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

[Hans Blaster]

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.

Did you actaully ask about interest rates? Because they are the topic of the thread and were only mentioned in some insane op ed as the "real reason" the tariffs are being jacked up.

"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?"

The Fed wouldn't lower interest rates when Biden argued it was an "end of COVID readjustment inflation" that had nothing to do with the usual "overheated economy" reason the Fed uses to keep interest rates high. So, why would you think they'd do it just to lower interest rates on government bonds while inflation is still "elevated"?

I've heard this from other economists.

Heard what? "Crash the stock market so investors flee to bonds and push up bond prices effectively lowering rates for the Treasury to refinance." They are saying that? What credible economist would say such a stupid thing.

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.

This has nothing to do with politics. I think the real reason is that Trump is an ignorant fool who doesn't have the first inkling of how international finance works and is stuck in some old vision of the past economy with trade surpluses in US manufactured goods. The last time we had anything like that economy (and it was already ending then) was when Trump was working for his father and they were under investigation for housing discrimination by the DOJ.

"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."

Induced chaos is NOT a viable economic management strategy. Period.

This is the sort of "strategy" I've come to expect from the hedge fund/private equity/crypto worlds with their extraction of wealth from things of value that they destroy to gain for themselves a fairly modest portion of what was ruined.

 

[Laodicean60]

Did you actaully ask about interest rates? Because they are the topic of the thread and were only mentioned in some insane op ed as the "real reason" the tariffs are being jacked up.

Don't turn your brain off to an opinion you can sometimes verify. We have an ungodly amount due this physical year with 7 or 9; it's a lot, and you want the lowest interest rate possible. The credit card analogy.

$7.6 trillion of US government debt will mature in the next year, adding pressure on rates

The $7.6 trillion that is coming due in the coming year represents 31% of the outstanding total, according to Apollo's chief economist.

markets.businessinsider.com

The Fed wouldn't lower interest rates when Biden argued

And if you'd read this is part of the way Trump is forcing us into a lower interest rate environment by the market crash and bond yields are coming down. We can sit in the peanut gallery and say it's insane, but tell me if there is another way. It's hurting everyone, and Trump doesn't care what anyone says, including Republicans, because he's a statesman, not a politician who's a prostitute for votes. Do you know what will happen in a debt crisis?

I think the real reason is that Trump is an ignorant fool who doesn't have the first inkling of how international finance works

This is no surprise; I've been hearing it for a year and a half. I take it you are satisfied with what has been going on and the money we've spent.

past economy with trade surpluses in US manufactured goods. The last time we had anything like that economy

You do know that our manufacturing abilities and supply line are currently a national security threat the reason Biden and Trump have been working hard for our manufacturing capability. We snapped to this during Covid. China makes a lot of stuff that we don't, including military parts.
I read somewhere that we can only manufacture 40000 shells a month. Just think, if we could give Ukraine 400000 shells, they might be better off. Then you have poor europe it is said we would lose a war with China because of our manufacturing woes.

 

[mark46]

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?

Who is that you think can afford 46% reciprocal taxes?

The answer with regard to the US economy is that it will shrink. Instead of GNP going up at a 2% annual rate for the rest of the year, negative growth is more likely. Agriculture will be hardest hit.

 

[mark46]

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?

I don't understand how countries "can afford the tarifs". Of course, we are talking about the companies that export into the US from those countries.

AUTO TAXES
Which companies can afford to pay a 25% tariff? I expect that many will simply stop selling in the US (Jaguar is first). or only sell high end luxury cars. The taxes on parts will be absorbed and hidden, other than by the increased prices. The companies will absorb some of the costs, but 25% is lot.

RECIPROCAL INCLUDING THE BASE 10%
Companies from which companies can afford these tariffs?
24 Japan
25 South Korea
32 Taiwan
26 India
36 Thailand
24 Malasia
32 Indonesia

Say prices only go up by 20%, will sales be unaffected? If course not. Sales will go down, reducing the bottom line of all the affected US retailers, while the consumers will have higher prices. What a Deal!
======
Maybe some products will be excluded, but make no mistake, these tariffs will have a severe effect.

