9 ms·

I think a lot of people assume the economic consequences like these have not been understood by the WH. Although I don't like this administration I beg to diffe

• maxerickson 2y ago
  If that is the plan, it's terrible. The majority of US debt is domestic. https://usafacts.org/articles/which-countries-own-the-most-us-debt/ https://usafacts.org/articles/which-countries-own-the-most-u...
  • ggm 2y ago
    Yes and no. As a headline "I reduced $7t of foreign debt" is pretty good. The plan appears to be to invite people to Mar a Lago and offer to trade the existing debt for new instruments out in the never-never. Domestic debt might not be such a big deal? Who is coming to collect?
    • maxerickson 2y ago
      So the argument is that we crashed the economy but at least we screwed foreigners over and not just social security?
      • Jensson 2y ago
        Wasn't that the plan all along, people always said "Ballooning Government debt is fine since unlike normal debt Governments can just print money and never really pay back the real value". Someone has to get screwed over when you do that, who do you suggest get screwed over?
        • jquery 2y ago
          That was a rainy day argument for not caring too much about debt. But what's happening now is we're raiding our savings account to pay for bath salts. No, it was not "the plan all along".
          • Jensson 2y ago
            > But what's happening now is we're raiding our savings account What savings, USA just takes on more debt it hasn't saved anything.
        • realusername 2y ago
          Other countries got screwed when doing that because the US used to have the world currency and could print money essentially without repercussions. Note the past tense as this advantage is now gone with Trump.
        • nthingtohide 2y ago
          I heard the term "bail-ins" used in this context. i.e. the elites will have to suffer the devaluation.
      • anigbrowl 2y ago
        YES. About ~30% of people appear willing to experience a loss as long as they believe they're inflicting a greater loss upon other people, and this personality type is baked in young. In my vier it's not a coincidence that polled support for Trump consistently hovers around 30%. https://www.science.org/doi/10.1126/sciadv.1600451 https://www.science.org/doi/10.1126/sciadv.1600451 Not all policy is rational. Oftentimes it's atavistic. Surely you have noticed by now that Trump deals in emotional arguments, not reasoned ones.
    • seanmcdirmid 2y ago
      > Domestic debt might not be such a big deal? Who is coming to collect? Old people with retirement needs. A lot of that debt is borrowed from SS surpluses in the past, and now the system is actually in deficit (so needs what it lent out back and then some). I’m all for screwing over boomers, psychologically I’ve convinced myself they are responsible for Trump and this mess (not entirely true, but the boomers as a generation messed things up for us before Trump was president, anyways).
    • tpm 2y ago
      > As a headline "I reduced $7t of foreign debt" is pretty good. Nobody cares about the big numbers when the wallets are empty.
    • nl 2y ago
      So the full faith and credit of the US Treasury is thrown away just like that? No one collects the debt. It’s just redeeming treasury bonds. If they are no longer good then the sub prime crisis is going to look like a minor economic wrinkle.
  • s1artibartfast 2y ago
    Still fits within a populist agenda. Not a lot of sympathy for mutual funds and the wealthy holding treasury notes that get inflated away. I'm not excited that 20% of federal revenue goes pay debt interest to some investors and stockholders. Especially when much of the original debt spending also went into the pockets of stockholders, sometimes the same ones. Of course, the actual problem is lack of control and debt spending, not the fact that investors exist. People say that public debt doesn't matter because it domestic, but the recipients and payers are different. It doesn't cancel out when I'm responsible for paying taxes and Vanguard or JPMorgan get the debt interest.
    • mahogany 2y ago
      > Still fits within a populist agenda. Not a lot of sympathy for mutual funds and the wealthy holding treasury notes that get inflated away. Wouldn’t this include average people’s pensions, IRAs, etc, too?
      • s1artibartfast 2y ago
        Yeah, national debt is splattered all around the US economy, but that doesn't mean it is uniform, or the payers and recipients are the same in terms of participation, returns, or even time. Foundationally, national debt is about passing costs into the future, which also creates another huge dichotomy in payers and beneficiaries. Minimal federal spending is on growth, so isn't really about investment as how much value can be extracted from one group to another, largely, but not entirely overlapping group.
        • mahogany 2y ago
          > but that doesn't mean it is uniform, or the payers and recipients are the same in terms of participation, returns, or even time. I’m not sure if I’m following, but a (let’s say) 20% cut to the value of an average retiree’s pension account will hurt much _more_ than the same cut to a diversified wealthy person. This is simply because poorer people are affected more by fixed costs. I don’t see where the populist angle comes in. Shouldn’t the populist angle be about targeting the “elite” specifically?
• belter 2y ago
  You have seen nothing yet. Next he will want a mineral deal with each country to pay back the money they stole from the USA in the past. "Primate Behavior Reference 21": https://youtu.be/GhxqIITtTtU https://youtu.be/GhxqIITtTtU
  • ggm 2y ago
    We even have aspiring leadership in Australia who see this as a win win and have proposed offering JV in uranium, lithium and rare earths. Murdoch press backs the idea, even when criticism of Trump is overt they always go to "we need him more than they need us" because of 50+ years of Defense posture which assumes we're insured by US forces.
    • sitkack 2y ago
      They will hang you out to dry.
