Haven't seen much of a discussion on tariffs here yet...
What are you guys predicting? Seems like all markets are already reacting super negatively.
Wonder exactly how far Trump is willing to go with this...will surely be inflationary right? Feeling pretty pessimistic myself
Buckle up
Tariffs are bad short term but potentially good long term (5+ years at least). Trump is not getting a 3rd term but looks like he is willing to take the risk to set the stage for another 8 years or more of Republican rule.
How are tariffs good long term
can grow (or in this case, bring back) domestic production
Are you the real Gordan Chang?
Mexico and Canada have to cave or risk a severe economic decline. This is why both President's are talking tough about how this is going to hurt the US economy, when the inevitable reality is their countries cannot sustain this. The EU most likely will do something they shouldn't have and get tariffs slapped onto themselves.
Unpopular opinion but I think this is good for G7 / EU countries. They have essentially stagnated and relied on the US since the fall of the Soviet Union. Whether it's tariffs, demands to increase defense spending, or withholding aid - it is time for them to stand on their own footing.
Econ 101. Tariffs hurt everyone. Efficient, large supply chains are great and benefit all. It's not about 'relying' on the US like may be the case with defense spending.
Red states are going to get railroaded.
Trump launches tariffs against US, Mexico, China, soon EU - and you think those are the ones that will get hurt most?
Unlike Trump, these parties aren't morons. They know full well where tariffs can hurt the most, and who has the most to lose.
In what way will Canada "cave"? What is Canada supposed to do?
Thanks prospect
Not a surprise. Any time Trump or Republicans do something moronic the usual crowd is dead silent. They’ll make a thread each if a Democrat does something dumb though.
WSO's servers can't handle a thread for every stupid thing a Democrat does.
ha.
The basic argument for MAGA tariffs is that the US is far less reliant on trade as a percentage of its GDP than other countries are. US has about 27% of its GDP in imports and exports, China has 37%, Canada has 67%, Mexico has 74%, Panama has 96%, and Denmark has 128%, so the basic idea is that if the US applies $1 worth of tariffs against Canada or Mexico, it will cause 2-3x the amount of damage to them as it would to the United States, and the US can use this concept to extract some sort of concession from these countries, be it territorial, natural resources, immigration, favorable investment rights, currency rates, monetary conditions, intelligence, or a whole host of other asks. The US is a net exporter of energy and food, which are arguably the basis of modern living, so it can afford to take this posture. Yes, tariffs are inherently inflationary and cause certain reductions to the economy, but to the extent that they are used in negotiating even more exorbitant privileges with other countries, they could in turn increase national treasure through some kind of trade warfare extractive colonialism / imperialism which siphons off foreign wealth for US purposes.
The second argument for MAGA trade warfare depends on how you view the Chinese economy. Certain economic commentators view that China has seen extraordinary modernization and economic growth in an economic miracle of the last 50 years, but that this has culminated in three things. 1. China is in demographic decline due to industrialization and the reverberating consequences from the now discontinued "One Child Policy," which will put strains on their workforce and economic output, although it remains to be seen how AI could potentially mitigate such things. 2. China has enormous amounts of real estate debt which is held at the regional government level rather than at the federal level, so China actually has a national debt that is 3x that of the United States, but it is not held at the national level. Real estate is an enormous part of the local economy, and there is a bubble dynamic where Chinese people will invest in entire skyscraper condos which no one ever uses (Evergrande, Country Garden, etc. are the tip of the iceberg as it is an enormous trillion dollar space). 3. This one is the most critical for the tariffs: China has industrial overhang of manufacturing supply, so it requires export customers in order to sustain itself. By imposing tariffs, you further exacerbate this oversupply, which is inherently deflationary.
Summing everything together, industrial oversupply deflation + one child depopulation deflation from reduced domestic demand + ballooning local government debt from the real estate bubble on a potentially shrinking level of GDP = massive oversupply problem which leaves the country as a husk state, devoid of people but brimming with overbuilt infrastructure which is impossible to maintain and domestic deflation problems. The argument is that tariffs are the puff of wind which knocks down the house of cards.
Super interesting.
