You know the craziest thing about watching this as an outsider in Canada is that we as a nation are losing one reliable trading partner (and obviously losing an ally but that's another conversation). Germany - losing a trade partner. Japan? And so on. But the US has lost 180 reliable trading partners. You're already seeing in the first week burgeoning trade alliances between nations who wouldn't have cooperated before, and the amount of resentment against America from this is going to take a generation to heal.
Of course I'm sure some people would claim this is 4D chess or what not but.. sometimes the person doing something crazy is just crazy at the end of the day.
Very well put. Alliances take years to build but can be broken in just days.
I'm tempted to think (hope? dream?) that the markets and trade will rebound if all this chaos makes American politics swing back towards an interest in global stability, but I think anyone partnering with the US would do so VERY carefully and right now the entire world is plotting how to remove US dependencies.
I was bringing this up with a guy yesterday who was genuinely supporting the policies and somebody chimed in that they were not worried at all, because everyone wants to trade with the big boy in town. Trust is not important if they are afraid of you (I'm paraphrasing). Quite a different perspective, but it is consistent with an observation I made about a lot of US comments, people are quite happy for their country/government to engage in tactics (e.g. bullying, industrial espionage even against partners...) that they are enraged if others (E.g. China) do it. Europeans seem to be much more susceptible to an "if you don't want it to be done to you don't do it to others" argument.
> Trust is not important if they are afraid of you .. Europeans seem to be much more susceptible to an "if you don't want it to be done to you don't do it to others" argument.
I've noticed this also, having spent a lot of time in both places. Some would say this is part of the American national character, and it's the darker side of hard-nosed individualistic cowboys, etc. The famous opening speech of Patton comes to mind here:
> When you were kids, you all admired the champion marble shooter, the fastest runner, the big league ball players, the toughest boxers. Americans love a winner and will not tolerate a loser. Americans play to win all the time. Now, I wouldn't give a hoot in hell for a man who lost and laughed.
There's at least some truth to this and the mean-spirited arrogance/strength in the rest of the speech being in line with national character, I think it has to be admitted. This seems like the guy was certainly never cut out to be a diplomat or act with moderation, and maybe most Americans aren't. That said though.. maybe a deeper issue is that suffering (economic or otherwise) changes people. Makes them merely hypocrtical in the best case, aggravated and mean on average, or in the worst case positively cruel. A lot of America has not been ok for a long time now.
Respectfully, I am suggesting that OP has an intellectual disability to think deriving notions about the 'American' national character from Patton is some tocquevillian insight and he may find it profitable to watch Downfall to try and figure out Brussels' next move. Don't forget the dousing rods.
> "if you don't want it to be done to you don't do it to others"
Doesn't work. We opened trade to China in the '70s. They took advantage of us, stealing IP, manipulating currency, paying their people terrible wages, crapping all over the environment. We let their companies freely in the US, they very severely restricted US business ventures in China.
Detroit, a former shining city in the industrial heartland, is now a bandit infested ruin.
In the US, a person used to be able to graduate high school and get a job that could support owning a house with a yard, a non-working spouse, a car, and multiple children.
For me, coming from the Rust Belt, it's incredibly, painfully obvious that globalization's basically destroyed the US economy. I'm constantly amazed to meet well-meaning, intelligent people who don't seem to understand this fact.
The Rust Belt's just one part of the story, not the whole US economy. Globalization actually created tons of wealth for the USA, but that money hasn't been spread around fairly. It's all piled up in coastal cities and with rich folks while factory towns got left behind.
Cutting off global trade wouldn't fix anything - it would tank the overall economy while only helping a few powerful players pulling the strings. The real problem isn't trade deals; it's that the USA never properly invested the profits back into the communities that got hit hardest.
The US economy is the largest in the world, disposable income, both average and median, are highest and second highest respectively. Median income is 30-40% higher than comparable developed economies, and significant higher than China.
And supporting a whole family on a single income well was a very narrow window of time, and it required the US to have no real economic competitors. Where US workers had no competition on the world stage, but their output was sold on the world stage. So even if the US go isolationist that's still never coming back.
A lot of this is just social change from the womens liberation movement. Women went to work and the market adapted. Now, in the main, you need 2 incomes to run a home.
It's worse in a lot of countries where tax policy disadvantages the pre-1960 norm like the UK.
Some places relied on other ways to make money (here in Australia it was comodoties). A lot is just social change to two income households, and it's main contributor to living costs was housings. Two people bringing in money ,means that households can pay more for a mortgage or rent, driving up costs.
That's what drove up housing costs after we switched from single to double income households. But before that, but before that, people in lots of countries could afford a house and a family on a single income, despite competition from other countries.
It's not that this situation was unsustainable or only attainable for the US; this situation should have been the norm, with the additional income just providing extra luxury or time off, but instead we got screwed through artificial scarcity and more money going to the very rich instead of the working and middle class.
>In the US, a person used to be able to graduate high school and get a job that could support owning a house with a yard, a non-working spouse, a car, and multiple children
A lot of the change there is not down to China but limiting the ability to build a cheap house through nimbyism and regulation and then competition from other dual income / high earners bidding everything up. You could fix it by allocating everyone a bit of land and letting them build whatever on it even if it was just a shack. It's not really trade that's the main problem.
For the people who want ^this guy to shut up but haven't engaged.. which part of the above is wrong? I can see hyperbole of "bandit infested ruin" pushing some buttons but otoh it's seems likely that crime is connected to general economic health.
It’s right and wrong. Globalisation has hurt the rust belt, but it’s also allowed for much cheaper goods, which many people have enjoyed. It’s also made other economies much richer, which has allowed them to purchase U.S. goods (China being an immense iPhone market, for example). It’s not zero sum. If the world economy grows, and the USA holds onto a massive slice of that growing pie, then the USA wins - as it has been doing.
And the part about life just being totally unaffordable now isn’t really to do with China stealing from the US - housing is catastrophically expensive in many countries, and is more to do with how it has evolved as an asset class than trade relationships.
Rust Belt isn't the entire US economy. Blaming where the US is today on globalization is probably 30 years too late.
The US economy has created enormous wealth. Domestic policies on how to spread around the prosperity to all citizens is where the US failed. Think more of what Sanders and AOC talk about, not bringing back factories that will be 99% automated anyway. For one example, how can the most prosperous country in the world have a majority of its bankruptcies tied to medical debt? And somehow people want to blame China or globalization or some other boogie man?
For me the idea of "stealing IP" in a society like China seems to miss the entire point of what they're doing and seems to fall short of having respect for cultural differences. What we think of as "respecting intellectual property rights" can also be seen as "hoarding property" which is antithetical to communist ideals.
Since your comment is comparing the US with China, maybe a bit of "whataboutism" is warranted here.
> stealing IP
Edward Snowden's leaks reveal that the US engages in wide-scale economic espionage. Additionally, the US also uses extra-territorial means of coercion to acquire cutting-edge technology -- see e.g. the Alstom case.
> manipulating currency
For many decades the US has been able to print money like a madman while the rest of the world absorbs the costs by virtue of the USD being the primary reserve currency globally. The US is also not above strong-arming its allies into appreciating their own currencies to boost American exports -- see the Plaza Accord, which partly contributed to Japan's subsequent Lost Decades.
> paying their people terrible wages
China has lifted hundreds of millions of people out of abject poverty in the last 20 years. In the US wages have remained stagnant for the working class over the same period, if not longer. Frustration among the working class -- which is entirely justified and understandable, by the way -- is probably one of the reasons why Trump was re-elected.
> crapping all over the environment
Chinese cities today are mostly clean and quiet, increasingly powered by renewable energy with more and more electric vehicles driven on the roads. The Chinese are also undertaking massive greening projects, such as the Great Green Wall: https://en.wikipedia.org/wiki/Great_Green_Wall_(China) On a per-capita basis the Chinese emit far less carbon dioxide than Americans do.
The US, especially when compared to almost any other developed country, is in no moral position to be sanctimonious about environmental issues.
Don't blame other countries -- China or not -- for America's own catastrophic, chronic failure in leadership and subpar policymaking, especially when America has enjoyed so many entrenched advantages for so many decades (and still does).
I agree that the Rust Belt has had it rough, but it is not the entire US economy. I won't argue that people saw the future in the 70s, but those jobs were/are going away to automation regardless (and they are certainly not coming back). It's better to not be reliant on them now. In hindsight globalization was right move. And even if it wasn't, trying to blame the current US issues on globalization is 30 years too late.
Statistically the US manufactures more than it ever has on a $ amount, and is the #2 manufacturer in the world. Until recently, the US economy was the envy of the world. The trade situation the US setup did and does work, and along with other policies, led to enormous prosperity that was just unevenly distributed.
Where the US failed, and mostly around GOP and now Trump policies, is not spreading the growing prosperity to more of its citizens. Given this enormous prosperity where is universal healthcare, free/low cost college, UBI, etc...?
Unfortunately, the people who really need these policies have mostly voted against them for decades. Their anger is legitimate, but it's misplaced. Being angry at "globalization" or "illegals" or pick a group is a misdirection fed by years of AM radio and Fox News. Now we are seeing the cycle continue, but this time the US economy may really be destroyed.
> In the US, a person used to be able to graduate high school and get a job that could support owning a house with a yard, a non-working spouse, a car, and multiple children.
That was never sustainable in the long run and no one can bring that back.
Well, we can't count on the entire rest of the world having all their factories bombed and being the only nation with reasonable manufacturing capability all the time.
The US was not an export-focused economy in the 50s and 60s. In fact trade as a percent of GDP bottomed out in those decades. Arguing that the prosperity for the average person was only "sustainable" in an environment where there wasn't foreign competition is an argument for tariffs.
It was the US benefiting from its position on the world stage as to why that was possible. The US was never and is not going to retain it's position on the world stage, and indeed under Trump it is radically declining.
The US is going to normalize with other western nations as we enter a multi-polar world.
The problem is Republicans don't accept that and think they can return to the 1950s.
When people say that China will replace the US as the world's largest buyer of exports, I always wonder what planet they're living on.
China does not WANT to do this. They have tons of protectionism. They give tons of preference to their own firms and protect their domestic market from foreign companies. This enables their firms to grow strong. This is a strategy which has been practiced by many many developing nations. They can't live without it and don't want to.
Why does gmerc think that China is going to rewrite its entire economic policy in order to take "market share?" We usually use that term to mean, you are selling stuff and want to sell to more customers because you make more money. In this context however we are talking about BUYING more stuff - why would it be sane for China to dominate the act of buying everything it can on the planet? (At the inevitable erosion of its manufacturing base - just like what happened to the USA when it opened up its markets.)
I mean you can think whatever you want about Trump and his actions, but it just makes zero sense to think that China will step in and fill the old role of the US here, when doing so is a polar opposite from their current trade strategy and would probably collapse their economy. And that gets to the real elephant in the room, which is that no one wants to do America's "old job" anymore. No one else wants to be the ubiquitous buyer of everything with big trade deficits all over the place, the vast majority of countries on earth defend their domestic markets and preference their local firms more than pre-Trump America did - exactly what are these new alliances that are going to arise, when everyone wants to sell to other countries, and no one wants to buy?
I happen to live in a country whose #1 export market was the USA and is being slapped with some of the largest tariffs. Time will tell of course but at the moment they pretty much just seem to be fucked and all they are saying is they are ready to come to the table and negotiate with the US as soon as possible. There just doesn't seem to be a ton of demand for their exports elsewhere - it's not like every country on earth isn't out there pimping its exports to anyone who will listen, pretty much all the time. If China or the EU had a burning need for a couple hundred billion dollars more of shellfish or textiles or what have you, they'd already be buying it.
cycomanic says>"Europeans seem to be much more susceptible to an "if you don't want it to be done to you don't do it to others" argument"<
While they may "talk the talk", Europe doesn't "Walk the walk"! Europe has strong tariffs on imports. The USA is now simply equalizing the situation. Here's an example:
Automobile Tariffs by Country 2025: put your cursor on a country to see its automobile tariff. European tariffs on autos are roughly four times those of the USA. While you're there you can look up the "sales tax" too!
European companies have had tariffs on USA products for decades. Those tariffs protect and maintain industries within a country. The USA failed to maintain that protection: the USA lost jobs and harmed industry which guts an economy. Meanwhile, for example, Germany protected it's auto industry with tariffs on cars from abroad.
My feeling is that "What's good for the goose is good for the gander."
There's no doubt that the "Law of Comparative Advantage"(LCA) in economics is a valid argument for trade. However, the LCA is almost always argued in the absence of externalities: costs generated by use of the LCA are usually not taken into account when examining a full economy: job losses, industry shrinkage and failure, etc.
I understand that argument I've never seen it spelled out by anyone other than me. I only brought it up as a last effort to explain the possible thinking behind these actions. It still won't make sense because even if you believe that you are the top dog and you can effortlessly bully others then you'd have to realize that you won't be the top dog in every situation all the time everywhere at the same time. There will be many instances where others who previously leaned your way for free will now look to get paid for leaning your way.
Americans are taught at a very young age about Manifest Destiny, the notion when starting in the East that America has a right all the way to the West. While events like Trail of Tears are mentioned, they're downplayed during early school years and not brought up again later when kids may be able to form an opinion. Essentially, winning is ingrained into the American mindset and is the driving force behind almost everything - this helps when making companies big and even bigger, but also mutual growth hard to fathom. Current US policy does feel very American. Seems like a make-or-break moment for the American model itself, and if it breaks there'll need to be a change starting from the early age education/propaganda.
> Europeans seem to be much more susceptible to an "if you don't want it to be done to you don't do it to others" argument.
I mean, in the specific realm of trade wars, that’s probably more correct, because the game theory of the thing tends to make retaliating against the aggressor nigh-inevitable, particularly in a “country v world” situation.
The US has benefited massively from soaking up the best brains globally. That's not going to keep happening; I have plenty of colleagues already who are refusing to travel to the US. We may well even swing into brain drain as Trump et al move closer to executing their cultural revolution.
Meanwhile, all those other countries will start trading more with each other. The US stands to be left out. Won't happen overnight, but Trump is pissing away the advantages. When the dollar isn't the global currency anymore things will really start to hurt.
It's an idiotic take I agree. However, I don't think the US has benefited massively from soaking the best brains globally because of its foreign or trade policies. Most dominant voices about US foreign policy and foreign business interest has always been characterized by aggression and exploitation.
I highly doubt people were ok with that because the US had low tariffs on their countries exports to the US.
If you (the US) massively subsidize the world order through your financial markets, military defense, and foreign aid, it’s only fair that you get to take advantage of your position.
Historically, the US has done this at the expense of its working class. Now there is a populist feeling that we are owed a long due “payback” for our generosity.
The Bernie/AOC left believe the payback is owed by our elites, who enriched themselves by austerity and hollowing out our industrial base.
The Trump/MAGA right believe the payback is owed by other countries — freeloaders that have benefited from our technology, military defense, and foreign aid while simultaneously being net exporters to the US.
To the latter crowd, the kind of “bullying” behavior you describe is actually the equivalent of a gentle giant who never stood up for himself finally deciding that he won’t take any more shit.
Edit: To any downvoters, please comment with where you think I’m wrong. I’m not defending any policy, just providing what I believe is an accurate representation of the populist American mindset described in the parent comment.
America is the richest country in the world. That is the payback. Yet somehow the working class is screwed.
People don't want to admit wealth distribution is the problem because that would make them "communists". It's an emotional response. I'm scared how far they take it.
Whether or not the “right wing working class” are right in their root cause analysis, the domestic situation in the US is catastrophic enough to demand explanation:
“If we are the richest country on earth, why can’t I afford a house and healthcare?”
Answer 1: You are being taken advantage of by wealthy elites within your country!
Answer 2: The whole world has made Americans front the bill for a regime of global peace, security, and a trusted reserve currency, at the cost of you, the American worker!
Depending on which answer you choose, and which camp you ally with, your worldview will differ.
I know. There is no reason to believe in #2. Its an emotional response. And so you cant change it. Just like you cant use logic with a flat earther. And that's scary for the rest of the world. I just hope no wars happen.
Housing and healthcare are the two things that have little to do with trade. Housing affordability is almost entirely policy driven. In a "free" market (quoted because the definition typically doesn't take into account the necessity of a functional society to maintain property rights and values, just ask Detroit), housing affordability is entirely dependent on one's relative income and propensity to spend, i.e. you can have high absolute income (say in NYC) and still find you desired housing unaffordable. I think people intuitively understand this. Healthcare costs are more complicated but is also almost entirely a domestic issue.
"People don't want to admit wealth distribution is the problem because that would make them "communists"."
If you are referring to taking wealth by force from people that earned it and giving to people that didn't earn it, yes it's 'communist'. There's nothing emotional about a methodology that has failed over and over again.
Well, we’ve been going through wealth redistribution towards the “elites”, and no one batted an eye.
China popped the real estate bubble, collapsing entire industry giants and making the “elites” swallow the financial downturn. Literally allowing the “poor” to refinance their homes on the back of the “rich”, because they believe housing isn’t for speculation, but for living in.
Tariffs without windfall profits tax will be further wealth redistribution, from the poor to the wealthy
Communism is control of the economy via government owning the businesses. What you are describing is taxes in a free market system. They are not the same thing, and being convinced they are is the majority of the problem.
Politicians should just come out and say this to the people. Oh you can't afford a house? Oh you cant afford healthcare? But we are the richest country in the world. And the system is fair. It means you didn't earn it. Duh.
> If you are referring to taking wealth by force from people that earned it and giving to people that didn't earn it, yes it's 'communist'.
Like taking money generated by the labourer and giving it to the company owners to share with their idle families? And threatening unemployment and precariousness/homelessness for those who disagree? This seems to have failed again indeed
Indeed. Taxation is as old as civilization. Civilization is built on taxation. The first writing systems, the first numbers, the first money, it was all invented to enable taxation. People should finally quit being so childish about this. Unless you want to go back to the stone age, taxation is unavoidable.
> To the latter crowd, the kind of “bullying” behavior you describe is actually the equivalent of a gentle giant who never stood up for himself finally deciding that he won’t take any more shit.
Assuming this generous interpretation is accurate, then it's a problem of ignorance of the people holding this view. Characterizing other countries as 'freeloaders' is exactly that - ignorance.
The US has always been incredibly mercenary with their investment. If there was a way of squeezing more blood from the stone a previous president would have done it. You learned about economic policy yesterday. Now you think that picking tariffs by throwing darts can do better than seasoned economic expert trying to maximize benefit to the US. It's just laughable.
Did I ever defend a particular industrial policy? No. You misread my comment.
My comment was intended to give the GP poster insight into the mindset of Americans who revel in the “bullying” behavior they described.
But one point of inquiry — how are foreign aid programs like USAID mercenary? Even if they are CIA fronts, it’s hard to argue that they are in any way economically extractive.
Supposedly they have a seasoned economic expert on staff, Stephen Miran. Is this guy a kook? It wouldn't surprise me, Trump had Laura Loomer at the White House and 1/2 an hour later three members of the National Secure Council had been fired.
A central problem with this administration is it's headed by a psychopath, who has a long track record of being an untrustworthy liar. Could he pick an economics team that can actually make hard choices that are generally better for America? It's possible. But it's also possible these are just more kooks, or corrupt people looking to grift, or people who think like Peter Thiel, that democracy is over and needs to be replaced by a monarch.
My take? Impeach and remove Trump from office. Do it now. If the country wants these kinds of policies, they need to do it through the Congress. Not through a president, sane or insane.
> Currently a senior strategist at Hudson Bay Capital Management LP and a fellow at the Manhattan Institute in New York City, Miran holds a PhD in economics from Harvard University and his dissertation advisor was Martin Feldstein, an eminent American economist who chaired the CEA during the Reagan administration.
> Miran.. points to Trump’s application of tariffs on China in 2018-2019, which he argues “passed with little discernible macroeconomic consequence.” He adds that during that time the U.S. dollar rose to offset the macroeconomic impact of the tariffs and resulted in significant revenue for the U.S. Treasury.. “The effective tariff rate on Chinese imports increased by 17.9 percentage points from the start of the trade war in 2018 to the maximum tariff rate in 2019,” the report said. “As the financial markets digested the news, the Chinese renminbi depreciated against the dollar over this period by 13.7 per cent, so that the after-tariff USD import price rose by 4.1 per cent.”
We don't actually know if Trump's tariff strategy is Stephen Miran's strategy, nor do we know what Stephen Miran thinks of the strategy.
What we do know is that Trump disproportionately attacks people who criticize him, withholds security protection from them, and sometimes even sends mobs to have them assassinated.
It also took some time before Mark Esper told the public that Trump ordered that protesters be shot.
Therefore, I think it's possible we won't get Stephen Miran's honest assessment in the near future. We'll just have to wait and see.
> The Council of Economic Advisers (CEA) is a United States agency within the Executive Office of the President established in 1946, which advises the president of the United States on economic policy. The CEA provides much of the empirical research for the White House and prepares the publicly-available annual Economic Report of the President.
It's clearly the Bernie/AOC left who are correct here. The US forced this world order on the rest of the world, and massively benefitted from it, so the payback is not owed by the rest of the world who had this forced on them (though they benefitted too) but by the wealthy elite, who benefitted by far the most from it.
Look at the number of multibillionaires the US has acquired over the past 40 years. The trillion dollar megacorps. The many millionaires in Congress. Those are the people who owe payback to the American public. But those are also the people who control the American public, control their news, and feed them misinformation.
> freeloaders that have benefited from our technology, military defense, and foreign aid while simultaneously being net exporters to the US.
I'm not trying to jump on you for having captured it, but the problem is that this is wholly nonsensical - the repayment for benefiting from our technology and military defense IS the net exporting to the US (via holding our currency). That "logic" is still based on having one foot in the paradigm of the financial engineering puppetmasters where getting real physical goods is somehow a liability rather than a benefit!
For sure, this enviable position has had a corrosive effect on our economy. But the inability to deal with that has been wholly down to self-inflicted policy wounds of previous decades - chiefly led by the Republican party marketing a game of fake "fiscal responsibility" whereby the government is prevented from taking deliberate action to mitigate the displacement of industry and workers, while the increased (but now centralized) wealth from offshoring (and other technological/economic gains) was merely handed over to the banksters in the form of low-interest loans that went into driving up the asset bubble.
> No new tariffs were announced for Canada. Canada and Mexico’s exemption for USMCA/CUSMA qualifying goods was maintained. However, 25% tariffs on non-USMCA compliant Canadian goods, Canadian steel and aluminum, Canadian autos and parts, and the 10% tariff on Canadian energy exports remain in place.. there are signs that negotiators on both sides are trying to steer Canada-US trade to a more productive process of an expedited renegotiation of the Canada-US-Mexico Trade Agreement (CUSMA).
> both leaders claim their approaches have helped them this week avoid what Trump calls “liberation day” tariffs.. Mexican officials on Thursday said the strategy had borne fruit and they would focus on getting an even better deal. Economy minister Marcelo Ebrard said: “It's a great achievement, I’d say, from the point of view of where we started not long ago that there would be no exemptions.” .. Mexico remains upbeat, with [President] Sheinbaum on Thursday trying to lure companies to invest in USMCA-compliant production in the country. “We think that with the dialogue we’ve established there are the conditions to have a better deal,” she said.
You've completely ignored what I wrote. The formula the white house used to set tariffs would result in lower tariffs for Canada and Mexico. If both countries were included in the formula Trump would have to cut announced tariffs on both countries.
You're disagreeing with statements by the President of Mexico, describing the result of ongoing negotiations?
Canada and Mexico share a physical border with USA, which has already resulted in unique (i.e. unrelated to the math of 180+ other countries which don't physically border USA) tariffs tailored to border security goals, under national security emergency directives which overrode USMCA.
USMCA has been historically gamed by international manufacturers seeking more favorable terms for products destined to the US market. As stated by the leadership of both Mexico and Canada, USMCA will need to be renegotiated to address issues identified by all three parties, which would then reduce the need to invoke the emergency-power tariffs that have been deployed against 180+ countries.
> As stated by the leadership of both Mexico and Canada, USMCA will need to be renegotiated to address issues identified by all three parties
On the canada side, i think the issue identified that needs to be addressed is the US president being a dick.
(I'm not being sarcastic here, that is my genuine impression. If you disagree can you cite a source for what issues canada wants addressed? Obviously times are a bit weird since we are having an election and its considered bad form for the gov to do anything during election season)
> Some Members of Parliament have also advocated for increasing trade barriers on Chinese imports alongside the United States, which the Canadian government has recently begun doing unilaterally. Suggesting Canada could be interested in coordinating those China-related trade policy measures across all three USMCA members, Deputy Prime Minister Chrystia Freeland recently said she sympathizes with US concerns that “Mexico is not acting the way that Canada and the US are when it comes to its economic relationship with China.”
That doesn't seem to support canada wanting to renogtiate usmca. The best way of handling that issue is probably not renegotiation (its way too specific of a situation to write a clause into the agreement for). Furthermore, Chrystia freeland hasn't been deputy PM for four months now, and the situation has changed a lot since then (not to mention we also have a new prime minister since then). At the time of that statement i don't think there was much appetitie for renegotiating usmca.
Compared to now where our current PM is straight up saying "The old relationship we had with the United States, based on deepening integration of our economies and tight security and military cooperations, is over"
> A broader change to the USMCA also looks likely, with Carney saying there had been “so many violations” that the free trade agreement needs “a renegotiation”.
Trump tariffs are based on the International Emergency Economic Powers Act (IEEPA) of 1977, overriding USMCA and other trade agreements. Any renegotiation of USMCA wouldn't stop the potential use of IEEPA to selectively override parts of USMCA v2.
It's more likely that USMCA violations referenced by Carney and Freeland were done by Mexico/China, at the economic expense of both Canada and USA.
All trade agreements are about surrendering some domestic power. What act or other domestic legal instrument is used is irrelavent.
In context it seems very unlikely this is about mexico, as carney is running on a platform of closer integration with mexico and strongly distancing canada ecconomically from the united states. Carney's ecconomic policies are not identical to the previous administration - it makes about as much sense to refer to trudeau/freeland's statements as it would to try and explain trump's policies by referencing things biden said/did.
Napkin math cannot apply to Mexico and Canada tariffs, because the USMCA (and preceding NAFTA) have long intertwined North American manufacturing supply chains, with components moving back and forth across borders.
Even the emergency border security tariffs and counter-tariffs announced earlier this year by US and Canada have since been carefully tailored for specific products and exceptions, as cooler heads prevailed on both sides of the border, to minimize immediate and catastrophic ripple effects across North American manufacturing.
The entire new tariff scheme is napkin math. Although it could also be napkin math done by some LLM.
If it was real math, it wouldn’t assume that there is some magical trade elasticity that is completely linear in the tariff rate. And real math might notice that the prices of goods that are subject to tariffs are an utterly absurd measure of value, cost, movement of money, or anything else.
Consider:
A US company does a bunch of R&D and designs a widget. They pay $10 each to a Chinese factory to manufacture it. They warehouse the widgets in Hong Kong. Each widget purchased by a US customer results in a “$100” item being imported. $90 stays in the US. $10 goes to China.
The same company does exactly the same thing except they ship in bulk to a US warehouse. The imported item is now “$10”. The tariff is 1/10 as much, the napkin math sees 1/10 as much trade imbalance, but the economic effect of the import is identical.
Or maybe they ship from Hong Kong to a French customer. This should be seen as an export from the US to France with $90 and an export from China to France worth $10. But I think it’s invisible to the napkin math.
Now consider that the US is home to some wildly successful companies with names like AMD and Nvidia. They sell chips for thousands of dollars each, worldwide. They pay TSMC quite a lot less to make them. If they warehouse in the US, they may be screwed now! If they ship from Taiwan to a buyer somewhere else, the US has, in effect, exported quite close to the full sale price of that chip, but no trade goods ever touched US soil. Can the napkin math sees that?
You can bet that several other countries use brains instead of napkins and will have no difficulty thinking that they could retaliate by restricting or taxing of these US-designed goods even if they’re imported from elsewhere. And China is working very hard to make their own alternatives, and they will surely be willing to export them.
(Don’t forget: The UK and Israel have CPU design expertise. ASML is dependent on tin zapping tech from San Diego, but they’re an EU company. And it looks like the successor to that tin zapping tech might be free electron lasers, and that technology come from US national labs and universities, but other countries also have FELs, and the nerdy physicists who fiddle with them are not happy with the US government right now.)
See the 2024 paper (40 pages) by Stephen Miran, current chair of the Council of Economic Advisers, which has influenced tariff policy, https://news.ycombinator.com/item?id=43589350
> Miran.. points to Trump’s application of tariffs on China in 2018-2019, which he argues “passed with little discernible macroeconomic consequence.” He adds that during that time the U.S. dollar rose to offset the macroeconomic impact of the tariffs and resulted in significant revenue for the U.S. Treasury.. “The effective tariff rate on Chinese imports increased by 17.9 percentage points from the start of the trade war in 2018 to the maximum tariff rate in 2019,” the report said. “As the financial markets digested the news, the Chinese renminbi depreciated against the dollar over this period by 13.7 per cent, so that the after-tariff USD import price rose by 4.1 per cent.”
(c) Should any trading partner take significant steps to remedy non-reciprocal trade arrangements and align sufficiently with the United States on economic and national security matters, I may further modify the HTSUS to decrease or limit in scope the duties imposed under this order.
Lobbyists and trade negotiators can read 700 words of strawman "napkin math", or 40 pages by CEA chair, or interviews with administration officials, to inform their negotiating position.
This is nonsense. The “non-reciprocal trade arrangements” mentioned don’t obviously exist at all, and, to the extent they exist, they are certainly not measured in any meaningful respect by the formulas going into the tariffs.
Having spent a whopping ten minutes finding official data (and I have no idea how good this data is as a whole — probably mediocre but far better than whatever nonsense the USTR is doing):
(a) The EU seems to thing that they run a trade surplus with us in goods and a deficit in services, and they’re close to balancing out.
(b) The US’s own data shows a net surplus with some countries and a net deficit with others. See here, page 28:
If the US was trying to negotiate sensibly and to identify anything remotely non-reciprocal, they would be rewarding the countries with positive numbers in that table! The US should be delighted to trade with Australia, Brazil, Belgium, the Netherlands, etc! By all means, we should buy more widgets and sell more fancy services!
As a silly analogy: if your housemate goes on a wild drunken rampage and starts trashing everything in sight while screaming “you need to reciprocate and wash the dishes more often and I will continue trashing things until you wash the dishes reciprocally,” the situation is not a viable negotiation tactic.
To the extent markets recover it will be because there’s confidence that exposure to bizarre and unpredictable behavior from the US has been reduced.
EU / China trade pacts, China / California, Mexico / EU. People have to patch around the mistaken over-reliance on sanity from the US. It’ll happen, not sure if it’ll take a few weeks or a few years though.
> I'm tempted to think (hope? dream?) that the markets and trade will rebound if all this chaos makes American politics swing back
The pump'n'dump scheme against Ukraine will forever change how small countries see the US support for democracy, even if it changes back to the previous status-quo.
The US treatment of Ukraine is having a massive impact on how everyone thinks about security.
All the US had to do was supply it's old weapons to Ukraine whilst replenishing it's stock (creating jobs in America) and things would have been fine. Now we're all in a world were Europeans are openly talking about developing nuclear weapons. Taiwan is totally on it's own, and Greenland is worried about being annexed.
Europe is openly talking about its own cooperative nuclear umbrella. Trump is correct that he deserves 100% of credit/blame for that, taking the heat for Putin.
It will be done by your friends the French, even if not to everyone. Poland is very keen on it.
In fact they are reopening and massively developing an airbase that will be hosting nukes near Colmar, 200 km from the German border. That's a 6 minute flight for a Dassault Rafale.
> All the US had to do was supply it's old weapons to Ukraine whilst replenishing it's stock (creating jobs in America) and things would have been fine.
Well, no, it's not fine, partly because we can't replenish our stocks fast enough. Ukraine is consuming nearly the entire planet's production capacity of Patriot missiles, eating enough of our ATACMS stockpile that it makes Combatant Commanders nervous, and more. To say nothing of the argument "supply Ukraine for as long as it takes, even if that means indefinitely" never made any sense; actions taken without a clear, achievable end goal in mind are just a waste of resources.
It sounds like you’re arguing for the military industrial complex.
“The Ukraine war is great because it creates US jobs through weapons manufacturing. Yeah, we might get our hair a bit mussed with the hundreds of thousands of deaths, but net-net it’s a win!”
In the end, countries are nuanced enough to understand American political dynamics. They see Orbans, they see Le Pens, they see Trump, and they know what is behind it. I am quite sure that Ukraine did not expect anything else from the Trump faction of the Republican party. His victory was not unlikely and he is a simple creature. If different factions win, they will be eager to work with America again, with less trust and reliance.
Realistically, it is for the best if countries are resilient to US failure. It will make Americans generationally poorer, but the world will be better off for it.
You are just assuming Attention craving/seeking Trump types don't exist in every country in the world.
If Trump and the rest of his podcasting/influencer buffoon class, can rise to power in the US riding on what is valued by Attention Economics, then the same can repeat in every country in the world.
The root cause is not changing cause the Algos have created a game that favor those who love Attention and will do whatever it takes to get it and keep it.
The people who voted for these policies have to feel a sufficient amount of pain from them to be sure they won't just vote for them again as soon as they get the chance. Most people who voted for Trump in 2024 would vote for him again if he ran for a 3rd term. Nobody can consider America a reliable partner until that isn't a laughable possibility again.
I think that those in command are also waiting for the next President to undo all that but it is going to have a tremendous effect for a decade or more. Hopefully for the US they won't go in a similar crisis like the UK is going through...
Cutting off countries like Japan or Taiwan like that when we know their geopolitical situation with China and how critical their economy is to the US is quite crazy.
Things are easier to break than they are to fix. The next president, if there will be another, will not be able to easily glue the pieces back together.
Yeah, this is the core issue. How can any ally fully trust the U.S. when major foreign policy commitments can be reversed every 4 years? One administration signs on, the next tears it up.
It's starting to look like U.S. agreements aren't really with the country, but with whoever happens to be in office. US allies is isolating itself and it's allies are going to hedge. The trend is already starting and it's going to be hard to reverse. Restoring that trust isn’t just a matter of electing the "right" leadership, either, at this juncture, I think that it would require institutional reforms and a consensus on foreign policy that transcends the electoral cycle.
I'm not going to cheer for the "downfall of US", but America is doing it to itself.
Are you pretty young? The narrative when it was happening was pretty catastrophic. I remember reading about people not being able to get prescriptions, for example, because no one knew how imports worked.
I don't know how things panned out, but the discussions in the early days around Brexit were absolutely on par or even worse than what we're seeing in these two days of discussions around tariffs.
I don't know what 'pretty young' is, apart from condescending, but I voted in it, so I remember as well as you do I imagine.
Regardless of contemporaneous comparisons, the up-thread comment I initially replied to suggested there was some ongoing worse 'crisis' in the UK than the current situation in the US, if they meant to refer to Brexit it was not clear at all, regardless of whether anyone things that's an ongoing worse situation. (Except that the fact it's not clear really suggests it isn't...)
Sorry, the implication is that this is far worse than Brexit, but that this is the US’s Global Exit, riffing off the strong negative connotations in te US. I saw it from on Bluesky, but that linked here https://theradicalfederalist.substack.com/p/the-neoreactiona... - so, being framed as much worse than Brexit.
No worries, yours was clearer, it was the first indication I had that anyone meant to compare to Brexit, I just asked to clarify. 'up-thread comment' I meant was the bdelmas one I replied to that referred only to 'crisis like the UK is going through' without elaboration.
What? The didn't happen, or it's not how it happened. Are you pretty young to remember Brexit?
The UK voted for Brexit in 2016, but it was up to the UK itself to invoke it with the EU. They took almost 4 years to do it in January of 2020 after 4 years of arguing about it with a transition period and trade talks with the EU until the end of 2020. It wasn't a surprise and "no one knew how imports worked". Yeah people online made all sort of wild hyperbolic scenarios, but trade was unaffected until the end of 2020. There were shortages in the UK around that time, but I wonder if you remember what happened shortly after January 31st of 2020?
The prescription drug shortages is still a problem in the UK. It's not because no one still knows how imports work in the UK, 5 years after Brexit. It's because the overall imports and exports in the UK has been falling since Brexit. Because the UK economy hasn't been doing great. Brexit, COVID, and then Ukraine/Russian energy dependency came in a pretty bad time for the UK.
> They took almost 4 years to do it in January of 2020 after 4 years of arguing about it with a transition period and trade talks with the EU until the end of 2020.
Currently, Trump’s tariffs have kinda broken the stock markets, and caused some difficult-to-measure economic damage (investments will have been delayed or cancelled, that sort of thing). If, tomorrow, Trump chokes on a well-done steak, or Congress puts him back in his box (remember, his ability to do _anything_ with tariffs is entirely within the gift of Congress), or otherwise the tariffs go away, then the markets will pretty much spring back, and the economic hit will be small enough that it’s hard to measure.
While estimates of the damage done by Brexit are of course very politically sensitive, nearly everyone agrees that some substantial damage has been done, particularly to trade and jobs (one estimate has the UK with _over 2 million_ fewer jobs today than it would otherwise have, Goldman Sachs says that the UK economy is 5% smaller than it ‘should’ be, etc etc)
Well before what's happening now the US still was doing very strong on the economy (plus their advantage to be that big, their military advantage, them owning half of their continent, etc...). But with what is unfolding now...
If you want to know more about the current situation in the UK I would recommend this video [1]. His channel is amazing for geopolitical content.
- The UK has one of the worst homelessness problems in Europe, with about 1 in 50 Londoners experiencing homelessness.
- The UK economy stagnated for 10 years following 2008, resulting in a "lost decade"
- The median disposable income in the UK was slightly lower than the US and Norway before the GFC by 6-8%, not it's 16-20% behind.
IDK if I'd call this a crisis, i.e. people aren't rioting in the streets. That said, this is not the direction you want to be moving in as a developed country. The trend of people in formerly dominant countries electing leaders who keep making stupid own goals (increasing economic inequality, Brexit, gutting the NHS, gutting US foreign aid, tariff-pocalypse) is very worrying.
Hey, so I was wrong in saying the UK has 10x the homelessness rate of the US. I used a stat from the video that "approximately one in fifty Londoners are now homeless." That's London, not the UK. Thanks for catching that -- I will update my post.
But also, uh, you're wrong too! Your numerator for the UK figure is actually an estimate for homeless people in England, while your denominator includes the whole UK.
Homelessness is a housing issue first, a poverty issue second. See housing as a game or musical chairs. If you don't have enough, the one getting stuffed first are the slowests (in that case, the unemployed poor, then the working poor).
If you can't give me any words that indicate what kind of crisis the UK is facing, while there's general agreement on 'Trump', 'tariffs', '(especially US) equities', 'the US dollar', 'global recession fears'... then I don't have time for your video recommendation.
Brexit was pretty bad for the UK proportional to the size of their population/economy, and is still causing problems even though the initial dislocation is over. If you think it's a lesser crisis, you could just say that. I haven't done the numbers to make an exact comparison, but they both have the qualities of being being abrupt, severe, and self-inflicted.
> If you think it's a lesser crisis, you could just say that.
I do, but the principal reason I didn't say that is that I had no idea it's what the commenter I replied to was referring to.
'Brexit' feels mostly completely irrelevant / not a topic of concern or debate since at least the beginning of the pandemic five years ago. The vote was almost a decade ago. 'If bdelmas thinks it's like Brexit, they could just say that', to paraphrase your own comment.
Britain took 4 years to negotiate and prepare for the new trading arrangement with the EU. It wasn't all smooth, but they did things like massively expand customs facilities at sea and airports to allow for the new inspections, train up inspectors for animal and plant imports. It gave time for people to move, companies to move their HQ, set up new warehouses, etc. Both sides were clear that the arrangement wouldn't be changed back with a change of government — the EU had no patience for that, opposition parties in the UK said they wouldn't aim for it either.
The USA hasn't done any of that, so the situation at this stage isn't the same.
Weeks after Brexit happened, when Covid started, EU governments quickly moved their focus to the pandemic. Since then, they've continued to tell Britain they aren't interested in reopening discussions so soon after new treaties were signed.
That's changed slightly with Russia/Ukraine/Trump, as the UK has positioned itself carefully between the USA and the rest of NATO.
All that time though, it remains a topic of debate in Britain since they haven't seen any of the promised benefits of Brexit. Some things have got worse, but I'd say it's generally a problem of stagnation, compared to improvements in comparable neighbouring countries.
That's a good summary, I basically agree. It's hardly describing a current and ongoing 'crisis' that the US hopefully doesn't deteriorate from its present position to the level of, though, is it?
I think if I were American I would be longing for the day that <insert Trump thing> 'remains a topic of debate because we haven't seen the promised benefit of it'!
The vote didn’t implement anything. Britain didn’t actually leave the EU until 2020. Brexit is as of much concern in Britain, still, as Trump is - because it underlies their entire shaken economy. You think some tariffs are bad? Ok now what if Trump simultaneously tore up every trade agreement? And cancelled the visas of every European citizen in the country, who happened to make up 10% of the medical sector?
Alright take 2020 then: year started $1.32/£, ended at 1.37. The world was shaken by SARS-nCoV-2019, but I do not remember us feeling particularly extra shaken by Brexit crisis.
That is not really relevant anyway, the up-thread suggestion was that there was some current ongoing crisis more significant than anything happening in the US. That user didn't even mention Brexit, but if that is what they meant, no, I assure you it's predominantly Trump and tax year end stuff in our news.
Thing is, Brexit didn’t _really_ happen in 2020. The UK was, for practical purposes, in the single market until 2021 under a transition arrangement, and even after that, it kind of petered out over years. Some special arrangements are _still in place_: https://www.politico.eu/article/uk-brexit-border-checks-dela...
Ok. I'm still awaiting to hear how it's currently a situation of terrible crisis that the US would not want to sink to.
If there are any crises in my UK news, they're in the Ukraine, Israel, USA, and perhaps Greenland & Canada by extension. To the extent there's crisis in the UK that I'm aware of, it's the same USA-inflicted event that the rest of the world's dealing with too.
Reading the parent's comment I was expecting the UK GDP to have been plunging since Brexit, but that's not the case apparently[0]. Some sectors clearly profited from it, compensating for those who went down the drain.
GDP isn't everything and from the outside the UK feel like in a very bad place, but I wonder what's the metric that really captures that status. Inequalities aren't getting that much wider as well.
There is a lot of data to talk about that's why I linked the video directly in the other comment. Maybe check it out. For the GDP it may not look bad but compared to other countries and especially the US, the UK is going through what we call a "lost decade". Their GDP should be +25% higher than right now... That's just one (huge) metric talked about in the video.
Yup. Sadly, discussion of Brexit on HN is trash tier. Almost every claim about it you'll find here is completely wrong. Not in the sense of differing values or priorities, but in a "this is totally made up" kind of way. It's really concerning that so many people's understanding of the UK and Europe have suffered such a huge rupture with reality. The map is not the territory!
Leaving the EU had no effect on the British economy. Not positive, not negative. Even the trade balance with the EU merely continued along its long term trend, so apparently the single market wasn't delivering any value in the end. The closest thing you can find to an economic impact was the currency dump that happened the moment the result was called, but the economy did fine in the post-referendum years and so those traders who panicked just took a bath and the currency recovered later. Not that a currency devaluation is such a bad thing for the UK anyway, its exports could use the help.
Even some non-economic impacts failed to materialize, in both directions. The UK rejoined the Horizon research programme (supposedly a "cherry" that would be lost), but also the reduction in immigration that voters were promised didn't happen either, in fact immigration went into overdrive.