    • GuestFAUniverse 2y ago
      What posture? Contracts with either Russia, or the US are worthless. E.g. the Budapest Memorandum? " According to the three memoranda, Russia, the U.S., and the U.K. confirmed their recognition of Belarus, Kazakhstan, and Ukraine becoming parties to the Treaty on the Non-Proliferation of Nuclear Weapons and effectively removing all Soviet nuclear weapons from their soil, and that they agreed to the following: 1. Respect the signatory's independence and sovereignty in the existing borders (in accordance with the principles of the CSCE Final Act). 2. Refrain from the threat or use of force against the territorial integrity or political independence of the signatories to the memorandum, and undertake that none of their weapons will ever be used against these countries, except in cases of self-defense or otherwise in accordance with the Charter of the United Nations. 3. Refrain from economic coercion designed to subordinate to their own interest the exercise by Ukraine, the Republic of Belarus, and Kazakhstan of the rights inherent in its sovereignty and thus to secure advantages of any kind. 4. Seek immediate Security Council action to provide assistance to the signatory if they "should become a victim of an act of aggression or an object of a threat of aggression in which nuclear weapons are used". 5. Not to use nuclear weapons against any non–nuclear-weapon state party to the Treaty on the Non-Proliferation of Nuclear Weapons, except in the case of an attack on themselves, their territories or dependent territories, their armed forces, or their allies, by such a state in association or alliance with a nuclear weapon state. 6. Consult with one another if questions arise regarding those commitments. "
• jckrichabdkejdb 2y ago
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• tootie 2y ago
  I have never caught even the slightest whiff of Trump knowing what he's doing on any topic. I'm genuinely not trying to be glib either, this is a sincere observation. When has he publicly or privately intimated that he understands how tariffs or trade work? Or energy or immigration or infrastructure or technology? His public persona gives facile and misleading explanations that are ostensibly just politicking, but every tidbit of leaked insider accounts or hot mics or unguarded moments don't show anything more than the same persona.
  • ggm 2y ago
    This tariff plan isn't Trumps. He co-opted Robert Lighthizer last time round, He was a trade negotiator, who believes strongly in protectionism.
    • threeseed 2y ago
      It is Howard Lutnick's plan who is the Secretary of Commerce. Has been widely reported that there was conflict amongst the inner circle about the extent of the tariffs and that it was Lutnick pushing for the most extreme version which is what we ended up with.
      • ggm 2y ago
        Thanks for the correction. I had trouble remembering the name and when I went searching Lighthizer came up first.
      • tootie 2y ago
        Is there a cite for that? I believe it just haven't seen it. Very worrying because Lutnick was Musk's guy and that puts him at least adjacent to Thiel and his cult of monarchy.
  • lurk2 2y ago
    > When has he publicly or privately intimated that he understands how tariffs or trade work? He has a Bachelor's Degree in Economics.
• deleted 2y ago
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• fspeech 2y ago
  That runs against basic financial reality. The treasuries are the basis of all U.S. liquidity. Owning commercial papers or stocks doesn't help as companies own treasuries. Putting deposits in banks won't help either because banks hold treasuries.
  • ggm 2y ago
    You've read up on the purported "Mar a lago" accord model? The idea is to threaten a repudiated debt, or agree to convert to long term non interest earning debt alternatives which can't be traded.
    • fspeech 2y ago
      That's supposedly done with the agreement of the creditors. There's never paying down of national debt over an extended period of time. That's not how modern finances work. Why they feel the need of cramming down friendly creditors is beyond me.
• DeRock 2y ago
  This is, as they say, “sanewashing”. Trump is doing this out of a mix of spite and a view of trade as a zero sum game. He may be advised into a path to try to pivot this into a “win” by large scale debt restructuring, but that is not the overarching motive.
  • saberdancer 2y ago
    Fully agreed. Tariffs are one thing that Trump has always been clear about. He likes them, he sees them as beneficial and now that he has no brakes in this administration he is finally going to try and put them in place. There is no 4D chess.
    • XorNot 2y ago
      I mean it's also clear he doesn't understand them. The poster he posed with today has a column labelled "tarrifs charged to the USA". The main feature of them was he discovered in his first term he could do them unilaterally without Congress, and his audience would just go along with it anyway.
• NicoJuicy 2y ago
  Of course they don't know. Should be obvious by now. They are not experts in the field. But loyalists for a trump autocracy
• r00fus 2y ago
  > I would think it unlikely they can secure an updraft from this to keep the house. What's the plan for that? Clearly they will "secure the vote". Massive voter disenfranchisement is already taking place, it will go to the next level.
  • threeseed 2y ago
    Elon proved this with the Wisconsin Supreme Court vote. He will likely dangle hundreds of millions in front of voters across the US to buy their vote without any repercussions. And then make that money back through the insider dealings that prioritise SpaceX et al.
    • apparent 2y ago
      GOP outspent Dems in WI and lost. Dems outspent GOP in FL and lost.
      • threeseed 2y ago
        Which is a sample size of 2. We have 468 seats which are up for election. Musk's brazen [1] use of money will have an impact. Question is how much. [1] https://apnews.com/article/wisconsin-supreme-court-elon-musk-trump-d75807980ac311b87606fb4ec58cc466 https://apnews.com/article/wisconsin-supreme-court-elon-musk...
        • apparent 2y ago
          [flagged]
          • Propelloni 2y ago
            I don't know how many billionaires support which party, so you may be right. I would be interested in a source. However, I believe there is a difference between donating money to a party and outright buying a vote. Let's see how we all think about it when the Dems start doing it, too.
• vitorgrs 2y ago
  The weighted average of the new U.S. tariffs will be 29% it seems. Maybe they know the consequences, but to give you a idea... it was 1.5% before. The new ones will be equivalent to Brazilian tariffs in 1989 before opening the economy (31%, data from World Bank). Now, Brazilian tariffs, which have one if the most closed economies, by weighted average, is 7%. China, have 2.2%. The United States will be an autarchy, similar to how LaTam was in the 70's, when tried this exact idea. The tariffs being as high instantly, will impact the economy, later, the country will probably grow, which is what they expect, but this is not a productive grow. Because your new factories now are not competing with external products, so your productivity go down, this means real income will also go down. So yeah, some people at best (if is not a robot doing the job) will have a job in a factory, but on what he will be able to spend with his wage won't make it worth even for this person.
  • gscott 2y ago
    I was reading an interesting article about tariffs put on foreign garlic or mushrooms can't remember which, rather than buying American companies just paid more for the foreign product and charged higher prices. The American makers of the product didn't sell more the company's just didn't care. Prices will go up Americans will buy less deflation will occur because they have to sell the product.
