O/T:- Trump Presidency 2.0 [hic sunt dracones]

[slack_pie]

Trump might have disregard for it but many of his wealthy friends and supporters might be looking over their shoulders. All eyes on China now.

Ultimately, he won't want to be remembered as the guy who crashed the economy and caused a recession. His ego is way too fragile for that. So unless he's genuinely unhinged, I'd imagine whatever's happening now is some sort of temporary economic brinkmanship. A deal with China will be made and he'll get to look like the strongman, at least in his head. But honestly, who knows at this point.

[Jampie]

I would be surprised if China make a deal, at this point. For the first time in literally ever they're making overtures to lead the world and it doesn't even sound ridiculous. Meanwhile their number one rival is self destructing its alliances and trade network. Never interrupt the enemy when he's screwing up.

And what's in a deal for them? Why even make a deal with someone who will break the deal as soon as he feels like it? They'll take a reputation hit, have to look weak, lose face. Not something an authoritarian regime will want to do. Not something any Chinese wants to do. I just don't see it.

My guess is they'll weather a recession because they consider it's worth the cost.

[BigFatPie]

Long term US bonds being dumped as we speak. Could be China dumping as retaliation or could be investors losing confidence in US as a safe haven. US Govt Borrowing getting bigly more expensive by the minute.

Ultimately this could be the most damaging effect of all.

Just reading about Peter Navarro, the *adviser* who many think is the brains behind the current policy. In books he wrote he made up people with names he got from anagrams of his own and attached quotes from them attacking China.

Absolutely stark raving mental.


https://en.m.wikipedia.org/wiki/Peter_Navarro

[andy6025]

I am in the guessing game as to Trumps motivations for these wild tariffs just like everyone else. However, I think there is a general world economic context that is important to note. The context is that the US economy as driving engine of a uni-polar geopolitical world order has been in significant decline relative to the rise of a multipolar global economy with multiple nodes in the east. In other words, the US empire has long been in the process of being eclipsed by China, India, Russia and the increasing development of what is termed the Global South. This inevitable shift in economic power centres started long prior to Donald Trump and will continue long after him. However, the US and whoever is in its drivers seat, has a choice on how it will react to this increasingly apparent reality: it can accept it and work to find a seat within if, or the US can fight against it and try to upend the whole system in an attempt to hang on to world economic hegemony and its dominance of a system that it often refers to as the Rules Based Order (where the US and its vassal states write the rules in their favour as they go along).

Here is my two cents of several possible motivations, some or all of which might be true simultaneously:

1. Trump, as dumb as he is in many facets, may actually be quite aware of this important shift in the global order. As such he wants to strengthen Americas position vis-a-vis its own allies such that they bear an increasing cost of maintaining the system and such that America can dedicate more of its own resources to capital consolidation, the foundation of its world economic domination.

2. Bring manufacturing back to America. This has been the promise of every campaigning would be president since the Reagan to Clinton administrations sent American capital abroad - first to Mexico in the 80s and 90s, and then to China ever since. However, they have all simply performed lip service in this regard - and no surprises there since their donors all have their money parked in China. Trump, on the other hand, is attempting to make good on this promise. There are very few ways to do it - tax cuts for businesses, direct subsidies, or tariffs. The first two are all but exhausted already. So tariffs it is. I will not go into detail here on the many reasons why tariffs will not likely succeed in achieving his desired result, but that said, there is also an outside possibility that it can work. Either way it is one hell of an interesting gamble.

3. Reduce the servicing requirements of the US debt. Lower interest rates means cheaper debt servicing. This usually happens in a recession, however IF (and its a big if) America is pumping capital investments within its own borders, tariffs are financing the treasury, government programs are slashed, and employment is full steam ahead, then there is an outside chance that overheating the economy can lead to some very significant debt reduction that will strengthen the US economic hegemony world wide. I will not get into the reasons here why this is likely to fail, but again; there is an outside chance it can work.

4. The unilateral renegotiating of trade and political relationships in Americas favour. America has a lot of economic weight to throw around, both amongst its allies and against its adversaries. In any 1-1 scenario America is historically in a position such that it can dictate terms with almost any world state (China, Russia, NK and Yemen being obvious exceptions, each for different reasons). This is somewhat proven when the US blew up the nordstream pipeline and the Germans simply accepted their own deindustrialization like the b?*tches that they are. While there is an outside chance that the world or various regions are willing and able to band together to strengthen their bargaining positions against the US in the face of these tariffs, it is far more likely that each country will be forced to renegotiate their trade relationships unilaterally with the US - which is potential a check mate by orange president. This is almost proving to be true. Canada and Australia are folding, as are some individual European nations. So too is India. There was talk of China, Japan, Korea and a few other pacific nations banding together for a cooperative response, Japan has since indicated direct unilateral negotiations with the US, which is almost tantamount to capitulation. IF the rest of the world could indeed band together in solidarity for a unified response to these tariffs, the outcome might well be different. But given that the rest of the world has bought into the ideological profesations by the US that China and Russia are bad, while the American led Rules Based Order is good, then that has severely hampered the wests ability to unify for a response with global powers that actually have weight to throw around, ie. China and Russia.

5. American exceptionalism as the indispensable nation. Despite the contextual shift I mentioned above, Trump and the entire US political class still see the US as occupying a much more self important position in the world economy than reality might otherwise dictate.

