Undecided voters

Trump just rug-pulled the entire world yesterday with the tariff announcements. I was expecting some tariffs from Trump (similar to his first term) but this recent batch is pretty much curtains for the international world order post 1971. USA running massive trade deficits was a feature of the system, not a bug. 60% effective tariffs on all imports from China, jeeeez. That's not a tariff, that's telling China we don't want you recycling your trade surpluses in US tech stocks anymore. Take your money and go home.

Triffin dilemma playing out. You cannot be a reserve currency of the world and at the same time run trade surpluses.
 
philostam said:
Trump just rug-pulled the entire world yesterday with the tariff announcements. I was expecting some tariffs from Trump (similar to his first term) but this recent batch is pretty much curtains for the international world order post 1971. USA running massive trade deficits was a feature of the system, not a bug. 60% effective tariffs on all imports from China, jeeeez. That's not a tariff, that's telling China we don't want you recycling your trade surpluses in US tech stocks anymore. Take your money and go home.

Triffin dilemma playing out. You cannot be a reserve currency of the world and at the same time run trade surpluses.
Click to expand...
It’s hard for me to wrap my head around it, in its entirety, from an economic model. Obviously, this is an extreme measure but I don’t believe this is for the purpose it expresses on the surface. My gut tells me that this is a way to take control of the bus and determine who is a real partner of the United States. We will see who comes to the table first and how the administration plans to negotiate a strategy which we obviously can’t know.

To me it looks like a way to create a new global economy by first tearing down the existing one that is choking everyone. Though, I could be completely wrong.
 
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I think looking at this from an economic models stance would be like trying to put out a raging fire by attempting to use a squirt gun to isolate and resolve one little flame at a time.

This is game theory of the highest order.

To quote a line from A Beautiful Mind:

“Adam Smith said the best result comes from everyone in the group doing what’s best for everyone in the group. Right, that’s what he said right?

Incomplete! Incomplete, okay, because the best result would come from doing what’s in the best interest of himself, and everyone in the group.

Adam Smith was wrong.”

With these tariffs, Trump is defying a global financial cartel and saying, essentially, that we all do what is in our best interests collectively, and this will result in our mutual success at the destruction of the cartel.

Anyone in large government leadership knows this and there’s no way they can’t see it as a win, IF, they come to the table and position their country in the best possible way. If nobody comes to the table, then the entire house of financial cards will collapse, and everyone loses.

We may be in a position where the tail wagging the dog is at an end.
 
TomasM said:
I think looking at this from an economic models stance would be like trying to put out a raging fire by attempting to use a squirt gun to isolate and resolve one little flame at a time.

This is game theory of the highest order.

To quote a line from A Beautiful Mind:

“Adam Smith said the best result comes from everyone in the group doing what’s best for everyone in the group. Right, that’s what he said right?

Incomplete! Incomplete, okay, because the best result would come from doing what’s in the best interest of himself, and everyone in the group.

Adam Smith was wrong.”

With these tariffs, Trump is defying a global financial cartel and saying, essentially, that we all do what is in our best interests collectively, and this will result in our mutual success at the destruction of the cartel.

Anyone in large government leadership knows this and there’s no way they can’t see it as a win, IF, they come to the table and position their country in the best possible way. If nobody comes to the table, then the entire house of financial cards will collapse, and everyone loses.

We may be in a position where the tail wagging the dog is at an end.
Click to expand...

Have you seen the formula they were using to determine what tariff rate to put on a country? It had nothing to do with tariffs, it was just 0.5*trade deficit USA is running with a foreign country. So if country X has 90% trade surplus vs USA, the tariff imposed on them is 45%.

What this tells to me is they want to get rid of the whole post 1971 world order. Interestingly, imports of Gold are exempt of tariffs. I think what they want is for trade surpluses to be stored in Gold, not in US assets. It is a bit insane that in exchange for US buying cheap stuff from China, the Chinese are buying equity stake in US best companies. This has to stop. They are fine with stocks dropping as a consequence of foreigners taking their money home. It's ironic that during the Trump inauguration the mainstream media told us this is a rule of oligarchs (Bezos, Zuck, Musk etc. were all there present in first row), while in reality Mag7 stocks are the biggest casualty of this shifting world order.

In essence it seems the goal is re-industrialization of USA, end of fiat monetary system and getting in extra revenues from tariffs in exchange for lower domestic/income taxes. Although I've seen some reports from Bloomberg that they actually want to increase taxes on the rich.

All this is good for lower/middle income Americans, just as the post 1971 order was good for Washington and Wall Street.
I think US will be fine in the medium term, while the rest of the world will have to deal with losing it's biggest customer.
 
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