    • vitorgrs 2y ago
      Likely will result in worse products as well (which is what happens when you remove competition). LaTam is perfect example on how bad this "wide" protectionism is. There's a ton of economic papers about it. If you really want protectionism, you could do something more similar to how South Korea did, by choosing specific sectors of economy you want to "protect", to create a "national industry". Most protectionist industrial policies also exempt imports of machines and other supplies used in factories. e.g. It makes no sense to put tariffs on machines used in a factory in the USA. AS that would make it more expensive for a factory to operate if they have to import a more expensive machine from Germany. "Buy a machine from the U.S", that would mean a more expensive machine likely, as it only exists because of tariffs. That basically means you'll have factories on best case scenario, but your cars, your computers, phones, won't be exported.
• jimnotgym 2y ago
  If they hold the midterms...
  • briandear 2y ago
    Is this a thought held by any serious person? The only major country to indefinitely postpone an election recently has been Ukraine. This idea that the midterms wouldn’t be held is tin foil nonsense.
    • chimprich 2y ago
      Ukraine hasn't postponed elections indefinitely. They have postponed them until they are no longer at war. Other countries have effectively gone from moderately democratic elections to sham elections. Turkey is one major country that is going through this process at the moment.
• johntitorjr 2y ago
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• jquery 2y ago
  This sounds like typical NYT sane-washing. After the Signal fiasco I've lost all confidence this administration is secretly super competent but just refuses to let any of us see it. There is no big plan here. This is just an old man surrounded by too many yes-men.
  • api 2y ago
    There is also a camp of ideologues that don’t care if they implode the economy if they get to LARP the TV version of the 1950s. Imploding the economy might even make it easier to sell traditionalist politics.
• philistine 2y ago
  Trump 2 is as far from Trump 1 as Trump 1 was from W. Bush.
  • DidYaWipe 2y ago
    And now W looks like a respectable statesman by comparison. And by comparison, he is.
    • CapricornNoble 2y ago
      Even during the first Trump Presidency I would see meme images of Bush Jr. captioned "Miss me yet?"
      • DidYaWipe 2y ago
        W was a tool, but I never thought he harbored malevolent intent for our country or served as a foreign asset the way Trump does.
  • MandieD 2y ago
    Trump makes Clinton look like a gentleman and Bush Jr. look like a scholar.
• porridgeraisin 2y ago
  The 2nd paragraph is 100% accurate.
• kilroy123 2y ago
  I think this is what's going on: https://youtu.be/cmTeg0B9tH8?si=yhIAg45FCBUW40mI https://youtu.be/cmTeg0B9tH8?si=yhIAg45FCBUW40mI
  • nthingtohide 2y ago
    Japan Joins CHINA To Strike Back On U.S. Trade Punishments! https://www.youtube.com/watch?v=ZOz4UgTW5-0 https://www.youtube.com/watch?v=ZOz4UgTW5-0 I recommend reading the summary of the video if you don't have time.
• aiauthoritydev 2y ago
  I have followed writings of the many in this administration, seen their interviews etc. Anyone who thinks there is a "5D chess", "the plan" etc. is purely drinking cope here. > cheap labor factories again isn't going to happen in 2025 It is not going to happen ever unless we plan to move people from better paying jobs in McDonalds and WellsFargo to China styled factories or we allow much higher immigration levels from South America. Trump admin and his advisors genuinely believe that tariffs are good, that they will create factories and jobs within USA and enable white families to raise families on a single income. They think rest of the world's existence is a mistake, they hate Europe, China, India and South America. They don't know much about Africa and admire Russia.
  • DidYaWipe 2y ago
    They didn't learn from the last time, when U.S. soybean farmers got screwed (the first time) and other countries established alternate supply chains that of course didn't involve the U.S. at all. As the USA makes itself a trade pariah and other countries forge new relationships amongst themselves, we're permanently devalued. The world will (continue to) move on without a backward-looking, unreliable, sad, and obnoxious USA.
    • aiauthoritydev 2y ago
      Trump's inner circle like Navarro, Miller etc. do not give two hoots about Soybean farmers or anyone else. They think poverty is a good thing if helps their view of "nationalism".
    • mrguyorama 2y ago
      >They didn't learn from the last time, when U.S. soybean farmers got screwed They absolutely learned. They learned those soybean farmers they screwed through outright incompetence or being too stupid to govern would still consume their propaganda and happily vote for them again.
• addicted 2y ago
  Why don’t you look up how they came up with those tariff numbers and come back and tell us that this is some sophisticated economics at play here.
  • ggm 2y ago
    I didn't say this is sophisticated. I said they expect the outcomes people are complaining about. They've workshopped this, and are aware how this is playing out. I would be very surprised if there is a significant leak of "we didn't expect this" anytime soon. Trump believes in tariffs, I don't.
    • briandear 2y ago
      Apparently much of the rest of the world believes in them as well: almost every country has tariffs and had them long before Trump.
      • amanaplanacanal 2y ago
        Usually targetted tariffs to protect specific industries, not across the board like this. This is next level.
• nabla9 2y ago
  >They want to repudiate foreign held debt, or devalue it, by revaluation of the USD Devaluing dollar does not reduce debt measured in dollars. It only makes US debt less valuable to forefingers. Devaluing dollar can work well only if foreign investments into US stop or reverse. "foreign investors at the end of last year owned 18% of U.S. stocks, according to Goldman Sachs" The trend has already reversed https://www.reuters.com/markets/us/foreign-demand-us-assets-might-not-be-dead-yet-jamie-mcgeever-2025-03-24/ https://www.reuters.com/markets/us/foreign-demand-us-assets-... Killing foreign demand for US assets more permanently is possible but it means financial market crash. What WILL happen is recession. Atlanta Fed GDPNow dropped from -2.8 to -3.7 percent in a week. https://www.atlantafed.org/cqer/research/gdpnow?date=2025-04-01 https://www.atlantafed.org/cqer/research/gdpnow?date=2025-04...