A lot of people who support the EU don't realize any of this, partly because the news doesn't report on things that don't happen so they never hear about it. But mostly it's because they conflate predictions with reality. For example, there's someone saying in this thread that "the narrative was pretty catastrophic" followed by "I don't know how things panned out". And when I pointed out this lack of impact less than two weeks ago here, I got a reply that cited another pile of predictions as a refutation:
It's a systemic problem that crops up in other areas too. During COVID modeling predictions were regularly repeated as if they'd already happened, and you see the same mental slippage in climate change discourse. The line between "we think this might happen", "this will happen" and "this has already happened" blurs to nothing.
This. There is no reason why any country should trust us anymore if entire trade relations can be destroyed by a presidential whim.
Even if Trump fell out of a window today and we got a pro-trade president tomorrow, we’re not fixing this damage for a very long time.
We probably would have to amend the constitution to insulate foreign policy from the whims of a single person if we want any chance of fixing this in our lifetime.
It's already there in the Constitution - Article II, Section 2, Clause 2. Unfortunately other countries chose not to require things in writing and were happy with pinky promises that could be reneged.
We (Canada) literally signed the United States-Mexico-Canada Agreement for trade in 2020... with Donald Trump. Trump this February said "Who would ever sign a thing like this?" and proceeded to make up the story about fentanyl coming from Canada as a pretense to ignore this deal. So there was certainly more than a pinky promise.
Additionally your senate just signed law to repeal the tariffs against Canada specifically so I don't know what other receipts or paperwork you'd like here. Not that I expect Trump to adhere to that of course, but I've never heard the perspective of "well these weren't signed agreements" for things that clearly were.
> Additionally your senate just signed law to repeal the tariffs against Canada specifically so I don't know what other receipts or paperwork you'd like here.
That bill won't pass the crazy house, but yes, CUSMA was signed law.
It doesn't require a constitutional amendment, we can just repeal the law [0] being used, which would ironically involve the same number of votes as keeping the law but slapping down Trump's particular usage of it. (That's now how it originally worked, but the easy-slapdown route got ruled unconstitutional.)
Military alliance stuff might be harder. Some stuff like NATO is supported by actual legislation, but other stuff was set up as a kind of gentleman's agreement with the US President-du-jour on the assumption that successors wouldn't be crazy.
Maybe, but vetoes are politically very expensive. Even if he threatens to veto, Congress should still do it. Not doing obvious things because they might run into opposition/problems is a recipe for more and worse of the same.
> Maybe, but vetoes are politically very expensive.
As are felony convictions, top secret docs in a bathroom at your house, sexual assault settlements, and the hundred other career-ending scandals the guy has survived without a scratch so far.
Agreed, but maybe Congress takes action on one thing they'll find it in themselves to take action on a second thing. Having been in a lot of real fights, standing there and doing nothing is almost invariably the worst choice.
Congress is 55-ish% Trump’s party and 45-ish% everyone else. Nobody in the Trump party would ever, ever, ever do something Trump didn’t want. The entire party platform is basically “whatever Trump wants”. Anyone who disagrees was primaried out of existence long ago.
There is no congress any more, not as an independent body. There is Trump, and there is a body of people who will, in the majority, do anything Trump wants them to do, and is not independent in any way.
Yes, just like I said: "which would ironically involve the same number of votes as keeping the law but slapping down Trump's particular usage of it."
Originally it wasn't veto-able (only needed a Concurrent Resolution of 50% in each house, no Presidential signature) but the Supreme Court ruled that part unconstitutional in the early 80s.
The president constitutionally doesn’t actually have this authority - the power to set tariffs is supposed to be exclusively the prerogative of the legislature, but Trump declares pro forma emergencies and the Republicans in power aren’t willing to check his power.
I don’t think that would matter at all. Pass all the laws you want, when the head of the executive branch orders the CBP to collect tariffs, they will. We’ve long since left the rule of law.
The rest of the world would still be at the mercy of an untrustworthy government that is largely incapable of any semblance of long term thinking. To say nothing of the weirdos who regularly vote for that government and who they tend to elect.
The US wasn't even in a crisis until 2025. We weren't in a stellar position (high deficits and debt, low unemployment but high underemployment). It was all recoverable before Trump started this trade war and doing things like cutting departments that actually brought in revenue.
Well, I disagree but the current policies guarantee it's not recoverable so a debate would mostly be around hypotheticals. We're reducing revenue but not spending (or not enough to offset the reduction in revenue so the deficit will rise), so the debt will only continue to rise at an increasing rate.
Ironically, Trump has the record for the highest deficit ever in US history. He's on track to beat it though and with a reasonably strong economy when he took office (again, not an ideal economy, underemployment is a major issue, but not a weak economy by any stretch).
> Ironically, Trump has the record for the highest deficit ever in US history.
hardly relevant comment since all presidents left and right have been pushing the button to increase deficits (and congress is completely responsible as well for not trying to balance the budget) so this is a systemic problem that will bring the downfall of America no matter what. It's just a matter of time, and with that level of debt, the time bomb keeps ticking faster and faster.
It’s relevant because republicans campaign on it. If neither party claimed to be fiscally responsible I’d agree. However one does and isn’t. That makes the relative debt load under that party compared to the other fair game.
The next president is going to be Trump. If people don't think that's at least a serious possibity they are extremely deluded about the situation the country is in right now.
We have repeatedly seen Trump say something that sounds ridiculous, and his supporters say "that won't actually happen, and if it does I won't support it", and then he does it and his supporters support it. He has recently said he may try for another term as president, and confirmed "No, no I'm not joking".
If you don't take his threats seriously by now, and the willingness of the GOP to get behind whatever he wants, then you are not paying attention - it has happened over, and over, and over.
On NPR they ran a response quote from Ryan Zinke that was nominally against it, but if you read between the lines you can see them laying the foundation. It was something like “I draw a hard line at violating the constitution, that’s something I’ll never support. But also right now there are leftists and activist judges who think they can violate the constitution by taking power away from the executive”
He never directly spoke against a third term, just “violating the constitution”, and then named some enemies. It’s a long way off still, but you can see the groundwork being laid for something like “emergency measures to protect the constitution” if they decide that’s the way they want to go.
Wouldn’t he have to get on the ballot in all the swing states at least? What if some states refuse to let him run? I can’t see California registering him for example, but that wouldn’t really matter of course.
Only if he tries to get a 3rd term by a fair election. The more realistic way to it happening is by hijacking the electoral process. There are a number of ways to do this, such as by claiming there was fraud and thereby having the justification to modify how "electors" [0] should cast their vote. This is exactly what was tried in the 2020 election.
Really, it's just an "if enough people in power and in general go along with it, then it works" kind of thing. The current trend in the GOP is to whip and/or expel those who do not fully support Trump. What happens if half of the elected politicians, most of their constituents, and most of the appointed government officials, decide that Trump is staying in office? No one knows. The power of words on paper only goes as far as people let it.
> We have repeatedly seen Trump say something that sounds ridiculous, and his supporters say "that won't actually happen, and if it does I won't support it", and then he does it and his supporters support it.
Attempting to overturn an election, putting tariffs on the entire world, deporting legal US residents without due process, passing a record-breaking number of executive orders, ending birthright citizenship, removing a pillar of the free press from the White House press pool.
Trump's father lived to 93, and mother to 88. He doesn't have any serious medical conditions (that we know of). There isn't a high chance that he's going to die of natural causes in the next 4 years.
>
> He doesn't have any serious medical conditions (that we know of).
He hasn't disclosed his medical records, which is something presidents are normally expected to do. You have to wonder why he disclosed his records in 2016 and not in 2024
> There isn't a high chance that he's going to die of natural causes in the next 4 years
Of course there is, he is Seventy Eight and Visibly Obese
His parents living longer is not a strong predictor
Sure, on paper, but who will enforce it? He’s already attempted a coup. He has 4 years to prepare for the retry. He’s already putting loyalists into law enforcement and military spots. He’s immune to all lawsuits and has the congress cowed.
When the markets are down, they are on sale for the rich. Eliminating competition via tariffs is good for those who want to compete where they couldn't before. They would let everything burn to further enrich themselves or push their ideology.
I think the combination of malice and incompetence remains the most credible theory:
Trump believes that the he/the US has the more powerful position in all of these relationships and wants to impose his will on the rest of the world and make them submit to his/US superiority. Which might actually work if he picked one target at a time. But you can't beat up the whole school at once. The fact that he can't do this to everyone at once, combined with his utter misunderstanding of what trade imbalance actually means, will lead to an outcome that is bad for everyone, but worse for the U.S. than most.
There are two other theories that I think have some shred of credibility, and they're both worse:
1. Trump intends to use his apparent ability to unilaterally impose or negate these taxes at will on a granular level to force countries, companies, and individuals to come groveling to him for favors, allowing him to use the presidency to further enrich and entrench himself.
2. Trump is divesting of dependence on allies because he thinks they might soon be adversaries. That's the most harrowing potential interpretation, but it relies on the notion that he has any kind of foresight. This is really only credible if you genuinely believe that it's Putin pulling his strings. Which is a possibility that's hard to dismiss.
@2) I don't see Putin behind this. The current situation is most likely a death stroke for Russia. Russia's war economy was already on the brink and running on borrowed time. With oil prices cratering that's it.
When he started with a limited set of tariffs on Canada/Mexico/China it sort of made sense as a bullying move. The administration at least had the bandwidth to conduct three sets of negotiations.
But it’s essentially impossible to negotiate 180 deals simultaneously. No way does Tunisia get even five minutes to pitch a deal - the simultaneous imposition of tariffs effectively DDOS’d the negotiation team.
I’m not advocating for or defending them, but he bullied some immigration related concessions out of Mexico back in February in the first round of this stuff. You could plausibly call it a negotiation tactic. The latest is just pure madness any way you look at it.
When the bully gets too ambitious the large number of bullied gang together for revenge, or at least effective countermeasures. The world will route around USA, find they can manage ok without it. The USA will be iced out, lose its reserve currency status, nobody will buy its military technology, making the USA unable to recoup large outlays for ambitious military projects, and the USA will lose its military dominance.
Also, the future of warfare and terrorism is autonomous networks of drones. Mexico and Canada won't be disposed to care what passes through their borders with the USA, and like Zelensky said ... we had the oceans and friendly neighbors, but that won't help us anymore.
The USA may get the metric system out of this. The only reason the USA can hang on to its ridiculous "imperial" units has been its economically dominant position.
Totally agreed! But bulling 95% of the class room... That doesn't work. New alliances would emerge, like Canada and the EU. No more new pipelines for the US but more upgrades to Canadian ports to ship oil to the EU. New economic routes will be created, new partner deals, etc... Without the US.
Trump just locked the US, kinda did the finger to the earth, and hopes people will come begging for trade.
Also for many countries it can’t be remedied because the tariffs are based on trade imbalances (not reciprocal, that is a lie). What does the US make that Cambodia needs/wants? There’s no way for them to close the gap on trade other than to stop selling to the US.
>Bullying people in inferior bargaining positions has somehow worked thus far.
Has it? To who?
Canada hasn't, and won't, negotiate a single thing. We increased border patrols for a made up problem and thus far it has entirely served to catch guns and drugs and illegals coming from the United States.
The United States has lost tens to hundreds of billions of sales to Canada. They are never, ever coming back.
Trump sabotaged a critical trading relationship in a way that Americans just cannot comprehend, through his laughably stupid "bullying".
Similarly, supposedly Vietnam has come "hat in hand". Vietnam has literally nothing to offer. It has negligible tariffs or blocks on US trade, it just happens to be a poor country. The bullying is utter stupidity.
Mexico thus far has taken being pissed in the face because they're 100% of Trump's purported problem -- from drugs, to migrants to cartels to funnelling Chinese goods, and the likelihood is that Mexico ends up being the biggest beneficiary.
> Even on death’s doorstep, Trevor was not angry. In fact, he staunchly supported the stance promoted by his elected officials. “Ain’t no way I would ever support Obamacare or sign up for it,” he told me. “I would rather die.” When I asked him why he felt this way even as he faced severe illness, he explained: “We don’t need any more government in our lives. And in any case, no way I want my tax dollars paying for Mexicans or welfare queens.”
> At the most basic level, Trevor died of the toxic effects of liver damage caused by hepatitis C. Yet Trevor’s deteriorating condition resulted also from the toxic effects of dogma. Dogma that told him that governmental assistance in any form was evil and not to be trusted, even when the assistance came in the form of federal contracts with private health insurance or pharmaceutical companies, or from expanded communal safety nets. Dogma that, as he made abundantly clear, aligned with beliefs about a racial hierarchy that overtly and implicitly aimed to keep white Americans hovering above Mexicans, welfare queens, and nonwhite others. Dogma suggesting to Trevor that minority groups received lavish benefits from the state, even though he himself lived and died on a low-income budget with state assistance. Trevor voiced a literal willingness to die for his place in this hierarchy, rather than participate in a system that might put him on the same plane as immigrants or racial minorities.
This is likely why Elon Musk--who in 1989 emigrated from Apartheid South Africa at the cusp of Apartheid ending in 1991--is convinced there is widespread fraud in social security benefits. He never culturally integrated with a post-Apartheid South Africa. He comes from a legacy white supremacist culture that sees non-white citizens getting social benefits as ripping off white citizens.
If anyone thinks a claim that Musk is a literal white supremacist is biased, remember that he did two Nazi salutes at the president's inauguration and endorsed Germany's AfD party.
Sparking the local industries needs to happen with incentives, not a tsunami.
You can't swap the supply chain to a local-first instantly. Many things aren't done locally. The factory buildings are gone. The labor isn't there or trained. The basic materials aren't local and need to be imported. The machines needed to produce the parts don't exist locally and need to be imported themselves; sending margins to unrealistic numbers and making it a non-starter environment.
What it is, is another flip of the table, an upset, to cause chaos and feed a positive environment for more chaos, which only suits those who benefit from chaos.
The episode of the Search Engine podcast “The puzzle of the all-American bbq scrubber” goes into detail on an example of this, is very interesting and makes the same points you’re making here.
Sometimes your best mates go a bit mad. Cut them some slack.
They will need a shoulder to cry on when they re-discover how well a trade war works out. The last ones seem to have happened at roughly 50 year intervals.
The US seems to be incapable of learning from the past. The worrying thing is that Mr Trump is old enough to remember directly or what his parents told him about the last fucked up trade shit storm or trade war.
You do not get to dictate how the world as a whole works ... ever. It has its own ideas about that.
Even Britain at its most imperious could not do that and the US can't even stop itself from trying to impose tariffs on its own air base in .io!
The best we can do from outside is to hope that the US does not collapse completely and that the downward trend stops at some point. If, somehow this all pans out that we will all benefit or even that just the US benefits then fine. Let's pick up the pieces and crack on.
I do not hate Americans nor their rather odd President. We are seeing change happening. It might be for the good eventually but I doubt it but I'm not an expert. In the meantime I suggest we continue to act as friends towards an old friend. When you go barking mad, you might need your mates to stand beside you whilst you dribble and widdle.
There’s still a way out, the US Congress could convene over the weekend and revoke the President’s ability to impose tariffs. Restore it to Congress as stated in the constitution.
Of course they won’t do that. Sic transit gloria mundi.
I started wondering if there's a way for citizens to push the issue that these tarrifs are unconstitutional. Like a lawsuit that got escalated to the Supreme Court or some thing if congress isn't going to.
Some of the senators are breaking away though.
If the country survives this though the next thing through executive order could be just as bad or worse. There doesn't seem to be any realistic way out of this insanity.
are they unconstitutional? i imagine, like many things, congress has constitutionally saw fit to cede its authority to the executive many many moons ago
They could be unconstitutional. The ability of Congress to delegate its authority to the President does have limits. If companies (the ones in a financial position to do this) sued, they'd have standing and could make their case. Whether it's successful or not would take a while to find out, and this is an instance where judges would likely leave the tariffs in place until the suit was settled in a court (before appeals) if the plaintiffs won.
they could be unconstitutional, but does that matter? the executive gets to enforce whatever it wants however it wants. nobody has to listen to congress or the courts when the executive is all aligned on what theyre gonna do
No, if it were ruled unconstitutional and the President continued to enforce the policies then Congress would be justified in impeaching and removing the President. This is unlikely to actually happen with the current Congress, however.
Could the President remain in office after an impeachment? Ask again in 2-3 years, but today, no. He'd be removed, no federal employee (civilian or military) would continue to take orders from him except perhaps his Cabinet and the DOGE boys. They all swear an oath to the Constitution, not to the man. In 2-3 years, though, could be a different culture.
> I started wondering if there's a way for citizens to push the issue that these tarrifs are unconstitutional.
Anyone who imports and is assessed a tariff would have personal standing to sue, arguing that the tax is illegal. I think there are some procedural requirements first to e.g. formally complain, but the dispute would eventually get its day in court.
However, these tariffs are being applied at least under a thin veneer of law regarding declared emergencies. It's clearly beyond the intent of the law for Trump to do this, but it's hard to draw a bright line between this and (e.g.) ambitious environmental regulation.
The "4D Chess" is that some powerful internal people doing a lot of manipulation want America to be an isolated very independent fascist state, and some powerful external people want to destabilize America and reduce its foreign influence. They're both making solid progress towards their goals.
The majority of the American people who voted for the current regime are being taken advantage of but like many they'll progressively more and more identify with wanting whatever outcome "their" team achieves.
> I'm sure some people would claim this is 4D chess
There is some regular 2D chess going on here, but it's not being played by anyone in the US admin. Putin wants to weaken NATO so he can continue expanding. America is a linchpin holding together much of the European alliances and not coincidentally the candidate he helped get elected twice is destroying the US's global standing and weakening the US dollar.
The rebuilding going on in Europe, the increase in European military spending, and the talk about nuclear weapons in Europe is a direct consequence. I don't know if Putin just expected Europe to run around incompetently like the Keystone Cops, but it kind of feels like they're acting quickly and competently without the US.
At any rate, all of this is bringing us much closer to a WWI or WWII style global military conflict.
If that really was Putins intention and doing he makes Trump look like a stable genius. Crude is already down to 62USD/barrel. If this goes on for any amount of time Russia is dead.
>Of course I'm sure some people would claim this is 4D chess or what not but.. sometimes the person doing something crazy is just crazy at the end of the day.
It is crazy and it does have some crazy logic. The US trade deficit is well pronounced only on material goods. If you add services, the deficit is much less, if any. The services are produced by the people and states mostly voting Democratic. So, Trump with his tariffs may succeed in causing the EU and others to retaliate against US services, thus damaging blue states and helping (well in his mind) the red states. Trump already did similar hit against blue states with SALT deduction for example, yet it was just a small preview.
There is most likely a deeper plan behind it. It's not 4D chess, or if it is, it's played by people who don't really understand it themselves, but there is a goal behind it: ending Reagan's neoliberal economic world order.
That in itself is not a bad goal, and it's one I agree with; neoliberalism has increased inequality, put excessive wealth in the hands of a tiny elite, and looted nations of their infrastructure and social structures. Neoliberalism should die.
The problem is that Trump's economic advisors seem to want a new world order where the rest of the world is even more subservient to the US, and they think they can enforce that by cutting everybody off from the US economy, and they'll only be let back if they accept America's new terms.
The problem is of course that the US actually cut itself off from the rest of the world, and as big and powerful as the US is, it's not more powerful than the rest of the world put together. It's not the rest of the world that will come crawling back; it's the US. After having squandered its 80 year dominant position in the global economy.
In the case of Trump, never attribute to ineptitude what can be explained by greed.
He is tanking the US economy so he and his billionaire cohort can buy things (businesses, real estate, stocks, etc) at a low price. Thus amassing more control and capital.
This is how the Russian oligarchy came into power.
Yes, he is inept. But in this case, he is following a playbook that was deliberately written to achieve the ends that this series of actions is bringing about.
Trump is the actual anti-imperialist, and as he said, unifier. He’s so selfless that he’s putting the US on the line to ensure world peace and unity /s
Could you clarify for me please why the term globalist would be used instead of global? Like "Apple is a global corporation" is an unarguable fact but using the term globalist for these companies seems pretty strange to me since there are some pretty weird connotations with it.
Very untrue. Major corporations can absorb the damage for a few months without raising their prices, since they have more inventory, bulk discounts, etc.
Small companies are often running nearly paycheck-to-paycheck, which requires them to raise prices immediately, making them completely uncompetitive with the large corporations.
The large corporations know this and are happy to keep their prices low and burn money until the small business competition dies, then they can raise their prices.
China is isolationist and they seem to be growing.
The problem is the USA is a consumer economy which isn’t sustainable. We could get away with it as a tech leader, but with China stepping ahead (Deepseek) china will be a tech leader and manufacturing leader. What will the USA have?
We love cheap stuff if the country providing it is weak and not a threat of any kind. Suddenly we don't love good Chinese prices any longer. The massive world wide tariffs are a scheme to restructure the trade order because we have lost control of the WTO, etc to China. We have been so greedy American companies fell over themselves to build factories and joint ventures in China only for China to create competitive companies and force these joint ventures to bankruptcy. Because of the greed, intellectual property and knowledge transfer to China Donald Trump has decided to save the system himself. The stock market being at all time highs doesn't matter if the United States is left empty of capabilities.
China is very far from isolationist. They're making huge investments into other countries with Belt & Road, importing huge amounts of commodities, exporting huge amounts of finished goods. Sure, the domestic market is protected, but it's a long way from North Korean autarky, which seems to be Trump's goal.
China is what now? China is the biggest trading partner of something like 70% of all nations in the world!
China is asymmetric and unfair, not "isolated". They disallow imports except in a handful of industries they can't replicate yet. That works for China, because: (1) they are huge, and (2) they remain poor, and thus can do the low wage jobs internally in addition to doing them for the rest of the world.
The US only has advantage #1. Though at this point #2 seems within reach...
I was looking at used cars on Carmax about two or three weeks ago. I looked again today. They're another $1-2k.
This is the shareholder/political class trying to eat their cake and have it too. Pay people a stagnant wage for 40 years while taking most of the surplus value and dedicating it to equities, then pretend to do something about it, but in a way that passes the buck to the people who have been making a stagnant wage so that the wealthy don't incur actual losses.
Share prices will be brought back up through layoffs.
1. When equities crash, market liquidity floods the bond market causing yields to drop
2. Refinance debt at these lower rates massively reducing interest burden
3. Cut government spending to cause rates to drop further
4. Reduced rates with a balanced budget results in non-inflationary borrowing and an economic upswing
Along the way, eliminate taxes for those earning below $150k.
If all of the above happens at the expense of equity holders so be it.
This plan has been made clear by multiple people from within the administration (namely Bessent who is one of the greatest macro investors of all time).
Now there’s many things to criticize in this plan (and lots of risk and unknown possible second order effects), but to describe it as “genuine chaos” or ineptitude is strange.
These people all have a shared idea of what they're doing, and since they sit in financially-backed echo chambers, those ideas eventually turn so absurd that they appear to have no idea of what they're doing.
Because they're wealthy enough to have separation between their 'existence' money and their 'power and status' money. Tank the country and they get to own a little sliver more of it. The cheese and clothes they buy don't change. Because they've got more than plenty.
No that's not what I mean I mean like if I have 99% of my assets in ...business capital (read: mostly stock) what's the plan? I'd have to front-run, but the wealthy own half of the business capital in the US so that's also incoherent because there's just not that much besides other wealthy to front-run.
If the wealthy wanted to buy something up on the cheap that they didn't own, they'd do residential real estate: something that's majority middle class owned (a fun corollary: property taxes are just wealth taxes on the middle class, the proportion of business capital the middle class owns is teeny). However, house prices have gone in the opposite direction as you'd expect from this theory!
Most wealthy people’s wealth is in investments. If the value of the investments goes down, there are fewer resources to “buy the dip.” It doesn’t hold water as a theory. Basically robbing Peter to pay Paul.
They have people whose jobs it is to even out those troughs, and I don't think you realize just how wealthy the wealthiest wealthy really are. Mark Zuckerberg, Elon Musk, and Larry Ellison each have a net worth that is on par with the total gross economic output of a small American metropolitan area.
> Mark Zuckerberg, Elon Musk, and Larry Ellison each have a net worth that is on par with the total gross economic output of a small American metropolitan area.
You're comparing apples to oranges.
Net worth is in dollars, while economic output is dollars per unit of time. The comparison does not make sense.
You didn't even say which unit of time! Hell, I have a higher net worth than the total economic output of the US, given a short enough time frame.
This level of pedantry won't play in reality against someone who just lost everything and is seeking revenge on the tech bros who they perceive as enabling all of this.
I'm sure all those billionaires who paid Trump the $1m to grin behind him are dreading the impact on their groceries and upward mobility like the rest of us. Never forget that Trump and Bezos and Zuckerberg truly think of us first and wouldn't be so antisocial as to trade your family for a little bit more.
But as many responses to your comments; there’s a portion of the population who are not invested in the markets this way.
There’s clearly a very different perspective for some, and as per my original reply; it seems many more are worried (rightfully so) about assets others cannot even begin to comprehend - let alone invest day to day, or “spare”, money into.
Yeah, the random memecoins he issued and the NFC trading cards were meaningless to him. He's only invested in Truth Social and The Constitution. That's why he's in such competition with the owner of Twitter and would never undercut his social media platform.
What I was trying to point out: his wealth is in real estate and one huge chunk of DJT. No blue chips, no managed funds; nothing that mainstream America and Barack Obama would choose. I contend he attacks the mainstream because of all that.
Repeal citizens united, curb campaign and lobbying spending, breaking down of these chaebol-like conglomerates, make healthcare public and tax the rich massively. Something no body seems to want.
Switch to a better voting system to destroy the 2 party system and curb extremists getting into power. At least the state compact voting change to modernize the electoral college.
I would like to say, from my perspective, that it seems to not matter how “good”, even “exceptional”, business listed on the stock market do; the outcome is hostile and negative to the customer/consumer. Costs have only gone up, dramatically so. In my case; entirely disproportionate to, if any, income increase coming in.
Market does good. Market does exceptional. The experience has generally been negative?
Market does bad? I expect a lot of us can connect the dots, and will no doubt be impacted again.
Maybe the market, in my perspective; is not a beneficial experience.
I don't think of it as the classic conspiracy in the sense of a La Cosa Nostra meeting in Apalachin.
It's more like a shared set of ideas, and those ideas are crazy, at least if you don't have a net worth that is enough to ride out all but the most historic of social upheavals. And part of avoiding that most historic of social upheavals is not laying off people for the sole profit of it, at least not without a good excuse.
Are you claiming that the 'shareholder class' would rather depress the economy and wipe out trillions in shareholder value...over inflating the economy and lowering interest rates?
Every major financial crisis since (at least) the 80's has resulted in a "K shaped recovery" in which the 99% are forced by circumstance to sell off assets to the wealthy at bargain prices.
Agree. This sounds like the simplistic "billionaires were the problem all along" take, which is, TBF, not that different from Trumpism. The only difference is the choice of enemies who are responsible for all our problems.
Not "the shareholder class" but the actual super wealthy, those few thousand individuals at the top.
A way I have recently seen this put is that if you have a billion dollars another billion doesn't do that much for you in real terms. But if you're a billionaire who likes to sexually harass your child's nanny, you would much prefer she be desperate and precarious rather than economically secure or with a lot of other viable options. This is one crude example but the dynamic is in play in many other situations.
So idk, it's plausible to me that the class interests of the wealthy extend beyond mere wealth accumulation. I can imagine circumstances where they would be willing to give up some of their absolute wealth in exchange for greater relative wealth.
Ok, I buy the premise that maybe the top 1000 people are super evil mr. burns type folks. I even buy the fact that they would be giving up absolute wealth for greater relative wealth.
But you know the easiest way to do that. Inflation. Expanding the money supply. Increasing the value of their assets at the expense of the working class. not tanking the value of the companies they own!
Just FYI, "surplus value" refers a concept Marx made up that is considered in mainstream economics to be an error in reasoning.
Even making sense of it requires buying into the labor theory of value that Marx took from Adams and Ricardo, but which is not taken seriously anymore.
That doesn't detract from the substance of the point you're making. But it's a little like reading someone say their house is hot because of all the phlogiston. It detracts from the force of the argument.
But also, literally I said a lot. There's enough meat there for someone who hasn't spent much time in the history of economics to spend an entire afternoon going down an enjoyable rabbit hole.
that connection between surplus value and the labour theory of value is fully unexplained in your post, so... you have not said nothing, but you haven't said enough to make your post consequential I'm afraid
Not going to comment on the politics, but I'd point out that recession odds on Kalshi are currently 64% and 58% on Polymarket [1,2]. In other words, recession in 2025 is more likely than not -- though far from guaranteed.
My thought relevant to HN is that either way this is likely to decimate venture capital and startups, at least in the short run. Venture capital funds come from limited partners like pensions and endowments, and the professionals I know are all shifting away from growth stocks and into value, international and bonds. VC is already in a drought (except for AI) and now my guess is that it's going to get worse. So many VCs I know have started only in the last 15 years, so they have never seen a real recession like 2009 while working in venture.
It's too late, these actions have shown how truly fragile and arbitrary USA policy is, and extreme anti-current-rules-based-order views are rampant in USA politics. Policy will be volatile and no multinationals or governments will want to deal with the chaos.
I don't think this is quite true. Because these tariffs have been levied under the guise of a national emergency, they technically need to be confirmed by the legislature within X number of days. The House is playing tricks to not hold a vote, and I'm not sure if they need cloture in the senate, but I don't think they need 2/3 to slap the tariffs down.
That is true. X=150 under the 1977 International Emergency Economic Powers Act, which is the authority under which Trump is establishing the tariffs. After 150 days, someone could file a lawsuit to reverse the tariffs if there has not been any vote.
"None of these trade provisions empowers Mr. Trump to impose tariffs on all imports from all countries based on an arbitrary formula. Section 122 lets a President impose tariffs of up to 15% in response to trade deficits, but Congress must approve them after 150 days. Someone should sue to block his abuse of power."
OK but they still just need a majority in the house to undo that? And that is assuming that silliness isn't smacked down in the courts forcing them to hold a vote anyway.
It’s more that it absolves them from having to hold a vote to continue the “emergency”. I believe the emergency act requires congress to vote to continue the emergency after a certain number of days.
But the republicans know that would be embarrassing to hold a public vote to do so- so they sneak in shit like this, to continue to be cowards since they’re too scared to publicly endorse the cruelty.
No-one’s seeing the impact yet (except for those who pay day-to-day attention to the markets, but that’s not a huge number of people), because nothing has actually happened yet. The tariffs go into effect on the 9th, and China’s retaliatory tariffs go into effect towards the end of the month; the EU’s retaliation will probably start hitting in May. Over the next month, it is likely that Americans will see prices go up dramatically, and significant job loss is likely. Considering how upset Americans got over expensive eggs, you’ve got to assume every congressperson is about to drown under a sea of angry calls and letters from constituents.
That might actually produce a veto-proof majority for undoing this, quite quickly.
Two thirds of the Senate, only half of the House. Focusing on reversing just the tariffs is a waste of effort. The traditional ownership-class backers of the Republican party need to wake up to the reality that this bankruptcy enthusiast will only bring further destruction and ruin, start leaning on some congresscritters to buck the maggot party line, and depose this America-hating fuck. That's about the only hope of the United States being able to rebuild credibility.
X-Com: Enemy Known, where you're forced to play with a certain squad leader who is always either out of Time Units, panicking, or mind-controlled, and a 99% hit chance is not really 99%.
I feel like you might be confused about the statement. One platform gives 58% odds, the other gives 64% odds. This is obviously high, but also very far from virtually guaranteed. In 100 trials, we’d expect recession in ~60 events. There is no secret math hidden here, it’s just that.
Actually, that's not what I've found. When I have compared betting sites like Kalshi and Polymarket to the implied probability of Fed rate cuts in the interest rate futures market, I have found them to match up and move in lock step with each other. (I don't work for any of these companies and I don't use the betting sites myself; just stating my observation.)
That's because there's an easy arbitrage. If the prices get out of line with each other, anyone can buy the cheap one, sell the expensive one, and get free money.
If the betting site is used as a hedge, then the equilibrium prices don’t reflect real-world probabilities.
Suppose people predicted that Trump would tank the economy and wanted a few extra dollars in that case. An extra dollar in a Trump world would be worth more than in a normal world, thus distorting betting.
> My thought relevant to HN is that either way this is likely to decimate venture capital and startups, at least in the short run.
Yeah, seemed like the IPOs were really getting going again, but I think that likely dries right up, too.
Unless you figured out how to materialize rare earths out of thin air, or spin up an automated factory in six months, it’s hard to imagine anyone will be looking to give you money.
It's already happening. Klarna canceled their IPO. So did StubHub. I think it's a safe bet that all planned IPOs have been canceled for the time being.
Good. Silicon Valley collectively sold their souls to Saudi Arabia, and put their full weight behind Trump because that’s what Saudi Arabia wanted, and now they are gonna get what they deserve. I hope their wealth is destroyed to the point of needing to care about Social Security and Medicare.
There used to be more of an image of making the world better - people were still talking about getting rich, of course, but there was a sense that they were going change the world more positively in the spirit of Steve Jobs’ bicycle for the mind quote, and it seemed like that got dropped in the 2010s when everything got so focused on adtech riches and, later, the cryptocurrency marketing push tried to finalize everything without delivering anything truly beneficial to the users.
The root of the economic imbalances lies in persistent dollar overvaluation that prevents the balancing of international trade, and this overvaluation is driven by inelastic demand for reserve assets. As global GDP grows, it becomes increasingly burdensome for the United States to finance the provision of reserve assets and the defense umbrella, as the manufacturing and tradeable sectors bear the brunt of the costs... Tariffs provide revenue, and if offset by currency adjustments, present minimal inflationary or otherwise adverse side effects.. Finally, I discuss a variety of financial market consequences of these policy tools, and possible sequencing.
> One of the core tenets of the document is the deliberate devaluation of the US dollar in order to make US exports favorable again.. a country which holds the world’s reserve currency faces a significant dilemma.. to keep its currency as reserve status—and reap all the geopolitical benefits this creates—the country must hamstring its own economic output by running a huge trade deficit, which means the country imports far more than it exports, which hurts—or in the case of the US, kills—domestic manufacturing.
>... if a French person buys a $50K Ford truck and imports it to France, that’s $50K USD that leaves France and goes back to the US, lowering France’s dollar holdings. If an American buys a $50K French Peugeot to import it to the US, he sends his $50K USD to France, which increases its dollar holdings.. to maintain the dollar’s reserve status.. US dollars are constantly flooding the world.. running a massive trade deficit where imports of foreign goods (outflow of USD) far outweigh exports of domestic goods (inflow of USD).
> Why must a country run a trade deficit to retain its global reserve currency status? Because when your currency is the global reserve currency, the entire world constantly hungers for it in order to use it in all the various countries’ international trade between each other. The only way to keep those countries constantly supplied with dollars is for Americans to buy tons of foreign imports, which effectively sends dollars to those countries, since these purchases are made with dollars
So... the problem with the US being the reserve currency is that it makes other countries cater to our tastes because they want our money...?
Yes, abd this appreciates USD, in turn makes production costs in US high, so the rest of the world doesn't buy what US produces.
It is by itself sustainable though as US doesn't only export produced goods but tech etc which the world wants. A valuable dollar funds this tech, in a sense whole world funds the US trch sector.
Not only “in a sense,” but also directly — many of the parent or grandparent LPs to US venture firms are foreign wealth funds, and US tech companies are (by way of our capital markets) held as an investment by many foreign nations (e.g. Norway’s sovereign wealth funds).
So we enrich foreign nations through our technology companies and capital markets. This is to the detriment of our domestic laborers, but it’s a great deal for our top ~30% “laptop class” that earn disproportionately well and have their savings stored in those same markets.
I'm not even sure that it is to the detriment of our domestic laborers. It certainly makes domestic manufacturing less competitive, especially the lowest skill/barrier to entry manufacturing. However, the US manufactures a LOT still, there are loads of reasonably well paying jobs for lower skill worker. I will say that housing and healthcare costs are high in the US but those are not things that are imported.
It also depends on what you think people want. Do they want a vast array of cheap consumer goods and entertainment, or do they want more affordable basics, like housing, cars, and healthcare?
If you go by PPP alone, the US is already in second place [0].
PPP is a horrible metric, but I’m not sure GDP per capita is any better.
His argument is pretty circular, which is e.g. not that Americans would work for Vietnamese wages but that we'd produce automation that can do the same work. But in that case: why aren't we doing that today?
The answer is that it's still more advantageous to pay Vietnam to make our clothes.
It's basically just no free lunch theorem: we can afford the CapEx of doing such a thing today precisely because we have better alternatives. If there were no better alternatives and we had to produce our own garments, we wouldn't be able to afford the CapEx to do it in a dramatically more labor-efficient manner.
We could already do it, then we automated huge portions of it, then as other economies matured we handed that work to them and developed into a high-margin, high-income knowledge economy.
We can rewind back to a middle income economy if we want, I guess, but I don't see the appeal.
I'm open to the argument that we want some domestic mass manufacturing capacity for reasons of self-sufficiency, supply chain resilience, etc, but just come out and say it: we need handouts to keep certain strategic industries alive despite their lack of economic viability in the marketplace.
I know that a quotation is not necessarily an endorsement, but this is a fantastically short-sighted idea.
> it becomes increasingly burdensome for the United States to finance the provision of reserve assets
How dare countries want pictures of dead Presidents so badly that... they're willing to send real goods to the United States for its consumption, with no expectation of reciprocation.
> and the defense umbrella
... and agree to a de-facto policy of minimal militarization, such that they could not pose a threat to America's global security interests, no matter what it decides those are.
A few hundred years ago, this would look like a tribute system. It's unfathomable that a nation in such a privileged position would decide it's tired of such a systematic set of advantages.
> as the manufacturing and tradeable sectors bear the brunt of the costs...
What's the saying, they've tried nothing and are all out of ideas? Industrial policy is a known and understood thing. The US has this in its defense sector even it doesn't want to admit it, and the CHIPS act was another attempt for the semiconductor industry.
This sort of policy is far more targeted and far less disruptive than blowing up international supply chains in hope of repatriating sweat-shop sneaker sewers and factories for five cent injection molded widgets.
You’re right about all you say. But the US has struggled to implement even the simplest forms of industrial policy because other countries are so extremely price-competitive, and our markets so unbridled, that our “elites” have eroded our industrial base to drive shareholder returns.
If not through tariffs, how else do you force reindustrialization? Industrial policy will always fail if it’s driven by a chimeric political system where both sides are incentivized to grow “The Economy” by eroding domestic capacity.
The CHIPS Act is too little, too late (when you’re competing with a fast-accelerating rival that is simultaneously your largest debt-holder and main industrial base).
US manufacturing is at an all time high in terms of output. Less people are needed in that sector because it's an area where automation is highest. I agree that there is a national security reason to have tariffs to protect some manufacturing, but that should be a precision targeted tariff if anything.
Your level of paranoia and aggression will vary depending on how hawkish you are. If you’re more hawkish you’ll be more aggressive and make your move as early as possible, and you’ll also tolerate a lot more pain to achieve your goal. Bessent seems pretty determined.
I do think it’s clear that our industrial capacities have eroded. Look at our infrastructure compared to China. We lag on every metric: transportation initiatives, building projects, solar production, new energy plants, and so on. Manufacturing is just 1/10th of the “full stack”.
I’m not making any political commentary as to whether tariffs are the right move or not, I’m only explaining the line of reasoning.
The problem is that the tariffs can be undone by the next president. I think that would discourage any investment in industry here. Even if this works, I feel like there is now a political commitment to undoing the tariffs.
They can, yes. But this is likely harder than you think. Suppose Trump puts a bunch of tariffs on cheap Chinese tires so that American tires are price competitive again (no idea if this happened, this is a hypothetical). If the next president removes those tariffs it would look like fucking over the tire manufacturers in whichever swing state they live in.
Ya I just have a suspicion that for some industries maybe easily done but for others, four years isn't long enough to embed yourself in an economy to the point where you have political support. It's not a bad idea to onshore some manufacturing. Like targeting the semiconductor and medicine industries should be a higher priority than autos I think. But what could happen is the companies put on a show of onshoring but nothing is really done because they know four years isn't long enough. For those two industries I suspect it's not.
> Industrial policy will always fail if it’s driven by a chimeric political system
I think you're begging the question here that a chimeric political system can craft an effective, long-term tariff policy if it can't craft a long-term industrial policy.
In both cases, the operative phrase is long-term. IF they're to be effective, either set of policies needs to look a decade ahead, and an industrial policy still wins compared to shotgun tariffs.
The Miran paper envisions long-term investment in US industry, e.g. see recent TSMC-Intel partnership and $100B investment in US manufacturing, brokered by the current administration.
TSMC previously pledged to pour $65 billion into U.S.-based fabrication plants and has received up to $6.6 billion in grants from the CHIPS Act, a major Biden administration-era law that sought to boost domestic semiconductor production. The new investment brings TSMC’s total investments in the U.S. chip industry to around $165 billion, Trump said in prepared remarks.
Let’s axiomatically presume that vertical integration (of your supply chain, manufacturing, software development, labor force, etc.) is the key to “innovation” in the abstract. You can see this starting to happen with BYD, the Chinese electric car company, for example.
With the above in mind, let’s say your goal as a country is to develop your industries so you can achieve broad vertical integration.
Soft economic assets (financial markets, legal structures, software, pharma, IP, etc.) are easier to bootstrap once you have hard economic assets assets (commodities, energy, manufacturing, transportation, logistics, etc.). If you lose your hard economic assets and only have soft ones, you are at a strategic disadvantage because your opponent (in this case China), can bootstrap their soft assets relatively quickly. By comparison, it will take you much longer to get your hard assets back (through the mythical process of “reshoring/reindustrialization”).
What makes you think the United States has lost hard economic assets? Also, have you considered that there are different types of innovations, that are affected by the structure of an economy and its research institutions?
The US has dominated radical innovations, China has excelled in incremental innovations. We're potentially throwing away our advantage in the former by decimating our research capacity (something conspicuously absent in your concept of what drives innovation), and there is no clear plan to take the necessary steps to rebuild our capacity in the latter.
The Pandemic exposed the reasons why pretty clearly. Having e.g. critical medicines manufactured by a geopolitical and military adversary is a very bad idea.
> unfathomable that a nation in such a privileged position would decide it's tired of such a systematic set of advantages.
That's just the thing, you've got it exactly backward! The US has been "looted, pillaged, raped and plundered by nations near and far," and it's far less rich than it should be.
Icarus is taking flight, the rest of the universe better watch out. And for those stuck getting carried along toward the sun... tough shit, there's not going to be enough time to convince a population of born and bred narcissists that it's really hot up there before the meltdown.
> As global GDP grows, it becomes increasingly burdensome for the United States to finance the provision of reserve assets and the defense umbrella
I don't understand. US share of global GDP is around where it was in 1980, and in 1995[1]. Is Miran arguing that America's "exorbitant privilege" of being the source of the world's reserve currency, literally being able to buy goods from any country in the world with money printed out of thin air, is actually a liability?
[1] Page 8 of his paper
EDIT after reading through Chapter 2 of the paper: Thank you for sharing this. I don't agree with many of the arguments Miran is throwing out so far, but at least it's self consistent.
He is saying:
1. If the US's global share of GDP decreases, then a set of global economic factors will cause the US to keep having to take on deficits to fund the rest of the world's desire for USD (because that is the world's reserve currency). If the US becomes small enough relative to the world economy, then this pressure will cause the US to risk defaulting on its debt.
2. The US's status as the reserve currency issuer means US dollars are artificially expensive. This means that low margin, high-labor industries like manufacturing can't thrive in the US. This is a national security risk because China/Russia can make lots of tanks/drones/etc and we can't.
3. The US benefits from being the reserve currency issuer because it can use that power to project force worldwide and maintain national security.