 

[Laodicean60]

Politicians worry about the party; Trump is concerned about the country.

Senator Cruz Warns Tariffs Risk Sparking GOP Wipeout in 2026 Elections

Ted Cruz sounds a potential bloodbath tariff alarm. But how did he vote?

mishtalk.com

 

[Hans Blaster]

Before I respond to your specific points I want to put out my position briefly. Hopefully the replies can happen in the longer reply parts to avoid rehashing things completely:

1. The concept for reducing interest rates in that Op Ed is incredibly stupid and wreckless.
2. The Op Ed author has not provided any evidence that this was the intent of Trump and his team. It looks entirely like a post hoc rationalization.

Don't turn your brain off to an opinion you can sometimes verify.

That's the biggest problem with the article right there: There is no verification. Just some writer for blogs and think tanks that thinks they have come up with a "clever" reason that just must be what happened.

We have an ungodly amount due this physical year with 7 or 9; it's a lot, and you want the lowest interest rate possible. The credit card analogy.

$7.6 trillion of US government debt will mature in the next year, adding pressure on rates

The $7.6 trillion that is coming due in the coming year represents 31% of the outstanding total, according to Apollo's chief economist.

markets.businessinsider.com

This is why you bring people in to Treasury that know how the bond market works and how to work around the yield curve to get the best financing of our debt.

And if you'd read this is part of the way Trump is forcing us into a lower interest rate environment by the market crash and bond yields are coming down.

There is no news reporting to it, just a speculative opinion piece. Trump also states over and over and over about how other countries are "ripping us off" with the trade imbalance and how "beautiful tariffs" will fix that problem. If someone else is pushing Trump toward large tariffs *because* it will cause interest rates to drop they aren't telling anyone about it.

We can sit in the peanut gallery and say it's insane,

It is insane. To tank the stock market, interfere with the commerce of various companies that import stuff, and trigger response tariffs from other nations for the purpose of getting investor money to flow into bonds with lower interest rates is Galactically Stupid.

but tell me if there is another way. It's hurting everyone,

Sell bonds at lower prices and higher interest rates as we have for years.

and Trump doesn't care what anyone says, including Republicans, because he's a statesman, not a politician who's a prostitute for votes.

HAHAHAHA. "Trump is not a politician" is a notion that was dead at least the moment he declared to run again for 2020. (And "Statesman" even more laughable. Why not call him a "gentleman and a scholar" just to cap off this absurdity?

Do you know what will happen in a debt crisis?

Bascially. Which is why you won't find me cheerleading against debt ceiling limit increases. Global financial panic. Breaking the US economy. Global recession. (Sort of like what the tariffs are already doing.)

This is no surprise; I've been hearing it for a year and a half. I take it you are satisfied with what has been going on and the money we've spent.

What money? The tariffs are just now going into effect so minimal revenue has been collected so far. (There isn't a special "tariff fund" where we can see the impact of expenditures from it either.)

You do know that our manufacturing abilities and supply line are currently a national security threat the reason Biden and Trump have been working hard for our manufacturing capability. We snapped to this during Covid. China makes a lot of stuff that we don't, including military parts.

Could you let us know what Trump did in 2017-2020 to add manufacturing capacity? It is way too early (and no relevant bills have been passed that could have impact) yet in this term. Thx.

I read somewhere that we can only manufacture 40000 shells a month. Just think, if we could give Ukraine 400000 shells, they might be better off. Then you have poor europe it is said we would lose a war with China because of our manufacturing woes.

And that's why a good fraction of the Ukraine supplemental military aid bills were investments in US arms manufacture infrastructure like artillery shell plants.

 

[mark46]

Politicians worry about the party; Trump is concerned about the country.

Senator Cruz Warns Tariffs Risk Sparking GOP Wipeout in 2026 Elections

Ted Cruz sounds a potential bloodbath tariff alarm. But how did he vote?

mishtalk.com

trump worries about Trump, and his power.

 

[Laodicean60]

1. The concept for reducing interest rates in that Op Ed is incredibly stupid and wreckless.
2. The Op Ed author has not provided any evidence that this was the intent of Trump and his team. It looks entirely like a post hoc rationalization.

