lot of sanctions. Europe is still buying gas from them.
#3. I’ve to remind you this - China exports in trillions.
#2. It's hard to know what's going on in Russia.
#3. High exports don't disprove GP's claim about "state economic planning and market barriers". In fact, they prove the success of those policies and help China maintain a $1T trade surplus, the very opposite of the US's situation.
Isn't ~10% spending on food like a historical best of any country ever?
The context of this is the impact of tariffs on households' budget, and in that context, invoice value is fine, because that's the value on which tariffs are applied. 30% tariffs don't mean all foods go up 30%, it means it goes up by 6% (20% of 30%).
Russia may now assume the role of the little brother of the East, having poured vast resources into the invasion while China and India have bided their time, watching the US-EU relationship deteriorate. Without getting too ahead of myself, it almost feels like watching the stars align perfectly for China, which could emerge as the “good guy” on top — much like the USA after the 1950s. They didn’t have to go to war, yet they’ve benefitted from a Russian military failure, Trump-related chaos, a possibly weakened NATO, increased exports to the EU and other markets, and more. Culturally, Hollywood may even shift to Beijing, and our grandkids might find it strange that Europeans once idolized the USA. It remains to be seen how China will manage to downplay its repression.
I visited Russia 15 years ago and have long wanted to return — assuming those in power were replaced with a more friendly alternative — but I’m no longer sure I want to. I imagine it will feel similar to the last years of the Soviet Union with widespread alcoholism and child prostitution. Historical significance only goes so far when signs of social despair are visible on every street corner.
That will never happen while China remains a communist nation.
This is _very much_ up for debate. It's been a couple of years since Russia went completely dark on publishing key numbers on their economy. [This was three years ago.](https://www.youtube.com/watch?v=ZRgS6gpiMX0). They had a large war chest ready before they went to war (part of which has been frozen in the west), and there are a lot of signs that they are on their last stretch before things go really bad for them.
Predicting _when_ things go bad is very difficult, so I do not hold that against said economists. The most telling sign is that the first thing the Russians ask for is for sanctions relief before any peace negotiations.
This is a country where its leader/president/dictator/mafia don/caporegime is quite literally a multitrillionaire.
Russia asking for sanctions relief is just relieving pressure for Putin as the people who keep him in power (the oligarchs) need access to the money they've stolen and want to be able to buy more yachts and football teams. Putin and his circle, as well as the oligarch class, don't give a fuck about the average Russian.
How is China's own economy doing these days?
Middle class expenses may arise around 5-10% at the very least.
America depends on other countries to supply some part of these materials (like Potash from Canada).
I'm not sure the assertion "food is entirely local" is entirely sound, when we consider the supply chain.
I mean, if American companies had rejected Linux/Ruby/Lua because "they are foreign goods, born in Finland/Japan/Brazil", were it better?
On what timeframe did they say that?
There’s a good argument they ARE working to that end, just not as fast as policymakers would like. See the RU economic weakness in September.
One can make a decent argument that the sanctions were insufficient as Russia is effectively a petrostate (now with industry on a war footing) and the sanctions largely avoided RU oil/gas. Also China took up the slack by buying whatever Russia was willing to sell, and in Russian currency which extended their runway.
Lastly, Russia predicted the sanctions as a response to their Feb 2022 invasion because similar things happened before, so they planned ahead and made themselves resilient to The US dollar financial system locking them out (the same way they made their internet resilient to foreign sovereigns potentially cutting them off.
Meanwhile in California, the high-speed rail project is not going so well. There's some serious problems in the U.S bureaucracy, especially blue states. A recent extension of a rail line in San Francisco came in at $1 billion per mile. There are huge amounts of people dependent on the government running inefficiently, vastly overpaying and taking as long as possible to complete work. As we've seen with DOGE, as soon as someone starts to dig into all that, the whole establishment dependent on that inefficiency screams bloody murder. They seem to be adept at developing flywheels where the more money they spend, the worse the problems get, and that justifies spending more money. The $300 million a year homeless budget in San Francisco is a great example of that tendency. Somehow, that needs to get fixed if we want to compete at a world standard level.
> The things that dominate middle class budgets: food, housing, medicine, education, are surprisingly local, and have become increasingly unaffordable in recent decades even as economic numbers have gone up.
Really you have to split goods into two categories, stuff that has no geographic ties(alot of these goods manufacture has been outsourced to asian countries and low wage countries) and stuff that is tied to a location, think Mexican tequila or Swiss watches.
The first category is more tied to the middle class and I could alot of the manufacturing coming back to the US due to cost. The second category cannot be made in the US and buyers will bear the brunt of the cost runups.
The stuff in the first category that is going to be hit hard with tariffs is by and large big ticket items like cars and electronics, and conversely the really cheap plastic junk that is ubiquitous at dollar stores. I think the days of 50 inch flat screens for a few hundred dollars are gone. In addition cars sold in the US(US made brands and not foreign companies) have alot of their supply chain in either mexico and canada but the middle class is not buying alot of newer cars - average age of a car is reaching the longest ever due to cars jumping in cost the past few years.
I see this really hurting high income americans alot more, new cars especially European luxury are going to be quite expensive, alot of expensive wines and liquor will jump in price, jewelry and luxury handbags will also be alot more expensive.
Anyone else with a proper business background would have been able to negotiate international trade agreements more favorably, including overall increases in tariffs, and if there was going to be unavoidable downward pressure it would certainly be much less than this at this point.
Plus someone with actual useful deal-making experience would have been able to maintain stability on the way to a noticeable if not shocking upturn by now, there was a lot of low-hanging fruit left over after Biden.
Why not do something with that, rather than take it out on the American people? Just because all of them didn't vote for Trump, he can't bring himself to care about the country as a whole, or average citizens hardly at all. Much less legal residents.
If the only way to "sink the liberals" makes almost everyone else go down with the ship, so be it.
