TARIFF CRAZY OPEN THREAD: Trump escalates towards nuclear trade war with China, EU Commission in a rare fit of sanity offers the Americans a zero-for-zero tariff deal on industrial goods
LINE GO DOWN AAAAAHHHHHHH.
The entire world is melting down over Donald Trump’s tariffs, and as I don’t have powerfully insightful thoughts on this topic, I offer you an open thread instead. My planned piece for today – on the schoolmarm menace – can wait until tomorrow.
Investors spent the weekend cultivating a panic over the impending trade war, such that stock markets opened sharply down this morning and continued mostly to crash as the day wore on. They did recover briefly in the United States, on the strength of fake news that Trump was on the verge of delaying his tariffs for 90 days – but the pessimism returned after the White House denied all such rumours. For the moment anyway, Trump is holding firm.
As everybody knows, China responded to Trump’s Liberation Day campaign by retaliating with their own 34% tariffs on American imports. Trump has now responded with a threat to impose additional tariffs of 50% on Chinese imports, unless the Chinese withdraw their 34% tariffs, which they are probably not going to do:
That seems bad.
In better news, the EU Commission have responded with unusual sanity. Although they are alleged to be preparing very vicious and painful “countermeasures” in back rooms to punish the Americans for their tariffs on imports, Ursula von der Leyen opened with an offer to drop all tariffs on “industrial goods” if the United States promises to do the same. I hope the United States can accept this deal, perhaps after ensuring that “industrial goods” are defined as widely as possible, and pushing harder for the abolition of the non-tariff trade barriers that the Trump administration has complained about – many of which are artefacts of European safeteyism and (especially) Green climate hysteria.
Anyway, I’m eager to hear what you make of all of this.
Trump’s actions are based on a decent of body of academic work. The formula linking to balance of trade is rational and smart. This is a multi stage plan with short, medium and long term effects and tactics. Sure it’s unorthodox. But orthodoxy was not working. It was driving the world off a cliff.
Hah! Everyone’s an economist now! And that can only be a good-ish thing, since most people never seemed to give one hoot about how the big boys in the back rooms have been rigging the system for nigh unto 80 years.
The Chief thing Trump’s tariff offensive will bring into sharp relief is the utter and almost incalculable fakery that has been baked into the US and other nations economies for decades.
What’s that saying, “the Truth hurts” - at first.
But it also heralds a new beginning upon which to build a more honest footing.
So don’t panic because the alternatives are even more frightening. Pray much and buckle up.