The Trump tariffs

scorpion said:
This backtracking is not a good look, and lends credence to Trump's critics who claim he's just flying by the seat of his pants with this whole thing. I fully support the Trumpian/MAGA goal of reshoring much of our advanced manufacturing and industrial capacity (for both economic and national security reasons), but it's becoming increasingly difficult to defend the means by which Trump is pursuing this agenda. It's honestly starting to feel like Trump and his team don't fully understand the economic machinations at play here - most specifically in regard to the role of the USD as the world reserve currency and how that necessarily entails trade deficits for the United States, as we must literally "export" USD to the rest of the world.

The economic and financial status quo of the U.S. was obviously not sustainable long term, and drastic changes were necessary to address the severe structural problems we're facing. But this sort of boneheaded blundering going back and forth with tariffs is clearly not the answer we were looking for, and is most definitely not reassuring in regard to Trump's ability to actually begin correcting these serious issues.
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This is all above my pay grade, but wouldn’t it be better to simply set goals (for national security reasons) of what can be bought from Chyna over the next 4 years? For example, most of our antibiotics come from Chyna. That is insane. Chyna holds a sword of Damocles over our heads. I heard we can’t build our own ships. That too is insane. Give a timeline where these things need to be sourced in the US or at least a non rival nation. Give Apple a timeline to reshore iPhone manufacturing out of Chyna. Etc etc
 
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Dusty said:
This is all above my pay grade, but wouldn’t it be better to simply set goals (for national security reasons) of what can be bought from Chyna over the next 4 years? For example, most of our antibiotics come from Chyna. That is insane. Chyna holds a sword of Dalmaces over our heads. I heard we can’t build our own ships. That too is insane. Give a timeline where these things need to be sourced in the US or at least a non rival nation. Give Apple a timeline to reshore iPhone manufacturing out of Chyna. Etc etc
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In a word: yes.

If China is truly the biggest problem/threat/rival, then the smart play is to gradually decouple from them economically. This would necessarily entail the creation of a bipartisan long-term U.S. national economic policy focused on reshoring key industries and manufacturing capabilities. It would also be wise to attempt to isolate China from the rest of the world by offering other countries advantageous deals if they commit to joining "Team USA" rather than siding with China in what may turn into a sort of economic cold war. Ending the Ukraine debacle and offering Russia economic olive branches would also be a great boon and would help create distance between Russia and China, who are really only allies of necessity currently standing in dual opposition to the U.S. agenda, but who don't fully trust each other and who are natural continental rival powers. Europe can and should be bullied to go along with whatever the U.S. is doing, and South America is a natural backyard and junior partner for American interests as well.

There also needs to be recognition that the reserve currency status of the USD has to be accounted for when discussing trade deficits and surpluses. The ability to issue the world reserve currency is an enormous privilege and power for the U.S. government, but it comes along with the necessity of trade deficits. There are structural means by which this problem could be alleviated, but the blanket declaration that "trade deficits are bad for the U.S." is idiotic and reveals a stunning lack of understanding of the role of the USD in the global economy.

The Trump Administration needs to get its house in order quickly, because it's really looking like amateur hour over there at the moment. Trump was elected to stop the wars, to end DEI/woke insanity and to make the average American feel more economically prosperous. He was not elected to perform a controlled demolition of the global economy in a misguided effort to balance American foreign trade (which is literally impossible to do with the USD as the global reserve currency). If they don't manage to clean up this mess within the next few months and limit any further damage, they're going to hand the Dems a layup in the mid-terms and greatly increase the odds of the Dems recapturing the White House in 2028.
 
I don't see how other countries dumping US Treasuries in "revenge" will somehow hurt the USA. I also think there is a lot of Talmudic Jews dumping Treasuries to feed fuel to the fire in order to "get Trump" and create a crisis, similarly to how they did with COVID.

