I would agree. The insider trading thing is central, and explains the volatility of the supposed policy. Trump doesn’t wake up on Monday morning and decide that his global strategy requires him to announce a change to his tariff policy. Basically because he does not have a global policy. But he can be expected to wake up on Monday, talk with Jared, who importunes him with a request to set up an opportunity for insider trading before Wednesday, because Jared needs a big cash infusion, and then Trump says, “Yeah, I know how to do that,“ and goes off and roils the stock market by noon, but lets Jared know in advance so that Jared can short the market, and then come out smelling like a rose by Wednesday because Trump let’s Jared know that on Wednesday he will reverse himself from Monday. The through line with almost everything Trump does is his toxic combination of narcissism, sociopathy, and unbridled power. Oh, I’m sorry, Jared’s broker is out of town on Wednesday, so let’s make it Thursday when Trump announces his reversal.😜
I think you've nailed it! Shades of a Putin-style kleptocracy. The U.S. economy will be circling the drain by the end of the year, if this is allowed to continue.
I’ve heard many people say that there doesn’t seem to be a rhyme or reason for these tariffs, but to me it looks like a massive tax shift to sales tax, which is an oligarch’s dream, right? The republican dominated congress can then use the influx of tariff money to call for a “much needed” follow up bill to give more tax breaks to billionaires.
Yes, I agree, but him and his friends get the added benefit of reverse robin hooding the American public; take from the consumers and give to the rich.
You’re right but this is also likely to backfire on our kleptocracy. Throughout history the moves by the wealthy and powerful to monopolize their wealth and power have been met by massive resistance from the masses, i.e. the people; the French Revolution and (ironically) our own American Revolution are examples. Our current crisis is likely to play out similarly. Due to chaotic rule the timing is not predictable, but it is clear that regular Americans will realize they’ve been had.
Maybe regular Americans will realize they’ve been had, or maybe not. Media propaganda has a whole lot to do with whether the general public understands the actual reasons they are hurting, as opposed to trumped up reasons.
Even if Americans wake up, they might need pitchforks. But they might not be asleep. They might be getting what theg voted for: a white supremacist government, the cost of it be damned.
Every time I read a posting/article about whether or not there is some sort of "strategy" behind Trump's tariffs or his other "policies", I am reminded of what David Brooks said in 2017: "We've got this perverse situation in which the vast analytic powers of the entire world are being spent trying to understand a guy whose thoughts are often just six fireflies beeping randomly in a jar." https://www.nytimes.com/2017/05/15/opinion/trump-classified-data.html
I look at this way: A silly old bugger, taking time off from his golf game, sits down in the Oval Office with a Sharpie in his hand and an assistant standing by with an iMac and printer at the ready...Howard Lutnick bounces into the room saying, "Mr President, do you know that those nasty Europeans are making hundreds of billions of dollars on pharmaceutical sales to our people here in America? Getting rich on our sick Americans? Here, this is our new tariff policy on those drugs, yadda-yadda".
His assistant taps and prints out the document, they call the media in, tRump flourishes his Sharpie, and there you have it, a "policy decision". And this is what Mr Napolitano means, exactly.
Haven’t heard anybody suggest other countries don’t impose tariffs. I have heard a “criminal grifter” suggest that his self-dealing and fitful, vacillating tariff pronouncements and actions are a responsible response. And I haven’t heard anybody who believes his BS excepting MAGA cultists….
Except that hiking tariffs will reduce trade as people shift to cheaper alternatives or forgo completely. Reduced trade affects the wealthy too. Even rich folks need to buy baby formula. Empty shelves at Costco or CVS affect everyone.
They will be able to absorb the higher costs a lot easier than the rest of us. And don’t forget the huge income tax breaks they will get to help with that.
"Hey Martha, we're running low on avocados. Let's take the Gulfstream down to Mexico for the weekend. We can stay at the Hilton Saturday and send the pilots out with a shopping list."
I think there's little doubt that he wants the revenue for his tax breaks, ignored entirely by this discussion. 10% on $2 trillion of imports (a lower number than currently, assuming trade is discouraged) is still $200 billion yearly. I don't know why this reason is so overlooked.
Somewhat. We currently import $3 trillion, and I lowered that to $2tr with 10% tariffs, a big shift but there's still coffee, bananas, etc. That turns out to be a lot of money with 10% tariffs, which are historically very high but who knows if sustainable...
