Trump's Tariffs Wipe Out over $6T on Wall Street in Epic Two-Day Rout

https://www.wsj.com/finance/stocks/u-s-stock-futures-fall-further-after-china-retaliates-against-trump-tariffs-3be33fa7

by perihelions • 1 year ago

446 732 1 year ago

wsj.com

jmholla• 1 year ago

https://archive.is/XMnlS

lenerdenator14• 1 year ago

I was looking at used cars on Carmax about two or three weeks ago. I looked again today. They're another $1-2k.

This is the shareholder/political class trying to eat their cake and have it too. Pay people a stagnant wage for 40 years while taking most of the surplus value and dedicating it to equities, then pretend to do something about it, but in a way that passes the buck to the people who have been making a stagnant wage so that the wealthy don't incur actual losses.

Share prices will be brought back up through layoffs.

gU9x3u8XmQNG4• 1 year ago

100% agree with this perspective. It’s surprising how few others seem to note this.

Thanks for posting it.

anon291• 1 year ago

And what is the solution?

JackYoustra21• 1 year ago

Why would shareholders want to tank the value of their shares?

VirusNewbie2• 1 year ago

Are you claiming that the 'shareholder class' would rather depress the economy and wipe out trillions in shareholder value...over inflating the economy and lowering interest rates?

bitmasher92• 1 year ago

Agreed. It’s very rare to get a group of shareholders to agree that the price of their stock should go down.

SJMG• 1 year ago

That is what I believe I also just read... I was just telling my girlfriend that Hackernews is the smarter, tech oriented reddit. Better go fix that.

giraffe_lady• 1 year ago

Not "the shareholder class" but the actual super wealthy, those few thousand individuals at the top.

A way I have recently seen this put is that if you have a billion dollars another billion doesn't do that much for you in real terms. But if you're a billionaire who likes to sexually harass your child's nanny, you would much prefer she be desperate and precarious rather than economically secure or with a lot of other viable options. This is one crude example but the dynamic is in play in many other situations.

So idk, it's plausible to me that the class interests of the wealthy extend beyond mere wealth accumulation. I can imagine circumstances where they would be willing to give up some of their absolute wealth in exchange for greater relative wealth.

yongjik• 1 year ago

Agree. This sounds like the simplistic "billionaires were the problem all along" take, which is, TBF, not that different from Trumpism. The only difference is the choice of enemies who are responsible for all our problems.

clipsy2• 1 year ago

Every major financial crisis since (at least) the 80's has resulted in a "K shaped recovery" in which the 99% are forced by circumstance to sell off assets to the wealthy at bargain prices.

JackYoustra21• 1 year ago

...or they could've just laid off and gotten even more.

maybe, just maybe, trump and the people around him are actually just crazy and there's no big conspiracy.

zip12344• 1 year ago

It's the simplest explanation and also the one with the most evidence

lenerdenator14• 1 year ago

I don't think of it as the classic conspiracy in the sense of a La Cosa Nostra meeting in Apalachin.

It's more like a shared set of ideas, and those ideas are crazy, at least if you don't have a net worth that is enough to ride out all but the most historic of social upheavals. And part of avoiding that most historic of social upheavals is not laying off people for the sole profit of it, at least not without a good excuse.

ants_everywhere4• 1 year ago

while taking most of the surplus value

Just FYI, "surplus value" refers a concept Marx made up that is considered in mainstream economics to be an error in reasoning.

Even making sense of it requires buying into the labor theory of value that Marx took from Adams and Ricardo, but which is not taken seriously anymore.

That doesn't detract from the substance of the point you're making. But it's a little like reading someone say their house is hot because of all the phlogiston. It detracts from the force of the argument.

dcre• 1 year ago

You haven’t said anything.

JeremyNT• 1 year ago

It amazes me the contortions some people go through to maintain the belief that this administration is competent.

Occam's razor suggests that they just have no idea what they're doing.

lenerdenator14• 1 year ago

These people all have a shared idea of what they're doing, and since they sit in financially-backed echo chambers, those ideas eventually turn so absurd that they appear to have no idea of what they're doing.

nitwit0052• 1 year ago

I'm fairly convinced it's easier feel like there is some plan, even if a bad or sinister one, than things being in a state of genuine chaos.

You occasionally see the people jumping between different ideas as to what the underlying plan is, once events no longer support their initial idea.

EasyMark2• 1 year ago

This regime is one Man, tRump, who surrounded himself by yes men. He doesn't have any sort of negative feedback cycle now to keep a cap on how much damage he can do to the economy. Either they owe him something, they are part of the MAGA cult, or they stand to make money by bending the knee (like Bezos and Zuck and Husk).

agubelu• 1 year ago

Many people share the worldview that those who are higher up in the hierarchy of power are the most capable or deserving of such positions.

So when those leaders start acting in a way that is irrational or clearly damaging, there's a pretty strong cognitive dissonance. There are two ways to deal with it:

- Assume that, since they're the higher-ups, they must know what they're doing. Therefore there must be some sort of plan that you're not able or supposed to understand.

- Reassess the notion that the higher-ups are always the most capable or deserving people, and assume there's a chance for inept people to access positions of power.

The first one is the path of least resistance, since it doesn't require challenging a fundamental pillar of your worldview.

fulladder5• 1 year ago

Not going to comment on the politics, but I'd point out that recession odds on Kalshi are currently 64% and 58% on Polymarket [1,2]. In other words, recession in 2025 is more likely than not -- though far from guaranteed.

My thought relevant to HN is that either way this is likely to decimate venture capital and startups, at least in the short run. Venture capital funds come from limited partners like pensions and endowments, and the professionals I know are all shifting away from growth stocks and into value, international and bonds. VC is already in a drought (except for AI) and now my guess is that it's going to get worse. So many VCs I know have started only in the last 15 years, so they have never seen a real recession like 2009 while working in venture.

[1] https://kalshi.com/markets/kxrecssnber/recession

[2] https://polymarket.com/event/us-recession-in-2025

ijustlovemath2• 1 year ago

Anyone who's played cards or an MMO know those are insanely good odds -- virtually guaranteed!

pinkmuffinere2• 1 year ago

virtually guaranteed!

I feel like you might be confused about the statement. One platform gives 58% odds, the other gives 64% odds. This is obviously high, but also very far from virtually guaranteed. In 100 trials, we’d expect recession in ~60 events. There is no secret math hidden here, it’s just that.

Terr_4• 1 year ago

X-Com: Enemy Known, where you're forced to play with a certain squad leader who is always either out of Time Units, panicking, or mind-controlled, and a 99% hit chance is not really 99%.