That said, I'm not worried about it at all. Dumping US Treasuries just makes interest rates increase, which will suck liquidity out of the global economy, sparking a massive deflationary wave across the world. Will it be painful in the USA? Yes, but the rest of the world will feel it 10x as hard. Governments will topple, people might starve, and the dollar will end up skyrocketing in value.

In this environment, with free falling stock prices, people will see the 6%+ rates on US Treasuries as by far the best return on investment. Only problem? They will cost so much more as the dollar skyrockets in value, so every country, which buys in their own currency, will end up buying at prices with lower returns than even what they would have gotten at 4%.

People act like the dollar isn't the reserve currency - this is delusional. If the COVID lockdowns, which tripled the amount of dollars in existence, did not cause a loss of confidence in the dollar, then this deflationary wave will do the exact opposite and make the dollar go to the moon. All of this "US Tresuries are being sold!!!! OH NO" is nothing more than fake news panic, it's not grounded in reality and everyone who sells their Treasuries now will get clobbered in the future as the dollar moon rockets in a deflationary scenario.
 
Samseau said:
That said, I'm not worried about it at all. Dumping US Treasuries just makes interest rates increase, which will suck liquidity out of the global economy, sparking a massive deflationary wave across the world. Will it be painful in the USA? Yes, but the rest of the world will feel it 10x as hard. Governments will topple, people might starve, and the dollar will end up skyrocketing in value.
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Buy the dip baby!

2008 everyone panicked. For the folks who just chilled left it alone... They wound up way ahead by 2009/2010.

Samseau said:
People act like the dollar isn't the reserve currency - this is delusional. If the COVID lockdowns, which tripled the amount of dollars in existence did not cause a loss of confidence in the dollar, then this deflationary wave will do the exact opposite and make the dollar go to the moon. All of this "US Tresuries are being sold!!!! OH NO" is nothing more than fake news panic, it's not grounded in reality and everyone who sells their Treasuries now will get clobbered in the future as the dollar moon rockets in a deflationary scenario.
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To replace the dollar the entire system has to collapse. We are soooo soooo soooo soooo far away from that it's not even funny.

Before we as an Empire give that up we will have wages several hot conflicts.

I see no change to the world order on our immediate horizons.
 
Samseau said:
People act like the dollar isn't the reserve currency - this is delusional. If the COVID lockdowns, which tripled the amount of dollars in existence did not cause a loss of confidence in the dollar, then this deflationary wave will do the exact opposite and make the dollar go to the moon. All of this "US Tresuries are being sold!!!! OH NO" is nothing more than fake news panic, it's not grounded in reality and everyone who sells their Treasuries now will get clobbered in the future as the dollar moon rockets in a deflationary scenario.
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The dollar is not going to rocket. The economic fallout from the trade war will cause all major economies (including the USA) to print more money and this will put a lid on the US dollars rise.
 
The world doesn't have to pay interest on the US bonds that they own? They benefit when interest rates increase! The Fed will have to step in to avoid runaway interest costs at some point. That means printing more dollars. So the dollar will fall, not rise. We just saw that dynamic last week, until Trump backtracked! It's a delicate balance. The holders also stand to lose, but they're much better of all in all.

The rest of the world can find other alternatives; Gold, Euro's, Rubles, Yuan etc. BRICS might eventually start to denominate in something else? The US depends on exporting it's inflation, hence this tariff move is particularly bad. If they can't do that the increased dollar supply won't be spread across the globe as much, but rather stay in the US, which means rising prices.
 

China, Vietnam sign deals as Xi visits Hanoi amid US tariff tensions​


Summary -
  • Xi begins three-nation Southeast Asia trip in Hanoi
  • Vietnam tightens controls on some China trade under US pressure
  • 45 agreements signed, including on rail links, supply chains
  • Vietnam green-lights jets approved by China, government says
  • China's COMAC signs deal with Vietjet, document shows
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expectation said:
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Supporting the above, several sources confirmed the existence of the document in a meeting between US + Irish Gov't. It was circulated after a meeting between Irish Deputy Prime Minister Simon Harris and US Trade Minister Howard Lutnick in Washington last week.

