Post New

These “tariffs” seemed to be designed to ensure that our trade with other countries appears to be roughly equal. No surplus, no deficit. Of course, there’s a huge hole in that logic, but I’ll get to that in a moment.

The U.S. is the richest country the world has ever seen. Our GDP is larger than the 2nd, 3rd, and 4th largest GDPs combined. And, we have a consumer based economy, which means Americans like to buy things. And buy them as cheaply as possible. Because of our economy’s size, there no way to have equal trade with every country in the world.

Which comes back to that big hole. As almost everyone on these boards is aware that a tariff is a tax on the people of the country that imposes the tariff. So this equalization is subsidized by Americans.

Which means that Americans will be paying more money for goods. Unless Elon Musk starts handing out oversized cardboard checks for a million bucks to everyone, this means we will be buying fewer goods. After all, our individual budgets are constrained by our earnings or savings or debt.

Paying more for goods is, well, inflation. Higher interest rates, anyone? Being forced to buy fewer goods with the money we have leads to fewer goods being produced which leads to fewer jobs being needed. I just don’t see much good coming out of this for the American consumer.

Building more factories in the U.S. is also going to be expensive, leading to higher costs and inflation. Wash, rinse, and repeat. It’s not a panacea.

Basically, either all the other countries get richer so they can buy more American goods or we get poorer paying a boatload of “tariffs”. I’m expecting these “tariffs” to be a huge anchor on our economy.

Further, this is nothing more than a vehicle to transfer wealth from low income and middle class Americans to multi-billionaires in the form of continued low tax rates.

Furthermore, this gives China a HUGE opportunity to develop new trade agreements in Asia, Europe, South America, etc. to their benefit and our detriment.

Thank you Herbert Trump for your service in weakening our once great country.

Furthermore, this gives China a HUGE opportunity to develop new trade agreements in Asia, Europe, South America, etc. to their benefit and our detriment

Already happening. New Chinese initiatives to peel away Japanese and Korean economies from US economic orbit.


Before someone thinks “that will never happen, just imagine being in their shoes, as your #1 trading partner just declared economic warfare on you.

And this whole looming disaster hinges on Trump's deficient world-view.

He has always had a win-lose view of business. He cannot win unless you lose. If you did not lose, he did not win. Further, if you get a win, that means that he loses. He would rather that both parties lose than his counter-party wins.

As many here fully understand, international trade is a win-win kind of deal. Each party gets something of benefit from international trade. Looking at it from the US side, by trading with poorer nations, we get goods at a cheaper price than we could produce them ourselves, and they get more jobs and more income. By trading with richer partners (Europe, for example) we each get access to goods that might only be available at higher cost if sourced domestically. Again, a win for each party.

But that win on the part of our trading partners is anathema to Trump. If they win on some point, that means we must have lost. So the imposition of wide ranging and high tariffs slows international trade considerably, meaning the US trading partners have much smaller benefits from that trade. They stop winning. And in Trump's damaged world view, that means he stops losing.

Personally, I think it is as simple as that. At least in his mind.

Hopefully, the words of Bill Clinton will come back to haunt Trump and his compliant MAGA partners in Congress. It's the economy, stupid. These tariffs are going to cause long and lasting pain. The sooner they are lifted, the sooner the pain stops getting worse. But the pain won't stop immediately once the tariffs are lifted. It will take some time for the damage caused by these tariffs to be reversed. And some damage - particularly to our international standing - may not be reversed in the life times of most people reading here.

--Peter

Already happening. New Chinese initiatives to peel away Japanese and Korean economies from US economic orbit.


Before someone thinks “that will never happen, just imagine being in their shoes, as your #1 trading partner just declared economic warfare on you.

Yep. The three countries have already started working together to develop a coordinated response to the U.S. tariffs. The Administration has managed to accomplish something heretofore unthinkable - to drive South Korea and Japan into a closer cooperative relationship with China against the U.S. Which is just...bizarre, considering that the Administration has characterized China as the biggest security and economic threat to the U.S.

Hopefully, the words of Bill Clinton will come back to haunt Trump and his compliant MAGA partners in Congress. It's the economy, stupid. These tariffs are going to cause long and lasting pain. The sooner they are lifted, the sooner the pain stops getting worse.