NekkoDroid• 1 year ago

And if you play Pokemon you know anything not 100% is 50%.

xnx2• 1 year ago

Those odds must incorporate some expectations that recent actions get reversed (and quickly!). Recession is guaranteed if new rules stay in place.

biophysboy3• 1 year ago

Reversing the actions would require either a 2/3 veto proof majority or Trump realizing he is wrong, both of which will probably take a while...

nwatson2• 1 year ago

It's too late, these actions have shown how truly fragile and arbitrary USA policy is, and extreme anti-current-rules-based-order views are rampant in USA politics. Policy will be volatile and no multinationals or governments will want to deal with the chaos.

darksaints2• 1 year ago

Good. Silicon Valley collectively sold their souls to Saudi Arabia, and put their full weight behind Trump because that’s what Saudi Arabia wanted, and now they are gonna get what they deserve. I hope their wealth is destroyed to the point of needing to care about Social Security and Medicare.

brailsafe3• 1 year ago

What souls did Silicon Valley ever have, c'mon srsly

ripped_britches• 1 year ago

Financial markets are generally better indicators of overall sentiment than betting sites but point taken

csomar• 1 year ago

The betting site did predict Trump will win the election.

fulladder5• 1 year ago

Actually, that's not what I've found. When I have compared betting sites like Kalshi and Polymarket to the implied probability of Fed rate cuts in the interest rate futures market, I have found them to match up and move in lock step with each other. (I don't work for any of these companies and I don't use the betting sites myself; just stating my observation.)

energy1234• 1 year ago

This is basically 1 - P(tariffs get repealed).

jmye2• 1 year ago

My thought relevant to HN is that either way this is likely to decimate venture capital and startups, at least in the short run.

Yeah, seemed like the IPOs were really getting going again, but I think that likely dries right up, too.

Unless you figured out how to materialize rare earths out of thin air, or spin up an automated factory in six months, it’s hard to imagine anyone will be looking to give you money.

fulladder5• 1 year ago

It's already happening. Klarna canceled their IPO. So did StubHub. I think it's a safe bet that all planned IPOs have been canceled for the time being.

lwansbrough• 1 year ago

So where is the bottom?

I don’t actually believe there is one, I’m just curious to hear what other people think.

UncleOxidant• 1 year ago

Sure, there's a bottom, but we're not close to it yet.

WorkerBee28474• 1 year ago

It could be down another 50%, it could already have passed. Historically, troughs in P/E ratios have occurred all over the place.

https://www.macrotrends.net/2577/sp-500-pe-ratio-price-to-ea...

Spooky233• 1 year ago

This weekend is going to determine that. There’s a pretty blood chance we’ll see the real crash Monday.

hackly4• 1 year ago

Only one man knows the answer to this question.

outer_web10• 1 year ago

He doesn't know either.

whatever14• 1 year ago

The vision is to convert the American economy from one with infinite profit margins (ads and software) to a manufacturing one with single percentage profit margins and limited growth potential due to tariff environment.

So I think a 80-90% drop in the overall market value is justified.

khazhoux• 1 year ago

I don't think these tariffs would affect software. ?

neogodless2• 1 year ago

I don't know the machinations at the level of Trump, the billionaires, and the GOP senators and representatives. Depending on what's going on, those in congress will never do their job.

OR, if they just believed in Trump's influence on votes in "free and fair elections", they might eventually hit a breaking point. Because if they let this happen unchecked, they will be voted out, 100%. (Not to mention everyone they know will have lost money, many more jobless, hungry, etc.)

Being complicit in triggering a great depression while being an elected official cannot be good for your career long-term.

jampa• 1 year ago

As someone who sold all my stock in January and invested into bonds, I think we are far from it, but the bottom it will depend if the tariffs are lifted in the next days. The worst case scenario would be tariffs being kept and the FED eventually losing independence.

I think it is safe to say that we probably will go back to pre COVID levels, since the trust in the stock market is eroded, but this time with high interest rates.

blatantly2• 1 year ago

Probably April or May 2025. I'm bullish still. But then I'm not all US stocks anyway.

jarym3• 1 year ago

It is interesting that tech (Nasdaq) is the hardest hit here. The real engine of US exports for recent decades and likely to be a casualty as other countries plan their trade-war retaliation.

And that's not even taking into consideration what might happen in the domestic market should there be a real recession - consumers will cut down their consumption and that'll filter back to lower corporate earnings.

In previous economic stumbles, US exports abroad were able to buffer domestic weakness. Probably not anymore...

xh-dude• 1 year ago

Petulantly, I’d observe Trump hates or doesn’t believe in knowledge economies. He’s delivering pain to a lot of people in my circles.

For all that, a strategic goal of ensuring trade is sustainable is probably worth sane discussion.

chuckadams• 1 year ago

Trump hates or doesn’t believe in knowledge

shortened that for you

wtcactus• 1 year ago

This all tariff imbecility created solely by Trump it’s atrocious, still, if EU response is to hit the main players in Nasdaq - where there are a lot of chip producers necessary for the ongoing AI revolution - we are just shooting ourselves majorly in the foot.

Surely there are much better companies for the EU to apply directed tariffs. EU absolutely has their weaknesses, but giving blunt responses (like China just did and put tariffs on everything) is not really our way. Expect EU answer to be well crafted and directed at very specific areas.

Terr_4• 1 year ago

created solely by Trump

Nitpick: No, the entire Republican party is at fault here.

They willfully ignored every warning, and attacked the people giving the warnings. They promoted him, protected him in two impeachments, eventually re-elected him, and actively confirmed his cabinet of sycophants instead of requiring some adults in the Oval Office. Then they took specific steps to block anyone from challenging his "national emergency" against our neighbors, by declaring that the rest of the year simply "doesn't count" for the 15 day timer in the original legislation. [0]

Some Republican legislators may have had hard-choices for securing their own re-elections, but they still chose this route.

[0] https://thehill.com/homenews/house/5189410-house-gop-democra...

cgio• 1 year ago

I would argue that China is just playing the game and EU should do too while it lasts. No time for sophistication in a street fight, this is not chess.

eagleislandsong2• 1 year ago

giving blunt responses (like China just did and put tariffs on everything)

It's incorrect to describe their response as "blunt". As someone who follows mainland Chinese media I can assure you that their policymakers have thoroughly prepared themselves for years. They even foresaw in 2021, after Biden took office, that Trump would become President again, unless he was assassinated. (Yes, they foresaw the assassination attempts as well; and no, they did not orchestrate these attempts -- if they did, Trump would be dead already.)