I tried finding some number to corroborate your claims.
The proportion of food in the American budget has decreased from ~17% to ~13% between the 60's and now. In fact, it has decreased a lot for "at home food" and increased slightly for "dining out food"[1]. Food seems cheaper than ever - on average. The current price of a calorie sufficient diet is now roughly $0.44/day in the US [2] that sounds very low. Between the 60's and today; the average daily supply of calories per person has increased from ~3000 kcal to ~3800 kcal [3]. People eat more than ever - on average.
[1] https://www.ers.usda.gov/data-products/chart-gallery/chart-d... [2] https://ourworldindata.org/grapher/cost-calorie-sufficient-d... [3] https://ourworldindata.org/grapher/daily-per-capita-caloric-...
I really wanna believe you, but aren't you just looking at the past with rose tainted glasses. And if you are young; aren't you making up a past that doesn't even exist ?
For food prices, look at the most recent 5-year timescale, where price increases are reported to be on the order of 30% for American consumers. [1]
[1] https://www.nerdwallet.com/article/finance/price-of-food
GP comment is cited food as the first item; and decades (not 5 year) as the reference timeframe, so I focused on that. I am sure that by cherry picking both items and timeframe (look at food but only over 5 year; education but only since the 60's; telecommunication but only since the price hike of last week) you can paint a different story, but that's not the point here.
Healthcare spending per capita has gone from $2,151 to $14,570 in the same period in 2023-dollars. [2]
The inflation-adjusted home price index has more than doubled over that period. [3]
Real wages have remained fairly stagnant over these same decades. [4]
[1] https://educationdata.org/average-cost-of-college-by-year
[2] https://www.healthsystemtracker.org/chart-collection/u-s-spe...
[3] https://cdn-0.inflationdata.com/articles/wp-content/uploads/...
[4] https://www.epi.org/publication/charting-wage-stagnation/
The US deindustrialized since the 70s. Russia has had 100 years to practice being an independent, self-reliant, sanctioned country. The reasons are obvious.
for example, blocking swift does not make money transactions impossible, makes it difficult for the layman in the first a few times.
nowadays, everyone uses crypto/usdt for the transactions and realizing it is actually cheaper and faster than the swift.
for the europe, they still buy the gas even at a higher price. grounding berlin to moscow flights only benefits turkish airlines and qatar airlines as now they profit from being monopolies (connections through istanbul and dubai)
the reality is that people adapt. i am not a trump supporter, i do not agree with the tariffs but that's what trump is trying to do; force people to adapt local goods
Double digit inflation despite a central bank baseline rate of over 20% is absolutely terrible. GDP numbers are only staying up because their government is spending a massive amount on the millitary and running huge deficits. The situation is very bad and getting worse. Millions of prime age workers have been pulled from productive work to supply the army and serve as assault troops. Hundreds of thousands have been killed or disabled.
The soviet stockpile drawdowns appear to have peaked which will put even more strain on the system. Nobody knows when the system will collapse but it will get there sooner or later without some major changes.
A strong version of the policy would thus involve directly tying tariffs to environmental and labor laws of the producing country, thus equalizing the field with the local companies. Not only would this allow for fair international competition, it would also economically incentivise the global development of good standards.
This happens all the time though? GMO are very restricted there, so farmers there can't use them. Imports are also banned.
Trump's tariffs don't really serve any specific policy goals other than "trade is bad and everyone should buy more from us than we buy from them," which is self-evidently absurd; why are we punishing Madagascar because we buy their vanilla and they're too poor to have extensive need of our services-based economy? Beggar-thy-neighbor trade policies inevitably beggar us as well, as we're likely to find out quite soon.
It is a very good interview and discussion.
But to impose them on 60+ countries at once for arbitrary reasons makes absolutely no sense.
Go open 10 year chats for the GDP, S&P 500, etc.
There was no problem with "level playing fields."
All of this is just one man who for forty years has been obsessed with how "we" are supposedly being "taken advantage of."
The economy overall was doing fine - intense economic stratification is a problem, but overall the country's economy was productive.
Man steps in, inheriting a growing economy doing just fine...and after months of uncertainty and upheaval, in two days erases a year's worth of economic growth.
He'll never get away with it a third time!
I find it funny people keep talking about someone figuring out it out when they actually published it, including the reasoning with references at the bottom: https://ustr.gov/issue-areas/reciprocal-tariff-calculations
tariff_rate = deficit / imports
tariff_rate = deficit / imports
That is what's going to determine if the policy is good or bad - if he uses it to boost manufacturing in the US, add jobs, even give people a rebate, it could do good things for the US.
https://drive.google.com/file/d/1Gk7TTyAYgyvvoP6szjV7J5wjjkC...
This level of tariffs is to discourage international dependency and trade as a prelude to war. Look who does not have a tariff.
This is not good policy - leading economists have written about this [1] as “…perhaps the worst economic own goal I have seen in my lifetime.”
[1] https://www.thefp.com/p/tyler-cowen-liberation-day-was-even
https://ustr.gov/countries-regions/europe-middle-east/russia...
In 2018, U.S. goods imports from Russia totaled $20.9 billion, up 22.4 percent ($3.8 billion) from 2017, but down 22.1 percent from ten years ago.
Maybe ask yourself why human suffering was so great that people voted to break the system..? Big tech should have paid more respect for things like housing.
What people call "rolling over" debt just means the government is issuing brand new bonds to raise money to pay off the ones that are maturing. These are completely separate transactions, often with entirely different investors. The government continuously sells new bonds and pays off maturing ones as part of normal operations.
Creating a recession to somehow game this system would be spectacularly counterproductive. Tax revenue would collapse while unemployment benefits and other social spending would skyrocket, creating even larger deficits. Any minor interest savings would be dwarfed by the economic damage. Not to mention the Fed sets rates based on economic conditions, not to help government borrowing. This isn't some clever financial strategy—It's just bad economics built on a fundamental misunderstanding of how sovereign debt markets function.
