Trump's Tariffs Wipe Out over $6T on Wall Street in Epic Two-Day Rout

I think less 4d chess and more Erlich Bachman school of negotiation. Bullying people in inferior bargaining positions has somehow worked thus far.

Leopards eating a lot of American faces.

I think that those in command are also waiting for the next President to undo all that but it is going to have a tremendous effect for a decade or more. Hopefully for the US they won't go in a similar crisis like the UK is going through...

Cutting off countries like Japan or Taiwan like that when we know their geopolitical situation with China and how critical their economy is to the US is quite crazy.

The "4D Chess" is that some powerful internal people doing a lot of manipulation want America to be an isolated very independent fascist state, and some powerful external people want to destabilize America and reduce its foreign influence. They're both making solid progress towards their goals.

The majority of the American people who voted for the current regime are being taken advantage of but like many they'll progressively more and more identify with wanting whatever outcome "their" team achieves.

This could lead to the largest "free trade zone" in the world... everyone but the USA.

4D chess is an absurd notion when you consider the actors involved. Only malice and incompetence are credible theories.

Very well put. Alliances take years to build but can be broken in just days.

I'm tempted to think (hope? dream?) that the markets and trade will rebound if all this chaos makes American politics swing back towards an interest in global stability, but I think anyone partnering with the US would do so VERY carefully and right now the entire world is plotting how to remove US dependencies.

It's not 4D chess. It's not even 1D chess.

Sparking the local industries needs to happen with incentives, not a tsunami.

You can't swap the supply chain to a local-first instantly. Many things aren't done locally. The factory buildings are gone. The labor isn't there or trained. The basic materials aren't local and need to be imported. The machines needed to produce the parts don't exist locally and need to be imported themselves; sending margins to unrealistic numbers and making it a non-starter environment.

What it is, is another flip of the table, an upset, to cause chaos and feed a positive environment for more chaos, which only suits those who benefit from chaos.

In the case of Trump, never attribute to ineptitude what can be explained by greed.

He is tanking the US economy so he and his billionaire cohort can buy things (businesses, real estate, stocks, etc) at a low price. Thus amassing more control and capital.

This is how the Russian oligarchy came into power.

There’s still a way out, the US Congress could convene over the weekend and revoke the President’s ability to impose tariffs. Restore it to Congress as stated in the constitution.

Of course they won’t do that. Sic transit gloria mundi.

China is isolationist and they seem to be growing.

The problem is the USA is a consumer economy which isn’t sustainable. We could get away with it as a tech leader, but with China stepping ahead (Deepseek) china will be a tech leader and manufacturing leader. What will the USA have?

Sometimes your best mates go a bit mad. Cut them some slack.

They will need a shoulder to cry on when they re-discover how well a trade war works out. The last ones seem to have happened at roughly 50 year intervals.

The US seems to be incapable of learning from the past. The worrying thing is that Mr Trump is old enough to remember directly or what his parents told him about the last fucked up trade shit storm or trade war.

You do not get to dictate how the world as a whole works ... ever. It has its own ideas about that.

Even Britain at its most imperious could not do that and the US can't even stop itself from trying to impose tariffs on its own air base in .io!

The best we can do from outside is to hope that the US does not collapse completely and that the downward trend stops at some point. If, somehow this all pans out that we will all benefit or even that just the US benefits then fine. Let's pick up the pieces and crack on.

I do not hate Americans nor their rather odd President. We are seeing change happening. It might be for the good eventually but I doubt it but I'm not an expert. In the meantime I suggest we continue to act as friends towards an old friend. When you go barking mad, you might need your mates to stand beside you whilst you dribble and widdle.

>Of course I'm sure some people would claim this is 4D chess or what not but.. sometimes the person doing something crazy is just crazy at the end of the day.

It is crazy and it does have some crazy logic. The US trade deficit is well pronounced only on material goods. If you add services, the deficit is much less, if any. The services are produced by the people and states mostly voting Democratic. So, Trump with his tariffs may succeed in causing the EU and others to retaliate against US services, thus damaging blue states and helping (well in his mind) the red states. Trump already did similar hit against blue states with SALT deduction for example, yet it was just a small preview.

> I'm sure some people would claim this is 4D chess

There is some regular 2D chess going on here, but it's not being played by anyone in the US admin. Putin wants to weaken NATO so he can continue expanding. America is a linchpin holding together much of the European alliances and not coincidentally the candidate he helped get elected twice is destroying the US's global standing and weakening the US dollar.

The rebuilding going on in Europe, the increase in European military spending, and the talk about nuclear weapons in Europe is a direct consequence. I don't know if Putin just expected Europe to run around incompetently like the Keystone Cops, but it kind of feels like they're acting quickly and competently without the US.

At any rate, all of this is bringing us much closer to a WWI or WWII style global military conflict.

> Of course I'm sure some people would claim this is 4D chess

You mean idiots of course.

"Mama always said ... stupid is as stupid does"

> Of course I'm sure some people would claim this is 4D chess or what not

No one worth listening to.