The Chinese have much more foresight than you seemingly give them credit for, unless I'm misinterpreting your words (in which case I apologise). On the other hand, European leaders have been extremely geopolitically infantile.

nimos3• 1 year ago

Almost all the trade deficit numbers being thrown around by the US administration don't include trade in services which the US generally has a large surplus. A lot of that is very high margin tech SASS/advertising.

If this continues it seems like this could be a "digg->reddit" type moment for US tech. In some ways it is easier for a lot of people to leave facebook than it is for a single person. If you look at gross margins there is a lot of room for competition, though network effects make that competition very difficult. Maybe this is the catalyst for competitors to break in.

victor1062• 1 year ago

Almost all the trade deficit numbers being thrown around by the US administration don't include trade in services which the US generally has a large surplus.

Then why don’t other countries tax US services? I don’t even hear this from anyone in the media too

FiniteField• 1 year ago

What about these tariffs would cause the millions/billions of non-paying users to stop using the free service that is facebook?

eclipticplane2• 1 year ago

Tech was easiest to export cross border. You can export tech through culture, and the USA has been a powerhouse of every major technical cultural channel for the last 50 years.

pizzly• 1 year ago

My comment may be naive but digital services do not have tariffs. Given the unpredictable manner of Trumps tariffs wouldn't this encourage more startups and companies to focus on exporting digital services instead of focusing on physical goods? If so there could be minimal increase in goods produced in US and instead US consumers just absorb the price rise of goods with the consequences that arise from that.

acdha3• 1 year ago

The other side of it is the lost trust in American tech. That’s most prominent in the military debates around whether other countries can rely on their expensive hardware working if they run afoul of American policy, or if the president is looking for leverage to extort a mineral deal, but it’s also highly relevant for the civilian side. For pretty much as long as we’ve had computers, most other countries have trusted hardware made by American companies running operating systems and applications made by American companies. Now everyone has to wonder what kind of espionage or sabotage would be possible if those companies were pressured – or whether the guys standing on stage would even need to be pressured. Suddenly, giving Google the ability to push code onto most of the devices in the world looks less like a security win and more like a risk - and it’s famously hard to establish trust without the rule of law as the foundation. Snowden started it but most allied governments were confident that there were limits in a way which is a lot harder to believe now.

I am expecting that 2024 will be seen as the peak for American tech companies: the longer this goes on, the more competition they’ll have with advantages they can’t match in foreign markets – especially if many of the immigrants who worked at those companies decide to start companies after leaving.

heigh6• 1 year ago

I think since the Snowden revelations it’s pretty clear there is no holds barred in terms of intelligence overreach from practically every angle and state.

What’s happening now, with the tariffs, is really wild (but ultra dumb imho) territory…

heigh6• 1 year ago

So in short, the trust with tech is already way gone. And should be. For everything else? Well trump just blew that up

beloch2• 1 year ago

This is an inherently political subject, but I would appreciate a dispassionate argument explaining how this could be even remotely good for the U.S.'s economy in a way that is light on MAGA ideology and doesn't simply claim the overwhelming majority of economists are dumb. I'm simply not seeing even a glimmer of a possible upside right now. I see even less possibility of an upside for those of us North of the border or pretty much anywhere else on the globe.

fulladder5• 1 year ago

The belief of Trump and his allies is that the last 40 years of free trade has been extremely favorable to college educated "elites" and extremely unfavorable to the working class. They see foreign trade as having hollowed out American manufacturing, and therefore they see the shutting down foreign trade as a way to reverse this decline. While they are aware that doing so will hurt college educated professionals, they don't care because they feel those people have had it too good for too long.

techpineapple2• 1 year ago

the irony is I don’t think there’s any way this hurts the college educated more than the working classes, as most things do.

lenerdenator14• 1 year ago

I think that's the belief of his voters in the Upper Midwest, but not necessarily Trump himself. He's the college-educated elite. He's playing them like a fiddle. He knows that they will absorb the damage from this, not the elites, who are far more connected than they are college educated.

ViktorRay3• 1 year ago

But these beliefs have been core to the American left for decades. Even left wing intellectuals like Noam Chomsky have attacked the neoliberal trade agreements I think.

Trump’s populist right wing fans have adopted traditionally left wing views. What’s surprising is so many left wing people are supportive of free trade when they were against free trade during the Reagan era.

api5• 1 year ago

I get it and even sympathize, but I don’t think it will work for three reasons.

First is the uncertainty they are creating. Factories take a long time to build and staff and cost millions to billions depending on size and industry. Who in their right mind is going to invest that to build factories that are only economically viable under a tariff regime that could vaporize after the next election? Or if Trump changes his mind? Which he has a history of doing. Chaos like this is anathema to that kind of long term investment.

I am not opposed to the idea of trying to rebalance trade and repatriate manufacturing. Not at all. But it can be done skillfully, strategically, and without panicking global markets. This economic pivot is less well planned and executed than Biden’s withdrawal from Afghanistan.

The second reason it won’t work is that there’s way more competition today. After WWII during those glory days of US manufacturing everyone talks about Europe was destroyed and much of Asia had not yet industrialized. We were not just selling to a domestic market. We were selling to a world that had no alternatives. That’s just not true anymore.

The third reason it won’t work is that these tariffs are going to be massively inflationary and that will wipe out any gains the working class gets from more or better jobs.

Meanwhile they are doing nothing to address cost disease in housing, health care, or education.

Housing is the big one and I haven’t heard a peep. Instead of using Federal leverage to tilt at windmills like trans people using bathrooms, they could use that power to push states to regularize zoning and allow more home construction. “No more Federal highway funds unless you implement a plan to reduce housing costs.” Now that would help the working class and the young. It would also help things like the birth rate, which I know a bunch of people on the right are freaking out about. Reducing the #1 cost barrier to family formation would help a lot.

In short I think they’re doing a terrible erratic job of implementing a dubious strategy. This is going to fail, and we will all get poorer as a result. China will be the largest beneficiary since even more of global trade will now shift to them. They are now seen as stable, responsible, and reliable while we look like a basket case.

JackYoustra21• 1 year ago

Sure, it's just that though, a belief. The vast majority of the poor have prospered from free trade; indeed, the costs they complain the most about (health, education, housing) are the biggest categories of things that _can't_ be traded.

jghn• 1 year ago

The belief of Trump and his allies

Trump and his allies are all college educated elites.

mathfailure14• 1 year ago

Where did you take this from? Trump is not from working class. Working class might've been his 'platform' for the election, but he's already elected now, he basically has no incentive now to fight for the rights/interests of his voters, he has his own wallet that needs to finally get filled. Unless you think he really aims for a 3rd term.

qiqitori• 1 year ago

The late night show industry is making record profits.