The main problem with the tariffs is this: the US has benefited mightily from globalism. What actually happened is that the US, being at the cutting edge of technology, outsourced mostly low paying jobs, while developing more innovative/productive industries and sold goods all across the world.
Apple's a prime example. All the difficult (read physical) and low-paying aspects of production are outsourced to Taiwan and China, meanwhile Apple employs tens of thousands of high paid engineers in the US. Ditto for all the big tech companies.
Now, globalism has negatively affected a certain segment of the population and it was definitely a mistake to ignore that (rust belt great example). But bringing manufacturing back won't fix that now that the cat's out of the bag. Engaging in a trade war will destroy a ton of high paying jobs (every multinational is going to take a sizeable revenue cut) just to bring back a small amount of low paying jobs, if any are brought back... Firms will likely build highly automated US factories.
The best possible version of this policy would be focused tariffs on specific goods you want manufactured in the US... Semiconductors, autos, steel, boats, that sort of thing.
J. Paul Getty happened to be in the right place at the right time for the 1929 market crash to result in an explosion in his net worth, what’s happening here is akin to ultra wealthy individuals recreating Black Thursday with the only difference being that it has been very publicly engineered and telegraphed in advance.
That is the steelman, if you think that those things are good things.
Unemployment lowering wages isn’t up for debate, cash-rich folks buying at the bottom of the market is not imaginary, and no one is trying to make the point that the tariffs somehow appeared emergently like weeds in the grass — we all agree that they are being imposed intentionally by people. There is no part of what was written there that is trivial to disprove.
If there weren't so many people whose livelihood or investment portfolios benefited from free trade or government spending the economic indicators wouldn't react as badly. Punishing or disincentivizing economic activity they don't like is more important than increasing GDP or asset values.
It may seem like a weak argument because of the circular logic but that shouldn't surprise any of us.
That said, if you want to make sense of the reasons behind the tariffs, I can offer a couple that would be reasons why Trump would implement tariffs.
1. While they are within his power, they are a cudgel he can use to hurt his enemies and show favoritism (and be open to bribes to get them lifted).
2. Trump has a weird obsession with tariffs, even after he lost a trade war with China in 2018 and had to bail out farmers with a bailout larger than the one to General Motors.
3. Also, as one of Trump's Wharton business school professors has stated numerous times, "Donald Trump was the dumbest goddam student I ever had."
The problem with this scenario is that every nation naturally has it's own idea of what is fair and that many things that are trade barriers are around politically sensitive issues (safety and purity standards, etc). So getting other nations to immediately drop stuff isn't that easy.
The analogy is war - after a short engagement, the trade-warring nation will "come home victorious". Like regular war, this scenario often doesn't come to pass.
[1] https://en.m.wikipedia.org/wiki/Foreign_policy_of_the_second...
This way though the downfall is at least controlled, comparable to landing a wounded plane instead of breaking up midair. Big Olga never believed its own bull of "infinite growth" and parallel drove plans forward to keep civilization going in pockets once the "8billion can life like kings" bubble bursts. Bill Gates microreactors come to mind.
The rest of us go to hell, aka wars, martial law and civil war, preferably without damaging the pockets and without going nuclear. THANK YOU!
Sorry , to all those that fell for fusion, mars and star trek fantasies.
You'd be looking at >60hr weeks doing physical labor and living hand to mouth in extreme poverty to sort of stay above water unless everything drops in price by an order of magnitude.
The implication that there will not be a massive drop in quality of life and workplace environments is difficult to reconcile with the seemingly-required impacts of massive deflation in real estate assets and commodity prices.
But free trade and commerce is antithetical to fascism. Unless the dictator can assume total control, his position is untenable. The goal is to form an equivalent of CCP Politburo and Putin in the form of POTUS + small number of hand-picked techbros. You can't achieve that goal unless you control commerce.
All of this is laid out in writings of Dark Enlightenment adherents and sanitized through Project 2025. Ironically, the people who complain the most about their freedoms being destroyed because their Facebook post saying COVID is a hoax was deleted not only will willingly submit to this, but also be its key enablers.
He has actually reposted a video confirming this outlook.
Another angle is he is targeting China. China is in a precarious domestic economic sitaution as well. It weakens China by reducing its exports. In addition tariffs if high enough for long enough encourage local manufacturing. If we go to war with China over Taiwan, it will be very easy for China to convert existing commercial factories to produce military goods. Much harder for us as so much of our manufacturing infrastructure has lain fallow. Its not a good idea to go to war with the country that makes everything you rely on.
I'm not saying these are valid ideas or it will play out like that. I'm saying this is what admin is thinking.
Also if you feel like a read, this is a paper by Trumps leading economic advisor Stephen Miran
https://www.hudsonbaycapital.com/documents/FG/hudsonbay/rese...
As an aside, for those who have 401(K) and IRA accounts in the US, the stock market plunge might be a great time to convert funds into ROTH accounts (lower taxes now, etc). At least there is a silver lining...
https://x.com/americapapabear/status/1907947224090423367?s=1...
Those rates are set via auctions driven by the demand for safe haven returns on investments, particularly returns when equities are risky. As demand for treasuries (safety) goes up, the rates on those same treasuries go down.
The fed sets the interbank exchange rates, these influence treasury rates but are a very different thing.
There is somewhat of an argument that countries such as China overuse American consumption as a crutch for development, rather than stimulating domestic consumption (Xi has, to give very mild credit, proposed policies to increase domestic demand); tariffs would certainly force countries and trade blocs to focus on non-American consumption, though this is a bit like losing weight by removing the patient's esophagus.