To look for a rational policy with the Trump tariff's is a fools game. Whatever were pre-election justifications, Trump the Showman, has found that announcing new tariffs puts him centerstage (which adores) and secondly the administration is desparately seeking ways to fund Billionaire tax cut and tariffs is the only source they can see right now. This isn't short term thinking, it's same day thinking.
Chaos is about centralizing control. It's like the messy desk, where only one person can find anything quickly. The confusion helps steer everyone to look to the sower of chaos for guidance and relief. Separation of powers requires structure and predictability, whereas chaos and unpredictability create dependency on the Imperial Leader. "Only I can fix this", because only I know what my next whim might be. The inconsistency also creates a sense of helplessness in the governed, who have no way of knowing what will please the boss, so they're less likely to take action on their own. These are tactics that abusers use all the time. The United States is now a dysfunctional family, writ large.
Trump is addicted to the dopamine high his system pumps out when he is in full chaos mode. Attention of any kind gets this internal cycle rolling. The people around him are on the same train. They can’t give answers or plan because that would not fuel the dopamine fight or flight reaction.
Excellent conversation. Let’s not forget the most important points. The US brand is in disrepair, and we now have China and Russia picking up the flack in Asia and Africa. A major blow to US interests in those regions.
Additionally, he has alienating all of our allies, and Japan is currently in the process of no longer supporting our treasury markets, refusing to renew their treasury’s when they mature, or agree to any treaties or trade deals that hurt China. For both S. Korea and Japan, this is a huge loss.
Additionally, Trump and his tariffs have sent the world’s supply chain into chaos, and the instability his tariffs has brought to the markets, make any capital investments risky to US and foreign corporations alike. Not to mention, corporate guidance going forward is in jeopardy.
And lastly, our Treasury markets have been downgraded by every major rating agency, and our Treasury’s are no longer a safe haven asset. This means that during our next recession, our interests rates will be higher, and the cost to service our debt and deficits will increase exponentially, reducing our ability to fund the government going forward.
Therefore, whether Trump changed course and reduced all tariffs going forward, the question I have is whether it’s too late because the die has been cast, or do we have a path forward, in which we can retain our place as a super power, both economically and militarily?
And let’s not forget, the military procurement process is also convoluted and will be unable to scale up effectively, should we have another major war.
DOGE also shut down the U.S. Digital Service (USDS), which helps create efficiencies , while also improving critical services through modernization and transformation: USDS has helped the military modernize outdated systems, improve user interfaces for military personnel, and streamline processes with digital tools. This was a key tool to modernization all of our military and governmental systems and processes. Just some thoughts…:)
I'm just a lay person, but I still don't understand why the stock market isn't reacting more forcefully to this nonsense. The short-term reactionary swings still reek of market manipulation, too.
My stock accounts went up 1% just last week. That's all I know how to track. In general, the market is "very volatile" right now. My accounts were down over 7% at one time this year and are now down a little over 2% for the year.
You're right about the impacts on business, but Paul has been quite clear about the impacts of uncertainty on the market. That's reflected in those declines and volatility I mentioned above.
Unpredictable large swings in the market mean opportunities to buy cheap if you know which companies are being targeted ahead of time, then sell high when you know when the bounce will come. Later when it becomes obvious that companies bottom lines are significantly hurt and their values drop, you are already out of them and onto the next opportunity. Short term thinking, taking advantage of the worst characteristics of the markets, benefits the insider “friends” of the White House manipulators - both domestic and foreign.
Uncertainty is anathema to business. It is also anathema to consumers. I suspect this quarter's growth rate is going to be strongly negative - the 'R' word. Our Orange Agent of Chaos is deliberately pushing the Nation into Recession for absolutely no discernible reason. None, whatsoever. And he will continue to shoot us in the feet until Congress grows a few pairs and tells him this is unacceptable. Yeah, I know - dream on.
Trump's big ugly bill will not sail through Congress, and we can have an impact on it. There are ways to put some roadblocks in front of this bill. All is definitely not lost. We need to take advantage of Republican infighting.
I would like to share some life experiences from a 75 years old engineer, Stanford graduate, worked in Europe, the Middle East and Canada, and living in Canada since 1986. I also visited China a few years ago as a tourist.