  • lwhi 2y ago
    I thought the US gov is hoping that debt is relinquished as part of negotiations, is that not the case?
    • nabla9 2y ago
      That's a crazy showertought. WH might actually consider it. After hypothetical successful debt relinquish negotiations, any new US debt would have similar interest rate to Argentinian debt, 30% or so. Wall Street would shrink and London (or Frankfurt) would become new global financial center. In reality, countries do just as what they do now. They raise counter-tariffs. The US faces coutertariffs from everyone. Other countries only from the US. Trade between countries other increase and they gradually adjust. Europeans start buying less iPhones and buy more Androids made in South Korea. Less Fords more Nissan.
      • nottorp 2y ago
        > Europeans start buying less iPhones I wonder... they're all made in China anyway. And shipped from there directly, not through the US. I'm sure that either the US tariffs won't apply to them, or Apple will shuffle some subsidiaries so they don't.
• zzzeek 2y ago
  bit of an 11 dimensional chess answer. Senator Chris Murphy has a much better explanation, which is simply this is Trump's way of holding private industry hostage [1]. The tariffs will be incrementally removed as various private industries give him loyalty pledges just as he is doing with large law firms and universities. that's it! so simple. [1] https://bsky.app/profile/chrismurphyct.bsky.social/post/3lluxkmx7wc2m https://bsky.app/profile/chrismurphyct.bsky.social/post/3llu...
  • yoyopa 2y ago
    [dead]
• exe34 2y ago
  > . I would think it unlikely they can secure an updraft from this to keep the house. What's the plan for that? given that they've done most of the things they accuse others of, I wouldn't be surprised if they win by 110%.
• aredox 2y ago
  Trump wasted his inheritance and has been several times in bankruptcies - and not "I took risks" bankrupt, more "I f*cked up" and "I lied" bankruptcies. Why do you think we are naive and you aren't?
• isoprophlex 2y ago
  > the midterms will hit while the bottom is still chugging along. I would think it unlikely they can secure an updraft from this to keep the house. What's the plan for that? There won't be any elections. We will stick with Trumpism. We will be our own best friends, Morty. The outside world will be our enemy. We will do great things Morty, we will do the greatest things. A Trump administration for a 100 years. A Trump administration forever. Over and over. Running around, the Trump administration forever.
• seanmcdirmid 2y ago
  Foreign debt is held in US treasuries, surely they know that? Trump can decide that treasuries can no longer be redeemed, but foreigners only hold 20% of them, so…he would have to somehow make them selectively redeemable, and anyways, there would go the USA’s credit, unless you mean other countries can bribe Trump with treasuries to bring down their tariff? They could also depreciate the USD reducing its debt in real terms but that will most definitely cause hyper inflation along with tariffs. They have no plan, not even a concept of a plan. Trump is just hoping that he can get lucky with a good outcome, but that is really improbable. This is a huge opportunity for China though if they make deals with everyone else to the exclusion of the USA. Even the idea of moving production back the USA is misguided, we are already at low unemployment, and haven’t made enough investments in automation like the Chinese are doing ATM. I doubt China will let us import that tech to setup our own factories quickly without worrying about who will work them.
• peterlada 2y ago
  I hold a more pessimistic view of the cause and I do agree with your argument that they do know the consequences. But they don't care for another reason. The plutocracy has fully captured the government and now seeks its ultimate goal: complete transfer of all tax burden to the 99%. For this end they cut the government spending, wrecking the democracy and they impose tariffs to generate fake temporary revenues, so they can argue that the huge tax cut (dwarfing all that came before) is economically sound and fully justified. This will wreck the global economy and with the coming bad times (wars, famine, extreme migration) nobody will have the presence or the governmental weight to rein in these few rich man.
• refurb 2y ago
  This explanation doesn’t make sense because dollar denominated debt doesn’t change with devaluation. What is the more likely explanation is all the countries with trade surpluses will feel the pain long before the US and agree to much better terms than before. The PM of Canada had already indicated progress is being made on their trade deal.
  • bigfudge 2y ago
    The US already had pretty favourable trade deals with most of the world. The trade deficit wasn’t because of tariff barriers to US goods overseas.
    • refurb 2y ago
      But the countries hit with high tariffs have specifically uneven trade arrangements. When countries put a high tariff on US goods while enjoying low or no tariffs when exporting to the US - that’s an unfair arrangement.
      • grey-area 2y ago
        No, they do not. Vietnam for example: US 46% tariff, Vietnam average 15% tariffs. This will hurt the US far more than it hurts other countries, as other countries will just start to bypass the US and trade with other nations. Who would trust goods from the US or having them as part of your supply chain after this?
        • refurb 2y ago
          The tariff’s aren’t entirely based on the trade deficit. Vietnam artificially keeps its currency undervalued to boost exports. Trade with other nations? These are exports to the US, which is 25% of the world’s GDP. Who is going to replace that demand? You think Vietnam, where 30% of GDP are US exports, is going to be hurt less than the US where Vietnam makes up 3.9% of imports?
          • 2y ago
• yibg 2y ago
  The bring manufacturing back to the US never made sense to be numbers wise. Thing A is currently manufactured in China | Vietnam | whatever lower cost country and sold for $x today. Slap on 50% tariffs so now it costs $1.5x. That provides an incentive to produce thing A locally sure. But if you can already produce thing A locally for $x, you wouldn't have offshored the production in the first place. Maybe producing thing A locally will cost less than $1.5x, but it'll still be more than $x. So cost still end up increasing. Am I missing something?
  • christkv 2y ago
    Two typical scenarios that we know from the past in industries like cars for example. Corp one has two factories one smaller one in the us one bigger one in the eu. They will now shift more of the production to the us from eu to avoid tariffs. Corp two only has a factory in the eu. They will now build another factory in the us to be able to avoid tariffs and keep selling their goods at competitive prices.