Trump is the actual anti-imperialist, and as he said, unifier. He’s so selfless that he’s putting the US on the line to ensure world peace and unity /s

The US represents a huge proportion of global demand.

These countries can establish as many new trade agreements as they want, but they aren’t going to replace the US market.

And to claim that the US has lost allies is ridiculous. Countries have done far worse and remained allies.

Let’s not overplay the impact here. Free trade is a relatively new thing. We’re just going back to the world the way it was a few decades ago.

There is most likely a deeper plan behind it. It's not 4D chess, or if it is, it's played by people who don't really understand it themselves, but there is a goal behind it: ending Reagan's neoliberal economic world order.

That in itself is not a bad goal, and it's one I agree with; neoliberalism has increased inequality, put excessive wealth in the hands of a tiny elite, and looted nations of their infrastructure and social structures. Neoliberalism should die.

The problem is that Trump's economic advisors seem to want a new world order where the rest of the world is even more subservient to the US, and they think they can enforce that by cutting everybody off from the US economy, and they'll only be let back if they accept America's new terms.

The problem is of course that the US actually cut itself off from the rest of the world, and as big and powerful as the US is, it's not more powerful than the rest of the world put together. It's not the rest of the world that will come crawling back; it's the US. After having squandered its 80 year dominant position in the global economy.

100% agree with this perspective. It’s surprising how few others seem to note this.

Thanks for posting it.

Are you claiming that the 'shareholder class' would rather depress the economy and wipe out trillions in shareholder value...over inflating the economy and lowering interest rates?

...or they could've just laid off and gotten even more.

maybe, just maybe, trump and the people around him are actually just crazy and there's no big conspiracy.

> while taking most of the surplus value

Just FYI, "surplus value" refers a concept Marx made up that is considered in mainstream economics to be an error in reasoning.

Even making sense of it requires buying into the labor theory of value that Marx took from Adams and Ricardo, but which is not taken seriously anymore.

That doesn't detract from the substance of the point you're making. But it's a little like reading someone say their house is hot because of all the phlogiston. It detracts from the force of the argument.

It amazes me the contortions some people go through to maintain the belief that this administration is competent.

Occam's razor suggests that they just have no idea what they're doing.

Anyone who's played cards or an MMO know those are insanely good odds -- virtually guaranteed!

Those odds must incorporate some expectations that recent actions get reversed (and quickly!). Recession is guaranteed if new rules stay in place.

Good. Silicon Valley collectively sold their souls to Saudi Arabia, and put their full weight behind Trump because that’s what Saudi Arabia wanted, and now they are gonna get what they deserve. I hope their wealth is destroyed to the point of needing to care about Social Security and Medicare.

Financial markets are generally better indicators of overall sentiment than betting sites but point taken

This is basically 1 - P(tariffs get repealed).

> My thought relevant to HN is that either way this is likely to decimate venture capital and startups, at least in the short run.

Yeah, seemed like the IPOs were really getting going again, but I think that likely dries right up, too.

Unless you figured out how to materialize rare earths out of thin air, or spin up an automated factory in six months, it’s hard to imagine anyone will be looking to give you money.

> As global GDP grows, it becomes increasingly burdensome for the United States to finance the provision of reserve assets and the defense umbrella

I don't understand. US share of global GDP is around where it was in 1980, and in 1995[1]. Is Miran arguing that America's "exorbitant privilege" of being the source of the world's reserve currency, literally being able to buy goods from any country in the world with money printed out of thin air, is actually a liability?

[1] Page 8 of his paper

EDIT after reading through Chapter 2 of the paper: Thank you for sharing this. I don't agree with many of the arguments Miran is throwing out so far, but at least it's self consistent.

He is saying:

1. If the US's global share of GDP decreases, then a set of global economic factors will cause the US to keep having to take on deficits to fund the rest of the world's desire for USD (because that is the world's reserve currency). If the US becomes small enough relative to the world economy, then this pressure will cause the US to risk defaulting on its debt.

2. The US's status as the reserve currency issuer means US dollars are artificially expensive. This means that low margin, high-labor industries like manufacturing can't thrive in the US. This is a national security risk because China/Russia can make lots of tanks/drones/etc and we can't.

3. The US benefits from being the reserve currency issuer because it can use that power to project force worldwide and maintain national security.

4. (He doesn't say this, but implies it in that coy way that people who read The New Criterion like to do) #1 is an unacceptable risk for America, and the US should employ a range of unilateral or multilateral measures to reshape the global financial system in a way that devalues the US Dollar, strengthens US manufacturing, and forces US trading partners (esp. other liberal democracies) to subsidize the US's status as the reserve currency issuer, since the US provides a global hegemony that is beneficial to them.

Also, having read portions of the Project 2025 "Mandate for America," it's really interesting to me how all of these right wing thinktank writers (Russ Vought, Max Primorac, and now Miran) seem to share the same writing style.

I know that a quotation is not necessarily an endorsement, but this is a fantastically short-sighted idea.

