Trump believes America’s capacity to compel others to do things our way is a wasting asset. He is putting this tariff regime in place to try to drive down foreign tariffs, and he needs to take a strong position to start that bargaining. That’s my guess. I also think he believes we are heading into a period of conflict, and we need to move manufacturing back to the United States because we need our country and North America to be autarkic and able to sustain itself in a hostile world. I think underlying Trump’s boosterish statements is a deep pessimism about our current situation, and our likely future prospects.
Trump is trying to remove all tariffs- that’s his ultimate goal. His approach is to threaten our trading partners with reciprocal tariffs. They will have a difficult time justifying their tariffs while condemning ours.
The problem with free trade is dealing with those who cheat, and don’t act rationally. China has billions of dollars, and buys our treasuries, which should make their currency strong. But they artificially keep the yuan weak - which would allow us to buy up assets in China, but they forbid it! So they have slave labor making us all sorts of products-
I love Milton Friedman and have read everything he has written, but he was a libertarian with a capital L, and a republican with a lower case R- and not a brawler. We are in a trade war. It started decades ago. Should we just accept the status quo? Allow countries to levy tariffs and trade restrictions on us, while we clutch our pearls?
The United States free market economy can out produce and out manufacture and out innovate every other country; they’re socialist dictatorships run by elites.
The tariffs they impose allow them to remain socialist dictatorships! Their citizens don’t revolt, their economies don’t crater, their standard of living while lower than ours seems more appealing.
So we can all pace back and forth and watch the indexes and shake our fist at Trump, but the bigger picture is that we are stopping socialism and globalists and collectivists from their goal to force the U.S. to its knees and usher in a
Globalist economic overlord of elitists.
We must all realize they have been trying to cripple us for decades. They pass laws and rules and manipulate their currencies and steal our intellectual property and it’s all so their overlords can stay in power.
Excellent comment. Exactly right. War by other means. If Im not mistaken, Reagan either instituted or at least threatened something like a 200% tariff on Japanese autos. Real free trade has never been tried.
I am not sure about that. You might be reading something into Trump that you want rather than what he wants. As you recall, people called Obama the empty suit because he would say things and people would project what they wanted into what he said-and instead he would act in the most sinister way possible. The way Trump talks he thinks they can replace taxes. Trump is pretty transparent about tariffs, and how he thinks about them.
In the end, they claim, everyone will be happy — including the American public that will be on the receiving end of the long-term gain of economic prosperity.
But The Post has learned that top Wall Street execs have been warning the White House and Trump himself in recent days that getting to that long-term gain, while feasible, will not be easy.
It could well result in a significant degree of short-term pain, more than just the markets going haywire. It could ignite something known as stagflation of higher prices ie., inflation, and lower growth, a possible recession. It’s an economic disruption not seen in decades as we upend the global trade ecosystem and play chicken with the rest of the industrialized world over tariffs.
Posted for YAZ https://humanevents.com/2025/04/02/megan-barth-liberation-day-is-coming-as-trump-dismantles-china-and-the-uniparty Yet, Trump is not stopping at tariffs. He is eyeing a chokehold on American dollars flowing into China's tech empire. His administration is formulating restrictions to block US investments in their semiconductors and AI sectors, which the CCP weaponizes through its Military-Civil Fusion strategy. China's "civilian" tech firms are legally bound to hand over data and intel to their military overlords. In response, Trump is squeezing out American cash from bankrolling our rivals. It's a bold flex that previous presidents have dared to try. President Trump has closed a sneaky loophole called the "de minimis dodge," which let Chinese goods slip into the US duty-free, screwing American manufacturers and charging American consumers for the favor. As manufacturers begin returning to the United States, Chinese imports will now face the tariffs they deserve. President Trump isn't just responding to a quarter-century of poor policy; he's orchestrating significant victories. (On China we can agree)
Conservative Treehouse claims that closing the de minimis loophole will destroy China's economy. Probably too good to be true, but we can only hope. Apparently ending the de minimis treatment for Chinese goods is targeted particularly at e-commerce sites, like Temu. Boy, what I would give to not have to put up with Temu's annoying Youtube ads, with that annoying ditty peddling cheap Chinese crap. I don't shop on Amazon or ebay anymore, but I understand that cheap Chinese imitations have taken over those sites as well. Cheap Chinese consumer goods are an invasive species like cockroaches.
