Trump's Tariffs and Possible Trade War

[Bamaro]

While I don’t agree, I understand your thought process and wish there were an economic Santa Claus to make it possible.

The concept of no growth lays waste to every pension fund (including SSI), every life insurance policy, every P&C insurance, every health insurance (including Medicare) every annuity, all equity markets, all bond markets, and is deflationary.

If you think inflation is bad, try deflation.

Then where does it end? I've seen the US population double. The economy hasn't gotten twice as good. It was probably better before and we weren't facing a 36T debt that is growing fast.

 

[Tidewater]

And, just to connect today's tariff controversy to yesterday's, there is this declaration by the people of South Carolina when they left the Union explaining their reasons:

"The Southern States now stand in the same relation toward the Northern States, in the vital matter of taxation (tariffs), that our ancestors stood toward the people of Great Britain. They are in a minority in Congress. Their representation in Congress is useless to protect them against unjust taxation, and they are taxed by the people of the North for their benefit exactly as the people of Great Britain taxed our ancestors in the British Parliament for their benefit. For the last forty years the taxes laid by the Congress of the United States have been laid with a view of subserving the interests of the North. The people of the South have been taxed by duties on imports not for revenue, but for an object inconsistent with revenue – to promote, by prohibitions, Northern interests in the productions of their mines and manufactures."

 

[Crimson1967]

My son works in the investment department of a major bank. He texted me last night and said “Trump tariffs=busy day”.

 

[4Q Basket Case]

Then where does it end? I've seen the US population double. The economy hasn't gotten twice as good. It was probably better before and we weren't facing a 36T debt that is growing fast.

The economy, as measured by per-capita GDP has gotten twice as good....since 2004 alone. Which was twice as good as it was in 1988 -- i.e., the economy today is 2x as good as it was in 2004, and 4x as good as it was in 1988. That's as measured in current dollars -- i.e., adjusted for inflation. Since it's per-capita, it's also adjusted for the increase in population.

From the World Bank: GDP per capita (current US$) - United States | Data

You're right on the debt. Keeping in mind that a quarter of that was in 3 different COVID stimulus packages of $3T each. The first was needed. The second was too big, and the third was pure pork.

That's a problem and gets back to fiscal discipline -- which neither party has had since Clinton. Regardless of who you point the finger at, you don't get out of the problem without growth.

The markets can adjust to pretty much any change, provided that it's over time. What it doesn't adjust to very well is shocks. Like what we're seeing today. As this is written, the stock markets are set to open down between 2.5% and 3.5%. Where it might go from there is anybody's guess.

And it's 100% self-inflicted.

 

[Bamaro]

The economy, as measured by per-capita GDP has gotten twice as good....since 2004 alone. Which was twice as good as it was in 1988 -- i.e., the economy today is 2x as good as it was in 2004, and 4x as good as it was in 1988. That's as measured in current dollars -- i.e., adjusted for inflation. Since it's per-capita, it's also adjusted for the increase in population.

From the World Bank: GDP per capita (current US$) - United States | Data

You're right on the debt. Keeping in mind that a quarter of that was in 3 different COVID stimulus packages of $3T each. The first was needed. The second was too big, and the third was pure pork.

That's a problem and gets back to fiscal discipline -- which neither party has had since Clinton.

The markets can adjust to pretty much any change, provided that it's over time. What it doesn't adjust to very well is shocks. Like what we're seeing today. As this is written, the stock markets are set to open down between 2.5% and 3.5%. Where it might go from there is anybody's guess.

And it's 100% self-inflicted.

Almost any economy can 'appear' to look good with massive deficit spending.

 

[JDCrimson]

So Tidewater, would or should the Pentagon war plan the progressive impact of this tariff policy if left in place over the remaining term? Imo, moves like this serve a tinder for wars...

