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Politics Tariffs/Trade Wars

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Donald Trump just did the economic equivalent of Control-Alt-Delete on his trade policy. No, he didn’t fully retreat but he backed down enough that he’s ceded almost all of his leverage. That does not mean he admitted the chaos he unfurled was an entirely unnecessary self-inflicted trauma—or that he fully understands his role in sending the global economy into a freefall for more than a month.
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Before jetting off to the Middle East, the President on Monday climbed down from a scorched-earth tariff tift and pulled import taxes on goods coming from China from an eye-popping 145% down to a less harsh 30%. In turn, China downgraded its retaliation to 10% from 125%, giving legions of U.S. businesses hope that they could weather a standoff between two global leaders famous for their unbending nature.

The added costs will still squeeze Americans who rely on cheap goods from China for day-to-day life, while the world’s two largest economies try to find a way out of their spiraling tit-for-tat standoff that roiled markets, shook consumer confidence, and shrunk the retirement accounts of millions of Americans. Even with the latest turnaround, U.S. consumers may still see some empty shelves in the coming weeks as the supply chain falls off the cliff. And the average American family would still see a net hike of $2,300, according to a new Yale Budget Lab analysis released after Trump’s announcement. And, later Monday, White House aides said the shift was not on all China imports; low-dollar packages from online retailers like Shein and Temu would actually see their surcharges jump in June.

Still, ever the salesman, Trump started a victory lap well past the starting line.

"There's a big incentive for China to stop, and I take them at their word they're going to work on that, I think, very hard,” Trump told reporters at the White House on Monday.

Trusting China has never been a good bet for U.S. policy. Taking Beijing “at their word” is for most Presidents code for being a sucker when it comes to promises of human rights, environmental safeguards, and global ambitions. Trump's stance runs completely counter to orthodoxy popularized by President Ronald Reagan: trust but verify.

But U.S. investors for the moment are putting their trust in Trump’s ability to steer the economy out of a potential nosedive and toward a safe landing. Markets broadly surged as the Dow recouped its post-"Liberation Day" losses sparked by Trump’s slapdash score settling.

Since April 2, investors have been in open revolt over the tumult. At its lowest point, the Dow was down 14% from the day Trump took office. Before the pause was announced after trade talks in Geneva, the Dow was still down 6% from Inauguration Day levels. By the time markets closed on Monday, the rebound was complete, with traders actually up from January thanks to the biggest day of gains since tariffs tanked confidence.

Trump, who has long shown an obsession with the stock markets as much as his polls, surely is taking the response as a win. The President’s unique flavor of grievance prompts him to see the U.S. economy as a perpetual victim of economic bullies and the bearer of bad actors. His protectionist advisers have encouraged his suspicions. But he also seeks approval, and whether it’s from polls or Wall Street’s Big Board, he reacts. His decision to pull back so strongly from the tariff stance he took just a few weeks ago showed just how reactionary and transactional this President can be.

Still, Trump’s retreat on tariffs with China is not complete. Ninety days is some breathing room for consumers and investors alike, but it’s not forever. China is painting the reversal as a victory on its side, likely nursing more resentment from Trump and his nationalistic pride. Trump’s defenders, meanwhile, are noting that the United States collected more than $7 billion on import taxes in April compared to a month earlier.

Now comes the spin contest. During his first term in office, Trump often used Potemkin announcements to declare victory in the hopes no one would follow up on the tangibles. Just look at the Foxconn project in Wisconsin: Trump promised 13,000 jobs and $10 billion investment there in 2017 and hyped it pretty relentlessly but it never came to pass. It was the same on his now-punchlined Infrastructure Week, a repeal of Obamacare, and a raise in family incomes by $4,000. None of that happened, either.

But here’s the thing with Trump and his followers: they often listen to the loudest voice in their ears, and it’s tough to credibly argue that anyone can project further than this President. That’s why this fallback on tariffs might be seen for a good chunk of this country as a victory despite evidence to the contrary. Facts—and 401(k) reports—may say one thing, but feelings have always shown more powerful than hard realities.
 
The timing is interesting just as the Chinese vehicles start really competing then this. Did they see their onshore made brand markets in China getting strangled and needed a life raft?

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Utes .. and not a single one made in Aussie
Million miles use to to be the holly grail, now its a few 100 thou Ks and expect to toss.
 
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  1. China's average tariffs rate, weighted, mean, all products from all countries was 2.31%.
  2. BUT, China's tariffs on US products was 6.5% as of 2022. But on January 1st, 2023, China's rate on US products was 7.3%.
  3. When Trump started his stupid trade war, China rose the tariffs on US products. However, it's back down to 10%.
  4. So Trump declared victory on raising the cost of US products by 3% in China. "Art of the deal"
 
So basically they got the American consumers to pay more of the deficit. Nice.

And companies.

Tax increases are a way to cut deficit, but it's so unpopular in the US they need to tell a "white" lie.
 
Don't tell me the Chinese were lying about having no meetings!

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And companies.

Tax increases are a way to cut deficit, but it's so unpopular in the US they need to tell a "white" lie.
The US does not have income problem, it has a spending problem. The government - Federal, State, Local - is addicted to spending.

IF tariff revenue can be reserved to pay down the debt, that would be fantastic.
 
The US does not have income problem, it has a spending problem. The government - Federal, State, Local - is addicted to spending.

IF tariff revenue can be reserved to pay down the debt, that would be fantastic.
SO instead of Fiscal discipline, lets charge the American people more for it. I mean if the goal is to help each and every American and to make their future better, why not... semi free health care, subsidized housing, major buildup on infrastructure. Cut military spending, close Military bases and cut off US Aid.
 