    • yibg 2y ago
      If corp two could have factories in the US and still sell them at competitive prices they would've done that already no? The fact that they haven't indicates it didn't make economic sense. So then doing so would mean their costs would go up, which would either mean they have to eat the extra cost and reduce profit or pass the extra cost to consumers.
      • christkv 2y ago
        They can only pass the extra costs if there is no competition and they can only eat the costs if their margin is big enough to absorb the cost and still remain profitable. If their us market share is important they will shift their production around to the us or somewhere that has a favorable trade agreement with the us.
        • yibg 2y ago
          The stated goal of tariffs is to force companies to shift production back to the US. But US production costs more, hence the outsourcing in the first place, so shifting production back to the US increases cost. If costs goes up then either prices go up too or margins go down or a mix of both.
• lpapez 2y ago
  I had hoped that this kind of "Trump is actually playing 4d chess, you just don't understand" argument would be dismissed after seeing him through the first term, but apparently not.
• JumpCrisscross 2y ago
  > they know what's going to happen, and they expect the coming storm because they seek what follows If they do they’re lying. The mechanism by which tariffs restore production is by raising prices. That makes it more lucrative to invest in serving that market. If producers have to absorb the tariff, they won’t boost production and the tariff is just a corporate tax increase. > to repudiate foreign held debt, or devalue it, by revaluation of the USD That’s called inflation!
• trhway 2y ago
  >What amazes me is the timing: the midterms will hit while the bottom is still chugging along. I would think it unlikely they can secure an updraft from this to keep the house. What's the plan for that? tax cut financed by the tariffs? Will buy/mislead a lot of voters when those checks would get sent mid next year. Especially those voters who couldn't notice that all those countries having tariffs (and VAT) are worse economically than US in major part because US didn't until now have much tariffs to speak of.
• deleted 2y ago
  [deleted]
• alfiedotwtf 2y ago
  As a professional armchair economist, I would call it a power off rather than a reset. It took over a hundred years for countries to once again have economic trust with France again when they went hard on tariffs in the 1600s causing war. Who in their right mind would negotiate with a man known to rip up existing agreements on a whim?! I have a feeling that this will knock the United States down a peg economically to the point where we look back on Liberation Day as America’s Brexit
  • somenameforme 2y ago
    Bretton Woods would like to have a chat with you.
  • bigfudge 2y ago
    Brexit is going to look like a minor bump compared to this. Even the stupid deal the UK negotiated didn’t try and seal the borders to imports.
• bearburger 2y ago
  It looks too complex, IMO. As someone living in Trump's beloved country (Russia), I'd say you should ask, "Cui prodest?" If some oligarchs (currently called billionaires, but we'll see) surrounding Trump benefit financially from these tariffs, then the plan isn't about state debt—it's about their personal wealth.
• bawolff 2y ago
  > They want to repudiate foreign held debt, or devalue it, by revaluation of the USD Given how dependent usa is on foreign debt, that sounds crazy to me. If they accomplish that sort of thing, they wont be able to borrow at favourable rates anymore. That seems incredibly bad for usa. Am i missing something on how severe that would be?
  • dzhiurgis 2y ago
    IIRC they are trying to pay off their debt since they are on a brink of default. They don't want to borrow anymore.
    • bawolff 2y ago
      They are literally borrowing more right now. I believe at record levels. Billions per day.
    • appointment 2y ago
      The massive tax cuts Trump is trying to extend or introduce are much larger than the spending cuts proposed so far. edit: Also the USA is nowhere near a default, unless congress chooses to not raise the ridiculous debt ceiling policy.
• heisenbit 2y ago
  This was a macro argument assuming a benevolent intention. However if we look purely at self interests the main thrust is to increase revenue on paper to cut taxes. At the same time raise debt ceiling. And when the tarifs proof unsustainable then well, we are in happy deficit spending land with no fault on the drivers side.
• darawk 2y ago
  This is a good take, but I think I can answer your question about the midterms. This is timed specifically for them. The drop we're seeing in markets right now isn't a pricing in of the tariffs, per se (at least, not yet), it's a pricing in of policy uncertainty that is going to lead to a near-term drop in investment. However, because they are doing it so early, they will have time to recalibrate and bake in exemptions until the market / inflation is happy. Up to and including backing off of the policy entirely, if that ends up being necessary. As a political strategy, it is perfectly timed to allow Trump to "save the economy" from his own policies. This is true imo independently of what you may think about the policy as policy. When it comes to the policy as such, recipirocal tariffs, conceptually, are designed to incentivize the overall global reduction in tariffs. So, as a headline, implementing "reciprocal tariffs" is actually favorable to free trade. However, there are some important details that they have fucked up, such as identifying tariffs with trade deficits in general, and in particular identifying them with trade deficits in goods only. That is really the component of the policy that doesn't make sense, and it is important. Most likely, they will recalibrate and/or provide a lot of exemptions, particularly as the midterms approach. As a political tactic, I think it will work out fairly well, if they respond to the feedback appropriately - that's the big question though, and that uncertainty is the most significant reason for the market drop.
  • ggm 2y ago
    So my pessimism they can't "heal" this in time is the weak bit, if there are multiple levers they can tweak leading into the midterms to say "it's morning in america" I say pessimism but in case it's not clear I'd prefer a democrat victory, both in the immediate past and in the coming midterms.