What we're seeing here is just ridiculous, from an economic perspective. Low-cost low-margin manufacturing is not coming back to the US, absent an economic crisis that pushes down to a upper-middle-income-level state (stay tuned!), while putting tariffs on agricultural products simply ensures that consumers will pay more without a corresponding increase in domestic competition (how many pineapples does the US grow?). The "calculation" of the tariffs, such as it is, is simply a tax on comparative advantage, which is mercantilist nonsense we left behind centuries ago. There's no steelman for this; even if there were, the increase in raw material costs would make the steelman unaffordable for us both.
* National Security - we need to be able to make or trade for what we need in the case of war. Even non-tariff economists will give you this one but it can become a slippery slope. We need some capacity to make semiconductors, some steel/aluminum, pharmaceuticals, drones, etc.
* Tank the 10-year. If people pour into treasuries, the 10-year drops and we can refinance our debt a lot cheaper.
* Force a renegotiation of unfair trade agreements.
Weak arguments (IMO):
* bring back manufacturing jobs - even if we reshore some manufacturing, it'll be at the cost of many more other jobs and that manufacturing will be highly automated. No capital appetite exists to do this. No CEO wants to do this. We don't have the infrastructure or supply chains for this.
What is very difficult to defend is the implementation even if you agree with plan. No one outside the trump bubble can really defend the on-again-off-again, inconsistent communication, or board of imaginary numbers used for these. Some float "madman theory" as part of design on renegotiations but I don't think people will make deals with 'madmen' they can't trust and instead are much more likely to build coalitions against them.
Except it already started: https://www.investing.com/news/politics-news/investment-comm...
The motivation for these tariffs are not economic or financial.
They are being used by a narcissist as a tool to force others prostate themselves on front of him. Whether foreign leaders - who will have to "kiss the ring" pleading the case for their country to get relief - or domestic CEOs who will now have join a queue to plead with Trump for exemptions for their particular sector (like the auto business CEOs have).
We've already seen it with social media CEOs who queued up to offer him money and support, we're seeing it with law firms whose very existence he has threatened by EO forcing senior partners to not only bend to his will but to humiliate themselves in doing so and we seen university presidents do similar.
The tariff stuff is a continuation and escalation of that policy.
The cost is to America's reputation, international standing and economic well-being and will be borne for decades. The benefits are ephemeral - an ego massage for DJ Trump.
This avoids the demographic and, depending on your perspective cultural challenges that are coming for many countries in the future, and lets America march to its own beat. America is setting up to be a fortress and a world unto itself in an unstable world. While a lot of countries will be going through these issues in the future America is doing its hard yards now.
Still years of economic misfortune ahead in the meantime.
The policy indicates trade, traditional partnerships, and traditional financial metrics are less important for the administration. It is largely symbolic rather than analytically worked out - the direction is more important than the details.
This is consistent with the economy being radically altered by robotics and AI. Comparative advantage in labor costs is becoming irrelevant, so a large part of the justification for trade disappears.
Wealth is being further concentrated into those with existing assets, as the negotiating position of labor becomes weaker. It is less important to maintain partnerships when you can do everything yourself.
Recession becomes less important than pushing hard for leadership in AI. Deepseek’s model release had a huge impact on the values of leading US firms. With AI traditional measures of the economy become significantly less relevant.
There's a trade off between economic diversity and comparative advantage, and a balance is better than being at either extreme.
A 5% cost advantage might be sufficient for a company to offshore production of medical supplies, but is that minor cost saving worthwhile versus the risk of a shortage in war or pandemic?
Automation is reducing labor cost advantages, and converging unit manufacturing costs globally, so more and more industries are falling into this "slight comparative advantage to offshoring" case.
Consider the case of Phil Knight of Nike. Here's what someone posted on Twitter (I don't know the account so obviously don't endorse everything, or anything else, it says):
"Knight's big "innovation" in shoe manufacturing was figuring out how to be one of the first people to flood the American market with cheaply made plastic footwear from Asia. Knight didn't make better, more durable shoes; he made cheaper ones by blowing up the native American industry.
Access to slave labor is, in the short run, a competitive advantage over skilled free labor.
In 1990, 10 years after the Nike IPO, there were 85,000 Americans employed making shoes. Today there are only 10,000 and 99% of our shoes are made overseas. The only exception is footwear for the military.
Phil Knight, however, is worth $35 billion and Nike has a market cap of $90 billion.
In other words, the good middle class wages once generated by homegrown American shoe manufacturing have been transformed by outsourcing into equities owned by a small class of investors and one insanely wealthy oligarch.
Global free trade is a way for the powerful to screw over the middle class by forcing them to compete with third world slave labor.
Yes, with high tariffs, Americans would have to pay slightly more for shoes. In return, however, they would be subsidizing good paying jobs and a decentralized industrial base in their own communities.
Global free trade, on the other hand, subsidizes massive increases in asset valuation. If you are one of the first "in on the ground floor" then you can make insane amounts of money by blowing up middle class wages by outsourcing those jobs overseas.
Libertarians and Wall Street types love to call this "capitalism" and the "free market" at work, but in reality, they are defrauding their countrymen out of the opportunity to build products themselves.
Americans are no longer able to make shoes at home. That option is not available to you. How can we call this a "free market" when it constrains our choices?
Outsourcing is 100% a government subsidy. It is a privilege, allowed by the state, to a select few citizens who figure out how to manipulate the international market to their advantage.
Phil Knight discovered the much cheaper Asian shoe market in the early 1960s because he had the money to travel abroad. His middle class neighbors making an honest living making shoes did not have that opportunity."
I also take issue with the trend of describing low paying jobs as "slave labor". Absolutely nobody in vietnam is heralding these tariffs, since they don't look forward to working even worse paying jobs as a result. Free trade benefits everyone except for abstruse dilettantes online.
So again, I've no idea whether the tariffs will work, and on paper I'm quite a bit poorer than I was a week ago, but the current regime must be smashed.
Those two stipulations would preserve America's reputation as a good global citizen, and would promote better conditions in the USA and the world.