In the sixties, cheap Japanese products flooded the Middle East where I grew up, and the term “Japanese goods” was synonymous with low price and poor quality. I remember the miniscule Datsuns (Nissan now), Hondas, and National (Panasonic now) transistor radios. The same thing happened with Chinese products when they started coming to North America, but that period is over now. The Chinese are producing high quality products and they manage to do it at very low prices.
I think I was one of the earliest users of Amazon, when it did not even ship to Canada from the US. So I opened a bank account, got an American credit card and rented a shipping address in Champlain NY. I would drive down from Montreal every few weeks to pick up my purchases and enjoy the savings.
I spent my professional life in manufacturing. We would buy production lines and machinery mostly from Europe, and some times from the US. Our suppliers always managed to monopolize spare parts by limiting the transfer of technical details.
American and European firms realized that moving their manufacturing operations to China would result in much lower costs, and they could maintain the quality of their products by implementing their quality control procedures. This meant that the full technology to produce a washing machine, an electric wire, a chemical product, or a car was transferred to China. Their factories are modern and more efficient, their labor costs are a fraction of western ones, and they have a huge pool of educated engineers and technicians, so there is no pressure to increase the se labor costs.
Last week I ordered an ultrasound water flow meter from Amazon for about 300US$ delivered to Montreal. It’s a digital box connected to two transducers that would be clamped on a pipe, and it would measure the flow rate. It was delivered by DHL 2 days after I ordered it, and the seller in China contacted me, asking me to refuse to pay any additional fees on delivery, which was the case. Similar products are presently selling from major supplier between two and six thousand dollars. For many Chinese products, 100% tariffs could still be competitive.
When I visited China, I thought that I would be able to buy lots of things at much lower prices, but I was disappointed. I would compare prices there with the same product on Amazon.ca, and I ended up buying nothing. I think that China has a policy of minimal consumption. This means that when they open up their internal market, they wouldn’t need to export as much.
Saad, would you flesh out your last thought please? Is it that the Chinese government will increase internal consumption by lowering domestic prices thus maintaining production levels of products that will be consumed at home and not exported?
That sounds like what Trump envisions for the US economy, an island unto itself.
Thank you for your detailed description of the flow meter. I too have seen price differentials that a 145% tariff would amount to at best a nuisance.
Thanks Al. My knowledge of economics is limited to economy 101 from the sixties, the relevant articles on NYT and WaPo, and of course Paul’s articles. When I visited China, I found food and clothing very cheap, the rest of basic consumer needs a bit less cheap but affordable.
I was part of a small group of friends, and we had rented the services of guides who met us for breakfast and left after dinner. We had a lot of honest conversations, and having done a lot of that in Eastern Europe and Russia before the fall of the wall, I think I can easily spot someone parroting the ruling party’s line. The impression we got is that the Chinese are satisfied because they are seeing a continuous improvement in life style. Compared to the west, I think their standard of living is about 25% of ours. If they increase it by 10 % every year, so it goes from 25% to 27.5% of our level the first year, they will need many years to reach our standard, while the people continue to feel better. This is what I feel their government is doing.
That makes consummate sense politically as well as on a human level. Never having won the lotto my suppositions are theoretical but sudden changes are usually unwelcome. It is wonderful to have the good Doctor on tap so to speak:-)
@Saad, excellent comment - thanks. I also travelled several times in China up to about 15 years ago, and my experience was similar to yours. Everyone had a job, even if it was guarding 100m of fencing outside the hotel compound - it was a job.
Their standard of living was below "ours", but improving by the day, and everyone appeared to be (perhaps stoically, or pragmatically) fairly happy with things.
I would question the applicability to how the current US government is acting of the term “trade war”, used several times by Mr. Politano.
A country starting a war usually has some offensive objectives.
Now from e.g. China’s perspective, in the context of thinking about how to retaliate, it may make sense to take about a “trade war”. Possible Chinese objectives could include forcing the US to backtrack so that China’s export industry won’t suffer too much, and/or harming the US, a country which from China’s perspective is a strategic adversary, as much as possible.
But in regard to looking at this from the US perspective, the very use of the phrase “trade war” looks to me like an act of sanewashing.
Instead of calling it a “bad” kind of tax, may I recommend you call it a “deeply regressive tax?” This tax will pound lower income Americans, who spend most or all of their income and will just scratch higher income Americans, who spend only a tiny fraction of their income.
