Trump's Tariffs and Trade War

[Meta not Meta]

Trump doesn't understand trade deficits.

He seems to think they're subsidies.

But he's given to so much fantastical thinking & rhetoric it's impossible to know what he really believes. But that's also what makes him such a great con man. Just "flood the zone" with lies, fantasies & half truths and keep everyone reeling.

He had to lie about fentanyl on the Canadian border in order to manufacture a crisis to "legally" abrogate an ongoing trade agreement. Will anyone even remember that a month from now?

But so much, even beyond this, is just lies, lies, lies ....

Regarding trade deficits, it's like someone having a credit card, overspending like a crazy person, and then blaming the business he bought from ("they're ripping us off") for that person going into debt.

Except it's actually worse than that ....

In effect, the US prints money to use as debt to buy foreign goods it doesn't or no longer can manufacture for itself.

So all those deficits he's so concerned about are actually funded with US dollars that are, in turn, often reinvested back into the US economy via the purchase of assets like stocks, bonds, real estate, etc. by the same countries supposedly "ripping us off."

It's just ridiculous to blame foreigners for that. The world is already-- or has been before tariffs-- quite literally helping to keep the US economy afloat by funding its debt.

Those foreign countries might actually buy American manufactured goods with those same dollars except for the fact that America doesn't make much of anything anymore for them to buy. Weapons, some pharmaceuticals ... what else exactly? And also because a strong US dollar just makes US exports of what surplus goods they do make uncompetitive.

MAGA's many, often fictional grievances and cloying sense of victimization require enemies like immigrants & foreigners to underpin them. Nothing can ever be their own fault. They must always be the victims and Trump exploits that.

They're not completely wrong about their plight, but they should instead try blaming their own financial elites for a change. The US long ago de-industrialized, "offshored" its manufacturing base, and left them behind, in effect, by adopting the "financialization" of its own economy over more than five decades.

Good luck to MAGA in returning to a time before that ....

 

[gaby]

Another ugly ugly day on the markets.....DOW-2230 NAS-962 SP--322...worst than yesterday....what a nightmare.....while the EMPEROR is playing golf .....

 

[Cujo1234]

Trump is a player. He used the same tactics on his cult to get their vote that he used on the bimbos he has bedded over the year. Telling them how special they are and how great he is. Both groups got flat on their backs for him but the cult pinned their ankles behind their ears for him expecting him to pleasure their button. Instead they unwittingly exposed their Hersey highway and Trump is driving a big old semi right into it.

 

[neverbored]

Wonder if the Trumptards are tired of winning yet lol

idiots, every single one of them.

 

[Womaniser]

Wonder if the Trumptards are tired of winning yet lol

idiots, every single one of them.

Speaking of Trumptards, I watched a reporter talking to Nebraska residents probably retired white men and women.
Naturally, they voted for Trump and are non educated like the great majority of MAGAS !

 

[Womaniser]

Speaking of Trumptards, I watched a reporter talking to Nebraska residents probably retired white men and women.
Naturally, they voted for Trump and are non educated like the great majority of MAGAS !

Speaking of Trumptards, I watched a reporter talking to Nebraska residents probably retired white men and women.
Naturally, they voted for Trump and are non educated like the great majority of MAGAS !

It's not directly related to tariffs but th DOGE will make important cuts to DHS, Department of Homeland Security.
In the Secret Services among others.
As long as Secret Service agents protecting Trump are fired, I completely agree with the cuts !

 

[2fast2slow]

Sorry for the long post. I spent the last few hours reading about this as its been bugging me all night and didn't feel like condensing it. I'm not a financial analyst, but do have interests.



My thoughts

They currently have a $34 Trillion national debt. And have already raised the dept ceiling to prevent defaulting. But now they have $3 Trillion debt maturing in 2025 and can’t afford a blowout in yields (increase in interest rates). A Fed bailout (aka printing money) affects the dollar’s credibility and value. So instead, they could be staging a controlled fire; using tariffs to create just enough panic to slow the economy down without torching everything and try to put the blame on foreign exporters. Trump and Musk have be saying this openly for months.