How do you see China countering? I read that maybe they will allow their currency to devalue. Game theory says then other countries (EU?) will place tariffs or restrictions on trade on them in response.
Yes, you can continue devaluing your currency, but you can also increase the rate of the tariff. It's just a math problem at that point. What matters is the political will to reduce purchases of another country's products. To the extent that Europe can be roped into this as well, yes, the tariffs would have more of an impact on China. With Donald Trump's unwillingness to disavow the use of an invasion to attack an Article V NATO ally for Greenland, it would appear that he is less interested in European collaboration on containment of China through the use of tariffs and is more interested in the world being partitioned into spheres of influence between Russia, China, and the United States. That is to say, he is less enamored by countering China or Russia on their regional ambitions than by ensuring that he has commensurate regional ambitions of his own to compensate for the regional ambitions he allows in others.
China has a lot of problems related to the "one child" policy and a looming demographic nightmare, but they aren't starving for cash. I've dealt with CIC, and there're basically second to Norway.
Now if you want to have a good rant, repealing the Jones Act makes sense, Flags of convenience are a joke, but it's stupid.
But can red states afford a trade war - where retaliatory tariffs are directly aimed at said red states? Killing off cornerstone industries there could literally turn states into third world countries, even more so than before. Increased trade between Mexico, Canada, China, EU (and whoever gets hit with tariffs) could afford them more time. A bunch of red states will go down the tubes long before those countries.
I would imagine that under such a scenario, there would be a strong impetus for redistributive subsidies to prop up critically impacted industries, thereby imposing some of the blow on the blue states as well, which could make it more palatable in aggregate.
It is absolutely fucking hilarious that the idiots on this forum think that the guy who 1.) inherited all his wealth 2.) ran several businesses into the ground and filed for bankruptcy multiple times 3.) Constantly says dumbshit like "run, spot, run", 4.) and soooo many other dumbass decisions is capable of any type of long term strategic planning. I'm surprised the man is able to get dressed in the morning and you morons are here talking about some deep play against China lol. The cope is real.
This is honestly how cults and religion operate. The followers are capable of Olympic gold medal mental gymnastics and can honestly convince themselves of anything if they want to.
Trump could lob a nuke over at Russia and I am certain you morons will be able to draft a thesis as to why WW3 would be the greatest thing to ever happen to America
I actually don't know who is dumber, Trump or his supporters LOL
Listen I can’t stand Trump just as much as any other person on the left but I think the analysis above by @kellycriterion speaks to the fact that Trump isn’t the sole actor pulling the policy strings here. He has a robust cabinet of competent lawmakers / economic advisors that could be very well trying to employ the above strategy here. If you want to debate the policy impacts, debate the policy impacts but we can’t keep using “trump is too dumb to do this lul” as a cop out to not engage with the consequences of very real long-term policy decisions being made in that office right now.
We have to stop giving any individual president so much credit on these things lmao, Trump just signs the papers - that’s it.
I agree with most of what you said but wouldn’t on a dollar for dollar basis it hurt the US more than other countries because the US GDP is much larger? I’m not really sure so just curious.
China does not have an election to worry about, US does.
This will be suicidal. The key, is not the import/export, but the dollar.
This is what he promised, so I’m not surprised and glad he is doing it. All the same morons are screaming and crying about this move, mind you these are the same morons who sent mfg overseas and decimated the US industrial base, want unfettered illegal immigration with its adjacent crime and drugs, and pushed infinite H-1Bs from backwards countries, so I figure Trump must be on to something.
As an American, I just hope this works out in our favor over the long term. I’m not a fan of the guy. America voted for a disruptor, and this is what we are getting.
As someone in real estate, I can see how injecting political risk into offshoring a factory (ie 100’s of millions to billions of dollars) in say Mexico to take advantage or circumvent economic treaties, could cause this type of strategy to be rethought in the future. We were even willing to piss off our closest allies. There’s probably going to be pain (if you’re young, the stock market crash if deep will be an opening for you). And at least for a generation of professionals, second thoughts on how to evaluate risk reward of this high capex off-shoring strategy going forward. That is one takeaway I believe is almost 100% certain and maybe in the US’ long term interests.
I have no idea how it will all turn out. History will tell.