They are not synonymous at all. Bad is a value judgement. Deeply regressive is descriptive and tells you what it is doing. You, then, get to decide whether that is good or bad. True, Regressive is a 25 cent word and bad is a nickel word. Guessing most folks who follow Paul can handle it, though.
When you want to take a break from tariffs and Trump, how about a column about how complicated things are getting. A Covid shot for instance. You used to be able to walk into a drug store, wait a few minutes, answer a few questions, give them your medical card and get the shot.
Here's what I went thru yesterday. Walgreen's, my closest pharmacy, only gives shots in their store about as far away from me as possible. The Wmspt. Pharmacy no longer gives shots. My Dr. said go to the drug store. I finally got an appointment at CVS after answering a ton of questions. THEN...
I have to bring my mobile phone because when I drive I must use the link in my text message to check in. (I had already deleted that text) And how about the many older Sr. Citizens who do not use a complicated cell phone?
Only then can I go to the Pharmacy counter. Why make things so difficult?
Now, how about my eye doctor...they have put in kiosks that you have to use to check in, yet there are still receptionists sitting there doing very little. I'm 88, still sane, but had trouble understanding some of the instructions. Why this change.
And to go to the movies, you have to use a kiosk. my friend and I had trouble. We finally located an usher who told us to go to the refreshments counter and they would check us in. Has that movie theatre really gained more profit asking customers to operate kiosks instead of just selling tickets?
Finally, how about credit card machines. Every one seems to be different. Why? There's always this hesitation as you figure out exactly where the card goes or whether this is one you can just tap. Why?
Oh, I forgot about those instructions when someone on line decides to change things. Who writes those instructions? Armadillos?
Anyway, I may be 88, but drive, handle my own investments, but would like things to stay simple. Is that too much to ask? Love your Substack reports! -Barbara P.
The last time I went to a movie the counter was closed. No sign to use a kiosk. So it was awhile before I figured it out. And the kiosk so frustrating to use, not user friendly at all. Then I realized that in a couple of weeks the movie I was going to see was going to be streaming on Apple. And it was cheaper than going to the theatre. Guess who will not be going to the movies again. If theaters go bankrupt I won’t miss them. In fact I probably won’t even notice.
When one of the vendors with whom I deal puts up a little window asking how they can improve their web site, I usually try to find a way to tell them not to change anything. I don't want to have to figure out where they put a feature I use this time. One the other hand, there are a few exceptions. Unfortunately, they never ask how they can improve things.
I'm very interested in learning more about the proposed tariffs on pharmaceuticals. How will that impact the average consumer? How will that impact the availability of our prescription medications?
I doubt that availability will be impacted; just price. Since a lot of that will be covered by insurance, premiums are likely to go up. If your insurance is provided by your employer, you probably won't notice a thing. I expect that people like myself on Medicare will see a big hike in the deductible costs for prescriptions soon and big hikes in the Part D charges next year. People on Medicaid plans will be SOL, even if they still have insurance after this "Big Beautiful" boondoggle goes through.
I’m guessing another reason for the tariff mess is to encourage bribes and other personal favors and insider trading opportunities.
That was my take as well, buy his bribecoin cryptocurrency get an exemption from the tariffs.
I would agree. The insider trading thing is central, and explains the volatility of the supposed policy. Trump doesn’t wake up on Monday morning and decide that his global strategy requires him to announce a change to his tariff policy. Basically because he does not have a global policy. But he can be expected to wake up on Monday, talk with Jared, who importunes him with a request to set up an opportunity for insider trading before Wednesday, because Jared needs a big cash infusion, and then Trump says, “Yeah, I know how to do that,“ and goes off and roils the stock market by noon, but lets Jared know in advance so that Jared can short the market, and then come out smelling like a rose by Wednesday because Trump let’s Jared know that on Wednesday he will reverse himself from Monday. The through line with almost everything Trump does is his toxic combination of narcissism, sociopathy, and unbridled power. Oh, I’m sorry, Jared’s broker is out of town on Wednesday, so let’s make it Thursday when Trump announces his reversal.😜
this is a great description of the great rip-off IMHO.
🎯
I think you've nailed it! Shades of a Putin-style kleptocracy. The U.S. economy will be circling the drain by the end of the year, if this is allowed to continue.
