Only The Reciprocal (Trade Deficit) Tariffs Are Crazy - Companies Will Be Able To React To The Rest

[mark46]

Yes, autos and imports will have higher prices. Companies can only absorb part of the tariff costs, ditto for the 10% across the board tariffs.
And, yes, some companies will increase the production in US auto plants.
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But what can Vietnam do to remove the 46% trade deficit tariff that has nothing to do with their own tariffs on US goods. Will US companies really accept shipment if they have to pay a 46% tax? Vietnam could remove all of its own tariffs, but the situation driving the tariffs won't change unless Vietnam reduces sales to the US. Do companies want to import at 45% more (how much will they pass on)? or will we simply have fewer goods available?
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TO BE CLEAR
Many countries will do fine, especially those with no trade deficit tax. Some will also negotiate with the US (Canada, Mexico, the UK, Ireland and Israel come to mind). However, companies operating in countries where there is a high trade deficit tax are truly screwed. They will need to open more markets (in Africa, Latin America and/or China) or they will fail (as Trump seems to want to happen). One thing that they can do is to greatly reduce sales to the US and then sell to countries without a trade deficit that might be able to re-sell to the US.

 

[loveofourlord]

where is the us going to make up for the loss of sales? Just have to look at tourism, 70% drop in tourism from Canada, are americans going to go to all these places that rely on Canadian money? If canada stops buying as much US goods as we do where is that money going to come from? Many companies sell out of the states because there isn't enough buisness in it.

But here is the truth about reciprocal tariffs, most countries can afford it, as we can sell it elsewhere, especially in the EU, where is the us going to sell their excess goods, or import the stuff needed?

 

[Vambram]

Trump urges Americans to 'hang tough' on tariffs plan as markets tumble

President Donald Trump has called on Americans to "hang tough" amid stock market turmoil over the last few days and as China retaliates with 34% tariffs.

www.foxnews.com

President Donald Trump is doubling down on his controversial tariffs program and has called on Americans to "hang tough" amid stock market turmoil over the last few days.

Trump, in a post on Truth Social Saturday morning, wrote that his plan is already working with trillions of dollars already being poured into the U.S. economy.

"We are bringing back jobs and businesses like never before. Already, more than FIVE TRILLION DOLLARS OF INVESTMENT, and rising fast! THIS IS AN ECONOMIC REVOLUTION, AND WE WILL WIN," Trump wrote.

This week's steep losses for the S&P 500 and the Nasdaq were among the worst in the past decade as stocks tumbled for a second day in a row. On Friday, the Dow Jones Industrial Average plunged 2,231.07 points, or 5.5%, while the S&P 500 and Nasdaq Composite fell 5.97% and 5.82%, respectively. The Nasdaq entered into bear market territory on Friday.

Trump implemented a 10% baseline tariff on all imported goods into the United States while some countries were slapped with higher tariffs.

But Trump remains defiant that his plan will work in the long term as he aims to reduce America's trade deficit with other countries, protect American industries and bolster jobs by encouraging companies to move manufacturing back to the U.S.

"HANG TOUGH, it won’t be easy, but the end result will be historic," Trump wrote. "We will, MAKE AMERICA GREAT AGAIN!!!" Trump wrote.

Trump took aim at China after the communist country clapped back to Trump’s Liberation Day tariff announcement with a reciprocal 34% tariff on U.S. imports.

"China has been hit much harder than the USA, not even close," Trump wrote. "They, and many other nations, have treated us unsustainably badly. We have been the dumb and helpless "whipping post," but not any longer."


Trump’s 34% tariffs announced against China on Wednesday come in addition to the 20% tariffs already imposed against the country.

 

[Vambram]

Here's what Trump is really up to with high-stakes tariff gambit
The plan is more ambitious than many realize, but the question is, will it work?


Let us be honest: When most people hear "tariffs," they think about price hikes and trade wars. But the Trump administration’s latest tariff rollout is not merely a knee-jerk protectionist move—it is part of a far broader strategy.

What is actually in play here is a high-stakes effort to build up leverage and resources to manage America’s debt, reset its industrial base, and renegotiate its standing in the global order.

And it all begins with a problem most people have not been told enough about.

In 2025, the U.S. government must refinance $9.2 trillion in maturing debt. Some $6.5 trillion of that comes due by June. That is not a typo—that is a debt wall the size of a small continent.