ViktorRay3• 1 year ago

In the long run it could lead to more fair trade deals.

Today’s episode of Newshour at the BBC World Service had a conversation between a BBC journalist and a German CDU politician where they talked about how the tariffs on cars from Germany entering America has historically been lower than the tariffs on cars from America entering Germany. The CDU politician was telling the BBC that he hoped maybe a resolution for all of this would be both America and Europe lowering their tariffs to zero.

That was the hope of that politician in the long run though. In the short run the politician was in a sad mood because he felt things economically are going to be bad for everybody.

jliptzin• 1 year ago

Trump himself has said the tariffs are to raise revenue in order to get rid of income and corporate taxes. But now they’re also a negotiating tool to eventually remove all tariffs with our trade partners? That makes no sense

bawolff9• 1 year ago

I think that is unlikely. Trade deals require precitability and trust. Nobody wants to sign a trade deal if it might not be worth the paper its written on next week.

I would expect that it would make future trade agreements more "unfair" to usa because other countries will price in a risk premium to cover america's unpredictability.

energy1234• 1 year ago

These tariffs don't create an incentive to strike fair deals because they're not based on trade barriers, they're solely based on trade deficits.

zip12344• 1 year ago

What is a fair trade deal? Levying a 40% tariff on a country that had a 1.5% tariff? There's not much to gain and a LOT to lose

techpineapple2• 1 year ago

If you want someone talking intellectually about the global trade situation, Oren Cass’ interview with Jon Stewart was pretty good.

https://www.youtube.com/watch?v=vgEQeLR-M0g

But I do think that a logical assessment undervalues the notion that this is an emotional/intuitive. I don’t think Oren Cass’ very interesting intellectualization of the problem will actually help you predict what Trump will do.

But in the emotional piece - He’s talked endlessly about how America is getting screwed, and his tariff calculation was based pretty directly on trade deficit calculations.

jimmyjazz14• 1 year ago

I wouldn't say its good for anyone, but it is probably worse for many of our trading partners so they would, in theory, make moves to negotiate with the US to skirt the tariffs. I don't think it will ultimately have been worth it in the end but time will tell.

jarym3• 1 year ago

My best understanding of the administration's psyche is that they're determined to have more manufacturing happen in the US - regardless of the economic impact.

It still doesn't make sense though - there's a reason sneaker makers like to have kids in places like Vietnam make shoes for a few cents per hour. It's because no one in the US would work gruelling hours for such little pay!

POTUS wants to 'level the field' but I'm not convinced it's dawned on him that as leader of one of the wealthiest nations on Earth, 'levelling' will mean the US getting poorer.

energy1234• 1 year ago

More manufacturing will move to the US, but they're about to get a real-time lesson in Econ 101 in the form of the destruction of their country as they abandon comparative advantage and achieve autarky, joining the illustrious club of North Korea.

sorcerer-mar4• 1 year ago

Also would require near-certainty that these conditions will last far, far longer than 4 years (or 4 days, per earlier tariff tantrums). Especially for the most important industries like semiconductors, steel, oil, which require massive capex.

pfannkuchen• 1 year ago

They used to work that way in the US! Then came the labor protections.

Labor conditions are a prisoners dilemma. Individuals in a location can’t really choose to opt out of poor labor conditions if that is what exists there. That is why it took a lot of activism in America to change the labor conditions.

So right now we are exploiting people in places that don’t have the same protections. The comparative advantage of those places is in allowing suffering, not in the people actually being more okay with the conditions.

JackYoustra21• 1 year ago

no, they just like tariff. Listen to trump: he thinks the trade deficit is the fiscal deficit if you listen to the words he actually says

donnachangstein2• 1 year ago

It's because no one in the US would work gruelling hours for such little pay!

There are entire towns in the US where nearly everyone is unemployed since the manufacturing dried up.

I would happily pay a few more dollars more per sneaker if it meant those people could have a job, and it meant my purchase went toward making someone's life here better.

levelling' will mean the US getting poorer

It was never about being rich (maybe in a silicon valley bubble it is) but these people need jobs not only to live but for personal fulfillment. The fact that you are contributing positively to society.

Not everyone wants to collect welfare or unemployment and do nothing for the rest of their life. It causes serious mental health issues and why the 'opioid epidemic' has ravaged these small former-manufacturing towns.

People are hungry for work because they want to be part of society.

tpetry2• 1 year ago

The problem is more that the companies want to keep their insane profit margin. They could produce in the US, pay workers more and sell for the same price.

But thats less revenue for the company. Less shareholder value. Less bonus for CEOs.

The problem is the hyper capitalism which we have for the past 50 years that every company needs more and more profits.

lenerdenator14• 1 year ago

This is an inherently political subject, but I would appreciate a dispassionate argument explaining how this could be even remotely good for the U.S.'s economy in a way that is light on MAGA ideology and doesn't simply claim the overwhelming majority of economists are dumb.

The slim hope to a voting bloc in the Upper Midwest that maybe, somehow, this will bring back manufacturing.

They've tried everything else; why not this?

We can't simply legally punish the people who shipped the factories off and drove the region into despair, so why not tax the stuff the factories made overseas as a part of the trade-off?

I'm not saying it's a good idea, I'm saying this is their logic.

api5• 1 year ago

I’m from Southern Ohio which was not hit as hard, but I know the attitude well. I call it “rust belt rage.”

I remember during the first Trump election hearing quotes like “I hope he does as much damage as possible” and “I can’t throw a bomb into the White House but I can throw a Trump.” Lots more like that.

The attitude in that region of the country is absolute seething rage. A lot of people from Northern Ohio, Western Pennsylvania, Michigan, etc. would be gleeful if they saw people hanged. It’s that kind of rage.

Imagine what the vibes would be on the West Coast if there was a huge set of policy changes that decimated and liquidated the high tech industries. All those software and engineering jobs just vaporize in a span of 20 years. Places that were once the wealthiest in the country look like failed states and war zones. Everyone who can leave leaves.

Then the media makes you the butt of jokes. Calls you “flyover country.”

mixmastamyk2• 1 year ago

The only positive outcome I can think of is that T and co are trying to scare trading partners into lowering their tariffs in response. Assuming that happens to some degree, T will revert his and then take credit. Then the market will return as well, and we all head off into the sunset.