Sorry, but I don't think Milton Friedman would see a different path on China if he were alive today. The established rationalization for allowing China to join the WTO and opening the US market to Chinese trade was that economic liberalization would lead to political liberalization, i.e. a free and democratic China (see the Hoover Institution's recent Uncommon Knowledge podcast with China expert Frank Dikotter). Wrong. Duh! In my opinion, Friedman's Capitalism and Freedom and Free to Choose provided the intellectual foundation for this erroneous view. The latter book focused on Hong Kong, so you can ask them out that worked out. On what planet was it ever a good idea to outsource our manufacturing to a country run by the Chinese Communist Party?
When I worked for the Haze-Grey Navy--getting on for forty years ago by now--we discovered something interesting. One of the suppliers for the optics on the Sidewinder (AIM-9) air-to-air missile was a company in...Jena, Poland. Apparently they offered the best pricing for these components and as a result, the previous program manager had seen fit to add them to the supplier list.
As you can well imagine this wasn't a good thing and we had to go to considerable lengths to establish an alternate--domestic--source. Unsurprisingly they cost more.
This is perhaps an extreme example, but it's revealing: there were all sorts of laws and regulations--in addition to plain common sense--why we shouldn't be buying a critical military component from a socialist-bloc country. Yet we were.
You may ask, what has this to do with tariffs? Well, OK. The inherent undesirability of tariffs is premised on the notion that "capitalism has no borders" as someone once put it. Well...a laudable idea in theory, but somewhat at variance with the world as we know it.
Let's consider the issue away from the military dimension, which presumably could be addressed by specific laws and regulations of a non-tariff nature ("We're NOT building aircraft carriers in China--or in Korea or Taiwan for that matter--no matter how cheap they are!"). Let's talk about shipbuilding more broadly. The US--for all practical purposes--no longer has a shipbuilding industry. Such capacity as we have is--you guessed it--an appanage of the military: Newport News, Litton Pascagoula, and a couple of other smaller suppliers. Even at the apogee of the Reagan 600-ship Navy building program, the only other major yards were Electric Boat and Bath Iron Works.
I assume we can agree that a maritime nation should have a robust shipbuilding industrial base. Yet we do not.
I do not mean to use this as justification for tariffs. Far from it. But it's a small part of why the calculus of tariff policy must be considered under a broader aegis than "it's cheaper to buy socks made in China."
Jeff - He did all of these last time except consumption tax and school choice which he is working on:
"End all subsidies of US companies and industry. Force them to compete. Will also go a long way in cutting spending.
Deregulate everything. Labor law. Environmental law. Repeal Dodd-Frank and Sarbanes-Oxley. End stupid do-nothing things like CAFE standards in the auto industry, which only make cars cost more.
Make the cost of energy cheap. Drill, baby drill. Abundant supplies of energy make it cheaper to build stuff.
End our current tax regime and go to a consumption tax.
Radically revamp our educational system and enact school choice."
The focus on Trump is easy here because he is a target; the real demons on our policies are in congress being paid by foreign entities to keep policies in their favor.
Trump doesn't like tariffs, it is a very serious leverage point we have rather than sending tax dollars and American lives to enforce policies. I will take them short term.
I notice there is no discussion on Duty Free De Minimus Loopholes or any other ways the world rapes us.
The world doesn't "rape" us is the point. The costs/opportunity costs find the money into the system. American consumers either pay less, or see the US interest rate be lower than it otherwise would, or some other positive economic effect.
China, for the last 10 years has experienced growth of 10% per year which is unheard of. Similar America in the late 19th century. Why?
Tariffs. I love Uncle Milty, but there hasn't been free trade for 34 years at least.
We have given away our manufacturing and with it innovation as they are inseparable. Again, we had deflation from 2018-2021 due to economic leverage as we are the worlds consumers. Wall street doesn't like this so they raise interest rates to keep prices up which is not organic. Increased production over demand drives prices down.