Now, here is the math: According to Treasury Secretary Scott Bessent, each basis-point (one one-hundredth of a percent) drop in interest rates saves the government roughly $1 billion per year. Since the announcement of tariffs on April 2, 10-year Treasury yields have fallen from 4.2 percent to 3.9 percent—a 30 basis point drop. If that holds, it translates to $30 billion in savings.
So, keeping yields low is not just sound policy—it is a fiscal necessity.

But we are in a difficult environment. Inflation has not fully cooled, and the Federal Reserve remains wary of cutting rates too quickly. So the question becomes: How does one bring yields down without the Fed’s help?

Here is where the strategy becomes interesting.

By introducing sweeping tariffs, the administration is creating precisely the kind of economic uncertainty that drives investors toward safer assets such as long-term U.S. Treasuries. When markets are spooked, capital exits risk and equity assets (as we see with the stock market collapse) and piles into safe assets, primarily the 10-year U.S. treasury bond. That demand pushes yields lower.


It is a counter-intuitive move, but a calculated one. Some have called it a "detox" for the overheated financial system. And it appears to be working.

However, even cheaper debt does not solve everything. The deficit remains massive—and that is where spending cuts come in.

Backed by the Department of Government Efficiency (DOGE) and Elon Musk, the administration is reportedly targeting $4 billion in daily spending cuts. If their recommendations translate to cuts and get ratified by Congress, that could amount to a trillion dollars off the deficit by late 2025.

At this point, we have two pillars: lower borrowing costs and tighter spending. But there remains a third—and arguably most important—pillar: growth.

Tariffs serve as the ignition switch. By making imports more expensive, they create space for American producers to step back in. The objective is not to punish trade partners—it is to make domestic industry viable again, even if only long enough to rebuild critical capacity.

Yes, prices will rise. But the administration is fully aware of that. In fact, it is front-loading the pain now, hoping to deliver visible job growth and factory activity before the November 2026 midterm elections.

 

[Hans Blaster]

Here's what Trump is really up to with high-stakes tariff gambit
The plan is more ambitious than many realize, but the question is, will it work?


Let us be honest: When most people hear "tariffs," they think about price hikes and trade wars. But the Trump administration’s latest tariff rollout is not merely a knee-jerk protectionist move—it is part of a far broader strategy.

What is actually in play here is a high-stakes effort to build up leverage and resources to manage America’s debt, reset its industrial base, and renegotiate its standing in the global order.

And it all begins with a problem most people have not been told enough about.

In 2025, the U.S. government must refinance $9.2 trillion in maturing debt. Some $6.5 trillion of that comes due by June. That is not a typo—that is a debt wall the size of a small continent.

Now, here is the math: According to Treasury Secretary Scott Bessent, each basis-point (one one-hundredth of a percent) drop in interest rates saves the government roughly $1 billion per year. Since the announcement of tariffs on April 2, 10-year Treasury yields have fallen from 4.2 percent to 3.9 percent—a 30 basis point drop. If that holds, it translates to $30 billion in savings.
So, keeping yields low is not just sound policy—it is a fiscal necessity.

But we are in a difficult environment. Inflation has not fully cooled, and the Federal Reserve remains wary of cutting rates too quickly. So the question becomes: How does one bring yields down without the Fed’s help?

Here is where the strategy becomes interesting.

By introducing sweeping tariffs, the administration is creating precisely the kind of economic uncertainty that drives investors toward safer assets such as long-term U.S. Treasuries. When markets are spooked, capital exits risk and equity assets (as we see with the stock market collapse) and piles into safe assets, primarily the 10-year U.S. treasury bond. That demand pushes yields lower.


It is a counter-intuitive move, but a calculated one. Some have called it a "detox" for the overheated financial system. And it appears to be working.

However, even cheaper debt does not solve everything. The deficit remains massive—and that is where spending cuts come in.

Backed by the Department of Government Efficiency (DOGE) and Elon Musk, the administration is reportedly targeting $4 billion in daily spending cuts. If their recommendations translate to cuts and get ratified by Congress, that could amount to a trillion dollars off the deficit by late 2025.

At this point, we have two pillars: lower borrowing costs and tighter spending. But there remains a third—and arguably most important—pillar: growth.