4. (He doesn't say this, but implies it in that coy way that people who read The New Criterion like to do) #1 is an unacceptable risk for America, and the US should employ a range of unilateral or multilateral measures to reshape the global financial system in a way that devalues the US Dollar, strengthens US manufacturing, and forces US trading partners (esp. other liberal democracies) to subsidize the US's status as the reserve currency issuer, since the US provides a global hegemony that is beneficial to them.
Also, having read portions of the Project 2025 "Mandate for America," it's really interesting to me how all of these right wing thinktank writers (Russ Vought, Max Primorac, and now Miran) seem to share the same writing style.
> In only two decades, China has grown to be the dominant player in shipbuilding, claiming more than half of the world’s commercial shipbuilding market, while the U.S. share has fallen to just 0.1%, posing serious economic and national security challenges for the U.S. and its allies, according to a report released Tuesday by the Center for Strategic and International Studies. In 2024 alone, one Chinese shipbuilder constructed more commercial vessels by tonnage than the entire U.S. shipbuilding industry has built since the end of World War II.
Yes, it is a liability, because in exchange for your reserve currency status you are indebting your country. Gradually, as you outsource more and produce less, your country derives more and more of its returns from soft economic assets (financial markets, legal structures, software, pharma, IP, etc.), than hard economic assets (commodities, energy, manufacturing, transportation, logistics, etc.).
In the long run, this hollows out your industrial base, drives income inequality (because labor is devalued when products/soft assets have zero marginal cost of replication), and defangs your country.
Said differently — vertical integration is the key to “innovation” in the abstract. You can see this with BYD.
With the above in mind, let’s say your goal as a country is to develop your industries so you can achieve vertical integration. Soft economic assets are easier to bootstrap once you have hard economic assets. If you lose your hard economic assets and only have soft ones, you are at a strategic disadvantage because your opponent (in this case China), can bootstrap their soft assets relatively quickly. By comparison, it will take you much longer to get your hard assets back (through the mythical process of “reshoring/reindustrialization”).
All that being said, this is not a commentary on the effectiveness of the tariff policy of the Trump administration.
Thanks for the explanation! Most of what you wrote makes sense to me. In particular, I think the concept that going hard -> soft economic assets is easier than the reverse is really interesting. I'll have to think on that more.
Things that still give me pause:
1. I don't understand why hard economic assets like manufacturing are more heavily impacted by this phenomenon. Wouldn't exporting a $50,000 car and a $50,000 software license have the same impact on the country's current account? I think it might have something to do with the marginal cost of replication point you made, but, for example, the marginal cost of manufacturing semiconductors is very small, and we trail in that too.
2. I disagree with your assertion that 'vertical integration is the key to “innovation” in the abstract.' I think this is often true, because vertical integration enables more control/flexibility and faster iteration, which allows innovation to occur. However, there are many cases (e.g. fabless semiconductors, meat poultry farming, software companies build on the cloud) where the innovation was actually to split the value chain into separate concerns with separate concerns.
1. The further you are up the chain of abstraction, the less “valuable” the export is as a form of power. Think of this as a spectrum between hard and soft assets — if you decline to sell advanced computing software to your rival, you may harm their ability to optimize crop yields, or whatever. But if you decline to sell them steel, or oil, you may decimate their energy supply and bring their economy to a halt.
So, generally speaking, harder assets have more “declination risk” for the purchaser than softer ones, because the softer ones are either a) at the tip of the value chain, or b) easier to clone and replace. China has done a great job of outright refusing US SaaS exports like social media companies, while “stealing” millions of Windows licenses from Microsoft.
Said differently, IP is fragile! If your opponent does not respect your laws, you can’t enforce them. Hard assets are the opposite, because you can more easily cut them off.
And again, they are usually at the bottom of the value chain, so everything else is dependent on them being available. No oil, no cloud computing. Not the other way around.
2. Great counterexamples. I think it depends on what you define as innovation, and perhaps more specifically what about innovation as a concept is important to you.
- There are “open” kinds of innovation that push humanity forward, grow global wealth and prosperity, and make everyone better off.
- There are also “closed” kinds of innovation that benefit only a particular group.
Generally speaking, open innovation is “fangless.” What I mean by this is that it does not greatly increase your geopolitical power. The Dutch, for example, own ASML, but this doesn’t really give them any power, because their tools are relatively “open”. Swiss companies own massive numbers of pharmaceutical patents, but that’s just a domicile on paper. If Switzerland were invaded tomorrow, their patent regime wouldn’t offer much protection.
By contrast, a more “closed” form of innovation (weapons manufacturing being the most extreme example) will dramatically increase your geopolitical power.
Think back to the atomic bomb. Now look to the future. If the US develops killer drone swarm technology, or genome-targeted bioweapons, or whatever else, that means we have the cards.
Once you have world (or space) domination technology, you can disproportionately benefit from it, and you can selectively enrich your allies by giving them access to it, like the US currently does with our weapons systems.
If you don’t vertically integrate, you can’t do closed innovation. And closed innovation is the only “hard money” — and perhaps the dominant power struggle in geopolitics.
That a Dutch company, ASML, commercialized a technology pioneered in America’s national laboratory ecosystem and largely funded by Intel also has important lessons for policymakers interested in protecting and promoting the next emerging technology.
Open innovation does not lead to geopolitical power.
There is one exception, which is that you can use your open innovation pipeline as a carrot to recruit intelligent people who then bolster your closed innovation ecosystem. The US used to be very good at this. We are still very good at this, but we're getting worse, and we're progressively more hostile to skilled immigration.
The Dutch and Swiss are very powerful, relative to their size. You can say fantasy things like "if they were invaded tomorrow", but that's not reality.
The US has atomic weapons, but has lost almost every war it has started since having nukes. Having weapons doesn't mean you will be faced with contexts to actually use them. "Genome-targeted bioweapons" is just made up nonsense. Just making up "if" statements of fantastical capabilities that do not have grounding in reality is just that: fantasy. Living in fantasy land is how the richest nation the world has ever seen could lose a war to teenagers in Afghanistan.
The idea of an "atomic bomb" would have seemed fantastical before it was developed. Bioweaponry is underfunded, far more dangerous than you think, and is a hot topic for the PRC [0].
And let's be clear — the US did not "lose a war" in Afghanistan or Iraq. Yes, we had failed pseudo-occupations. That is not the same as losing a war. No country, save perhaps Iraq during the Gulf War, has experienced the force of a modern American army. And if you want know what happened during the Gulf War, look at the "Casualties and losses" section on the Wikipedia page [1]. Spoiler: America won, Saddam lost.
You, and I, and the entire world, have been living under a Pax Americana for the past 70-something years. As that world order fractures, you will see that no country without hard assets and military power, the Netherlands and Switzerland included, are as powerful as they may seem.
Friedrich Merz, the incoming German Prime Minister, spoke very eloquently about this in his first televised conversation. Germany will lead the re-militarization of Europe (disclaimer: I am also a German citizen) [2].
America didn't lose the Iraq War to Saddam, it lost to disparate groups of Islamic jihadis who read some Mao.
Losing a war is not body counts, it's a military withdrawal after a failure to achieve objectives. It doesn't mean there are winners.
America went into Afghanistan to destroy Al-qaeda and remove the Taliban from power. At the end of the war, the Taliban were back in power and global jihadism is even stronger and more pervasive than before. That is losing a war.
Pax Americana shows that big militarized states like the US and Russia (before that USSR) do not wield the operational war power they imagine. They lose every war they start (which, again, is not to say there is a triumphant winner).
> And let's be clear — the US did not "lose a war" in Afghanistan or Iraq. Yes, we had failed pseudo-occupations. That is not the same as losing a war.
You do not wage war for the sake of war, war is a tool for achieving political goals. What you're saying is that the U.S. won battles in these wars, but ultimately lost because they failed to achieve their political objectives — which were the very reasons the wars were started in the first place. They lost in Vietnam, Afghanistan, and Iraq. They lost all of these wars.
I meant "liability" in the sense of "is the US's status as the global reserve currency, on balance, a bad thing for the US?" not in the sense of "Is a US dollar abroad an asset or a liability on America's balance sheet?" Probably could have used a better word.
The counterpoint to this is that the US as the reserve country means that it’s very cheap for the US to service its debt since it’s holds the money supply. It basically controls its own destiny in that sense.
It is interesting that tech (Nasdaq) is the hardest hit here. The real engine of US exports for recent decades and likely to be a casualty as other countries plan their trade-war retaliation.
And that's not even taking into consideration what might happen in the domestic market should there be a real recession - consumers will cut down their consumption and that'll filter back to lower corporate earnings.
In previous economic stumbles, US exports abroad were able to buffer domestic weakness. Probably not anymore...
Almost all the trade deficit numbers being thrown around by the US administration don't include trade in services which the US generally has a large surplus. A lot of that is very high margin tech SASS/advertising.
If this continues it seems like this could be a "digg->reddit" type moment for US tech. In some ways it is easier for a lot of people to leave facebook than it is for a single person. If you look at gross margins there is a lot of room for competition, though network effects make that competition very difficult. Maybe this is the catalyst for competitors to break in.
>Almost all the trade deficit numbers being thrown around by the US administration don't include trade in services which the US generally has a large surplus.
Then why don’t other countries tax US services? I don’t even hear this from anyone in the media too
Countries can and have under the name of "digital services tax". Generally the rates are low and often only cover a subset of things. The US and tech giants have historically pushed back hard on them. This is a reasonably up to date link to the situation in Europe https://taxfoundation.org/data/all/eu/digital-tax-europe-202... Keep in mind many of those are proposed and not implemented.
The real threat to the US IMO is losing marketshare. The stock market has gotten beat up but most of the real pain for the average person is still off in the horizon. Anti-US sentiment is growing quickly, if we enter a full blown global recession/depression I think it could be a real catalyst for large sudden shifts away from US tech companies.
Yes, and that’s always mysteriously forgotten in these conversations.
Historically, China stole US IP and software, like Windows, en masse. Now they refuse to import our main export product — software — while we import their physical products and software like TikTok.
If we were allowed to export our services to China in exchange, this would be a very different geopolitical moment.
Thank you for providing me a front-row example of it. There's always one bullshit excuse or another.
In reality, the US suppresses Canada's national defense, because for some weird reason, it doesn't want a heavily-armed neighbor.
As for energy, for every dollar of it that it buys, it derives far more than a dollar of economic utility from it, which is why it's screaming bloody murder at the mere mention of Canada turning off, or adding surcharges at the tap.
All this is why in 2025, one would have to be an utter fool to expect America to keep faith.
In reality, Canadians have bravely fought and died for American interests in the Middle East. Don’t take any of this as my personal view, or as a repudiation of the interpersonal camaraderie that Americans, by and large, still feel with Canadians (although I understand it’s no longer universally reciprocated).
However, as a matter of industrial economic reality, NAFTA likely benefited Canada more than it did the US, and the US does subsidize NATO and Canadian defense by extension. What barriers are there to an independent Canadian defense industry?
(Although I would argue that NAFTA benefited both countries, and we should continue our free trade agreements!)
>What barriers are there to an independent Canadian defense industry?
A defense industry is intertwined with a industry for civilians, for example in aeronautics. Certain nearby trading partners have historically stymied attempts to maintain such an industry.
I agree, even though I don’t agree with how these tarrifs were implemented I don’t have any sympathy for China. President Trump is absolutely right when he says China took full advantage of the US policies.
What caused people to stop using the free service that is MySpace? What caused people stop using the free service that is Digg? Being free isn't particularly novel. Facebook isn't providing this service out of some sense of altruism. It is incredibly profitable.
What about the tariffs would cause people to stop using it? Because they - along with many other of the administrations postulations and policies - are incredibly unpopular and a complete 180 of US foreign trade policy. Because tech is a money printing machine for the US and tech oligarchs who have largely bent the knee to Trump.
The other side of it is the lost trust in American tech. That’s most prominent in the military debates around whether other countries can rely on their expensive hardware working if they run afoul of American policy, or if the president is looking for leverage to extort a mineral deal, but it’s also highly relevant for the civilian side. For pretty much as long as we’ve had computers, most other countries have trusted hardware made by American companies running operating systems and applications made by American companies. Now everyone has to wonder what kind of espionage or sabotage would be possible if those companies were pressured – or whether the guys standing on stage would even need to be pressured. Suddenly, giving Google the ability to push code onto most of the devices in the world looks less like a security win and more like a risk - and it’s famously hard to establish trust without the rule of law as the foundation. Snowden started it but most allied governments were confident that there were limits in a way which is a lot harder to believe now.
I am expecting that 2024 will be seen as the peak for American tech companies: the longer this goes on, the more competition they’ll have with advantages they can’t match in foreign markets – especially if many of the immigrants who worked at those companies decide to start companies after leaving.
I think since the Snowden revelations it’s pretty clear there is no holds barred in terms of intelligence overreach from practically every angle and state.
What’s happening now, with the tariffs, is really wild (but ultra dumb imho) territory…
Snowden showed that they were willing to compromise allies, but there was still some idea that it was at least plausibly legitimate targets.
Now people are worried that economic espionage or even sabotage are possible. For example, if you are the government of Canada, Snowden annoyed you but you weren’t asking whether Microsoft Update would brick every computer in your government right before a military assault. You probably aren’t thinking that’s highly likely now, either, but you have some intelligence officers analyzing it seriously in a way which would have seemed paranoid a decade ago.
Tech was easiest to export cross border. You can export tech through culture, and the USA has been a powerhouse of every major technical cultural channel for the last 50 years.
My comment may be naive but digital services do not have tariffs. Given the unpredictable manner of Trumps tariffs wouldn't this encourage more startups and companies to focus on exporting digital services instead of focusing on physical goods? If so there could be minimal increase in goods produced in US and instead US consumers just absorb the price rise of goods with the consequences that arise from that.
This all tariff imbecility created solely by Trump it’s atrocious, still, if EU response is to hit the main players in Nasdaq - where there are a lot of chip producers necessary for the ongoing AI revolution - we are just shooting ourselves majorly in the foot.
Surely there are much better companies for the EU to apply directed tariffs. EU absolutely has their weaknesses, but giving blunt responses (like China just did and put tariffs on everything) is not really our way. Expect EU answer to be well crafted and directed at very specific areas.
Nitpick: No, the entire Republican party is at fault here.
They willfully ignored every warning, and attacked the people giving the warnings. They promoted him, protected him in two impeachments, eventually re-elected him, and actively confirmed his cabinet of sycophants instead of requiring some adults in the Oval Office. Then they took specific steps to block anyone from challenging his "national emergency" against our neighbors, by declaring that the rest of the year simply "doesn't count" for the 15 day timer in the original legislation. [0]
Some Republican legislators may have had hard-choices for securing their own re-elections, but they still chose this route.
I would argue that China is just playing the game and EU should do too while it lasts. No time for sophistication in a street fight, this is not chess.
China has latitude in inflicting pain on its own people that the EU does not, and simply mirroring the US’s tariffs would impose significant pain and will not be the EU’s first choice. It may happen anyway, but it’s a harder decision for the EU than for China.
To me, really, the interesting thing is that _the US_ thinks it can do it. Given how annoyed the American public got about expensive eggs, I really question whether that is true; I don’t think people will sit back and go “cool, I can’t afford consumer goods now, and I’ve just lost my job, but it is all part of Dear Leader’s plan.” The idea, which Trump has actually vocalised, that the American public will tolerate pain seems totally at odds with, well, history.
> giving blunt responses (like China just did and put tariffs on everything)
It's incorrect to describe their response as "blunt". As someone who follows mainland Chinese media I can assure you that their policymakers have thoroughly prepared themselves for years. They even foresaw in 2021, after Biden took office, that Trump would become President again, unless he was assassinated. (Yes, they foresaw the assassination attempts as well; and no, they did not orchestrate these attempts -- if they did, Trump would be dead already.)
The Chinese have much more foresight than you seemingly give them credit for, unless I'm misinterpreting your words (in which case I apologise). On the other hand, European leaders have been extremely geopolitically infantile.
Whatever, I'm in Canada and decided to cut down all costs. Fully expecting a recession as well as a depression.
We thought about getting a new car, but not going to do that until in a few years when car sellers are begging me to take one. Right now they are so arrogant that they charge high rates and popular cars takes months to deliver. I'm gonna sit for another 3-4 years.
Also decided to remove all travel plans from the near future. Purchases higher than $100 are going to require a stamp from the financial department ($wifie). All purchases re-directed to local second hand market as mu as possible. Thought about buying a MacBook for RE but to hell with it. No new phones, no nothing until something breaks and evaluated by the financial department to be "essential".
Fuck it. I just got a small raise and bonus but feel so insecure. I expect to lose job at any moment.
> Fuck it. I just got a small raise and bonus but feel so insecure. I expect to lose job at any moment.
just today 3 people from my network messaged me about losing their job and asking about some opportunity. They worked remotely for American companies (from Brazil).
I feel similarly, and I actually just got laid off last week.
However, I don’t think tariffs are going to result in no more IT jobs, I’m sure there will be jobs available, they might just not pay as much as they have.
Iam amazed at the epic levels of ruin one man can bring upon a country and how a whole country of people can elect someone so utterly out of depth. This level of idiocy wouldnt be tolerated in companies if done by an intern.
But what if a significant fraction of the employees believed in some message being spread that intern?
Whether the intern is an inveterate grifter, and/or happens to be personally sponsored by a powerful mob boss, does not matter for the employees latching onto that message.
In that context too, I have a feeling these flaws would be tolerated/overlooked.
Has anyone checked out Fox News recently? There is zero, and I mean zero coverage of the implications of the tariffs. W.T.F. At what point do you go “okay, we’re actually on par with North Korea”?
Freedom of the press means you have dishonest press. Fox News is just ESPN for news consumption. Out of sight, out of mind. If they reported the bad news, these people would change the channel anyway.
This is the payout difference between perato optimal and minmax solutions. Trust is gone so the sum value to all players is lower overall than it was before. The only thing is the rest of the world still has trust with each other so the ultimate looser is just the US. I just wish that the devastation this is causing could only impact those that caused it but the reality is that those responsible, those that voted for this, won't admit or learn from this, or the hundreds of other devastating acts going on, and will keep inflicting this type of pain. We really did have it all.
Real estate, bonds, foreign stocks, oil. There's a billion options out there. Or they can just sit and wait. Losing for a bit of inflation is better than losing 20-30% in a recession.
AFAIK this is one of the first times that a significant downward move in the stock market wasn't also seen in the price of Bitcoin. Usually they're correlated.
Lookup VUSXX. It is a vanguard short term treasury fund. That's where I put my cash. It is currently paying 4.24% that is state tax free (I live in Oregon).
Unfortunately it is hard to predict if that rate will stay high enough. Previously I had 'cash' in iBonds which for a while paid 8-9% early in the pandemic when inflation was high. If none of the above pays well enough I look into treasuries, or CDs.
Bonds and stocks tend to have an inverse correlation. And, yep, bonds are up while stocks and real estate are down.
That’s why financial advisors tell you to keep a mix of stocks and bonds, trending towards a greater percentage of bonds depending on your risk tolerance and as you get older. (Because bonds have lower returns than stocks, historically, but are also less volatile.)
Often yes but sometimes they both go down. However bonds don't decline as fast. The actual strategy I follow is stock/bond/short-term. The short term is like a buffer currently invested in short term treasury fund. Think of it like a game. If stocks are low then sell bonds and when that is also low then use the short term investment to live on to wait out the market recovery. Also if you are retired like me you would tighten expenses when drawing from the short term during a downturn.
Buy Treasury Inflation Protected Securities (TIPS) and hold them to maturity. (Don't buy TIPS funds, their value fluctuates based on interest rates. Buy actual TIPS instead, at either Fidelity or Vanguard.)
Trump has consistently avoided consequences from breaking the rules.
You can’t fight someone like that within the rules, and right now the left will throw anyone who starts breaking the rules in jail while consistently being unable to hold the opposition accountable.
Anyone who says the left is doing anything which requires power should not be taken seriously at all.
The left is people like Richard Wolff, Naomi Klein, Noam Chomsky, Slavoj Žižek, Ralph Nader, Norman Finkelstein, Vandana Shiva, Chris Hedges, Michael Parenti, Cornel West.
The left has almost no organized political power in the US. Except for a few city councils and a couple state houses, it's zero.
When people use "the left" as a catch-all for "not us", some broad brushed painting of "outsiders" this isn't a serious conversation, they're just waving their arms around and making sounds.
The only people the left are capable of holding accountable appear to be other people on the left, or disposable flunkies on the right, so the only thing the left appears to be accomplishing with this approach is self destruction, or clearing out deadwood on the right.
If stocks hit $0, you probably have more immediate concerns - like where you are going to get your next meal and if someone is going to shoot you for the contents of your fridge.
Stocks could still continue to fall, but they aren't going to slide to zero.
When faced with "cash in hand that might lose value through inflation" versus "the stocks you currently own at risk of being worthless", the decision to sell is straightforward even in the absense of a next step.
There is always a risk that a specific stock will go to 0. It happens even in good ecconomic times.
The decision to sell is not straightforward, even given the current situation. It would probably be the wrong decision for the average person unless you really know what you are doing.
> Brazilian hyperinflation lasted from 1985 (the year when the military dictatorship ended) to 1994, with prices rising by 184,901,570,954.39% (or 1.849×1011 percent; equivalent to a tenfold increase on average a year)
I'll give the consensus answers from the trading arena. Each of your questions has a fairly significant long-term backdrop, a medium-term one, a short term one, and an immediate day-to-day narrative. That's fairly obvious, but there is strong confluence now when it comes to some of the things you are asking. And please ignore the grammar - on a phone and banging it out:
International money is now flowing out of US assets. This is a shift from the past few years where the US has seen historic inflows that kicked into overdrive with the AI wave. The pairing of stronger dollar and rising US assets made us equities especially attractive for international investors. This peaked with the US exceptionalism trade during the beginning of the Trump presidency, and now as a response to tariffs you are seeing dollar down stocks down which is making the sell-off especially painful for international participants.
Before the recent tariff shock, those previous narratives were already coming to an end. European equities have been ripping. That's one place where money has been flowing from big players like hedge funds.
A lot of the money has gone into deleveraging. When you look at prime broker data you can see that hedge fund positioning, large asset manager positioning, vol control, CTA, and most of the big market participants have been heavily lowering exposure for a solid month now. Remember that cash can go to lowering leverage.
The bond question is very much in play. You are correct that bonds have not been catching a bid. The consensus outlook was moving to stagflationary, and bonds had other hair like the US still having a lot of debt to term out (and newly issue... deficits are running Huge despite the news of cuts in inconsequential places as far as overall budget), and some more recent theater releases about consumer inflation expectations were frankly shocking, and that feeds into the fed's response function when it comes to cutting rates and helping out a bond rally cycle. This is part of the reason you're seeing money go, well, a lot of other places! Like European banks, gold, etc over the past few months. Now we're in a full on recession trade, and this debate is in overdrive. Fed cuts were increasingly priced in, bonds caught a bid, but Powell spoke very recently and said there was too much uncertainty to even consider cuts which pulled back those rate cut expectations. Opinions that are in conflict are priced into various aspects of the market right now, and this will play out in the coming weeks.
On to Gold. I think it's fine to simplify it and say that Gold sniffed the danger out. It's been on a face ripping rally for a while now, and what you see now is a great setup for the trading phenomenon of "sell the news." Once everybody is long there's no one left to buy and only sellers can come in from there. When markets get hot like that, you get fast money coming in that is prone to selling on small down moves (because they're only joining the bandwagon to make "easy" money, and they're not interested in losing even a little bit of money. They are also often tourists in that they do not have deep knowledge of the investment product so when something like gold selling off when it should be going up happens, there is a fear response.
That said, the gold selloff today is significant. Have heard two commentaries on this, and both agree it's a sign of margin calls and liquidation/sharp capitulation. In extreme sell-offs you see all correlations go to the one, and there is a "dash for cash" to meet collateral requirements and shore up risk metrics. You can also see signs of this in FX markets. Some other commentary from today confirmed stres in treasury liquidity, which is a "safe haven" but also gets liquidated in dash for cash situations.
And this does partially answer "where the money is going". T Bills. That's what everyone wants when battening down the hatches.
Gold is indeed best viewed as an uncertainty hedge rather than an inflation hedge. That's a good observation. It's really a hedge against systemic fragility though things like people being unsure of Central Bank policy... Tariffs.... Etc. It's not exactly a day-to-day extreme market volatility hedge. Some of the cash is going literally into hedges! Volatility itself is hugely being bid up right now. That stuff is even better than cash because it has negative correlation to risk assets.
Stitch everything together and you get a pretty good backdrop for the current sell-off. It even helps explain things like the 2-day back to back action, where day one was a huge selloff but it was somewhat orderly because everyone was coming in with fairly low exposure, so panic didn't really set in until day two (and he's selling feedback loops often continue until liquidation is forced, which marks a bottom for buyers to take a stab at. Nobody wants to step in during a steep grind down of price).
Relevant charts. Not all of them have the labels in-chart, but it's all significant data. Ex: here's a real data point that isn't in the charts below, but is a typical example of this sort of data. "High volatility is expected to generate 80 billion USD in equity supply from macro strategy funds over the next week if conditions continue": https://ibb.co/album/KNBSw2
Inflation only happens if the US starts paying down the debt -- locking up the tariff money in interest payments. Otherwise, there's fundamentally no increase in the supply of money. I'm guessing there still will be inflation for consumers, especially seeing as most don't have the funds to invest in bonds.
I’m pretty sure the conventional wisdom suggests inflation happens when countries don’t pay down their debt.
Increased money supply isn’t the only cause of inflation (e.g., stagflation). Uncertainty about how to price goods—especially for goods in the middle of supply chains—could cause supply disruptions. It’s a self-inflicted version of the Covid supply disruptions.
You owe tax on the difference between contributed dollars and converted dollars. So if you contributed $100 and it historically had grown to $150, you would owe tax on $50 to convert.
If that $150 in value is suddenly $120 instead, your tax bill to convert is significantly cheaper.
Rebuy equities/reinvest dividends at reduced prices, pay taxes now, enjoy tax-free growth. If the current admin is serious about trying to get rid of income tax, then that would eliminate a major advantage of trad vs roth.
ROTH contributions grow tax-free. Doing your conversions now allows you to buy equities are they're currently discounted prices, maximizing your potential long-term tax-free gains.
Especially if you hit the RMD threshold in retirement. Even more important is how RMDs affect Medicare premiums(1). The best advice I have is to avoid RMDs as much as possible since they can/will affect other parts of your retirement strategy. Thus, converting to ROTH today may save you lots of cash in the future.
A simple but profound idea that has stuck with me from the days when I religiously listened to The Macro Tourist's podcast: who's on the other side of the trade? In order for AAPL to drop 7% today, someone of course had to agree to sell their shares at a price that is 7% lower than yesterday's. But perhaps more interesting, someone else agreed to buy the shares at that price. Who's buying here and who's selling? Who's more composed? What is the investment timeframe of the seller versus the buyer?
Presumably most 401(k) contributions and dividend reinvestments happening automatically create a large volume of buying power.
While some people freak out, call an agent, sell stocks, I'd imagine this is mostly actively managed (by humans and software) investments doing the selling.
Beyond that, when you sell something, maybe it felt like it was worth $10. But you offer it for $9.95. Maybe someone buys it, maybe not. Maybe you drop it to $9.80? Then someone buys it. Rinse and repeat until the price is now $8.
When you sell a "$10" stock, if you say you won't sell it for less than $10, you might not be able to do so. It's all more complicated than that, and there are limit and market orders, etc. that affect how much the price will vary from when you initiate it.
But if you're like "hmm, this is horrible news for the economy" you probably press the "sell as fast as possible" order, and your $10 stock might actually sell instantly for $9.50 because for someone with a "smart" algorithm, $9.50 looks pretty good when the stock still seems valued at $9.75+. But then a few million shares sell at prices lower than $9.75 and now the same system that thought it was a good idea to buy at $9.50 thinks it's a good idea to turn around and sell it... for even less.
Does it really need someone on the other side to buy or can it be like other markets (consumer goods lets say) where you can set the price lower and not necessary have a buyer. You just announce it that you are willing to sell 10k of this type of share at 200 or lower up to 190. Then someone else seeing this says we are also willing to sell 20k at 190 or 180 ? And so even if no one bought these shares now their “average” price is not 200 but 190ish?
Sorry if the scenario sounds stupid and it is far away how the shares market works.
You are correct -- the (bid,ask) price can change with no trades taking place.
GP is hinting at a common fallacy -- I call it the "strong hands fallacy." It's common in crypto: "Every time the price of $fartcoin goes down, it's moving from weak hands to strong hands. Price drops are just more reason to be bullish!"
There was widespread institutional selling, and typically dip buyers are non-professional traders who underperform the market [1] [2]
At the end of the day, does it really matter who's the marginal buyer and who's the marginal seller?
Do we learn anything about the value of Apple Inc by learning that the marginal buyer was an HFT hoping to offload inventory in 500ns, a mid-frequency shop who will hedge delta at end-of-day, or a value investor who will hold for a lifetime?
I claim any such information would be rapidly priced in by flow-analysis algos, and thus reflected in the closing price.
Some people have an obligation to sell (option contracts must be honored, ETFs must be rebalanced, etc.) and this creates liquidity.
Some people also have a lower risk tolerance (or want the money to put into something with more predictable returns like say treasuries) and want out now.
The last market crash was caused by the very economically unnatural COVID and the global response to it. This one is caused by insane foreign policy. Both of these are weird recessions because they don't have anything to do with real market conditions or even stupid pathological market conditions (housing crash).
The covid response of printing trillions of dollars and other currencies around the world meant that there was way more money and it had to end up somewhere.
There's just way more money to invest than there are productive companies to invest in. So you get crazy P/E ratios in the best bets available.
The "fix" is to inflate that money away (or maybe to tax it and pay down deficits?) but it's not an easy monetary policy or a familiar one.
There is away out of this mess: A U.S. Senate bill that would require congressional approval for new tariffs gained more Republican support on Friday [1].
Trump is not going to back down since that will make him look like a loser. Neither is China. But GOP can help Trump out by creating a new law that automatically expires all new tariffs after 60 days unless approved by congress. This will let Trump extricate his head from this mess without losing face.
To be clear, this is going to have to pass the house. Then, Trump will veto it. Then, the senate will need 16 Republican senators (30% of the party) to vote against it. And it's still a toss-up if Trump will even obey it or if he'll executively order customs to continue the Tariffs.
So unless Republicans suddenly grow a spine, which is unlikely given their current strategy is "hide the stock ticket on Fox news" and pretend glorious leader is a genius, this is a token effort that will do nothing.
And even if the tariffs are revoked, we've destroyed our reputation. You think countries will want to continue on like nothing happened after this? The only thing that might stop the impending collapse of the US economy as 180 nations divest from the empire we built is if we were to impeach and convict Trump immediately and set an example that this economic chaos will not be tolerated; that allies are not fair game to bully.
But, honestly, I think that ship has already sailed. It needed to happen immediately, not after a week of testing the waters.
My assumption is that Trump understands what a mess he has gotten himself into and wants to extricate his head, without losing face. Congressional action will allow him to do that because he can blame congress for undoing his tariffs which was a good idea all along. This is the only way out.
You are laboring under the dubious assumption that Trump gives any fucks about the US economy. (And that, even more dubious, that the real-life congress will manage more than bloviation on TikTok.)
This is a pure klept move. Who knows if he understands that the US manufacturing iPhones and cars-with-no-foreign-parts isn't possible in his lifetime (or most of ours), but regardless, he understands that this is his chance to finally get rich for real after all that cosplayin', and doesn't need to understand the rest.
I don't see what would lead you to this conclusion. Multiple members of his cabinet have direct said the plan will do this, so it's not like they don't know they're collapsing the economy. His secretary of commerce (?) has published papers about wanting to remove the US dollar as the reserve currency and destroy our status as the hegemon in pursuit of us becoming a T-shirt sweatshop nation instead of an infotech powerhouse.
Heck, even Musk accidentally said the quiet part aloud on Twitter about burning it all down.
In my opinion? No, and precisely because you used the words "third impeachment". I have come to realize there simply is no bottom. He was truly right: he could shoot someone in broad daylight and he wouldn't be held accountable.
If Republicans weren't aligned with Trump, it wouldn't have been a 51-aye vote. If they actually cared, they would be on the news discussing historical precedent and impeachment right now. Yesterday they were praising him on Fox, calling this a genius plan that will save America while denying the market collapse is even haplening. They, again, talk of a third term for glorious leader.
The party has become fundamentally incapable of admitting they are wrong about anything to the point that they would rather descend into a fascist regime that disappears political opposition to El Salvador prisons.
This is an inherently political subject, but I would appreciate a dispassionate argument explaining how this could be even remotely good for the U.S.'s economy in a way that is light on MAGA ideology and doesn't simply claim the overwhelming majority of economists are dumb. I'm simply not seeing even a glimmer of a possible upside right now. I see even less possibility of an upside for those of us North of the border or pretty much anywhere else on the globe.
My best understanding of the administration's psyche is that they're determined to have more manufacturing happen in the US - regardless of the economic impact.
It still doesn't make sense though - there's a reason sneaker makers like to have kids in places like Vietnam make shoes for a few cents per hour. It's because no one in the US would work gruelling hours for such little pay!
POTUS wants to 'level the field' but I'm not convinced it's dawned on him that as leader of one of the wealthiest nations on Earth, 'levelling' will mean the US getting poorer.
More manufacturing will move to the US, but they're about to get a real-time lesson in Econ 101 in the form of the destruction of their country as they abandon comparative advantage and achieve autarky, joining the illustrious club of North Korea.
Also would require near-certainty that these conditions will last far, far longer than 4 years (or 4 days, per earlier tariff tantrums). Especially for the most important industries like semiconductors, steel, oil, which require massive capex.
You said the most important part. Trump and Co believes that a car or semi factories grow overnight like mushrooms in the forest. If a CEO of a semiconductor company would decide to start building a billion dollar plant in the USA, which would take 6-8 years to built, knowing that new President from the other much different party might take over in less than 4 years, that CEO would probably endup being sued by shareholders for jeopardizing the company's bottom line.
Noone in their right mind will start building factories in USA because of temporary tariffs that all might go away with an executive order and a stroke of a pen comes January 2029.
They used to work that way in the US! Then came the labor protections.
Labor conditions are a prisoners dilemma. Individuals in a location can’t really choose to opt out of poor labor conditions if that is what exists there. That is why it took a lot of activism in America to change the labor conditions.
So right now we are exploiting people in places that don’t have the same protections. The comparative advantage of those places is in allowing suffering, not in the people actually being more okay with the conditions.
> It's because no one in the US would work gruelling hours for such little pay!
There are entire towns in the US where nearly everyone is unemployed since the manufacturing dried up.
I would happily pay a few more dollars more per sneaker if it meant those people could have a job, and it meant my purchase went toward making someone's life here better.
> levelling' will mean the US getting poorer
It was never about being rich (maybe in a silicon valley bubble it is) but these people need jobs not only to live but for personal fulfillment. The fact that you are contributing positively to society.
Not everyone wants to collect welfare or unemployment and do nothing for the rest of their life. It causes serious mental health issues and why the 'opioid epidemic' has ravaged these small former-manufacturing towns.
People are hungry for work because they want to be part of society.
I find it hard to sympathize, given how much work there is in this country.
People cross the southern border illegally without knowing the local language and with close to no skills and still get jobs, build families and give a chance to prosper to their offspring.
I'm not saying there's no hardship anywhere in the US, but rather that the US has so much richness as a whole that these towns you talk about should be going out of their way to find job elsewhere in the US.
Its how urbanization works and has been the trend for a long time. There's no reason why every geographic location has to have a booming economy.
Though every human should have the ability and right to move where the economic boom is happening.
> People cross the southern border illegally without knowing the local language and with close to no skills and still get jobs, build families and give a chance to prosper to their offspring.
Those people work jobs with illegally bad working conditions and illegally low salaries.
The problem is more that the companies want to keep their insane profit margin. They could produce in the US, pay workers more and sell for the same price.
But thats less revenue for the company. Less shareholder value. Less bonus for CEOs.
The problem is the hyper capitalism which we have for the past 50 years that every company needs more and more profits.
The boundaries of what is politics and what isn't is difficult to suss (for me) these days. I personally do not believe this is good. But I have a theory on why those that do think so.
I'm 54. It follows that I see a number of people my age. I'm churchgoing, as well as involved in a number of clubs (pilots, rowing, legos, etc). So I get to rub shoulders with a decent amount of people. And especially a bunch of older people. Our parents are aging.
I'm just beginning to see how hard these years from here on out have a number of difficult challenges. I've begun writing myself notes that I hope will help me navigate the years ahead. One of the key issues is feeling relevant still. As well as losing your competitive edge. Your formative wisdom is being invalidated and eroded constantly.
Couple that with a period of euphoria that was experienced as post WWII prosperity followed by the cessation of the "cold war" and a surge in population, and you have a group of people that are more in their own generational bubble than historically. There's enough peers to make you feel like you're in the majority. I think many of these people feel like this is good, because it feeds the need for relevancy. It's not uncommon for older people to lash out, somewhat foolishly, as they transit these years. And as cognition decreases, it becomes easier to game people in this age bracket (unless someone has a better explanation for why older people are the best target of scams).
As I visit with many of the older genrations (not all of course), their justifications, when pared back often come down to "this makes me feel relevant again". And attempts to restore "the narrative I have in my head about how life was in the good years".
Just some rambling thoughts, about why some people think this is good. It's less about the money to them, and more about a hope of something gained. Not unlike a terminally ill person blowing a wad of cash on something that they would never otherwise have justified.
It is sad, that it comes at the expense of the younger generations. It breaks my heart actually.
That may be, but if you run the numbers, the older generations overwhelmingly put this administration in power. If for some reason you weren’t able to vote after 65, it would have been close. And if you weren’t able to vote over 55, it would have gone largely the other way.
Hey thank you for posting this comment. It’s a very interesting perspective!
I wonder if a factor is that many of these older folks don’t have grandchildren to the extent older folks of previous generations did.
I don’t know what effect that could have but I know it’s a feeling that troubles many baby boomers. They thought their children would have children by now and in many cases that’s not happening. It can lead to a great deal of sadness.
In the long run it could lead to more fair trade deals.
Today’s episode of Newshour at the BBC World Service had a conversation between a BBC journalist and a German CDU politician where they talked about how the tariffs on cars from Germany entering America has historically been lower than the tariffs on cars from America entering Germany. The CDU politician was telling the BBC that he hoped maybe a resolution for all of this would be both America and Europe lowering their tariffs to zero.
That was the hope of that politician in the long run though. In the short run the politician was in a sad mood because he felt things economically are going to be bad for everybody.
I think that is unlikely. Trade deals require precitability and trust. Nobody wants to sign a trade deal if it might not be worth the paper its written on next week.
I would expect that it would make future trade agreements more "unfair" to usa because other countries will price in a risk premium to cover america's unpredictability.
e.g. The U.S. has now violated CUSMA/USMCA/NAFTA 2.0 to an egregious degree, and this treaty is due to be renegotiated next year. As an unreliable partner, the U.S. is going to have to give up some serious concessions to Mexico and Canada to make the treaty happen. It's no different than applying for a loan with a low credit score. If you're a higher risk, the rates will be unfavourable.
Trump himself has said the tariffs are to raise revenue in order to get rid of income and corporate taxes. But now they’re also a negotiating tool to eventually remove all tariffs with our trade partners? That makes no sense
I think in theory it forces the middle class to buy American due to tariffs, which builds a more sustainable lower class at the expense of the middle and lower upper classes.
I think it’s still an overall net negative (dramatically) that sees us become overall poorer and less influential, but I would guess there will be more factory sorts of jobs.
The deadweight losses from this trade are staggering, several percents of gdp that'll mostly hit people who consume imports (mostly low-end goods so probably poor people)
If American made prices did not increase too match tariff adjusted foreign made prices that logic would hold. But we know from recent and not so recent history - American made prices some increase, even if they are not impacted at all.
It is strategically beneficial, for trade agreements, diplomatic leverage and in international conflicts, for a nation to have a strong industrial base, in other words an economy that creates and exports actual physical goods. Tariffs level the playing field in our own consumer economy for American made goods, because without them American manufacturing is competing with countries where labor is absurdly cheap.
My thought today was that aside from the stocks crashing, and aside from any realistic possibility of magically minting new manufacturing facilities, you'd force the price of imported products up in the short term, and prices don't really go back down, so after they go away you'll hypothetically be selling the same products at higher prices that people are now used to, and nothing else needs to happen functionally to increase efficiency or build them domestically. 1) Increase cost of selling imports 2) Crash stock market 3) Buy stocks 4) Remove tariffs 5) Profit
> This is an inherently political subject, but I would appreciate a dispassionate argument explaining how this could be even remotely good for the U.S.'s economy in a way that is light on MAGA ideology and doesn't simply claim the overwhelming majority of economists are dumb.
The slim hope to a voting bloc in the Upper Midwest that maybe, somehow, this will bring back manufacturing.
They've tried everything else; why not this?
We can't simply legally punish the people who shipped the factories off and drove the region into despair, so why not tax the stuff the factories made overseas as a part of the trade-off?
I'm not saying it's a good idea, I'm saying this is their logic.
I’m from Southern Ohio which was not hit as hard, but I know the attitude well. I call it “rust belt rage.”
I remember during the first Trump election hearing quotes like “I hope he does as much damage as possible” and “I can’t throw a bomb into the White House but I can throw a Trump.” Lots more like that.
The attitude in that region of the country is absolute seething rage. A lot of people from Northern Ohio, Western Pennsylvania, Michigan, etc. would be gleeful if they saw people hanged. It’s that kind of rage.
Imagine what the vibes would be on the West Coast if there was a huge set of policy changes that decimated and liquidated the high tech industries. All those software and engineering jobs just vaporize in a span of 20 years. Places that were once the wealthiest in the country look like failed states and war zones. Everyone who can leave leaves.
Then the media makes you the butt of jokes. Calls you “flyover country.”
> Imagine what the vibes would be on the West Coast if there was a huge set of policy changes that decimated and liquidated the high tech industries. All those software and engineering jobs just vaporize in a span of 20 years.
> Then the media makes you the butt of jokes. Calls you “flyover country.”
The people in your analogy are not the same types suffering from rust belt rage. One group is willing and very wanting to learn and grow and build, and the other is openly antagonistic to any sort of growth.
That's why they became flyover country. I don't think that would happen on the west coast if your scenario were to occur because of the different culture.
What can I say except: I don’t buy that at all. I lived in Los Angeles for 8 years and Boston for 5. There are some cultural differences but the people there are still just human.
When a region and a culture declines, it gets more nostalgic and reactionary. The arrow of cause and effect goes that way. Places like Detroit were innovation centers and much more culturally open before their entire economy was rug pulled.
If California were rug pulled you’d end up with a culture that lives permanently in the shadow of its boom times and rages at the world.
Damn. Because California has been rug pulled. The underground weed economy was responsible for hundreds of millions of dollars in black market revenue. That money's now gone to Oklahoma because the legal cannabis laws are more favorable there, leaving a absolutely gaping hole in California's economy that can't be replaced by growing alternative crops like saffron, or, in keeping with the illegal theme, poppies/heroin or coca/cocaine. Because it was illegal before legalization, there are scant few stats on just how large it was, but where'd growers used to get $4,000/lb, they're now getting $400/lb. (I have this conspiracy theory level theory, in that San Francisco used to be home to illegal grow ops which forced pg&e to upgrade transformers and substations to support pre-led grow lights, which were massively power hungry. since that power is now no longer needed because those grow ops are no longer viable thanks to legalization, but the upgraded substations remain, the rise of electric cars isn't quite the emergency it should be.)
