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Bad news: there aren't any. Cash-equivalents will get eaten by inflation, everything else is going to get wrecked too.
Is this finally the hour for metals stackers?
No. Less trade means less stuff is available that people want, period. Everything is worth less because there are less things to buy (except food I guess).
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Remains to be seen, the one interesting thing is that Tariffs are just paper barriers to trade. A 'social construct,' if you will.
We haven't physically built a wall or blown up any bridges.
If countries are willing to play ball and lower all (their) paper barriers to trade, then goods can 'instantly' start flowing again, and possibly under better overall terms. Like, just last week Trump committed to bombing the Houthis in hopes of restoring safe access to the Suez for global shipping. He clearly WANTS goods to flow smoothly.
I will precommit now, that if other countries actively take steps to reduce tariffs and otherwise appease Trump's demands and Trump is too temperamental to accept these offers in good faith and we still have most of these Tarriffs in place at the same levels come May 2nd 2025 (unless real deals are pending come that date), it is a bad thing and we will be in for some rough times. I will criticize/condemn Trump and Co. in no uncertain terms.
If other countries DON'T take active steps to reduce tariffs or otherwise negotiate, I will have to admit that my model of the world is drastically misinformed.
So my full expectation is that there will be a couple weeks of rapidfire and rough negotiations with some touch-and-go moments, but ultimately other nations will do the needful and come the end of April Trump will make a YUUUGE fanfare about signing Tariff reductions and trade agreements with those countries that capitulated, and markets will 'correct course.'
Trump has given himself a lot of runway to try and land this plane relatively smoothly, but there's going to be a lot of turbulence on the way in, that seems certain.
I'll also grant that this causes substantial uncertainty for American investors and entrepreneurs which is 'bad.' But, uhhh, what other country could they find that is inherently more stable and inviting for investment?
Say you‘re the median trade partner with the US, you have a trade surplus towards it, and about a 5% tariff on US goods. Out comes trump with a 20% tariff, with a 10 % minimum, and not based on anything you actually do (or whether you are friend or foe), just balance of trade. And you think they will cancel their own tariffs and offer mineral concessions ?
From the POV of the rest of the world, this is extremely high 'trade aggression'. If you answer this with concessions, you are the most spineless weakling that ever noodled.
The only question being debated right now from brussels to peking and tokyo to london is how much to retaliate. The most extreme pro-american, pro-free trade position being to ignore it and wait for his tantrum, or his presidency, to end.
You‘re very lucky empirically because your theory has been tested and disproved within 24 hours. China has retaliated with a 34% tariff on US goods.
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But what is it countries are supposed to do? It doesn't seem to be about tariffs themselves but trade deficits. Simply buying large amounts of American goods could be an option for them to get these numbers down but it's not in the power of most of the worst affected countries.
Offer access to your country's natural resources, like was proposed with Ukraine?
Make direct investments into American manufacturing like Taiwan?
I expect that the deals reached by each country will look different, with the outcomes being the result of some creative horse-trading.
Now, I'm also concerned that this will result in an overly complex patchwork of trade deals and potentially contradictory obligations between various countries, when the simplest outcome would just be everyone drops tariffs to some agreed-upon maximum and signs on to a treaty to keep them there.
But this is not some historically unprecedented diplomatic endeavor.
But neither of these deals actually change the trade deficit, which is about goods flow not investment. My point is that the new tariffs should be based on something countries can correct rather than something orthogonal to what the US's problem with them is.
Ya know, I'd actually agree it would be nice to have clarity as to how these countries can respond to quickly get the tariffs dropped, the attempt at opacity seems odd.
But I ascribe that to the mix of goals Trump is pursuing, which is to say he needs flexibility so tying himself to an algorithm means he can't maneuver much.
That's maybe the concerning part, aside from Trump's temperament. He is trying to optimize along a few different dimensions instead of merely seeking one blunt policy outcome.
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They don't have the money to do that. About all they can do is stop exporting.
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The tariffs aren't reciprocal - the "tariffs charged to the USA" column on the poster he held up is a measure of the bilateral trade deficit and has nothing to do with what tariffs are charged on US exports. Vietnam and Israel both cut tariffs on the US, and still got hit. Trump isn't asking Vietnam to cut tariffs, he is asking Vietnam to stop exporting manufactured goods.
Trump may reverse the tariffs in exchange for kayfabe concessions and falsely claim a yuge win (as he did with the first round of Mexico/Canada tariffs), but he hasn't articulated any demands for real concessions that other countries are in a position to make.
At the risk of speculating TOO much, its what you might expect from a "Door in the Face" negotiation tactic.
Which Trump absolutely has employed in the past.
As I said if he's too temperamental to actually negotiate, articulate demands, make some concessions, and reach a deal then yeah, we're in trouble.
We'll probably be getting the first whispers of offers and counteroffers over the weekends. The administration has been much more leak-proof (Issues with Signal chat notwithstanding) and moving much more quickly this time around, indeed the details of the tariffs didn't leak in advance, hence it catching many by surprise! It's absurd to assume there's not a lot of active discussion happening behind closed doors already.
But I think that a guy who knows he's only got about 3 years to impose as much of a policy impact as possible (probably less than 2 if the midterms don't go well) is going to be more aggressive up front.
On this basis literally anything Trump does can be explained as a brilliant negotiating tactic. If your aim is just to induce lower tariffs from foreign nations, why not actually base your tariffs on the real rates of other nations and not this balance of trade nonsense? There are plenty of countries with lower average tariff rates than the US who have nevertheless been hit - what precisely is Trump trying to achieve there if his aim is reciprocal reductions?
Gunboat diplomacy is brilliant negotiating tactic if you have gunboats and the other side don't. Now I think it is stupid for trump to try and fight so many economic blocs at once. He should have chosen EU or China for destruction and let Vance finish the other in 4 years. Not both at once.
