One good explanation is that Trump is using the tariffs to profit.
Step 1: Announce a massive tariff, causing the markets to plummet.
Step 2: With stock prices down, Trump and his minions scoop up cheap stocks.
Step 3: Announce a temporary roll-back of the tariffs, causing the markets to rally.
Step 4: Trump and his minions sell stocks and take their profits.
Step 5: Rinse, repeat.
An alternative explanation is that Trump has poor impulse control and has a deep-seated need for attention, so he throws out massive numbers for tariffs. Then, stocks plummet and bond yields rise, raising grave concerns about the financial stability of the U.S… Anyone in his administration with any inkling about economics panic, warn him of the potential for financial collapse and the end of his regime. Fearing for his own future, he then walks back the tariffs in an effort to attempt to mitigate the harm he has caused.
Honestly, I don’t know which it is, but what I do know is that this tariff merry-go-round is not sustainable, and eventually the U.S. will lose all credibility and the money pulsing through our markets will seek saner grounds elsewhere.
Trump is dead serious about the tariffs. He’s been dead serious about tariffs for pretty much his entire adult life. This obsession goes back decades. Yes, people are opportunisticly using the chaos to profit, but the chaos is not the plan, just a side effect of Trump’s total inability to plan.
He’s using tariffs as a sword to show off his power.
Tariffs is pretty much the most dangerous non-military weapon that the President can use without any legislative action. You are correct that his goal isn’t chaos itself, but we would be remiss if we don’t understand why Trump is using them.
Trump not only wants to look powerful, he wants to feel powerful. He is like a kid who knocks someone else’s blocks down so that people can see he’s in charge. Through his eyes, he sees someone else’s suffering from his actions and then he can see the pain of those people as they look at him in disbelief. Trump is using tariffs as a stick to cause panic in those countries so that he can see them grovel at his feet.
That’s why he doesn’t care that it hurts his supporters. I would go so far as to say he wants his supporters to be hurt so that they can know that he’s in charge.
This is authoritarianism. This is about him. Even if whatever trade deals come out of these tariffs are worse than they were before him, he claims victory because he forced the other side to the table.
Well put. We’re in agreement on all of this, and understanding why Trump is so obsessed with tariffs helps to explain why he is so thoroughly confused about what exactly his tariffs are supposed to achieve. They are, simultaneously, a means of raising government income, a means of repatriating manufacturing, and a means of forcing other countries into more favourable trade terms (any careful examination shows that each of these objectives instantly nullifies the other two; it literally cannot be the case that more than one of these is true). The reason he’s so confused is because he starts with the use of tariffs as his desired outcome and then post-hoc justifies it with whatever reason he’s been given most recently. He wants to force other people to the table, yes, but he also wants to bring manufacturing back, and he also wants to cut taxes and replace them with tariffs, because really he just wants tariffs to be a thing that he does, that succeeds by some definition. The actual definition of success is irrelevant.
Spot on. I’ll add that Trump not only wants to see other countries panic and grovel, he wants U.S. CEOs to panic and grovel at his feet. Hence his feud with Tim Apple and threats to ramp up tariffs solely on i-phones.
But has he even forced anyone to the table recently? Last time Europe said counter tariffs, then China flatout said no, and now Europe is flatout saying no as well. Trump is practically a crazy man yelling at people across the street at this point.
Mexico and Canada famously came back to the table only for Trump to renegotiate a deal that they both were already going to do.
I honestly haven’t kept track but it wouldn’t surprise me if some of the smaller countries that are dependent on US sales have renegotiated their deals.
The yield is the interest rate paid on the bonds issued. As the U.S. becomes a worse credit risk, investors demand additional interest to compensate for the risk. Existing bond values tank, because they were issued at a lower rate, and accordingly are paying less than bonds currently issued. Here is an archive link to a recent Economist article discussing the issue.
One good explanation is that Trump is using the tariffs to profit.