The briefing states that the United States wants to decouple from China and that any country that wants to conclude a trade deal with President Trump will also have to distance itself from China.

www.irishtimes.com

US to demand EU pulls away from China in return for cutting tariffs

Confidential briefing documents identify what US may seek in talks and point to early move on pharma tariffs
www.irishtimes.com www.irishtimes.com
 
expectation said:
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This doesn't isolate China, (?) it only stops chinese goods coming to the US via arbitrage. The US will lose out, as there will be less goods to buy, especially things like textiles, shoes, electronics. China both can and will trade more with the Eurozone and the rest of the world. The dollar also keeps falling against the Euro, not good for a nation that imports a lot. Again rooted in having the reserve currency etc...
 
Johnnyvee said:
This doesn't isolate China, (?) it only stops chinese goods coming to the US via arbitrage. The US will lose out, as there will be less goods to buy, especially things like textiles, shoes, electronics. China both can and will trade more with the Eurozone and the rest of the world. The dollar also keeps falling against the Euro, not good for a nation that imports a lot. Again rooted in having the reserve currency etc...
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Its starting to look like that the strategy is to isolate BRICS trading bloc away from the US-led bloc in addition to recruiting as many nations as he can away from China.


IMG_D526DB340834-1.jpeg
 
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Samseau said:

Liberation Day Fallout: China's Port Volumes Sink After Trump's Tariff Blitz | ZeroHedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero
www.zerohedge.com www.zerohedge.com

Muh 2.5% of the economy!! China about to get crushed.
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It's a lot of noise but the preliminary data points indeed indicate the tariffs are hitting. In general China's economy has been performing weakly since they started their Zero Covid policy. The Chinese debt mountain isn't much smaller than the US' (but instead shifted on local governments and SOEs), and metrics ranging from manufacturing output to oil imports point towards stagnation. That's why the Chinese intervened to arrest the market crash immediately after T's announcement, their debt markets and stock market are propped up and in a bad state amidst the real estate crisis, and China can't afford to have equity markets crumble too due to yet another slump (this time related to diminished exports due to T's trade war).

A big indicator of future decisionmaking will be China's continued selling of US treasury bonds. If the Changs need to continue selling treasuries to defend their (weak) currency it means Trump is winning and China will eventually be forced to make a deal. Ergo if the yuan shows an abrupt devaluation it means the Chinese have run out of UST to sell and its artificial peg against the dollar is crumbling. The Chinese need a relatively strong yuan to support their imports of food, crude oil and LNG.

On the other hand if the 10 year UST yield gets out of control Trump might tone it down a notch again. If neither happens and markets stabilize the current situation will persist leading to long term economic decoupling with the US taking on an increasingly hostile attitude.
 
Get2choppaaa said:
Buy the dip baby!

2008 everyone panicked. For the folks who just chilled left it alone... They wound up way ahead by 2009/2010.


To replace the dollar the entire system has to collapse. We are soooo soooo soooo soooo far away from that it's not even funny.

Before we as an Empire give that up we will have wages several hot conflicts.

I see no change to the world order on our immediate horizons.
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Most is hype and all over the internet ignoramii climbed on their soap box regurgitating their e-daddy's latest hot take word for word pretending it's their own. Extreme and sensationalist content generates more clicks, and then there is the paid foreign agent cohort which is invested in spreading nonsense.

China is a peer competitor that was manufactured by ((the usual suspects)) and as such it has been allowed to grow on the back of backdoored tech, beneficial deals and free money but those days are coming to an end. Economic decoupling is on the horizon and with that comes a free US hand in taking China down a notch or two - potentially in a set of hot conflicts in China's vicinity.

Trump is making America self-sustainable on every front but an understated problem is the US Defence sector's dependency on China when it comes to critical minerals like gallium, germanium and antimony. Even if alternative suppliers start supplying it will still take time to detour the supply change and build the infrastructure/refineries. Any Chinese strategy will revolve around disrupting US supply chains in the immediate lead up to a conflict.
 
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