> it becomes increasingly burdensome for the United States to finance the provision of reserve assets

How dare countries want pictures of dead Presidents so badly that... they're willing to send real goods to the United States for its consumption, with no expectation of reciprocation.

> and the defense umbrella

... and agree to a de-facto policy of minimal militarization, such that they could not pose a threat to America's global security interests, no matter what it decides those are.

A few hundred years ago, this would look like a tribute system. It's unfathomable that a nation in such a privileged position would decide it's tired of such a systematic set of advantages.

> as the manufacturing and tradeable sectors bear the brunt of the costs...

What's the saying, they've tried nothing and are all out of ideas? Industrial policy is a known and understood thing. The US has this in its defense sector even it doesn't want to admit it, and the CHIPS act was another attempt for the semiconductor industry.

This sort of policy is far more targeted and far less disruptive than blowing up international supply chains in hope of repatriating sweat-shop sneaker sewers and factories for five cent injection molded widgets.

> Why must a country run a trade deficit to retain its global reserve currency status? Because when your currency is the global reserve currency, the entire world constantly hungers for it in order to use it in all the various countries’ international trade between each other. The only way to keep those countries constantly supplied with dollars is for Americans to buy tons of foreign imports, which effectively sends dollars to those countries, since these purchases are made with dollars

So... the problem with the US being the reserve currency is that it makes other countries cater to our tastes because they want our money...?

The counterpoint to this is that the US as the reserve country means that it’s very cheap for the US to service its debt since it’s holds the money supply. It basically controls its own destiny in that sense.

> Fuck it. I just got a small raise and bonus but feel so insecure. I expect to lose job at any moment.

just today 3 people from my network messaged me about losing their job and asking about some opportunity. They worked remotely for American companies (from Brazil).

Petulantly, I’d observe Trump hates or doesn’t believe in knowledge economies. He’s delivering pain to a lot of people in my circles.

For all that, a strategic goal of ensuring trade is sustainable is probably worth sane discussion.

This all tariff imbecility created solely by Trump it’s atrocious, still, if EU response is to hit the main players in Nasdaq - where there are a lot of chip producers necessary for the ongoing AI revolution - we are just shooting ourselves majorly in the foot.

Surely there are much better companies for the EU to apply directed tariffs. EU absolutely has their weaknesses, but giving blunt responses (like China just did and put tariffs on everything) is not really our way. Expect EU answer to be well crafted and directed at very specific areas.

Almost all the trade deficit numbers being thrown around by the US administration don't include trade in services which the US generally has a large surplus. A lot of that is very high margin tech SASS/advertising.

If this continues it seems like this could be a "digg->reddit" type moment for US tech. In some ways it is easier for a lot of people to leave facebook than it is for a single person. If you look at gross margins there is a lot of room for competition, though network effects make that competition very difficult. Maybe this is the catalyst for competitors to break in.

Tech was easiest to export cross border. You can export tech through culture, and the USA has been a powerhouse of every major technical cultural channel for the last 50 years.

The other side of it is the lost trust in American tech. That’s most prominent in the military debates around whether other countries can rely on their expensive hardware working if they run afoul of American policy, or if the president is looking for leverage to extort a mineral deal, but it’s also highly relevant for the civilian side. For pretty much as long as we’ve had computers, most other countries have trusted hardware made by American companies running operating systems and applications made by American companies. Now everyone has to wonder what kind of espionage or sabotage would be possible if those companies were pressured – or whether the guys standing on stage would even need to be pressured. Suddenly, giving Google the ability to push code onto most of the devices in the world looks less like a security win and more like a risk - and it’s famously hard to establish trust without the rule of law as the foundation. Snowden started it but most allied governments were confident that there were limits in a way which is a lot harder to believe now.

I am expecting that 2024 will be seen as the peak for American tech companies: the longer this goes on, the more competition they’ll have with advantages they can’t match in foreign markets – especially if many of the immigrants who worked at those companies decide to start companies after leaving.

But what if a significant fraction of the employees believed in some message being spread that intern?

Whether the intern is an inveterate grifter, and/or happens to be personally sponsored by a powerful mob boss, does not matter for the employees latching onto that message.

In that context too, I have a feeling these flaws would be tolerated/overlooked.

Freedom of the press means you have dishonest press. Fox News is just ESPN for news consumption. Out of sight, out of mind. If they reported the bad news, these people would change the channel anyway.

jfc do some reading about North Korea before making idiotic comparisons like that.

Fox News is irrelevant when Americans see their retirement account lose 65% between now and late 2026.

They removed their stock ticker that runs at the bottom of the screen for the first time in 30 years. They're a Trump propaganda machine.

If I had $1000 in cash, and inflation hits 10%, the purchasing power is equivalent to (1000 / 1.1 = ~$909) in 2026.

If I had the same $1000 in stock, and it lost 11% of its value in 2 days, I might worry about it being worth close to $0 by the end of the month.