The Trump tariffs meet neither of those stipulations.
https://www.hudsonbaycapital.com/documents/FG/hudsonbay/rese...
It is a blueprint for "tariff based upheavel". It proposes using 'unilateral U.S. tariffs as leverage' to force other countries into a new accord, dubbed by some a potential "Mar-a-Lago Accord," analogous to Bretton Woods, that would include 'coordinated currency realignments'.
Miran argued that because the strong dollar has made U.S. exports uncompetitive and fueled chronic deficits, the U.S. might need to pressure other countries to strengthen their currencies (i.e. weaken the dollar) through a trade war if necessary. Alongside this potential grand strategy, it's also argue the tariffs directly address specific issues like unfair trade practices (the 'reciprocity' argument), dumping, reliance on adversarial supply chains (national security), and aim to incentivize domestic manufacturing investment.
Elements of Miran's thinking in the paper are evident in the Administration's approach. For instance, Trump aides publicly claim they are targeting countries with "artificially devalued" currencies for tougher tariffs and the President frames tariffs as "reciprocal", a hint that the endgame is to make others lower their trade barriers or adjust currency values to balance trade.
This strategic thinking appears connected to the 'traffic light' system mentioned by Treasury Secretary Scott Bessent.. https://instituteofgeoeconomics.org/en/research/2025040302/
Direct quote: "Treasury Secretary Scott Bessent has mentioned, the US could have a “traffic light” system that divides the world into three tiers: “green” countries with shared values, aligned economic and security goals, and a willingness to cooperate on exchange rates; “yellow” or neutral countries that want to keep high tariffs and remain outside the US defense system; and “red” countries, meaning adversaries or sanctioned nations that refuse to cooperate."
I think that adds potential useful context around where we might expect countries to align and what the intent is. Or perhaps as I've seen it put more inflammatorily, there are "vassals", "neutral" and "adversaries".
One last note would be that comparisons to the 1930s Smoot-Hawley tariffs are often made but the context is fundamentally different. In the 1930s, the US was a major creditor nation with large trade surpluses and dominant manufacturing. Today it's a large debtor nation seeking to revitalize its industrial base and reduce deficits within a far more globalized system. It's not quite fair to call it protectionism (as a sole objective) and the time period doesn't generalize to today's America.
With those datapoints....
The steelman perspective is that this is less short-term theater and more a high-stakes, potentially disruptive strategy aimed at fundamentally restructuring the global trading system. The intended endgame is to reassert U.S. economic advantage, enhance national security through resilient supply chains, and better align global economic rules with U.S. interests in a changed geopolitical landscape, using U.S. market access and currency centrality as key leverage.
To be clear, this doesn't imply that I agree. I’m not convinced it’ll succeed as intended, but that’s the best-case rationale. It might be a "Hail Mary" to prevent ceding global leadership to China.. or a way to "hit reset".
What I don't understand is that China was dirt poor 30 years ago and was not a manufacturing powerhouse even 15 years ago. It was the Taiwanese, the Japanese, and the westerners who invested heavily in China and brought them technologies and expertise and bootstrapped the massive manufacturing industries in China. The quality and professionalism of US workers used to be the envy of Chinese people. Since when rebuilding the manufacturing business has become mission impossible? Can we really keep printing money when we make so little stuff? I get that we have great service jobs, but who wants our services if we don't make anything worth servicing? Back in 1917, Allyn Young believed that London would always be the finance center of the world, but we all know what happened later.
I'm not sure if Tarrif will work in the end, but at least it can attract additional investment given that the US is the largest consumer market in the world. Combined that with deregulation (assuming it will be be successful) , at least the US has a shot to bring back the key manufacturing business. And don't we believe actions lead to information? What have we done in the past 15 years to stop our deindustrialization? At least this time our government is trying. For that, I'd like to give them benefit of doubt.
Hence he didn't put tariffs on Russia.
He’s maintaining crippling sanctions on Russia…
There are no steelman arguments for THESE tariffs, which are based on the premise of blindly assuming that all trade deficits across the board are bad, even for things the US is physically incapable of producing like various rare earths or diamonds, and then even more blindly setting tariffs based on the raw numbers of those trade deficits.
IPOs already getting pulled, M&A market dead, market selloff, inflation persisting (soon to rise), probable max tax brackets to rise, etc.
The degree of thumbing the scales has to outweigh unpopularity of the incumbent. High voter turnout will beat any attempts of deniable cheating. Which is why unpopular dictators end up imprisoning or disqualifying their opponents , and rather than subverting the voting process. America hasn't reached "desperate dictatorship" levels yet, nor will it be there in 4 years. Extrapolating from current events, congressional Republicans are barreling towards a midterm wipe-out.
Absolutely delusiomal nonsense. Trump lost an election by nearly 10 million votes and still complained about fraud. If he's in power, he will stop at nothing to make sure this fraud thing is the law of the land.
It will make Hunter's laptop seem quaint.
Also if you are wealthy you have more money in the market than sitting in cash, so crashes hurt more than help you.
Buffet has been sitting on a massive pile of cash for some time now...
We hedge our bets (hence the name hedge funds) so that in market downturns, we use the profits from these weird investments that hit the green without liquidating the typical stocks. We use that money to buy the dips on regular stocks, failing businesses, and cheap real estate. Then, the market rebounds, and we still have our SPX without taking losses. You only get richer once you hit approximately $20M net worth and understand this.
Institutional investors love recessions. At my trade desk firm in Chicago (CBOE) during Covid we were each making the firm like $300k/hour scalping retails with a 20% cut.
But glad things are going well for you in your universe.
And perhaps Google about hedge funds a bit to understand how they make money. Of course most are down now...
The whole point is not all hedge funds are supposed to outperform SPY, hence the name "hedge." They make money on fees.
They can't all make profit in a bear market. But some will. All are still making profits on fees.