This is your opinion; if you provide an alternative, then let's hear it. It's unconventional, but until I can hear another economist have a better idea, then this is the only viable option. I understand why the FED does its own thing.

Trump Shares Claim He’s Crashing Stock Market ‘On Purpose’ As He Lobbies For Emergency Rate Cuts

The S&P 500 is down more than 14% since Trump won the election in November, with most losses concentrated since he announced his hawkish tariffs Wednesday.

www.forbes.com

hat's the biggest problem with the article right there: There is no verification. Just some writer for blogs and think tanks that thinks they have come up with a "clever" reason that just must be what happened.

Have you tried looking for other sources besides the opinion?

HAHAHAHA. "Trump is not a politician" is a notion that was dead at least the moment he declared to run again for 2020. (And "Statesman" even more laughable. Why not call him a "gentleman and a scholar" just to cap off this absurdity?

He does not care what anyone thinks, and he is doing what he thinks is best for the future of the country. I may have used the wrong words, but he shows he's not a prostitute to a party like past presidents willing to say anything to get elected. Cruz is whining now.

Bascially. Which is why you won't find me cheerleading against debt ceiling limit increases. Global financial panic. Breaking the US economy. Global recession. (Sort of like what the tariffs are already doing.)

I don't remember hearing any complaints from you guys last admin, only this one when it comes to debt (tribal warfare), but I honestly think he wants an economic slowdown or maybe a recession to bring asset prices down, and I'm fine with that. Maybe my sons will be able to afford a home. If we allow the Fed to tighten monetary policy, which has created layoffs then what Trump is dong is helping the Fed with inflation

What money?

$1 trillion every 100 days. from the last admin.

Could you let us know what Trump did in 2017-2020 to add manufacturing capacity?

He did regulatory work plus some steel manufacturing and TCJA. Biden didn't reverse any Trump policies, just tweaked them; this is how government should operate.

And that's why a good fraction of the Ukraine supplemental military aid bills were investments in US arms manufacture infrastructure like artillery shell plants.

Yep, and Trump is continuing onshoring because of National Security. Sadly, we knew about this in 2010. But our government is dysfunctional, no foresight, just reactionary.

https://www.cisa.gov/sites/default/files/publications/nipp-ssp-defense-industrial-base-2010-508.pdf

 

[Laodicean60]

Sell bonds at lower prices and higher interest rates as we have for years.

I missed this one. You need to read how bonds work.

 

[SimplyMe]

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

I'd rather pay 21%, if I had to take a 10% cut in income to get the 12% rate. And, yes, while cooling the economy might lower the debt, the issue is that it cuts tax revenues by more than the decrease in the rate on the debt. It doesn't help to lower the rate if you are increasing the debt by more than if you keep the economy healthy.

 

[Pommer]

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.

Slaps VAT on foreign goods and tells people that other nations’ companies are paying the tariffs.

This is not correct, (because he actually says that other “countries” will pay the tariff, which isn’t any better).

 

[Maria Billingsley]

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?

Considering bankruptcy is part of his business model, I have great doubts his tariff war model will work. History tells us it did not work in the past.

Smoot–Hawley Tariff Act - Wikipedia

en.wikipedia.org

"Intended to bolster domestic employment and manufacturing, the tariffs instead deepened the Depression because the U.S.'s trading partners retaliated with tariffs of their own, leading to U.S. exports and global trade plummeting. Economists and historians widely regard the act as a policy misstep, and it remains a cautionary example of protectionist policy in modern economic debates.[2] It was followed by more liberal trade agreements, such as the Reciprocal Trade Agreements Act of 1934."

 

[mark46]

Considering bankruptcy is part of his business model, I have great doubts his tariff war model will work. History tells us it did not work in the past.

Smoot–Hawley Tariff Act - Wikipedia

en.wikipedia.org

"Intended to bolster domestic employment and manufacturing, the tariffs instead deepened the Depression because the U.S.'s trading partners retaliated with tariffs of their own, leading to U.S. exports and global trade plummeting. Economists and historians widely regard the act as a policy misstep, and it remains a cautionary example of protectionist policy in modern economic debates.[2] It was followed by more liberal trade agreements, such as the Reciprocal Trade Agreements Act of 1934."