And, just to connect today's tariff controversy to yesterday's, there is this declaration by the people of South Carolina when they left the Union explaining their reasons:

"The Southern States now stand in the same relation toward the Northern States, in the vital matter of taxation (tariffs), that our ancestors stood toward the people of Great Britain. They are in a minority in Congress. Their representation in Congress is useless to protect them against unjust taxation, and they are taxed by the people of the North for their benefit exactly as the people of Great Britain taxed our ancestors in the British Parliament for their benefit. For the last forty years the taxes laid by the Congress of the United States have been laid with a view of subserving the interests of the North. The people of the South have been taxed by duties on imports not for revenue, but for an object inconsistent with revenue – to promote, by prohibitions, Northern interests in the productions of their mines and manufactures."

 

[Tidewater]

So Tidewater, would or should the Pentagon war plan the progressive impact of this tariff policy if left in place over the remaining term? Imo, moves like this serve a tinder for wars...

Absolutely, existing contingency plans should reflect reality.

And it could serve as tinder for wars. Let's not forget that Abraham Lincoln started the Civil War because the Confederates' duty-free transit policy was going to make it possible to completely circumvent the federal tariff.

 

[JDCrimson]

In our inifinite wisdom, we have now weakened our own supply chain for our defense program...

I have a good idea, how about we sanction ourselves?

Absolutely, existing contingency plans should reflect reality.

And it could serve as tinder for wars. Let's not forget that Abraham Lincoln started the Civil War because the Confederates' duty-free transit policy was going to make it possible to completely circumvent the federal tariff.

 

[4Q Basket Case]

In our inifinite wisdom, we have now weakened our own supply chain for our defense program...

I have a good idea, how about we sanction ourselves?

You're 100% correct....we've raised taxes and prices (IOW inflation) on ourselves and hurt our ability to defend ourselves, at least in the short run.

You can't make this stuff up.

 

[DzynKingRTR]

if my 401k, Roth IRA, Mutual Funds, get any worse I am going to owe money.

 

[Bamabuzzard]

I don't quite understand the concept of the tarriffs other than revenue for the government at the expense of higher prices for their citizens. Is that basically what ultimately happens?

 

[AWRTR]

You're 100% correct....we've raised taxes and prices (IOW inflation) on ourselves and hurt our ability to defend ourselves, at least in the short run.

You can't make this stuff up.

I've been onboard with the illegal immigration actions and DOGE digging into all of this nonsense spending. Here's a fine example of my tax dollars being thrown out a window.

doge-uncovers-va-agreement-pay-014704130.html

This tariff stuff is nuts. You are pouring gas on an inflationary cycle already in existence. It's maddening. It's harmful to the consumer and Trump will sink his own presidency that could be successful if he just didn't do this stuff. If he just focused on energy, food, and housing prices he would be in good shape. Give certainty on tax policy, cut regulations, and just be pro growth is the way forward, but he's going to wreck it all.

 

[Tidewater]

I don't quite understand the concept of the tarriffs other than revenue for the government at the expense of higher prices for their citizens. Is that basically what ultimately happens?

Generally, tariffs are ad valorem (a percentage of the value). Sometimes they are "specific duties" (a fixed amount per ton, for example).
What tariffs do inside the country imposing the tariff is to bend the supply up (increase the price for the tariffed commodity). Since the demand curve is unchanged, this likely causes domestic consumers to shift from buying foreign (pre-tariff) to buying domestic (post-tariff) equivalents (if available). This increases the price of domestically-prodoced equivalents (at least in the short run). Workers in those industries like this. Industrialists in those industries do as well.
Some will continue to buy foreign even after the tariff and this generates federal revenue.

It also make "downstream" products more expensive. If you put a tariff on steel, then everything made from steel becomes more expensive.

So, generally:

• Tariffs increase prices for tariffed items and downstream products. Industrialists and workers in protected industries benefit from them and therefore like them.
• Consumers pays a bit more for tariffed items.
• Federal government makes a bit of revenue.

 

[selmaborntidefan]

That's a problem and gets back to fiscal discipline -- which neither party has had since Clinton.