Tariffs serve as the ignition switch. By making imports more expensive, they create space for American producers to step back in. The objective is not to punish trade partners—it is to make domestic industry viable again, even if only long enough to rebuild critical capacity.

Yes, prices will rise. But the administration is fully aware of that. In fact, it is front-loading the pain now, hoping to deliver visible job growth and factory activity before the November 2026 midterm elections.

Is that their actual plan? Do you have a source? Because crashing the markets to get better interest rates is an insane plan.

 

[loveofourlord]

Here's what Trump is really up to with high-stakes tariff gambit
The plan is more ambitious than many realize, but the question is, will it work?


Let us be honest: When most people hear "tariffs," they think about price hikes and trade wars. But the Trump administration’s latest tariff rollout is not merely a knee-jerk protectionist move—it is part of a far broader strategy.

What is actually in play here is a high-stakes effort to build up leverage and resources to manage America’s debt, reset its industrial base, and renegotiate its standing in the global order.

And it all begins with a problem most people have not been told enough about.

In 2025, the U.S. government must refinance $9.2 trillion in maturing debt. Some $6.5 trillion of that comes due by June. That is not a typo—that is a debt wall the size of a small continent.

Now, here is the math: According to Treasury Secretary Scott Bessent, each basis-point (one one-hundredth of a percent) drop in interest rates saves the government roughly $1 billion per year. Since the announcement of tariffs on April 2, 10-year Treasury yields have fallen from 4.2 percent to 3.9 percent—a 30 basis point drop. If that holds, it translates to $30 billion in savings.
So, keeping yields low is not just sound policy—it is a fiscal necessity.

But we are in a difficult environment. Inflation has not fully cooled, and the Federal Reserve remains wary of cutting rates too quickly. So the question becomes: How does one bring yields down without the Fed’s help?

Here is where the strategy becomes interesting.

By introducing sweeping tariffs, the administration is creating precisely the kind of economic uncertainty that drives investors toward safer assets such as long-term U.S. Treasuries. When markets are spooked, capital exits risk and equity assets (as we see with the stock market collapse) and piles into safe assets, primarily the 10-year U.S. treasury bond. That demand pushes yields lower.


It is a counter-intuitive move, but a calculated one. Some have called it a "detox" for the overheated financial system. And it appears to be working.

However, even cheaper debt does not solve everything. The deficit remains massive—and that is where spending cuts come in.

Backed by the Department of Government Efficiency (DOGE) and Elon Musk, the administration is reportedly targeting $4 billion in daily spending cuts. If their recommendations translate to cuts and get ratified by Congress, that could amount to a trillion dollars off the deficit by late 2025.

At this point, we have two pillars: lower borrowing costs and tighter spending. But there remains a third—and arguably most important—pillar: growth.

Tariffs serve as the ignition switch. By making imports more expensive, they create space for American producers to step back in. The objective is not to punish trade partners—it is to make domestic industry viable again, even if only long enough to rebuild critical capacity.

Yes, prices will rise. But the administration is fully aware of that. In fact, it is front-loading the pain now, hoping to deliver visible job growth and factory activity before the November 2026 midterm elections.

not happening, there is no way buisnesses even if this works will be ready to manufacture any time in the next 2-5 years, as said a million times, it takes money time resources to do these things, the US isn't full of manufacturing plants with skilled workers, modernization, and such juts waiting for a buisness to start up.

 

[Vambram]

Is that their actual plan? Do you have a source? Because crashing the markets to get better interest rates is an insane plan.

The source is the article from FoxNews.com

I do not know if that is their actual plan or not.

 

[Vambram]

not happening, there is no way buisnesses even if this works will be ready to manufacture any time in the next 2-5 years, as said a million times, it takes money time resources to do these things, the US isn't full of manufacturing plants with skilled workers, modernization, and such juts waiting for a buisness to start up.

I disagree. This can indeed happen in just a couple of years.

 

[Hans Blaster]

The source is the article from FoxNews.com

I do not know if that is their actual plan or not.

There is no mention of interest rates in the article you linked:

Trump urges Americans to 'hang tough' on tariffs plan as markets tumble

President Donald Trump has called on Americans to "hang tough" amid stock market turmoil over the last few days and as China retaliates with 34% tariffs.

www.foxnews.com

 

[loveofourlord]

I disagree. This can indeed happen in just a couple of years.

really? Tell me whose saying this? Because all the economist, companies themeslves, and such are saying it can't. And even a couple of years will hurt the states while the tariffs are up, and if they go down no reason to switch.

then add in prices going up.