Literally, please ask ChatGPT this: "please explain to my friend why very rich people use several hedge funds that are underperforming SPY"
And, of course, all hedge funds would like to be profitable all the time, but that's not a reason why people invest in them.
Some people invest in hedge funds that only buy whiskey, tequila, and cigars.
but yeah, it is a red herring in an industry that’s obsessed with hyperbolic phrasing
I know % losses are far more relevant, but it's still baffling the support this guy gets.
Tariffs are supposed to be imposed by congress, not the president. The president is using a loophole (declaring a national emergency) to give himself authority to bypass congress.
It shouldn't be possible for 1 branch of government to take such drastic measures unilaterally.
We lived in the illusion that this wasn't the case for nearly 250 years because most of the time, elected officials have largely acted in good faith. However, the Republican party (correctly) determined that when it comes to wielding power most effectively, it's in their best interest to protect its own members in all branches rather than members in each branch thinking of themselves as independent of (or even in conflict with) the other two branches as the constitution envisions.
1. Why didn't they include services exported by the US in their 'tariff chart' ? The EU for example, imports a lot more US (tech amongst others) services than they export to the US. It seems disingenous
2. Why couldn't this tariff strategy be implemented in a more calculated, predictable, slow way to give everyone time to adjust, at home and abroad. What's to gain from doing it this way over the one I mentioned ?
They are also just terrible at communication, needlessly aggressive and bombastic
If I was to hazard that guess, they don't care about services, services are already a dominant US product, no one can beat us. Manufacturing is where we are weak so they went after that. They want manufacturing to come back to the US in case of a war with China over Taiwan. They also don't want counter tariffs on services as again that's our major export. What's really interesting and I could be wrong here is I dont think anyone else has actually hit the US with tariffs on those same services. Its a very calm trade war so far. But its early
"I don't trust them at all, I just needed them to beat the alternative" Did you think this meant regarding his economic policies as in make money from them? I did not vote for him on the economy at all. If I see a way to hedge against what's coming, of course I will do that. Would be foolish not to.
By alternative I meant the other option for president. If you are angry at me for that, then so be it but you don't know me, we can be civil. You are free to just not comment.
You mentioned he delivered/will deliver on roughly 60% of the things you were looking for.
Do you draw the line somewhere and say, even if I get 60% of things I want, the other 40% could be/are a real dealbreaker ?
It's a very common thing for politicians to deliver on some things that are inconsequential while pursuing their own private agenda for other things.
In my home country there's a saying about politicians: He stole, but he also delivered. The social contract is that as long as the politician does 10% common good, (usually highly visible, populist, short term stuff) he can pursue his own interests be they short term, or long term, even if they are detrimental to the society as a whole - as long as he delivered some short term results.
"Do you draw the line somewhere and say, even if I get 60% of things I want, the other 40% could be/are a real dealbreaker"
Absolutely as soon as we fall into secret police and citizens being taken in the night and put in camps or falling out of windows, that's the line for me. He has already come close to it. Censorship is another issue for me but that is not really his thing.
I am quite angry at the insanity with the El Salvador prisons and the man "mistakenly" taken. That's something I am watching. I did vote for him on the border though and removing people that are here illegally. So I have to temper that with the knowledge that the process is not a nice one and there is going to be violence and mistakes will be made. That is the stark reality of calling for enforcement of laws though, law is only law when backed by state sanctioned violence.
"He stole, but he also delivered" I like this and I think this aligns with my outlook. I know Trump is going to make moves to enrich himself, and I am ok with it as long as its not blatant and as long as it causes little collateral damage. I don't think this is one of those things. I think he genuinely believes that doing this with the tariffs is a good thing.
I mentioned it in another of my comments if you want to find it, on how the crashing stock market allows the government to refinance $10 trillion for lower rates. I think that's the goal here. That and rebuilding manufacturing and punishing China. I have no idea how this plays out though. Its possible he doesn't either.
Trump is a lot of things but he is not an idiot. He could not still be here if he was, he gets away with things that would sink anyone else. On top of that he has Musk and that man is also a lot of things but he is one of if not the smartest most driven man on the planet.
Trump is not a nice man, I know that but it will take a brutal man to carry out the social policies I voted for and not collapse under the constant criticism. I knew from the beginning it was a deal with the devil.
So I will watch how it plays out.
The other side was just so much more dangerous long term in my opinion. I wont go into my reasoning, this is not the place for that and it's not relevant to the conversation. Just know I am very comfortable with my vote on those grounds.
So I will remain cautiously optimistic that there is a plan and rational. Trump is Trump but there are some very capable people on the economics and finance side of the house.
At this point in the game I would vote the same way again without hesitation. It's only been 100 days though.
You're drawing the line at things that are already happening. Legal citizens are being put into literal camps (the fact it's a modern warehouse or a Salvadorian prison doesn't make it less of a camp) solely based on their appearance.
He's blatantly making moves to enrich himself (see meme coins, tariff back and forward, etc), and unless you live under a rock, the collateral damage should be clear to you now. He's constantly lying when he speaks and I'm sure an educated person as yourself can see that.
You say the other side was more dangerous long in the long term, and although I don't like either side either, it was clear which side was still progress.
You somehow got into a mental state where you're able to trust someone to do things in good will and at the same time say that he's "not a nice man".
You support what is being done, and at the same time you say you don't understand it and you admit it's possible he doesn't either.
Please, take a second to think why billionaires of all people, would be interested in doing anything that doesn't benefit them. They're billionaires because they spent their life doing just that, they don't care about you and I.
You're clinging to the hope that maybe what they're doing somehow benefits you, but you're not even sure how that would happen.
When this happens, it's already too late. Because it means they've already disappeared all the easy people, and they're comfortable enough to start disappearing citizens. So you should move your line waaaaaaay up to when they start disappearing the undesirables.
A really good line would have been calling for free and fair elections to be overturned. They made their intentions very clear that day.