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SO instead of Fiscal discipline, lets charge the American people more for it. I mean if the goal is to help each and every American and to make their future better, why not... semi free health care, subsidized housing, major buildup on infrastructure. Cut military spending, close Military bases and cut off US Aid.
Fiscal discipline! LOL! You're kidding, right? Every Democrat and 95% of Republicans are addicted to deficit spending.

6 months from now, I expect everyone's tariffs to settle in at 10% which will be eaten by the exporting country, that is, if they want to do business in the biggest, wealthiest market in history. The Chinese will pay more, like 30-50%, unless they curb their fentanyl production to the cartels. China will also eat the tariffs, if they still want to do business in the US or price themselves out of the market. Their choice.
 
SO instead of Fiscal discipline, lets charge the American people more for it. I mean if the goal is to help each and every American and to make their future better, why not... semi free health care, subsidized housing, major buildup on infrastructure. Cut military spending, close Military bases and cut off US Aid.
So just borrow it all. Numerous examples of this type of economy now and no longer as an economic thesis.
So give me a perameter you want to use as no your are bettor off now argument... I have already proposed the health system as a general canary in the coal mine. Here your model is on traige with migrant nurses.
How about what was all of that fiscal stimulus for. A never before seen on earth attempt to get growth.
Its not healthy right, only an idiot would propose otherwise and you are no idiot.. so what's your alternative fix then to balance spending and increase growth ?
Tariffs increased revenue so balancing the books and more manufacturing increases growth and revenue so whats your alternative as you have already argued tariffs work.
 
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So whats the cause, the cheap Chinese copy dependency. As bad a fentanol and they know it. Its not hard to order from another place. Or perhaps start to design things themselves instead of off the pathetic shelf rebranding. This is how pathetic they got.. go off to a place like Alibaba on their computor screen, slap their pathetic logo on a copy from someone else and then advertise it as theirs....joke.
These are finding it hard..who cares.
 
In the "news " today..
New Zealand has a poor and declining record of productivity growth, which inhibits increasing incomes and the ability to fund social infrastructure.

Infrastructure is widely regarded as an enabler to improve productivity. However, as Infrastructure New Zealand notes in its position paper on asset recycling, New Zealand has an upcoming infrastructure pipeline valued at $150 billion but there is a funding gap. Some $60b of this pipeline is yet to have identified funding sources.

Infrastructure New Zealand further notes that if this funding gap was financed solely by debt, that would almost double our debt burden. The level of debt matters because it limits the choices we have in future and the ability to continue to fund the rising demands of New Zealand Superannuation, healthcare and defence. We also need financial flexibility to respond to shocks such as earthquakes and pandemics.

Asset recycling is where a Government (or local authority) sells or leases some of its holdings in an existing asset that it owns to fund the establishment of new assets.

What a brain wave reverse mortgage.

All in favor of one of those profile industries and cocktail evenings in Welly , such as a James Cameron film and publicly subsidized requiring affordable Kiwi ingenuity. There is no public flap about that or worry of the free trade worlders critique.
 
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Fiscal discipline! LOL! You're kidding, right? Every Democrat and 95% of Republicans are addicted to deficit spending.

6 months from now, I expect everyone's tariffs to settle in at 10% which will be eaten by the exporting country, that is, if they want to do business in the biggest, wealthiest market in history. The Chinese will pay more, like 30-50%, unless they curb their fentanyl production to the cartels. China will also eat the tariffs, if they still want to do business in the US or price themselves out of the market. Their choice.
I agree, but fiscal discipline has been done before. I agree with you on most parts, except that it is the consumers/business that pays the tariffs not the exporting nations.
So just borrow it all. Numerous examples of this type of economy now and no longer as an economic thesis.
So give me a perameter you want to use as no your are bettor off now argument... I have already proposed the health system as a general canary in the coal mine. Here your model is on traige with migrant nurses.
How about what was all of that fiscal stimulus for. A never before seen on earth attempt to get growth.
Its not healthy right, only an idiot would propose otherwise and you are no idiot.. so what's your alternative fix then to balance spending and increase growth ?
Tariffs increased revenue so balancing the books and more manufacturing increases growth and revenue so whats your alternative as you have already argued tariffs work.
I dont know how it is in NZ, but the fiscal stimulus in over here does benefit the population in the long run and create economic growth. Mind you we have a hybrid system and not full blown welfare. Hell, if done right the government doesnt even have to touch the coffers, just go with Public Private Partnerships. Anywho my point is investing in military and worse... war is not a viable business model.
 
6 months from now, I expect everyone's tariffs to settle in at 10% which will be eaten by the exporting country, that is, if they want to do business in the biggest, wealthiest market in history

By what process? Every competitor except American is also at 10% tariff. And they tend to be more expensive anyway.

If US was a control economy and not a market economy, I could believe this.

America stronk!!!111 is not the answer here. Tariffs work the same there as anywhere else. Cia agents will show up at my home and beat me with sticks until I lower my prices?

If the American importer could demand drop of price of 10-30% at a flick of a finger, they have already done so. Or what is the reason they are not increasing their profits today? They are paying more now out of goodness of their hearts? They are such payriots that they have waited for the eventuality that US imposes tariffs to start really negotiating?
 
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Democratic strategist Matt McDermott said the White House still hasn’t delivered on its central promise: bringing factory jobs back to the U.S.


In the meantime, Americans are stuck with a 30% import tax, which eventually gets passed on to consumers. “Trump caved and got zero in return,” McDermott wrote.

That 30% was in place during the entire Biden admin..

Matt McDermott's take on the debate;
By any measure, Trump was as or more incoherent during the debate than Biden. Worse, the incoherence was compounded by a litany of insane conspiracy ...
 

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