So much of the arts and Burning Man and entire communities in the Emerald Triangle were propped up by that money, and it's gone.
Time will tell how things go for California. I remain hopeful, but there's just no real data about the black market thanks to its very nature, so it's hard to know just how large that gaping hole is.
That’s fascinating. I always figured that real estate hyperinflation just drove all the arts and cool counterculture stuff away.
The upper Midwest had a lot of culture too. Disco (Chicago was a big place for that), Motown (named after Detroit), techno (also Detroit), industrial (Cleveland / Akron), and house music (Chicago and Detroit) all either came from or had large contributions from what is now called the rust belt.
That whole region used to be solidly Democratic. It drifted a bit R in the 90s and 2000s until Trump flipped it with one word: tariffs. Another quote I remember from a guy in Michigan in 2016: "when Trump started talking about trade... I'd die for this man. I don't care what else he does."
Different people have different reasons for supporting a politician, but for these people it's... I'm not even sure it's hope at this point. For some of them it's revenge. They feel lied to and betrayed.
I guess that's part pretty different from the old Cali weed industry. Nobody promised them anything. For these people the Democrats told them NAFTA would bring jobs.
> Imagine what the vibes would be on the West Coast if there was a huge set of policy changes that decimated and liquidated the high tech industries
We had large inflation caused by Joe Biden's industrial revival acts (spurring a massive increase in factory construction (see https://home.treasury.gov/news/featured-stories/unpacking-th...) that led to interest rate rises and a TON of tech layoffs! People on this forum should be aware that the chain of causality runs in that direction.
And are you saying that the US media doesn't pillory Californa as a liberal hellhole? I actually don't even know what distribution of media you consume that doesn't handwring over the morality of liberals.
Interest rates didn't rise because of industrial revival acts; they rose because they had been artificially low for a decade and someone had to throw water on the economy to cool it lest hyperinflation hit.
> and a TON of tech layoffs!
The nature of tech layoffs and what has happened in the Midwest over the last 50 years are completely different. When a guy is let go from Meta, he's let go from a job that earned him well over the median salary for Americans. Provided he hasn't blown it out his ass on courses at microdosing at Esalen, he should have something in savings. He has resources. He has connections. He has opportunities. When you work in an area with that much money in it - remember, Larry Ellison, Elon Musk, and Mark Zuckerberg each have a net worth that puts them on par with the yearly gross economic product of small American metropolitan areas - you can recover.
When a guy was let go from an automotive parts supplier in Michigan in 1988, he's making near that median salary. He has far less cushion. The nature of his work does not allow him to simply open his laptop and toy around with new business ideas, or open a startup; his former employer was the employer in town. When it went under, the town went under, and he had no way to get out.
And that's before accounting for what the rusting hulks of machinery did to the town. Chemicals dumped before regulation poison the water and soil. Major swathes of real estate needing millions of dollars in cleanup before any real redevelopment can occur. Maybe the Feds will get around to it with the Superfund in a generation or two; the developer from back east sure as hell isn't going to pay for it. By the way, can the town - which is already short on funds - give them tax increment financing for that redevelopment? They'll never come out ahead otherwise. You can't just convert a former brake pad manufacturing plant to lofts like you can with a former tech headquarters in San Francisco.
> And are you saying that the US media doesn't pillory Californa as a liberal hellhole? I actually don't even know what distribution of media you consume that doesn't handwring over the morality of liberals.
> Interest rates didn't rise because of industrial revival acts; they rose because they had been artificially low for a decade and someone had to throw water on the economy to cool it lest hyperinflation hit.
I hate "artificially low" why artificial? What makes something artificial and what makes it real? In economics, there's an idea of a natural interest rate: the interest rate which is the lowest under which inflation will not occur. That has been trending lower, see https://www.newyorkfed.org/research/policy/rstar. It absolutely is not artificially set anywhere: the fed doesn't set the natural rate of interest, it accommodates it with a policy rate and has to deal with a 12-18 month lag for their policy to be effective (a fun quirk - there's a cool badeconomics thread on this) which is why it was hard to deal with inflation caused by the russian invasion: you can't predict that 12-18 months out!
> The nature of tech layoffs and what has happened in the Midwest over the last 50 years are completely different.
No data backing this up.
> where are you getting that from OC's comment?
OC talking about media calling them 'flyover country' as if it matters / is somehow out of bounds conduct at all.
> I hate "artificially low" why artificial? What makes something artificial and what makes it real?
When people have cheap access to money, they spend it. When they spend it in such a manner that it outpaces the ability of the supply side to, well, supply, the result is inflation. And that's what we saw in '21 and '22. You had someone handing out PPP loans like candy and forgiving them outright, you had stimmy checks (that weren't backed by anything real, but that's another story), you had people sitting around looking for stuff to pass lockdown with, etc.
So at that point, by definition, we're lower than the "natural" interest rate. This showed that a lot of businesses in the tech industry couldn't survive without dirt-cheap money to give them ever-increasing amounts of runway. You can't just hyper scale like Uber when borrowers expect the rate of return dictated by the now-higher "natural" interest rate.
> No data backing this up.
Besides decades of economic, social, environmental, and political events and trends, you're right. Wanna have a bottle of water from Flint, MI? I can pull one out of the cellar. 2015, a fine year.
> OC talking about media calling them 'flyover country' as if it matters / is somehow out of bounds conduct at all.
1) that's not indicative of the stuff you were charging
2) yeah, it is out-of-bounds conduct. It's an a-hole move to belittle poorer regions in your country, whether explicitly or in more tacit ways. If you do it long enough, you get where we are now. Anyone happy about that?
> And that's what we saw in '21 and '22. You had someone handing out PPP loans like candy and forgiving them outright, you had stimmy checks (that weren't backed by anything real, but that's another story), you had people sitting around looking for stuff to pass lockdown with, etc.
Yes, this is my whole point. The American Rescue Act and subsequent policies that were very much propping up salient jobs (certainly not wfh tech jobs that are, definitionally, resistant to lockdowns) fueled inflation that led to the end of zero interest rate period which led to large layoffs in tech.
> Wanna have a bottle of water from Flint, MI?
Flint falsifies your point, it is a democratic bastion. If you'd expect that to radicalize people, it should be deep deep read.
> yeah, it is out-of-bounds conduct
Out of bounds is a social norm over time. Donald Trump, their far and away champion, gives such egregious conduct I can't read this with a straight face.
But we can go further back. Was 'just say no' not egregious enough for you? AIDS shaming? The vicious anger against gay people? I can take any snapshot of the past - conservatives will always be the cry bully at any of the years in time you want to pick.
Originally the Intel Ohio One fab was being lobbied for by some housewife in Lorain. It went to New Albany because that part of Northern Ohio couldn't get its act together in contiguous land acquisition.
I’m pretty sure the only ones it will be good for are the rich. Make the rich richer. They will be able to buy stocks cheaply. They will be able to buy homes cheaply as people lose their jobs and foreclose. They will make the USA into a nation of renters. They will increase inflation and prices of everything so most people will be on the cusp of insolvency so they have to work multiple jobs for lower wages and can never retire. They will decrease education so people won’t be able to recognize the propaganda for what it is. They will disappear dissidents. They will make abortion illegal so people churn out the next generation of wage slaves. They will create false enemies (Canadians, gays, liberals, atheists, Jews, Muslims, anyone not white, etc.) to distract people from the real villains.
The rich are about to get a massive tax cut. They cannot possibly spend all those savings on things like food or consumer goods. So where does it go? Assets: Housing, more stocks, antiquities. Any truly rich person will have a diversified portfolio of assets. So what if some of their stocks go down temporarily? They will go back up eventually and the rich can afford to wait out much longer than any normal peon. Its not even a nefarious thing either. If anyone were in their position it would be the prudent thing to do. The most important thing is they have to put this money into something now before it erodes. Buy up all the stocks, buy up all the land, buy up all the vintage collector items, hell even buy up all the retro video games, just do it now.
It's more concentrated than you give it credit: the wealthy overwhelmingly hold their money in business capital (read: stocks) not housing. Housing is predominantly owned by the middle class. Having stocks go up and down is what mostly changes the ultra-rich wealth, and in this case they're going down.
wouldn't a drop in equities be the worst thing for them then? That'd trigger a margin call and liquidation; at the very least, they can do that without the shares falling.
You're implicitly saying that they have an enormous if not cash position then leverage capacity that they're holding out on with the opportunity to buy more shares. In which case I challenge you: tell me where! I see tons of evidence of rich people completely shifted to risky risky equities (accredited investments have many attractions, one of them is not risk / 'volatility' (depending on your definition, see matt levine for details)!).
It's clearly not good for the US economy, but I think that is a red herring. This has been so far, and continues to be, a highly successful endeavor from the perspective that matters: that of the US president himself, who wants to benefit personally.
I think it's helpful to ask "What if this president actually doesn't care one way or the other what happens to the US economy, the world economy, or even geopolitical stability (beyond the US not getting nuked, causing him to die), and everything is just a grifter's instinct for how to benefit personally?"
In that light, literally everything this administration does makes perfect sense.
This is a man whose main accomplishment before the presidency was "being famous" — starring in a reality TV show and professional wrestling (the fake/scripted kind), and he clearly wants to be the center of attention in the media.
Although his tariffs are widely mocked by knowledgeable people as "insane", "stupid", or as the Financial Times put it, "one of the greatest acts of self-harm in American economic history", imposing them gives the man himself the opportunity for corruption on a scale unprecedented in modern US history.
He can easily (very easily) benefit financially and otherwise because heads of state, captains of industry, and the ultra-wealthy have to come to him to beg, flatter, or do something — buy his memecoin, rent out his hotels, buy his otherwise-failed social network for billions, the list is near-infinite — to get out from under his tariffs.
So I don't think there is any upside of the kind you are talking about. But there is substantial upside for the man himself, and it is enough to explain all of his actions.
They only seem nonsensical if you believe he is trying to act in the best interests of the nation.
Trump has kooky beliefs about tariffs, and his economic guys are yes men.
Economics and science mean nothing to the President. He probably heard some blowhard in a bar 50 years ago yabber about tariffs. He’s an instinctual person, and when he senses danger to himself, he’ll pivot.
I’d guess there will be air strikes on Iran or threats of an incursion into the Mexican side of the border by June.
Or it's just his newest promise to give voters something for free. Like the wall that was partially built and paid for with DoD funds. He advertises tariffs as free money from other countries. For some reason people buy it.
The belief of Trump and his allies is that the last 40 years of free trade has been extremely favorable to college educated "elites" and extremely unfavorable to the working class. They see foreign trade as having hollowed out American manufacturing, and therefore they see the shutting down foreign trade as a way to reverse this decline. While they are aware that doing so will hurt college educated professionals, they don't care because they feel those people have had it too good for too long.
I think that's the belief of his voters in the Upper Midwest, but not necessarily Trump himself. He's the college-educated elite. He's playing them like a fiddle. He knows that they will absorb the damage from this, not the elites, who are far more connected than they are college educated.
Where did you take this from? Trump is not from working class. Working class might've been his 'platform' for the election, but he's already elected now, he basically has no incentive now to fight for the rights/interests of his voters, he has his own wallet that needs to finally get filled. Unless you think he really aims for a 3rd term.
Sure, it's just that though, a belief. The vast majority of the poor have prospered from free trade; indeed, the costs they complain the most about (health, education, housing) are the biggest categories of things that _can't_ be traded.
I get it and even sympathize, but I don’t think it will work for three reasons.
First is the uncertainty they are creating. Factories take a long time to build and staff and cost millions to billions depending on size and industry. Who in their right mind is going to invest that to build factories that are only economically viable under a tariff regime that could vaporize after the next election? Or if Trump changes his mind? Which he has a history of doing. Chaos like this is anathema to that kind of long term investment.
I am not opposed to the idea of trying to rebalance trade and repatriate manufacturing. Not at all. But it can be done skillfully, strategically, and without panicking global markets. This economic pivot is less well planned and executed than Biden’s withdrawal from Afghanistan.
The second reason it won’t work is that there’s way more competition today. After WWII during those glory days of US manufacturing everyone talks about Europe was destroyed and much of Asia had not yet industrialized. We were not just selling to a domestic market. We were selling to a world that had no alternatives. That’s just not true anymore.
The third reason it won’t work is that these tariffs are going to be massively inflationary and that will wipe out any gains the working class gets from more or better jobs.
Meanwhile they are doing nothing to address cost disease in housing, health care, or education.
Housing is the big one and I haven’t heard a peep. Instead of using Federal leverage to tilt at windmills like trans people using bathrooms, they could use that power to push states to regularize zoning and allow more home construction. “No more Federal highway funds unless you implement a plan to reduce housing costs.” Now that would help the working class and the young. It would also help things like the birth rate, which I know a bunch of people on the right are freaking out about. Reducing the #1 cost barrier to family formation would help a lot.
In short I think they’re doing a terrible erratic job of implementing a dubious strategy. This is going to fail, and we will all get poorer as a result. China will be the largest beneficiary since even more of global trade will now shift to them. They are now seen as stable, responsible, and reliable while we look like a basket case.
But these beliefs have been core to the American left for decades. Even left wing intellectuals like Noam Chomsky have attacked the neoliberal trade agreements I think.
Trump’s populist right wing fans have adopted traditionally left wing views. What’s surprising is so many left wing people are supportive of free trade when they were against free trade during the Reagan era.
I don't think the left has been automatically in favor of tariffs--or at least I'd appreciate evidence for that claim. The complaints about free trade deals that I've seen have tended to be about provisions that treated various labor and environmental regulations as restraints on trade. It's fair to say that left-liberal people are paying more attention to the downsides of tariffs than they were, but I don't think it's a simple reversal of positions.
I’m not sure what your sources are but if Bernie Sanders is the left, then he’s been saying the same thing for a long time and continues to. Maybe there’s some nuance to it?
I wouldn't say its good for anyone, but it is probably worse for many of our trading partners so they would, in theory, make moves to negotiate with the US to skirt the tariffs. I don't think it will ultimately have been worth it in the end but time will tell.
- I voted for Trump but do not consider myself a strong supporter (I saw it much more of a vote for who you dislike less sort of situation)
- I don't understand and am not supportive of the approach on Tariffs
- I am an active participate in what most here would consider right wing politics although I don't find myself aligning on every topic (e.g. I am supportive of the abortion laws in California) so I tend to hear a lot of the chatter "from the other side"
Some arguments that I have heard (which I mostly do not agree with) are
- When manufacturing moved out of the US to low cost of living countries, this hurt towns which relied on manufacturing (e.g. the rust belt). Cost is the primary reason why manufacturing moved. Raising the cost on overseas manufacturing may make domestic manufacturing cost competitive. Although economics tells us this will still be a net loss there may be externalities which are not priced into the trade (e.g. the towns falling apart and people becoming despondent / drug addicted might not be factored into corporate profit models)
- Being overly dependent on China or more broadly "foreign powers" for manufacturing represents a national security risk.
- In theory this could be posturing to provide an opening for the US to negotiate more favorable trade agreements. For example Israel, Vietnam, and Argentina have made some statements about reducing trade barriers on US companies.
- In theory it could be beneficial to shift the revenue model of the US towards raising revenue with tariffs while reducing interest rates and other tax rates (e.g. "no taxes on overtime and tips")
The argument in favour of free trade is that it increases the pie, so that everyone can be better off (a Pareto improvement). However, given that trade does produce winners and losers, this argument is predicated on redistribution, namely (over)compensating the losers.
That second part of the argument in favour of free trade is often conveniently forgotten. So when that redistribution doesn’t happen, then opposing free trade is quite rational for some.
To improve rust belt manufacturing, you would target competitors of industries in that area, not the whole global economy.
We imposed a 32% tariff on Taiwan. Simultaneously, we are making it more expensive to manufacture here in the states. We have 1/4 China's pop - why would we try to compete on raw output by ourselves, instead of strengthening ties w/ the world?
For many countries, there is nothing to negotiate since we already have free trade agreements with them. We may import a lot of goods, but we export a lot of services, like many developed nations do.
With regard to raising revenue, think of the tradeoffs. If demand is elastic (given our trade deficit, it has to be!), this will be a tax on many, many American businesses and consumers. Its just moving the taxes from income tax to a consumption tax. That's a worse deal for poorer/middle-class Americans.
It seems the maximum likelihood model is a political one and not an economic one. Trump likes making deals and he historically has made them by applying his leverage and bullying people to go his way. Now he has the most powerful office in the world and a lot of leverage to bully anyone he wants (universities, law firms, other countries). Lots of lunch money will be taken but no one's going to go near the bully anymore.
At the end of the day, it's about Trump's need for attention and ability to wield power, rather than any economic objective. Tariffs are a way to wield significant power without requiring the approval of Congress.
Donald J. Trump lost an auction in 1988 for a 58-key piano used in the classic film “Casablanca” to a Japanese trading company representing a collector. While he brushed off being outbid, it was a firsthand reminder of Japan’s growing wealth, and the following year, Mr. Trump went on television to call for a 15 percent to 20 percent tax on imports from Japan.
“I believe very strongly in tariffs,” Mr. Trump, at the time a Manhattan real estate developer with fledgling political instincts, told the journalist Diane Sawyer, before criticizing Japan, West Germany, Saudi Arabia and South Korea for their trade practices. “America is being ripped off,” he said. “We’re a debtor nation, and we have to tax, we have to tariff, we have to protect this country.” [1]
We're in an Emperor With No Clothes situation and all of his aids have no clothes either.
The only positive outcome I can think of is that T and co are trying to scare trading partners into lowering their tariffs in response. Assuming that happens to some degree, T will revert his and then take credit. Then the market will return as well, and we all head off into the sunset.
Likely why it is happening so early in the admin, so we can all forget about it by the end.
But I do think that a logical assessment undervalues the notion that this is an emotional/intuitive. I don’t think Oren Cass’ very interesting intellectualization of the problem will actually help you predict what Trump will do.
But in the emotional piece - He’s talked endlessly about how America is getting screwed, and his tariff calculation was based pretty directly on trade deficit calculations.
I think this might be a move to stop a world war (between Russia and NATO/Europe). If U.S. also leaves NATO any time soon - the chances for a world war would decrease greatly.
I don't think that makes sense. Wars happen when one of the sides think they can win (and want something). USA leaving nato and reducing trade makes european states more vulnerable. I would expect this to increase the liklihood of war.
Especially in the near term - eventually europe will adapt to the new world order, but in the mean time their is a limited window of opportunity where everything is in flux, which would be a great time to strike.
But... they can? If Ukraine can fight Russia to a standstill, a fully mobilized Europe clearly at least has a shot. Unless it escalates to nuclear weapons and everyone loses... But you need at least an argument if you want to say that is less likely without any initial US involvement, it's not obvious.
Exactly. Europe thinks it may join Ukraine in a war against Russia to actually win that war.
My point is that this is quite a reason why a nuke war may occur.
And if U.S. turns back away from Europe - Europe might 'sober up' and not seek the prolongation of a conflict. Non-nuke wars end somehow. One side usually loses, without such a loss - there would be no end for the war and more and more people would die. A bitter ending is better than endless bitterness.
There's nothing in my comment to "exactly" in support of your point. If the US backs away from Europe it may be more likely to encourage Ukrainian surrender. Russia may be more likely to attack Poland. Germany may be more likely to develop its own nuclear deterrent. Or none of these things may happen. Extrapolating from tariffs to world peace demands a bit more than loose speculation at the continental level.
I doubt Europe would be that cocky without a full support from their "big bro" from across the ocean.
As for attacking Poland - that sounds quite uncalled for: Poland doesn't have a meaningful share of Russian natives living there historically for the Poland to start oppressing them to the point Russia would start a war against Poland. I can't even think of any reason why Russia would attack Poland.
Yes, the isolationist era that followed World War One clearly calmed the rest of the world, so that the various "expansionist" regimes felt less threatened and just let their neighbors be.
It's different now, since at that time there were no weapons of total annihilation (and now there are quite some).
That's exactly why 'expansionist' regimes were ready to start some next war, being eager "to get some extra land" as a result of said war.
The current war is different: this is the war that started not out of appetite towards foreign lands, but, basically, out of primal fear, the fear concerning safety. The West was failing at self-reflection and was completely oblivious about their own actions being treated as crossing a real red line for Russia's safety.
You may scare a wandering bear away, but driving it into a corner is both stupid and fatal.
Interesting, but I don’t see it this way at all. The west talked Ukraine into giving up their nukes and said we’ll keep you safe. All that without NATO. But as time has ebbed, and Russia meddling in eastern Ukraine went largely ignored by the west, Russia grew emboldened and decided it could just invest in a history rewrite, an airing of past grievances, and an invasion.
If Ukraine had said “fuck no” from day one, “we’re keeping our stuff, we don’t trust any of you long term at that level”, it would be in interesting world we live in.
This narrative that NATO provoked Russia into this is non sequitur. A gaslight of grandeur.
I am sorry, but it looks like you are just uneducated about the facts and events that happened prior to Russia taking Crimea back. You should not just read some, but actually dig a bit, if you are really interested. I'm not here for a political debate really, I'm not buying into your baity (and wrong) arguments. I shared my idea about how tariffs might be a step that might actually prevent a nuke war and I just expand on said thought.
Care to explain your rationale? Seems like Russia is in no position to invade any NATO country unless the US leaves the alliance. They've proven themselves wholly outclassed in Ukraine, against a much smaller country with refurb gear.
Furthermore, Russia has no plans to invade any NATO country. It just won't let NATO invade^W expand to Ukraine. And no, this war is not how you describe it: said 'much smaller country' was 2nd biggest (in terms of military strength) in Europe after Russia itself.
And it's not a 1x1 war of big Russia vs small Ukraine: Ukraine got help from all over Europe, G.B., U.S. and Canada. Help in arms, in intel, in training, in money and other resources. Russia got sanctioned badly, by such a big bunch of countries that you'd rather be smirking not about Russia not being able to win already, but at Europe (and now U.S.) economy getting some hits... while Russian economy still stands yet. While all the sanctions are still in effect. For years.
> Furthermore, Russia has no plans to invade any NATO country.
Not only are you attempting to prove a negative with "trust me bro" but it's especially laughable given recent history. Please tell me how many days before the Ukraine invasion Russia had "no plans to invade".
> this war is not how you describe it: said 'much smaller country'
Personally I consider 1/3 the population "much smaller" but you do you.
> it's not a 1x1 war of big Russia vs small Ukraine: Ukraine got help from all over Europe, G.B., U.S. and Canada.
Exactly why the US remaining in NATO prevents a large scale conventional war. Because Russia is pathetic unless it is bullying smaller neighbors or threatening nuclear war.
I think it's the opposite: with US remaining in NATO, Europe will feel cocky enough to get dragged in a war, Russia will of course retaliate and further escalation (especially if Russia starts losing) highly likely will lead to the nukes.
Now look at the news: Germany sends troops (for permanent stationing) to Eastern Europe. GB, France and Germany discuss deployment of their troops to Ukraine.
Does anyone have any idea where all of this tarrif(tax) revenue is going? I think it's a little more creative than just increasing wealth. Are there any bold visions or grand plans/futures in the works that this could be going towards?
Tax cuts for the rich. Defunding the IRS, cutting social services, and pushing tariffs to tax the working class are all consistent with needing to keep the government running without taxing the billionaires.
The vision is to convert the American economy from one with infinite profit margins (ads and software) to a manufacturing one with single percentage profit margins and limited growth potential due to tariff environment.
So I think a 80-90% drop in the overall market value is justified.
As someone who sold all my stock in January and invested into bonds, I think we are far from it, but the bottom it will depend if the tariffs are lifted in the next days. The worst case scenario would be tariffs being kept and the FED eventually losing independence.
I think it is safe to say that we probably will go back to pre COVID levels, since the trust in the stock market is eroded, but this time with high interest rates.
I don't know the machinations at the level of Trump, the billionaires, and the GOP senators and representatives. Depending on what's going on, those in congress will never do their job.
OR, if they just believed in Trump's influence on votes in "free and fair elections", they might eventually hit a breaking point. Because if they let this happen unchecked, they will be voted out, 100%. (Not to mention everyone they know will have lost money, many more jobless, hungry, etc.)
Being complicit in triggering a great depression while being an elected official cannot be good for your career long-term.
I don’t expect Trump to make sane or rational decisions. But can anyone explain why the GOP senate is just standing by? Surely they are getting hit on the effects of the tariffs like everyone else. Doesn’t compute.
Because opposing Trump risks becoming an outcast, which is the thing that humans want least, and losing their job. There is not yet the sign that their voting base actually wants them to do anything to oppose Trump.
But what about those who are not up for re-election soon (unlike Representatives). If they're in for another 3-5 years regardless, by then things will have changed anyway.
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.
Trump's been talking about tariffs for far longer than the current t-note cycle. He was talking about it a decade ago during his first time in office. IIRC he ran for POTUS as a Reform Party candidate in the 90s or 00s, and that party was started by Ross Perot, who was against NAFTA on the grounds that it'd cause a giant sucking sound of American jobs to Mexico.
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.
Gotta have a hook. Look at how he did in the Upper Midwest in '24 vs. '20. That was through appealing to the manufacturing base. There are elements of that bloc that have wanted tariffs for decades.
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.
sure but you can basically say whatever you want. Remember the trump tax plan is just 'cut taxes on the rich and provide industrial subsidies' and that works just fine. No need to chop share prices while you're at it with a silly tariff.
> 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
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.
National stock market is owned by people, but the national debt is owned (and has to be payed) by the government. Basically, the government is just milking the reach now to lower gov's national debt. Poorer people rather win from this (even if no manufacturers come to U.S. to avoid tariff barriers, which some manufacturers will and which will be another small benefit for the poorer (more jobs)).
Jobs are different; which jobs in your opinion are likely to be lost? I can't think of examples where less-skilled labor workers would lose their jobs as result of tariffs, other than in a case where they were a maid/gardener of some business that went bankrupt by said tariffs.
Give some good examples, please, to support your claim.
Stock is easy to goose back up via QE and/or lower prime rate. Once you lock in those interest rates on debt, though, there's nothing you can do about them. You're also ignoring trade barriers that other countries have, and the fact that we've been offshoring manufacturing capacity for over three decades. What Trump is doing today is what Bernie was advocating in the 00's.
Interest rates are lowered when inflation is low. Inflation is low when supply is high. Tariffs cause supply shortages. Inflation expectations are up. Interest rates will be up.
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.
Because you don't know when the dip will end, and how much lower it could go. People could (and do) choose to exit the market if they expect further volatility, and when they do exit, they need something to park their cash.
It's 1D chess, really, and it isn't really Trump who came up with the idea. We're between a rock and a hard place. If we refinanced at 4.8%, the interest payment would go to $1.2T per year. If we refinance at a lower rate, it's lower. Note that we're not just refinancing either, we'll have to borrow about $1.8T, too, unless DOGE miraculously achieves its $1T/yr savings (doesn't look like it will, if the current trends are anything to go by). Tariff revenues would help to plug that hole somewhat. Then there's the issue of many countries having higher tariffs for our stuff than we have for theirs. That's not "free" trade. Then, finally, there's the issue of the near-irreversible erosion of the industrial base.
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.
> Tariff revenues would help to plug that hole somewhat.
"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.
What do you mean? We can't afford to finance their security anymore. Nor can we afford their protective tariffs against our goods. Why can't we afford it? Because we're running $1.8T budget deficit, and paying $1T+ in interest on our debt next year. Because each man, woman and child in the US already owes $100K+ straight from birth. Do you just want to keep adding to that number hoping that we'll never turn into Zimbabwe?
That's the trouble with "barrier" tariffs and weighted tariff calculations. E.g. a lot of US agricultural products are subject to up to 50% tariff in the EU, so the US is simply unable to sell them there in significant quantity. What do you get as a result of a weighted tariff calculation? That's right, you get "low tariff". Japan is also interesting. It imposes insane tariffs (several hundred percent) on some US agricultural goods, but 0% on US cars. Why 0% on cars? Because they are able to basically disallow import of US cars through regulation.
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.
So your theory is that there’s an amazing master plan, but only insane people on Twitter (and notably, not, say, _Wall Street_, or any economists) are smart enough to see its ineffable wisdom?
To be fair, I do think the markets will eventually recover. If not soon, then in 4 years time. Assuming democracy hasn’t eroded to the point that timeline is meaningless.
Isn't it obvious that Trump's goal are not these tariffs, but renegotiated trading agreements? But everybody just seems to love to proclaim this the end of US.
Trust doesn’t matter if you have the most powerful military force in the world. You think the middle eastern countries surrounding Israel trust Netanyahu? Nope, but they sure fall in line and keep the negotiated peace because let’s face it, all of them combined will crumble before a single Israeli battalion. Might does indeed work in negotiations regardless of trust.
Talk about hubris. The US military is specified to fight a 2 front war, but has proved singularly unable to defeat other countries in occupation. The idea the US can just blackmail the world by force may be about to be tested, but I wouldn't be willing to bet on its success.
No I think the goal is to isolate the US and make it no longer a global power. That's explicitly the goal of several powerful people who were instrumental in Trump's rise to power.
This includes not only foreign adversaries (and those who work for them) who helped Trump, but also ideological crypto currency fans who fantasize about ending the idea of nation states in general.
How is that obvious? Why would your 'negotiating stance' be 'give no demands and tariff the entire world, including islands with just penguins, a nonsensical rate?'
I mean sure I guess you can say he's negotiating, in which case I'd like you to admit he's a terrible negotiator.
They aren’t the tariffs other countries are imposing, they are basically the trade deficit ratio instead. A country could have a 0% tariff on American goods but if Americans had a trade deficit with that country they would have been slapped with a tariff.
Fakest of fake news; no developed country (except a few weird microstates) has effective tariffs higher than about 3%. Bizarrely, he based it on _trade deficits_. Today, only two countries have effective tariffs rates >20% (Bermuda and the Cayman Islands), though it will be three next week.
(Based on the World Bank metric; WTO uses a slightly different metric and says there are three; Bahamas, Sudan and Iran.)
Assuming we don't give all of the jobs generated to h1b's and O1's I think this could do very good things for the country. Dollars staying within the US and not going to other countries is good.
You know the craziest thing about watching this as an outsider in Canada is that we as a nation are losing one reliable trading partner (and obviously losing an ally but that's another conversation). Germany - losing a trade partner. Japan? And so on. But the US has lost 180 reliable trading partners. You're already seeing in the first week burgeoning trade alliances between nations who wouldn't have cooperated before, and the amount of resentment against America from this is going to take a generation to heal.
Of course I'm sure some people would claim this is 4D chess or what not but.. sometimes the person doing something crazy is just crazy at the end of the day.
Very well put. Alliances take years to build but can be broken in just days.
I'm tempted to think (hope? dream?) that the markets and trade will rebound if all this chaos makes American politics swing back towards an interest in global stability, but I think anyone partnering with the US would do so VERY carefully and right now the entire world is plotting how to remove US dependencies.
I was bringing this up with a guy yesterday who was genuinely supporting the policies and somebody chimed in that they were not worried at all, because everyone wants to trade with the big boy in town. Trust is not important if they are afraid of you (I'm paraphrasing). Quite a different perspective, but it is consistent with an observation I made about a lot of US comments, people are quite happy for their country/government to engage in tactics (e.g. bullying, industrial espionage even against partners...) that they are enraged if others (E.g. China) do it. Europeans seem to be much more susceptible to an "if you don't want it to be done to you don't do it to others" argument.
> Trust is not important if they are afraid of you .. Europeans seem to be much more susceptible to an "if you don't want it to be done to you don't do it to others" argument.
I've noticed this also, having spent a lot of time in both places. Some would say this is part of the American national character, and it's the darker side of hard-nosed individualistic cowboys, etc. The famous opening speech of Patton comes to mind here:
> When you were kids, you all admired the champion marble shooter, the fastest runner, the big league ball players, the toughest boxers. Americans love a winner and will not tolerate a loser. Americans play to win all the time. Now, I wouldn't give a hoot in hell for a man who lost and laughed.
There's at least some truth to this and the mean-spirited arrogance/strength in the rest of the speech being in line with national character, I think it has to be admitted. This seems like the guy was certainly never cut out to be a diplomat or act with moderation, and maybe most Americans aren't. That said though.. maybe a deeper issue is that suffering (economic or otherwise) changes people. Makes them merely hypocrtical in the best case, aggravated and mean on average, or in the worst case positively cruel. A lot of America has not been ok for a long time now.
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Respectfully, what the fuck are you talking about?
Respectfully, I am suggesting that OP has an intellectual disability to think deriving notions about the 'American' national character from Patton is some tocquevillian insight and he may find it profitable to watch Downfall to try and figure out Brussels' next move. Don't forget the dousing rods.
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> "if you don't want it to be done to you don't do it to others"
Doesn't work. We opened trade to China in the '70s. They took advantage of us, stealing IP, manipulating currency, paying their people terrible wages, crapping all over the environment. We let their companies freely in the US, they very severely restricted US business ventures in China.
Detroit, a former shining city in the industrial heartland, is now a bandit infested ruin.
In the US, a person used to be able to graduate high school and get a job that could support owning a house with a yard, a non-working spouse, a car, and multiple children.
For me, coming from the Rust Belt, it's incredibly, painfully obvious that globalization's basically destroyed the US economy. I'm constantly amazed to meet well-meaning, intelligent people who don't seem to understand this fact.
The Rust Belt's just one part of the story, not the whole US economy. Globalization actually created tons of wealth for the USA, but that money hasn't been spread around fairly. It's all piled up in coastal cities and with rich folks while factory towns got left behind. Cutting off global trade wouldn't fix anything - it would tank the overall economy while only helping a few powerful players pulling the strings. The real problem isn't trade deals; it's that the USA never properly invested the profits back into the communities that got hit hardest.
The US economy is the largest in the world, disposable income, both average and median, are highest and second highest respectively. Median income is 30-40% higher than comparable developed economies, and significant higher than China.
https://en.m.wikipedia.org/wiki/Disposable_household_and_per...
Even industrial output the US is second highest, and it's closer to first place than second.
https://en.m.wikipedia.org/wiki/List_of_countries_by_GDP_sec...
And supporting a whole family on a single income well was a very narrow window of time, and it required the US to have no real economic competitors. Where US workers had no competition on the world stage, but their output was sold on the world stage. So even if the US go isolationist that's still never coming back.
> And supporting a whole family on a single income well was a very narrow window of time, and it required the US to have no real economic competitors.
But then how were other countries able to have this while having economic competitors?
A lot of this is just social change from the womens liberation movement. Women went to work and the market adapted. Now, in the main, you need 2 incomes to run a home.
It's worse in a lot of countries where tax policy disadvantages the pre-1960 norm like the UK.
Some places relied on other ways to make money (here in Australia it was comodoties). A lot is just social change to two income households, and it's main contributor to living costs was housings. Two people bringing in money ,means that households can pay more for a mortgage or rent, driving up costs.
That's what drove up housing costs after we switched from single to double income households. But before that, but before that, people in lots of countries could afford a house and a family on a single income, despite competition from other countries.
It's not that this situation was unsustainable or only attainable for the US; this situation should have been the norm, with the additional income just providing extra luxury or time off, but instead we got screwed through artificial scarcity and more money going to the very rich instead of the working and middle class.
>In the US, a person used to be able to graduate high school and get a job that could support owning a house with a yard, a non-working spouse, a car, and multiple children
A lot of the change there is not down to China but limiting the ability to build a cheap house through nimbyism and regulation and then competition from other dual income / high earners bidding everything up. You could fix it by allocating everyone a bit of land and letting them build whatever on it even if it was just a shack. It's not really trade that's the main problem.
For the people who want ^this guy to shut up but haven't engaged.. which part of the above is wrong? I can see hyperbole of "bandit infested ruin" pushing some buttons but otoh it's seems likely that crime is connected to general economic health.
It’s right and wrong. Globalisation has hurt the rust belt, but it’s also allowed for much cheaper goods, which many people have enjoyed. It’s also made other economies much richer, which has allowed them to purchase U.S. goods (China being an immense iPhone market, for example). It’s not zero sum. If the world economy grows, and the USA holds onto a massive slice of that growing pie, then the USA wins - as it has been doing.
And the part about life just being totally unaffordable now isn’t really to do with China stealing from the US - housing is catastrophically expensive in many countries, and is more to do with how it has evolved as an asset class than trade relationships.
> which part of the above is wrong?
Rust Belt isn't the entire US economy. Blaming where the US is today on globalization is probably 30 years too late.
The US economy has created enormous wealth. Domestic policies on how to spread around the prosperity to all citizens is where the US failed. Think more of what Sanders and AOC talk about, not bringing back factories that will be 99% automated anyway. For one example, how can the most prosperous country in the world have a majority of its bankruptcies tied to medical debt? And somehow people want to blame China or globalization or some other boogie man?
For me the idea of "stealing IP" in a society like China seems to miss the entire point of what they're doing and seems to fall short of having respect for cultural differences. What we think of as "respecting intellectual property rights" can also be seen as "hoarding property" which is antithetical to communist ideals.
Since your comment is comparing the US with China, maybe a bit of "whataboutism" is warranted here.
> stealing IP
Edward Snowden's leaks reveal that the US engages in wide-scale economic espionage. Additionally, the US also uses extra-territorial means of coercion to acquire cutting-edge technology -- see e.g. the Alstom case.
> manipulating currency
For many decades the US has been able to print money like a madman while the rest of the world absorbs the costs by virtue of the USD being the primary reserve currency globally. The US is also not above strong-arming its allies into appreciating their own currencies to boost American exports -- see the Plaza Accord, which partly contributed to Japan's subsequent Lost Decades.
> paying their people terrible wages
China has lifted hundreds of millions of people out of abject poverty in the last 20 years. In the US wages have remained stagnant for the working class over the same period, if not longer. Frustration among the working class -- which is entirely justified and understandable, by the way -- is probably one of the reasons why Trump was re-elected.
> crapping all over the environment
Chinese cities today are mostly clean and quiet, increasingly powered by renewable energy with more and more electric vehicles driven on the roads. The Chinese are also undertaking massive greening projects, such as the Great Green Wall: https://en.wikipedia.org/wiki/Great_Green_Wall_(China) On a per-capita basis the Chinese emit far less carbon dioxide than Americans do.
The US, especially when compared to almost any other developed country, is in no moral position to be sanctimonious about environmental issues.
Don't blame other countries -- China or not -- for America's own catastrophic, chronic failure in leadership and subpar policymaking, especially when America has enjoyed so many entrenched advantages for so many decades (and still does).
I agree that the Rust Belt has had it rough, but it is not the entire US economy. I won't argue that people saw the future in the 70s, but those jobs were/are going away to automation regardless (and they are certainly not coming back). It's better to not be reliant on them now. In hindsight globalization was right move. And even if it wasn't, trying to blame the current US issues on globalization is 30 years too late.
Statistically the US manufactures more than it ever has on a $ amount, and is the #2 manufacturer in the world. Until recently, the US economy was the envy of the world. The trade situation the US setup did and does work, and along with other policies, led to enormous prosperity that was just unevenly distributed.
Where the US failed, and mostly around GOP and now Trump policies, is not spreading the growing prosperity to more of its citizens. Given this enormous prosperity where is universal healthcare, free/low cost college, UBI, etc...?
Unfortunately, the people who really need these policies have mostly voted against them for decades. Their anger is legitimate, but it's misplaced. Being angry at "globalization" or "illegals" or pick a group is a misdirection fed by years of AM radio and Fox News. Now we are seeing the cycle continue, but this time the US economy may really be destroyed.
> In the US, a person used to be able to graduate high school and get a job that could support owning a house with a yard, a non-working spouse, a car, and multiple children.
That was never sustainable in the long run and no one can bring that back.
Why was it not sustainable? Clearly the houses were there, and the non-working spouses, and the car and the children...
Well, we can't count on the entire rest of the world having all their factories bombed and being the only nation with reasonable manufacturing capability all the time.
The US was not an export-focused economy in the 50s and 60s. In fact trade as a percent of GDP bottomed out in those decades. Arguing that the prosperity for the average person was only "sustainable" in an environment where there wasn't foreign competition is an argument for tariffs.
https://www.stlouisfed.org/on-the-economy/2020/march/evoluti...
It was the US benefiting from its position on the world stage as to why that was possible. The US was never and is not going to retain it's position on the world stage, and indeed under Trump it is radically declining.
The US is going to normalize with other western nations as we enter a multi-polar world.
The problem is Republicans don't accept that and think they can return to the 1950s.
I think csense is engaging in good faith discussion. The proper response is an explanation, not downvotes.
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Which is why China doesn’t need to do anything but reliably trade right now and take the US market share.
When people say that China will replace the US as the world's largest buyer of exports, I always wonder what planet they're living on.
China does not WANT to do this. They have tons of protectionism. They give tons of preference to their own firms and protect their domestic market from foreign companies. This enables their firms to grow strong. This is a strategy which has been practiced by many many developing nations. They can't live without it and don't want to.
Why does gmerc think that China is going to rewrite its entire economic policy in order to take "market share?" We usually use that term to mean, you are selling stuff and want to sell to more customers because you make more money. In this context however we are talking about BUYING more stuff - why would it be sane for China to dominate the act of buying everything it can on the planet? (At the inevitable erosion of its manufacturing base - just like what happened to the USA when it opened up its markets.)
I mean you can think whatever you want about Trump and his actions, but it just makes zero sense to think that China will step in and fill the old role of the US here, when doing so is a polar opposite from their current trade strategy and would probably collapse their economy. And that gets to the real elephant in the room, which is that no one wants to do America's "old job" anymore. No one else wants to be the ubiquitous buyer of everything with big trade deficits all over the place, the vast majority of countries on earth defend their domestic markets and preference their local firms more than pre-Trump America did - exactly what are these new alliances that are going to arise, when everyone wants to sell to other countries, and no one wants to buy?
I happen to live in a country whose #1 export market was the USA and is being slapped with some of the largest tariffs. Time will tell of course but at the moment they pretty much just seem to be fucked and all they are saying is they are ready to come to the table and negotiate with the US as soon as possible. There just doesn't seem to be a ton of demand for their exports elsewhere - it's not like every country on earth isn't out there pimping its exports to anyone who will listen, pretty much all the time. If China or the EU had a burning need for a couple hundred billion dollars more of shellfish or textiles or what have you, they'd already be buying it.
cycomanic says>"Europeans seem to be much more susceptible to an "if you don't want it to be done to you don't do it to others" argument"<
While they may "talk the talk", Europe doesn't "Walk the walk"! Europe has strong tariffs on imports. The USA is now simply equalizing the situation. Here's an example:
Automobile Tariffs by Country 2025: put your cursor on a country to see its automobile tariff. European tariffs on autos are roughly four times those of the USA. While you're there you can look up the "sales tax" too!
https://worldpopulationreview.com/country-rankings/automobil...
European companies have had tariffs on USA products for decades. Those tariffs protect and maintain industries within a country. The USA failed to maintain that protection: the USA lost jobs and harmed industry which guts an economy. Meanwhile, for example, Germany protected it's auto industry with tariffs on cars from abroad.
My feeling is that "What's good for the goose is good for the gander."
There's no doubt that the "Law of Comparative Advantage"(LCA) in economics is a valid argument for trade. However, the LCA is almost always argued in the absence of externalities: costs generated by use of the LCA are usually not taken into account when examining a full economy: job losses, industry shrinkage and failure, etc.
>Trust is not important if they are afraid of you
I understand that argument I've never seen it spelled out by anyone other than me. I only brought it up as a last effort to explain the possible thinking behind these actions. It still won't make sense because even if you believe that you are the top dog and you can effortlessly bully others then you'd have to realize that you won't be the top dog in every situation all the time everywhere at the same time. There will be many instances where others who previously leaned your way for free will now look to get paid for leaning your way.