Why? Because slowing the economy reduces inflation, which tends to shift investors to seek “safe” USD assets (bonds), which increases demand for dollars.

It’s definitly not random.

The tariffs aren’t just to "look tough". They’re targeted at countries with large trade surpluses with the U.S. but especially cheap labor export models. Think China, India, Vietnam... The higher the trade imbalance, the higher the tariff based on how dependent they are on selling to the U.S. but that also hurts their adversaries who rely on exports for their GDP. Why so many? I mean, some countries I've never even heard of. I think its a smoke show required by their MAGA narative. 10% blanket is nothing and still brings something to the coffres.

Meanwhile, 77% of the U.S. economy is services which is untouchable by tariffs. Finance, tech, consulting? all safe. What’s getting hit? TVs, sneakers, cheap electronics (ie: Amazon) ; stuff that’s price elastic and won’t break the economy if it costs 20-50% more (of course middle class will freak).


What I think they are trying to accomplish

When the market cools due to tariffs, they are hoping money will move from the stock market and into U.S. Treasuries (considered “safe havens”). That demand in bonds pushes down yields (interest rates), which makes it cheaper to refinance that mountain of a debt. So yeah, tariffs raise money, but they also lower the cost of borrowing = double win.

Trump is using the nationalism speech while internally could just be his attempt to prevent an actual collapse of the USD. I'm hoping with a lot of doubt here lol cause you know... Trump. We can laugh all we want about his antics, his persona, his failed businesses. But the bottom line truth, the US can't show weakness at a time like this. Even China can't afford to see the US economy collapse as they need people with credit cards to buy their crap (even if they hold 760$ billion in US Treasury bonds).

No taxes. No money printing. No panic and hopefully no riots (this I'm curious to see how they manage this). Just controlled noise. This might be why so few Democrats are yelling. The US economy could truly be at a more fragile crossroads than we know and that doesn't help democrats either. I think Dems will wait a year before going full force as they can't do anything right now.


My conclusions

The middle class is about to get fucking squeezed - But they are going to deflect the inflation to other countries in their narrative to prevent uprising (I think this fails).
Managed inflation while maintaining a strong dollar even if it means the entire world goes into a global recession... this is going to suck for everyone and will take a long time to re-establish trust. But they don't care about that... cause USA#1 regardless. This has always been the american way, should not be a surprise.


The signs I'm looking for

• The stock market is going to take a severe hit. If you have any investments you've already been feeling the burn for over a month.
• After the hit, keep an eye on quality stocks getting hit hard by tariffs will eventually rise back (Apple, Nvidia, etc...).
• Opportunities in U.S. blue chip stocks, especially in service sectors (finance, tech, health) as they're tariff-insulated.
• Treasury yields dropping = demand rising.
• That 3$ Trillion dollar debt.

As for Canada... save your money and buy local. A lot of Canadians need that support more than they need anything from abroad right now. And let’s not forget plenty of countries showed us love when it mattered. They’re about to feel the pain too, and it’s our turn to stand by them. This is gonna hurt, but we might come out stronger if we double down on new alliances. Hopefully, the U.S. wakes up and pulls up a chair at the family table... with a damn good bottle of bourbon.

i like your thoughts, except for 1 thing. Trump and his team are not smart enought to pull this off let alone concoct this plan. He is not an 'evil genius', he is just evil. He does not give a crap about the US debt. He actually just believes tariffs are a miracle tool. He has been touting them since the 80s. And now he is surrounded with yes-men, so no one to stop him. This will blow up in his face and he will find a way out, blaming everyone else but himself.

 

[neverbored]

i like your thoughts, except for 1 thing. Trump and his team are not smart enought to pull this off let alone concoct this plan. He is not an 'evil genius', he is just evil. He does not give a crap about the US debt. He actually just believes tariffs are a miracle tool. He has been touting them since the 80s. And now he is surrounded with yes-men, so no one to stop him. This will blow up in his face and he will find a way out, blaming everyone else but himself.