Likely why it is happening so early in the admin, so we can all forget about it by the end.

irrational2• 1 year ago

I’m pretty sure the only ones it will be good for are the rich. Make the rich richer. They will be able to buy stocks cheaply. They will be able to buy homes cheaply as people lose their jobs and foreclose. They will make the USA into a nation of renters. They will increase inflation and prices of everything so most people will be on the cusp of insolvency so they have to work multiple jobs for lower wages and can never retire. They will decrease education so people won’t be able to recognize the propaganda for what it is. They will disappear dissidents. They will make abortion illegal so people churn out the next generation of wage slaves. They will create false enemies (Canadians, gays, liberals, atheists, Jews, Muslims, anyone not white, etc.) to distract people from the real villains.

JackYoustra21• 1 year ago

The rich have most of their money in stocks, saying they can lower stocks to buy stocks doesn't make much sense

mathfailure14• 1 year ago

I think this might be a move to stop a world war (between Russia and NATO/Europe). If U.S. also leaves NATO any time soon - the chances for a world war would decrease greatly.

bawolff9• 1 year ago

I don't think that makes sense. Wars happen when one of the sides think they can win (and want something). USA leaving nato and reducing trade makes european states more vulnerable. I would expect this to increase the liklihood of war.

Especially in the near term - eventually europe will adapt to the new world order, but in the mean time their is a limited window of opportunity where everything is in flux, which would be a great time to strike.

travisgriggs4• 1 year ago

Yes, the isolationist era that followed World War One clearly calmed the rest of the world, so that the various "expansionist" regimes felt less threatened and just let their neighbors be.

History rhymes with itself.

outer_web10• 1 year ago

Care to explain your rationale? Seems like Russia is in no position to invade any NATO country unless the US leaves the alliance. They've proven themselves wholly outclassed in Ukraine, against a much smaller country with refurb gear.

everforward• 1 year ago

I think in theory it forces the middle class to buy American due to tariffs, which builds a more sustainable lower class at the expense of the middle and lower upper classes.

I think it’s still an overall net negative (dramatically) that sees us become overall poorer and less influential, but I would guess there will be more factory sorts of jobs.

JackYoustra21• 1 year ago

We got the factory jobs already: https://home.treasury.gov/news/featured-stories/unpacking-th...

The deadweight losses from this trade are staggering, several percents of gdp that'll mostly hit people who consume imports (mostly low-end goods so probably poor people)

soared• 1 year ago

If American made prices did not increase too match tariff adjusted foreign made prices that logic would hold. But we know from recent and not so recent history - American made prices some increase, even if they are not impacted at all.

travisgriggs4• 1 year ago

The boundaries of what is politics and what isn't is difficult to suss (for me) these days. I personally do not believe this is good. But I have a theory on why those that do think so.

I'm 54. It follows that I see a number of people my age. I'm churchgoing, as well as involved in a number of clubs (pilots, rowing, legos, etc). So I get to rub shoulders with a decent amount of people. And especially a bunch of older people. Our parents are aging.

I'm just beginning to see how hard these years from here on out have a number of difficult challenges. I've begun writing myself notes that I hope will help me navigate the years ahead. One of the key issues is feeling relevant still. As well as losing your competitive edge. Your formative wisdom is being invalidated and eroded constantly.

Couple that with a period of euphoria that was experienced as post WWII prosperity followed by the cessation of the "cold war" and a surge in population, and you have a group of people that are more in their own generational bubble than historically. There's enough peers to make you feel like you're in the majority. I think many of these people feel like this is good, because it feeds the need for relevancy. It's not uncommon for older people to lash out, somewhat foolishly, as they transit these years. And as cognition decreases, it becomes easier to game people in this age bracket (unless someone has a better explanation for why older people are the best target of scams).

As I visit with many of the older genrations (not all of course), their justifications, when pared back often come down to "this makes me feel relevant again". And attempts to restore "the narrative I have in my head about how life was in the good years".

Just some rambling thoughts, about why some people think this is good. It's less about the money to them, and more about a hope of something gained. Not unlike a terminally ill person blowing a wad of cash on something that they would never otherwise have justified.

It is sad, that it comes at the expense of the younger generations. It breaks my heart actually.

calmbell• 1 year ago

I was shocked to learn that 75-year-old white men supported Kamala Harris at a significantly higher rate than 20-year-old white men: https://www.nytimes.com/2025/03/18/opinion/ezra-klein-podcas... (search for "75-year-old white men").

ViktorRay3• 1 year ago

Hey thank you for posting this comment. It’s a very interesting perspective!

I wonder if a factor is that many of these older folks don’t have grandchildren to the extent older folks of previous generations did.

I don’t know what effect that could have but I know it’s a feeling that troubles many baby boomers. They thought their children would have children by now and in many cases that’s not happening. It can lead to a great deal of sadness.

mightyham• 1 year ago

It is strategically beneficial, for trade agreements, diplomatic leverage and in international conflicts, for a nation to have a strong industrial base, in other words an economy that creates and exports actual physical goods. Tariffs level the playing field in our own consumer economy for American made goods, because without them American manufacturing is competing with countries where labor is absurdly cheap.

JackYoustra21• 1 year ago

American manufacturing by value is at an all time high. The jobs went to automation.

brailsafe3• 1 year ago

My thought today was that aside from the stocks crashing, and aside from any realistic possibility of magically minting new manufacturing facilities, you'd force the price of imported products up in the short term, and prices don't really go back down, so after they go away you'll hypothetically be selling the same products at higher prices that people are now used to, and nothing else needs to happen functionally to increase efficiency or build them domestically. 1) Increase cost of selling imports 2) Crash stock market 3) Buy stocks 4) Remove tariffs 5) Profit

But I don't know wtf I'm talking about.

Spooky233• 1 year ago

Trump has kooky beliefs about tariffs, and his economic guys are yes men.

Economics and science mean nothing to the President. He probably heard some blowhard in a bar 50 years ago yabber about tariffs. He’s an instinctual person, and when he senses danger to himself, he’ll pivot.

I’d guess there will be air strikes on Iran or threats of an incursion into the Mexican side of the border by June.

outer_web10• 1 year ago

Or it's just his newest promise to give voters something for free. Like the wall that was partially built and paid for with DoD funds. He advertises tariffs as free money from other countries. For some reason people buy it.

fzeroracer• 1 year ago

Donald J. Trump lost an auction in 1988 for a 58-key piano used in the classic film “Casablanca” to a Japanese trading company representing a collector. While he brushed off being outbid, it was a firsthand reminder of Japan’s growing wealth, and the following year, Mr. Trump went on television to call for a 15 percent to 20 percent tax on imports from Japan.