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Yes.
He wrote a book on this. To the extent you believe the words on the page, you can use it to make insights into his mind and his preferred strategies. He's not some completely mysterious, inscrutable chaos demon, but when people react to his actions with such alarm, its easy for him to build a reputation as one.
We can make judgments based on his behavior during his first term, which so many people seem to treat like ancient forgotten history.
I AGREE that you can't pretend every Trump move is a 4-D chess move that will inevitably result in whatever his desired outcome is. I prefer to model him as a shark, with finely-honed instincts for survival in his cutthroat environment.
But it would be stupid to assume he does things without some goal or strategy in mind, after all he's successfully outmaneuvered many experienced political actors and avoided a multi-pronged attempt to send him to prison to win a national election. Twice. (maybe three times, but that argument isn't worth rehashing). Other than him just being the favorite of the Gods, the best explanation is he is more canny than his opponents want to give him credit for, or his opponents are genuinely that incompetent.
Here's a question: can you point out any actions he took in the foreign relations arena, from his first term, where he straight up 'lost?' i.e. where he capitulated with absolutely nothing to show for it or maybe even gave something up?
Because he racked up some actual wins. People said moving the U.S. embassy to Jerusalem would trigger chaos and reprisals from the Muslim world. Instead it went smoothly, and many Arab countries lined up shortly thereafter to improve diplomacy with the U.S. and Isreal!
I mean, the Middle East did eventually fall back into increased chaos... during Biden's term.
Oh, and remember when he Went to North Korea, the FIRST President to do so, and got them to at least verbally agree to denuclearization talks?, and NK has been substantially less uppity since then?
Apparently that's still their stated intention!
Look man, I'm trying my best to disentangle my feeling about Trump's persona and actually look at his actions and their outcomes, and end of the day, the guy usually brings home some kind of bacon when he's locked in, no matter how distasteful you find his tactics.
So we could just pretend that THIS time he's acting completely out of pocket and flailing around randomly or see where it actually goes. Yes, there's some cause for concern! Trump can be temperamental! But I'm also modelling the other countries in this situation, and it seems obvious they almost all have good reasons to reach some kind of deal in the very near future, and failure to even try to do so would be irrational on their part! I don't think they're irrational, so I think the pressure from Trump will get them to the table, at least.
No he didn't. The man who wrote the book has admitted his share of fault in building the myth that the man who bankrupted multiple casinos and has to give personal guarantees on commercial mortgages because his credit is shot is a successful businessman.
He surrendered to the Taliban. The surrender agreement was timed to go into effect after the election, meaning that he got to blame Biden, but it was Trump's deal.
Has North Korea actually taken any steps towards denuclearisation, or did they just offer Trump a photo op? Trump has a demonstrated pattern of kayfabe gunboat diplomacy where he threatens to harm another country and then doesn't do so because they announce something that doesn't cost them anything or deliver any actual benefit to the US - for example the first round of Canada tariffs which were dropped in exchange for Trudeau reannouncing a border security package he had already announced in November, or 1st term Trump relaxing tariffs on China in exchange for a non-binding promise to buy more American soybeans.
Did you read your helpfully provided Wiki link? DITF is about making a big ask which you know is going to be rejected in order to anchor the following smaller ask as reasonable. Trump hasn't made an ask - the tariffs are not, in fact, reciprocal, and the countries they are being imposed on know this even if the US public don't. If we are using feet and doors as our preferred metaphor, Trump's tactics here are banging the door down with a battering ram while shouting "Make me an offer, motherfuckers!" There isn't a name for that particular approach to negotiating, because it is retarded.
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There's nothing to negotiate, though. If he'd cited other countries' actual tariffs and trade barriers, including a bunch of dubious ones, there's be something to discuss. But he's citing the actual balance of trade, and, especially with the poorer countries like Vietnam, there's nothing good to do about that. You can only increase US imports (which the E.U. might be able to do but won't, but e.g. Vietnam practically cannot because they're too poor), or decrease exports to the US (which is the bad outcome)
Or potentially agree to grant access to your country's natural resources, or make investments directly in American manufacturing.
Like Ukraine and Taiwan, respectively.
https://www.reuters.com/world/europe/putin-suggests-temporary-administration-ukraine-end-war-2025-03-28/
https://apnews.com/article/taiwan-us-tsmc-chips-investment-71d3aeb2bc403a92ce8eccdd8c51c0c8)
Now I actually would NOT like an overly complex patchwork of trade deals.
I'd prefer the world where everyone drops tariffs to some agreed-upon maximum and signs on to a treaty to keep them there.
As I intimated upthread, if these countries do NOT come to the table to attempt negotiation, I will have to seriously rethink my model of the world at large.
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And! Vietnam had already made recent cuts to tariffs on U.S. goods (liquefied natural gas cut from 5 percent to 2 percent, automobiles from a range of 45-64 percent to 32 percent, and on ethanol from 10 percent to 5 percent). The carrot they got from this effort? A 46-percent tariff on their goods.
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GP said:
Safer not safe. Bonds will continue to grow in nominal dollars, where stocks could drop 50%+.
As much as I hate the tariffs, this is surely unlikely because if this looked like happening at all enough Congressional Republicans would turn on Trump to step in. I mean that would be 1932 levels of political disaster for the Republican party if this actually happened.
I sure hope so, but that's about the size of the 2000 and 2008 crashes, so it's not inconceivable.
Yeah but there was nothing anyone could do to stop those once it became clear what was happening, whereas if there's a recession now it will be blindingly obvious what is going on.
That sounds reasonable, but the market often isn't. In fairness, my portfolio composition is still the 100% VFFSX it's always been, and I just chunked my whole bonus into it, so \shrug.
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