Americans are taught at a very young age about Manifest Destiny, the notion when starting in the East that America has a right all the way to the West. While events like Trail of Tears are mentioned, they're downplayed during early school years and not brought up again later when kids may be able to form an opinion. Essentially, winning is ingrained into the American mindset and is the driving force behind almost everything - this helps when making companies big and even bigger, but also mutual growth hard to fathom. Current US policy does feel very American. Seems like a make-or-break moment for the American model itself, and if it breaks there'll need to be a change starting from the early age education/propaganda.
> Europeans seem to be much more susceptible to an "if you don't want it to be done to you don't do it to others" argument.
I mean, in the specific realm of trade wars, that’s probably more correct, because the game theory of the thing tends to make retaliating against the aggressor nigh-inevitable, particularly in a “country v world” situation.
Yeah, that's an idiotic take...
The US has benefited massively from soaking up the best brains globally. That's not going to keep happening; I have plenty of colleagues already who are refusing to travel to the US. We may well even swing into brain drain as Trump et al move closer to executing their cultural revolution.
Meanwhile, all those other countries will start trading more with each other. The US stands to be left out. Won't happen overnight, but Trump is pissing away the advantages. When the dollar isn't the global currency anymore things will really start to hurt.
It's an idiotic take I agree. However, I don't think the US has benefited massively from soaking the best brains globally because of its foreign or trade policies. Most dominant voices about US foreign policy and foreign business interest has always been characterized by aggression and exploitation.
I highly doubt people were ok with that because the US had low tariffs on their countries exports to the US.
Devil’s advocate:
If you (the US) massively subsidize the world order through your financial markets, military defense, and foreign aid, it’s only fair that you get to take advantage of your position.
Historically, the US has done this at the expense of its working class. Now there is a populist feeling that we are owed a long due “payback” for our generosity.
The Bernie/AOC left believe the payback is owed by our elites, who enriched themselves by austerity and hollowing out our industrial base.
The Trump/MAGA right believe the payback is owed by other countries — freeloaders that have benefited from our technology, military defense, and foreign aid while simultaneously being net exporters to the US.
To the latter crowd, the kind of “bullying” behavior you describe is actually the equivalent of a gentle giant who never stood up for himself finally deciding that he won’t take any more shit.
Edit: To any downvoters, please comment with where you think I’m wrong. I’m not defending any policy, just providing what I believe is an accurate representation of the populist American mindset described in the parent comment.
America is the richest country in the world. That is the payback. Yet somehow the working class is screwed.
People don't want to admit wealth distribution is the problem because that would make them "communists". It's an emotional response. I'm scared how far they take it.
Right, and I think that’s largely true.
Whether or not the “right wing working class” are right in their root cause analysis, the domestic situation in the US is catastrophic enough to demand explanation:
Answer 1: You are being taken advantage of by wealthy elites within your country!Answer 2: The whole world has made Americans front the bill for a regime of global peace, security, and a trusted reserve currency, at the cost of you, the American worker!
Depending on which answer you choose, and which camp you ally with, your worldview will differ.
I know. There is no reason to believe in #2. Its an emotional response. And so you cant change it. Just like you cant use logic with a flat earther. And that's scary for the rest of the world. I just hope no wars happen.
There is if you believe the “globalists” are the same people from #1. It doesn’t help that there is some appreciable degree of overlap.
Dona nobis pacem!
Housing and healthcare are the two things that have little to do with trade. Housing affordability is almost entirely policy driven. In a "free" market (quoted because the definition typically doesn't take into account the necessity of a functional society to maintain property rights and values, just ask Detroit), housing affordability is entirely dependent on one's relative income and propensity to spend, i.e. you can have high absolute income (say in NYC) and still find you desired housing unaffordable. I think people intuitively understand this. Healthcare costs are more complicated but is also almost entirely a domestic issue.
"People don't want to admit wealth distribution is the problem because that would make them "communists"."
If you are referring to taking wealth by force from people that earned it and giving to people that didn't earn it, yes it's 'communist'. There's nothing emotional about a methodology that has failed over and over again.
Well, we’ve been going through wealth redistribution towards the “elites”, and no one batted an eye.
China popped the real estate bubble, collapsing entire industry giants and making the “elites” swallow the financial downturn. Literally allowing the “poor” to refinance their homes on the back of the “rich”, because they believe housing isn’t for speculation, but for living in.
Tariffs without windfall profits tax will be further wealth redistribution, from the poor to the wealthy
Communism is control of the economy via government owning the businesses. What you are describing is taxes in a free market system. They are not the same thing, and being convinced they are is the majority of the problem.
Politicians should just come out and say this to the people. Oh you can't afford a house? Oh you cant afford healthcare? But we are the richest country in the world. And the system is fair. It means you didn't earn it. Duh.
> If you are referring to taking wealth by force from people that earned it and giving to people that didn't earn it, yes it's 'communist'.
Like taking money generated by the labourer and giving it to the company owners to share with their idle families? And threatening unemployment and precariousness/homelessness for those who disagree? This seems to have failed again indeed
Or, alternatively, it's called "taxes" and "wealth redistribution".
High inequalities is proven to be bad for development, so clearly there is a point where people have too much and it's harmful to society.
Ergo it would be immoral to allow some to hoard wealth infinitely, just because they can.
Most of those people didn't earn it directly, but via exploiting people working under them and not paying them a fair share for their work.
> If you are referring to taking wealth by force from people that earned it and giving to people that didn't earn it, yes it's 'communist'.
No, that's capitalist. That's literally the core of capitalism.
>If you are referring to taking wealth by force from people that earned it and giving to people that didn't earn it, yes it's 'communist'
No, it's taxation. A pretty common phenomenon.
Indeed. Taxation is as old as civilization. Civilization is built on taxation. The first writing systems, the first numbers, the first money, it was all invented to enable taxation. People should finally quit being so childish about this. Unless you want to go back to the stone age, taxation is unavoidable.
> To the latter crowd, the kind of “bullying” behavior you describe is actually the equivalent of a gentle giant who never stood up for himself finally deciding that he won’t take any more shit.
Assuming this generous interpretation is accurate, then it's a problem of ignorance of the people holding this view. Characterizing other countries as 'freeloaders' is exactly that - ignorance.
Also, what about all the coups, military operations, political pressure etc etc? Was that the gentle giant?
The US has always been incredibly mercenary with their investment. If there was a way of squeezing more blood from the stone a previous president would have done it. You learned about economic policy yesterday. Now you think that picking tariffs by throwing darts can do better than seasoned economic expert trying to maximize benefit to the US. It's just laughable.
Did I ever defend a particular industrial policy? No. You misread my comment.
My comment was intended to give the GP poster insight into the mindset of Americans who revel in the “bullying” behavior they described.
But one point of inquiry — how are foreign aid programs like USAID mercenary? Even if they are CIA fronts, it’s hard to argue that they are in any way economically extractive.
Supposedly they have a seasoned economic expert on staff, Stephen Miran. Is this guy a kook? It wouldn't surprise me, Trump had Laura Loomer at the White House and 1/2 an hour later three members of the National Secure Council had been fired.
https://www.politico.com/newsletters/morning-money/2025/01/0...
https://www.nytimes.com/2025/04/04/us/politics/trump-nsc-fir...
A central problem with this administration is it's headed by a psychopath, who has a long track record of being an untrustworthy liar. Could he pick an economics team that can actually make hard choices that are generally better for America? It's possible. But it's also possible these are just more kooks, or corrupt people looking to grift, or people who think like Peter Thiel, that democracy is over and needs to be replaced by a monarch.
My take? Impeach and remove Trump from office. Do it now. If the country wants these kinds of policies, they need to do it through the Congress. Not through a president, sane or insane.
> Supposedly they have a seasoned economic expert on staff, Stephen Miran. Is this guy a kook?
https://financialpost.com/news/stephen-miran-economist-trump...
> Currently a senior strategist at Hudson Bay Capital Management LP and a fellow at the Manhattan Institute in New York City, Miran holds a PhD in economics from Harvard University and his dissertation advisor was Martin Feldstein, an eminent American economist who chaired the CEA during the Reagan administration.
> Miran.. points to Trump’s application of tariffs on China in 2018-2019, which he argues “passed with little discernible macroeconomic consequence.” He adds that during that time the U.S. dollar rose to offset the macroeconomic impact of the tariffs and resulted in significant revenue for the U.S. Treasury.. “The effective tariff rate on Chinese imports increased by 17.9 percentage points from the start of the trade war in 2018 to the maximum tariff rate in 2019,” the report said. “As the financial markets digested the news, the Chinese renminbi depreciated against the dollar over this period by 13.7 per cent, so that the after-tariff USD import price rose by 4.1 per cent.”
We don't actually know if Trump's tariff strategy is Stephen Miran's strategy, nor do we know what Stephen Miran thinks of the strategy.
What we do know is that Trump disproportionately attacks people who criticize him, withholds security protection from them, and sometimes even sends mobs to have them assassinated.
It also took some time before Mark Esper told the public that Trump ordered that protesters be shot.
Therefore, I think it's possible we won't get Stephen Miran's honest assessment in the near future. We'll just have to wait and see.
Miran is CEA chair, https://en.wikipedia.org/wiki/Council_of_Economic_Advisers
> The Council of Economic Advisers (CEA) is a United States agency within the Executive Office of the President established in 1946, which advises the president of the United States on economic policy. The CEA provides much of the empirical research for the White House and prepares the publicly-available annual Economic Report of the President.
It's clearly the Bernie/AOC left who are correct here. The US forced this world order on the rest of the world, and massively benefitted from it, so the payback is not owed by the rest of the world who had this forced on them (though they benefitted too) but by the wealthy elite, who benefitted by far the most from it.
Look at the number of multibillionaires the US has acquired over the past 40 years. The trillion dollar megacorps. The many millionaires in Congress. Those are the people who owe payback to the American public. But those are also the people who control the American public, control their news, and feed them misinformation.
> freeloaders that have benefited from our technology, military defense, and foreign aid while simultaneously being net exporters to the US.
I'm not trying to jump on you for having captured it, but the problem is that this is wholly nonsensical - the repayment for benefiting from our technology and military defense IS the net exporting to the US (via holding our currency). That "logic" is still based on having one foot in the paradigm of the financial engineering puppetmasters where getting real physical goods is somehow a liability rather than a benefit!
For sure, this enviable position has had a corrosive effect on our economy. But the inability to deal with that has been wholly down to self-inflicted policy wounds of previous decades - chiefly led by the Republican party marketing a game of fake "fiscal responsibility" whereby the government is prevented from taking deliberate action to mitigate the displacement of industry and workers, while the increased (but now centralized) wealth from offshoring (and other technological/economic gains) was merely handed over to the banksters in the form of low-interest loans that went into driving up the asset bubble.
https://www.retailcouncil.org/u-s-hits-185-nations-with-tari...
> No new tariffs were announced for Canada. Canada and Mexico’s exemption for USMCA/CUSMA qualifying goods was maintained. However, 25% tariffs on non-USMCA compliant Canadian goods, Canadian steel and aluminum, Canadian autos and parts, and the 10% tariff on Canadian energy exports remain in place.. there are signs that negotiators on both sides are trying to steer Canada-US trade to a more productive process of an expedited renegotiation of the Canada-US-Mexico Trade Agreement (CUSMA).
More context on US trade policy: https://news.ycombinator.com/item?id=43589350
So the tariffs were calculated based on dividing goods trade deficit by overall goods trade.
If you run that formula for Canada and Mexico, the number would be LOWER than the tariffs already imposed.
So they had to leave Canada and Mexico off to keep things looking consistent.
You can confirm here from USTR stats: https://ustr.gov/countries-regions/americas/canada#:~:text=C...
https://www.ft.com/content/96bc1b74-14dd-47ab-8bbd-1add97a2a...
> both leaders claim their approaches have helped them this week avoid what Trump calls “liberation day” tariffs.. Mexican officials on Thursday said the strategy had borne fruit and they would focus on getting an even better deal. Economy minister Marcelo Ebrard said: “It's a great achievement, I’d say, from the point of view of where we started not long ago that there would be no exemptions.” .. Mexico remains upbeat, with [President] Sheinbaum on Thursday trying to lure companies to invest in USMCA-compliant production in the country. “We think that with the dialogue we’ve established there are the conditions to have a better deal,” she said.
You've completely ignored what I wrote. The formula the white house used to set tariffs would result in lower tariffs for Canada and Mexico. If both countries were included in the formula Trump would have to cut announced tariffs on both countries.
Do you dispute this? It's trivial to calculate.
You're making the mistake of believing that anyone left in the MAGA camp is arguing in good faith.
You're disagreeing with statements by the President of Mexico, describing the result of ongoing negotiations?
Canada and Mexico share a physical border with USA, which has already resulted in unique (i.e. unrelated to the math of 180+ other countries which don't physically border USA) tariffs tailored to border security goals, under national security emergency directives which overrode USMCA.
USMCA has been historically gamed by international manufacturers seeking more favorable terms for products destined to the US market. As stated by the leadership of both Mexico and Canada, USMCA will need to be renegotiated to address issues identified by all three parties, which would then reduce the need to invoke the emergency-power tariffs that have been deployed against 180+ countries.
> As stated by the leadership of both Mexico and Canada, USMCA will need to be renegotiated to address issues identified by all three parties
On the canada side, i think the issue identified that needs to be addressed is the US president being a dick.
(I'm not being sarcastic here, that is my genuine impression. If you disagree can you cite a source for what issues canada wants addressed? Obviously times are a bit weird since we are having an election and its considered bad form for the gov to do anything during election season)
Nov 2024 analysis, https://www.whitecase.com/insight-alert/north-america-prepar...
> Some Members of Parliament have also advocated for increasing trade barriers on Chinese imports alongside the United States, which the Canadian government has recently begun doing unilaterally. Suggesting Canada could be interested in coordinating those China-related trade policy measures across all three USMCA members, Deputy Prime Minister Chrystia Freeland recently said she sympathizes with US concerns that “Mexico is not acting the way that Canada and the US are when it comes to its economic relationship with China.”
That doesn't seem to support canada wanting to renogtiate usmca. The best way of handling that issue is probably not renegotiation (its way too specific of a situation to write a clause into the agreement for). Furthermore, Chrystia freeland hasn't been deputy PM for four months now, and the situation has changed a lot since then (not to mention we also have a new prime minister since then). At the time of that statement i don't think there was much appetitie for renegotiating usmca.
Compared to now where our current PM is straight up saying "The old relationship we had with the United States, based on deepening integration of our economies and tight security and military cooperations, is over"
From the FT article linked upthread, https://archive.is/J09AN
> A broader change to the USMCA also looks likely, with Carney saying there had been “so many violations” that the free trade agreement needs “a renegotiation”.
Yes, that is what i meant by "the issue identified that needs to be addressed is the US president being a dick."
Trump tariffs are based on the International Emergency Economic Powers Act (IEEPA) of 1977, overriding USMCA and other trade agreements. Any renegotiation of USMCA wouldn't stop the potential use of IEEPA to selectively override parts of USMCA v2.
It's more likely that USMCA violations referenced by Carney and Freeland were done by Mexico/China, at the economic expense of both Canada and USA.
All trade agreements are about surrendering some domestic power. What act or other domestic legal instrument is used is irrelavent.
In context it seems very unlikely this is about mexico, as carney is running on a platform of closer integration with mexico and strongly distancing canada ecconomically from the united states. Carney's ecconomic policies are not identical to the previous administration - it makes about as much sense to refer to trudeau/freeland's statements as it would to try and explain trump's policies by referencing things biden said/did.
Yes, because the math provides a much simpler explanation.
Napkin math cannot apply to Mexico and Canada tariffs, because the USMCA (and preceding NAFTA) have long intertwined North American manufacturing supply chains, with components moving back and forth across borders.
Even the emergency border security tariffs and counter-tariffs announced earlier this year by US and Canada have since been carefully tailored for specific products and exceptions, as cooler heads prevailed on both sides of the border, to minimize immediate and catastrophic ripple effects across North American manufacturing.
The entire new tariff scheme is napkin math. Although it could also be napkin math done by some LLM.
If it was real math, it wouldn’t assume that there is some magical trade elasticity that is completely linear in the tariff rate. And real math might notice that the prices of goods that are subject to tariffs are an utterly absurd measure of value, cost, movement of money, or anything else.
Consider:
A US company does a bunch of R&D and designs a widget. They pay $10 each to a Chinese factory to manufacture it. They warehouse the widgets in Hong Kong. Each widget purchased by a US customer results in a “$100” item being imported. $90 stays in the US. $10 goes to China.
The same company does exactly the same thing except they ship in bulk to a US warehouse. The imported item is now “$10”. The tariff is 1/10 as much, the napkin math sees 1/10 as much trade imbalance, but the economic effect of the import is identical.
Or maybe they ship from Hong Kong to a French customer. This should be seen as an export from the US to France with $90 and an export from China to France worth $10. But I think it’s invisible to the napkin math.
Now consider that the US is home to some wildly successful companies with names like AMD and Nvidia. They sell chips for thousands of dollars each, worldwide. They pay TSMC quite a lot less to make them. If they warehouse in the US, they may be screwed now! If they ship from Taiwan to a buyer somewhere else, the US has, in effect, exported quite close to the full sale price of that chip, but no trade goods ever touched US soil. Can the napkin math sees that?
You can bet that several other countries use brains instead of napkins and will have no difficulty thinking that they could retaliate by restricting or taxing of these US-designed goods even if they’re imported from elsewhere. And China is working very hard to make their own alternatives, and they will surely be willing to export them.
(Don’t forget: The UK and Israel have CPU design expertise. ASML is dependent on tin zapping tech from San Diego, but they’re an EU company. And it looks like the successor to that tin zapping tech might be free electron lasers, and that technology come from US national labs and universities, but other countries also have FELs, and the nerdy physicists who fiddle with them are not happy with the US government right now.)
> The entire new tariff scheme is napkin math.
See the 2024 paper (40 pages) by Stephen Miran, current chair of the Council of Economic Advisers, which has influenced tariff policy, https://news.ycombinator.com/item?id=43589350
https://financialpost.com/news/stephen-miran-economist-trump...
> Miran.. points to Trump’s application of tariffs on China in 2018-2019, which he argues “passed with little discernible macroeconomic consequence.” He adds that during that time the U.S. dollar rose to offset the macroeconomic impact of the tariffs and resulted in significant revenue for the U.S. Treasury.. “The effective tariff rate on Chinese imports increased by 17.9 percentage points from the start of the trade war in 2018 to the maximum tariff rate in 2019,” the report said. “As the financial markets digested the news, the Chinese renminbi depreciated against the dollar over this period by 13.7 per cent, so that the after-tariff USD import price rose by 4.1 per cent.”
Whatever paper may have "influenced" the policy, here is the official statement and it is very much napkin math and nothing else.
https://ustr.gov/issue-areas/reciprocal-tariff-calculations
That "napkin math" guide is like "enterprise pricing"—a starting point—for negotiation defined by the official White House Executive Order, https://www.whitehouse.gov/presidential-actions/2025/04/regu...
Lobbyists and trade negotiators can read 700 words of strawman "napkin math", or 40 pages by CEA chair, or interviews with administration officials, to inform their negotiating position.This is nonsense. The “non-reciprocal trade arrangements” mentioned don’t obviously exist at all, and, to the extent they exist, they are certainly not measured in any meaningful respect by the formulas going into the tariffs.
Having spent a whopping ten minutes finding official data (and I have no idea how good this data is as a whole — probably mediocre but far better than whatever nonsense the USTR is doing):
(a) The EU seems to thing that they run a trade surplus with us in goods and a deficit in services, and they’re close to balancing out.
(b) The US’s own data shows a net surplus with some countries and a net deficit with others. See here, page 28:
https://www.census.gov/foreign-trade/Press-Release/current_p...
If the US was trying to negotiate sensibly and to identify anything remotely non-reciprocal, they would be rewarding the countries with positive numbers in that table! The US should be delighted to trade with Australia, Brazil, Belgium, the Netherlands, etc! By all means, we should buy more widgets and sell more fancy services!
As a silly analogy: if your housemate goes on a wild drunken rampage and starts trashing everything in sight while screaming “you need to reciprocate and wash the dishes more often and I will continue trashing things until you wash the dishes reciprocally,” the situation is not a viable negotiation tactic.
To the extent markets recover it will be because there’s confidence that exposure to bizarre and unpredictable behavior from the US has been reduced.
EU / China trade pacts, China / California, Mexico / EU. People have to patch around the mistaken over-reliance on sanity from the US. It’ll happen, not sure if it’ll take a few weeks or a few years though.
Oh, high quality will recover. Biotech will recover. It’s possible Walmart stock doesn’t recover. Auto makers will be interesting.
> I'm tempted to think (hope? dream?) that the markets and trade will rebound if all this chaos makes American politics swing back
The pump'n'dump scheme against Ukraine will forever change how small countries see the US support for democracy, even if it changes back to the previous status-quo.
The US treatment of Ukraine is having a massive impact on how everyone thinks about security.
All the US had to do was supply it's old weapons to Ukraine whilst replenishing it's stock (creating jobs in America) and things would have been fine. Now we're all in a world were Europeans are openly talking about developing nuclear weapons. Taiwan is totally on it's own, and Greenland is worried about being annexed.
There's real trouble coming.
canada is also worried about being annexed, and that nato partners wont heed the call to article 5 against a US invasion and naval blockade
Quick note that Europeans have had nuclear weapons since 1945.
Europe is openly talking about its own cooperative nuclear umbrella. Trump is correct that he deserves 100% of credit/blame for that, taking the heat for Putin.
It will be done by your friends the French, even if not to everyone. Poland is very keen on it.
In fact they are reopening and massively developing an airbase that will be hosting nukes near Colmar, 200 km from the German border. That's a 6 minute flight for a Dassault Rafale.
> All the US had to do was supply it's old weapons to Ukraine whilst replenishing it's stock (creating jobs in America) and things would have been fine.
Well, no, it's not fine, partly because we can't replenish our stocks fast enough. Ukraine is consuming nearly the entire planet's production capacity of Patriot missiles, eating enough of our ATACMS stockpile that it makes Combatant Commanders nervous, and more. To say nothing of the argument "supply Ukraine for as long as it takes, even if that means indefinitely" never made any sense; actions taken without a clear, achievable end goal in mind are just a waste of resources.
https://economictimes.indiatimes.com/news/international/us/d...
https://www.bruegel.org/analysis/us-defence-industrial-base-...
It sounds like you’re arguing for the military industrial complex.
“The Ukraine war is great because it creates US jobs through weapons manufacturing. Yeah, we might get our hair a bit mussed with the hundreds of thousands of deaths, but net-net it’s a win!”
In the end, countries are nuanced enough to understand American political dynamics. They see Orbans, they see Le Pens, they see Trump, and they know what is behind it. I am quite sure that Ukraine did not expect anything else from the Trump faction of the Republican party. His victory was not unlikely and he is a simple creature. If different factions win, they will be eager to work with America again, with less trust and reliance.
Realistically, it is for the best if countries are resilient to US failure. It will make Americans generationally poorer, but the world will be better off for it.
> It will make Americans generationally poorer, but the world will be better off for it.
The world will become more resilient, but this could easily be a lose-lose for USA and other democratic nations.
> In the end, countries are nuanced enough to understand American political dynamics.
Is that why Ukraine agreed to the Budapest Memorandum?
You are just assuming Attention craving/seeking Trump types don't exist in every country in the world.
If Trump and the rest of his podcasting/influencer buffoon class, can rise to power in the US riding on what is valued by Attention Economics, then the same can repeat in every country in the world.
The root cause is not changing cause the Algos have created a game that favor those who love Attention and will do whatever it takes to get it and keep it.
If you remember he blew up TTIP, TTP/TTPA during his first mandate.
The people who voted for these policies have to feel a sufficient amount of pain from them to be sure they won't just vote for them again as soon as they get the chance. Most people who voted for Trump in 2024 would vote for him again if he ran for a 3rd term. Nobody can consider America a reliable partner until that isn't a laughable possibility again.
I think that those in command are also waiting for the next President to undo all that but it is going to have a tremendous effect for a decade or more. Hopefully for the US they won't go in a similar crisis like the UK is going through...
Cutting off countries like Japan or Taiwan like that when we know their geopolitical situation with China and how critical their economy is to the US is quite crazy.
Things are easier to break than they are to fix. The next president, if there will be another, will not be able to easily glue the pieces back together.
Yeah, this is the core issue. How can any ally fully trust the U.S. when major foreign policy commitments can be reversed every 4 years? One administration signs on, the next tears it up.
It's starting to look like U.S. agreements aren't really with the country, but with whoever happens to be in office. US allies is isolating itself and it's allies are going to hedge. The trend is already starting and it's going to be hard to reverse. Restoring that trust isn’t just a matter of electing the "right" leadership, either, at this juncture, I think that it would require institutional reforms and a consensus on foreign policy that transcends the electoral cycle.
I'm not going to cheer for the "downfall of US", but America is doing it to itself.
> Hopefully for the US they won't go in a similar crisis like the UK is going through...
Err.. do tell about the UK's larger crisis than US'?
I’ve been seeing people call this GEXIT, or global exit.
As a comparison to Brexit? At what point even momentarily was that in a worse situation, nevermind as an ongoing matter?
Are you pretty young? The narrative when it was happening was pretty catastrophic. I remember reading about people not being able to get prescriptions, for example, because no one knew how imports worked.
I don't know how things panned out, but the discussions in the early days around Brexit were absolutely on par or even worse than what we're seeing in these two days of discussions around tariffs.
I don't know what 'pretty young' is, apart from condescending, but I voted in it, so I remember as well as you do I imagine.
Regardless of contemporaneous comparisons, the up-thread comment I initially replied to suggested there was some ongoing worse 'crisis' in the UK than the current situation in the US, if they meant to refer to Brexit it was not clear at all, regardless of whether anyone things that's an ongoing worse situation. (Except that the fact it's not clear really suggests it isn't...)
Sorry, the implication is that this is far worse than Brexit, but that this is the US’s Global Exit, riffing off the strong negative connotations in te US. I saw it from on Bluesky, but that linked here https://theradicalfederalist.substack.com/p/the-neoreactiona... - so, being framed as much worse than Brexit.
No worries, yours was clearer, it was the first indication I had that anyone meant to compare to Brexit, I just asked to clarify. 'up-thread comment' I meant was the bdelmas one I replied to that referred only to 'crisis like the UK is going through' without elaboration.
> I don't know what 'pretty young' is, apart from condescending, but I voted in it,
'Pretty young' would imply maybe you haven't been voting for very long, and are likely under 25.
(if they share the same definition) then no, I am not.
An under 25 year old today wouldn't have been able to have voted on the 2016 referendum anyway.
Note that these tariffs largely don’t take effect til the 9th. That’s when we start seeing what the second-order effects are.
Frankly, the first order effects as well.
Right now we're seeing the 0th order effects.
What? The didn't happen, or it's not how it happened. Are you pretty young to remember Brexit?
The UK voted for Brexit in 2016, but it was up to the UK itself to invoke it with the EU. They took almost 4 years to do it in January of 2020 after 4 years of arguing about it with a transition period and trade talks with the EU until the end of 2020. It wasn't a surprise and "no one knew how imports worked". Yeah people online made all sort of wild hyperbolic scenarios, but trade was unaffected until the end of 2020. There were shortages in the UK around that time, but I wonder if you remember what happened shortly after January 31st of 2020?
The prescription drug shortages is still a problem in the UK. It's not because no one still knows how imports work in the UK, 5 years after Brexit. It's because the overall imports and exports in the UK has been falling since Brexit. Because the UK economy hasn't been doing great. Brexit, COVID, and then Ukraine/Russian energy dependency came in a pretty bad time for the UK.
> They took almost 4 years to do it in January of 2020 after 4 years of arguing about it with a transition period and trade talks with the EU until the end of 2020.
Oh, longer than that. Some transition arrangements are _still in practice in place_, for instance see https://www.politico.eu/article/uk-brexit-border-checks-dela... . Brexit is not done, yet; things will get worse before they get better.
Currently, Trump’s tariffs have kinda broken the stock markets, and caused some difficult-to-measure economic damage (investments will have been delayed or cancelled, that sort of thing). If, tomorrow, Trump chokes on a well-done steak, or Congress puts him back in his box (remember, his ability to do _anything_ with tariffs is entirely within the gift of Congress), or otherwise the tariffs go away, then the markets will pretty much spring back, and the economic hit will be small enough that it’s hard to measure.
While estimates of the damage done by Brexit are of course very politically sensitive, nearly everyone agrees that some substantial damage has been done, particularly to trade and jobs (one estimate has the UK with _over 2 million_ fewer jobs today than it would otherwise have, Goldman Sachs says that the UK economy is 5% smaller than it ‘should’ be, etc etc)
Well before what's happening now the US still was doing very strong on the economy (plus their advantage to be that big, their military advantage, them owning half of their continent, etc...). But with what is unfolding now...
If you want to know more about the current situation in the UK I would recommend this video [1]. His channel is amazing for geopolitical content.
[1] https://youtu.be/OTWDzMjgsEY?si=hxoB8ef_y2Qy4u0I
Some stats from this video:
- The UK has one of the worst homelessness problems in Europe, with about 1 in 50 Londoners experiencing homelessness.
- The UK economy stagnated for 10 years following 2008, resulting in a "lost decade"
- The median disposable income in the UK was slightly lower than the US and Norway before the GFC by 6-8%, not it's 16-20% behind.
IDK if I'd call this a crisis, i.e. people aren't rioting in the streets. That said, this is not the direction you want to be moving in as a developed country. The trend of people in formerly dominant countries electing leaders who keep making stupid own goals (increasing economic inequality, Brexit, gutting the NHS, gutting US foreign aid, tariff-pocalypse) is very worrying.
Ten times? More like two times:
US population is around 340 000 000, 770 000 homeless.
UK population is around 68 000 000, 354 000 homeless. (Possibly calculated more inclusively.)
That's 0.23 % and 0.52 %.
(Numbers from https://en.wikipedia.org/wiki/Homelessness_in_the_United_Sta... and https://en.wikipedia.org/wiki/Homelessness_in_the_United_Kin... or more specifically from a govt department and a homelessness charity. The US figure "does not include those staying with friends or family because they do not have a place of their own".)
Hey, so I was wrong in saying the UK has 10x the homelessness rate of the US. I used a stat from the video that "approximately one in fifty Londoners are now homeless." That's London, not the UK. Thanks for catching that -- I will update my post.
But also, uh, you're wrong too! Your numerator for the UK figure is actually an estimate for homeless people in England, while your denominator includes the whole UK.
Homelessness is a housing issue first, a poverty issue second. See housing as a game or musical chairs. If you don't have enough, the one getting stuffed first are the slowests (in that case, the unemployed poor, then the working poor).
Fair enough. (England's population is 57 million, so that's 0.62 % in England.)
It's interesting that this video is so focused on productivity since 2008, when a worker's income has been decoupled from productivity for decades.
If you can't give me any words that indicate what kind of crisis the UK is facing, while there's general agreement on 'Trump', 'tariffs', '(especially US) equities', 'the US dollar', 'global recession fears'... then I don't have time for your video recommendation.
Brexit was pretty bad for the UK proportional to the size of their population/economy, and is still causing problems even though the initial dislocation is over. If you think it's a lesser crisis, you could just say that. I haven't done the numbers to make an exact comparison, but they both have the qualities of being being abrupt, severe, and self-inflicted.
> If you think it's a lesser crisis, you could just say that.
I do, but the principal reason I didn't say that is that I had no idea it's what the commenter I replied to was referring to.
'Brexit' feels mostly completely irrelevant / not a topic of concern or debate since at least the beginning of the pandemic five years ago. The vote was almost a decade ago. 'If bdelmas thinks it's like Brexit, they could just say that', to paraphrase your own comment.
Britain took 4 years to negotiate and prepare for the new trading arrangement with the EU. It wasn't all smooth, but they did things like massively expand customs facilities at sea and airports to allow for the new inspections, train up inspectors for animal and plant imports. It gave time for people to move, companies to move their HQ, set up new warehouses, etc. Both sides were clear that the arrangement wouldn't be changed back with a change of government — the EU had no patience for that, opposition parties in the UK said they wouldn't aim for it either.
The USA hasn't done any of that, so the situation at this stage isn't the same.
Weeks after Brexit happened, when Covid started, EU governments quickly moved their focus to the pandemic. Since then, they've continued to tell Britain they aren't interested in reopening discussions so soon after new treaties were signed.
That's changed slightly with Russia/Ukraine/Trump, as the UK has positioned itself carefully between the USA and the rest of NATO.
All that time though, it remains a topic of debate in Britain since they haven't seen any of the promised benefits of Brexit. Some things have got worse, but I'd say it's generally a problem of stagnation, compared to improvements in comparable neighbouring countries.
That's a good summary, I basically agree. It's hardly describing a current and ongoing 'crisis' that the US hopefully doesn't deteriorate from its present position to the level of, though, is it?
I think if I were American I would be longing for the day that <insert Trump thing> 'remains a topic of debate because we haven't seen the promised benefit of it'!
The vote didn’t implement anything. Britain didn’t actually leave the EU until 2020. Brexit is as of much concern in Britain, still, as Trump is - because it underlies their entire shaken economy. You think some tariffs are bad? Ok now what if Trump simultaneously tore up every trade agreement? And cancelled the visas of every European citizen in the country, who happened to make up 10% of the medical sector?
Alright take 2020 then: year started $1.32/£, ended at 1.37. The world was shaken by SARS-nCoV-2019, but I do not remember us feeling particularly extra shaken by Brexit crisis.
That is not really relevant anyway, the up-thread suggestion was that there was some current ongoing crisis more significant than anything happening in the US. That user didn't even mention Brexit, but if that is what they meant, no, I assure you it's predominantly Trump and tax year end stuff in our news.
Thing is, Brexit didn’t _really_ happen in 2020. The UK was, for practical purposes, in the single market until 2021 under a transition arrangement, and even after that, it kind of petered out over years. Some special arrangements are _still in place_: https://www.politico.eu/article/uk-brexit-border-checks-dela...
Ok. I'm still awaiting to hear how it's currently a situation of terrible crisis that the US would not want to sink to.
If there are any crises in my UK news, they're in the Ukraine, Israel, USA, and perhaps Greenland & Canada by extension. To the extent there's crisis in the UK that I'm aware of, it's the same USA-inflicted event that the rest of the world's dealing with too.
Oh, you’re actually British, how surprising. Perhaps it’s only still a topic among people who understood what was going to happen.
Reading the parent's comment I was expecting the UK GDP to have been plunging since Brexit, but that's not the case apparently[0]. Some sectors clearly profited from it, compensating for those who went down the drain.
GDP isn't everything and from the outside the UK feel like in a very bad place, but I wonder what's the metric that really captures that status. Inequalities aren't getting that much wider as well.
https://www.macrotrends.net/global-metrics/countries/gbr/uni...
There is a lot of data to talk about that's why I linked the video directly in the other comment. Maybe check it out. For the GDP it may not look bad but compared to other countries and especially the US, the UK is going through what we call a "lost decade". Their GDP should be +25% higher than right now... That's just one (huge) metric talked about in the video.
Yup. Sadly, discussion of Brexit on HN is trash tier. Almost every claim about it you'll find here is completely wrong. Not in the sense of differing values or priorities, but in a "this is totally made up" kind of way. It's really concerning that so many people's understanding of the UK and Europe have suffered such a huge rupture with reality. The map is not the territory!
Leaving the EU had no effect on the British economy. Not positive, not negative. Even the trade balance with the EU merely continued along its long term trend, so apparently the single market wasn't delivering any value in the end. The closest thing you can find to an economic impact was the currency dump that happened the moment the result was called, but the economy did fine in the post-referendum years and so those traders who panicked just took a bath and the currency recovered later. Not that a currency devaluation is such a bad thing for the UK anyway, its exports could use the help.
Even some non-economic impacts failed to materialize, in both directions. The UK rejoined the Horizon research programme (supposedly a "cherry" that would be lost), but also the reduction in immigration that voters were promised didn't happen either, in fact immigration went into overdrive.
A lot of people who support the EU don't realize any of this, partly because the news doesn't report on things that don't happen so they never hear about it. But mostly it's because they conflate predictions with reality. For example, there's someone saying in this thread that "the narrative was pretty catastrophic" followed by "I don't know how things panned out". And when I pointed out this lack of impact less than two weeks ago here, I got a reply that cited another pile of predictions as a refutation:
https://news.ycombinator.com/item?id=43469356
It's a systemic problem that crops up in other areas too. During COVID modeling predictions were regularly repeated as if they'd already happened, and you see the same mental slippage in climate change discourse. The line between "we think this might happen", "this will happen" and "this has already happened" blurs to nothing.
This. There is no reason why any country should trust us anymore if entire trade relations can be destroyed by a presidential whim.
Even if Trump fell out of a window today and we got a pro-trade president tomorrow, we’re not fixing this damage for a very long time.
We probably would have to amend the constitution to insulate foreign policy from the whims of a single person if we want any chance of fixing this in our lifetime.
It's already there in the Constitution - Article II, Section 2, Clause 2. Unfortunately other countries chose not to require things in writing and were happy with pinky promises that could be reneged.
We (Canada) literally signed the United States-Mexico-Canada Agreement for trade in 2020... with Donald Trump. Trump this February said "Who would ever sign a thing like this?" and proceeded to make up the story about fentanyl coming from Canada as a pretense to ignore this deal. So there was certainly more than a pinky promise.
Additionally your senate just signed law to repeal the tariffs against Canada specifically so I don't know what other receipts or paperwork you'd like here. Not that I expect Trump to adhere to that of course, but I've never heard the perspective of "well these weren't signed agreements" for things that clearly were.
Yep, he’s doing to other countries what he’s done to contractors, plumbers, and other tradesmen for years.
> Additionally your senate just signed law to repeal the tariffs against Canada specifically so I don't know what other receipts or paperwork you'd like here.
That bill won't pass the crazy house, but yes, CUSMA was signed law.
There is a technicality in normal times, though: ratifying treaties negotiated by the President only need to pass the Senate.
I mean, most of international law and deals are basically pinky promises. But grown-ups are supposed to keep those pinky promises
It doesn't require a constitutional amendment, we can just repeal the law [0] being used, which would ironically involve the same number of votes as keeping the law but slapping down Trump's particular usage of it. (That's now how it originally worked, but the easy-slapdown route got ruled unconstitutional.)
Military alliance stuff might be harder. Some stuff like NATO is supported by actual legislation, but other stuff was set up as a kind of gentleman's agreement with the US President-du-jour on the assumption that successors wouldn't be crazy.
[0] https://en.wikipedia.org/wiki/International_Emergency_Econom...
> we can just repeal the law [0] being used
Only with a veto-proof majority in both chambers.
Maybe, but vetoes are politically very expensive. Even if he threatens to veto, Congress should still do it. Not doing obvious things because they might run into opposition/problems is a recipe for more and worse of the same.
> Maybe, but vetoes are politically very expensive.
As are felony convictions, top secret docs in a bathroom at your house, sexual assault settlements, and the hundred other career-ending scandals the guy has survived without a scratch so far.
Agreed, but maybe Congress takes action on one thing they'll find it in themselves to take action on a second thing. Having been in a lot of real fights, standing there and doing nothing is almost invariably the worst choice.
Congress is 55-ish% Trump’s party and 45-ish% everyone else. Nobody in the Trump party would ever, ever, ever do something Trump didn’t want. The entire party platform is basically “whatever Trump wants”. Anyone who disagrees was primaried out of existence long ago.
There is no congress any more, not as an independent body. There is Trump, and there is a body of people who will, in the majority, do anything Trump wants them to do, and is not independent in any way.
theres 0 actual political cost to them.
trump doesnt need anything from congress, and probably wouldnt change tariff policy even after said law is passed in a veto-proof way
Doing nothing and just watching how how dictatorship pans out is also an option, sure.
Yes, just like I said: "which would ironically involve the same number of votes as keeping the law but slapping down Trump's particular usage of it."
Originally it wasn't veto-able (only needed a Concurrent Resolution of 50% in each house, no Presidential signature) but the Supreme Court ruled that part unconstitutional in the early 80s.
The president constitutionally doesn’t actually have this authority - the power to set tariffs is supposed to be exclusively the prerogative of the legislature, but Trump declares pro forma emergencies and the Republicans in power aren’t willing to check his power.
Passing law that removes tariff authority from the president would be a good start to rebuilding trust.
I don’t think that would matter at all. Pass all the laws you want, when the head of the executive branch orders the CBP to collect tariffs, they will. We’ve long since left the rule of law.
The rest of the world would still be at the mercy of an untrustworthy government that is largely incapable of any semblance of long term thinking. To say nothing of the weirdos who regularly vote for that government and who they tend to elect.
The US wasn't even in a crisis until 2025. We weren't in a stellar position (high deficits and debt, low unemployment but high underemployment). It was all recoverable before Trump started this trade war and doing things like cutting departments that actually brought in revenue.
> was all recoverable
The debt was never recoverable
Well, I disagree but the current policies guarantee it's not recoverable so a debate would mostly be around hypotheticals. We're reducing revenue but not spending (or not enough to offset the reduction in revenue so the deficit will rise), so the debt will only continue to rise at an increasing rate.
Ironically, Trump has the record for the highest deficit ever in US history. He's on track to beat it though and with a reasonably strong economy when he took office (again, not an ideal economy, underemployment is a major issue, but not a weak economy by any stretch).
> Ironically, Trump has the record for the highest deficit ever in US history.
hardly relevant comment since all presidents left and right have been pushing the button to increase deficits (and congress is completely responsible as well for not trying to balance the budget) so this is a systemic problem that will bring the downfall of America no matter what. It's just a matter of time, and with that level of debt, the time bomb keeps ticking faster and faster.
It’s relevant because republicans campaign on it. If neither party claimed to be fiscally responsible I’d agree. However one does and isn’t. That makes the relative debt load under that party compared to the other fair game.
Can you share your understanding of what you think the debt actually is?
On top of all of their other preexisting and pending crises..
The next president is going to be Trump. If people don't think that's at least a serious possibity they are extremely deluded about the situation the country is in right now.
We have repeatedly seen Trump say something that sounds ridiculous, and his supporters say "that won't actually happen, and if it does I won't support it", and then he does it and his supporters support it. He has recently said he may try for another term as president, and confirmed "No, no I'm not joking".
If you don't take his threats seriously by now, and the willingness of the GOP to get behind whatever he wants, then you are not paying attention - it has happened over, and over, and over.
On NPR they ran a response quote from Ryan Zinke that was nominally against it, but if you read between the lines you can see them laying the foundation. It was something like “I draw a hard line at violating the constitution, that’s something I’ll never support. But also right now there are leftists and activist judges who think they can violate the constitution by taking power away from the executive”
He never directly spoke against a third term, just “violating the constitution”, and then named some enemies. It’s a long way off still, but you can see the groundwork being laid for something like “emergency measures to protect the constitution” if they decide that’s the way they want to go.
Wouldn’t he have to get on the ballot in all the swing states at least? What if some states refuse to let him run? I can’t see California registering him for example, but that wouldn’t really matter of course.
Only if he tries to get a 3rd term by a fair election. The more realistic way to it happening is by hijacking the electoral process. There are a number of ways to do this, such as by claiming there was fraud and thereby having the justification to modify how "electors" [0] should cast their vote. This is exactly what was tried in the 2020 election.
Really, it's just an "if enough people in power and in general go along with it, then it works" kind of thing. The current trend in the GOP is to whip and/or expel those who do not fully support Trump. What happens if half of the elected politicians, most of their constituents, and most of the appointed government officials, decide that Trump is staying in office? No one knows. The power of words on paper only goes as far as people let it.
https://en.wikipedia.org/wiki/United_States_Electoral_Colleg...