I agree about Trump and his surrounding. However, I do think he's just a figurehead masking the involvement of far more dangerous individuals who prefer the discritionary space they need to execute their will. People capable of getting an idiot bafoon elected.

Political medling isn't anything new. Its just shocking to most to think that the US itself could ever fall victim. I hate that it sounds so conspirational - but it just feels like the only possible explanation for the current political state.

And yes, it will blow up in his face and the next in line will simply move up.

 

[Gazoo64]

Unreal that one lunatic can cause chaos in stock markets around the world and wipe trillions off of people’s savings!!

These tariffs make no sense, but he has all these puppets around him that bow to whatever the dictator says and dare not contradict him!

Can’t the congress or the senate stop this nonsense? Of course it would take a couple of Republicans to grow a pair of b@lls and actually confront their holy leader.

What crazy nonsense. Are the MAGA gang tired of winning yet ??

 

[gaby]

Yesterday on CNN the CHIEF architect of this FIASCO PETER NAVARRO said the stock market PANIC was the fault of the media.....wow...incredible....déjà vu.....lolllll....

 

[gaby]

...and VP ELON says he wants ''zero tariff situation'' with EUROPE......the clash is coming......someone surprise??????

 

[Gazoo64]

From convicted criminal, to President, to wannabe dictator, to ruining the world’s financial markets (among many other things).
Unreal that this could happen.
Imagine the next 4 years!

History says that things never end well when evil dictators are put in power. I guess the US didn’t learn this lesson?!?

 

[Jazzman1218]

From convicted criminal, to President, to wannabe dictator, to ruining the world’s financial markets (among many other things).
Unreal that this could happen.
Imagine the next 4 years!

History says that things never end well when evil dictators are put in power. I guess the US didn’t learn this lesson?!?

All it took was 230,000 votes in the swing states of Wisconsin, Michigan, and Pennsylvania who were upset with the price of bacon and eggs to elect this idiot. These same voters will swing back to the Democrat candidate (as long as it's not a woman) in 4 years but by then it may be too late. 2024 was the most important election of our lifetime and American voters blew it.

 

[DetectiveDavidMills]

 

[DetectiveDavidMills]

 

[DetectiveDavidMills]

 

[neverbored]

 

[gaby]

...ad do you bet he will win his own tournament today.....and let the universe know...lolll....what a sordid ans abominable character...

 

[neverbored]

...ad do you bet he will win his own tournament today.....and let the universe know...lolll....what a sordid ans abominable character...

My grand father was an avid golfer. He always said he could judge a man's character based on how honest he was with his score.
Mr Shit Pants can't even golf honorably lol

 

[CaptRenault]

I approve almost all of Trump's current policies and his implementation of those policies: cutting federal funds to universities that tolerated anti-semetic , pro-Hamas campus disruptions; banning discriminatory DEI practices by the government; banning men from women's sports etc.

But I am adamantly opposed to Trump's tariff policies and especially by his confused, misguided and bumbling implementation of his tariff policies. He can't even decide the reason for his own tariff policy. Is it to raise revenue to replace the revenue that might be lost by tax cuts or is it to protect and supposedly restore some imaginary golden age of American manufacturing? Or both? Or neither? It depends on what he feels like when he answers the question. He needs to go back to the Univ. of Pennsylvania and retake the Economics 101 course.