And even he didn't "really" have it. The best thing that helped him balance the budget was the GOP capture of both houses and a public behind the concept of a balanced budget (the Perot voters) that served as guardrails to keep idiots from spending frivolously.

And then Clinton was, shall we say, tied up quite a bit scrambling for survival in his second term.

 

[crimsonaudio]

I'm no economist and many here have forgotten more than I know about economics.

That said, I get the feeling that these tariffs are an effort to strong arm other countries into more equitable trade - IOW, I don't see them as being long-term as virtually no other country can afford to lose the US as a consumer. They will (hopefully) inspire more companies to invest in making things in the US as well.

It seems like a gamble to me, but I can also see where we may well end up with more equitable trade deals than we currently have with many / most countries. The US still swings the biggest economic stick on the planet.

 

[selmaborntidefan]

This tariff stuff is nuts. You are pouring gas on an inflationary cycle already in existence. It's maddening. It's harmful to the consumer and Trump will sink his own presidency that could be successful if he just didn't do this stuff. If he just focused on energy, food, and housing prices he would be in good shape.

You are 100% right, but Mr. Six Bankruptcies has ALWAYS been the "I'm smarter than you, know more than you, and I will show you how smart I am" contrarian. This right here is why I know his so-called DOGE is going to COST MORE MONEY than he can possibly save even though I'd favor the concept.

This is all about, "I'm the most powerful man in the world, I can make kingdoms rise and fall, and nobody can do anything about it!" Followed by the evil mad scientist laugh.

 

[4Q Basket Case]

I don't quite understand the concept of the tariffs other than revenue for the government at the expense of higher prices for their citizens. Is that basically what ultimately happens?

The idea is that you make foreign goods more expensive, so the consumers opt for domestic substitutes, driving up demand for domestic products, driving expansion of production capacity, and driving up payrolls (both number of employees and per-employee compensation), etc.

You often see it couched as "protecting American jobs."

The unintended consequences are that domestic producers are isolated from competition. So they have less incentive to produce more efficiently and less incentive to improve quality. Also, some foreign countries produce stuff for which there is either no local substitute or the substitute isn't the same quality, or it's not really a substitute at all.

For example, there's a reason there's no American coffee, tea or cocoa.

So the consumer ends up paying more for both lower quality stuff and lesser selection, and domestic industry gets fat and lazy.

The classic case is the American auto industry. Between an industry in its infancy, wars & resultant re-construction, and tariffs, foreign competitors were not significant players in the US market for about 75 years.

Which, after tipping over several dominoes along the way, led to the embarrassments of the Ford Pinto, the Chevy Vega, the Chrysler K cars, the AMC Pacer and Gremlin, cars that wouldn't turn off (the OFC will definitely remember "run-on knocking"), and cars that spent more time in the repair shop than on the road.

Finally, Toyota kicked the door in with quality cars, and it's taken since then for the domestic industry to catch up.

 

[jthomas666]

https://twitter.com/i/web/status/1907801011189641469

Newsmax team - and Rudy Giuliani - get to ring the opening bell on a day when Trump's tariffs crater the stock market.

 

[selmaborntidefan]

https://twitter.com/i/web/status/1907801011189641469

Newsmax team - and Rudy Giuliani - get to ring the opening bell on a day when Trump's tariffs crater the stock market.

the jokes write themselves......God, I miss Norm McDonald.......

 

[Its On A Slab]

Absolutely, existing contingency plans should reflect reality.

And it could serve as tinder for wars. Let's not forget that Abraham Lincoln started the Civil War because the Confederates' duty-free transit policy was going to make it possible to completely circumvent the federal tariff.

If this is true, why were tariffs not mentioned at all in any of the seceding states' Articles of Secession?

Slavery most curiously was mentioned.

The Declaration of Causes of Seceding States

The Declaration of Causes made by Georgia, Mississippi, South Carolina, and Texas.

www.battlefields.org