As someone that has repeatedly bet my net worth building out supply chains in the US and abroad, it’s extremely frustrating.
Keep in mind he’s reneging on the deal he negotiated lol.
Prediction: It will crash the (global) economy, and strengthen economy ties / trade between the affected countries. Red states will be the first to go down the tubes, as those are the states that will get hit the worst - and likely to be singled out. Trillions in bail-out money might be the way to float them for some time.
If things get bad enough, maybe a realistic impeachment will be back on the table. Some of his voters will have to touch the hot stove, and face reality.
It has to be to pay for TCJA or whatever his tax cuts are called. In that context, this shit isn't going away IMO.
Remember what he said: https://www.reuters.com/world/us/trump-push-use-tariffs-pay-tax-cuts-fa…
"Instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens. For this purpose, we are establishing the External Revenue Service to collect all tariffs, duties and revenues. It will be massive amounts of money pouring into our treasury coming from foreign sources," Trump said during his inaugural address on Monday.
Bingo
lol this forum refuses to call Trump the dumbass that he is. Surprised it took so long for this thread to be made.
This same moron is still fixated and rambling about Canada becoming the 51st state, and taking the Panama Canal and Greenland.
China and Russia are loving every minute of this.
My personal favorite are the MAGAs on social media crying about how this will affect their business and livelihood. You voted for this so bend over and take it.
[Sarcasm]Enjoy the cheaper cost of living that he promised you[/sarcasm]
Go ahead and cover me in monkey shit. It’s funny how some of you nerds think that hurts people’s feelings
But I thought Trump was single handedly going to lower the price of eggs!?!
How do US tariffs compare to other countries?
Everyone turns into Milton fucking Friedman when the US imposes tariffs, but is more than happy to bend over and take it from other countries.
How about instead of quoting Econ 101 you go study some Econ 201 and learn about tit for tat.
Exports to the US only account for ~15% of Chinese exports. I'm sure they've been preparing for this scenario for 5+ years.
I'll get downvoted for this, but I sometimes question how American's view the world. To take an example, the ideal China seems to be:
- Democratic (assuming the people vote pro-US)
- Third-world country with no tech ambitions (world's low-cost factory — but cannot take away US jobs)
- Strong consumer economy to sell US goods (please no refugee crisis)
- No territorial disputes, no buffer zone with US (no sphere of influence)
- No military (US hegemony)
- Yes military (no freeloaders)
Canada checks many of these boxes, and even they're getting the Trump treatment LOL
It’s modern day Monroe Doctrine to contain China. None of this should come as a surprise. Our vassals again need to fall in line under the new world paradigm. No more business with China or else we force a regime change that will do our bidding.
My take is that inflation is going to tick up over the next 12-18 months. Cost of tariffs will be passed onto consumers almost immediately and worsened by a reduction in immigration which reduces labour supply. The Fed may eventually have to raise rates in response.
With many things - and trade policy is certainly one of those things - it's foolish to assume the first move reveals a lot about the strategy.
Not sure exactly what Trump's endgame is but he's shown himself over the years to be very aware of decisions that are easily reversible. Tariffs are easily reversible so he doesn't mind fucking around and finding out. Many will take it as a sign of erraticism but I think it's pretty smart. There's interviews with Jeff Bezos where he talks about not wasting precious time thinking too long about decisions that you'll be able to reverse later.
Love the idiots in here doubting Trump. Sends a couple tweets and has a couple phone calls and gets billions of dollars worth of concessions and manpower to both borders in a matter of days. And now Mexico and Canada are on their heels with their 30 day reprieves, and they better actually show progress.
How much time did this take Trump, maybe a few hours? It’s literally always been this easy, but TDS morons probably think this is “losing” and “undiplomatic”. Trump is going to drag the losers and haters across the finish line.
Canada held out the longest so far at just over 16 hours, but Trudy bitched out earlier today. Was hilarious watching that cute little press conference announcing tariffs on $155m in US goods and saying not to buy Floridian orange juice. It's like watching a 6 year old try to apply financial pressure on a 40 y/o working professional. It's been literally 2 weeks and Trump's gotten more economic concessions from other countries that the senile old man did in 4 years... libs just dripping with cope 😂
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