SCOTUS can overrule the States just as they did with CO in 2024
> We have repeatedly seen Trump say something that sounds ridiculous, and his supporters say "that won't actually happen, and if it does I won't support it", and then he does it and his supporters support it.
Any examples?
Attempting to overturn an election, putting tariffs on the entire world, deporting legal US residents without due process, passing a record-breaking number of executive orders, ending birthright citizenship, removing a pillar of the free press from the White House press pool.
The man is 78 years old
There's a good chance he doesn't even live to the end of this term, forget running for president again at 82...
Trump's father lived to 93, and mother to 88. He doesn't have any serious medical conditions (that we know of). There isn't a high chance that he's going to die of natural causes in the next 4 years.
> > He doesn't have any serious medical conditions (that we know of).
He hasn't disclosed his medical records, which is something presidents are normally expected to do. You have to wonder why he disclosed his records in 2016 and not in 2024
> There isn't a high chance that he's going to die of natural causes in the next 4 years
Of course there is, he is Seventy Eight and Visibly Obese
His parents living longer is not a strong predictor
Natural causes?
It is likely he will get assassinated, it was already close once, so the poster just didn't include that in his calculations by saying natural causes.
The constitution says you’re wrong. And the justices he appointed would uphold the constitution if he tried it.
Sure, on paper, but who will enforce it? He’s already attempted a coup. He has 4 years to prepare for the retry. He’s already putting loyalists into law enforcement and military spots. He’s immune to all lawsuits and has the congress cowed.
And just to be sure he gets the help he needs from the public, preemptively blanket pardon everybody.
>And the justices he appointed would uphold the constitution if he tried it.
I don't feel that's a given. But even if they do, it needs to be enforced which feels much less likely.
4D chess is an absurd notion when you consider the actors involved. Only malice and incompetence are credible theories.
When the markets are down, they are on sale for the rich. Eliminating competition via tariffs is good for those who want to compete where they couldn't before. They would let everything burn to further enrich themselves or push their ideology.
They'retrying to play 4D chess, but they don't understand how the pieces move.
This is charitable.
I think the combination of malice and incompetence remains the most credible theory:
Trump believes that the he/the US has the more powerful position in all of these relationships and wants to impose his will on the rest of the world and make them submit to his/US superiority. Which might actually work if he picked one target at a time. But you can't beat up the whole school at once. The fact that he can't do this to everyone at once, combined with his utter misunderstanding of what trade imbalance actually means, will lead to an outcome that is bad for everyone, but worse for the U.S. than most.
There are two other theories that I think have some shred of credibility, and they're both worse:
1. Trump intends to use his apparent ability to unilaterally impose or negate these taxes at will on a granular level to force countries, companies, and individuals to come groveling to him for favors, allowing him to use the presidency to further enrich and entrench himself.
2. Trump is divesting of dependence on allies because he thinks they might soon be adversaries. That's the most harrowing potential interpretation, but it relies on the notion that he has any kind of foresight. This is really only credible if you genuinely believe that it's Putin pulling his strings. Which is a possibility that's hard to dismiss.
@2) I don't see Putin behind this. The current situation is most likely a death stroke for Russia. Russia's war economy was already on the brink and running on borrowed time. With oil prices cratering that's it.
I think less 4d chess and more Erlich Bachman school of negotiation. Bullying people in inferior bargaining positions has somehow worked thus far.
When he started with a limited set of tariffs on Canada/Mexico/China it sort of made sense as a bullying move. The administration at least had the bandwidth to conduct three sets of negotiations.
But it’s essentially impossible to negotiate 180 deals simultaneously. No way does Tunisia get even five minutes to pitch a deal - the simultaneous imposition of tariffs effectively DDOS’d the negotiation team.
I'd love to hear more about what sort of sense these tariffs made at any stage since they were announced.
I’m not advocating for or defending them, but he bullied some immigration related concessions out of Mexico back in February in the first round of this stuff. You could plausibly call it a negotiation tactic. The latest is just pure madness any way you look at it.
The sense is that it's just another day in the life of a cult of action for action's sake.
When the bully gets too ambitious the large number of bullied gang together for revenge, or at least effective countermeasures. The world will route around USA, find they can manage ok without it. The USA will be iced out, lose its reserve currency status, nobody will buy its military technology, making the USA unable to recoup large outlays for ambitious military projects, and the USA will lose its military dominance.
Also, the future of warfare and terrorism is autonomous networks of drones. Mexico and Canada won't be disposed to care what passes through their borders with the USA, and like Zelensky said ... we had the oceans and friendly neighbors, but that won't help us anymore.
EDIT: minor corrections
The USA may get the metric system out of this. The only reason the USA can hang on to its ridiculous "imperial" units has been its economically dominant position.
Imperial units are British, and the United States doesn’t use the imperial system.
Totally agreed! But bulling 95% of the class room... That doesn't work. New alliances would emerge, like Canada and the EU. No more new pipelines for the US but more upgrades to Canadian ports to ship oil to the EU. New economic routes will be created, new partner deals, etc... Without the US.
Trump just locked the US, kinda did the finger to the earth, and hopes people will come begging for trade.
Also for many countries it can’t be remedied because the tariffs are based on trade imbalances (not reciprocal, that is a lie). What does the US make that Cambodia needs/wants? There’s no way for them to close the gap on trade other than to stop selling to the US.
And yet even after stiffing the contractors, the casinos still went bankrupt.
It’s a culture thing.
>Bullying people in inferior bargaining positions has somehow worked thus far.
Has it? To who?
Canada hasn't, and won't, negotiate a single thing. We increased border patrols for a made up problem and thus far it has entirely served to catch guns and drugs and illegals coming from the United States.
The United States has lost tens to hundreds of billions of sales to Canada. They are never, ever coming back.
Trump sabotaged a critical trading relationship in a way that Americans just cannot comprehend, through his laughably stupid "bullying".
Similarly, supposedly Vietnam has come "hat in hand". Vietnam has literally nothing to offer. It has negligible tariffs or blocks on US trade, it just happens to be a poor country. The bullying is utter stupidity.
Mexico thus far has taken being pissed in the face because they're 100% of Trump's purported problem -- from drugs, to migrants to cartels to funnelling Chinese goods, and the likelihood is that Mexico ends up being the biggest beneficiary.
Leopards eating a lot of American faces.
But they were supposed to eat other people’s faces. You know THOSE people.
About a quarter of America (whose vote collectively counts for >50%) will happily suffer if it means that people they don't like suffer slightly more.
Reminds me of this: https://www.bostonreview.net/articles/jonathan-m-metzl-dying...
> Even on death’s doorstep, Trevor was not angry. In fact, he staunchly supported the stance promoted by his elected officials. “Ain’t no way I would ever support Obamacare or sign up for it,” he told me. “I would rather die.” When I asked him why he felt this way even as he faced severe illness, he explained: “We don’t need any more government in our lives. And in any case, no way I want my tax dollars paying for Mexicans or welfare queens.”
> At the most basic level, Trevor died of the toxic effects of liver damage caused by hepatitis C. Yet Trevor’s deteriorating condition resulted also from the toxic effects of dogma. Dogma that told him that governmental assistance in any form was evil and not to be trusted, even when the assistance came in the form of federal contracts with private health insurance or pharmaceutical companies, or from expanded communal safety nets. Dogma that, as he made abundantly clear, aligned with beliefs about a racial hierarchy that overtly and implicitly aimed to keep white Americans hovering above Mexicans, welfare queens, and nonwhite others. Dogma suggesting to Trevor that minority groups received lavish benefits from the state, even though he himself lived and died on a low-income budget with state assistance. Trevor voiced a literal willingness to die for his place in this hierarchy, rather than participate in a system that might put him on the same plane as immigrants or racial minorities.
This is likely why Elon Musk--who in 1989 emigrated from Apartheid South Africa at the cusp of Apartheid ending in 1991--is convinced there is widespread fraud in social security benefits. He never culturally integrated with a post-Apartheid South Africa. He comes from a legacy white supremacist culture that sees non-white citizens getting social benefits as ripping off white citizens.
If anyone thinks a claim that Musk is a literal white supremacist is biased, remember that he did two Nazi salutes at the president's inauguration and endorsed Germany's AfD party.
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Leopards getting purchased instead of Abrams.
This type of comment is boring and doesn’t really advance the discussion.
I used to enjoy HN but it seems to have developed into these sorts of comments quite quickly.
It's not 4D chess. It's not even 1D chess.
Sparking the local industries needs to happen with incentives, not a tsunami.
You can't swap the supply chain to a local-first instantly. Many things aren't done locally. The factory buildings are gone. The labor isn't there or trained. The basic materials aren't local and need to be imported. The machines needed to produce the parts don't exist locally and need to be imported themselves; sending margins to unrealistic numbers and making it a non-starter environment.
What it is, is another flip of the table, an upset, to cause chaos and feed a positive environment for more chaos, which only suits those who benefit from chaos.
The episode of the Search Engine podcast “The puzzle of the all-American bbq scrubber” goes into detail on an example of this, is very interesting and makes the same points you’re making here.
Sometimes your best mates go a bit mad. Cut them some slack.
They will need a shoulder to cry on when they re-discover how well a trade war works out. The last ones seem to have happened at roughly 50 year intervals.
The US seems to be incapable of learning from the past. The worrying thing is that Mr Trump is old enough to remember directly or what his parents told him about the last fucked up trade shit storm or trade war.
You do not get to dictate how the world as a whole works ... ever. It has its own ideas about that.
Even Britain at its most imperious could not do that and the US can't even stop itself from trying to impose tariffs on its own air base in .io!
The best we can do from outside is to hope that the US does not collapse completely and that the downward trend stops at some point. If, somehow this all pans out that we will all benefit or even that just the US benefits then fine. Let's pick up the pieces and crack on.
I do not hate Americans nor their rather odd President. We are seeing change happening. It might be for the good eventually but I doubt it but I'm not an expert. In the meantime I suggest we continue to act as friends towards an old friend. When you go barking mad, you might need your mates to stand beside you whilst you dribble and widdle.
There’s still a way out, the US Congress could convene over the weekend and revoke the President’s ability to impose tariffs. Restore it to Congress as stated in the constitution.
Of course they won’t do that. Sic transit gloria mundi.
I started wondering if there's a way for citizens to push the issue that these tarrifs are unconstitutional. Like a lawsuit that got escalated to the Supreme Court or some thing if congress isn't going to.
Some of the senators are breaking away though.
If the country survives this though the next thing through executive order could be just as bad or worse. There doesn't seem to be any realistic way out of this insanity.
Such a lawsuit has already been filed: https://www.wsj.com/opinion/trump-tariffs-lawsuit-ieepa-simp...
are they unconstitutional? i imagine, like many things, congress has constitutionally saw fit to cede its authority to the executive many many moons ago
They could be unconstitutional. The ability of Congress to delegate its authority to the President does have limits. If companies (the ones in a financial position to do this) sued, they'd have standing and could make their case. Whether it's successful or not would take a while to find out, and this is an instance where judges would likely leave the tariffs in place until the suit was settled in a court (before appeals) if the plaintiffs won.
they could be unconstitutional, but does that matter? the executive gets to enforce whatever it wants however it wants. nobody has to listen to congress or the courts when the executive is all aligned on what theyre gonna do
No, if it were ruled unconstitutional and the President continued to enforce the policies then Congress would be justified in impeaching and removing the President. This is unlikely to actually happen with the current Congress, however.
Could the President remain in office after an impeachment? Ask again in 2-3 years, but today, no. He'd be removed, no federal employee (civilian or military) would continue to take orders from him except perhaps his Cabinet and the DOGE boys. They all swear an oath to the Constitution, not to the man. In 2-3 years, though, could be a different culture.
> I started wondering if there's a way for citizens to push the issue that these tarrifs are unconstitutional.
Anyone who imports and is assessed a tariff would have personal standing to sue, arguing that the tax is illegal. I think there are some procedural requirements first to e.g. formally complain, but the dispute would eventually get its day in court.
However, these tariffs are being applied at least under a thin veneer of law regarding declared emergencies. It's clearly beyond the intent of the law for Trump to do this, but it's hard to draw a bright line between this and (e.g.) ambitious environmental regulation.
> Of course I'm sure some people would claim this is 4D chess
You mean idiots of course.
The "4D Chess" is that some powerful internal people doing a lot of manipulation want America to be an isolated very independent fascist state, and some powerful external people want to destabilize America and reduce its foreign influence. They're both making solid progress towards their goals.
The majority of the American people who voted for the current regime are being taken advantage of but like many they'll progressively more and more identify with wanting whatever outcome "their" team achieves.
> I'm sure some people would claim this is 4D chess
There is some regular 2D chess going on here, but it's not being played by anyone in the US admin. Putin wants to weaken NATO so he can continue expanding. America is a linchpin holding together much of the European alliances and not coincidentally the candidate he helped get elected twice is destroying the US's global standing and weakening the US dollar.
The rebuilding going on in Europe, the increase in European military spending, and the talk about nuclear weapons in Europe is a direct consequence. I don't know if Putin just expected Europe to run around incompetently like the Keystone Cops, but it kind of feels like they're acting quickly and competently without the US.
At any rate, all of this is bringing us much closer to a WWI or WWII style global military conflict.
If that really was Putins intention and doing he makes Trump look like a stable genius. Crude is already down to 62USD/barrel. If this goes on for any amount of time Russia is dead.
"Mama always said ... stupid is as stupid does"
This could lead to the largest "free trade zone" in the world... everyone but the USA.
> Of course I'm sure some people would claim this is 4D chess or what not
No one worth listening to.
>Of course I'm sure some people would claim this is 4D chess or what not but.. sometimes the person doing something crazy is just crazy at the end of the day.
It is crazy and it does have some crazy logic. The US trade deficit is well pronounced only on material goods. If you add services, the deficit is much less, if any. The services are produced by the people and states mostly voting Democratic. So, Trump with his tariffs may succeed in causing the EU and others to retaliate against US services, thus damaging blue states and helping (well in his mind) the red states. Trump already did similar hit against blue states with SALT deduction for example, yet it was just a small preview.
There is most likely a deeper plan behind it. It's not 4D chess, or if it is, it's played by people who don't really understand it themselves, but there is a goal behind it: ending Reagan's neoliberal economic world order.
That in itself is not a bad goal, and it's one I agree with; neoliberalism has increased inequality, put excessive wealth in the hands of a tiny elite, and looted nations of their infrastructure and social structures. Neoliberalism should die.
The problem is that Trump's economic advisors seem to want a new world order where the rest of the world is even more subservient to the US, and they think they can enforce that by cutting everybody off from the US economy, and they'll only be let back if they accept America's new terms.
The problem is of course that the US actually cut itself off from the rest of the world, and as big and powerful as the US is, it's not more powerful than the rest of the world put together. It's not the rest of the world that will come crawling back; it's the US. After having squandered its 80 year dominant position in the global economy.
In the case of Trump, never attribute to ineptitude what can be explained by greed.
He is tanking the US economy so he and his billionaire cohort can buy things (businesses, real estate, stocks, etc) at a low price. Thus amassing more control and capital.
This is how the Russian oligarchy came into power.
Trump's businesses have repeatedly declared bankruptcy. Don't rule out ineptitude.
He bankrupted a casino. I’m not sure how you even manage to do that.
He bankrupted casinos 6 times. Six. Managed to lose money on a money printing machine.
Yes, he is inept. But in this case, he is following a playbook that was deliberately written to achieve the ends that this series of actions is bringing about.
Trump is the actual anti-imperialist, and as he said, unifier. He’s so selfless that he’s putting the US on the line to ensure world peace and unity /s
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Could you clarify for me please why the term globalist would be used instead of global? Like "Apple is a global corporation" is an unarguable fact but using the term globalist for these companies seems pretty strange to me since there are some pretty weird connotations with it.
Are globalist multinational corporations the main ones that get hurt by tariffs?
Yes, in the current American system!
Very untrue. Major corporations can absorb the damage for a few months without raising their prices, since they have more inventory, bulk discounts, etc.
Small companies are often running nearly paycheck-to-paycheck, which requires them to raise prices immediately, making them completely uncompetitive with the large corporations.
The large corporations know this and are happy to keep their prices low and burn money until the small business competition dies, then they can raise their prices.
Do those giant corporations employ any Americans?
Are they gonna struggle to feed their families?
They do employ Americans! And now they will employ fewer Americans! This is bad!
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The US represents a huge proportion of global demand.
These countries can establish as many new trade agreements as they want, but they aren’t going to replace the US market.
And to claim that the US has lost allies is ridiculous. Countries have done far worse and remained allies.
Let’s not overplay the impact here. Free trade is a relatively new thing. We’re just going back to the world the way it was a few decades ago.
China is isolationist and they seem to be growing.
The problem is the USA is a consumer economy which isn’t sustainable. We could get away with it as a tech leader, but with China stepping ahead (Deepseek) china will be a tech leader and manufacturing leader. What will the USA have?
In what plane of reality is China isolationist
They are the least isolationist they have to sell their goods, often by building the roads that carry them.
I think term is protectionist? Not an economist.
We love cheap stuff if the country providing it is weak and not a threat of any kind. Suddenly we don't love good Chinese prices any longer. The massive world wide tariffs are a scheme to restructure the trade order because we have lost control of the WTO, etc to China. We have been so greedy American companies fell over themselves to build factories and joint ventures in China only for China to create competitive companies and force these joint ventures to bankruptcy. Because of the greed, intellectual property and knowledge transfer to China Donald Trump has decided to save the system himself. The stock market being at all time highs doesn't matter if the United States is left empty of capabilities.
Do you think walling their population off from the Internet doesn't qualify?
Economically and diplomatically? No, it doesn't.
Is any foreign Google or Facebook or any social media website allowed to operate in China?
China doesn't allow other tech companies to compete (Google, Facebook, Amazon, etc) .
China is very far from isolationist. They're making huge investments into other countries with Belt & Road, importing huge amounts of commodities, exporting huge amounts of finished goods. Sure, the domestic market is protected, but it's a long way from North Korean autarky, which seems to be Trump's goal.
> China is isolationist
China is what now? China is the biggest trading partner of something like 70% of all nations in the world!
China is asymmetric and unfair, not "isolated". They disallow imports except in a handful of industries they can't replicate yet. That works for China, because: (1) they are huge, and (2) they remain poor, and thus can do the low wage jobs internally in addition to doing them for the rest of the world.
The US only has advantage #1. Though at this point #2 seems within reach...
China doesn't allow foreign businesses to operate. See Google, Facebook, etc
I was looking at used cars on Carmax about two or three weeks ago. I looked again today. They're another $1-2k.
This is the shareholder/political class trying to eat their cake and have it too. Pay people a stagnant wage for 40 years while taking most of the surplus value and dedicating it to equities, then pretend to do something about it, but in a way that passes the buck to the people who have been making a stagnant wage so that the wealthy don't incur actual losses.
Share prices will be brought back up through layoffs.
It amazes me the contortions some people go through to maintain the belief that this administration is competent.
Occam's razor suggests that they just have no idea what they're doing.
I'm fairly convinced it's easier feel like there is some plan, even if a bad or sinister one, than things being in a state of genuine chaos.
You occasionally see the people jumping between different ideas as to what the underlying plan is, once events no longer support their initial idea.
The plan is crystal clear:
1. When equities crash, market liquidity floods the bond market causing yields to drop
2. Refinance debt at these lower rates massively reducing interest burden
3. Cut government spending to cause rates to drop further
4. Reduced rates with a balanced budget results in non-inflationary borrowing and an economic upswing
Along the way, eliminate taxes for those earning below $150k.
If all of the above happens at the expense of equity holders so be it.
This plan has been made clear by multiple people from within the administration (namely Bessent who is one of the greatest macro investors of all time).
Now there’s many things to criticize in this plan (and lots of risk and unknown possible second order effects), but to describe it as “genuine chaos” or ineptitude is strange.
> This plan has been made clear by multiple people from within the administration
Do you have sources?
(I also subscribe to the "genuine chaos" theory, but your comment makes sense)
It's not that crystal clear when the ideas from Stephan Miran to reshape the world order by turning allies into vassals is also part of the plan.
There's a plan, it's to reshape the global trade à la Bretton-Woods, and the Plaza Accords.
The rest is just noise and plausible deniability for people to gobble up and accept to have been shoved into a New World Order.
Let us know what the new plan is when Trump does something that doesn't fit with this.
or they could've... taxed wealth. But the broligarchs who control trump wouldn't be ok with that.
But could they? Don't they all have unavoidable loopholes to avoid paying?
These people all have a shared idea of what they're doing, and since they sit in financially-backed echo chambers, those ideas eventually turn so absurd that they appear to have no idea of what they're doing.
100% agree with this perspective. It’s surprising how few others seem to note this.
Thanks for posting it.
Why would shareholders want to tank the value of their shares?
To some people, you can propose literally any possible political scenario and they'd find a way to say it benefits the wealthy.
Because they're wealthy enough to have separation between their 'existence' money and their 'power and status' money. Tank the country and they get to own a little sliver more of it. The cheese and clothes they buy don't change. Because they've got more than plenty.
No that's not what I mean I mean like if I have 99% of my assets in ...business capital (read: mostly stock) what's the plan? I'd have to front-run, but the wealthy own half of the business capital in the US so that's also incoherent because there's just not that much besides other wealthy to front-run.
If the wealthy wanted to buy something up on the cheap that they didn't own, they'd do residential real estate: something that's majority middle class owned (a fun corollary: property taxes are just wealth taxes on the middle class, the proportion of business capital the middle class owns is teeny). However, house prices have gone in the opposite direction as you'd expect from this theory!
Buy the dip?
Most wealthy people’s wealth is in investments. If the value of the investments goes down, there are fewer resources to “buy the dip.” It doesn’t hold water as a theory. Basically robbing Peter to pay Paul.
They have people whose jobs it is to even out those troughs, and I don't think you realize just how wealthy the wealthiest wealthy really are. Mark Zuckerberg, Elon Musk, and Larry Ellison each have a net worth that is on par with the total gross economic output of a small American metropolitan area.
> Mark Zuckerberg, Elon Musk, and Larry Ellison each have a net worth that is on par with the total gross economic output of a small American metropolitan area.
You're comparing apples to oranges.
Net worth is in dollars, while economic output is dollars per unit of time. The comparison does not make sense.
You didn't even say which unit of time! Hell, I have a higher net worth than the total economic output of the US, given a short enough time frame.
This level of pedantry won't play in reality against someone who just lost everything and is seeking revenge on the tech bros who they perceive as enabling all of this.
I'm sure all those billionaires who paid Trump the $1m to grin behind him are dreading the impact on their groceries and upward mobility like the rest of us. Never forget that Trump and Bezos and Zuckerberg truly think of us first and wouldn't be so antisocial as to trade your family for a little bit more.
see above comment under other thread
I never said they want to.
But as many responses to your comments; there’s a portion of the population who are not invested in the markets this way.
There’s clearly a very different perspective for some, and as per my original reply; it seems many more are worried (rightfully so) about assets others cannot even begin to comprehend - let alone invest day to day, or “spare”, money into.
Trump only owns one stock: a major portion of the parent company of Truth social. Nothing he’s done has caused that stock to rise or steady.
Yeah, the random memecoins he issued and the NFC trading cards were meaningless to him. He's only invested in Truth Social and The Constitution. That's why he's in such competition with the owner of Twitter and would never undercut his social media platform.
What I was trying to point out: his wealth is in real estate and one huge chunk of DJT. No blue chips, no managed funds; nothing that mainstream America and Barack Obama would choose. I contend he attacks the mainstream because of all that.
TMTG down over 10% since before announcement
And what is the solution?
Repeal citizens united, curb campaign and lobbying spending, breaking down of these chaebol-like conglomerates, make healthcare public and tax the rich massively. Something no body seems to want.
Switch to a better voting system to destroy the 2 party system and curb extremists getting into power. At least the state compact voting change to modernize the electoral college.
I’m definitely not qualified to answer this.
I would like to say, from my perspective, that it seems to not matter how “good”, even “exceptional”, business listed on the stock market do; the outcome is hostile and negative to the customer/consumer. Costs have only gone up, dramatically so. In my case; entirely disproportionate to, if any, income increase coming in.
Market does good. Market does exceptional. The experience has generally been negative?
Market does bad? I expect a lot of us can connect the dots, and will no doubt be impacted again.
Maybe the market, in my perspective; is not a beneficial experience.
...or they could've just laid off and gotten even more.
maybe, just maybe, trump and the people around him are actually just crazy and there's no big conspiracy.
It's the simplest explanation and also the one with the most evidence
I don't think of it as the classic conspiracy in the sense of a La Cosa Nostra meeting in Apalachin.
It's more like a shared set of ideas, and those ideas are crazy, at least if you don't have a net worth that is enough to ride out all but the most historic of social upheavals. And part of avoiding that most historic of social upheavals is not laying off people for the sole profit of it, at least not without a good excuse.
Are you claiming that the 'shareholder class' would rather depress the economy and wipe out trillions in shareholder value...over inflating the economy and lowering interest rates?
Every major financial crisis since (at least) the 80's has resulted in a "K shaped recovery" in which the 99% are forced by circumstance to sell off assets to the wealthy at bargain prices.
Agreed. It’s very rare to get a group of shareholders to agree that the price of their stock should go down.
That is what I believe I also just read... I was just telling my girlfriend that Hackernews is the smarter, tech oriented reddit. Better go fix that.
Agree. This sounds like the simplistic "billionaires were the problem all along" take, which is, TBF, not that different from Trumpism. The only difference is the choice of enemies who are responsible for all our problems.
Not "the shareholder class" but the actual super wealthy, those few thousand individuals at the top.
A way I have recently seen this put is that if you have a billion dollars another billion doesn't do that much for you in real terms. But if you're a billionaire who likes to sexually harass your child's nanny, you would much prefer she be desperate and precarious rather than economically secure or with a lot of other viable options. This is one crude example but the dynamic is in play in many other situations.
So idk, it's plausible to me that the class interests of the wealthy extend beyond mere wealth accumulation. I can imagine circumstances where they would be willing to give up some of their absolute wealth in exchange for greater relative wealth.
Ok, I buy the premise that maybe the top 1000 people are super evil mr. burns type folks. I even buy the fact that they would be giving up absolute wealth for greater relative wealth.
But you know the easiest way to do that. Inflation. Expanding the money supply. Increasing the value of their assets at the expense of the working class. not tanking the value of the companies they own!
> while taking most of the surplus value
Just FYI, "surplus value" refers a concept Marx made up that is considered in mainstream economics to be an error in reasoning.
Even making sense of it requires buying into the labor theory of value that Marx took from Adams and Ricardo, but which is not taken seriously anymore.
That doesn't detract from the substance of the point you're making. But it's a little like reading someone say their house is hot because of all the phlogiston. It detracts from the force of the argument.
You haven’t said anything.
Surely this retort sounded cooler in your head?
But also, literally I said a lot. There's enough meat there for someone who hasn't spent much time in the history of economics to spend an entire afternoon going down an enjoyable rabbit hole.
that connection between surplus value and the labour theory of value is fully unexplained in your post, so... you have not said nothing, but you haven't said enough to make your post consequential I'm afraid
Not going to comment on the politics, but I'd point out that recession odds on Kalshi are currently 64% and 58% on Polymarket [1,2]. In other words, recession in 2025 is more likely than not -- though far from guaranteed.
My thought relevant to HN is that either way this is likely to decimate venture capital and startups, at least in the short run. Venture capital funds come from limited partners like pensions and endowments, and the professionals I know are all shifting away from growth stocks and into value, international and bonds. VC is already in a drought (except for AI) and now my guess is that it's going to get worse. So many VCs I know have started only in the last 15 years, so they have never seen a real recession like 2009 while working in venture.
[1] https://kalshi.com/markets/kxrecssnber/recession
[2] https://polymarket.com/event/us-recession-in-2025
Those odds must incorporate some expectations that recent actions get reversed (and quickly!). Recession is guaranteed if new rules stay in place.
It's too late, these actions have shown how truly fragile and arbitrary USA policy is, and extreme anti-current-rules-based-order views are rampant in USA politics. Policy will be volatile and no multinationals or governments will want to deal with the chaos.
Reversing the actions would require either a 2/3 veto proof majority or Trump realizing he is wrong, both of which will probably take a while...
I don't think this is quite true. Because these tariffs have been levied under the guise of a national emergency, they technically need to be confirmed by the legislature within X number of days. The House is playing tricks to not hold a vote, and I'm not sure if they need cloture in the senate, but I don't think they need 2/3 to slap the tariffs down.
That is true. X=150 under the 1977 International Emergency Economic Powers Act, which is the authority under which Trump is establishing the tariffs. After 150 days, someone could file a lawsuit to reverse the tariffs if there has not been any vote.
"None of these trade provisions empowers Mr. Trump to impose tariffs on all imports from all countries based on an arbitrary formula. Section 122 lets a President impose tariffs of up to 15% in response to trade deficits, but Congress must approve them after 150 days. Someone should sue to block his abuse of power."
Source: https://www.wsj.com/opinion/donald-trump-tariffs-disturbance... (https://archive.ph/l2272)
Nope. The rider to the “clean cr” took care of that contingency.
https://www.congress.gov/119/bills/hres211/BILLS-119hres211r... - see page 4
OK but they still just need a majority in the house to undo that? And that is assuming that silliness isn't smacked down in the courts forcing them to hold a vote anyway.
It’s more that it absolves them from having to hold a vote to continue the “emergency”. I believe the emergency act requires congress to vote to continue the emergency after a certain number of days.
But the republicans know that would be embarrassing to hold a public vote to do so- so they sneak in shit like this, to continue to be cowards since they’re too scared to publicly endorse the cruelty.
OK so my original point stands, only a handful of reps need to defect. They don't need to meet the 2/3 veto threshold.
No-one’s seeing the impact yet (except for those who pay day-to-day attention to the markets, but that’s not a huge number of people), because nothing has actually happened yet. The tariffs go into effect on the 9th, and China’s retaliatory tariffs go into effect towards the end of the month; the EU’s retaliation will probably start hitting in May. Over the next month, it is likely that Americans will see prices go up dramatically, and significant job loss is likely. Considering how upset Americans got over expensive eggs, you’ve got to assume every congressperson is about to drown under a sea of angry calls and letters from constituents.
That might actually produce a veto-proof majority for undoing this, quite quickly.
Two thirds of the Senate, only half of the House. Focusing on reversing just the tariffs is a waste of effort. The traditional ownership-class backers of the Republican party need to wake up to the reality that this bankruptcy enthusiast will only bring further destruction and ruin, start leaning on some congresscritters to buck the maggot party line, and depose this America-hating fuck. That's about the only hope of the United States being able to rebuild credibility.
This is basically 1 - P(tariffs get repealed).
Anyone who's played cards or an MMO know those are insanely good odds -- virtually guaranteed!
X-Com: Enemy Known, where you're forced to play with a certain squad leader who is always either out of Time Units, panicking, or mind-controlled, and a 99% hit chance is not really 99%.
This made me laugh.. then cry..
Thanks for the memories!
> virtually guaranteed!
I feel like you might be confused about the statement. One platform gives 58% odds, the other gives 64% odds. This is obviously high, but also very far from virtually guaranteed. In 100 trials, we’d expect recession in ~60 events. There is no secret math hidden here, it’s just that.
GP comment is a joke about gambler fallacy (or also MMO crit, drop, etc rates)
Ah lol, I just totally missed the joke
And if you play Pokemon you know anything not 100% is 50%.
Financial markets are generally better indicators of overall sentiment than betting sites but point taken
Actually, that's not what I've found. When I have compared betting sites like Kalshi and Polymarket to the implied probability of Fed rate cuts in the interest rate futures market, I have found them to match up and move in lock step with each other. (I don't work for any of these companies and I don't use the betting sites myself; just stating my observation.)
That's because there's an easy arbitrage. If the prices get out of line with each other, anyone can buy the cheap one, sell the expensive one, and get free money.
The betting site did predict Trump will win the election.
The crypto betting site users had high sentiment trump would win
If the betting site is used as a hedge, then the equilibrium prices don’t reflect real-world probabilities.
Suppose people predicted that Trump would tank the economy and wanted a few extra dollars in that case. An extra dollar in a Trump world would be worth more than in a normal world, thus distorting betting.
> My thought relevant to HN is that either way this is likely to decimate venture capital and startups, at least in the short run.
Yeah, seemed like the IPOs were really getting going again, but I think that likely dries right up, too.
Unless you figured out how to materialize rare earths out of thin air, or spin up an automated factory in six months, it’s hard to imagine anyone will be looking to give you money.
It's already happening. Klarna canceled their IPO. So did StubHub. I think it's a safe bet that all planned IPOs have been canceled for the time being.
Good. Silicon Valley collectively sold their souls to Saudi Arabia, and put their full weight behind Trump because that’s what Saudi Arabia wanted, and now they are gonna get what they deserve. I hope their wealth is destroyed to the point of needing to care about Social Security and Medicare.
What souls did Silicon Valley ever have, c'mon srsly
There used to be more of an image of making the world better - people were still talking about getting rich, of course, but there was a sense that they were going change the world more positively in the spirit of Steve Jobs’ bicycle for the mind quote, and it seemed like that got dropped in the 2010s when everything got so focused on adtech riches and, later, the cryptocurrency marketing push tried to finalize everything without delivering anything truly beneficial to the users.
2024 paper (40 pages) by Stephen Miran, current chair of the Council of Economic Advisers, which has influenced tariff policy, https://www.hudsonbaycapital.com/documents/FG/hudsonbay/rese...
blog review/opinion, https://simplicius76.substack.com/p/trumps-liberation-day-an...> One of the core tenets of the document is the deliberate devaluation of the US dollar in order to make US exports favorable again.. a country which holds the world’s reserve currency faces a significant dilemma.. to keep its currency as reserve status—and reap all the geopolitical benefits this creates—the country must hamstring its own economic output by running a huge trade deficit, which means the country imports far more than it exports, which hurts—or in the case of the US, kills—domestic manufacturing.
>... if a French person buys a $50K Ford truck and imports it to France, that’s $50K USD that leaves France and goes back to the US, lowering France’s dollar holdings. If an American buys a $50K French Peugeot to import it to the US, he sends his $50K USD to France, which increases its dollar holdings.. to maintain the dollar’s reserve status.. US dollars are constantly flooding the world.. running a massive trade deficit where imports of foreign goods (outflow of USD) far outweigh exports of domestic goods (inflow of USD).
> Why must a country run a trade deficit to retain its global reserve currency status? Because when your currency is the global reserve currency, the entire world constantly hungers for it in order to use it in all the various countries’ international trade between each other. The only way to keep those countries constantly supplied with dollars is for Americans to buy tons of foreign imports, which effectively sends dollars to those countries, since these purchases are made with dollars
So... the problem with the US being the reserve currency is that it makes other countries cater to our tastes because they want our money...?
Yes, abd this appreciates USD, in turn makes production costs in US high, so the rest of the world doesn't buy what US produces.
It is by itself sustainable though as US doesn't only export produced goods but tech etc which the world wants. A valuable dollar funds this tech, in a sense whole world funds the US trch sector.
Not only “in a sense,” but also directly — many of the parent or grandparent LPs to US venture firms are foreign wealth funds, and US tech companies are (by way of our capital markets) held as an investment by many foreign nations (e.g. Norway’s sovereign wealth funds).
So we enrich foreign nations through our technology companies and capital markets. This is to the detriment of our domestic laborers, but it’s a great deal for our top ~30% “laptop class” that earn disproportionately well and have their savings stored in those same markets.
I'm not even sure that it is to the detriment of our domestic laborers. It certainly makes domestic manufacturing less competitive, especially the lowest skill/barrier to entry manufacturing. However, the US manufactures a LOT still, there are loads of reasonably well paying jobs for lower skill worker. I will say that housing and healthcare costs are high in the US but those are not things that are imported.
It also depends on what you think people want. Do they want a vast array of cheap consumer goods and entertainment, or do they want more affordable basics, like housing, cars, and healthcare?
If you go by PPP alone, the US is already in second place [0].
PPP is a horrible metric, but I’m not sure GDP per capita is any better.
[0]: https://en.m.wikipedia.org/wiki/List_of_countries_by_GDP_(PP...
More competitive US manufacturing wouldn't lead to more affordable basics, would it?
Arguably it would. Not my argument, but just listen to any of Bessent’s thinking on the topic.
His argument is pretty circular, which is e.g. not that Americans would work for Vietnamese wages but that we'd produce automation that can do the same work. But in that case: why aren't we doing that today?
The answer is that it's still more advantageous to pay Vietnam to make our clothes.
It's basically just no free lunch theorem: we can afford the CapEx of doing such a thing today precisely because we have better alternatives. If there were no better alternatives and we had to produce our own garments, we wouldn't be able to afford the CapEx to do it in a dramatically more labor-efficient manner.
You can't automate something that you can't already do manually (IMO/IME).
We could already do it, then we automated huge portions of it, then as other economies matured we handed that work to them and developed into a high-margin, high-income knowledge economy.
We can rewind back to a middle income economy if we want, I guess, but I don't see the appeal.
I'm open to the argument that we want some domestic mass manufacturing capacity for reasons of self-sufficiency, supply chain resilience, etc, but just come out and say it: we need handouts to keep certain strategic industries alive despite their lack of economic viability in the marketplace.
I know that a quotation is not necessarily an endorsement, but this is a fantastically short-sighted idea.
> it becomes increasingly burdensome for the United States to finance the provision of reserve assets
How dare countries want pictures of dead Presidents so badly that... they're willing to send real goods to the United States for its consumption, with no expectation of reciprocation.
> and the defense umbrella
... and agree to a de-facto policy of minimal militarization, such that they could not pose a threat to America's global security interests, no matter what it decides those are.
A few hundred years ago, this would look like a tribute system. It's unfathomable that a nation in such a privileged position would decide it's tired of such a systematic set of advantages.
> as the manufacturing and tradeable sectors bear the brunt of the costs...
What's the saying, they've tried nothing and are all out of ideas? Industrial policy is a known and understood thing. The US has this in its defense sector even it doesn't want to admit it, and the CHIPS act was another attempt for the semiconductor industry.
This sort of policy is far more targeted and far less disruptive than blowing up international supply chains in hope of repatriating sweat-shop sneaker sewers and factories for five cent injection molded widgets.
You’re right about all you say. But the US has struggled to implement even the simplest forms of industrial policy because other countries are so extremely price-competitive, and our markets so unbridled, that our “elites” have eroded our industrial base to drive shareholder returns.
If not through tariffs, how else do you force reindustrialization? Industrial policy will always fail if it’s driven by a chimeric political system where both sides are incentivized to grow “The Economy” by eroding domestic capacity.
The CHIPS Act is too little, too late (when you’re competing with a fast-accelerating rival that is simultaneously your largest debt-holder and main industrial base).
US manufacturing is at an all time high in terms of output. Less people are needed in that sector because it's an area where automation is highest. I agree that there is a national security reason to have tariffs to protect some manufacturing, but that should be a precision targeted tariff if anything.
Your level of paranoia and aggression will vary depending on how hawkish you are. If you’re more hawkish you’ll be more aggressive and make your move as early as possible, and you’ll also tolerate a lot more pain to achieve your goal. Bessent seems pretty determined.
I do think it’s clear that our industrial capacities have eroded. Look at our infrastructure compared to China. We lag on every metric: transportation initiatives, building projects, solar production, new energy plants, and so on. Manufacturing is just 1/10th of the “full stack”.
I’m not making any political commentary as to whether tariffs are the right move or not, I’m only explaining the line of reasoning.
but america doesnt want solar production, building projects, or transportation initiatives.
new roads and oil only.
Well, I’ve never said I agree with how the current administration is going about their business. But it’s instructive to understand their perspective.
The problem is that the tariffs can be undone by the next president. I think that would discourage any investment in industry here. Even if this works, I feel like there is now a political commitment to undoing the tariffs.
This is a big problem with the strategy.
Of course, if you manage to dismantle checks and balances, manipulate elections, and stay in for a third term, you fix the problem…
You do introduce a lot of other problems, in the line of "Nice factory you have there, it would be a shame if you happened to fall out of a window."
They can, yes. But this is likely harder than you think. Suppose Trump puts a bunch of tariffs on cheap Chinese tires so that American tires are price competitive again (no idea if this happened, this is a hypothetical). If the next president removes those tariffs it would look like fucking over the tire manufacturers in whichever swing state they live in.
Ya I just have a suspicion that for some industries maybe easily done but for others, four years isn't long enough to embed yourself in an economy to the point where you have political support. It's not a bad idea to onshore some manufacturing. Like targeting the semiconductor and medicine industries should be a higher priority than autos I think. But what could happen is the companies put on a show of onshoring but nothing is really done because they know four years isn't long enough. For those two industries I suspect it's not.
That's only if American tire companies choose to invest as if the tariffs will stick around for longer than Trump does.
This isn't the first time Trump imposed tariffs. Did Biden remove them during his term?
Biden did remove some of them.
> Industrial policy will always fail if it’s driven by a chimeric political system
I think you're begging the question here that a chimeric political system can craft an effective, long-term tariff policy if it can't craft a long-term industrial policy.
In both cases, the operative phrase is long-term. IF they're to be effective, either set of policies needs to look a decade ahead, and an industrial policy still wins compared to shotgun tariffs.
The Miran paper envisions long-term investment in US industry, e.g. see recent TSMC-Intel partnership and $100B investment in US manufacturing, brokered by the current administration.
Didn't Biden make a huge agreement with TSMC, already?
This more than doubles the previous investment, https://techcrunch.com/2025/03/03/tsmc-pledges-to-spend-100b...
Why is it important to force reindustrialization?
Let’s axiomatically presume that vertical integration (of your supply chain, manufacturing, software development, labor force, etc.) is the key to “innovation” in the abstract. You can see this starting to happen with BYD, the Chinese electric car company, for example.
With the above in mind, let’s say your goal as a country is to develop your industries so you can achieve broad vertical integration.
Soft economic assets (financial markets, legal structures, software, pharma, IP, etc.) are easier to bootstrap once you have hard economic assets assets (commodities, energy, manufacturing, transportation, logistics, etc.). If you lose your hard economic assets and only have soft ones, you are at a strategic disadvantage because your opponent (in this case China), can bootstrap their soft assets relatively quickly. By comparison, it will take you much longer to get your hard assets back (through the mythical process of “reshoring/reindustrialization”).
More in my comment here: https://news.ycombinator.com/item?id=43589566.
What makes you think the United States has lost hard economic assets? Also, have you considered that there are different types of innovations, that are affected by the structure of an economy and its research institutions?
The US has dominated radical innovations, China has excelled in incremental innovations. We're potentially throwing away our advantage in the former by decimating our research capacity (something conspicuously absent in your concept of what drives innovation), and there is no clear plan to take the necessary steps to rebuild our capacity in the latter.
I’ve never said I agree with how the current administration is going about their business. But it’s instructive to understand their perspective.
My comments in this thread are mostly informed by everything I read about Bessent.
The Pandemic exposed the reasons why pretty clearly. Having e.g. critical medicines manufactured by a geopolitical and military adversary is a very bad idea.
> unfathomable that a nation in such a privileged position would decide it's tired of such a systematic set of advantages.
That's just the thing, you've got it exactly backward! The US has been "looted, pillaged, raped and plundered by nations near and far," and it's far less rich than it should be.
Icarus is taking flight, the rest of the universe better watch out. And for those stuck getting carried along toward the sun... tough shit, there's not going to be enough time to convince a population of born and bred narcissists that it's really hot up there before the meltdown.
> As global GDP grows, it becomes increasingly burdensome for the United States to finance the provision of reserve assets and the defense umbrella
I don't understand. US share of global GDP is around where it was in 1980, and in 1995[1]. Is Miran arguing that America's "exorbitant privilege" of being the source of the world's reserve currency, literally being able to buy goods from any country in the world with money printed out of thin air, is actually a liability?