Inflation only happens if the US starts paying down the debt -- locking up the tariff money in interest payments. Otherwise, there's fundamentally no increase in the supply of money. I'm guessing there still will be inflation for consumers, especially seeing as most don't have the funds to invest in bonds.

I don't know, but us stocks aren't the only options, they could just be transferring to european stocks.

Real estate, bonds, foreign stocks, oil. There's a billion options out there. Or they can just sit and wait. Losing for a bit of inflation is better than losing 20-30% in a recession.

Trump just said "fuck you" to 95% of the planet. These stocks have a long way to fall.

It sure would be nice to have a competent, organized opposition that does more than finger wag and tsk tsk in a scornful tone

The dollar may devalue, but Apple just did.

Gold is up 14% this year, and up last year as well. A lot for something not inclined to move.

Bonds and stocks tend to have an inverse correlation. And, yep, bonds are up while stocks and real estate are down.

That’s why financial advisors tell you to keep a mix of stocks and bonds, trending towards a greater percentage of bonds depending on your risk tolerance and as you get older. (Because bonds have lower returns than stocks, historically, but are also less volatile.)

Interest rates are high enough that holding cash isn't terrible, particularly if you expect the administration to reverse course on tariffs yet again.

Powell said the Fed isn't changing its plans to keep combating inflation from Trump's first term.

TLT is worth considering, though maybe we'll see Elon decide the treasury will default on bond payments.

> But what exactly are they doing with the cash?

Buy Treasury Inflation Protected Securities (TIPS) and hold them to maturity. (Don't buy TIPS funds, their value fluctuates based on interest rates. Buy actual TIPS instead, at either Fidelity or Vanguard.)

A lot of money is moving into treasuries, which is causing the 10 yr yield to quickly drop below 4%.

https://www.barrons.com/articles/10-year-treasury-yield-junk...

AFAIK this is one of the first times that a significant downward move in the stock market wasn't also seen in the price of Bitcoin. Usually they're correlated.

ROTH conversions.

Lookup VUSXX. It is a vanguard short term treasury fund. That's where I put my cash. It is currently paying 4.24% that is state tax free (I live in Oregon).

Unfortunately it is hard to predict if that rate will stay high enough. Previously I had 'cash' in iBonds which for a while paid 8-9% early in the pandemic when inflation was high. If none of the above pays well enough I look into treasuries, or CDs.

I'll give the consensus answers from the trading arena. Each of your questions has a fairly significant long-term backdrop, a medium-term one, a short term one, and an immediate day-to-day narrative. That's fairly obvious, but there is strong confluence now when it comes to some of the things you are asking. And please ignore the grammar - on a phone and banging it out:

International money is now flowing out of US assets. This is a shift from the past few years where the US has seen historic inflows that kicked into overdrive with the AI wave. The pairing of stronger dollar and rising US assets made us equities especially attractive for international investors. This peaked with the US exceptionalism trade during the beginning of the Trump presidency, and now as a response to tariffs you are seeing dollar down stocks down which is making the sell-off especially painful for international participants.

Before the recent tariff shock, those previous narratives were already coming to an end. European equities have been ripping. That's one place where money has been flowing from big players like hedge funds.

A lot of the money has gone into deleveraging. When you look at prime broker data you can see that hedge fund positioning, large asset manager positioning, vol control, CTA, and most of the big market participants have been heavily lowering exposure for a solid month now. Remember that cash can go to lowering leverage.

The bond question is very much in play. You are correct that bonds have not been catching a bid. The consensus outlook was moving to stagflationary, and bonds had other hair like the US still having a lot of debt to term out (and newly issue... deficits are running Huge despite the news of cuts in inconsequential places as far as overall budget), and some more recent theater releases about consumer inflation expectations were frankly shocking, and that feeds into the fed's response function when it comes to cutting rates and helping out a bond rally cycle. This is part of the reason you're seeing money go, well, a lot of other places! Like European banks, gold, etc over the past few months. Now we're in a full on recession trade, and this debate is in overdrive. Fed cuts were increasingly priced in, bonds caught a bid, but Powell spoke very recently and said there was too much uncertainty to even consider cuts which pulled back those rate cut expectations. Opinions that are in conflict are priced into various aspects of the market right now, and this will play out in the coming weeks.

On to Gold. I think it's fine to simplify it and say that Gold sniffed the danger out. It's been on a face ripping rally for a while now, and what you see now is a great setup for the trading phenomenon of "sell the news." Once everybody is long there's no one left to buy and only sellers can come in from there. When markets get hot like that, you get fast money coming in that is prone to selling on small down moves (because they're only joining the bandwagon to make "easy" money, and they're not interested in losing even a little bit of money. They are also often tourists in that they do not have deep knowledge of the investment product so when something like gold selling off when it should be going up happens, there is a fear response.

That said, the gold selloff today is significant. Have heard two commentaries on this, and both agree it's a sign of margin calls and liquidation/sharp capitulation. In extreme sell-offs you see all correlations go to the one, and there is a "dash for cash" to meet collateral requirements and shore up risk metrics. You can also see signs of this in FX markets. Some other commentary from today confirmed stres in treasury liquidity, which is a "safe haven" but also gets liquidated in dash for cash situations.