“I believe very strongly in tariffs,” Mr. Trump, at the time a Manhattan real estate developer with fledgling political instincts, told the journalist Diane Sawyer, before criticizing Japan, West Germany, Saudi Arabia and South Korea for their trade practices. “America is being ripped off,” he said. “We’re a debtor nation, and we have to tax, we have to tariff, we have to protect this country.” [1]

We're in an Emperor With No Clothes situation and all of his aids have no clothes either.

[1] https://www.nytimes.com/2019/05/15/us/politics/china-trade-d...

alphabettsy2• 1 year ago

He’s shown himself to be deeply motivated by petty slights so that makes a lot of sense.

alaxhn5• 1 year ago

To lay out my own biases

  - I voted for Trump but do not consider myself a strong supporter (I saw it much more of a vote for who you dislike less sort of situation)
  - I don't understand and am not supportive of the approach on Tariffs
  - I am an active participate in what most here would consider right wing politics although I don't find myself aligning on every topic (e.g. I am supportive of the abortion laws in California) so I tend to hear a lot of the chatter "from the other side"

Some arguments that I have heard (which I mostly do not agree with) are

   - When manufacturing moved out of the US to low cost of living countries, this hurt towns which relied on manufacturing (e.g. the rust belt). Cost is the primary reason why manufacturing moved. Raising the cost on overseas manufacturing may make domestic manufacturing cost competitive. Although economics tells us this will still be a net loss there may be externalities which are not priced into the trade (e.g. the towns falling apart and people becoming despondent / drug addicted might not be factored into corporate profit models)
  - Being overly dependent on China or more broadly "foreign powers" for manufacturing represents a national security risk.
  - In theory this could be posturing to provide an opening for the US to negotiate more favorable trade agreements. For example Israel, Vietnam, and Argentina have made some statements about reducing trade barriers on US companies.
  - In theory it could be beneficial to shift the revenue model of the US towards raising revenue with tariffs while reducing interest rates and other tax rates (e.g. "no taxes on overtime and tips")

biophysboy3• 1 year ago

To improve rust belt manufacturing, you would target competitors of industries in that area, not the whole global economy.

We imposed a 32% tariff on Taiwan. Simultaneously, we are making it more expensive to manufacture here in the states. We have 1/4 China's pop - why would we try to compete on raw output by ourselves, instead of strengthening ties w/ the world?

For many countries, there is nothing to negotiate since we already have free trade agreements with them. We may import a lot of goods, but we export a lot of services, like many developed nations do.

With regard to raising revenue, think of the tradeoffs. If demand is elastic (given our trade deficit, it has to be!), this will be a tax on many, many American businesses and consumers. Its just moving the taxes from income tax to a consumption tax. That's a worse deal for poorer/middle-class Americans.

FabHK2• 1 year ago

Thanks for illuminating the mindset.

One thing I want to say in support:

The argument in favour of free trade is that it increases the pie, so that everyone can be better off (a Pareto improvement). However, given that trade does produce winners and losers, this argument is predicated on redistribution, namely (over)compensating the losers.

That second part of the argument in favour of free trade is often conveniently forgotten. So when that redistribution doesn’t happen, then opposing free trade is quite rational for some.

lunarlull11• 1 year ago

To lay out my own biases
- I voted for Trump

What will it take for you to regret doing so?

mizzao• 1 year ago

It seems the maximum likelihood model is a political one and not an economic one. Trump likes making deals and he historically has made them by applying his leverage and bullying people to go his way. Now he has the most powerful office in the world and a lot of leverage to bully anyone he wants (universities, law firms, other countries). Lots of lunch money will be taken but no one's going to go near the bully anymore.

At the end of the day, it's about Trump's need for attention and ability to wield power, rather than any economic objective. Tariffs are a way to wield significant power without requiring the approval of Congress.

veidr3• 1 year ago

It's clearly not good for the US economy, but I think that is a red herring. This has been so far, and continues to be, a highly successful endeavor from the perspective that matters: that of the US president himself, who wants to benefit personally.

I think it's helpful to ask "What if this president actually doesn't care one way or the other what happens to the US economy, the world economy, or even geopolitical stability (beyond the US not getting nuked, causing him to die), and everything is just a grifter's instinct for how to benefit personally?"

In that light, literally everything this administration does makes perfect sense.

This is a man whose main accomplishment before the presidency was "being famous" — starring in a reality TV show and professional wrestling (the fake/scripted kind), and he clearly wants to be the center of attention in the media.

Although his tariffs are widely mocked by knowledgeable people as "insane", "stupid", or as the Financial Times put it, "one of the greatest acts of self-harm in American economic history", imposing them gives the man himself the opportunity for corruption on a scale unprecedented in modern US history.

He can easily (very easily) benefit financially and otherwise because heads of state, captains of industry, and the ultra-wealthy have to come to him to beg, flatter, or do something — buy his memecoin, rent out his hotels, buy his otherwise-failed social network for billions, the list is near-infinite — to get out from under his tariffs.

So I don't think there is any upside of the kind you are talking about. But there is substantial upside for the man himself, and it is enough to explain all of his actions.

They only seem nonsensical if you believe he is trying to act in the best interests of the nation.

tim3332• 1 year ago

I saw Peter Navarro saying US car plants were only running at 65% capacity and by tariffing foreign cars, the US plants could crank up and produce more. Not sure how true that is but that's the kind of thing that could be positive.

monkburger• 1 year ago

1930 all over again.

lreeves2• 1 year ago

You know the craziest thing about watching this as an outsider in Canada is that we as a nation are losing one reliable trading partner (and obviously losing an ally but that's another conversation). Germany - losing a trade partner. Japan? And so on. But the US has lost 180 reliable trading partners. You're already seeing in the first week burgeoning trade alliances between nations who wouldn't have cooperated before, and the amount of resentment against America from this is going to take a generation to heal.

Of course I'm sure some people would claim this is 4D chess or what not but.. sometimes the person doing something crazy is just crazy at the end of the day.

outer_web10• 1 year ago

I think less 4d chess and more Erlich Bachman school of negotiation. Bullying people in inferior bargaining positions has somehow worked thus far.

bdelmas4• 1 year ago

Totally agreed! But bulling 95% of the class room... That doesn't work. New alliances would emerge, like Canada and the EU. No more new pipelines for the US but more upgrades to Canadian ports to ship oil to the EU. New economic routes will be created, new partner deals, etc... Without the US.