Yes, that is about the only way I can make sense out of his 'circle of chaos' circle jerk on tariffs.
I’ve heard many people say that there doesn’t seem to be a rhyme or reason for these tariffs, but to me it looks like a massive tax shift to sales tax, which is an oligarch’s dream, right? The republican dominated congress can then use the influx of tariff money to call for a “much needed” follow up bill to give more tax breaks to billionaires.
Here's the rhyme and the reason: they make trump feel like a big strong manly man who is running the whole world.
Yes.
Yes, I agree, but him and his friends get the added benefit of reverse robin hooding the American public; take from the consumers and give to the rich.
You’re right but this is also likely to backfire on our kleptocracy. Throughout history the moves by the wealthy and powerful to monopolize their wealth and power have been met by massive resistance from the masses, i.e. the people; the French Revolution and (ironically) our own American Revolution are examples. Our current crisis is likely to play out similarly. Due to chaotic rule the timing is not predictable, but it is clear that regular Americans will realize they’ve been had.
Maybe regular Americans will realize they’ve been had, or maybe not. Media propaganda has a whole lot to do with whether the general public understands the actual reasons they are hurting, as opposed to trumped up reasons.
Hmm. "Past performance is not a guarantee of future returns," or something like that. Sure hope you're right that regular Americans will wake up.
Even if Americans wake up, they might need pitchforks. But they might not be asleep. They might be getting what theg voted for: a white supremacist government, the cost of it be damned.
"Even if Americans wake up, they might need pitchforks"
Which, no doubt, come from China and, if the tariffs go back to 145%, there goes the revolution ....
I sure hope so
Disgusting evil SPAM! Reported!
Every time I read a posting/article about whether or not there is some sort of "strategy" behind Trump's tariffs or his other "policies", I am reminded of what David Brooks said in 2017: "We've got this perverse situation in which the vast analytic powers of the entire world are being spent trying to understand a guy whose thoughts are often just six fireflies beeping randomly in a jar." https://www.nytimes.com/2017/05/15/opinion/trump-classified-data.html
I look at this way: A silly old bugger, taking time off from his golf game, sits down in the Oval Office with a Sharpie in his hand and an assistant standing by with an iMac and printer at the ready...Howard Lutnick bounces into the room saying, "Mr President, do you know that those nasty Europeans are making hundreds of billions of dollars on pharmaceutical sales to our people here in America? Getting rich on our sick Americans? Here, this is our new tariff policy on those drugs, yadda-yadda".
His assistant taps and prints out the document, they call the media in, tRump flourishes his Sharpie, and there you have it, a "policy decision". And this is what Mr Napolitano means, exactly.
You nailed it. However, the other person in the room, Stephen Miller, who is behind 98% of the decisions and tRump is simply the order taker/executor.
He is definitely the eminence gris in everything bad that this administration does. Cruelty is the point. Stupidity is the outcome.
Haven’t heard anybody suggest other countries don’t impose tariffs. I have heard a “criminal grifter” suggest that his self-dealing and fitful, vacillating tariff pronouncements and actions are a responsible response. And I haven’t heard anybody who believes his BS excepting MAGA cultists….
That is hilarious! 😂 Thanks for the chuckle.
Agree with this. Big extension of the tax cuts his donors love, paid for by a (disguised by lies) sales tax.
Except that hiking tariffs will reduce trade as people shift to cheaper alternatives or forgo completely. Reduced trade affects the wealthy too. Even rich folks need to buy baby formula. Empty shelves at Costco or CVS affect everyone.
They will be able to absorb the higher costs a lot easier than the rest of us. And don’t forget the huge income tax breaks they will get to help with that.
"Hey Martha, we're running low on avocados. Let's take the Gulfstream down to Mexico for the weekend. We can stay at the Hilton Saturday and send the pilots out with a shopping list."
Have a good engine. The Gulf Stream runs North at about 4.5 knots.
If you get me some avocados I'll give you some of my Hilton Honors points
There are Gulfstreams, and the Gulf Stream.
If you can afford to take A Gulfstream good for you.
I can too because I placed a big bet on then relatively unknown Nvidia I 2015. Now 240x what I paid for it. Jensen Huang, my hero.
Life's good!