And this does partially answer "where the money is going". T Bills. That's what everyone wants when battening down the hatches.

Gold is indeed best viewed as an uncertainty hedge rather than an inflation hedge. That's a good observation. It's really a hedge against systemic fragility though things like people being unsure of Central Bank policy... Tariffs.... Etc. It's not exactly a day-to-day extreme market volatility hedge. Some of the cash is going literally into hedges! Volatility itself is hugely being bid up right now. That stuff is even better than cash because it has negative correlation to risk assets.

Stitch everything together and you get a pretty good backdrop for the current sell-off. It even helps explain things like the 2-day back to back action, where day one was a huge selloff but it was somewhat orderly because everyone was coming in with fairly low exposure, so panic didn't really set in until day two (and he's selling feedback loops often continue until liquidation is forced, which marks a bottom for buyers to take a stab at. Nobody wants to step in during a steep grind down of price).

Relevant charts. Not all of them have the labels in-chart, but it's all significant data. Ex: here's a real data point that isn't in the charts below, but is a typical example of this sort of data. "High volatility is expected to generate 80 billion USD in equity supply from macro strategy funds over the next week if conditions continue": https://ibb.co/album/KNBSw2

So, the value disappears when the stock market tanks. It is not a zero sum game where the 6 trillion is suddenly cash instead.

Presumably most 401(k) contributions and dividend reinvestments happening automatically create a large volume of buying power.

While some people freak out, call an agent, sell stocks, I'd imagine this is mostly actively managed (by humans and software) investments doing the selling.

Beyond that, when you sell something, maybe it felt like it was worth $10. But you offer it for $9.95. Maybe someone buys it, maybe not. Maybe you drop it to $9.80? Then someone buys it. Rinse and repeat until the price is now $8.

When you sell a "$10" stock, if you say you won't sell it for less than $10, you might not be able to do so. It's all more complicated than that, and there are limit and market orders, etc. that affect how much the price will vary from when you initiate it.

But if you're like "hmm, this is horrible news for the economy" you probably press the "sell as fast as possible" order, and your $10 stock might actually sell instantly for $9.50 because for someone with a "smart" algorithm, $9.50 looks pretty good when the stock still seems valued at $9.75+. But then a few million shares sell at prices lower than $9.75 and now the same system that thought it was a good idea to buy at $9.50 thinks it's a good idea to turn around and sell it... for even less.

Some people have an obligation to sell (option contracts must be honored, ETFs must be rebalanced, etc.) and this creates liquidity.

Some people also have a lower risk tolerance (or want the money to put into something with more predictable returns like say treasuries) and want out now.

There was widespread institutional selling, and typically dip buyers are non-professional traders who underperform the market [1] [2]

At the end of the day, does it really matter who's the marginal buyer and who's the marginal seller?

Do we learn anything about the value of Apple Inc by learning that the marginal buyer was an HFT hoping to offload inventory in 500ns, a mid-frequency shop who will hedge delta at end-of-day, or a value investor who will hold for a lifetime?

I claim any such information would be rapidly priced in by flow-analysis algos, and thus reflected in the closing price.

[1] https://www.reuters.com/markets/retail-bought-stocks-largest...

[2] https://www.businessinsider.com/retail-investors-buy-dip-tru...

Asking just for me to learn:

Does it really need someone on the other side to buy or can it be like other markets (consumer goods lets say) where you can set the price lower and not necessary have a buyer. You just announce it that you are willing to sell 10k of this type of share at 200 or lower up to 190. Then someone else seeing this says we are also willing to sell 20k at 190 or 180 ? And so even if no one bought these shares now their “average” price is not 200 but 190ish?

Sorry if the scenario sounds stupid and it is far away how the shares market works.

Why?

With this kind of free fall it's going to trigger a lot of busts.

The covid response of printing trillions of dollars and other currencies around the world meant that there was way more money and it had to end up somewhere.

There's just way more money to invest than there are productive companies to invest in. So you get crazy P/E ratios in the best bets available.

The "fix" is to inflate that money away (or maybe to tax it and pay down deficits?) but it's not an easy monetary policy or a familiar one.

The belief of Trump and his allies is that the last 40 years of free trade has been extremely favorable to college educated "elites" and extremely unfavorable to the working class. They see foreign trade as having hollowed out American manufacturing, and therefore they see the shutting down foreign trade as a way to reverse this decline. While they are aware that doing so will hurt college educated professionals, they don't care because they feel those people have had it too good for too long.

The late night show industry is making record profits.

In the long run it could lead to more fair trade deals.

Today’s episode of Newshour at the BBC World Service had a conversation between a BBC journalist and a German CDU politician where they talked about how the tariffs on cars from Germany entering America has historically been lower than the tariffs on cars from America entering Germany. The CDU politician was telling the BBC that he hoped maybe a resolution for all of this would be both America and Europe lowering their tariffs to zero.