    • darawk 2y ago
      The reason for my "optimism" is that it's just as easy for him to undo this as doing it in the first place. If he keeps them in place as constructed for more than say, 3 months, without shooting them through with loopholes, then he might have a real unfixable problem on his hands, as businesses start to seriously reorient themselves. However, if over the next 3 months or so, he starts tactically peeling them back or being very "generous" with exemptions, the net economic impact could be relatively small, and maybe even moderately positive (depending on the details). Fwiw I'd prefer the republicans win again, so my optimism is actual (not that I don't have substantial criticisms of the current admin's policies). However, it is refreshing to have a content-focused exchange on the internet about politics, so h/t to you :)
• Havoc 2y ago
  Given everything recent I’d say competence in the WH is a stretch The prez is literally holding up placards where half the numbers on it are mislabelled and they rest of the numbers are that mislabelled/misunderstood number divided by half That sounds like garden variety incompetence to me not 5D chess
  • grey-area 2y ago
    There is a low cunning at work though - Trump now runs the largest military in the world and the largest economy and if the only way he can impress other people is to use that power he will use it to try to beat them into submission. Chaos at this point is his friend as he attempts to stay in power as long as possible, so expect trade wars, war, domestic chaos and forcing others to show loyalty to him personally and pay him off as the biggest bully in the room. He sees this in very simple terms. So no there is not a high intelligence at work but he is not without agency and cunning. He has operated this way all his life due to inherited money and got away with it. And damn the consequences for everyone else, including the people who elected him, he doesn’t consider that in his calculations, which is what makes them so confusing for those who think he is playing by normal rules of politics or business.
• Liwink 2y ago
  > What amazes me is the timing: the midterms will hit while the bottom is still chugging along. I think Trump is getting unpopular actions out of the way quickly, perhaps planning to announce an income tax reduction later to save the midterm elections.
• noobermin 2y ago
  I am amazed at how many people are still imputing intelligence to Donald Trump. Him winning the presidency again after everything is less about him being some deep mastermind and more an exposure of the issues with America that have been there building for decades now. The difference between Trump 1 and Trump 2 is that all the "establishment" R politicians who were "corrupt" or "deep state" but willing to work with him could at least steer the ship in the first term. Those people are gone and all who remain are ideologues and yes-men. Trying to find logic in the madness strikes me as someone going through the stages of grief near death, trying to find sense in a senseless, uncaring world. Take occam's razor, no one is steering the ship at the white house right now.
• ithkuil 2y ago
  Probably the plan for that is to do massive gaslighting on social media and find someone to blame for the hardship. Leveraging emotions (especially the aggressive ones) may be an effective way to keep support of the base. I really wish I was more optimistic and share your position that voters are driven by self-interest. I hope you're right though.
• dyauspitr 2y ago
  They literally took trade deficit %s and represented them as tariffs levied by those countries.
• hnaccount_rng 2y ago
  > they know what's going to happen, and they expect the coming storm because they seek what follows. I agree that that's their understanding. I'd argue that in reality they don't, they can't. International relations are a very complex system. And there is no precedent of an empire wilfully dismantling its periphery. I really don't enjoy the whole "may you live in interesting times" thingy
• wolframhempel 2y ago
  I don't think its about devaluing the currency to pay back debt at all. I believe it's about a fundamental vision of an autark USA, decoupled from any international obligations, whether its NATO, WHO or WTO and focused purely on producing and selling domestically whilst having a "beautiful ocean on each side". I believe that's an unrealistic vision, not least since America's debt means it cannot afford significant shrinkage of its global market or a loss of its status as reserve currency, but I believe autarkie is the goal none the less.
• deleted 2y ago
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• ReptileMan 2y ago
  Personally I think that their bet is - it will hurt US, but it will devastate EU and hurt China more than US. EU is fragile economically and political instability will follow if its economy crashes. Especially if US pushes OPEC to jack up the prices.
• groestl 2y ago
  > What's the plan for that? The answer to this is pretty simple, although American Exceptionalism makes it hard to see for many Americans. For every other country, most could see pretty clearly that they'll not plan on holding free elections going forward.
• h4ck_th3_pl4n3t 2y ago
  Always keep in mind that Blackrock manages the retirement/social insurance funds of a lot of countries. If the USD crashes, they will, too. The aftermath will probably be complete isolation of the US, because no country will want to trade with them. And the administration is fine with that, because they're not interested in keeping the status quo of democracy alive. More influence for them, less influence from outside. That's how oligarchs think and act.
• risyachka 2y ago
  Even the best economists can't predict economy results from "small" actions. With global ones like this - they are absolutely oblivious what will happen.
• Isn0gud 2y ago
  They might be smart about it like you said, but they might also just be stupid. And the theory that they are smart about it is based on a whole bunch more assumptions...
• bambax 2y ago
  > the midterms will hit The plan may be that there are no more elections, or that the only people who are allowed to vote are identified MAGA supporters. Does this seem impossible? Everything Trump has done would have been considered impossible only a couple of months ago. What Trump reveals is the utter apathy of Americans. They're sheep in lions' clothing, not the other way around.
• vkou 2y ago
  > Maybe by 2027? Why on earth would you spend millions and billions of dollars on investing into a ROI-10-year factory, when a cheeseburger overdose or, heaven forbid, the Dems winning another election will take that investment and turn it straight into the toilet? Not to mention that you'll be locked out of the world's markets, thanks to reciprocal tariffs.
• timeon 2y ago
  I tend to agree with you that they know. However the signal leeks showed me that they are not just playing stupid in public - it seems that they are like that for real.
• cantrecallmypwd 2y ago
  Rich people are typically insulated from economic downturns, especially ones they cause, by their ability to shift investments and asset allocations to mitigate and/or profit from changing tides. Furthermore, Trump has never bought his own groceries, pumped his own gas, or interviewed for a job so retail prices and layoffs are abstractions "for plebs". Plus, he's reaching the end of his life so he doesn't have very much proverbial skin in the game since his motivations revolve almost exclusively around himself.
• bamboozled 2y ago
  By the time the midterms come along I doubt there will be many people left who want the job of fixing up this mess. So they will likely get to keep it.
• 4ndrewl 2y ago
  "Personally I think it's a mistake but hot takes "they have no idea what's coming" are I believe naive." They slapped 10pct tariffs on the Heard and McDonald islands. Literally uninhabited islands in Antarctica.