WILL THE TARIFF MODEL WORK?
What does that mean? What are the goals?
1) Prices will definitely go up for several years at least (it takes that long to build new factories.
2) Many of the high-tech factory jobs will be jobs for robot in factories in Texas, Arkansas and Tennessee (not MI). Check out Tesla. Importantly, tech jobs will greatly increase.
3) We will indeed import less from other countries. Our $200 sneakers will be manufactured in MISS instead of Vietnam.
4) We will greatly reduce our trade with China, greatly reducing our agriculture sector. China is already finding trade partners.
5) We will greatly reduce our reliance on Asian goods. Those countries will sell more to China, and within China's economic network.
6) The US will continue to trade a lot with Canada, Mexico and the UK. Trump will certainly sign deals with all of them (and with Ireland).
7) Yes, Trump will make deals with many countries to reduce the effect of tariffs on them. Of course, the more we reduce the tariffs on a country, the fewer jobs will be replaced by moving their product production to the US.
() The BOTTOM LINE is that the structure of world trade as it has existed for the last 80 years will be greatly changed with much more reliance on deals with individual countries and less on a world market and multi-lateral standards and deals.
=====================

 

[Hans Blaster]

I missed this one. You need to read how bonds work.

O rely?

Inverse Relation Between Interest Rates and Bond Prices

 

[Hans Blaster]

This is your opinion; if you provide an alternative, then let's hear it. It's unconventional, but until I can hear another economist have a better idea, then this is the only viable option. I understand why the FED does its own thing.

Don't do high tariffs. That's my alternative.

Trump Shares Claim He’s Crashing Stock Market ‘On Purpose’ As He Lobbies For Emergency Rate Cuts

The S&P 500 is down more than 14% since Trump won the election in November, with most losses concentrated since he announced his hawkish tariffs Wednesday.

www.forbes.com

So, someone with access to Trump's' social media account posted a video link that includes a version of this insanity. Forbes doesn't think it is a good idea, and given that the video also (falsely) claims that Warren Buffett praised Trump's tariff policy, it is more likely that that falsehood is what attracted Trump's social media people to the video.

Have you tried looking for other sources besides the opinion?

Why should I? It is a crazy opinion offered by a non-economist.

He does not care what anyone thinks, and he is doing what he thinks is best for the future of the country. I may have used the wrong words, but he shows he's not a prostitute to a party like past presidents willing to say anything to get elected. Cruz is whining now.

I don't remember hearing any complaints from you guys last admin, only this one when it comes to debt (tribal warfare), but I honestly think he wants an economic slowdown or maybe a recession to bring asset prices down, and I'm fine with that. Maybe my sons will be able to afford a home. If we allow the Fed to tighten monetary policy, which has created layoffs then what Trump is dong is helping the Fed with inflation

Complaints about what? How does any of this have anything to do with the thread? I don't know what your are trying to argue.

$1 trillion every 100 days. from the last admin.

what?

He did regulatory work plus some steel manufacturing and TCJA. Biden didn't reverse any Trump policies, just tweaked them; this is how government should operate.

OK. (Yet you are favoring a massively disruptive tariff policy.)

Yep, and Trump is continuing onshoring because of National Security. Sadly, we knew about this in 2010. But our government is dysfunctional, no foresight, just reactionary.

https://www.cisa.gov/sites/default/files/publications/nipp-ssp-defense-industrial-base-2010-508.pdf

2010 was not in a Trump presidency.

 

[Laodicean60]

OK. (Yet you are favoring a massively disruptive tariff policy.)

I'm not favoring anything, but not going to whine about it. The whole world doesn't like the tariff, but this is Trump's economic reset, and nothing can be done about it. But listening to some other economist, I understand why he's doing it.

2010 was not in a Trump presidency.

Don't be shallow; we have a problem in the US manufacturing and correct this was Obama.

Laodicean60 said:
$1 trillion every 100 days. from the last admin.

what?