Grassley's already co-sponsored a bill to move tariff authority back to Congress, instead of being at the discretion of the President:

https://www.politico.com/live-updates/2025/04/03/c...

It's unlikely to pass anytime soon, of course. It could possibly get 60 Senate votes, but Johnson would never let it hit the floor in the House unless the economy tanks and things got apocalyptic for his frontline members. Must trust President Trump, and all that. But it's something.

It could possibly get 60 Senate votes, but Johnson would never let it hit the floor in the House

Of course not. Johnson hasn't seen enough pain personally yet. And he's got a very tenuous grip on his gavel. One slip away from the MAGA line and he'll be "McCarthyed".

I don't see anything happening until the 2026 elections at best. If these tariffs stay in place until then, I foresee a MAGA bloodbath in the mid terms. Probably flip the House to Democrat, and potentially primary a few MAGAs back to more centrist traditional GOP candidates (meaning people willing to compromise to get part of what they want instead of sticking to the Trump win-lose view of things). Senate is a much harder lift for Democrats. Too many Dem seats up for re-election, and too many very red seats on the GOP side. But we could see a move from MAGA to a more centrist GOP there as well.

--Peter

...the Administration has characterized China as the biggest security and economic threat to the U.S.

Wow. An actual correct statement from the Administration...I'm going to have to sit down for a minute.

Of course, their handling of that situation is inept. No wonder he couldn't even make a casino profitable.

Welp...guess we'll see if this works.

Of course not. Johnson hasn't seen enough pain personally yet. And he's got a very tenuous grip on his gavel. One slip away from the MAGA line and he'll be "McCarthyed".

If his members start feeling pain, I would think he would have to respond. Otherwise, he could be ousted. He barely got the position in the first place. A few defections, and he's on his way out. No?

A few defections, and he's on his way out. No?

Absolutely yes. The few remaining old school GOP are unlikely to oust him, as they still see the chaos that would ensue from a call to open the Speaker's Chair as a bad thing. But from the MAGA side of the conservative coalition, chaos is the point. So as soon as Johnson steps away from MAGA orthodoxy - or doesn't respond quickly enough to a change in MAGA orthodoxy - he's gone. And chaos in the House will ensue.

Maybe I should have said "If Johnson takes one step away from the MAGA line, he'll be 'McCarthyed' ". (Haven't had a chance to use quotes in quotes in a while. They're fun!)

--Peter

Absolutely yes. The few remaining old school GOP are unlikely to oust him, as they still see the chaos that would ensue from a call to open the Speaker's Chair as a bad thing. But from the MAGA side of the conservative coalition, chaos is the point. So as soon as Johnson steps away from MAGA orthodoxy - or doesn't respond quickly enough to a change in MAGA orthodoxy - he's gone. And chaos in the House will ensue.

It's hard to predict things, especially the future.

If the economy tanks due to the launch of this trade war, Johnson will face competing - and unreconcilable - pressures. His frontline members will desperately want the Congress to take back tariff authority and fix things. But his MAGA members will want him to trust the President, and Trump will want to throw him out of the Speakership if he tries to undo the tariffs.

But complicating that is that Trump and the MAGA members can't afford for the House to go into chaos until the One Big Beautiful Bill has passed, which is some time away. They need a functioning majority. They can't afford to go into another Speaker selection process, where the frontline members insist on having a vote on the tariff bill as a condition of supporting a candidate and the MAGA members insist on the contrary.

So who knows?

So who knows?

Indeed. Who knows?

While I don't know either, if I were a betting man, I'd bet on chaos for now. I think things will need to get worse before they get better.


But complicating that is that Trump and the MAGA members can't afford for the House to go into chaos until the One Big Beautiful Bill has passed, which is some time away.

Correct me if I'm wrong, but isn't the current CR good through the end of September? That's half a year away. Plenty of time to drop into chaos, come out, and work on the Big Beautiful Bill. And if it's not enough, pass another CR.

--Peter

Already happening. New Chinese initiatives to peel away Japanese and Korean economies from US economic orbit.

Don't worry, we'll have a robust trade with Russia. Or...maybe just some nice Trump branded properties in Russia.

