WAI. Trump is crashing the T-note yield to refinance $9T (which is how much US debt is going to mature in 2025) at a lower rate. That, for those of us who know arithmetic, is approximately one quarter of all US debt. It seems to be working.
He doesn't care about the debt; you can see this in how he pays taxes.
What he needs is something that lets the rich have their cake and eat it too. He needs to appear to be doing something for working-class American manufacturing jobs, while making the people that would fill those jobs bear the brunt of the impact. Tariffs are an expedient way to do that. They don't have to be approved by Congress and are effectively an autocratic way of raising taxes. They apply to prices first, not revenues, and they're simple to implement. The surplus value that used to head to shareholders as a result of cheap foreign goods will go down, but that can be offset by layoffs and the like.
The refinancing, if it's even a viable plan, is a nice side-effect.
could you just do the layoffs without the tariff if it were a conspiracy?
If you lay off people to send the stock price up, you are the enemy. If you do it to "protect American manufacturing", you're a hero.
Well, to a very niche part of the voting public, but it's enough.
Now, does it benefit anyone? Hell no. But the tariffs are the hook that make him different from decades of GOP free trade globalization policy.
Even if this were intended (unlikely), destroying $6T of notional stock market value so far to save $270b/yr of interest (if 10-year yields drop by 3%, which hasn't happened yet) is a bad trade.
You're crazy if you think that the trade barriers are over _thirty percent globally_.
Net FDI = trade deficit is an accounting identity. Reshoring and the trade deficit aren't necessarily complementary.
Who cares what Bernie was advocating?
Give some good examples, please, to support your claim.
Warren Buffett warned about this back in 2003, and proposed an elegant solution, which, unfortunately, would require Congress to implement it through legislation: https://faculty.washington.edu/ss1110/IF/Buffett%20Fortune%2... But we do not have a functioning congress, so Buffett's solution is impossible.
"Somewhat" being a key operand here. America is a net importer globally, a protracted trade war is inherently leveraged against us. Neither the rock nor the hard place is forcing anyone to harass our trade partners and abandon our defensive alliances.
Virtually none of the US’s major trading partners have high tariffs. Per the World Bank:
- EU: 1.39% total effective tariffs.
- China: 2.3%
- Canada: 2.35%
- Mexico: 1.21%
- Japan: 1.84%
US (prior to Trump II): 1.47%
US (next week): Estimated at over 20%.
There's also another aspect, beyond tariffs. In a very real sense, we're paying for the security of EU, Japan, and Canada. Why aren't they buying more of our goods or energy? How long can we foot the bill of over 2/3rds of NATO defense spending, _and_ run $900B+ trade deficits? To what end are we funding the security of developed countries, most of which are half across the world, who could fund it on their own? Why are they _still_ buying Russian oil and gas while we do all that? The whole situation is idiotic.
Trump basically has two levers when it comes to trade deficits: boost exports, and reduce imports. Of these he only directly controls the latter, but he's trying to pull both. And crash the treasury yields at the same time.
His introduction to his solution reads more like a prophecy. Other countries, including have also taken the trade deficit path. Mine is nowhere far as down that path as the USA, but still it makes me nervous. I saw no way out - until Trump. It looks very likely Trump will make Buffett's prophecy come true. The fallout should make all sorts of thinks possible - including solving the trade deficit issue.
Uhmmm, no. Did I imply that? I can't see how Trump benefits from this, let alone anyone else in the USA. In fact I had to think long and hard to come up with anyone on the planet who benefits. Maybe Putin, but now he's up against a re-arming and united Europe.
I was just admiring Buffett's solution. It turns the debt into a marketable good, and so lets the market decide who will be best at getting reducing it. It probably would not work for some reason I can't think of, but it's very appealing.
But now I think about it, Buffett may benefit. He said in the article he's moved a lot of his portfolio overseas, according to the AI's around 40% of it. Lets assume the worst happens and the US dollar and economy falls off a cliff in the next 4 years. Trump and the rump of barnacles in the GOP that support him will be wiped off the political map, because as Biden discovered yet again, regardless of how well you govern "it's about the economy stupid", even if the economy was tanked by the other sides COVID bazooka 4 years prior. Buffett will move his portfolio back onshore after it all bottoms out and the price is cheap. The pain will be remembered so there won't be a repeat for at least a few decades. The USA will bounce back, and Buffett doubles his money. It's the typical Buffett play.