He’s surrounded himself with yes men and true believers. No way would anyone who could get close to Trump on his pet project ever consider tanking it like this.
They imposed stupid tariffs based on trade deficits because they really believe Trumps BS about how trade deficits prove the rest of the world is “ripping off the US”. Hell, they even posted their algorithm on an official government site, they were so proud of it.
Yes, as I said in another (probably wrong) thread; they’ve put some of the highest tariff on dirt-poor countries that make labor-intensive goods for US consumers, or grow things which cannot be grown in the US like vanilla e.g. Lesotho, Madagascar and (to a lesser extent) Vietnam.
Who on earth really believes that the US is the country being exploited in such trades? And doesn’t that give them (the maga faithful) pause about the whole rationale?
I don’t believe the word rationale means for the maga faithful what it means for you.
I thought his first term had already allowed him “alternative facts”.
How does BIG BUSINESS feel about the sanity of their chief executive?
Also, small businesses contribute to 55% of jobs. The Russell 2000 is not looking so good these days.
Or for that matter, rational.
I have a friend from my university days who runs a rather successful business supplying martial arts equipment to a rather small community, of which he’s a prominent member. I just got an e-mail from them, saying to buy now before the tariffs kick in. Most of his stuff is made in Japan, and this is going to kick the shit out him, I think. Not a huge company, but he employs a number of people, and makes enough to have a pretty decent lifestyle.
Who knows what will happen now?
According to this reliable and honest news source, other countries are lining up to negotiate the tariffs.
Anybody heard anything about this?
Honestly, it’s not surprising that this would happen. Everyone knows Trump flip flops like a drunken trapeze artist, and no country actually wants to have these tariffs. So they’ll talk to Trump, since he’s the only game in town. Even if it’s just to say they think the tariffs are a bad idea.
The trick will be finding some small concession that Trump is obsessed with, but which won’t hurt the other country too much. If such a thing does not exist, then they have to decide: take the pain of the tariffs, or take the pain of capitulation.
Of course they are.
Trump said countries would be able to negotiate, and this provides personal opportunities. Eric Trump sent tweets saying the first countries to negotiate would have better results.
As the article I linked above says, however, the goal of companies establishing expensive American factories depends on stable economics, consistency and not negotiating with anyone. Trump is undermining his own strategy. That is why he has written tough sounding no negotiation, will not change my mind BS on Truth Social. With Trump anything is a deal.
Trump will say something like that regardless. These huge tariffs won’t be a large share of government revenue, but they will pay for some of the costs of extending Trump’s tax cuts. But not even all of it. NYT:
The tariffs will help fill the budget hole created by the tax cuts in Congress. Analysts at the Tax Foundation, a think tank that generally favors lower taxes, expect that Mr. Trump’s various tariffs could generate as much as $3.2 trillion in revenue over the next 10 years, a substantial sum that could help pay for the roughly $5 trillion in tax cuts Republicans in Congress are eyeing. To tie the fate of the two together, some Trump administration officials, like senior trade adviser Peter Navarro, have even gone so far as to say that “tariffs are tax cuts.”
I doubt whether these tariffs will last for 10 years though in their current form. But yes, tariffs that pay for Trumpist tax cuts represent a redistribution from the poor and middle class to those with high incomes.
NYT carries water for Trump in the article. Republicans could pass a bill bringing tariffs back to levels that the US agreed to across Democratic and Republican administrations. But the GOP won’t, and they furthermore duck responsibility:
Representative Max Miller, an Ohio Republican and member of the tax writing committee in the House: “I’m focused on what we can control here in the House that will have a great economic impact for every American.”
With Republican support there are easily enough votes for a veto override, but they won’t explore that. It’s entirely within their control but the GOP doesn’t want to govern.
Do those tariff projections assume that we’ll be buying at the same rate we did before, just with tariffs? Because obviously that wouldn’t be the case.
I’m assuming when they came up with them by using ChatGPT, they didn’t specify that in the prompt
Israel and Vietnam are both offering zero tariffs all around.
The U.S.already has free or low tariff agreements with virtually all these countries – with carve-outs for a few favored trading items. Eliminating the carve-outs normally creates a big domestic political problem. Many countries have a dairy lobby. But the economic significance of those carve-outs is a lot less than the damage of the Trump tariffs. The average voter around the world probably thinks that Trump is a highly dangerous lunatic and will give their own leaders some slack in negotiating with a crazy guy.
So, I think the foreign governments will mostly offer zero tariffs all around.
To Republican economists, this would be a great deal. Lots of GOP senators would like it.
Problem is, Trump doesn’t want zero tariffs. He wants high tariffs.
Also, Trump’s big problem is when we buy more of their stuff than they buy of ours. The foreign governments do not control this and so cannot offer a balance of trade number. And our trade deficits are going up daily as consumers abroad avoid Made in U.S.A. products – and as businesses switch sourcing to more stable countries.
Suppose Vietnam offered zero tariffs on imports from the U.S., and allowed their own exports to be tariffed at half the Trump rate (23 percent instead of 46 percent). That’s the kind of deal Trump would probably accept. But I cannot see any of our trading partners accepting such a humiliation.
In theory, they could also offer to shut down barriers to American practices such as GMO food. But that could be an impossible political problem, and I doubt Trump cares about it – or he might even be anti-GMO. I’ll bet RFK Jr. is.
Coyne puts things really well in the Toronto Globe and Mail (limited gift link below). Note, the article is worth reading and far more detailed than the excerpt.