That was the hope of that politician in the long run though. In the short run the politician was in a sad mood because he felt things economically are going to be bad for everybody.

If you want someone talking intellectually about the global trade situation, Oren Cass’ interview with Jon Stewart was pretty good.

https://www.youtube.com/watch?v=vgEQeLR-M0g

But I do think that a logical assessment undervalues the notion that this is an emotional/intuitive. I don’t think Oren Cass’ very interesting intellectualization of the problem will actually help you predict what Trump will do.

But in the emotional piece - He’s talked endlessly about how America is getting screwed, and his tariff calculation was based pretty directly on trade deficit calculations.

I wouldn't say its good for anyone, but it is probably worse for many of our trading partners so they would, in theory, make moves to negotiate with the US to skirt the tariffs. I don't think it will ultimately have been worth it in the end but time will tell.

My best understanding of the administration's psyche is that they're determined to have more manufacturing happen in the US - regardless of the economic impact.

It still doesn't make sense though - there's a reason sneaker makers like to have kids in places like Vietnam make shoes for a few cents per hour. It's because no one in the US would work gruelling hours for such little pay!

POTUS wants to 'level the field' but I'm not convinced it's dawned on him that as leader of one of the wealthiest nations on Earth, 'levelling' will mean the US getting poorer.

> This is an inherently political subject, but I would appreciate a dispassionate argument explaining how this could be even remotely good for the U.S.'s economy in a way that is light on MAGA ideology and doesn't simply claim the overwhelming majority of economists are dumb.

The slim hope to a voting bloc in the Upper Midwest that maybe, somehow, this will bring back manufacturing.

They've tried everything else; why not this?

We can't simply legally punish the people who shipped the factories off and drove the region into despair, so why not tax the stuff the factories made overseas as a part of the trade-off?

I'm not saying it's a good idea, I'm saying this is their logic.

The only positive outcome I can think of is that T and co are trying to scare trading partners into lowering their tariffs in response. Assuming that happens to some degree, T will revert his and then take credit. Then the market will return as well, and we all head off into the sunset.

Likely why it is happening so early in the admin, so we can all forget about it by the end.

I’m pretty sure the only ones it will be good for are the rich. Make the rich richer. They will be able to buy stocks cheaply. They will be able to buy homes cheaply as people lose their jobs and foreclose. They will make the USA into a nation of renters. They will increase inflation and prices of everything so most people will be on the cusp of insolvency so they have to work multiple jobs for lower wages and can never retire. They will decrease education so people won’t be able to recognize the propaganda for what it is. They will disappear dissidents. They will make abortion illegal so people churn out the next generation of wage slaves. They will create false enemies (Canadians, gays, liberals, atheists, Jews, Muslims, anyone not white, etc.) to distract people from the real villains.

I think this might be a move to stop a world war (between Russia and NATO/Europe). If U.S. also leaves NATO any time soon - the chances for a world war would decrease greatly.

I think in theory it forces the middle class to buy American due to tariffs, which builds a more sustainable lower class at the expense of the middle and lower upper classes.

I think it’s still an overall net negative (dramatically) that sees us become overall poorer and less influential, but I would guess there will be more factory sorts of jobs.

The boundaries of what is politics and what isn't is difficult to suss (for me) these days. I personally do not believe this is good. But I have a theory on why those that do think so.

I'm 54. It follows that I see a number of people my age. I'm churchgoing, as well as involved in a number of clubs (pilots, rowing, legos, etc). So I get to rub shoulders with a decent amount of people. And especially a bunch of older people. Our parents are aging.

I'm just beginning to see how hard these years from here on out have a number of difficult challenges. I've begun writing myself notes that I hope will help me navigate the years ahead. One of the key issues is feeling relevant still. As well as losing your competitive edge. Your formative wisdom is being invalidated and eroded constantly.

Couple that with a period of euphoria that was experienced as post WWII prosperity followed by the cessation of the "cold war" and a surge in population, and you have a group of people that are more in their own generational bubble than historically. There's enough peers to make you feel like you're in the majority. I think many of these people feel like this is good, because it feeds the need for relevancy. It's not uncommon for older people to lash out, somewhat foolishly, as they transit these years. And as cognition decreases, it becomes easier to game people in this age bracket (unless someone has a better explanation for why older people are the best target of scams).

As I visit with many of the older genrations (not all of course), their justifications, when pared back often come down to "this makes me feel relevant again". And attempts to restore "the narrative I have in my head about how life was in the good years".

Just some rambling thoughts, about why some people think this is good. It's less about the money to them, and more about a hope of something gained. Not unlike a terminally ill person blowing a wad of cash on something that they would never otherwise have justified.

It is sad, that it comes at the expense of the younger generations. It breaks my heart actually.

It is strategically beneficial, for trade agreements, diplomatic leverage and in international conflicts, for a nation to have a strong industrial base, in other words an economy that creates and exports actual physical goods. Tariffs level the playing field in our own consumer economy for American made goods, because without them American manufacturing is competing with countries where labor is absurdly cheap.