Trump is using these as leverage, not an income stream. Yet. And we know that tariffs cannot replace income taxes which is why we should get rid of these as well.
Covering a lot here and please do not think I am attacking you personally. The bottom line is our own government has satisfied their paymasters since 1913 to over-regulate us driving us down the wrong corridor of cheap labor rather than innovation.
About 20 years ago radio talk show host Neal Boortz and Congressman John Linder proposed what they call a "Fair Tax" to replace federal income tax. They even put a book out on it. A lot of thought went into it, IMO. A wonderful concept because it was based on consumption. The more you bought the more you paid.
I no longer think it's just about "Bad Trade Deals". Like DOGE being originally sold as "finding efficiencies", It's really about the fraud. My imagination was not vast enough, once again, to include this breadth of fraud on top of all the others. Who pays a tariff to an uninhabited island? And 10%? Without checking? All this ruminating about the headlines going across are missing the real details. Like 330 yr old SS recipients. Letting this play out may be the wiser move. Meanwhile, I'm going to go see if I can catch some babies going out with all this bathwater.
Time to upend the post-WWII order where everyone gets by at the expense of the US. Those days are over and the old order needs to be replaced with something else. I don’t want tariffs and Trump is pushing for change towards that goal. We have to move on from us paying tariffs to others and they pay none to us.
The other thought is that increasing tariffs doesn’t automatically spur local production as a replacement nor does it always make sense.
Eg if a widget cost $10 from abroad, it’s for a good reason. It’s because if you made it in the US, it might cost $20. So what’s the benefit?? And what would +25% do? Not much, except to raise the consumer price to $12.5 or it lowers the profits of the widget-maker by $2.5 if they eat the tariffs.
Either way, someone is screwed, while the US collects $2.5 maybe … if the purchasing volumes keep up.
That said, I really think we should have zero tariffs across the board with friendly countries that don’t subsidize and some nominal tariffs with others, selectively.
Little known fact that doesn’t get publicized. The US has about $1 Trillion trade surplus on services, software and technology with the rest of the world. If these countries reciprocate by adding tariffs on the price of software and technology services, the top 20 US Tech companies are screwed.
To do the five things you mentioned to fix the economy (which I agree with), would take a lot of effort on the part of Congress. However, we all know Congress is the one who created those problems and doesn't have the will to enact the things you said. So I think tariffs are one of the only tools Trump has to try to right our economy and so he is using them out of desperation. Also, the State Dept is pretty much worthless when it comes to negotiations, as they always negotiate for the State Dept's interest, not the country's, and in doing so always give away the store.
And that is why we are in the state we are in. Because Congress has failed (not just this one but several others prior to this one--->this one can't be labeled a failure because they are just getting started but Cory Booker didn't inspire any idea they will get things done two days ago)
I voted for Trump for many reasons. I appreciate many things about him & rue the rampant TDS that has infected many Americans & hurt our body politic. That said, Trump adoration is nearly as unbearable as TDS & has also impedes thoughtful discourse. Your post about tariffs is thoughtful and measured. But Trump adoration folk will say you don't get it, that Trump's playing 4D chess. Meh. I voted for DOGE, for deregulation, for common sense that jettisons DEI & the BS permitting men to believe they are women & can change in women's locker rooms. I voted for sane economic policies that work for all; especially lowering prices & lowering inflation. This whacked tariffs thing however hurts the economy & will not lower prices or inflation. Trump has to know that ... right? Because all the good momentum he has achieved thus far will soon go away & mid-terms will bring Wisconsin Supreme Court sized pain if thoughtfulnessdoesn't return. Thanks for your terrific piece again, Jeff. Cheers.
I agree with most of this. Not that it matters how I think but so you have the background to know where I am coming from. Much the same way this essay starts with "I like Trump. I voted for him."
I certainly hope Trump is using this as a negotiating tactic. I can not be sure. Although admittedly Trump needs for everyone to be unsure if the tactic is to work. If people think he isn't serious they won't capitulate. The threat needs to be credible to work.