I think there's little doubt that he wants the revenue for his tax breaks, ignored entirely by this discussion. 10% on $2 trillion of imports (a lower number than currently, assuming trade is discouraged) is still $200 billion yearly. I don't know why this reason is so overlooked.
partly, you're assuming continuing demand, rather than preferential going without, where possible.
Somewhat. We currently import $3 trillion, and I lowered that to $2tr with 10% tariffs, a big shift but there's still coffee, bananas, etc. That turns out to be a lot of money with 10% tariffs, which are historically very high but who knows if sustainable...
Doesn't the American consumer power the US economy?
Yes it went long but it was brilliant commentary and very engaging. Thank you for the amazing teaching you do using this platform.
Thank you Mr. Krugman and Mr. Politano for that informative, sane, conversation about insanity.
Every time they move the markets they make money. It’s a grift that can/is repeatable. Laughing all the way to the bank.
To look for a rational policy with the Trump tariff's is a fools game. Whatever were pre-election justifications, Trump the Showman, has found that announcing new tariffs puts him centerstage (which adores) and secondly the administration is desparately seeking ways to fund Billionaire tax cut and tariffs is the only source they can see right now. This isn't short term thinking, it's same day thinking.
Chaos is about centralizing control. It's like the messy desk, where only one person can find anything quickly. The confusion helps steer everyone to look to the sower of chaos for guidance and relief. Separation of powers requires structure and predictability, whereas chaos and unpredictability create dependency on the Imperial Leader. "Only I can fix this", because only I know what my next whim might be. The inconsistency also creates a sense of helplessness in the governed, who have no way of knowing what will please the boss, so they're less likely to take action on their own. These are tactics that abusers use all the time. The United States is now a dysfunctional family, writ large.
Trump is addicted to the dopamine high his system pumps out when he is in full chaos mode. Attention of any kind gets this internal cycle rolling. The people around him are on the same train. They can’t give answers or plan because that would not fuel the dopamine fight or flight reaction.
Excellent conversation. Let’s not forget the most important points. The US brand is in disrepair, and we now have China and Russia picking up the flack in Asia and Africa. A major blow to US interests in those regions.
Additionally, he has alienating all of our allies, and Japan is currently in the process of no longer supporting our treasury markets, refusing to renew their treasury’s when they mature, or agree to any treaties or trade deals that hurt China. For both S. Korea and Japan, this is a huge loss.
Additionally, Trump and his tariffs have sent the world’s supply chain into chaos, and the instability his tariffs has brought to the markets, make any capital investments risky to US and foreign corporations alike. Not to mention, corporate guidance going forward is in jeopardy.
And lastly, our Treasury markets have been downgraded by every major rating agency, and our Treasury’s are no longer a safe haven asset. This means that during our next recession, our interests rates will be higher, and the cost to service our debt and deficits will increase exponentially, reducing our ability to fund the government going forward.
Therefore, whether Trump changed course and reduced all tariffs going forward, the question I have is whether it’s too late because the die has been cast, or do we have a path forward, in which we can retain our place as a super power, both economically and militarily?
And let’s not forget, the military procurement process is also convoluted and will be unable to scale up effectively, should we have another major war.
DOGE also shut down the U.S. Digital Service (USDS), which helps create efficiencies , while also improving critical services through modernization and transformation: USDS has helped the military modernize outdated systems, improve user interfaces for military personnel, and streamline processes with digital tools. This was a key tool to modernization all of our military and governmental systems and processes. Just some thoughts…:)
I'm just a lay person, but I still don't understand why the stock market isn't reacting more forcefully to this nonsense. The short-term reactionary swings still reek of market manipulation, too.
Yes Donnie Twodolls makes some ambiguous announcement every time the market falls and we see an uptick.
My stock accounts went up 1% just last week. That's all I know how to track. In general, the market is "very volatile" right now. My accounts were down over 7% at one time this year and are now down a little over 2% for the year.
I don't think any of the tariff damages are in yet. Good luck.
You're right about the impacts on business, but Paul has been quite clear about the impacts of uncertainty on the market. That's reflected in those declines and volatility I mentioned above.
Unpredictable large swings in the market mean opportunities to buy cheap if you know which companies are being targeted ahead of time, then sell high when you know when the bounce will come. Later when it becomes obvious that companies bottom lines are significantly hurt and their values drop, you are already out of them and onto the next opportunity. Short term thinking, taking advantage of the worst characteristics of the markets, benefits the insider “friends” of the White House manipulators - both domestic and foreign.
