A pretty cool read about Trump administration’s strategic goals. So if I understand correct, the tariff policies are not just about reducing trade deficits but are part of a broader economic plan to reshape the global financial system. With tariffs the US and A could force foreign central banks and governments to adjust their policies in order to ultimately devalue the USD to boost US manufacturing (at the expense of Wall Street and likely decreased geopolitical influence).
short term it is painful. i almost hate trump for it and regret voting for him,
but the truth is, this is waht we need to do to be competitive. plus we have all the wealth.
if we cut our spending we are really just causing havoc in other coutnries that are dependent on us and the higher process will make our people save more and stop this consumerism ideology.
this tariff though will make the fed more cautious in lowering rates. trump will ultimately force the fed between unemployment or inflation. if i was a gambling man, the fed will choose to save the unemployed and risk stagflation rather than super high unemployment.
in any case. trump will b eable to replace the fed in 2 years. if powell doesnt do what he wants him to do. he’ll be replaced with a more dovish fed than will be biased to trump.
It’s definitely an interesting time to be alive. The US and China are moving along the steps of Thucydides Trap and someone could say there’s already a war going on. Trump’s plan is part of this war. Structurally the matchup is pretty even imo: the US is energy independent while China has massive advantage in rare minerals. Technologically China is already ahead in some areas while the US controls financial flows and the dollar system. Military wise US is superior but China is taking huge steps and catching up. Soon they might rival US’s naval powers. Geography is on China’s side and their Belt and Road initiative is a economic superweapon.
Howard Lutnick (CEO of Cantor Fitzgerald and Commerce Secretary) on the birth of DOGE:
So I’m in the car with him [Trump]… And I said, “We’re going to balance the budget.” And I said, "I
have one favor to ask of you If we can balance the budget for you - will you agree to waive all
income tax for every person who makes less than $150,000 a year for the United States of America,
which by the way is about 85% of America.
And the reason you want to work for Donald Trump is he looks at me, he goes, “Sure.” You realize
the president of the United States said, “If you balance the budget, sure.” And he’s not lying. He’s
not kidding. He’s like, “Yeah that seems that seems like a great idea.” Right and so and then I tell
him “Okay I’m going to go recruit Elon because Elon’s all in…”
When was this? Didn’t in his first term Trump give permanent tax cuts to the higher income deciles while the middle class got temporary cuts? Not sure if I remember that correctly.
I think it dropped March 20 of this year. It’s a podcast.
Trump 2.0 is a lot more Trumpian than Trump 1.0 was.
There’s an old expression, `Personnel is Policy.’
President Trump said on Joe Rogan (another podcast) during the campaign that the biggest mistake of his first term was hiring disloyal people, singling out neocons.
In part that was probably due to turtle controlling the Senate and refusing to take up confirmation hearings for nominees he (turtle) didn’t like.
Trump 2.0 is a lot more like what we were hoping for the first time round.
Treasury Secretary Scott Bessent is on another episode of the podcast Secretary Lutnick was on,
The fake news WaPo used to proclaim that Democracy dies in darkness.
Trump 2.0 has been more open with the media than any administration I can remember.
edit: added:
if 3% of US trade runs through the Suez while 40% of European trade does, they have a point: why aren’t the Europeans doing the heavy lifting here instead of the US?
lol he will not balance the budget. He’s going to have to cut a lot more and go over the most toxic things to do that. Namely ss, Medicare, and medical.
I have no idea what’s going to happen in the medium term. I’m kind of worried about the dollars role as the reserve currency. I don’t agree with everything the US does but I’d still much rather have US as the world super power than China. The way US has recently weaponized financial flows through SWIFT, sanctions, freezing of assets, will likely lead to many countries wanting to decouple from the US as the hegemony currency. This process has already started. If successful, it can lead to US being unable to finance its budget deficit.
What has happened under Bretton Woods has been largely inevitable. Triffin Dilemma
The USD is the global reserve currency which leads to it being overvalued which makes it harder to export which leads to large trade and budget deficits.
In the long term, losing global reserve currency status may benefit the US as a lower dollar will help exports and boost employment and GDP, which in turn will help cut the budget deficit.
The post-WW2 monetary order was set at Bretton Woods (New Hampshire, USA) by Lord Keynes (a British socialist) and Harry Dexter White (a soviet agent in the US government who also played a role in the ultimatum to Japan which led to Pearl Harbor and the US entry into WW2).
Keynes wanted a new global currency (the Bancor) as the reserve currency, and despised gold (which he termed the `barbaric metal’). We ended up with the gold exchange standard, with the USD as the reserve currency which was exchangeable for gold by other nations at a fixed rate ($35/oz, the rate set by FDR when he defaulted on the prior 20.67/oz). That was unsustainable as the Fed continued to debase the US currency and foreign nations were able to exchange debased US dollars for gold, and led to Nixon’s closure of the gold window, at which point the USD became pure fiat.
They say they’ve now removed the remaining tariffs on US products, primarily in the food and agricultural categories. That would mean that the US now has an actual free trade deal with Israel (as opposed to `managed trade’).
No one else seems to have taken President Trump up on his offer (the US won’t tariff you if you don’t tariff the US).
The discounted reciprocal tariffs have been announced.
The list I’ve seen:
if a country’s tariff against the US is \ge 20\%, the US discounted reciprocal tariff will be half that country’s tariff on the US
if a country’s tariff against the US is between 10% and 20%, the US discounted reciprocal tariff will be 10%
if a country’s tariff against the US is <10\%, that country does not appear on the list
Botswana charges 74% so the US charges 0.5*74=37\%
Costa Rica charges 17% so the US charges 10%
Canadian leader Doug Ford proposes eliminating tariffs on US imports — if President Trump does the same
Ford is the Premier of the province of Ontario and belongs to the center-left conservative party, so he’s not in the Canadian Federal government and not in the same party as governors Trudeau and Carney.
Not sure about the headline (“Ford proposes”) as I thought that was what was on offer from President Trump anyway, so perhaps “Ford Agrees …”.
Governor Carney wants division with the US to distract from other issues during his election campaign, so is unlikely to follow Ford’s example.
added
“The post-war international economic system was based upon three incorrect assumptions: first, that if the United States led the world in liberalizing tariff and non-tariff barriers the rest of the world would follow; second, that such liberalization would ultimately result in more economic convergence and increased domestic consumption among U.S. trading partners converging towards the share in the United States; and third, that as a result, the United States would not accrue large and persistent goods trade deficits.”
lol
Obviously I’m not part of the Trump administration and don’t speak for the President.
However, I did see a discussion between talking heads on I think Fox Business the other night, who were debating whether the tariffs should be reciprocal (in the end we got discounted reciprocal) or the same rate for all countries. The talking head arguing for the uniform rate was concerned about “trans-shipment”, where goods are sent to the US via a 3rd country to evade tariffs.
The tariffs on uninhabited islands may to deter trans-shipment