However. In the spirit of "lets all make the best arguments possible", one supporting argument here does not sit well with me.
"We are far better off trading, and the fact that we are the largest consumer market in the world makes it so everyone wants to sell here. Free trade also keeps our interest rates lower. "
Now, to me, this sounds like "sure we have a trade defect, but we make up for it with a capital surplus". Sure. It's first year macro. Capital account = current account.
But not all capital accounts are the same.
It's one thing when I get dividends from foreign companies and use that to purchase foreign goods. Because then basically they are just sending me things for "free". Free at least in the passive income sense.
It is another thing when I am selling assets or borrowing money to buy consumer items. "Selling bonds" is borrowing money and calling it a surplus on the capital account is just.... well I mean it is technically correct but it feels like we're hiding the ball.
Lots of institutions will finance the defect on your current account by purchasing the bonds from your capital account. Some of them are called credit card companies. Some of them are called are called title loan companies. Some of them are called payday lenders.
When someone goes in for a payday loan we don't talk about how great it is that their current account equals their current account. "They amount they spent more than they made is equal to the amount the borrowed". No duh.
So we need to distinguish. There is a HUGE difference between "living off the interest" and "living off borrowed money". Both involve the capital account but they are not the same.
I don't think that is necessarily correct. It's not a fixed pie, or a zero sum game. Sure, you might see a company move stuff here, but that might be good and might be bad depending on the costs/opportunity costs.
Trump believes America’s capacity to compel others to do things our way is a wasting asset. He is putting this tariff regime in place to try to drive down foreign tariffs, and he needs to take a strong position to start that bargaining. That’s my guess. I also think he believes we are heading into a period of conflict, and we need to move manufacturing back to the United States because we need our country and North America to be autarkic and able to sustain itself in a hostile world. I think underlying Trump’s boosterish statements is a deep pessimism about our current situation, and our likely future prospects.
https://www.zerohedge.com/geopolitical/here-are-three-goals-trump-wants-achieve-through-his-global-trade-war
The author of this post seems to be thinking along similar lines.
Trump is trying to remove all tariffs- that’s his ultimate goal. His approach is to threaten our trading partners with reciprocal tariffs. They will have a difficult time justifying their tariffs while condemning ours.
The problem with free trade is dealing with those who cheat, and don’t act rationally. China has billions of dollars, and buys our treasuries, which should make their currency strong. But they artificially keep the yuan weak - which would allow us to buy up assets in China, but they forbid it! So they have slave labor making us all sorts of products-
I love Milton Friedman and have read everything he has written, but he was a libertarian with a capital L, and a republican with a lower case R- and not a brawler. We are in a trade war. It started decades ago. Should we just accept the status quo? Allow countries to levy tariffs and trade restrictions on us, while we clutch our pearls?
The United States free market economy can out produce and out manufacture and out innovate every other country; they’re socialist dictatorships run by elites.
The tariffs they impose allow them to remain socialist dictatorships! Their citizens don’t revolt, their economies don’t crater, their standard of living while lower than ours seems more appealing.
So we can all pace back and forth and watch the indexes and shake our fist at Trump, but the bigger picture is that we are stopping socialism and globalists and collectivists from their goal to force the U.S. to its knees and usher in a
Globalist economic overlord of elitists.
We must all realize they have been trying to cripple us for decades. They pass laws and rules and manipulate their currencies and steal our intellectual property and it’s all so their overlords can stay in power.
I prefer a trade war to a thermonuclear war.
Excellent comment. Exactly right. War by other means. If Im not mistaken, Reagan either instituted or at least threatened something like a 200% tariff on Japanese autos. Real free trade has never been tried.
I am not sure about that. You might be reading something into Trump that you want rather than what he wants. As you recall, people called Obama the empty suit because he would say things and people would project what they wanted into what he said-and instead he would act in the most sinister way possible. The way Trump talks he thinks they can replace taxes. Trump is pretty transparent about tariffs, and how he thinks about them.
https://nypost.com/2025/04/02/business/trumps-tariff-hardball-is-all-about-forcing-better-trade-deals/ President Trump and his team are telling top financiers his tariff plan unveiled today is all about playing the long game — getting trading partners who are clearly protectionist to reduce or remove their barriers to US exports in exchange for us doing the same.