Trump just locked the US, kinda did the finger to the earth, and hopes people will come begging for trade.

nwatson2• 1 year ago

When the bully gets too ambitious the large number of bullied gang together for revenge, or at least effective countermeasures. The world will route around USA, find they can manage ok without it. The USA will be iced out, lose its reserve currency status, nobody will buy its military technology, making the USA unable to recoup large outlays for ambitious military projects, and the USA will lose its military dominance.

Also, the future of warfare and terrorism is autonomous networks of drones. Mexico and Canada won't be disposed to care what passes through their borders with the USA, and like Zelensky said ... we had the oceans and friendly neighbors, but that won't help us anymore.

EDIT: minor corrections

yojo2• 1 year ago

When he started with a limited set of tariffs on Canada/Mexico/China it sort of made sense as a bullying move. The administration at least had the bandwidth to conduct three sets of negotiations.

But it’s essentially impossible to negotiate 180 deals simultaneously. No way does Tunisia get even five minutes to pitch a deal - the simultaneous imposition of tariffs effectively DDOS’d the negotiation team.

insane_dreamer5• 1 year ago

Also for many countries it can’t be remedied because the tariffs are based on trade imbalances (not reciprocal, that is a lie). What does the US make that Cambodia needs/wants? There’s no way for them to close the gap on trade other than to stop selling to the US.

brookst3• 1 year ago

And yet even after stiffing the contractors, the casinos still went bankrupt.

It’s a culture thing.

llm_nerd• 1 year ago

Bullying people in inferior bargaining positions has somehow worked thus far.

Has it? To who?

Canada hasn't, and won't, negotiate a single thing. We increased border patrols for a made up problem and thus far it has entirely served to catch guns and drugs and illegals coming from the United States.

The United States has lost tens to hundreds of billions of sales to Canada. They are never, ever coming back.

Trump sabotaged a critical trading relationship in a way that Americans just cannot comprehend, through his laughably stupid "bullying".

Similarly, supposedly Vietnam has come "hat in hand". Vietnam has literally nothing to offer. It has negligible tariffs or blocks on US trade, it just happens to be a poor country. The bullying is utter stupidity.

Mexico thus far has taken being pissed in the face because they're 100% of Trump's purported problem -- from drugs, to migrants to cartels to funnelling Chinese goods, and the likelihood is that Mexico ends up being the biggest beneficiary.

fracus• 1 year ago

Leopards eating a lot of American faces.

steveBK123• 1 year ago

But they were supposed to eat other people’s faces. You know THOSE people.

labster2• 1 year ago

Leopards getting purchased instead of Abrams.

refurb3• 1 year ago

This type of comment is boring and doesn’t really advance the discussion.

I used to enjoy HN but it seems to have developed into these sorts of comments quite quickly.

bdelmas4• 1 year ago

I think that those in command are also waiting for the next President to undo all that but it is going to have a tremendous effect for a decade or more. Hopefully for the US they won't go in a similar crisis like the UK is going through...

Cutting off countries like Japan or Taiwan like that when we know their geopolitical situation with China and how critical their economy is to the US is quite crazy.

t0lo2• 1 year ago

On top of all of their other preexisting and pending crises..

OJFord10• 1 year ago

Hopefully for the US they won't go in a similar crisis like the UK is going through...

Err.. do tell about the UK's larger crisis than US'?

darksaints2• 1 year ago

This. There is no reason why any country should trust us anymore if entire trade relations can be destroyed by a presidential whim.

Even if Trump fell out of a window today and we got a pro-trade president tomorrow, we’re not fixing this damage for a very long time.

We probably would have to amend the constitution to insulate foreign policy from the whims of a single person if we want any chance of fixing this in our lifetime.

paxys3• 1 year ago

The next president is going to be Trump. If people don't think that's at least a serious possibity they are extremely deluded about the situation the country is in right now.

Jtsummers4• 1 year ago

The US wasn't even in a crisis until 2025. We weren't in a stellar position (high deficits and debt, low unemployment but high underemployment). It was all recoverable before Trump started this trade war and doing things like cutting departments that actually brought in revenue.

baranul• 1 year ago

Things are easier to break than they are to fix. The next president, if there will be another, will not be able to easily glue the pieces back together.

colechristensen3• 1 year ago

The "4D Chess" is that some powerful internal people doing a lot of manipulation want America to be an isolated very independent fascist state, and some powerful external people want to destabilize America and reduce its foreign influence. They're both making solid progress towards their goals.

The majority of the American people who voted for the current regime are being taken advantage of but like many they'll progressively more and more identify with wanting whatever outcome "their" team achieves.

antiquark• 1 year ago

This could lead to the largest "free trade zone" in the world... everyone but the USA.

anon373839• 1 year ago

4D chess is an absurd notion when you consider the actors involved. Only malice and incompetence are credible theories.

epgui• 1 year ago

This is charitable.

sethammons2• 1 year ago

When the markets are down, they are on sale for the rich. Eliminating competition via tariffs is good for those who want to compete where they couldn't before. They would let everything burn to further enrich themselves or push their ideology.

jredwards• 1 year ago

I think the combination of malice and incompetence remains the most credible theory:

Trump believes that the he/the US has the more powerful position in all of these relationships and wants to impose his will on the rest of the world and make them submit to his/US superiority. Which might actually work if he picked one target at a time. But you can't beat up the whole school at once. The fact that he can't do this to everyone at once, combined with his utter misunderstanding of what trade imbalance actually means, will lead to an outcome that is bad for everyone, but worse for the U.S. than most.

There are two other theories that I think have some shred of credibility, and they're both worse:

1. Trump intends to use his apparent ability to unilaterally impose or negate these taxes at will on a granular level to force countries, companies, and individuals to come groveling to him for favors, allowing him to use the presidency to further enrich and entrench himself.

2. Trump is divesting of dependence on allies because he thinks they might soon be adversaries. That's the most harrowing potential interpretation, but it relies on the notion that he has any kind of foresight. This is really only credible if you genuinely believe that it's Putin pulling his strings. Which is a possibility that's hard to dismiss.

mcv7• 1 year ago

They'retrying to play 4D chess, but they don't understand how the pieces move.

toddmorey• 1 year ago

Very well put. Alliances take years to build but can be broken in just days.