Anyway, what should Canada do about Trump's sabotage of the U.S. Canada economic relationship. It would be normal for Canada to punch back hard at Trump and match his tariffs tit for tat. But that would punish Canadians and the Canadian economy just as much as the Trump tariffs will inevitably damage American pocketbooks and firms. A wise Canadian economist and a senior fellow at the Macdonald-Laurier Institute proposes a different strategy and I agree: just wait him out until Americans scream loud enough in protest and threaten to vote against the Republicans in any upcoming elections (other countries should do the same). High tariffs are the same as high taxes and Americans don't need or want any more taxes than they already have.

https://www.wsj.com/opinion/canada-can-beat-trumps-tariffs-by-waiting-them-out-trade-policy-09a92f9a?st=6Mzpxz&reflink=desktopwebshare_permalink

It’s natural for Canada to respond to the barrage of U.S. tariffs by threatening retaliation. But an escalating trade war plays into President Trump’s hands and risks higher inflationary pressures in both countries. A better strategy is to let tariffs raise prices until American consumers and producers pressure Mr. Trump to reverse the damage.

There’s a myth floating around that Canada doesn’t really need the U.S., and that the answer to Mr. Trump’s aggression is simply to diversify Canada’s export market. This isn’t true. Yes, Canada should use the disruption of trade with the U.S. to diversify some exports to other countries. Limiting oil and gas exports to the U.S. would depress Canada’s export prices and cost tens of billions of dollars in lost revenue, and Canada’s ability to sell oil and gas in overseas markets has been severely restricted by its cancellation of major pipeline projects.
But Canada’s ability to diversify export markets is limited. These markets often don’t exist, even if Canada had free-trade deals with all the Group of Seven nations. Most international trade occurs within three regional trading blocs—Southeast Asia, Europe and North America. Geographic proximity is crucial, and much international trade is the movement of products between companies within supply chains. Opportunities to diversify such trade, especially Canada’s auto exports, outside North America are essentially nil.

That means Canada needs a strategy toward the U.S. that won’t dig a deeper hole for both countries. Sending a steady stream of supplicants to the White House pleading for exemptions reinforces Mr. Trump’s power to impose his will, inviting further rounds of threats. Retaliatory tariffs are emotionally satisfying but punish Canadians with higher prices along with U.S. producers.

The best strategy is to call Mr. Trump’s bluff and dare him to impose and maintain higher tariffs. There’s no chance that auto production can be shifted to the U.S. in one year, let alone by April 2, when the 25% tariff on auto goods and many other Canadian products is scheduled to go into effect. The tariff could cause U.S. vehicle prices to soar by as much as $12,000, according to the Michigan-based Anderson Economic Group, as auto parts cross the border several times during assembly.
Let Mr. Trump explain to Americans why they are paying 20 to 40 cents more for a gallon of gasoline—the result of his planned 10% tariff on Canadian oil and gas—and thousands of dollars more for vehicles. Consumers and the Federal Reserve are already worried about inflation accelerating, the opposite of Mr. Trump’s promise to lower prices on day one. Even absent higher prices, there is limited public support for tariffs on Canada. A Jan. 28 poll by Innovative Research Group found that 76% of Americans, including a majority of Republicans, don’t support a 25% tariff on Canadian products.

Canada should follow Australia’s example in dealing with a regional trade bully. After Australia called for an international investigation into the origins of the Covid virus in 2020, China enacted tariffs and restrictions on a wide range of Australian exports. The damage was minimal, as China kept importing Australian minerals while Australia found new markets for many of its other resources. Canada can be confident that U.S. tariffs will hurt Americans and motivate affected consumers and producers to pressure Mr. Trump to reverse them. Trade wars, after all, end in stagflation.
There already has been lasting damage to the reputation of the U.S. as a trustworthy ally and reliable trade partner. Mr. Trump has made clear that America’s signature on any document is now meaningless, whether it is the U.S.-Mexico-Canada Agreement—which Mr. Trump himself negotiated—the North Atlantic Treaty Organization, the Columbia and Great Lakes water treaties, or even U.S.-Canada border agreements settled decades ago. It’s impossible to see how America’s long-term interests are served by its reneging on written agreements. The old adage holds that “trust arrives on foot and leaves on horseback.” When it comes to the longstanding goodwill between the U.S. and Canada, that horse has bolted.

Mr. Cross, a former chief economist at Statistics Canada, is a senior fellow at the Macdonald-Laurier Institute and a contributor to the Center for North American Prosperity and Security.