  • dev0p 2y ago
    The defending theory for that is that it doesn't allow for loopholes by trading through tax exempt countries. It's certainly an interesting strategy. Let's see how it plays out.
    • 4ndrewl 2y ago
      Except those islands are Australian territories. And they've given Australia higher tariffs, so in theory they could reduce these tariffs (which will be paid at least in part by US citizens) by exporting through there? There's nothing strategic about a 4 column excel spreadsheet and one formula.
      • dev0p 2y ago
        By all accounts, it doesn't make sense. Hence why it's ... well, interesting, to say the least.
• mpreda 2y ago
  > They want to repudiate foreign held debt, or devalue it, by revaluation of the USD I don't understand, who's holding that "foreign held debt"? foreign countries I suppose, so which countries do you have in mind? For one, it's not China, which holds a large amount of US treasury bonds (so basically, China is a lender of USD). So the revaluation of USD would work great for China: one, the value of the China-held USD bonds increases, and second, the price of Chinese exports decreases in USD terms. So help me understand, what's the plan with the revaluation of USD?
• wslh 2y ago
  > ... they know what's going to happen While we cannot predict the future, it's moving faster. The world system is under immense stress. Complexity at this scale increases the chance of black swans and unpredictable outcomes. Many powerful actors are reacting simultaneously in divergent directions, which can reshape the trajectory altogether. We are vulnerable to cascading surprises.
• aredox 2y ago
  "The king is walking around naked; surely he's got a great reason for that. And his advisors wouldn't let him do it if there wasn't a deeper purpose!"
• h4ny 2y ago
  > and they expect the coming storm because they seek what follows. Well, a lot of economists, including one Nobel Prize winner (Paul Krugman) have commented on this being a bad idea for the economy... On the off chance that those people who are supposed to know what they are talking about are all wrong and haven't thought about it being some genius diversion tactics -- it's generally still a pretty bad idea for a government to effectively ask everyone to "tough it out" and "just trust me bro". It's really disappointing that people are actually trying to theorize this as some kind of genius plan. It doesn't take a genius to figure out the amount of irreparable damage they have already done to regular folks is unacceptable (uh... I'm sure some nutters out there think that DOGE is keeping track of all the damages they have done and will pay everyone once their genius plans have worked out). That kind of logic really amazes me.
  • rat87 2y ago
    paul krugman isnt useful example because he is a liberal democrat and people will try to say thats why he said its stupid. even though hes right and it is stupid. plenty of conservative economists are basically saying wtf Bro to these tarrifs. Sadly that will also probably not help but it has more of a chance to do something
• fedeb95 2y ago
  they understand first order effects, but second or higher orders are seldom predictable in this matters. So the risk is huge. This massive shock will reveal hidden frailties.
• virgilp 2y ago
  Trump told you, I don't know why you still wonder what's the plan: https://www.reuters.com/world/us/trump-tells-christians-they-wont-have-vote-after-this-election-2024-07-27/ https://www.reuters.com/world/us/trump-tells-christians-they...
• ptero 2y ago
  > hot takes "they have no idea what's coming" are I believe naive. They know. They just don't care I think they know, they care and decided that it is a reasonable way forward given very limited (trade and budget deficit) options. Otherwise I think you are spot on. To spitball some ideas on your midterm comment (again, agree to it). One possibility is they see it as an unavoidable loss, plan on using veto to maintain course set during the first 2 years (which is why they rush) and hope to be in the updraft phase by the November 2028 elections. Maybe.
  • amanaplanacanal 2y ago
    If they piss off enough people impeachment is back on the table. They might not last until the 2028 election.
  • speakfreely 2y ago
    This seems likely, but I cannot figure out why they are not trying to pass more legislation in the first 2 years if they're fairly sure they're going to lose the midterms. The only conclusion that can be drawn from their public actions is that they believe they can more or less enforce all their policies by executive order and that they're very sure they will be keeping the executive in 2028.
• jmull 2y ago
  Of course there are people who know. But not the decision maker. I notice the use of collective pronouns, but there is only one person driving this. Everyone else is riding the tiger. Not sure why, despite long and consistent experience, that people keep thinking he’s anyone but exactly who he appears to be. There’s no grand plan, calculated risk, or 4D-chess. The clown is just putting on a performance, based on his immediate feelings, and the immediate reaction of the crowd. There’s nothing else there.
• basisword 2y ago
  >> hot takes "they have no idea what's coming" are I believe naive While I agree they probably have some idea what will happen, don't forget that these same people added a journalist to a group chat where they planned a military attack. They fired a bunch of critical people and then didn't know how to get in touch with them to try and rehire them. Assuming they're total idiots isn't much of a stretch.
• LastTrain 2y ago
  That all sounds fine except that the admin have no intention of keeping these tariffs, rendering your point kind of moot. Trump will enact/retract these tariffs multiple times over just the next month, and few to none of them will still be this high in three months. Since we are just speculating here - what is probably going on is that Trump has some very bad ideas and no one is allowed to contradict him. I'm sure there are people around him that know better, but he really is this simple minded. To your point about midterms, I'm sure his Project 2025 handlers are beside themselves that he's doing this, but there is little they can do to stop him.
• rongrobert 2y ago
  [flagged]
• JonChesterfield 2y ago
  > What's the plan for that? Trump ran on a campaign that voting is a pain and you won't have to do it again if he wins. Since then he's maintained that third term is the plan. Doesn't really matter how upset the voting population is if you're going to ignore their votes.
• alkonaut 2y ago
  > "they have no idea what's coming" are I believe naive. There could be someone who understands this. But this someone never shows their face in public, or provides any rationale for the policies beyond the nonsense like "reciprocal tariffs" or similar nonsense. I mean the literal board with tariff percentages that was held up had numbers that made NO sense, to anyone! Yet there are no critical questions? It's beginning to feel like a conspiracy theory. That behind the obvious idiots who are the faces of the policies, are some other, less inept people who are pulling the strings. But who would this be? > they expect the coming storm because they seek what follows. If there are elections in 2026 and 2030 then what follows is a blue wave in the midterms and millions of disappointed voters who had their 401k's gutted, saw prices of most goods increase 10%+ in 2 years, saw little to no tax cuts, lost their jobs if they worked for the government, and lost their social security.