Now secret police are disappearing people off the street but that's still not crossing the line, because the status of their citizenship is under question.
But you see there's only one more step for them to cross your line. So let me ask you: what are you going to do when (not if) it's crossed?
We've been there since the Floyd protests, at least.
You know that was a joke right? The people who said it were kidding around, you know, making stuff up?
Just because his well-documented racism doesn't affect you doesn't mean it's non-existant.
https://www.theverge.com/news/642620/trump-tariffs-formula-a...
This is a scandal in its own right, but we have to deal with an economic crisis, and a national security disaster, on top of an apparent complete collapse of competence in the west wing; it's literally being run by C-students who graduate without doing their own homework.
To me, the more concerning detail is that they don’t have any messaging about what their strategy is, except what appears to be guessing from various members of the administration — often which is mutually exclusive with other messaging.
The real risk of all that is people are going to sit on the cash they have, unwilling to make purchases when they can’t see the risk in their future.
My wife and I want to install new flooring, but that’s off the table for us right now, until we have a better idea where this is going.
^ those decisions are disastrous for the economy en masse
There's a difference between nonpartisanship and ignorance.
Incompetent leader and a coterie of overconfident personalities with no depth or expertise. The fallout is predictable.
“THIS IS A GREAT TIME TO GET RICH, RICHER THAN EVER BEFORE!!!” Trump said on Truth Social (2025-04-04)
https://thehill.com/homenews/administration/5231994-trump-tr...
1) They didn't include services exported by the US un their "tariff chart" because that chart is just some post-hoc rationalization to their arbitrary, capricious actions.
2) They could implement a more calculated, predictable, slow way of doing this, but these people are not the kind to do that. They are shoot first, don't even ask questions later, just claim victory and keep shooting types.
> What's to gain from doing it this way over the one I mentioned ?
You're asking the wrong question. The right question is: "What do they have to lose by acting the way they are"?
They have nothing to lose. They aren't accountable to anyone. They aren't eligible to be reelected so they're not worried about another term. They have control over all branches of government. They have control of the DOJ and the FBI so they won't be investigated or prosecuted.
There's no downside or disincentive to act the way they are, and so that's why they're dong it.
That’s so true, and I think it undermines reasonable conversations about his actions. Like talking to someone about why they’re rooting for the bad guy in a movie.
To put that in Simpsons terms: "The Garage? Well oo la di da Mr. Frenchman."
Dow Slides Another 1k Points. Nasdaq on Pace to Enter Bear Market
The United States has burned trust and credibility that can never be recovered. Its collapse into a pariah state like North Korea or Russia, cut off from diplomatic ties and trade and left by most of the world to decompose into an irrelevant husk is inevitable. The market will adapt, likely after years of global depression, with China and Europe competing to become the new global hegemon. The normal that existed prior to Trump, like all those jobs he promised, is never coming back.
If you see a Trump supporter, be sure to thank them.
Speaking as one of the biggest Trump critics.
And I believe this is a correct analysis, but I also think that Trump is over playing his hand and miscalculating the reactions of the world at large.
We are going to see a lot more chaos and weird moves during the coming weeks, but I am not optimist about the final outcome.
After that it could level off. Or continue to fall, if there are knock-on effects that haven't yet been priced in.
(Or, I suppose, a bunch of manufacturing could spring up in the US, superior to the rest of the world, giving us whole new export markets and pushing the Dow into six figures. Let's find out!)
Didn't we find out like a century ago with the Smooth-Hawley tariffs? Do we really have to test this again, and now in the sloppiest most haphazard way?
China is not playing ball, but equally large India is working on announcing a Bilateral Trade Agreement (a FTA in all but name) with the US by Aug-Oct.
To put it impolitely, bullshit. Zero rational analysis comes to this conclusion.
Trump began this idiocy by attacking Canada and Mexico, the very countries he triumphantly signed his trade agreement with just five years ago. He lied -- that's what he does -- about a made up Fentanyl emergency, but it's clear the guy loves tariffs (he's been going on about this for years, and still people try to pretend that isn't what this is about...amazingly everyone just assumes that everything out of his mouth is a lie). Outside of oil and gas the US has (or rather had) a massive trade surplus with Canada, but oh well that's a thing of the past now and will never return.
Then he attacked everyone else.
He did the same thing in term one. He could easily have gotten everyone onboard with strategies to contain or slow China, but instead he pushed everyone else away. He had adults in the room containing his profound sabotage of the US the first time, but this time he's going to speedrun the country to dissolution.
I get that the Trump faithful are desperately trying to do the 4D chess thing now. It will never work. The clown has no idea what he is doing, and has build such a cult no one can tell him how profoundly stupid he is. His treasury secretary is likely to quit in days.
But I maintain that the real core thing behind this chaos is about China.
Early in the nonsense with Canada, Lutnick and Bessent repeatedly tried to give an offramp by broaching the possibility of a revised CUSMA / NAFTA that included more coordinated action on China. The problem, though, is that Trump is a catastrophically stupid imbecile / self-serving criminal, with his administration of Fox News plastic face morons and criminals -- I will not mince words about it, and every American should feel shameful how far they have fallen -- so all the attempts are for naught. Trump kept barrelling ahead like a particularly dumb rhino, to the net effect of significant damage to the US.
Like, at this point everyone realizes that China is going to take Taiwan right, and it will 100% be because of Donald Trump. The only thing stopping them before was concerns about relationships, trade, being a pariah. Now you have the US repeatedly boasting about taking Greenland, about making Canada a state, and spitting in the faces of every ally, all while pandering to dictator garbage like Putin. Yeah, one China will be Trump's legacy. And from that, the percolating violence that will grow.
It cannot be overstated how catastrophic that clown will be for the US and for the world in general, and he's just getting started. Nuclear proliferation has a decade ahead of going absolutely wild.