While I do not have a crystal ball, I think that it is too late for America to reposition itself to avoid the shift to a multipolar world. It is more likely that these tariffs and hostile actions while exacerbate Americas decline and make it happen all the faster. But the general reality is that things were headed this way anyways. Europe and Canada shot themselves itself in the lung long ago and will be the immediate casualties of this intense trade war. We are likely headed towards a deep recession. The global south will likely turn even faster towards China, India and Russia. America might get a bit of a boost from this in 5-10 years time, but the writing has long been on the wall. It is only now that the general public is beginning to be able to decipher it.

[Elite_Pie]

The pantomime continues! I admit I have very minimal knowledge as to how global financial markets work, but this latest backtracking from Trump on tariffs suggests two basic options to me:

1. The Lullapie option - It's all part of his masterplan and it's going great.

2. The normal person option - Those in his inner circle with a brain cell have said to him "Donald you've gone way too far, and most countries aren't dancing to your tune. We might be the biggest and most powerful nation on the planet, but we're not bigger and more powerful than them all put together. You ain't gonna to win this, so try and find a way out to save face".

The third option is that Lord Lucan rides Shergar to victory in the Grand National.

[Jampie]

Thanks Andy, always good to get the Kremlin view on things. Naturally, and as usual, I have to add that the Nord Stream pipeline was shut down when it blew and so the only beneficiary would be someone who wanted to send a signal to russian oligarchs that there was no going back to how things were before the war. Also, nobody's presented evidence that the US was responsible.

As to Trump's latest backflip... if it's strategic what's the strategy that benefits?

1. Is it "Bring manufacturing back to the US"? In which case, how does slashing all the tariffs achieve that?

2. Is it "force everyone to make a better trade deal with the US?" In which case, how does taking away all your big tariffs achieve that?

3. Is it "start a trade war just with China"? In which case, why piss off the entire rest of the world and crash every stock market?

I've got to go with occam's razor here. Whatever the strategy was, it's changed. And that's nothing but a display of incompetence.

If you had a consistent strategy from the start, how does changing the tariff rates with your underpants help it?

If you really wanted manufacturing back in the US, surely you'd apply tariffs strategically - avoid tariffing stuff you need to build or supply factories, apply tariffs only on goods you intend to make in the US, and absolutely you would not be changing the rates and rules. You'd announce a multi-year plan to phase them in, probably. Not change them day by day, week by week. If you want to encourage investment, changing the investment environment unpredictably is one of the worst things you can do. Big investors need to make long term plans. It takes years to build a factory and usually years to see a return from it. So you need years + years of stability.

If instead manufacturing was a red herring and you just wanted better trade deals for the US, surely you'd have a strategy from the get-go about achieving that. And a blanket tariff party on the entire rest of the world would have to be the single dumbest move you could make. Yeah the US has enormous bargaining power. But as others have pointed out, they have next to none if they try to bargain the entire rest of the world at once.

The fact that the tariffs included 10% on Australia, a country with which the US had both a trade surplus and a free trade agreement, and separately on Heard Island (for example), a place inhabited solely by penguins, tells me that there never really was a plan. This entire exercise was a poorly thought out stunt conceived by people who literally did not understand what the impacts of their actions were.

And that's the only narrative that actually explains everything that happened. He's gone back on the tariffs (for now) because the impacts weren't as expected. Nobody came begging for a deal. Reasonable offers were made, but nobody panicked and offered the furniture like he was expecting. Meanwhile the markets sent an extremely clear signal that his economic policy was madness, which was also a rude shock. Stupid woke markets! So the "strategy" has changed. I'm sure it will change again and again like all his "strategies". What will he achieve? So far, lasting damage to the US's reputation as a reliable trade partner.

[i961pie]

If you really wanted manufacturing back in the US, surely you'd apply tariffs strategically - avoid tariffing stuff you need to build or supply factories, apply tariffs only on goods you intend to make in the US, and absolutely you would not be changing the rates and rules. You'd announce a multi-year plan to phase them in, probably. Not change them day by day, week by week. If you want to encourage investment, changing the investment environment unpredictably is one of the worst things you can do. Big investors need to make long term plans. It takes years to build a factory and usually years to see a return from it. So you need years + years of stability.

This.
I wonder how many of his wealthy mates made a massive killing on the stock market? Selling before they crashed and then buying when they did crash, surely there wasn't any insider dealings?

[andy6025]

nobody's presented evidence that the US was responsible [for blowing up Nordstream].

Seymour Hersh provided the definitive account with evidence. If you missed that one then you might wish to re-evaluate the news feeds available to the lonely residents of Jampieland.

As to Trump's latest backflip... if it's strategic what's the strategy that benefits?

The backflip is because the US bond market went bananas, leading to a potential liquidity crisis. As I mentioned in my last post - the US no longer has the clout that it used to, and yet Trump is acting like it still does. He had to walk back his tariffs in order to avoid a financial disaster. But by doing so he just advertised to the world just how weak the US really is.

As for your comment on my post - well it turns out the Kremlin got it right yet again.

The rest of your post I generally agree with and is not worth addressing line by line.

[drillerpie]

This.
I wonder how many of his wealthy mates made a massive killing on the stock market? Selling before they crashed and then buying when they did crash, surely there wasn't any insider dealings?

Large spikes in trading volume shortly before Trump's post would suggest the Signal group was hot yesterday.

[slack_pie]

Large spikes in trading volume shortly before Trump's post would suggest the Signal group was hot yesterday.

Politicians have been insider trading since forever. There's even a Pelosi Stock Tracker that provides real-time updates on Nancy Pelosi's latest trades, which always seem to be timed perfectly. I'm not condoning it, but it's not something specific to Trump and his cronies.