Uncertainty is anathema to business. It is also anathema to consumers. I suspect this quarter's growth rate is going to be strongly negative - the 'R' word. Our Orange Agent of Chaos is deliberately pushing the Nation into Recession for absolutely no discernible reason. None, whatsoever. And he will continue to shoot us in the feet until Congress grows a few pairs and tells him this is unacceptable. Yeah, I know - dream on.
Trump's big ugly bill will not sail through Congress, and we can have an impact on it. There are ways to put some roadblocks in front of this bill. All is definitely not lost. We need to take advantage of Republican infighting.
Defeat Trump's ᗺig ᗺackassward ᗺoondoggle
https://kathleenweber.substack.com/p/trumps-ig-ackassward-oondoggle/comments
I would like to share some life experiences from a 75 years old engineer, Stanford graduate, worked in Europe, the Middle East and Canada, and living in Canada since 1986. I also visited China a few years ago as a tourist.
In the sixties, cheap Japanese products flooded the Middle East where I grew up, and the term “Japanese goods” was synonymous with low price and poor quality. I remember the miniscule Datsuns (Nissan now), Hondas, and National (Panasonic now) transistor radios. The same thing happened with Chinese products when they started coming to North America, but that period is over now. The Chinese are producing high quality products and they manage to do it at very low prices.
I think I was one of the earliest users of Amazon, when it did not even ship to Canada from the US. So I opened a bank account, got an American credit card and rented a shipping address in Champlain NY. I would drive down from Montreal every few weeks to pick up my purchases and enjoy the savings.
I spent my professional life in manufacturing. We would buy production lines and machinery mostly from Europe, and some times from the US. Our suppliers always managed to monopolize spare parts by limiting the transfer of technical details.
American and European firms realized that moving their manufacturing operations to China would result in much lower costs, and they could maintain the quality of their products by implementing their quality control procedures. This meant that the full technology to produce a washing machine, an electric wire, a chemical product, or a car was transferred to China. Their factories are modern and more efficient, their labor costs are a fraction of western ones, and they have a huge pool of educated engineers and technicians, so there is no pressure to increase the se labor costs.
Last week I ordered an ultrasound water flow meter from Amazon for about 300US$ delivered to Montreal. It’s a digital box connected to two transducers that would be clamped on a pipe, and it would measure the flow rate. It was delivered by DHL 2 days after I ordered it, and the seller in China contacted me, asking me to refuse to pay any additional fees on delivery, which was the case. Similar products are presently selling from major supplier between two and six thousand dollars. For many Chinese products, 100% tariffs could still be competitive.
When I visited China, I thought that I would be able to buy lots of things at much lower prices, but I was disappointed. I would compare prices there with the same product on Amazon.ca, and I ended up buying nothing. I think that China has a policy of minimal consumption. This means that when they open up their internal market, they wouldn’t need to export as much.
Saad, would you flesh out your last thought please? Is it that the Chinese government will increase internal consumption by lowering domestic prices thus maintaining production levels of products that will be consumed at home and not exported?
That sounds like what Trump envisions for the US economy, an island unto itself.
Thank you for your detailed description of the flow meter. I too have seen price differentials that a 145% tariff would amount to at best a nuisance.
Thanks Al. My knowledge of economics is limited to economy 101 from the sixties, the relevant articles on NYT and WaPo, and of course Paul’s articles. When I visited China, I found food and clothing very cheap, the rest of basic consumer needs a bit less cheap but affordable.
I was part of a small group of friends, and we had rented the services of guides who met us for breakfast and left after dinner. We had a lot of honest conversations, and having done a lot of that in Eastern Europe and Russia before the fall of the wall, I think I can easily spot someone parroting the ruling party’s line. The impression we got is that the Chinese are satisfied because they are seeing a continuous improvement in life style. Compared to the west, I think their standard of living is about 25% of ours. If they increase it by 10 % every year, so it goes from 25% to 27.5% of our level the first year, they will need many years to reach our standard, while the people continue to feel better. This is what I feel their government is doing.