[1] Page 8 of his paper
EDIT after reading through Chapter 2 of the paper: Thank you for sharing this. I don't agree with many of the arguments Miran is throwing out so far, but at least it's self consistent.
He is saying:
1. If the US's global share of GDP decreases, then a set of global economic factors will cause the US to keep having to take on deficits to fund the rest of the world's desire for USD (because that is the world's reserve currency). If the US becomes small enough relative to the world economy, then this pressure will cause the US to risk defaulting on its debt.
2. The US's status as the reserve currency issuer means US dollars are artificially expensive. This means that low margin, high-labor industries like manufacturing can't thrive in the US. This is a national security risk because China/Russia can make lots of tanks/drones/etc and we can't.
3. The US benefits from being the reserve currency issuer because it can use that power to project force worldwide and maintain national security.
4. (He doesn't say this, but implies it in that coy way that people who read The New Criterion like to do) #1 is an unacceptable risk for America, and the US should employ a range of unilateral or multilateral measures to reshape the global financial system in a way that devalues the US Dollar, strengthens US manufacturing, and forces US trading partners (esp. other liberal democracies) to subsidize the US's status as the reserve currency issuer, since the US provides a global hegemony that is beneficial to them.
Also, having read portions of the Project 2025 "Mandate for America," it's really interesting to me how all of these right wing thinktank writers (Russ Vought, Max Primorac, and now Miran) seem to share the same writing style.
Is there any relationship between reserve currency, national security and power projection? https://apnews.com/article/shipbuilding-china-united-states-...
> In only two decades, China has grown to be the dominant player in shipbuilding, claiming more than half of the world’s commercial shipbuilding market, while the U.S. share has fallen to just 0.1%, posing serious economic and national security challenges for the U.S. and its allies, according to a report released Tuesday by the Center for Strategic and International Studies. In 2024 alone, one Chinese shipbuilder constructed more commercial vessels by tonnage than the entire U.S. shipbuilding industry has built since the end of World War II.
its kinda funny though, since US lack of shipbuilding is directly the result of protectionist law in the jones act
get rid of the jones act, and you get americans on boats again, rather than trucks
Do the waterways support ship freight anymore? We'd need to redevelop the Great Lakes and riverways I think.
Yes, it is a liability, because in exchange for your reserve currency status you are indebting your country. Gradually, as you outsource more and produce less, your country derives more and more of its returns from soft economic assets (financial markets, legal structures, software, pharma, IP, etc.), than hard economic assets (commodities, energy, manufacturing, transportation, logistics, etc.).
In the long run, this hollows out your industrial base, drives income inequality (because labor is devalued when products/soft assets have zero marginal cost of replication), and defangs your country.
Said differently — vertical integration is the key to “innovation” in the abstract. You can see this with BYD.
With the above in mind, let’s say your goal as a country is to develop your industries so you can achieve vertical integration. Soft economic assets are easier to bootstrap once you have hard economic assets. If you lose your hard economic assets and only have soft ones, you are at a strategic disadvantage because your opponent (in this case China), can bootstrap their soft assets relatively quickly. By comparison, it will take you much longer to get your hard assets back (through the mythical process of “reshoring/reindustrialization”).
All that being said, this is not a commentary on the effectiveness of the tariff policy of the Trump administration.
Thanks for the explanation! Most of what you wrote makes sense to me. In particular, I think the concept that going hard -> soft economic assets is easier than the reverse is really interesting. I'll have to think on that more.
Things that still give me pause:
1. I don't understand why hard economic assets like manufacturing are more heavily impacted by this phenomenon. Wouldn't exporting a $50,000 car and a $50,000 software license have the same impact on the country's current account? I think it might have something to do with the marginal cost of replication point you made, but, for example, the marginal cost of manufacturing semiconductors is very small, and we trail in that too.
2. I disagree with your assertion that 'vertical integration is the key to “innovation” in the abstract.' I think this is often true, because vertical integration enables more control/flexibility and faster iteration, which allows innovation to occur. However, there are many cases (e.g. fabless semiconductors, meat poultry farming, software companies build on the cloud) where the innovation was actually to split the value chain into separate concerns with separate concerns.
1. The further you are up the chain of abstraction, the less “valuable” the export is as a form of power. Think of this as a spectrum between hard and soft assets — if you decline to sell advanced computing software to your rival, you may harm their ability to optimize crop yields, or whatever. But if you decline to sell them steel, or oil, you may decimate their energy supply and bring their economy to a halt.
So, generally speaking, harder assets have more “declination risk” for the purchaser than softer ones, because the softer ones are either a) at the tip of the value chain, or b) easier to clone and replace. China has done a great job of outright refusing US SaaS exports like social media companies, while “stealing” millions of Windows licenses from Microsoft.
Said differently, IP is fragile! If your opponent does not respect your laws, you can’t enforce them. Hard assets are the opposite, because you can more easily cut them off.
And again, they are usually at the bottom of the value chain, so everything else is dependent on them being available. No oil, no cloud computing. Not the other way around.
2. Great counterexamples. I think it depends on what you define as innovation, and perhaps more specifically what about innovation as a concept is important to you.
- There are “open” kinds of innovation that push humanity forward, grow global wealth and prosperity, and make everyone better off.
- There are also “closed” kinds of innovation that benefit only a particular group.
Generally speaking, open innovation is “fangless.” What I mean by this is that it does not greatly increase your geopolitical power. The Dutch, for example, own ASML, but this doesn’t really give them any power, because their tools are relatively “open”. Swiss companies own massive numbers of pharmaceutical patents, but that’s just a domicile on paper. If Switzerland were invaded tomorrow, their patent regime wouldn’t offer much protection.
By contrast, a more “closed” form of innovation (weapons manufacturing being the most extreme example) will dramatically increase your geopolitical power.
Think back to the atomic bomb. Now look to the future. If the US develops killer drone swarm technology, or genome-targeted bioweapons, or whatever else, that means we have the cards.
Once you have world (or space) domination technology, you can disproportionately benefit from it, and you can selectively enrich your allies by giving them access to it, like the US currently does with our weapons systems.
If you don’t vertically integrate, you can’t do closed innovation. And closed innovation is the only “hard money” — and perhaps the dominant power struggle in geopolitics.
> The Dutch, for example, own ASML, but this doesn’t really give them any power, because their tools are relatively “open”.
https://cset.georgetown.edu/wp-content/uploads/CSET-Tracing-...
You prove my point.
Open innovation does not lead to geopolitical power.
There is one exception, which is that you can use your open innovation pipeline as a carrot to recruit intelligent people who then bolster your closed innovation ecosystem. The US used to be very good at this. We are still very good at this, but we're getting worse, and we're progressively more hostile to skilled immigration.
The Dutch and Swiss are very powerful, relative to their size. You can say fantasy things like "if they were invaded tomorrow", but that's not reality.
The US has atomic weapons, but has lost almost every war it has started since having nukes. Having weapons doesn't mean you will be faced with contexts to actually use them. "Genome-targeted bioweapons" is just made up nonsense. Just making up "if" statements of fantastical capabilities that do not have grounding in reality is just that: fantasy. Living in fantasy land is how the richest nation the world has ever seen could lose a war to teenagers in Afghanistan.
The idea of an "atomic bomb" would have seemed fantastical before it was developed. Bioweaponry is underfunded, far more dangerous than you think, and is a hot topic for the PRC [0].
And let's be clear — the US did not "lose a war" in Afghanistan or Iraq. Yes, we had failed pseudo-occupations. That is not the same as losing a war. No country, save perhaps Iraq during the Gulf War, has experienced the force of a modern American army. And if you want know what happened during the Gulf War, look at the "Casualties and losses" section on the Wikipedia page [1]. Spoiler: America won, Saddam lost.
You, and I, and the entire world, have been living under a Pax Americana for the past 70-something years. As that world order fractures, you will see that no country without hard assets and military power, the Netherlands and Switzerland included, are as powerful as they may seem.
Friedrich Merz, the incoming German Prime Minister, spoke very eloquently about this in his first televised conversation. Germany will lead the re-militarization of Europe (disclaimer: I am also a German citizen) [2].
[0]: https://en.wikipedia.org/wiki/Ethnic_bioweapon#People's_Repu...
[1]: https://en.wikipedia.org/wiki/Gulf_War
[2]: https://www.youtube.com/shorts/CBhioWra4rA
America didn't lose the Iraq War to Saddam, it lost to disparate groups of Islamic jihadis who read some Mao.
Losing a war is not body counts, it's a military withdrawal after a failure to achieve objectives. It doesn't mean there are winners.
America went into Afghanistan to destroy Al-qaeda and remove the Taliban from power. At the end of the war, the Taliban were back in power and global jihadism is even stronger and more pervasive than before. That is losing a war.
Pax Americana shows that big militarized states like the US and Russia (before that USSR) do not wield the operational war power they imagine. They lose every war they start (which, again, is not to say there is a triumphant winner).
> And let's be clear — the US did not "lose a war" in Afghanistan or Iraq. Yes, we had failed pseudo-occupations. That is not the same as losing a war.
You do not wage war for the sake of war, war is a tool for achieving political goals. What you're saying is that the U.S. won battles in these wars, but ultimately lost because they failed to achieve their political objectives — which were the very reasons the wars were started in the first place. They lost in Vietnam, Afghanistan, and Iraq. They lost all of these wars.
Yes, that's exactly what a liability is! US currency is an IOU. The more of it out in the world the less value there is in America's domestic assets.
I meant "liability" in the sense of "is the US's status as the global reserve currency, on balance, a bad thing for the US?" not in the sense of "Is a US dollar abroad an asset or a liability on America's balance sheet?" Probably could have used a better word.
Curious on your thoughts in response to my sibling comment :)
i generally cannot go to the US government with a dollar to withdraw its worth in gold.
US debt is an IOU, but USD is just an object that i can barter with
You and I don't get to print money. Other classes do.
The counterpoint to this is that the US as the reserve country means that it’s very cheap for the US to service its debt since it’s holds the money supply. It basically controls its own destiny in that sense.
It is interesting that tech (Nasdaq) is the hardest hit here. The real engine of US exports for recent decades and likely to be a casualty as other countries plan their trade-war retaliation.
And that's not even taking into consideration what might happen in the domestic market should there be a real recession - consumers will cut down their consumption and that'll filter back to lower corporate earnings.
In previous economic stumbles, US exports abroad were able to buffer domestic weakness. Probably not anymore...
Almost all the trade deficit numbers being thrown around by the US administration don't include trade in services which the US generally has a large surplus. A lot of that is very high margin tech SASS/advertising.
If this continues it seems like this could be a "digg->reddit" type moment for US tech. In some ways it is easier for a lot of people to leave facebook than it is for a single person. If you look at gross margins there is a lot of room for competition, though network effects make that competition very difficult. Maybe this is the catalyst for competitors to break in.
>Almost all the trade deficit numbers being thrown around by the US administration don't include trade in services which the US generally has a large surplus.
Then why don’t other countries tax US services? I don’t even hear this from anyone in the media too
Countries can and have under the name of "digital services tax". Generally the rates are low and often only cover a subset of things. The US and tech giants have historically pushed back hard on them. This is a reasonably up to date link to the situation in Europe https://taxfoundation.org/data/all/eu/digital-tax-europe-202... Keep in mind many of those are proposed and not implemented.
The real threat to the US IMO is losing marketshare. The stock market has gotten beat up but most of the real pain for the average person is still off in the horizon. Anti-US sentiment is growing quickly, if we enter a full blown global recession/depression I think it could be a real catalyst for large sudden shifts away from US tech companies.
They do - the EU and UK have 'Digital Services Tax' which predominantly targets US social media giants..
The EU is currently thinking about doing exactly that.
I think that's the nuclear option, at least for China.
Aren't these kinds of services already largely banned in China?
Yes, and that’s always mysteriously forgotten in these conversations.
Historically, China stole US IP and software, like Windows, en masse. Now they refuse to import our main export product — software — while we import their physical products and software like TikTok.
If we were allowed to export our services to China in exchange, this would be a very different geopolitical moment.
> If we were allowed to export our services to China in exchange, this would be a very different geopolitical moment.
No, it wouldn't, just look at how Canada's being treated. The mothership would just broadcast different excuses.
What would it take for Canada to hit 2%?
https://globalnews.ca/news/11050336/canada-defence-spending-...
The US massively subsidizes Canada’s national defense and energy production (crude oil refining).
Thank you for providing me a front-row example of it. There's always one bullshit excuse or another.
In reality, the US suppresses Canada's national defense, because for some weird reason, it doesn't want a heavily-armed neighbor.
As for energy, for every dollar of it that it buys, it derives far more than a dollar of economic utility from it, which is why it's screaming bloody murder at the mere mention of Canada turning off, or adding surcharges at the tap.
All this is why in 2025, one would have to be an utter fool to expect America to keep faith.
In reality, Canadians have bravely fought and died for American interests in the Middle East. Don’t take any of this as my personal view, or as a repudiation of the interpersonal camaraderie that Americans, by and large, still feel with Canadians (although I understand it’s no longer universally reciprocated).
However, as a matter of industrial economic reality, NAFTA likely benefited Canada more than it did the US, and the US does subsidize NATO and Canadian defense by extension. What barriers are there to an independent Canadian defense industry?
(Although I would argue that NAFTA benefited both countries, and we should continue our free trade agreements!)
>What barriers are there to an independent Canadian defense industry?
A defense industry is intertwined with a industry for civilians, for example in aeronautics. Certain nearby trading partners have historically stymied attempts to maintain such an industry.
On the contrary, NAFTA supported Canadian industry! Auto, agriculture, energy, you name it.
I agree, even though I don’t agree with how these tarrifs were implemented I don’t have any sympathy for China. President Trump is absolutely right when he says China took full advantage of the US policies.
What about these tariffs would cause the millions/billions of non-paying users to stop using the free service that is facebook?
What caused people to stop using the free service that is MySpace? What caused people stop using the free service that is Digg? Being free isn't particularly novel. Facebook isn't providing this service out of some sense of altruism. It is incredibly profitable.
What about the tariffs would cause people to stop using it? Because they - along with many other of the administrations postulations and policies - are incredibly unpopular and a complete 180 of US foreign trade policy. Because tech is a money printing machine for the US and tech oligarchs who have largely bent the knee to Trump.
The other side of it is the lost trust in American tech. That’s most prominent in the military debates around whether other countries can rely on their expensive hardware working if they run afoul of American policy, or if the president is looking for leverage to extort a mineral deal, but it’s also highly relevant for the civilian side. For pretty much as long as we’ve had computers, most other countries have trusted hardware made by American companies running operating systems and applications made by American companies. Now everyone has to wonder what kind of espionage or sabotage would be possible if those companies were pressured – or whether the guys standing on stage would even need to be pressured. Suddenly, giving Google the ability to push code onto most of the devices in the world looks less like a security win and more like a risk - and it’s famously hard to establish trust without the rule of law as the foundation. Snowden started it but most allied governments were confident that there were limits in a way which is a lot harder to believe now.
I am expecting that 2024 will be seen as the peak for American tech companies: the longer this goes on, the more competition they’ll have with advantages they can’t match in foreign markets – especially if many of the immigrants who worked at those companies decide to start companies after leaving.
I think since the Snowden revelations it’s pretty clear there is no holds barred in terms of intelligence overreach from practically every angle and state.
What’s happening now, with the tariffs, is really wild (but ultra dumb imho) territory…
Snowden showed that they were willing to compromise allies, but there was still some idea that it was at least plausibly legitimate targets.
Now people are worried that economic espionage or even sabotage are possible. For example, if you are the government of Canada, Snowden annoyed you but you weren’t asking whether Microsoft Update would brick every computer in your government right before a military assault. You probably aren’t thinking that’s highly likely now, either, but you have some intelligence officers analyzing it seriously in a way which would have seemed paranoid a decade ago.
So in short, the trust with tech is already way gone. And should be. For everything else? Well trump just blew that up
Petulantly, I’d observe Trump hates or doesn’t believe in knowledge economies. He’s delivering pain to a lot of people in my circles.
For all that, a strategic goal of ensuring trade is sustainable is probably worth sane discussion.
> Trump hates or doesn’t believe in knowledge
shortened that for you
Tech was easiest to export cross border. You can export tech through culture, and the USA has been a powerhouse of every major technical cultural channel for the last 50 years.
My comment may be naive but digital services do not have tariffs. Given the unpredictable manner of Trumps tariffs wouldn't this encourage more startups and companies to focus on exporting digital services instead of focusing on physical goods? If so there could be minimal increase in goods produced in US and instead US consumers just absorb the price rise of goods with the consequences that arise from that.
This all tariff imbecility created solely by Trump it’s atrocious, still, if EU response is to hit the main players in Nasdaq - where there are a lot of chip producers necessary for the ongoing AI revolution - we are just shooting ourselves majorly in the foot.
Surely there are much better companies for the EU to apply directed tariffs. EU absolutely has their weaknesses, but giving blunt responses (like China just did and put tariffs on everything) is not really our way. Expect EU answer to be well crafted and directed at very specific areas.
> created solely by Trump
Nitpick: No, the entire Republican party is at fault here.
They willfully ignored every warning, and attacked the people giving the warnings. They promoted him, protected him in two impeachments, eventually re-elected him, and actively confirmed his cabinet of sycophants instead of requiring some adults in the Oval Office. Then they took specific steps to block anyone from challenging his "national emergency" against our neighbors, by declaring that the rest of the year simply "doesn't count" for the 15 day timer in the original legislation. [0]
Some Republican legislators may have had hard-choices for securing their own re-elections, but they still chose this route.
[0] https://thehill.com/homenews/house/5189410-house-gop-democra...
I would argue that China is just playing the game and EU should do too while it lasts. No time for sophistication in a street fight, this is not chess.
China has latitude in inflicting pain on its own people that the EU does not, and simply mirroring the US’s tariffs would impose significant pain and will not be the EU’s first choice. It may happen anyway, but it’s a harder decision for the EU than for China.
To me, really, the interesting thing is that _the US_ thinks it can do it. Given how annoyed the American public got about expensive eggs, I really question whether that is true; I don’t think people will sit back and go “cool, I can’t afford consumer goods now, and I’ve just lost my job, but it is all part of Dear Leader’s plan.” The idea, which Trump has actually vocalised, that the American public will tolerate pain seems totally at odds with, well, history.
> giving blunt responses (like China just did and put tariffs on everything)
It's incorrect to describe their response as "blunt". As someone who follows mainland Chinese media I can assure you that their policymakers have thoroughly prepared themselves for years. They even foresaw in 2021, after Biden took office, that Trump would become President again, unless he was assassinated. (Yes, they foresaw the assassination attempts as well; and no, they did not orchestrate these attempts -- if they did, Trump would be dead already.)
The Chinese have much more foresight than you seemingly give them credit for, unless I'm misinterpreting your words (in which case I apologise). On the other hand, European leaders have been extremely geopolitically infantile.
Whatever, I'm in Canada and decided to cut down all costs. Fully expecting a recession as well as a depression.
We thought about getting a new car, but not going to do that until in a few years when car sellers are begging me to take one. Right now they are so arrogant that they charge high rates and popular cars takes months to deliver. I'm gonna sit for another 3-4 years.
Also decided to remove all travel plans from the near future. Purchases higher than $100 are going to require a stamp from the financial department ($wifie). All purchases re-directed to local second hand market as mu as possible. Thought about buying a MacBook for RE but to hell with it. No new phones, no nothing until something breaks and evaluated by the financial department to be "essential".
Fuck it. I just got a small raise and bonus but feel so insecure. I expect to lose job at any moment.
> Fuck it. I just got a small raise and bonus but feel so insecure. I expect to lose job at any moment.
just today 3 people from my network messaged me about losing their job and asking about some opportunity. They worked remotely for American companies (from Brazil).
Yeah, that's the uncertainty we all have to face. I hope they find some local jobs at least.
I don't even know what I can do if I can't find an IT job. I don't have any other skills.
I feel similarly, and I actually just got laid off last week.
However, I don’t think tariffs are going to result in no more IT jobs, I’m sure there will be jobs available, they might just not pay as much as they have.
I wish you good luck. Man I don't know what I can do.
I can't Uber because I only have one car.
I can't onlyfan because I'm not a nude female.
I can't twitch because there are already millions out there.
I don't know what I can do. Seriously.
Iam amazed at the epic levels of ruin one man can bring upon a country and how a whole country of people can elect someone so utterly out of depth. This level of idiocy wouldnt be tolerated in companies if done by an intern.
But what if a significant fraction of the employees believed in some message being spread that intern?
Whether the intern is an inveterate grifter, and/or happens to be personally sponsored by a powerful mob boss, does not matter for the employees latching onto that message.
In that context too, I have a feeling these flaws would be tolerated/overlooked.
Has anyone checked out Fox News recently? There is zero, and I mean zero coverage of the implications of the tariffs. W.T.F. At what point do you go “okay, we’re actually on par with North Korea”?
Freedom of the press means you have dishonest press. Fox News is just ESPN for news consumption. Out of sight, out of mind. If they reported the bad news, these people would change the channel anyway.
This is the payout difference between perato optimal and minmax solutions. Trust is gone so the sum value to all players is lower overall than it was before. The only thing is the rest of the world still has trust with each other so the ultimate looser is just the US. I just wish that the devastation this is causing could only impact those that caused it but the reality is that those responsible, those that voted for this, won't admit or learn from this, or the hundreds of other devastating acts going on, and will keep inflicting this type of pain. We really did have it all.
So honest question: A bunch of people who currently own stock are deciding they'd rather have cash instead -- that much is obvious.
But what exactly are they doing with the cash?
Don't want to hold onto it, everyone says devaluation and inflation is coming.
Bitcoin and gold are kinda flat. I expected them to shoot up as uncertainty hedges. What gives?
Real estate, bonds, foreign stocks, oil. There's a billion options out there. Or they can just sit and wait. Losing for a bit of inflation is better than losing 20-30% in a recession.
> Losing for a bit of inflation is better than losing 20-30% in a recession.
Except you can't time it like that. Inflation eats your savings all the time, while recessions are short.
I have a friend who's been saying "stocks are too risky" since about 2010. He prefers the predictable ~3% inflation...
Gold is going off the charts
A lot of money is moving into treasuries, which is causing the 10 yr yield to quickly drop below 4%.
https://www.barrons.com/articles/10-year-treasury-yield-junk...
AFAIK this is one of the first times that a significant downward move in the stock market wasn't also seen in the price of Bitcoin. Usually they're correlated.
What’s the sample size of significant downward moves in the market during the existence of BTC?
Lookup VUSXX. It is a vanguard short term treasury fund. That's where I put my cash. It is currently paying 4.24% that is state tax free (I live in Oregon).
Unfortunately it is hard to predict if that rate will stay high enough. Previously I had 'cash' in iBonds which for a while paid 8-9% early in the pandemic when inflation was high. If none of the above pays well enough I look into treasuries, or CDs.
Bonds and stocks tend to have an inverse correlation. And, yep, bonds are up while stocks and real estate are down.
That’s why financial advisors tell you to keep a mix of stocks and bonds, trending towards a greater percentage of bonds depending on your risk tolerance and as you get older. (Because bonds have lower returns than stocks, historically, but are also less volatile.)
Often yes but sometimes they both go down. However bonds don't decline as fast. The actual strategy I follow is stock/bond/short-term. The short term is like a buffer currently invested in short term treasury fund. Think of it like a game. If stocks are low then sell bonds and when that is also low then use the short term investment to live on to wait out the market recovery. Also if you are retired like me you would tighten expenses when drawing from the short term during a downturn.
> Bonds and stocks tend to have an inverse correlation.
Careful with this, it's not always true and which kind and duration of bonds is important.
I don't know, but us stocks aren't the only options, they could just be transferring to european stocks.
European stocks where down even more than US stocks today (although not down nearly as much yesterday)
> But what exactly are they doing with the cash?
Buy Treasury Inflation Protected Securities (TIPS) and hold them to maturity. (Don't buy TIPS funds, their value fluctuates based on interest rates. Buy actual TIPS instead, at either Fidelity or Vanguard.)
Trump just said "fuck you" to 95% of the planet. These stocks have a long way to fall.
It sure would be nice to have a competent, organized opposition that does more than finger wag and tsk tsk in a scornful tone
Maybe all the billionaire owners of these stocks can go storm the capital together?
Trump has consistently avoided consequences from breaking the rules.
You can’t fight someone like that within the rules, and right now the left will throw anyone who starts breaking the rules in jail while consistently being unable to hold the opposition accountable.
It’s enforced self destruction.
Not sure what your position is here. “The left is trying to hold people to account, but that makes them less popular.”?
Anyone who says the left is doing anything which requires power should not be taken seriously at all.
The left is people like Richard Wolff, Naomi Klein, Noam Chomsky, Slavoj Žižek, Ralph Nader, Norman Finkelstein, Vandana Shiva, Chris Hedges, Michael Parenti, Cornel West.
The left has almost no organized political power in the US. Except for a few city councils and a couple state houses, it's zero.
When people use "the left" as a catch-all for "not us", some broad brushed painting of "outsiders" this isn't a serious conversation, they're just waving their arms around and making sounds.
Clearly that is not what I said.
The only people the left are capable of holding accountable appear to be other people on the left, or disposable flunkies on the right, so the only thing the left appears to be accomplishing with this approach is self destruction, or clearing out deadwood on the right.
Mostly just self destruction.
What can be done?
Gold is up 14% this year, and up last year as well. A lot for something not inclined to move.
If I had $1000 in cash, and inflation hits 10%, the purchasing power is equivalent to (1000 / 1.1 = ~$909) in 2026.
If I had the same $1000 in stock, and it lost 11% of its value in 2 days, I might worry about it being worth close to $0 by the end of the month.
If stocks hit $0, you probably have more immediate concerns - like where you are going to get your next meal and if someone is going to shoot you for the contents of your fridge.
Stocks could still continue to fall, but they aren't going to slide to zero.
They can fall 90% slowly. Look at south Europe after 2018
I did, and did not see a 90% fall.
The Greek stock exchange went gradually from ~5,500 in 2007 to ~ 500 in 2011.
The recovery started only after 2020 ish. Today it is around ~1,500.
Edit: Oh now I see. I had a typo. I meant to say the crash happened after 2008 not 2018.
Stocks overall? No.
The few stocks I might have specifically invested in? Possible.
Then it'll be a good lesson for you to diversify investments.
You're totally missing the point, but ok.
What was the point?
When faced with "cash in hand that might lose value through inflation" versus "the stocks you currently own at risk of being worthless", the decision to sell is straightforward even in the absense of a next step.
There is always a risk that a specific stock will go to 0. It happens even in good ecconomic times.
The decision to sell is not straightforward, even given the current situation. It would probably be the wrong decision for the average person unless you really know what you are doing.
Under ordinary circumstances, sure.
But right now, sell sell sell is a forgiveable reaction.
> Brazilian hyperinflation lasted from 1985 (the year when the military dictatorship ended) to 1994, with prices rising by 184,901,570,954.39% (or 1.849×1011 percent; equivalent to a tenfold increase on average a year)
https://en.wikipedia.org/wiki/Hyperinflation#Notable_hyperin...
ROTH conversions.
The dollar may devalue, but Apple just did.
I'll give the consensus answers from the trading arena. Each of your questions has a fairly significant long-term backdrop, a medium-term one, a short term one, and an immediate day-to-day narrative. That's fairly obvious, but there is strong confluence now when it comes to some of the things you are asking. And please ignore the grammar - on a phone and banging it out:
International money is now flowing out of US assets. This is a shift from the past few years where the US has seen historic inflows that kicked into overdrive with the AI wave. The pairing of stronger dollar and rising US assets made us equities especially attractive for international investors. This peaked with the US exceptionalism trade during the beginning of the Trump presidency, and now as a response to tariffs you are seeing dollar down stocks down which is making the sell-off especially painful for international participants.
Before the recent tariff shock, those previous narratives were already coming to an end. European equities have been ripping. That's one place where money has been flowing from big players like hedge funds.
A lot of the money has gone into deleveraging. When you look at prime broker data you can see that hedge fund positioning, large asset manager positioning, vol control, CTA, and most of the big market participants have been heavily lowering exposure for a solid month now. Remember that cash can go to lowering leverage.
The bond question is very much in play. You are correct that bonds have not been catching a bid. The consensus outlook was moving to stagflationary, and bonds had other hair like the US still having a lot of debt to term out (and newly issue... deficits are running Huge despite the news of cuts in inconsequential places as far as overall budget), and some more recent theater releases about consumer inflation expectations were frankly shocking, and that feeds into the fed's response function when it comes to cutting rates and helping out a bond rally cycle. This is part of the reason you're seeing money go, well, a lot of other places! Like European banks, gold, etc over the past few months. Now we're in a full on recession trade, and this debate is in overdrive. Fed cuts were increasingly priced in, bonds caught a bid, but Powell spoke very recently and said there was too much uncertainty to even consider cuts which pulled back those rate cut expectations. Opinions that are in conflict are priced into various aspects of the market right now, and this will play out in the coming weeks.
On to Gold. I think it's fine to simplify it and say that Gold sniffed the danger out. It's been on a face ripping rally for a while now, and what you see now is a great setup for the trading phenomenon of "sell the news." Once everybody is long there's no one left to buy and only sellers can come in from there. When markets get hot like that, you get fast money coming in that is prone to selling on small down moves (because they're only joining the bandwagon to make "easy" money, and they're not interested in losing even a little bit of money. They are also often tourists in that they do not have deep knowledge of the investment product so when something like gold selling off when it should be going up happens, there is a fear response.
That said, the gold selloff today is significant. Have heard two commentaries on this, and both agree it's a sign of margin calls and liquidation/sharp capitulation. In extreme sell-offs you see all correlations go to the one, and there is a "dash for cash" to meet collateral requirements and shore up risk metrics. You can also see signs of this in FX markets. Some other commentary from today confirmed stres in treasury liquidity, which is a "safe haven" but also gets liquidated in dash for cash situations.
And this does partially answer "where the money is going". T Bills. That's what everyone wants when battening down the hatches.
Gold is indeed best viewed as an uncertainty hedge rather than an inflation hedge. That's a good observation. It's really a hedge against systemic fragility though things like people being unsure of Central Bank policy... Tariffs.... Etc. It's not exactly a day-to-day extreme market volatility hedge. Some of the cash is going literally into hedges! Volatility itself is hugely being bid up right now. That stuff is even better than cash because it has negative correlation to risk assets.
Stitch everything together and you get a pretty good backdrop for the current sell-off. It even helps explain things like the 2-day back to back action, where day one was a huge selloff but it was somewhat orderly because everyone was coming in with fairly low exposure, so panic didn't really set in until day two (and he's selling feedback loops often continue until liquidation is forced, which marks a bottom for buyers to take a stab at. Nobody wants to step in during a steep grind down of price).
Relevant charts. Not all of them have the labels in-chart, but it's all significant data. Ex: here's a real data point that isn't in the charts below, but is a typical example of this sort of data. "High volatility is expected to generate 80 billion USD in equity supply from macro strategy funds over the next week if conditions continue": https://ibb.co/album/KNBSw2
Not bad for just "banging it out on the phone". Thanks!
Interest rates are high enough that holding cash isn't terrible, particularly if you expect the administration to reverse course on tariffs yet again.
Powell said the Fed isn't changing its plans to keep combating inflation from Trump's first term.
TLT is worth considering, though maybe we'll see Elon decide the treasury will default on bond payments.
Inflation only happens if the US starts paying down the debt -- locking up the tariff money in interest payments. Otherwise, there's fundamentally no increase in the supply of money. I'm guessing there still will be inflation for consumers, especially seeing as most don't have the funds to invest in bonds.
I’m pretty sure the conventional wisdom suggests inflation happens when countries don’t pay down their debt.
Increased money supply isn’t the only cause of inflation (e.g., stagflation). Uncertainty about how to price goods—especially for goods in the middle of supply chains—could cause supply disruptions. It’s a self-inflicted version of the Covid supply disruptions.
On the bright side, this may be a good opportunity to convert 401(K) or IRA funds into a ROTH account.
Why?
You owe tax on the difference between contributed dollars and converted dollars. So if you contributed $100 and it historically had grown to $150, you would owe tax on $50 to convert.
If that $150 in value is suddenly $120 instead, your tax bill to convert is significantly cheaper.
Rebuy equities/reinvest dividends at reduced prices, pay taxes now, enjoy tax-free growth. If the current admin is serious about trying to get rid of income tax, then that would eliminate a major advantage of trad vs roth.
Because you have to pay taxes on it when you convert, and you will have less to pay taxes on if you do it now.
ROTH contributions grow tax-free. Doing your conversions now allows you to buy equities are they're currently discounted prices, maximizing your potential long-term tax-free gains.
Especially if you hit the RMD threshold in retirement. Even more important is how RMDs affect Medicare premiums(1). The best advice I have is to avoid RMDs as much as possible since they can/will affect other parts of your retirement strategy. Thus, converting to ROTH today may save you lots of cash in the future.
(1) https://www.fedsmith.com/2024/10/23/rmds-are-silently-increa...
Lower absolute taxes
A simple but profound idea that has stuck with me from the days when I religiously listened to The Macro Tourist's podcast: who's on the other side of the trade? In order for AAPL to drop 7% today, someone of course had to agree to sell their shares at a price that is 7% lower than yesterday's. But perhaps more interesting, someone else agreed to buy the shares at that price. Who's buying here and who's selling? Who's more composed? What is the investment timeframe of the seller versus the buyer?
It takes two to make a market.
Presumably most 401(k) contributions and dividend reinvestments happening automatically create a large volume of buying power.
While some people freak out, call an agent, sell stocks, I'd imagine this is mostly actively managed (by humans and software) investments doing the selling.
Beyond that, when you sell something, maybe it felt like it was worth $10. But you offer it for $9.95. Maybe someone buys it, maybe not. Maybe you drop it to $9.80? Then someone buys it. Rinse and repeat until the price is now $8.
When you sell a "$10" stock, if you say you won't sell it for less than $10, you might not be able to do so. It's all more complicated than that, and there are limit and market orders, etc. that affect how much the price will vary from when you initiate it.
But if you're like "hmm, this is horrible news for the economy" you probably press the "sell as fast as possible" order, and your $10 stock might actually sell instantly for $9.50 because for someone with a "smart" algorithm, $9.50 looks pretty good when the stock still seems valued at $9.75+. But then a few million shares sell at prices lower than $9.75 and now the same system that thought it was a good idea to buy at $9.50 thinks it's a good idea to turn around and sell it... for even less.
Asking just for me to learn:
Does it really need someone on the other side to buy or can it be like other markets (consumer goods lets say) where you can set the price lower and not necessary have a buyer. You just announce it that you are willing to sell 10k of this type of share at 200 or lower up to 190. Then someone else seeing this says we are also willing to sell 20k at 190 or 180 ? And so even if no one bought these shares now their “average” price is not 200 but 190ish?
Sorry if the scenario sounds stupid and it is far away how the shares market works.
You are correct -- the (bid,ask) price can change with no trades taking place.
GP is hinting at a common fallacy -- I call it the "strong hands fallacy." It's common in crypto: "Every time the price of $fartcoin goes down, it's moving from weak hands to strong hands. Price drops are just more reason to be bullish!"
There was widespread institutional selling, and typically dip buyers are non-professional traders who underperform the market [1] [2]
At the end of the day, does it really matter who's the marginal buyer and who's the marginal seller?
Do we learn anything about the value of Apple Inc by learning that the marginal buyer was an HFT hoping to offload inventory in 500ns, a mid-frequency shop who will hedge delta at end-of-day, or a value investor who will hold for a lifetime?
I claim any such information would be rapidly priced in by flow-analysis algos, and thus reflected in the closing price.
[1] https://www.reuters.com/markets/retail-bought-stocks-largest...
[2] https://www.businessinsider.com/retail-investors-buy-dip-tru...
Some people have an obligation to sell (option contracts must be honored, ETFs must be rebalanced, etc.) and this creates liquidity.
Some people also have a lower risk tolerance (or want the money to put into something with more predictable returns like say treasuries) and want out now.
https://archive.is/XMnlS
Tech really needs to fall another 50% at least. I think when the big AI bust happens(unless it's happening now), we will see that
With this kind of free fall it's going to trigger a lot of busts.
The last market crash was caused by the very economically unnatural COVID and the global response to it. This one is caused by insane foreign policy. Both of these are weird recessions because they don't have anything to do with real market conditions or even stupid pathological market conditions (housing crash).
The covid response of printing trillions of dollars and other currencies around the world meant that there was way more money and it had to end up somewhere.
There's just way more money to invest than there are productive companies to invest in. So you get crazy P/E ratios in the best bets available.
The "fix" is to inflate that money away (or maybe to tax it and pay down deficits?) but it's not an easy monetary policy or a familiar one.
There is away out of this mess: A U.S. Senate bill that would require congressional approval for new tariffs gained more Republican support on Friday [1].
Trump is not going to back down since that will make him look like a loser. Neither is China. But GOP can help Trump out by creating a new law that automatically expires all new tariffs after 60 days unless approved by congress. This will let Trump extricate his head from this mess without losing face.
[1] https://www.reuters.com/world/us/more-us-senate-republicans-...
To be clear, this is going to have to pass the house. Then, Trump will veto it. Then, the senate will need 16 Republican senators (30% of the party) to vote against it. And it's still a toss-up if Trump will even obey it or if he'll executively order customs to continue the Tariffs.
So unless Republicans suddenly grow a spine, which is unlikely given their current strategy is "hide the stock ticket on Fox news" and pretend glorious leader is a genius, this is a token effort that will do nothing.
And even if the tariffs are revoked, we've destroyed our reputation. You think countries will want to continue on like nothing happened after this? The only thing that might stop the impending collapse of the US economy as 180 nations divest from the empire we built is if we were to impeach and convict Trump immediately and set an example that this economic chaos will not be tolerated; that allies are not fair game to bully.
But, honestly, I think that ship has already sailed. It needed to happen immediately, not after a week of testing the waters.
My assumption is that Trump understands what a mess he has gotten himself into and wants to extricate his head, without losing face. Congressional action will allow him to do that because he can blame congress for undoing his tariffs which was a good idea all along. This is the only way out.
You are laboring under the dubious assumption that Trump gives any fucks about the US economy. (And that, even more dubious, that the real-life congress will manage more than bloviation on TikTok.)
This is a pure klept move. Who knows if he understands that the US manufacturing iPhones and cars-with-no-foreign-parts isn't possible in his lifetime (or most of ours), but regardless, he understands that this is his chance to finally get rich for real after all that cosplayin', and doesn't need to understand the rest.
I don’t think that’s a fair assumption.
I don't see what would lead you to this conclusion. Multiple members of his cabinet have direct said the plan will do this, so it's not like they don't know they're collapsing the economy. His secretary of commerce (?) has published papers about wanting to remove the US dollar as the reserve currency and destroy our status as the hegemon in pursuit of us becoming a T-shirt sweatshop nation instead of an infotech powerhouse.
Heck, even Musk accidentally said the quiet part aloud on Twitter about burning it all down.
I absolutely agree that impeachment and conviction is the only way to restore the world's trust in the US.
If this bill passes and Trump vetos it, don't you think that could raise the odds for a 3rd impeachment process?
In my opinion? No, and precisely because you used the words "third impeachment". I have come to realize there simply is no bottom. He was truly right: he could shoot someone in broad daylight and he wouldn't be held accountable.
If Republicans weren't aligned with Trump, it wouldn't have been a 51-aye vote. If they actually cared, they would be on the news discussing historical precedent and impeachment right now. Yesterday they were praising him on Fox, calling this a genius plan that will save America while denying the market collapse is even haplening. They, again, talk of a third term for glorious leader.
The party has become fundamentally incapable of admitting they are wrong about anything to the point that they would rather descend into a fascist regime that disappears political opposition to El Salvador prisons.
Trump would surely veto, and I currently have doubts there will ever be enough Republican votes to override
I’m tired of winning boss.
- Xi Jinping, 2027
This is an inherently political subject, but I would appreciate a dispassionate argument explaining how this could be even remotely good for the U.S.'s economy in a way that is light on MAGA ideology and doesn't simply claim the overwhelming majority of economists are dumb. I'm simply not seeing even a glimmer of a possible upside right now. I see even less possibility of an upside for those of us North of the border or pretty much anywhere else on the globe.
My best understanding of the administration's psyche is that they're determined to have more manufacturing happen in the US - regardless of the economic impact.
It still doesn't make sense though - there's a reason sneaker makers like to have kids in places like Vietnam make shoes for a few cents per hour. It's because no one in the US would work gruelling hours for such little pay!
POTUS wants to 'level the field' but I'm not convinced it's dawned on him that as leader of one of the wealthiest nations on Earth, 'levelling' will mean the US getting poorer.
More manufacturing will move to the US, but they're about to get a real-time lesson in Econ 101 in the form of the destruction of their country as they abandon comparative advantage and achieve autarky, joining the illustrious club of North Korea.
Also would require near-certainty that these conditions will last far, far longer than 4 years (or 4 days, per earlier tariff tantrums). Especially for the most important industries like semiconductors, steel, oil, which require massive capex.
You said the most important part. Trump and Co believes that a car or semi factories grow overnight like mushrooms in the forest. If a CEO of a semiconductor company would decide to start building a billion dollar plant in the USA, which would take 6-8 years to built, knowing that new President from the other much different party might take over in less than 4 years, that CEO would probably endup being sued by shareholders for jeopardizing the company's bottom line.
Noone in their right mind will start building factories in USA because of temporary tariffs that all might go away with an executive order and a stroke of a pen comes January 2029.
Or might go away in May 2025, after whatever foreign leader or competitor bought enough $TRUMP, or rented sufficient luxury hotel rooms.
They used to work that way in the US! Then came the labor protections.
Labor conditions are a prisoners dilemma. Individuals in a location can’t really choose to opt out of poor labor conditions if that is what exists there. That is why it took a lot of activism in America to change the labor conditions.
So right now we are exploiting people in places that don’t have the same protections. The comparative advantage of those places is in allowing suffering, not in the people actually being more okay with the conditions.
Yes, that's why Florida is considering bringing back child labor - https://www.cnn.com/2025/03/25/business/florida-child-labor-....
no, they just like tariff. Listen to trump: he thinks the trade deficit is the fiscal deficit if you listen to the words he actually says
> It's because no one in the US would work gruelling hours for such little pay!
There are entire towns in the US where nearly everyone is unemployed since the manufacturing dried up.
I would happily pay a few more dollars more per sneaker if it meant those people could have a job, and it meant my purchase went toward making someone's life here better.
> levelling' will mean the US getting poorer
It was never about being rich (maybe in a silicon valley bubble it is) but these people need jobs not only to live but for personal fulfillment. The fact that you are contributing positively to society.
Not everyone wants to collect welfare or unemployment and do nothing for the rest of their life. It causes serious mental health issues and why the 'opioid epidemic' has ravaged these small former-manufacturing towns.
People are hungry for work because they want to be part of society.
I find it hard to sympathize, given how much work there is in this country.
People cross the southern border illegally without knowing the local language and with close to no skills and still get jobs, build families and give a chance to prosper to their offspring.
I'm not saying there's no hardship anywhere in the US, but rather that the US has so much richness as a whole that these towns you talk about should be going out of their way to find job elsewhere in the US.
Its how urbanization works and has been the trend for a long time. There's no reason why every geographic location has to have a booming economy.
Though every human should have the ability and right to move where the economic boom is happening.
> People cross the southern border illegally without knowing the local language and with close to no skills and still get jobs, build families and give a chance to prosper to their offspring.
Those people work jobs with illegally bad working conditions and illegally low salaries.
Most don't, though. Most even pay taxes, though they don't receive welfare benefits of those taxes.