Selective memory in politics. You don't remember the talk of government debt last year? Search for it and you'll see.

Don't do high tariffs. That's my alternative.

Ok, just whine. Nothing is going to change. Out

 

[mark46]

I'm an old man. I recall when a president came in without any mandate, formed a committee, reformed welfare and made the government more efficient. 377,000 federal jobs were cut. There were no lawsuits. The subcommittees had lots of input from both parties and from the workers. The speaker (of the other party) fought over many issues and held the president's feet to the fire.

We had SURPLUSES. There was a plan to use 1/3 of the projected surpluses over the next 10 years on improving the financial underpinnings of Medicare and Social Security. The plan did NOT call for debt increases every year. Rather the plan was for the debt to be eliminated by the end of the ten-year period.

The Congress turned over, there was a new speaker, and senators went back to their old ways, eventually increasing the debt limit every year.

That was then and now is now.
===========
There needs to be a real commission, one whose job it is to present a balanced budget within 5 years, as well as making the government more efficient, and modernized to take advantage of new technologies. DOGE and Musk could have done that if the goals given to them by the president were different. Make no mistake, Musk has succeeded bigly, doing exactly what Trump wanted him to do,

YES, this will mean higher taxes and more efficient delivery of services. And yes, tax rates for individuals needs to go up and for there to be a robust minimum tax of 15%

Higher taxes mean a terrible economy. ??? Look up how the economy did in the Kennedy years. The top rate wasn't 34%, it was 92%. I'm fine with lower corporate rates to better compete in the global economy. Of course, that isn't relevant now that trade will be reduced by so much.
============
AS AN ASIDE
I suspect that much of the new tariffs will be gone within a year, but they will still be a huge negative effect on the economy. I suspect that because MUSK is speaking out against tariffs. Old-style Republicans are speaking out against tariffs. And Congress has even started to vote to gain control of tariff policy. That will all help, but the damage will continue since the base 10% tax won't go away, nor will the focused taxes on aluminum, autos, steel and China. A recession is almost inevitable in the next year. Higher prices ARE inevitable in the short term and in the long-term. [Hpw will we ever make shoes pr clothes at lower costs then Vietnam or Malasia?

 

[Hans Blaster]

I'm not favoring anything, but not going to whine about it. The whole world doesn't like the tariff, but this is Trump's economic reset, and nothing can be done about it. But listening to some other economist, I understand why he's doing it.

You're just making odd excuses for his reckless actions.

Don't be shallow; we have a problem in the US manufacturing and correct this was Obama.

Laodicean60 said:
$1 trillion every 100 days. from the last admin.

Selective memory in politics. You don't remember the talk of government debt last year? Search for it and you'll see.

Government debt isn't the topic of the thread.

Ok, just whine. Nothing is going to change. Out

 

[Maria Billingsley]

WILL THE TARIFF MODEL WORK?
What does that mean? What are the goals?
1) Prices will definitely go up for several years at least (it takes that long to build new factories.
2) Many of the high-tech factory jobs will be jobs for robot in factories in Texas, Arkansas and Tennessee (not MI). Check out Tesla. Importantly, tech jobs will greatly increase.
3) We will indeed import less from other countries. Our $200 sneakers will be manufactured in MISS instead of Vietnam.
4) We will greatly reduce our trade with China, greatly reducing our agriculture sector. China is already finding trade partners.
5) We will greatly reduce our reliance on Asian goods. Those countries will sell more to China, and within China's economic network.
6) The US will continue to trade a lot with Canada, Mexico and the UK. Trump will certainly sign deals with all of them (and with Ireland).
7) Yes, Trump will make deals with many countries to reduce the effect of tariffs on them. Of course, the more we reduce the tariffs on a country, the fewer jobs will be replaced by moving their product production to the US.
() The BOTTOM LINE is that the structure of world trade as it has existed for the last 80 years will be greatly changed with much more reliance on deals with individual countries and less on a world market and multi-lateral standards and deals.
=====================

Thanks for sharing however, I choose not to use a crystal ball when practicing economics. We have tried and true methods based on many past failures through tariffs.