That makes consummate sense politically as well as on a human level. Never having won the lotto my suppositions are theoretical but sudden changes are usually unwelcome. It is wonderful to have the good Doctor on tap so to speak:-)
@Saad, excellent comment - thanks. I also travelled several times in China up to about 15 years ago, and my experience was similar to yours. Everyone had a job, even if it was guarding 100m of fencing outside the hotel compound - it was a job.
Their standard of living was below "ours", but improving by the day, and everyone appeared to be (perhaps stoically, or pragmatically) fairly happy with things.
I would question the applicability to how the current US government is acting of the term “trade war”, used several times by Mr. Politano.
A country starting a war usually has some offensive objectives.
Now from e.g. China’s perspective, in the context of thinking about how to retaliate, it may make sense to take about a “trade war”. Possible Chinese objectives could include forcing the US to backtrack so that China’s export industry won’t suffer too much, and/or harming the US, a country which from China’s perspective is a strategic adversary, as much as possible.
But in regard to looking at this from the US perspective, the very use of the phrase “trade war” looks to me like an act of sanewashing.
Instead of calling it a “bad” kind of tax, may I recommend you call it a “deeply regressive tax?” This tax will pound lower income Americans, who spend most or all of their income and will just scratch higher income Americans, who spend only a tiny fraction of their income.
The two are synonymous, and "bad" is a lot shorter and easily understood by more people.
They are not synonymous at all. Bad is a value judgement. Deeply regressive is descriptive and tells you what it is doing. You, then, get to decide whether that is good or bad. True, Regressive is a 25 cent word and bad is a nickel word. Guessing most folks who follow Paul can handle it, though.
When you want to take a break from tariffs and Trump, how about a column about how complicated things are getting. A Covid shot for instance. You used to be able to walk into a drug store, wait a few minutes, answer a few questions, give them your medical card and get the shot.
Here's what I went thru yesterday. Walgreen's, my closest pharmacy, only gives shots in their store about as far away from me as possible. The Wmspt. Pharmacy no longer gives shots. My Dr. said go to the drug store. I finally got an appointment at CVS after answering a ton of questions. THEN...
I have to bring my mobile phone because when I drive I must use the link in my text message to check in. (I had already deleted that text) And how about the many older Sr. Citizens who do not use a complicated cell phone?
Only then can I go to the Pharmacy counter. Why make things so difficult?
Now, how about my eye doctor...they have put in kiosks that you have to use to check in, yet there are still receptionists sitting there doing very little. I'm 88, still sane, but had trouble understanding some of the instructions. Why this change.
And to go to the movies, you have to use a kiosk. my friend and I had trouble. We finally located an usher who told us to go to the refreshments counter and they would check us in. Has that movie theatre really gained more profit asking customers to operate kiosks instead of just selling tickets?
Finally, how about credit card machines. Every one seems to be different. Why? There's always this hesitation as you figure out exactly where the card goes or whether this is one you can just tap. Why?
Oh, I forgot about those instructions when someone on line decides to change things. Who writes those instructions? Armadillos?
Anyway, I may be 88, but drive, handle my own investments, but would like things to stay simple. Is that too much to ask? Love your Substack reports! -Barbara P.
The last time I went to a movie the counter was closed. No sign to use a kiosk. So it was awhile before I figured it out. And the kiosk so frustrating to use, not user friendly at all. Then I realized that in a couple of weeks the movie I was going to see was going to be streaming on Apple. And it was cheaper than going to the theatre. Guess who will not be going to the movies again. If theaters go bankrupt I won’t miss them. In fact I probably won’t even notice.
When one of the vendors with whom I deal puts up a little window asking how they can improve their web site, I usually try to find a way to tell them not to change anything. I don't want to have to figure out where they put a feature I use this time. One the other hand, there are a few exceptions. Unfortunately, they never ask how they can improve things.
I'm very interested in learning more about the proposed tariffs on pharmaceuticals. How will that impact the average consumer? How will that impact the availability of our prescription medications?
I doubt that availability will be impacted; just price. Since a lot of that will be covered by insurance, premiums are likely to go up. If your insurance is provided by your employer, you probably won't notice a thing. I expect that people like myself on Medicare will see a big hike in the deductible costs for prescriptions soon and big hikes in the Part D charges next year. People on Medicaid plans will be SOL, even if they still have insurance after this "Big Beautiful" boondoggle goes through.
Interesting -- thanks for clarifying.