My thought today was that aside from the stocks crashing, and aside from any realistic possibility of magically minting new manufacturing facilities, you'd force the price of imported products up in the short term, and prices don't really go back down, so after they go away you'll hypothetically be selling the same products at higher prices that people are now used to, and nothing else needs to happen functionally to increase efficiency or build them domestically. 1) Increase cost of selling imports 2) Crash stock market 3) Buy stocks 4) Remove tariffs 5) Profit

But I don't know wtf I'm talking about.

Trump has kooky beliefs about tariffs, and his economic guys are yes men.

Economics and science mean nothing to the President. He probably heard some blowhard in a bar 50 years ago yabber about tariffs. He’s an instinctual person, and when he senses danger to himself, he’ll pivot.

I’d guess there will be air strikes on Iran or threats of an incursion into the Mexican side of the border by June.

Donald J. Trump lost an auction in 1988 for a 58-key piano used in the classic film “Casablanca” to a Japanese trading company representing a collector. While he brushed off being outbid, it was a firsthand reminder of Japan’s growing wealth, and the following year, Mr. Trump went on television to call for a 15 percent to 20 percent tax on imports from Japan.

“I believe very strongly in tariffs,” Mr. Trump, at the time a Manhattan real estate developer with fledgling political instincts, told the journalist Diane Sawyer, before criticizing Japan, West Germany, Saudi Arabia and South Korea for their trade practices. “America is being ripped off,” he said. “We’re a debtor nation, and we have to tax, we have to tariff, we have to protect this country.” [1]

We're in an Emperor With No Clothes situation and all of his aids have no clothes either.

[1] https://www.nytimes.com/2019/05/15/us/politics/china-trade-d...

To lay out my own biases

  - I voted for Trump but do not consider myself a strong supporter (I saw it much more of a vote for who you dislike less sort of situation)
  - I don't understand and am not supportive of the approach on Tariffs
  - I am an active participate in what most here would consider right wing politics although I don't find myself aligning on every topic (e.g. I am supportive of the abortion laws in California) so I tend to hear a lot of the chatter "from the other side"

Some arguments that I have heard (which I mostly do not agree with) are

   - When manufacturing moved out of the US to low cost of living countries, this hurt towns which relied on manufacturing (e.g. the rust belt). Cost is the primary reason why manufacturing moved. Raising the cost on overseas manufacturing may make domestic manufacturing cost competitive. Although economics tells us this will still be a net loss there may be externalities which are not priced into the trade (e.g. the towns falling apart and people becoming despondent / drug addicted might not be factored into corporate profit models)
  - Being overly dependent on China or more broadly "foreign powers" for manufacturing represents a national security risk.
  - In theory this could be posturing to provide an opening for the US to negotiate more favorable trade agreements. For example Israel, Vietnam, and Argentina have made some statements about reducing trade barriers on US companies.
  - In theory it could be beneficial to shift the revenue model of the US towards raising revenue with tariffs while reducing interest rates and other tax rates (e.g. "no taxes on overtime and tips")

It seems the maximum likelihood model is a political one and not an economic one. Trump likes making deals and he historically has made them by applying his leverage and bullying people to go his way. Now he has the most powerful office in the world and a lot of leverage to bully anyone he wants (universities, law firms, other countries). Lots of lunch money will be taken but no one's going to go near the bully anymore.

At the end of the day, it's about Trump's need for attention and ability to wield power, rather than any economic objective. Tariffs are a way to wield significant power without requiring the approval of Congress.

It's clearly not good for the US economy, but I think that is a red herring. This has been so far, and continues to be, a highly successful endeavor from the perspective that matters: that of the US president himself, who wants to benefit personally.

I think it's helpful to ask "What if this president actually doesn't care one way or the other what happens to the US economy, the world economy, or even geopolitical stability (beyond the US not getting nuked, causing him to die), and everything is just a grifter's instinct for how to benefit personally?"

In that light, literally everything this administration does makes perfect sense.

This is a man whose main accomplishment before the presidency was "being famous" — starring in a reality TV show and professional wrestling (the fake/scripted kind), and he clearly wants to be the center of attention in the media.

Although his tariffs are widely mocked by knowledgeable people as "insane", "stupid", or as the Financial Times put it, "one of the greatest acts of self-harm in American economic history", imposing them gives the man himself the opportunity for corruption on a scale unprecedented in modern US history.

He can easily (very easily) benefit financially and otherwise because heads of state, captains of industry, and the ultra-wealthy have to come to him to beg, flatter, or do something — buy his memecoin, rent out his hotels, buy his otherwise-failed social network for billions, the list is near-infinite — to get out from under his tariffs.

So I don't think there is any upside of the kind you are talking about. But there is substantial upside for the man himself, and it is enough to explain all of his actions.

They only seem nonsensical if you believe he is trying to act in the best interests of the nation.

I saw Peter Navarro saying US car plants were only running at 65% capacity and by tariffing foreign cars, the US plants could crank up and produce more. Not sure how true that is but that's the kind of thing that could be positive.