Yep. The three countries have already started working together to develop a coordinated response to the U.S. tariffs. The Administration has managed to accomplish something heretofore unthinkable - to drive South Korea and Japan into a closer cooperative relationship with China against the U.S. Which is just...bizarre, considering that the Administration has characterized China as the biggest security and economic threat to the U.S.

Somehow MAGA and the right wing media will spin it as just more complex 3-D chess from our very stable genius of a leader.

Welp...guess we'll see if this works.

I guess it would help if we knew what it was supposed to accomplish.

The Administration is all over the map on this.

Some talk up the amount of revenue these tariffs will bring in - but that only happens if the tariffs stay in place and we continue to import at high levels.

Others talk about the need for other countries to get on the phone and cut a deal - but what kind of deal can they cut? The tariffs aren't really reciprocal or based on reality - Japan doesn't really impose a 46% tariff rate on the U.S. either through actual duties or non-tariff barriers - so there's not actually anything they can change. Their real tariffs are only about 4% (one of the lowest rates in the world), so even if they zero them out it won't do anything.

Still others talk about returning manufacturing jobs to the U.S. But that's not going to "work" - it's just going to make us poorer. Most of the manufacturing jobs that left to places like Vietnam are the same sort of crappy jobs that we have trouble getting high-school graduates to take anyway. What's the endgame there?

Speaking of Nike and Vietnam, in his Chartbook today, Adam Tooze notes that 50% of Nike’s products are made in Vietnam, and that there are half a million people in the country working for the at least 155 factories that make Nike goods. Now we’re slapping massive tariffs on them, but the question is ... to what end? Do we think there are hundreds of thousands of people in the US eager to work in sneaker and t-shirt factories at the wages that sneaker and t-shirt factories pay? Are there people eager to work in sneaker factories even at ‘good’ wages? Do we think that the US has the level of robotic capability to replace these factories without having to hire a lot of workers? And if not, what is the administration trying to accomplish?

https://archive.ph/KTygV#selection-1631.0-1635.674

The only actual objective behind these tariffs is an attempt to reduce trade deficits to zero. Which is at least a thing that it's targeted to achieve (as opposed to the fig leaf justifications of reshoring manufacturing or generating revenue, which are contradictory goals). The problem is that it's a stupid thing:

Thomas Sampson, associate professor of economics at the London School of Economics, said the formula was “a figleaf for Trump’s misguided obsession with bilateral trade imbalances” and that there was “no economic rationale” for the tariffs.

* * *

Oleksandr Shepotylo, an econometrician at Aston University, Birmingham, which recently modelled the effects of a global trade war, said the use of economic formulas merely gave the USTR document “a sense of being linked to economic theory”, but it was in fact divorced from the reality of trade economics.

“The formula . . . gives you a level of tariff that would reduce [the] bilateral trade deficit to zero. This is an insane objective. There is no economic reason to have balanced trade with all countries,” he said.

“So in this sense, this policy is very unorthodox and cannot be defended at all.”

https://archive.ph/w523X#selection-4355.0-4367.81

There's no way to "see if this works," because there's no legitimate economic objective to it. Had they actually done a deep dive into the fundamentals of each target country's economic and trade regimes to genuinely identify where there might be tariff imbalances and/or non-tariff barriers, as opposed to just differences in the fundamentals of different national economies that cause trade imbalances for reasons that have nothing to do with economic or trade policy, then the tariffs could have been a took to address those tariffs/NTB's. But they didn't do that. They just came up with whopping big tariffs against countries with big trade imbalances. Those tariffs can't achieve anything but reduce trade imbalances, regardless of how badly they impoversh us.

There's no way to "see if this works," because there's no legitimate economic objective to it.

You'd think some of the financial geniuses on team Trump would put a stop to this madness. Are they all really too afraid to disagree with Trump? Surely, all the oligarchs must know that these tariffs will not be any good for their bottom line either, right?

You'd think some of the financial geniuses on team Trump would put a stop to this madness. Are they all really too afraid to disagree with Trump? Surely, all the oligarchs must know that these tariffs will not be any good for their bottom line either, right?

Trump thinks trade deficits are bad. Bad enough that damaging the economy will be worthwhile....because then we won't have trade deficits:

“This is not serious trade policy or grand strategy,” said [economic historian Adam] Tooze. “The boss hates trade deficits and his team of willing sycophants came up with a formula, however idiotic, that ticked the box.”

https://archive.ph/vXoyg#selection-1723.0-1723.194

If that means saddling American households with a loss of $3-4K in purchasing power, slowing economic growth, possibly triggering a global recession, and obliterating companies like Nike as a going concern....well, who cares? Surely GM hiring an extra shift or two at one of their existing plants will make up for that...