 

[Laodicean60]

Is that their actual plan? Do you have a source? Because crashing the markets to get better interest rates is an insane plan.

What would you do?

 

[Laodicean60]

What is actually in play here is a high-stakes effort to build up leverage and resources to manage America’s debt, reset its industrial base, and renegotiate its standing in the global order.

Good posts! I've heard similar talk by economists on YouTube. Also, the USA is buying gold, so maybe it wouldn't be a bad idea to buy some with your tax returns and some speculate that the government might revalue it.

 

[Laodicean60]

There is no mention of interest rates in the article you linked:

I'm sure you have a credit card. Would you rather pay 21% on your debt or 12%?

 

[Vambram]

There is no mention of interest rates in the article you linked:

Trump urges Americans to 'hang tough' on tariffs plan as markets tumble

President Donald Trump has called on Americans to "hang tough" amid stock market turmoil over the last few days and as China retaliates with 34% tariffs.

www.foxnews.com

The problem with the massive national debt and also interest rates are discussed in the following article.

Here's what Trump is really up to with high-stakes tariff gambit

Policy analyst Tanvi Ratna breaks down what President Trump is really up to with his tariffs, and it is more ambitious that you may think.

www.foxnews.com

 

[Hans Blaster]

What would you do?

Find some sources for my claims.

 

[Laodicean60]

Is that their actual plan? Do you have a source? Because crashing the markets to get better interest rates is an insane plan.

Find some sources for my claims.

What?

 

[Hans Blaster]

The problem with the massive national debt and also interest rates are discussed in the following article.

Here's what Trump is really up to with high-stakes tariff gambit

Policy analyst Tanvi Ratna breaks down what President Trump is really up to with his tariffs, and it is more ambitious that you may think.

www.foxnews.com

Seriously? An opinion piece? From an engineer in crypto world? This person has no idea what is actually behind the stupid tariff policy, just a projection of their own world of fantasy economics.

(And the earlier post looks like it was just a straight cut and past of that op ed without citation.)

 

[Hans Blaster]

What?

I replied to your post with what I would do if I posted some wild unsourced claim. I responded to your post before the actual reply to my query since I saw yours first. (Generally I reply to posts in the order I spot them.) A link to the copied text with the crazy ideas was provided.

 

[Laodicean60]

Seriously? An opinion piece? From an engineer in crypto world? This person has no idea what is actually behind the stupid tariff policy, just a projection of their own world of fantasy economics.

(And the earlier post looks like it was just a straight cut and past of that op ed without citation.)

This is true (I heard 7 T), and would you rather refinance this debt at a higher interest rate? my credit card analogy. You can look it up and see that it's true.
"In 2025, the U.S. government must refinance $9.2 trillion in maturing debt."

It's a no-brainer. I'm sure you'd agree with this Hans.
"So, keeping yields low is not just sound policy—it is a fiscal necessity."

This is why I asked you how you'd bring rates down instead knee knee-jerk and say it's insane.

"But we are in a difficult environment. Inflation has not fully cooled, and the Federal Reserve remains wary of cutting rates too quickly. So the question becomes: How does one bring yields down without the Fed’s help?"

I've heard this from other economists. Sad people turn off their brains due to politics but debt might be the existential threat when its you young people that will be hurt the worst. Don't cry when they take your disability check.

"Here is where the strategy becomes interesting.

By introducing sweeping tariffs, the administration is creating precisely the kind of economic uncertainty that drives investors toward safer assets such as long-term U.S. Treasuries. When markets are spooked, capital exits risk and equity assets (as we see with the stock market collapse) and piles into safe assets, primarily the 10-year U.S. treasury bond. That demand pushes yields lower."

 

[KCfromNC]

Here's what Trump is really up to with high-stakes tariff gambit
The plan is more ambitious than many realize, but the question is, will it work?

After trying similar tariffs in the 30s, the results were so disastrous it was nearly 2 generations before Republicans gained power again. If it works that way at least there would be some positive benefit, but seems like a lot of effort to go through to get there.

Anyway, aren't there rules here against unattributed copy-paste of entire articles?