It is a many-magnitudes more dangerous world, and Americans that think they will be immune from what is coming, courtesy of that orange faced clown, are in for a very rude reality.
Either way, the stature and role of the US internationally has been forever altered, and not positively.
One of America's largest trading partners (6th largest import market) so there's that.
Furthermore, India is also working on announcing a Bilateral Trade Agreement with the US before the QUAD Summit in October (https://www.bloomberg.com/news/articles/2025-04-03/trump-pil...)
Other large countries also have delegations in the midst of negotiations already - like SK (https://www.bloomberg.com/news/articles/2025-04-03/south-kor...).
The EU has also started negotiating (https://www.bloomberg.com/news/articles/2025-04-04/eu-begins...)
And Canada and Mexico remain under NAFTA/USMCA.
Tl;dr - most of America's largest trading partners are in the midst of negotiations or exempt.
What do you think Vietnam will offer?
It has negligible tariffs on US goods. It exports a lot to the US because it has very cheap labour, because it's a poor country. It is in no position to buy more from the US. There is no universe where it's going to even remotely close that trade deficit.
So what, in your rose-coloured view, do you think they are offering up?
I mean, everyone realizes this is a hilarious cope regardless. Trump declared, with utter absolutism, that the tariffs are not going anywhere and there is no way to negotiate them. That his "ERS" would net trillions and balance the budget. But wait...now it was really a masterful negotiating strategy?
I mean, Trump could have said "here's the tariffs we have estimate based upon a current analysis", and if isn't remediated in a month we'll stagger in "reciprocal" tariffs. That isn't what he did. Instead he did the stupidest thing imaginable, which is what we see today. So yes, when he has to backtrack because it was the most catastrophic self-destruction in history, feel good that a super poor country came "hat in hand".
There is no deal to be had here. Trump wanted to impose the largest tax hike in history to pay for massive tax cuts for your plutocrats. Everything else is bullshit.
In a couple of months Trump has firmly destroyed US leadership, and absolutely cemented China's ascendancy. All of the ridiculously specious "it's actually 4D chess and what he's really doing are..." is a riot in the context of the pure unadulterated stupidity coming from this administration.
Fixed that for you. It’s horrifying isn’t it?
Don’t micron, intel, and GF have US fabs?
Because the components are going to become more expensive?
Because the US labor is more expensive?
Do you know how it breaks down?
money on the table for patriotism ?
Of course.
Do you think you're the only one who wants to source US semiconductor parts?
It's supply and demand. Along with some good ole fashioned profiteering.
That said, if the US does enter a depression then the cost of labor in the US will plummet as people compete for jobs which may? change that ratio in favor of manufacturing in the US. That is rumored to be the "big secret" behind these stupid moves but frankly the folks who believe that are not seeing what I'm seeing I guess.
I gave this a shot at home a month ago by cutting my kids off from toys online and getting them a 3D printer. They have already printed more toys than the cost of the printer. The only problem is that the printer was manufactured in China.
In 2024, $15 BILLION dollars was invested in AI startups, and a record $250 BILLION dollars by established companies (nVidia/Microsoft/Google/Facebook/Apple)
I don't believe that AI making any meaningful progress on the "timeline" will occur just because you throw even more money at it.
Lots of jokes flying around about how the new business opportunity is smuggling. Sure it was booze back in the day, but hey meeting market demand is a thing.
(Hint: Trump’s just put an extra 20% tariff on it.)
The uncertainty of what will happen 2-3 weeks or 2-3 months (or 2-3 years) from now is causing a lot of people to react very negatively to this, regardless of their personal politics.
You mean "this week."
It'll get rewritten by then.
Stocks have done very well and have been at historically high prices. There is still much room to fall.
My European friends and family are amused... China is going to take the US' place in the world economy, Europe will become more self-sufficient and innovative, the US turning mercantilist will simply reduce their influence in the global marketplace... There's not much the world truly NEEDS from the US... Stuff like semiconductors were outsourced long ago, ASML and TSMC are the most important companies in that equation, neither are American.
This is just the beginning, and I can’t wait to see even more threads here trying to rationalize why this is all Good, Actually before a thread discussing the end of Pax Americana gets killfiled by an Altman acolyte.
Obviously it can't be that easy, but seems like the market still thinks Trump might just do a complete 180? I guess he's done so multiple times the last two months, but those threats/alarms seem like dry runs from which he's crafted his current policy.
Just remember you didn't make gains until you sell those puts. If you made a lucky bet and won, sell!
Countries acquiesce
Or Jerome Powell does an emergency rate cut like the President keeps demanding
Or Trump acquiesces
Or everyone just decides they oversold everything
enjoy the volatility, the first hit is free
They’re options, they can go all the way to zero, not “near to zero” (which is what happens to the majority of options contracts regardless). That said, with options you leverage a lot more shares than buying outright, so the risk can be smaller. And if OP has any sense, they’ve unloaded those positions already and made some serious bank.
specifically because OP bought 1 to 2 week expirations, so a market reversal at the other end of the weekend won't set them to zero
Absolutely not, I am a coward and only buying options around the $50-range and selling out for +$20 to +$100.
This could go wrong in so many ways and eventually undermine US strength while boosting Chinese global influence even further.
Biden was also willing to do so. For example, he put a 100% tariff on electric cars.
> But we do have a huge debt problem in this country.
Which is largely Trump's fault. He increased the debt by $8T versus Biden's $5T, and people costing his promises on the campaign trail concluded that his promises would increase the debt at twice the rate that Harris's promises would have.
Remember the financial crisis when Bush (R) wrote them a $800B check and Obama (D) delivered it hat in hand? Suck it wall st.
This is actually a tax on the rich. And they won't care about higher prices.
Nope, it's a tax on everyone. Rich people will pay more of it, but non rich people will be harder hit as % of income. Same as sales tax/VAT.
Rich people will pay more for their food too, but they can afford to - they are rich.