I think you can make an argument that the minimum wage is too low, but it's hard to argue that the salary they take is illegal.
The problem is more that the companies want to keep their insane profit margin. They could produce in the US, pay workers more and sell for the same price.
But thats less revenue for the company. Less shareholder value. Less bonus for CEOs.
The problem is the hyper capitalism which we have for the past 50 years that every company needs more and more profits.
You plan to retire. Do you invest in something growing at n% or n+1%? If your company can't get a similar return, your company doesn't get investment.
It isn't "hyper" capitalism, it is just capitalism and competition for investment.
The boundaries of what is politics and what isn't is difficult to suss (for me) these days. I personally do not believe this is good. But I have a theory on why those that do think so.
I'm 54. It follows that I see a number of people my age. I'm churchgoing, as well as involved in a number of clubs (pilots, rowing, legos, etc). So I get to rub shoulders with a decent amount of people. And especially a bunch of older people. Our parents are aging.
I'm just beginning to see how hard these years from here on out have a number of difficult challenges. I've begun writing myself notes that I hope will help me navigate the years ahead. One of the key issues is feeling relevant still. As well as losing your competitive edge. Your formative wisdom is being invalidated and eroded constantly.
Couple that with a period of euphoria that was experienced as post WWII prosperity followed by the cessation of the "cold war" and a surge in population, and you have a group of people that are more in their own generational bubble than historically. There's enough peers to make you feel like you're in the majority. I think many of these people feel like this is good, because it feeds the need for relevancy. It's not uncommon for older people to lash out, somewhat foolishly, as they transit these years. And as cognition decreases, it becomes easier to game people in this age bracket (unless someone has a better explanation for why older people are the best target of scams).
As I visit with many of the older genrations (not all of course), their justifications, when pared back often come down to "this makes me feel relevant again". And attempts to restore "the narrative I have in my head about how life was in the good years".
Just some rambling thoughts, about why some people think this is good. It's less about the money to them, and more about a hope of something gained. Not unlike a terminally ill person blowing a wad of cash on something that they would never otherwise have justified.
It is sad, that it comes at the expense of the younger generations. It breaks my heart actually.
I was shocked to learn that 75-year-old white men supported Kamala Harris at a significantly higher rate than 20-year-old white men: https://www.nytimes.com/2025/03/18/opinion/ezra-klein-podcas... (search for "75-year-old white men").
That may be, but if you run the numbers, the older generations overwhelmingly put this administration in power. If for some reason you weren’t able to vote after 65, it would have been close. And if you weren’t able to vote over 55, it would have gone largely the other way.
Hey thank you for posting this comment. It’s a very interesting perspective!
I wonder if a factor is that many of these older folks don’t have grandchildren to the extent older folks of previous generations did.
I don’t know what effect that could have but I know it’s a feeling that troubles many baby boomers. They thought their children would have children by now and in many cases that’s not happening. It can lead to a great deal of sadness.
In the long run it could lead to more fair trade deals.
Today’s episode of Newshour at the BBC World Service had a conversation between a BBC journalist and a German CDU politician where they talked about how the tariffs on cars from Germany entering America has historically been lower than the tariffs on cars from America entering Germany. The CDU politician was telling the BBC that he hoped maybe a resolution for all of this would be both America and Europe lowering their tariffs to zero.
That was the hope of that politician in the long run though. In the short run the politician was in a sad mood because he felt things economically are going to be bad for everybody.
I think that is unlikely. Trade deals require precitability and trust. Nobody wants to sign a trade deal if it might not be worth the paper its written on next week.
I would expect that it would make future trade agreements more "unfair" to usa because other countries will price in a risk premium to cover america's unpredictability.
e.g. The U.S. has now violated CUSMA/USMCA/NAFTA 2.0 to an egregious degree, and this treaty is due to be renegotiated next year. As an unreliable partner, the U.S. is going to have to give up some serious concessions to Mexico and Canada to make the treaty happen. It's no different than applying for a loan with a low credit score. If you're a higher risk, the rates will be unfavourable.
These tariffs don't create an incentive to strike fair deals because they're not based on trade barriers, they're solely based on trade deficits.
Trump himself has said the tariffs are to raise revenue in order to get rid of income and corporate taxes. But now they’re also a negotiating tool to eventually remove all tariffs with our trade partners? That makes no sense
What is a fair trade deal? Levying a 40% tariff on a country that had a 1.5% tariff? There's not much to gain and a LOT to lose
I think in theory it forces the middle class to buy American due to tariffs, which builds a more sustainable lower class at the expense of the middle and lower upper classes.
I think it’s still an overall net negative (dramatically) that sees us become overall poorer and less influential, but I would guess there will be more factory sorts of jobs.
We got the factory jobs already: https://home.treasury.gov/news/featured-stories/unpacking-th...
The deadweight losses from this trade are staggering, several percents of gdp that'll mostly hit people who consume imports (mostly low-end goods so probably poor people)
If American made prices did not increase too match tariff adjusted foreign made prices that logic would hold. But we know from recent and not so recent history - American made prices some increase, even if they are not impacted at all.
It is strategically beneficial, for trade agreements, diplomatic leverage and in international conflicts, for a nation to have a strong industrial base, in other words an economy that creates and exports actual physical goods. Tariffs level the playing field in our own consumer economy for American made goods, because without them American manufacturing is competing with countries where labor is absurdly cheap.
American manufacturing by value is at an all time high. The jobs went to automation.
My thought today was that aside from the stocks crashing, and aside from any realistic possibility of magically minting new manufacturing facilities, you'd force the price of imported products up in the short term, and prices don't really go back down, so after they go away you'll hypothetically be selling the same products at higher prices that people are now used to, and nothing else needs to happen functionally to increase efficiency or build them domestically. 1) Increase cost of selling imports 2) Crash stock market 3) Buy stocks 4) Remove tariffs 5) Profit
But I don't know wtf I'm talking about.
> This is an inherently political subject, but I would appreciate a dispassionate argument explaining how this could be even remotely good for the U.S.'s economy in a way that is light on MAGA ideology and doesn't simply claim the overwhelming majority of economists are dumb.
The slim hope to a voting bloc in the Upper Midwest that maybe, somehow, this will bring back manufacturing.
They've tried everything else; why not this?
We can't simply legally punish the people who shipped the factories off and drove the region into despair, so why not tax the stuff the factories made overseas as a part of the trade-off?
I'm not saying it's a good idea, I'm saying this is their logic.
I’m from Southern Ohio which was not hit as hard, but I know the attitude well. I call it “rust belt rage.”
I remember during the first Trump election hearing quotes like “I hope he does as much damage as possible” and “I can’t throw a bomb into the White House but I can throw a Trump.” Lots more like that.
The attitude in that region of the country is absolute seething rage. A lot of people from Northern Ohio, Western Pennsylvania, Michigan, etc. would be gleeful if they saw people hanged. It’s that kind of rage.
Imagine what the vibes would be on the West Coast if there was a huge set of policy changes that decimated and liquidated the high tech industries. All those software and engineering jobs just vaporize in a span of 20 years. Places that were once the wealthiest in the country look like failed states and war zones. Everyone who can leave leaves.
Then the media makes you the butt of jokes. Calls you “flyover country.”
Oh, I'm from Kansas City. I get it, and like Southern Ohio, we weren't hit as hard, but I heard the same comments.
> Imagine what the vibes would be on the West Coast if there was a huge set of policy changes that decimated and liquidated the high tech industries. All those software and engineering jobs just vaporize in a span of 20 years.
> Then the media makes you the butt of jokes. Calls you “flyover country.”
The people in your analogy are not the same types suffering from rust belt rage. One group is willing and very wanting to learn and grow and build, and the other is openly antagonistic to any sort of growth.
That's why they became flyover country. I don't think that would happen on the west coast if your scenario were to occur because of the different culture.
What can I say except: I don’t buy that at all. I lived in Los Angeles for 8 years and Boston for 5. There are some cultural differences but the people there are still just human.
When a region and a culture declines, it gets more nostalgic and reactionary. The arrow of cause and effect goes that way. Places like Detroit were innovation centers and much more culturally open before their entire economy was rug pulled.
If California were rug pulled you’d end up with a culture that lives permanently in the shadow of its boom times and rages at the world.
LA and Boston are both centers of creativity, curiosity and learning, without religion encroaching on every day life of guiding peoples thoughts.
None of that is true for the rust belt or bible belt.
Damn. Because California has been rug pulled. The underground weed economy was responsible for hundreds of millions of dollars in black market revenue. That money's now gone to Oklahoma because the legal cannabis laws are more favorable there, leaving a absolutely gaping hole in California's economy that can't be replaced by growing alternative crops like saffron, or, in keeping with the illegal theme, poppies/heroin or coca/cocaine. Because it was illegal before legalization, there are scant few stats on just how large it was, but where'd growers used to get $4,000/lb, they're now getting $400/lb. (I have this conspiracy theory level theory, in that San Francisco used to be home to illegal grow ops which forced pg&e to upgrade transformers and substations to support pre-led grow lights, which were massively power hungry. since that power is now no longer needed because those grow ops are no longer viable thanks to legalization, but the upgraded substations remain, the rise of electric cars isn't quite the emergency it should be.)
So much of the arts and Burning Man and entire communities in the Emerald Triangle were propped up by that money, and it's gone.
Time will tell how things go for California. I remain hopeful, but there's just no real data about the black market thanks to its very nature, so it's hard to know just how large that gaping hole is.
That’s fascinating. I always figured that real estate hyperinflation just drove all the arts and cool counterculture stuff away.
The upper Midwest had a lot of culture too. Disco (Chicago was a big place for that), Motown (named after Detroit), techno (also Detroit), industrial (Cleveland / Akron), and house music (Chicago and Detroit) all either came from or had large contributions from what is now called the rust belt.
That whole region used to be solidly Democratic. It drifted a bit R in the 90s and 2000s until Trump flipped it with one word: tariffs. Another quote I remember from a guy in Michigan in 2016: "when Trump started talking about trade... I'd die for this man. I don't care what else he does."
Different people have different reasons for supporting a politician, but for these people it's... I'm not even sure it's hope at this point. For some of them it's revenge. They feel lied to and betrayed.
I guess that's part pretty different from the old Cali weed industry. Nobody promised them anything. For these people the Democrats told them NAFTA would bring jobs.
I'm from between Cleveland and Youngstown. They could have kept voting for Traficant and Cafaro if they wanted to give middle fingers and throw bombs.
> Imagine what the vibes would be on the West Coast if there was a huge set of policy changes that decimated and liquidated the high tech industries
We had large inflation caused by Joe Biden's industrial revival acts (spurring a massive increase in factory construction (see https://home.treasury.gov/news/featured-stories/unpacking-th...) that led to interest rate rises and a TON of tech layoffs! People on this forum should be aware that the chain of causality runs in that direction.
And are you saying that the US media doesn't pillory Californa as a liberal hellhole? I actually don't even know what distribution of media you consume that doesn't handwring over the morality of liberals.
> that led to interest rate rises
Interest rates didn't rise because of industrial revival acts; they rose because they had been artificially low for a decade and someone had to throw water on the economy to cool it lest hyperinflation hit.
> and a TON of tech layoffs!
The nature of tech layoffs and what has happened in the Midwest over the last 50 years are completely different. When a guy is let go from Meta, he's let go from a job that earned him well over the median salary for Americans. Provided he hasn't blown it out his ass on courses at microdosing at Esalen, he should have something in savings. He has resources. He has connections. He has opportunities. When you work in an area with that much money in it - remember, Larry Ellison, Elon Musk, and Mark Zuckerberg each have a net worth that puts them on par with the yearly gross economic product of small American metropolitan areas - you can recover.
When a guy was let go from an automotive parts supplier in Michigan in 1988, he's making near that median salary. He has far less cushion. The nature of his work does not allow him to simply open his laptop and toy around with new business ideas, or open a startup; his former employer was the employer in town. When it went under, the town went under, and he had no way to get out.
And that's before accounting for what the rusting hulks of machinery did to the town. Chemicals dumped before regulation poison the water and soil. Major swathes of real estate needing millions of dollars in cleanup before any real redevelopment can occur. Maybe the Feds will get around to it with the Superfund in a generation or two; the developer from back east sure as hell isn't going to pay for it. By the way, can the town - which is already short on funds - give them tax increment financing for that redevelopment? They'll never come out ahead otherwise. You can't just convert a former brake pad manufacturing plant to lofts like you can with a former tech headquarters in San Francisco.
> And are you saying that the US media doesn't pillory Californa as a liberal hellhole? I actually don't even know what distribution of media you consume that doesn't handwring over the morality of liberals.
... where are you getting that from OC's comment?
> Interest rates didn't rise because of industrial revival acts; they rose because they had been artificially low for a decade and someone had to throw water on the economy to cool it lest hyperinflation hit.
I hate "artificially low" why artificial? What makes something artificial and what makes it real? In economics, there's an idea of a natural interest rate: the interest rate which is the lowest under which inflation will not occur. That has been trending lower, see https://www.newyorkfed.org/research/policy/rstar. It absolutely is not artificially set anywhere: the fed doesn't set the natural rate of interest, it accommodates it with a policy rate and has to deal with a 12-18 month lag for their policy to be effective (a fun quirk - there's a cool badeconomics thread on this) which is why it was hard to deal with inflation caused by the russian invasion: you can't predict that 12-18 months out!
> The nature of tech layoffs and what has happened in the Midwest over the last 50 years are completely different.
No data backing this up.
> where are you getting that from OC's comment?
OC talking about media calling them 'flyover country' as if it matters / is somehow out of bounds conduct at all.
> I hate "artificially low" why artificial? What makes something artificial and what makes it real?
When people have cheap access to money, they spend it. When they spend it in such a manner that it outpaces the ability of the supply side to, well, supply, the result is inflation. And that's what we saw in '21 and '22. You had someone handing out PPP loans like candy and forgiving them outright, you had stimmy checks (that weren't backed by anything real, but that's another story), you had people sitting around looking for stuff to pass lockdown with, etc.
So at that point, by definition, we're lower than the "natural" interest rate. This showed that a lot of businesses in the tech industry couldn't survive without dirt-cheap money to give them ever-increasing amounts of runway. You can't just hyper scale like Uber when borrowers expect the rate of return dictated by the now-higher "natural" interest rate.
> No data backing this up.
Besides decades of economic, social, environmental, and political events and trends, you're right. Wanna have a bottle of water from Flint, MI? I can pull one out of the cellar. 2015, a fine year.
> OC talking about media calling them 'flyover country' as if it matters / is somehow out of bounds conduct at all.
1) that's not indicative of the stuff you were charging 2) yeah, it is out-of-bounds conduct. It's an a-hole move to belittle poorer regions in your country, whether explicitly or in more tacit ways. If you do it long enough, you get where we are now. Anyone happy about that?
> And that's what we saw in '21 and '22. You had someone handing out PPP loans like candy and forgiving them outright, you had stimmy checks (that weren't backed by anything real, but that's another story), you had people sitting around looking for stuff to pass lockdown with, etc.
Yes, this is my whole point. The American Rescue Act and subsequent policies that were very much propping up salient jobs (certainly not wfh tech jobs that are, definitionally, resistant to lockdowns) fueled inflation that led to the end of zero interest rate period which led to large layoffs in tech.
> Wanna have a bottle of water from Flint, MI?
Flint falsifies your point, it is a democratic bastion. If you'd expect that to radicalize people, it should be deep deep read.
> yeah, it is out-of-bounds conduct
Out of bounds is a social norm over time. Donald Trump, their far and away champion, gives such egregious conduct I can't read this with a straight face.
But we can go further back. Was 'just say no' not egregious enough for you? AIDS shaming? The vicious anger against gay people? I can take any snapshot of the past - conservatives will always be the cry bully at any of the years in time you want to pick.
Originally the Intel Ohio One fab was being lobbied for by some housewife in Lorain. It went to New Albany because that part of Northern Ohio couldn't get its act together in contiguous land acquisition.
I’m pretty sure the only ones it will be good for are the rich. Make the rich richer. They will be able to buy stocks cheaply. They will be able to buy homes cheaply as people lose their jobs and foreclose. They will make the USA into a nation of renters. They will increase inflation and prices of everything so most people will be on the cusp of insolvency so they have to work multiple jobs for lower wages and can never retire. They will decrease education so people won’t be able to recognize the propaganda for what it is. They will disappear dissidents. They will make abortion illegal so people churn out the next generation of wage slaves. They will create false enemies (Canadians, gays, liberals, atheists, Jews, Muslims, anyone not white, etc.) to distract people from the real villains.
The rich have most of their money in stocks, saying they can lower stocks to buy stocks doesn't make much sense
The rich are about to get a massive tax cut. They cannot possibly spend all those savings on things like food or consumer goods. So where does it go? Assets: Housing, more stocks, antiquities. Any truly rich person will have a diversified portfolio of assets. So what if some of their stocks go down temporarily? They will go back up eventually and the rich can afford to wait out much longer than any normal peon. Its not even a nefarious thing either. If anyone were in their position it would be the prudent thing to do. The most important thing is they have to put this money into something now before it erodes. Buy up all the stocks, buy up all the land, buy up all the vintage collector items, hell even buy up all the retro video games, just do it now.
It's more concentrated than you give it credit: the wealthy overwhelmingly hold their money in business capital (read: stocks) not housing. Housing is predominantly owned by the middle class. Having stocks go up and down is what mostly changes the ultra-rich wealth, and in this case they're going down.
They get loans using their portfolios as collateral and then use the loans to buy stocks. This is very standard.
wouldn't a drop in equities be the worst thing for them then? That'd trigger a margin call and liquidation; at the very least, they can do that without the shares falling.
You're implicitly saying that they have an enormous if not cash position then leverage capacity that they're holding out on with the opportunity to buy more shares. In which case I challenge you: tell me where! I see tons of evidence of rich people completely shifted to risky risky equities (accredited investments have many attractions, one of them is not risk / 'volatility' (depending on your definition, see matt levine for details)!).
The late night show industry is making record profits.
It's clearly not good for the US economy, but I think that is a red herring. This has been so far, and continues to be, a highly successful endeavor from the perspective that matters: that of the US president himself, who wants to benefit personally.
I think it's helpful to ask "What if this president actually doesn't care one way or the other what happens to the US economy, the world economy, or even geopolitical stability (beyond the US not getting nuked, causing him to die), and everything is just a grifter's instinct for how to benefit personally?"
In that light, literally everything this administration does makes perfect sense.
This is a man whose main accomplishment before the presidency was "being famous" — starring in a reality TV show and professional wrestling (the fake/scripted kind), and he clearly wants to be the center of attention in the media.
Although his tariffs are widely mocked by knowledgeable people as "insane", "stupid", or as the Financial Times put it, "one of the greatest acts of self-harm in American economic history", imposing them gives the man himself the opportunity for corruption on a scale unprecedented in modern US history.
He can easily (very easily) benefit financially and otherwise because heads of state, captains of industry, and the ultra-wealthy have to come to him to beg, flatter, or do something — buy his memecoin, rent out his hotels, buy his otherwise-failed social network for billions, the list is near-infinite — to get out from under his tariffs.
So I don't think there is any upside of the kind you are talking about. But there is substantial upside for the man himself, and it is enough to explain all of his actions.
They only seem nonsensical if you believe he is trying to act in the best interests of the nation.
Trump has kooky beliefs about tariffs, and his economic guys are yes men.
Economics and science mean nothing to the President. He probably heard some blowhard in a bar 50 years ago yabber about tariffs. He’s an instinctual person, and when he senses danger to himself, he’ll pivot.
I’d guess there will be air strikes on Iran or threats of an incursion into the Mexican side of the border by June.
Or it's just his newest promise to give voters something for free. Like the wall that was partially built and paid for with DoD funds. He advertises tariffs as free money from other countries. For some reason people buy it.
The belief of Trump and his allies is that the last 40 years of free trade has been extremely favorable to college educated "elites" and extremely unfavorable to the working class. They see foreign trade as having hollowed out American manufacturing, and therefore they see the shutting down foreign trade as a way to reverse this decline. While they are aware that doing so will hurt college educated professionals, they don't care because they feel those people have had it too good for too long.
I think that's the belief of his voters in the Upper Midwest, but not necessarily Trump himself. He's the college-educated elite. He's playing them like a fiddle. He knows that they will absorb the damage from this, not the elites, who are far more connected than they are college educated.
Where did you take this from? Trump is not from working class. Working class might've been his 'platform' for the election, but he's already elected now, he basically has no incentive now to fight for the rights/interests of his voters, he has his own wallet that needs to finally get filled. Unless you think he really aims for a 3rd term.
Sure, it's just that though, a belief. The vast majority of the poor have prospered from free trade; indeed, the costs they complain the most about (health, education, housing) are the biggest categories of things that _can't_ be traded.
I get it and even sympathize, but I don’t think it will work for three reasons.
First is the uncertainty they are creating. Factories take a long time to build and staff and cost millions to billions depending on size and industry. Who in their right mind is going to invest that to build factories that are only economically viable under a tariff regime that could vaporize after the next election? Or if Trump changes his mind? Which he has a history of doing. Chaos like this is anathema to that kind of long term investment.
I am not opposed to the idea of trying to rebalance trade and repatriate manufacturing. Not at all. But it can be done skillfully, strategically, and without panicking global markets. This economic pivot is less well planned and executed than Biden’s withdrawal from Afghanistan.
The second reason it won’t work is that there’s way more competition today. After WWII during those glory days of US manufacturing everyone talks about Europe was destroyed and much of Asia had not yet industrialized. We were not just selling to a domestic market. We were selling to a world that had no alternatives. That’s just not true anymore.
The third reason it won’t work is that these tariffs are going to be massively inflationary and that will wipe out any gains the working class gets from more or better jobs.
Meanwhile they are doing nothing to address cost disease in housing, health care, or education.
Housing is the big one and I haven’t heard a peep. Instead of using Federal leverage to tilt at windmills like trans people using bathrooms, they could use that power to push states to regularize zoning and allow more home construction. “No more Federal highway funds unless you implement a plan to reduce housing costs.” Now that would help the working class and the young. It would also help things like the birth rate, which I know a bunch of people on the right are freaking out about. Reducing the #1 cost barrier to family formation would help a lot.
In short I think they’re doing a terrible erratic job of implementing a dubious strategy. This is going to fail, and we will all get poorer as a result. China will be the largest beneficiary since even more of global trade will now shift to them. They are now seen as stable, responsible, and reliable while we look like a basket case.
the irony is I don’t think there’s any way this hurts the college educated more than the working classes, as most things do.
> The belief of Trump and his allies
Trump and his allies are all college educated elites.
But these beliefs have been core to the American left for decades. Even left wing intellectuals like Noam Chomsky have attacked the neoliberal trade agreements I think.
Trump’s populist right wing fans have adopted traditionally left wing views. What’s surprising is so many left wing people are supportive of free trade when they were against free trade during the Reagan era.
I don't think the left has been automatically in favor of tariffs--or at least I'd appreciate evidence for that claim. The complaints about free trade deals that I've seen have tended to be about provisions that treated various labor and environmental regulations as restraints on trade. It's fair to say that left-liberal people are paying more attention to the downsides of tariffs than they were, but I don't think it's a simple reversal of positions.
I’m not sure what your sources are but if Bernie Sanders is the left, then he’s been saying the same thing for a long time and continues to. Maybe there’s some nuance to it?
2025 https://www.sanders.senate.gov/press-releases/news-sanders-s...
2011 https://www.sanders.senate.gov/press-releases/senate-speech-...
MAGA Communism is apparently a thing.
I wouldn't say its good for anyone, but it is probably worse for many of our trading partners so they would, in theory, make moves to negotiate with the US to skirt the tariffs. I don't think it will ultimately have been worth it in the end but time will tell.
To lay out my own biases
Some arguments that I have heard (which I mostly do not agree with) areThanks for illuminating the mindset.
One thing I want to say in support:
The argument in favour of free trade is that it increases the pie, so that everyone can be better off (a Pareto improvement). However, given that trade does produce winners and losers, this argument is predicated on redistribution, namely (over)compensating the losers.
That second part of the argument in favour of free trade is often conveniently forgotten. So when that redistribution doesn’t happen, then opposing free trade is quite rational for some.
To improve rust belt manufacturing, you would target competitors of industries in that area, not the whole global economy.
We imposed a 32% tariff on Taiwan. Simultaneously, we are making it more expensive to manufacture here in the states. We have 1/4 China's pop - why would we try to compete on raw output by ourselves, instead of strengthening ties w/ the world?
For many countries, there is nothing to negotiate since we already have free trade agreements with them. We may import a lot of goods, but we export a lot of services, like many developed nations do.
With regard to raising revenue, think of the tradeoffs. If demand is elastic (given our trade deficit, it has to be!), this will be a tax on many, many American businesses and consumers. Its just moving the taxes from income tax to a consumption tax. That's a worse deal for poorer/middle-class Americans.
> To lay out my own biases
> - I voted for Trump
What will it take for you to regret doing so?
It seems the maximum likelihood model is a political one and not an economic one. Trump likes making deals and he historically has made them by applying his leverage and bullying people to go his way. Now he has the most powerful office in the world and a lot of leverage to bully anyone he wants (universities, law firms, other countries). Lots of lunch money will be taken but no one's going to go near the bully anymore.
At the end of the day, it's about Trump's need for attention and ability to wield power, rather than any economic objective. Tariffs are a way to wield significant power without requiring the approval of Congress.
Donald J. Trump lost an auction in 1988 for a 58-key piano used in the classic film “Casablanca” to a Japanese trading company representing a collector. While he brushed off being outbid, it was a firsthand reminder of Japan’s growing wealth, and the following year, Mr. Trump went on television to call for a 15 percent to 20 percent tax on imports from Japan.
“I believe very strongly in tariffs,” Mr. Trump, at the time a Manhattan real estate developer with fledgling political instincts, told the journalist Diane Sawyer, before criticizing Japan, West Germany, Saudi Arabia and South Korea for their trade practices. “America is being ripped off,” he said. “We’re a debtor nation, and we have to tax, we have to tariff, we have to protect this country.” [1]
We're in an Emperor With No Clothes situation and all of his aids have no clothes either.
[1] https://www.nytimes.com/2019/05/15/us/politics/china-trade-d...
He’s shown himself to be deeply motivated by petty slights so that makes a lot of sense.
The only positive outcome I can think of is that T and co are trying to scare trading partners into lowering their tariffs in response. Assuming that happens to some degree, T will revert his and then take credit. Then the market will return as well, and we all head off into the sunset.
Likely why it is happening so early in the admin, so we can all forget about it by the end.
If you want someone talking intellectually about the global trade situation, Oren Cass’ interview with Jon Stewart was pretty good.
https://www.youtube.com/watch?v=vgEQeLR-M0g
But I do think that a logical assessment undervalues the notion that this is an emotional/intuitive. I don’t think Oren Cass’ very interesting intellectualization of the problem will actually help you predict what Trump will do.
But in the emotional piece - He’s talked endlessly about how America is getting screwed, and his tariff calculation was based pretty directly on trade deficit calculations.
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Perhaps you'd like to give an example, maybe for the UK since all the information will be in English.
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Well, you should then accept that some things will be very expensive for you as well. Is that what you want?
I think this might be a move to stop a world war (between Russia and NATO/Europe). If U.S. also leaves NATO any time soon - the chances for a world war would decrease greatly.
I don't think that makes sense. Wars happen when one of the sides think they can win (and want something). USA leaving nato and reducing trade makes european states more vulnerable. I would expect this to increase the liklihood of war.
Especially in the near term - eventually europe will adapt to the new world order, but in the mean time their is a limited window of opportunity where everything is in flux, which would be a great time to strike.
I'd like to correct you: wars don't happen when just one of the sides thinks they can win, they happen when BOTH sides think so.
I think that exactly for this reason Europe needs such a vaccine shot, so they stop they can win a war against Russia.
But... they can? If Ukraine can fight Russia to a standstill, a fully mobilized Europe clearly at least has a shot. Unless it escalates to nuclear weapons and everyone loses... But you need at least an argument if you want to say that is less likely without any initial US involvement, it's not obvious.
Exactly. Europe thinks it may join Ukraine in a war against Russia to actually win that war.
My point is that this is quite a reason why a nuke war may occur.
And if U.S. turns back away from Europe - Europe might 'sober up' and not seek the prolongation of a conflict. Non-nuke wars end somehow. One side usually loses, without such a loss - there would be no end for the war and more and more people would die. A bitter ending is better than endless bitterness.
There's nothing in my comment to "exactly" in support of your point. If the US backs away from Europe it may be more likely to encourage Ukrainian surrender. Russia may be more likely to attack Poland. Germany may be more likely to develop its own nuclear deterrent. Or none of these things may happen. Extrapolating from tariffs to world peace demands a bit more than loose speculation at the continental level.
Surely there is:
> Europe clearly at least has a shot
I doubt Europe would be that cocky without a full support from their "big bro" from across the ocean.
As for attacking Poland - that sounds quite uncalled for: Poland doesn't have a meaningful share of Russian natives living there historically for the Poland to start oppressing them to the point Russia would start a war against Poland. I can't even think of any reason why Russia would attack Poland.
The Kremlin can come up with a rationalization for whatever their territorial desires are.
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Yes, the isolationist era that followed World War One clearly calmed the rest of the world, so that the various "expansionist" regimes felt less threatened and just let their neighbors be.
History rhymes with itself.
Multi-polarity is the number one cause of war and conflict.
It's different now, since at that time there were no weapons of total annihilation (and now there are quite some).
That's exactly why 'expansionist' regimes were ready to start some next war, being eager "to get some extra land" as a result of said war.
The current war is different: this is the war that started not out of appetite towards foreign lands, but, basically, out of primal fear, the fear concerning safety. The West was failing at self-reflection and was completely oblivious about their own actions being treated as crossing a real red line for Russia's safety.
You may scare a wandering bear away, but driving it into a corner is both stupid and fatal.
Haha please describe the NATO invasion of Russia. This sounds entertaining.
Easy.
1. Crimea, Donetsk People's Republic, Lugansk People's Republic, Kherson Oblast, Zaporozhskaya Oblast are now parts of Russia.
2. NATO still thinks those are parts of Ukraine.
3. Some of NATO countries are now in talks about sending their troops to Ukraine.
Haha I was thinking you might describe the decisionmaking involved in having a multinational defensive alliance invade a nuclear power.
Instead you decided to use it as an opportunity to claim that the Russian-occupied territories should be internationally recognized. You're funny.
> 1. Crimea, Donetsk People's Republic, Lugansk People's Republic, Kherson Oblast, Zaporozhskaya Oblast are now parts of Russia.
Not factually, nor legally.
Interesting, but I don’t see it this way at all. The west talked Ukraine into giving up their nukes and said we’ll keep you safe. All that without NATO. But as time has ebbed, and Russia meddling in eastern Ukraine went largely ignored by the west, Russia grew emboldened and decided it could just invest in a history rewrite, an airing of past grievances, and an invasion.
If Ukraine had said “fuck no” from day one, “we’re keeping our stuff, we don’t trust any of you long term at that level”, it would be in interesting world we live in.
This narrative that NATO provoked Russia into this is non sequitur. A gaslight of grandeur.
I am sorry, but it looks like you are just uneducated about the facts and events that happened prior to Russia taking Crimea back. You should not just read some, but actually dig a bit, if you are really interested. I'm not here for a political debate really, I'm not buying into your baity (and wrong) arguments. I shared my idea about how tariffs might be a step that might actually prevent a nuke war and I just expand on said thought.
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Care to explain your rationale? Seems like Russia is in no position to invade any NATO country unless the US leaves the alliance. They've proven themselves wholly outclassed in Ukraine, against a much smaller country with refurb gear.
Furthermore, Russia has no plans to invade any NATO country. It just won't let NATO invade^W expand to Ukraine. And no, this war is not how you describe it: said 'much smaller country' was 2nd biggest (in terms of military strength) in Europe after Russia itself.
And it's not a 1x1 war of big Russia vs small Ukraine: Ukraine got help from all over Europe, G.B., U.S. and Canada. Help in arms, in intel, in training, in money and other resources. Russia got sanctioned badly, by such a big bunch of countries that you'd rather be smirking not about Russia not being able to win already, but at Europe (and now U.S.) economy getting some hits... while Russian economy still stands yet. While all the sanctions are still in effect. For years.
> Furthermore, Russia has no plans to invade any NATO country.
Not only are you attempting to prove a negative with "trust me bro" but it's especially laughable given recent history. Please tell me how many days before the Ukraine invasion Russia had "no plans to invade".
> this war is not how you describe it: said 'much smaller country'
Personally I consider 1/3 the population "much smaller" but you do you.
> it's not a 1x1 war of big Russia vs small Ukraine: Ukraine got help from all over Europe, G.B., U.S. and Canada.
Exactly why the US remaining in NATO prevents a large scale conventional war. Because Russia is pathetic unless it is bullying smaller neighbors or threatening nuclear war.
I think it's the opposite: with US remaining in NATO, Europe will feel cocky enough to get dragged in a war, Russia will of course retaliate and further escalation (especially if Russia starts losing) highly likely will lead to the nukes.
Now look at the news: Germany sends troops (for permanent stationing) to Eastern Europe. GB, France and Germany discuss deployment of their troops to Ukraine.
Seems like I'm rather right, than wrong.
How many days before the invasion did Russia claim to have no plans to invade?
1930 all over again.
https://archive.md/XMnlS
Does anyone have any idea where all of this tarrif(tax) revenue is going? I think it's a little more creative than just increasing wealth. Are there any bold visions or grand plans/futures in the works that this could be going towards?
Tax cuts for the rich. Defunding the IRS, cutting social services, and pushing tariffs to tax the working class are all consistent with needing to keep the government running without taxing the billionaires.
They just signed the budget, it's not a secret. They're giving $2.5 trillion in tax cuts to the wealthiest Americans.
Response from friends who voted for this because of Elon: “let them cook“.
This doesn’t seem to shock them
do these friends participate in the market?
They do. I think it’s one of these beliefs vs logic things
So where is the bottom?
I don’t actually believe there is one, I’m just curious to hear what other people think.
The vision is to convert the American economy from one with infinite profit margins (ads and software) to a manufacturing one with single percentage profit margins and limited growth potential due to tariff environment.
So I think a 80-90% drop in the overall market value is justified.
I don't think these tariffs would affect software. ?
All of the Chinese buying Google and Facebook ads, do you think they will keep buying?
Do you think that Apple, Google, Fb will be able to continue operating in the EU as frictionlessly as they do today ?
US software now has to respect borders.
As someone who sold all my stock in January and invested into bonds, I think we are far from it, but the bottom it will depend if the tariffs are lifted in the next days. The worst case scenario would be tariffs being kept and the FED eventually losing independence.
I think it is safe to say that we probably will go back to pre COVID levels, since the trust in the stock market is eroded, but this time with high interest rates.
Sure, there's a bottom, but we're not close to it yet.
It could be down another 50%, it could already have passed. Historically, troughs in P/E ratios have occurred all over the place.
https://www.macrotrends.net/2577/sp-500-pe-ratio-price-to-ea...
This weekend is going to determine that. There’s a pretty blood chance we’ll see the real crash Monday.
Probably April or May 2025. I'm bullish still. But then I'm not all US stocks anyway.
Only one man knows the answer to this question.
He doesn't know either.
I don't know the machinations at the level of Trump, the billionaires, and the GOP senators and representatives. Depending on what's going on, those in congress will never do their job.
OR, if they just believed in Trump's influence on votes in "free and fair elections", they might eventually hit a breaking point. Because if they let this happen unchecked, they will be voted out, 100%. (Not to mention everyone they know will have lost money, many more jobless, hungry, etc.)
Being complicit in triggering a great depression while being an elected official cannot be good for your career long-term.
“The Stock Market(s) are literally crashing. There was no reason for this, all self inflicted!”
- Trump….https://truthsocial.com/@realDonaldTrump/posts/1084698607876...
What's that supposed to mean? He is saying the quiet part out loud?
Jun/2022
The tweet is from June 13, 2022.
Must feel good to be great again.
Don’t check your 401K accounts, Americans.
This idiocracy administration is single handedly ruining both _public_ and _private_ safety nets.
To my fellow Americans that helped vote this dipshit into office, please fuck off.
I don’t expect Trump to make sane or rational decisions. But can anyone explain why the GOP senate is just standing by? Surely they are getting hit on the effects of the tariffs like everyone else. Doesn’t compute.
Because opposing Trump risks becoming an outcast, which is the thing that humans want least, and losing their job. There is not yet the sign that their voting base actually wants them to do anything to oppose Trump.
But what about those who are not up for re-election soon (unlike Representatives). If they're in for another 3-5 years regardless, by then things will have changed anyway.
And no tariffs on Russia, oh I wonder why...
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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.
Trump's been talking about tariffs for far longer than the current t-note cycle. He was talking about it a decade ago during his first time in office. IIRC he ran for POTUS as a Reform Party candidate in the 90s or 00s, and that party was started by Ross Perot, who was against NAFTA on the grounds that it'd cause a giant sucking sound of American jobs to Mexico.
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.
> 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.
could you just do the layoffs without the tariff if it were a conspiracy?
But then what are you doing to "help" American manufacturing?
I mean clearly nothing but why does that matter
Gotta have a hook. Look at how he did in the Upper Midwest in '24 vs. '20. That was through appealing to the manufacturing base. There are elements of that bloc that have wanted tariffs for decades.
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.
sure but you can basically say whatever you want. Remember the trump tax plan is just 'cut taxes on the rich and provide industrial subsidies' and that works just fine. No need to chop share prices while you're at it with a silly tariff.
> 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
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.
National stock market is owned by people, but the national debt is owned (and has to be payed) by the government. Basically, the government is just milking the reach now to lower gov's national debt. Poorer people rather win from this (even if no manufacturers come to U.S. to avoid tariff barriers, which some manufacturers will and which will be another small benefit for the poorer (more jobs)).
Tariffs are incredibly regressive, add in the likely job losses and wage losses, and poorer people are going to be the biggest losers.
Jobs are different; which jobs in your opinion are likely to be lost? I can't think of examples where less-skilled labor workers would lose their jobs as result of tariffs, other than in a case where they were a maid/gardener of some business that went bankrupt by said tariffs.
Give some good examples, please, to support your claim.
Stock is easy to goose back up via QE and/or lower prime rate. Once you lock in those interest rates on debt, though, there's nothing you can do about them. You're also ignoring trade barriers that other countries have, and the fact that we've been offshoring manufacturing capacity for over three decades. What Trump is doing today is what Bernie was advocating in the 00's.
Interest rates are lowered when inflation is low. Inflation is low when supply is high. Tariffs cause supply shortages. Inflation expectations are up. Interest rates will be up.
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?
That's the most charitable possible reading of this strategy. There are many others.
Why would anyone purchase the T-notes with a poor return? Especially if other assets are in a dip?
Because you don't know when the dip will end, and how much lower it could go. People could (and do) choose to exit the market if they expect further volatility, and when they do exit, they need something to park their cash.
Is that really what he’s doing? If so, then that’s some 5d chess right there.
It's 1D chess, really, and it isn't really Trump who came up with the idea. We're between a rock and a hard place. If we refinanced at 4.8%, the interest payment would go to $1.2T per year. If we refinance at a lower rate, it's lower. Note that we're not just refinancing either, we'll have to borrow about $1.8T, too, unless DOGE miraculously achieves its $1T/yr savings (doesn't look like it will, if the current trends are anything to go by). Tariff revenues would help to plug that hole somewhat. Then there's the issue of many countries having higher tariffs for our stuff than we have for theirs. That's not "free" trade. Then, finally, there's the issue of the near-irreversible erosion of the industrial base.
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.
> Tariff revenues would help to plug that hole somewhat.
"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.
What do you mean? We can't afford to finance their security anymore. Nor can we afford their protective tariffs against our goods. Why can't we afford it? Because we're running $1.8T budget deficit, and paying $1T+ in interest on our debt next year. Because each man, woman and child in the US already owes $100K+ straight from birth. Do you just want to keep adding to that number hoping that we'll never turn into Zimbabwe?
> Nor can we afford their protective tariffs against our goods.
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%.
That's the trouble with "barrier" tariffs and weighted tariff calculations. E.g. a lot of US agricultural products are subject to up to 50% tariff in the EU, so the US is simply unable to sell them there in significant quantity. What do you get as a result of a weighted tariff calculation? That's right, you get "low tariff". Japan is also interesting. It imposes insane tariffs (several hundred percent) on some US agricultural goods, but 0% on US cars. Why 0% on cars? Because they are able to basically disallow import of US cars through regulation.
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.
Don’t worry. President Trump knows what he’s doing. If anything, this is a perfect time to invest before the markets inevitably recover.
So your theory is that there’s an amazing master plan, but only insane people on Twitter (and notably, not, say, _Wall Street_, or any economists) are smart enough to see its ineffable wisdom?
Should have /s’ed that.
To be fair, I do think the markets will eventually recover. If not soon, then in 4 years time. Assuming democracy hasn’t eroded to the point that timeline is meaningless.
Isn't it obvious that Trump's goal are not these tariffs, but renegotiated trading agreements? But everybody just seems to love to proclaim this the end of US.
No. It's not obvious that there's any lucid end goal whatsoever.
Isn't it obvious that you can't negotiate effectively if nobody trusts you?
Trust doesn’t matter if you have the most powerful military force in the world. You think the middle eastern countries surrounding Israel trust Netanyahu? Nope, but they sure fall in line and keep the negotiated peace because let’s face it, all of them combined will crumble before a single Israeli battalion. Might does indeed work in negotiations regardless of trust.
Talk about hubris. The US military is specified to fight a 2 front war, but has proved singularly unable to defeat other countries in occupation. The idea the US can just blackmail the world by force may be about to be tested, but I wouldn't be willing to bet on its success.
No I think the goal is to isolate the US and make it no longer a global power. That's explicitly the goal of several powerful people who were instrumental in Trump's rise to power.
This includes not only foreign adversaries (and those who work for them) who helped Trump, but also ideological crypto currency fans who fantasize about ending the idea of nation states in general.
How is that obvious? Why would your 'negotiating stance' be 'give no demands and tariff the entire world, including islands with just penguins, a nonsensical rate?'
I mean sure I guess you can say he's negotiating, in which case I'd like you to admit he's a terrible negotiator.
because that's the way he likes to do things?
"it's obvious that he's negotiating because he likes to negotiate in an incoherent way" I don't really know how to read what you're saying
No, I was replying to you second question.
This is what all of the smart people have been saying. So pretty much yeah.
Literally not one person I would consider to be smart, or at least educated, has said any such thing.
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Aren’t the tariffs that the US is imposing half of what other countries have? Or was that fake news from the admin?
They aren’t the tariffs other countries are imposing, they are basically the trade deficit ratio instead. A country could have a 0% tariff on American goods but if Americans had a trade deficit with that country they would have been slapped with a tariff.
Ah thanks for the explanation. Definitely a ridiculous metric to go off of to determine tariffs.
Fakest of fake news; no developed country (except a few weird microstates) has effective tariffs higher than about 3%. Bizarrely, he based it on _trade deficits_. Today, only two countries have effective tariffs rates >20% (Bermuda and the Cayman Islands), though it will be three next week.
(Based on the World Bank metric; WTO uses a slightly different metric and says there are three; Bahamas, Sudan and Iran.)
Assuming we don't give all of the jobs generated to h1b's and O1's I think this could do very good things for the country. Dollars staying within the US and not going to other countries is good.
Cheap stocks people. Got my eye on some that below a certain price it would be a no brainer to buy. Global trade is rerouting around the bottleneck.
Didn't think there would be an opportunity so soon after March 2020.
Got my eye on a tech stock that has dropped about 40% already but was undervalued before IMO.
This is a fine idea, but having the cash during a recession to buy stocks is not always easy.