Brendan Duke @Brendan_Duke
Incredible stuff--they wanted to make the thing seem more sophisticated than it is so they threw in two Greek letters but selected values that cancel out so it's still just trade deficit divided by imports.

SNIP
Δτι = Xi-mi
........----------
.........ε*φ* mi
........(4*1/4*mi)

Parameter Selection
To calculate reciprocal tariffs, import and export data from the U.S. Census Bureau for 2024. Parameter values for ε and φ were selected. The price elasticity of import demand, &, was set at 4.
Recent evidence suggests the elasticity is near 2 in the long run (Boehm et al., 2023), but estimates of the elasticity vary. To be conservative, studies that find higher elasticities near 3-4 (e.g., Broda and Weinstein 2006; Simonovska and Waugh 2014; Soderbery 2018) were drawn on. The elasticity of import prices with respect to tariffs, φ, is 0.25. The recent experience with U.S. tariffs on China has demonstrated that tariff pass through to retail prices was low (Cavallo et al, 2021).

You'd think some of the financial geniuses on team Trump would put a stop to this madness.

Clearly, you don't think like a MAGA. This isn't madness at all. First, it provides a cover story on which to hang a projected $600 billion (or whatever) per year in new revenues with which to make permanent the Trump 1.0 tax cut while "reducing" the deficit. Second, it creates a new point of leverage with which to extort tribute from domestic industries and international trading partners: "Oh, you want relief from the tariff? What will you offer Don Trumpo in return?" Win-Win!

Welp...guess we'll see if this works.

We’ll all have a front row seat.

Note: if you need to buy a seat, get it now before Saturday

You'd think some of the financial geniuses on team Trump would put a stop to this madness. Are they all really too afraid to disagree with Trump?

Trump has surrounded himself with nothing but boot-licking sycophants. He's in his happy place and the world can just go to hell.

"He's in his happy place and the world can just go to hell."

He's off on another 3 day golf weekend, at a cost to the taxpayer of around $10,000,000
per jaunt. This used to irk me, the hypocrisy of MAGA calling out all of the government
employees who worked remotely, while Trump is missing in action consistently ( ya, like
he's working at MaraLardo, lol ). But now I'm thinking that $10,000,000 taxpayer tab per weekend is the best deal that the taxpayer can hope to get out of Trump. He's costing the Country
$Trillions when he's in office, at "work".

The FED is in a tough spot: higher inflation and lower growth. The FED has said inflation is the top priority, but has to judge if the tariff effects are temporary. A one-time tariff increase is in theory a temporary rise in inflation.

The tariffs will get dropped. Either by Trump or the 2027 Congress.

Federal Reserve chief says Trump tariffs likely to raise inflation and slow US economic growth, April 4, 2025
" Powell said that the tariffs, and their likely impacts on the economy and inflation, are “significantly larger than expected.” He also said that the import taxes are “highly likely” to lead to “at least a temporary rise in inflation,” but added that “it is also possible that the effects could be more persistent.”

“Our obligation is to ... make certain that a one-time increase in the price level does not become an ongoing inflation problem,” Powell said in remarks delivered in Arlington, Virginia.

Powell’s focus on inflation suggests that the Fed will likely keep its benchmark interest rate unchanged at about 4.3% in the coming months. Wall Street investors, meanwhile, now expect five interest rate cuts this year, a number that has increased since President Donald Trump announced the tariffs Wednesday. "
https://apnews.com/article/tariffs-inflation-econo...

More Fed rate cuts are expected now compared to a few months ago.
https://www.atlantafed.org/cenfis/market-probabili...

The CME market is pricing in a 95% probability of at least 75 bps drop in the Fed rate this year. (From 425-450 current to 350-375 or lower.)
https://www.cmegroup.com/markets/interest-rates/cm...

or the 2027 Congress

When hours count, the 2027 Congress is just years away.

Post New

Berkshire Hathaway FAQ

---

Contact Shrewd'm
Contact the developer of these message boards.