  • roxolotl 2y ago
    So I asked this question back when the wiki page for exorbitant privilege[0], the term used to refer to the US’ status, was posted. I was provided with a few links of people who do seem to understand[1]. The Hudson Bay capital piece was probably the most interesting[2]. 0: https://en.wikipedia.org/wiki/Exorbitant_privilege?wprov=sfti1 https://en.wikipedia.org/wiki/Exorbitant_privilege?wprov=sft... 1: https://news.ycombinator.com/item?id=43529614 https://news.ycombinator.com/item?id=43529614 2: https://www.hudsonbaycapital.com/documents/FG/hudsonbay/research/638199_A_Users_Guide_to_Restructuring_the_Global_Trading_System.pdf https://www.hudsonbaycapital.com/documents/FG/hudsonbay/rese...
• markus_zhang 2y ago
  > Rust belt sewing shops and Walmart grade cheap goods production lines? Are we really going to see this happening in 2 years? I'm not sure about this. The cost of Mexican/South Asian factories are still a lot lower than US.
  • sorcerer-mar 2y ago
    We absolutely will not, especially given the administration's demonstrated lack of willpower. What you will see is many promises of massive investment, conspicuously scheduled to break ground around 2028ish.
    • markus_zhang 2y ago
      That's what I'm really worried about.
• mikesickler 2y ago
  Foreign held debt is less than 30% of outstanding, and less than that is sovereign-owned, so I don't think devaluing or attempting to restructure foreign debt via "century bonds" will have much effect on US debt obligations. I seriously doubt this administration understands any of this. I agree that they don't care, but I don't think they know what's going to happen. No one does.
• mystified5016 2y ago
  There may have been a hint of strategy at one time. But the sheer level of gross incompetence coming from every side of this administration does not really lead one to believe that "global 4d chess trade war" is within the actual abilities of this administration to grasp.
• jcfrei 2y ago
  In my opinion you are giving the US government far too much credit. Trump has through his usage of social media created a weapon that he can strike at anyone that stands in his way. With all branches under Republican control there's simply no one left who can stand up to him without having his political career destroyed. We've seen this story unfold so many times in countries around the world - Turkey would be one recent example where the misguided policies of Erdogan have left the country with record inflation rates for years.
• toyg 2y ago
  > a lot of people assume the economic consequences like these have not been understood by the WH I think you're making the same mistake a lot of observers are making: you're looking at this from an economic perspective, and think those decisions were taken on an economic basis. But that is likely not the case. The Trumpist movement is entirely focused on political aims: re-establishing old hierarchies of power inside the country, and entrenching them for good. The important work is the slashing and burning of welfare and safeguards for lower and middle classes, putting minorities "back in their place", and entrenching the wealthy into positions of absolute dominance. Everything else is a distraction, to keep newspeople busy and the population focused on recreating an idealized, "Happy Days" 1950 society. Enemies will be created to make you hate, this or that policy will be picked up or dropped just to keep you arguing, and meanwhile the important work is made irreversible. Once you destroy what was built over a century, it will take decades to rebuild them, and meanwhile the New Normal will take root and become impossibly hard to remove. Fascism and nazism did not move from economic principles - they picked up what they needed as they went, opportunistically, because their main aims were fundamentally political. The Trump II administration works in the same way: the priority is political dominance to achieve political aims at societal level, everything else is tangential and opportunistic.
• shlant 2y ago
  > I would think it unlikely they can secure an updraft from this to keep the house. What's the plan for that? They tried to steal an election already - it's pretty easy to understand why they are making decisions as if they don't have to worry about elections anymore
  • jeffhuys 2y ago
    This does not, at all, contribute to the discussion.
    • atom058 2y ago
      As an outside observer, I believe that it's dangerous to disregard the threat of a dismantling of the democratic system. The current administration seem to have little regards for any traditions or rules of law, and is actively targeting governmental institutions that limit how they can wield their power. Democracy is not some magic spell that will bring the administration back to normality. Democracy only works as long as all players continue to act as if democratic decisions are binding. The executive branch have already shown they are more than willing to go against the judicial branch. They could do the same with the legislative branch. Questioning the legitimacy of elections, or actively rigging elections, is a possible next step in the same playbook. We should focus on how the actions of the current administration work as means to consolidate their power. A powerful minority can rule over a majority, as long as their keys to power are upheld.
• dmix 2y ago
  People are also getting way too caught up in the math and numbers. They think WH calculated the percentages through incompetence but the 25% tariffs weren't based on anything very real either. The entire goal is not carefully calculated trade equality, it's mafia style intimidation to get some easy concessions as quickly as possible from everybody... before the economy crashes too hard. Spamming tariffs to see what sticks. The math is just a plausible justification for something they would have done anyway. It's bully tactics. For ex see Canada's fentynal importation issue, which was something invented to justify a natsec emergency legally. The numbers don't have to be real, just plausibly deniable.
  • Def_Os 2y ago
    Bingo. Occam's razor suggests that the WH is again simply trying to force good short-term deals using mobster tactics.
• dcchambers 2y ago
  My personal opinion is less complicated: they're pulling the economic levers they have in a way that they can use to enrich the top 0.1% even more. The richest of the rich got very wealthy during COVID (economic fallout, buying up lots of stocks at a discount then the biggest stock market bull run we've ever seen) and they want to make it happen again.
• MetaWhirledPeas 2y ago
  > What amazes me is the timing If it didn't hit midterms it would hit the next presidential race. You gotta pick your poison. I guess they decided it's better to just get it over with.