In the end, they claim, everyone will be happy — including the American public that will be on the receiving end of the long-term gain of economic prosperity.
But The Post has learned that top Wall Street execs have been warning the White House and Trump himself in recent days that getting to that long-term gain, while feasible, will not be easy.
It could well result in a significant degree of short-term pain, more than just the markets going haywire. It could ignite something known as stagflation of higher prices ie., inflation, and lower growth, a possible recession. It’s an economic disruption not seen in decades as we upend the global trade ecosystem and play chicken with the rest of the industrialized world over tariffs.
Posted for YAZ https://humanevents.com/2025/04/02/megan-barth-liberation-day-is-coming-as-trump-dismantles-china-and-the-uniparty Yet, Trump is not stopping at tariffs. He is eyeing a chokehold on American dollars flowing into China's tech empire. His administration is formulating restrictions to block US investments in their semiconductors and AI sectors, which the CCP weaponizes through its Military-Civil Fusion strategy. China's "civilian" tech firms are legally bound to hand over data and intel to their military overlords. In response, Trump is squeezing out American cash from bankrolling our rivals. It's a bold flex that previous presidents have dared to try. President Trump has closed a sneaky loophole called the "de minimis dodge," which let Chinese goods slip into the US duty-free, screwing American manufacturers and charging American consumers for the favor. As manufacturers begin returning to the United States, Chinese imports will now face the tariffs they deserve. President Trump isn't just responding to a quarter-century of poor policy; he's orchestrating significant victories. (On China we can agree)
But the Chinese can trade through a confederate state to get what they want.
Conservative Treehouse claims that closing the de minimis loophole will destroy China's economy. Probably too good to be true, but we can only hope. Apparently ending the de minimis treatment for Chinese goods is targeted particularly at e-commerce sites, like Temu. Boy, what I would give to not have to put up with Temu's annoying Youtube ads, with that annoying ditty peddling cheap Chinese crap. I don't shop on Amazon or ebay anymore, but I understand that cheap Chinese imitations have taken over those sites as well. Cheap Chinese consumer goods are an invasive species like cockroaches.
Sorry, but I don't think Milton Friedman would see a different path on China if he were alive today. The established rationalization for allowing China to join the WTO and opening the US market to Chinese trade was that economic liberalization would lead to political liberalization, i.e. a free and democratic China (see the Hoover Institution's recent Uncommon Knowledge podcast with China expert Frank Dikotter). Wrong. Duh! In my opinion, Friedman's Capitalism and Freedom and Free to Choose provided the intellectual foundation for this erroneous view. The latter book focused on Hong Kong, so you can ask them out that worked out. On what planet was it ever a good idea to outsource our manufacturing to a country run by the Chinese Communist Party?
When I worked for the Haze-Grey Navy--getting on for forty years ago by now--we discovered something interesting. One of the suppliers for the optics on the Sidewinder (AIM-9) air-to-air missile was a company in...Jena, Poland. Apparently they offered the best pricing for these components and as a result, the previous program manager had seen fit to add them to the supplier list.
As you can well imagine this wasn't a good thing and we had to go to considerable lengths to establish an alternate--domestic--source. Unsurprisingly they cost more.
This is perhaps an extreme example, but it's revealing: there were all sorts of laws and regulations--in addition to plain common sense--why we shouldn't be buying a critical military component from a socialist-bloc country. Yet we were.
You may ask, what has this to do with tariffs? Well, OK. The inherent undesirability of tariffs is premised on the notion that "capitalism has no borders" as someone once put it. Well...a laudable idea in theory, but somewhat at variance with the world as we know it.
Let's consider the issue away from the military dimension, which presumably could be addressed by specific laws and regulations of a non-tariff nature ("We're NOT building aircraft carriers in China--or in Korea or Taiwan for that matter--no matter how cheap they are!"). Let's talk about shipbuilding more broadly. The US--for all practical purposes--no longer has a shipbuilding industry. Such capacity as we have is--you guessed it--an appanage of the military: Newport News, Litton Pascagoula, and a couple of other smaller suppliers. Even at the apogee of the Reagan 600-ship Navy building program, the only other major yards were Electric Boat and Bath Iron Works.
