This is crazy. Trump can make tariffs 154% or a billion percent or whatever the Russians fined Google, but it is still self-defeating and random. Random is no way to run an economy.
The only point to Trump’s ridiculousness is if no one thought he would negotiate, since that is why factories might decide they have to be located in America. With all this craziness and inconsistency, spending three billion dollars and eight years to build a car plant seems like a decision one can delay since next week everything will be different.
The highest tariffs, apart from China and Lesotho, went to St. Pierre and Miquelon. 50%!!! Either Trump really dislikes Poilievre or crustaceans, since they export little else.
10 year yield on t-bills is spiking which means they’re having a hard time getting people to buy our treasuries, because the world no longer views the US as stable and reliable. Our debt is revolving. We sell new debt to pay maturing t-bills, so the increase in rate increases the cost of servicing our entire debt. That’s going to be tens of billions of dollars per year more paid in interest because of the damage we’ve done to the world trust in the US.
This is all on top of much larger factors like the world boycotting US products and tourists avoiding the US like the plague. Yes, as noted in the image I posted a few posts up, “this will totally make us rich!”.
Yeah. Instead of Las Vegas, I’m thinking of Cuba this year. Maybe no gambling, but I can easily see myself relaxing on a beach with a fine Havana cigar. Plus, by going to Cuba, I’m giving another middle finger to the United States.
Cuba has long been a favoured destination for Canadian sun-seekers, and many European tourists as well. The absence of MAGAts is currently a major feature, along with warm weather and fine beaches. Consider having that Havana cigar with a well-aged Havana Club rum! With the current boycott on US liquor, I actually find that I prefer Havana Club to Bacardi – it’s about the same price, but much richer in flavour.
Is this the most Trump-critical article from Fox News this decade?
They even take what seems to be a sarcastic potshot at Navarro:
The aforementioned Navarro, you’ll be happy to hear, went on Fox and guaranteed there will be no recession. So you can all resume regular breathing.
And for Fox, this feels positively scathing:
It doesn’t help Trump that after the early rebound rally yesterday ran out of gas, the Dow dropped another 320 points, after a dramatic decline that has decimated people’s stock holdings and 401-Ks. The Constitution, by the way, says Congress is in charge of tariffs.
Come on, Fox. I know you love Trump, but you gotta love money more, right?
That’s going to be their new line when this keeps going south: “…so this depression is all their fault!” 10 to 1 odds they refer to it as a “Democratically controlled Congress” as well.
That is NOT a larger factor than changes in demand for US financial instruments. That’s a speck on the overall picture compared to the price the US government must pay to borrow money.
I used to go to Vegas every year. I was looking forward to the WSOP. No chance at all now. I have to go to the USA once, for business, but I’m being paid to do it and I need the business.
I wouldn’t go to Cuba though. It’s a dictatorship. Consider the Dominican. Some resorts have gambling! I have heard good things about Hard Rock Punta Cana.
I really wish that this clip was longer to see what the Fox hosts said further into this report. But I refuse to search for more fox video.
Fox News tells a story a small business owner who used to pay $26,000 in tariffs on goods imported from China, but now faces a $346,000 tariff due to Trump’s new 104% tariff on Chinese imports.
“We think that China is gonna have to pay for it. A special needs toy importer-- when the tariff went into effect, his tariff bill went from $26,000 at midnight to $346,000. And that’s money that’s got to have to come out of his pocket… They think foreign countries have to pay the tariff, that’s not true. Tariffs are being paid by Americans.”
Well, of course that all depends what direction the bond markets go and how much they change. Right now the bond markets are weakening causing yields to rise, but that’s an extraordinary anomaly when stock markets are tanking. In theory yields should be falling as investors move money from stocks to the bond markets.
Paul Krugman made the same point this morning, and he has a rather scary reason why:
What we’re actually seeing is investors, especially hedge funds, selling assets in a “dash for cash.” When investors sell off bonds, they drive their price down, which means that they push their yield up. Why does this cause the breakeven rate to fall? Because the market for indexed bonds is relatively small and thin, so the rush to sell has a bigger effect in depressing prices and raising interest rates for index bonds than for ordinary bonds.
Here he shows a graph of the breakeven inflation rate over the last 22 years, including the 2008 financial crisis and Covid.
Investors weren’t really predicting huge deflation in 2008-9, they were just rushing to sell assets and raise cash. And that’s what’s happening now, although not to the same degree (yet).
In other words, I was looking for guidance about inflation and instead found the telltale signs of an incipient financial crisis. Others, looking at other indicators, from the basis trade to junk bonds to struggles to refinance private loans, are seeing the same thing.
With the current boycott on US liquor, I actually find that I prefer Havana Club to Bacardi – it’s about the same price, but much richer in flavour.