Trump would surely veto, and I currently have doubts there will ever be enough Republican votes to override

To be clear, this is going to have to pass the house. Then, Trump will veto it. Then, the senate will need 16 Republican senators (30% of the party) to vote against it. And it's still a toss-up if Trump will even obey it or if he'll executively order customs to continue the Tariffs.

So unless Republicans suddenly grow a spine, which is unlikely given their current strategy is "hide the stock ticket on Fox news" and pretend glorious leader is a genius, this is a token effort that will do nothing.

And even if the tariffs are revoked, we've destroyed our reputation. You think countries will want to continue on like nothing happened after this? The only thing that might stop the impending collapse of the US economy as 180 nations divest from the empire we built is if we were to impeach and convict Trump immediately and set an example that this economic chaos will not be tolerated; that allies are not fair game to bully.

But, honestly, I think that ship has already sailed. It needed to happen immediately, not after a week of testing the waters.

- Xi Jinping, 2027

do these friends participate in the market?

Sure, there's a bottom, but we're not close to it yet.

It could be down another 50%, it could already have passed. Historically, troughs in P/E ratios have occurred all over the place.

https://www.macrotrends.net/2577/sp-500-pe-ratio-price-to-ea...

This weekend is going to determine that. There’s a pretty blood chance we’ll see the real crash Monday.

Only one man knows the answer to this question.

The vision is to convert the American economy from one with infinite profit margins (ads and software) to a manufacturing one with single percentage profit margins and limited growth potential due to tariff environment.

So I think a 80-90% drop in the overall market value is justified.

I don't know the machinations at the level of Trump, the billionaires, and the GOP senators and representatives. Depending on what's going on, those in congress will never do their job.

OR, if they just believed in Trump's influence on votes in "free and fair elections", they might eventually hit a breaking point. Because if they let this happen unchecked, they will be voted out, 100%. (Not to mention everyone they know will have lost money, many more jobless, hungry, etc.)

Being complicit in triggering a great depression while being an elected official cannot be good for your career long-term.

As someone who sold all my stock in January and invested into bonds, I think we are far from it, but the bottom it will depend if the tariffs are lifted in the next days. The worst case scenario would be tariffs being kept and the FED eventually losing independence.

I think it is safe to say that we probably will go back to pre COVID levels, since the trust in the stock market is eroded, but this time with high interest rates.

Probably April or May 2025. I'm bullish still. But then I'm not all US stocks anyway.

Tax cuts for the rich. Defunding the IRS, cutting social services, and pushing tariffs to tax the working class are all consistent with needing to keep the government running without taxing the billionaires.

They just signed the budget, it's not a secret. They're giving $2.5 trillion in tax cuts to the wealthiest Americans.

What's that supposed to mean? He is saying the quiet part out loud?

Because opposing Trump risks becoming an outcast, which is the thing that humans want least, and losing their job. There is not yet the sign that their voting base actually wants them to do anything to oppose Trump.

Should have /s’ed that.

To be fair, I do think the markets will eventually recover. If not soon, then in 4 years time. Assuming democracy hasn’t eroded to the point that timeline is meaningless.

So your theory is that there’s an amazing master plan, but only insane people on Twitter (and notably, not, say, _Wall Street_, or any economists) are smart enough to see its ineffable wisdom?

Is that really what he’s doing? If so, then that’s some 5d chess right there.

Trump's been talking about tariffs for far longer than the current t-note cycle. He was talking about it a decade ago during his first time in office. IIRC he ran for POTUS as a Reform Party candidate in the 90s or 00s, and that party was started by Ross Perot, who was against NAFTA on the grounds that it'd cause a giant sucking sound of American jobs to Mexico.

He doesn't care about the debt; you can see this in how he pays taxes.

What he needs is something that lets the rich have their cake and eat it too. He needs to appear to be doing something for working-class American manufacturing jobs, while making the people that would fill those jobs bear the brunt of the impact. Tariffs are an expedient way to do that. They don't have to be approved by Congress and are effectively an autocratic way of raising taxes. They apply to prices first, not revenues, and they're simple to implement. The surplus value that used to head to shareholders as a result of cheap foreign goods will go down, but that can be offset by layoffs and the like.

The refinancing, if it's even a viable plan, is a nice side-effect.

That's the most charitable possible reading of this strategy. There are many others.

> Trump is crashing the T-note yield to refinance $9T (which is how much US debt is going to mature in 2025) at a lower rate

Even if this were intended (unlikely), destroying $6T of notional stock market value so far to save $270b/yr of interest (if 10-year yields drop by 3%, which hasn't happened yet) is a bad trade.

Why would anyone purchase the T-notes with a poor return? Especially if other assets are in a dip?

No. It's not obvious that there's any lucid end goal whatsoever.

How is that obvious? Why would your 'negotiating stance' be 'give no demands and tariff the entire world, including islands with just penguins, a nonsensical rate?'

I mean sure I guess you can say he's negotiating, in which case I'd like you to admit he's a terrible negotiator.