I assume we can agree that a maritime nation should have a robust shipbuilding industrial base. Yet we do not.
I do not mean to use this as justification for tariffs. Far from it. But it's a small part of why the calculus of tariff policy must be considered under a broader aegis than "it's cheaper to buy socks made in China."
I added to some stock positions today. Probably early, but a lot of fear out there.
Jeff - He did all of these last time except consumption tax and school choice which he is working on:
"End all subsidies of US companies and industry. Force them to compete. Will also go a long way in cutting spending.
Deregulate everything. Labor law. Environmental law. Repeal Dodd-Frank and Sarbanes-Oxley. End stupid do-nothing things like CAFE standards in the auto industry, which only make cars cost more.
Make the cost of energy cheap. Drill, baby drill. Abundant supplies of energy make it cheaper to build stuff.
End our current tax regime and go to a consumption tax.
Radically revamp our educational system and enact school choice."
The focus on Trump is easy here because he is a target; the real demons on our policies are in congress being paid by foreign entities to keep policies in their favor.
Trump doesn't like tariffs, it is a very serious leverage point we have rather than sending tax dollars and American lives to enforce policies. I will take them short term.
I notice there is no discussion on Duty Free De Minimus Loopholes or any other ways the world rapes us.
The world doesn't "rape" us is the point. The costs/opportunity costs find the money into the system. American consumers either pay less, or see the US interest rate be lower than it otherwise would, or some other positive economic effect.
Here is Spencer Morrison, an expert on tariffs
https://podcasts.apple.com/us/podcast/bannon-s-war-room/id1485351658?i=1000701971778
China, for the last 10 years has experienced growth of 10% per year which is unheard of. Similar America in the late 19th century. Why?
Tariffs. I love Uncle Milty, but there hasn't been free trade for 34 years at least.
We have given away our manufacturing and with it innovation as they are inseparable. Again, we had deflation from 2018-2021 due to economic leverage as we are the worlds consumers. Wall street doesn't like this so they raise interest rates to keep prices up which is not organic. Increased production over demand drives prices down.
Trump is using these as leverage, not an income stream. Yet. And we know that tariffs cannot replace income taxes which is why we should get rid of these as well.
Covering a lot here and please do not think I am attacking you personally. The bottom line is our own government has satisfied their paymasters since 1913 to over-regulate us driving us down the wrong corridor of cheap labor rather than innovation.
About 20 years ago radio talk show host Neal Boortz and Congressman John Linder proposed what they call a "Fair Tax" to replace federal income tax. They even put a book out on it. A lot of thought went into it, IMO. A wonderful concept because it was based on consumption. The more you bought the more you paid.
Fairtax.org, I am on the advisory board!
Shhh, don't tell Jeff.
https://x.com/JavierBlas/status/1907556720424964233
I no longer think it's just about "Bad Trade Deals". Like DOGE being originally sold as "finding efficiencies", It's really about the fraud. My imagination was not vast enough, once again, to include this breadth of fraud on top of all the others. Who pays a tariff to an uninhabited island? And 10%? Without checking? All this ruminating about the headlines going across are missing the real details. Like 330 yr old SS recipients. Letting this play out may be the wiser move. Meanwhile, I'm going to go see if I can catch some babies going out with all this bathwater.
agree.....
Time to upend the post-WWII order where everyone gets by at the expense of the US. Those days are over and the old order needs to be replaced with something else. I don’t want tariffs and Trump is pushing for change towards that goal. We have to move on from us paying tariffs to others and they pay none to us.
Very well put.
You shld go on cncb and splain’ that !!
The other thought is that increasing tariffs doesn’t automatically spur local production as a replacement nor does it always make sense.
Eg if a widget cost $10 from abroad, it’s for a good reason. It’s because if you made it in the US, it might cost $20. So what’s the benefit?? And what would +25% do? Not much, except to raise the consumer price to $12.5 or it lowers the profits of the widget-maker by $2.5 if they eat the tariffs.