Step 1: Announce a massive tariff, causing the markets to plummet.
Step 2: With stock prices down, Trump and his minions scoop up cheap stocks.
Step 3: Announce a temporary roll-back of the tariffs, causing the markets to rally.
Step 4: Trump and his minions sell stocks and take their profits.
Step 5: Rinse, repeat.
An alternative explanation is that Trump has poor impulse control and has a deep-seated need for attention, so he throws out massive numbers for tariffs. Then, stocks plummet and bond yields rise, raising grave concerns about the financial stability of the U.S… Anyone in his administration with any inkling about economics panic, warn him of the potential for financial collapse and the end of his regime. Fearing for his own future, he then walks back the tariffs in an effort to attempt to mitigate the harm he has caused.
Honestly, I don’t know which it is, but what I do know is that this tariff merry-go-round is not sustainable, and eventually the U.S. will lose all credibility and the money pulsing through our markets will seek saner grounds elsewhere.
Trump is dead serious about the tariffs. He’s been dead serious about tariffs for pretty much his entire adult life. This obsession goes back decades. Yes, people are opportunisticly using the chaos to profit, but the chaos is not the plan, just a side effect of Trump’s total inability to plan.
He’s using tariffs as a sword to show off his power.
Tariffs is pretty much the most dangerous non-military weapon that the President can use without any legislative action. You are correct that his goal isn’t chaos itself, but we would be remiss if we don’t understand why Trump is using them.
Trump not only wants to look powerful, he wants to feel powerful. He is like a kid who knocks someone else’s blocks down so that people can see he’s in charge. Through his eyes, he sees someone else’s suffering from his actions and then he can see the pain of those people as they look at him in disbelief. Trump is using tariffs as a stick to cause panic in those countries so that he can see them grovel at his feet.
That’s why he doesn’t care that it hurts his supporters. I would go so far as to say he wants his supporters to be hurt so that they can know that he’s in charge.
This is authoritarianism. This is about him. Even if whatever trade deals come out of these tariffs are worse than they were before him, he claims victory because he forced the other side to the table.
Well put. We’re in agreement on all of this, and understanding why Trump is so obsessed with tariffs helps to explain why he is so thoroughly confused about what exactly his tariffs are supposed to achieve. They are, simultaneously, a means of raising government income, a means of repatriating manufacturing, and a means of forcing other countries into more favourable trade terms (any careful examination shows that each of these objectives instantly nullifies the other two; it literally cannot be the case that more than one of these is true). The reason he’s so confused is because he starts with the use of tariffs as his desired outcome and then post-hoc justifies it with whatever reason he’s been given most recently. He wants to force other people to the table, yes, but he also wants to bring manufacturing back, and he also wants to cut taxes and replace them with tariffs, because really he just wants tariffs to be a thing that he does, that succeeds by some definition. The actual definition of success is irrelevant.
Spot on. I’ll add that Trump not only wants to see other countries panic and grovel, he wants U.S. CEOs to panic and grovel at his feet. Hence his feud with Tim Apple and threats to ramp up tariffs solely on i-phones.
But has he even forced anyone to the table recently? Last time Europe said counter tariffs, then China flatout said no, and now Europe is flatout saying no as well. Trump is practically a crazy man yelling at people across the street at this point.
Mexico and Canada famously came back to the table only for Trump to renegotiate a deal that they both were already going to do.
I honestly haven’t kept track but it wouldn’t surprise me if some of the smaller countries that are dependent on US sales have renegotiated their deals.
Except the bond yields also tank because everyone can see that we’re maxing out the credit cards
The yield is the interest rate paid on the bonds issued. As the U.S. becomes a worse credit risk, investors demand additional interest to compensate for the risk. Existing bond values tank, because they were issued at a lower rate, and accordingly are paying less than bonds currently issued. Here is an archive link to a recent Economist article discussing the issue.
But those bonds also prop up the value of the dollar so if existing investors decide the bonds are no longer worth holding onto…