Excerpt:
As always, Donald Trump defeats the imagination. You thought you knew just how crazy his trade policy was. You were bracing for those hefty global reciprocal tariffs Mr. Trump had vowed to bring in – on top of the auto tariffs, on top of the steel tariffs, on top of the special punitive tariffs applied to Mexico and Canada for the crime of being America’s neighbours. But you’d no idea, did you? You didn’t anticipate how enormous they would be, for starters: more than US$400-billion annually, the largest tax increase in U.S. history, guaranteed to blow up world trade and very likely to drive the world economy into recession, if not depression.
And you certainly didn’t anticipate how those “reciprocal” tariffs would be calculated: not on the basis of any factual assessment of the tariffs each country imposes on U.S. goods, nor even by monkeying around with estimated values of non-tariff barriers or currency “manipulation,” but simply by calculating the ratio of the surplus on trade each country has with the U.S. to its total exports to the U.S.: as if the entire bilateral trade surplus (or U.S. trade deficit) were accounted for by unfair trade practices.
Yet even in the face of this insanity, the mind rebels. It still wants there to be some rational basis for it. Surely in the fullness of time it will be revealed to have been some grand strategy to force other countries to lower their trade barriers, the “madman theory” as applied to trade negotiations, as some of Mr. Trump’s retainers continue to maintain. Maybe, as some other Trump supporters claim, it’s an instance of “optimal tariff theory,” a canny attempt to exploit U.S. market power to extract “rents” from other countries’ producers.
Or maybe it’s even grander, part of some complicated game of three-dimensional geopolitical chess designed to reset global trade, reorient global military alliances and realign global currencies at the same time.
Yeah, no.
Re last post, I like Coyne’s article. But I did not understand everything. Can someone explain this to me another way, or provide a link I should read?
Here’s what I do not understand.
Suppose the U.S. has minimal or zero tariff with another nation, perhaps due to a free trade agreement.
Then, Trump insults the people of that nation by saying they are ripping off the U.S. and therefore need to be hit with punishing tariffs. As a result, proud patriots of said nation stop buying Made in U.S.A. products.
This of course is happening right now. As a result, I would have thought that our trade deficit with the poster’s nation is increasing daily. Or, if we have one, our trade surplus with them is decreasing. What the heck does that have to do with the United States federal budget deficit? Did the U.S. budget deficit increase, by the same amount as the U.S. trade deficit, because a poster here bought Brazilian orange juice this afternoon instead of Florida? I do not see the mechanism there.
Thanks for all ideas from someone who did not take economics in college (although I did once read Economics for Dummies 
).
The best way to resolve this is for someone to convince Trump that we’re ripping off the other countries. Here they are, working for low wages all day to build us cool stuff, and all we’re doing is moving some numbers in a bank account back in the other direction, and we’ve got plenty of big numbers in bank accounts. What a good deal for the US.
I get the confusion.
My best guess is that it’s overly simplistic: the US only has the GDP that it does because of our individual, corporate, and sovereign willingness to continually accrue debt.
Much poorer countries may have neither the willingness nor the ability to undertake meaningful debt.
Blame the trade surpluses with other countries on that – our willingness to keep whipping out the credit card.
But it rings specious to me because willingness to take on debt is a perfectly cromulent tool of business when used to buy raw materials, inventory, capital expenditures, etc.
So … as I read it … I’m either missing the fundamental point too or the fundamental point is missing a thing or two 
All in all a very good article IMO, but it seems to conflate budget deficit, balance of payments, trade deficit, domestic savings and external debt. And only in a couple of paragraphs in the middle, the rest of the arguments are spot on. Strange.
They’re two different accounts. However, Coyne is correct. He’s not saying they are the same account - he very, very clearly did not say that. He is saying they are connected. A large government deficit will result in a larger trade deficit. The reverse is not true. It’s the federal deficit that drives up the trade deficit. (The numbers won’t match exactly in each fiscal year, but they even out over time.)
Every year, the US federal government spends roughly $2 trillion more than it brings in; it’s legitimately wildly out of control. So the US has way, way more money to spend than the stuff it makes. Coyne describes it a bit differently, and it’s a complex thing to fully grasp, but that’s the point. The money has to come from, and go to, somewhere, right?
No, your decision to buy orange juice from overseas is not adding to the federal debt, but the federal deficit is what pumps trillions of borrowed money into the economy, which inevitably spills over into buying foreign stuff.
You cannot possibly avoid this by levying tariffs. Tariffs WILL reduce the trade deficit, by the amount of money collected, since that offsets the deficit. But it means consumers don’t have that money anymore, so they aren’t any better off in that regard (and there are other huge negative effects on top of that.) It’s six of one, half a dozen of the other. If the USA wanted to hack away $400 billion from deficit spending, it really should just cut the defense budget and corporate welfare. The trade deficit would then drop by that much, too (all other things being equal.)
Coyne’s point is not specious. It is fact. He is correct beyond any doubt or question, there is zero debate to be had here.
Of course debt can be a useful business tool, but you cannot deny that incurring ongoing debt means more money going out than in, isn’t that obvious? If I get a mortgage, I will run a huge trade deficit this year, won’t I? Way, way more money will be going out of my account than coming in. If I decide to hork up my credit cards, more money is going out. Deficit spending, baby. It inevitably causes trade imbalance. The trade imbalance is not the problem - I would be getting stuff in return for my deficit spending. That part is fine. Indeed, often desirable. Now I have a house. I got something in return for that deficit spending, and over time I can even out the balance of trade, and enjoy living in a house. It might even end up being a cheaper decision than the alternatives, like renting.
Yes, incurring debt is sometimes good. You need to borrow now to build for later in a lot of circumstances. I am sure you’d agree however than there’s a limit as to the debt one can take on, right? That can be a serious concern.
So