Either way, someone is screwed, while the US collects $2.5 maybe … if the purchasing volumes keep up.
That said, I really think we should have zero tariffs across the board with friendly countries that don’t subsidize and some nominal tariffs with others, selectively.
Little known fact that doesn’t get publicized. The US has about $1 Trillion trade surplus on services, software and technology with the rest of the world. If these countries reciprocate by adding tariffs on the price of software and technology services, the top 20 US Tech companies are screwed.
I think the point you made about trade surpluses on services etc is not well known and glad you made it.
To do the five things you mentioned to fix the economy (which I agree with), would take a lot of effort on the part of Congress. However, we all know Congress is the one who created those problems and doesn't have the will to enact the things you said. So I think tariffs are one of the only tools Trump has to try to right our economy and so he is using them out of desperation. Also, the State Dept is pretty much worthless when it comes to negotiations, as they always negotiate for the State Dept's interest, not the country's, and in doing so always give away the store.
And that is why we are in the state we are in. Because Congress has failed (not just this one but several others prior to this one--->this one can't be labeled a failure because they are just getting started but Cory Booker didn't inspire any idea they will get things done two days ago)
I wonder if the media would slobber all over Trump if he spoke for 25 hours? What a clown show!
I voted for Trump for many reasons. I appreciate many things about him & rue the rampant TDS that has infected many Americans & hurt our body politic. That said, Trump adoration is nearly as unbearable as TDS & has also impedes thoughtful discourse. Your post about tariffs is thoughtful and measured. But Trump adoration folk will say you don't get it, that Trump's playing 4D chess. Meh. I voted for DOGE, for deregulation, for common sense that jettisons DEI & the BS permitting men to believe they are women & can change in women's locker rooms. I voted for sane economic policies that work for all; especially lowering prices & lowering inflation. This whacked tariffs thing however hurts the economy & will not lower prices or inflation. Trump has to know that ... right? Because all the good momentum he has achieved thus far will soon go away & mid-terms will bring Wisconsin Supreme Court sized pain if thoughtfulnessdoesn't return. Thanks for your terrific piece again, Jeff. Cheers.
I agree with most of this. Not that it matters how I think but so you have the background to know where I am coming from. Much the same way this essay starts with "I like Trump. I voted for him."
I certainly hope Trump is using this as a negotiating tactic. I can not be sure. Although admittedly Trump needs for everyone to be unsure if the tactic is to work. If people think he isn't serious they won't capitulate. The threat needs to be credible to work.
However. In the spirit of "lets all make the best arguments possible", one supporting argument here does not sit well with me.
"We are far better off trading, and the fact that we are the largest consumer market in the world makes it so everyone wants to sell here. Free trade also keeps our interest rates lower. "
Now, to me, this sounds like "sure we have a trade defect, but we make up for it with a capital surplus". Sure. It's first year macro. Capital account = current account.
But not all capital accounts are the same.
It's one thing when I get dividends from foreign companies and use that to purchase foreign goods. Because then basically they are just sending me things for "free". Free at least in the passive income sense.
It is another thing when I am selling assets or borrowing money to buy consumer items. "Selling bonds" is borrowing money and calling it a surplus on the capital account is just.... well I mean it is technically correct but it feels like we're hiding the ball.
Lots of institutions will finance the defect on your current account by purchasing the bonds from your capital account. Some of them are called credit card companies. Some of them are called are called title loan companies. Some of them are called payday lenders.
When someone goes in for a payday loan we don't talk about how great it is that their current account equals their current account. "They amount they spent more than they made is equal to the amount the borrowed". No duh.
So we need to distinguish. There is a HUGE difference between "living off the interest" and "living off borrowed money". Both involve the capital account but they are not the same.
If I am right, tariffs mean more things made in America and lower taxes. If I am correct, then I am going all in. https://tinyurl.com/yeyp6evt
I don't think that is necessarily correct. It's not a fixed pie, or a zero sum game. Sure, you might see a company move stuff here, but that might be good and might be bad depending on the costs/opportunity costs.