I'm tempted to think (hope? dream?) that the markets and trade will rebound if all this chaos makes American politics swing back towards an interest in global stability, but I think anyone partnering with the US would do so VERY carefully and right now the entire world is plotting how to remove US dependencies.

owebmaster2• 1 year ago

I'm tempted to think (hope? dream?) that the markets and trade will rebound if all this chaos makes American politics swing back

The pump'n'dump scheme against Ukraine will forever change how small countries see the US support for democracy, even if it changes back to the previous status-quo.

walterbell16• 1 year ago

https://www.retailcouncil.org/u-s-hits-185-nations-with-tari...

No new tariffs were announced for Canada. Canada and Mexico’s exemption for USMCA/CUSMA qualifying goods was maintained. However, 25% tariffs on non-USMCA compliant Canadian goods, Canadian steel and aluminum, Canadian autos and parts, and the 10% tariff on Canadian energy exports remain in place.. there are signs that negotiators on both sides are trying to steer Canada-US trade to a more productive process of an expedited renegotiation of the Canada-US-Mexico Trade Agreement (CUSMA).

More context on US trade policy: https://news.ycombinator.com/item?id=43589350

cycomanic• 1 year ago

I was bringing this up with a guy yesterday who was genuinely supporting the policies and somebody chimed in that they were not worried at all, because everyone wants to trade with the big boy in town. Trust is not important if they are afraid of you (I'm paraphrasing). Quite a different perspective, but it is consistent with an observation I made about a lot of US comments, people are quite happy for their country/government to engage in tactics (e.g. bullying, industrial espionage even against partners...) that they are enraged if others (E.g. China) do it. Europeans seem to be much more susceptible to an "if you don't want it to be done to you don't do it to others" argument.

brookst3• 1 year ago

To the extent markets recover it will be because there’s confidence that exposure to bizarre and unpredictable behavior from the US has been reduced.

EU / China trade pacts, China / California, Mexico / EU. People have to patch around the mistaken over-reliance on sanity from the US. It’ll happen, not sure if it’ll take a few weeks or a few years though.

ModernMech• 1 year ago

The people who voted for these policies have to feel a sufficient amount of pain from them to be sure they won't just vote for them again as soon as they get the chance. Most people who voted for Trump in 2024 would vote for him again if he ran for a 3rd term. Nobody can consider America a reliable partner until that isn't a laughable possibility again.

petre2• 1 year ago

If you remember he blew up TTIP, TTP/TTPA during his first mandate.

keyle• 1 year ago

It's not 4D chess. It's not even 1D chess.

Sparking the local industries needs to happen with incentives, not a tsunami.

You can't swap the supply chain to a local-first instantly. Many things aren't done locally. The factory buildings are gone. The labor isn't there or trained. The basic materials aren't local and need to be imported. The machines needed to produce the parts don't exist locally and need to be imported themselves; sending margins to unrealistic numbers and making it a non-starter environment.

What it is, is another flip of the table, an upset, to cause chaos and feed a positive environment for more chaos, which only suits those who benefit from chaos.

arwhatever• 1 year ago

The episode of the Search Engine podcast “The puzzle of the all-American bbq scrubber” goes into detail on an example of this, is very interesting and makes the same points you’re making here.

popalchemist2• 1 year ago

In the case of Trump, never attribute to ineptitude what can be explained by greed.

He is tanking the US economy so he and his billionaire cohort can buy things (businesses, real estate, stocks, etc) at a low price. Thus amassing more control and capital.

This is how the Russian oligarchy came into power.

loudmax• 1 year ago

Trump's businesses have repeatedly declared bankruptcy. Don't rule out ineptitude.

labster2• 1 year ago

There’s still a way out, the US Congress could convene over the weekend and revoke the President’s ability to impose tariffs. Restore it to Congress as stated in the constitution.

Of course they won’t do that. Sic transit gloria mundi.

tayo42• 1 year ago

I started wondering if there's a way for citizens to push the issue that these tarrifs are unconstitutional. Like a lawsuit that got escalated to the Supreme Court or some thing if congress isn't going to.

Some of the senators are breaking away though.

If the country survives this though the next thing through executive order could be just as bad or worse. There doesn't seem to be any realistic way out of this insanity.

itake5• 1 year ago

China is isolationist and they seem to be growing.

The problem is the USA is a consumer economy which isn’t sustainable. We could get away with it as a tech leader, but with China stepping ahead (Deepseek) china will be a tech leader and manufacturing leader. What will the USA have?

lunarboy• 1 year ago

In what plane of reality is China isolationist

ajross• 1 year ago

China is isolationist

China is what now? China is the biggest trading partner of something like 70% of all nations in the world!

China is asymmetric and unfair, not "isolated". They disallow imports except in a handful of industries they can't replicate yet. That works for China, because: (1) they are huge, and (2) they remain poor, and thus can do the low wage jobs internally in addition to doing them for the rest of the world.

The US only has advantage #1. Though at this point #2 seems within reach...

decimalenough• 1 year ago

China is very far from isolationist. They're making huge investments into other countries with Belt & Road, importing huge amounts of commodities, exporting huge amounts of finished goods. Sure, the domestic market is protected, but it's a long way from North Korean autarky, which seems to be Trump's goal.

gerdesj• 1 year ago

Sometimes your best mates go a bit mad. Cut them some slack.

They will need a shoulder to cry on when they re-discover how well a trade war works out. The last ones seem to have happened at roughly 50 year intervals.

The US seems to be incapable of learning from the past. The worrying thing is that Mr Trump is old enough to remember directly or what his parents told him about the last fucked up trade shit storm or trade war.

You do not get to dictate how the world as a whole works ... ever. It has its own ideas about that.

Even Britain at its most imperious could not do that and the US can't even stop itself from trying to impose tariffs on its own air base in .io!

The best we can do from outside is to hope that the US does not collapse completely and that the downward trend stops at some point. If, somehow this all pans out that we will all benefit or even that just the US benefits then fine. Let's pick up the pieces and crack on.

I do not hate Americans nor their rather odd President. We are seeing change happening. It might be for the good eventually but I doubt it but I'm not an expert. In the meantime I suggest we continue to act as friends towards an old friend. When you go barking mad, you might need your mates to stand beside you whilst you dribble and widdle.

trhway• 1 year ago

Of course I'm sure some people would claim this is 4D chess or what not but.. sometimes the person doing something crazy is just crazy at the end of the day.

It is crazy and it does have some crazy logic. The US trade deficit is well pronounced only on material goods. If you add services, the deficit is much less, if any. The services are produced by the people and states mostly voting Democratic. So, Trump with his tariffs may succeed in causing the EU and others to retaliate against US services, thus damaging blue states and helping (well in his mind) the red states. Trump already did similar hit against blue states with SALT deduction for example, yet it was just a small preview.

ants_everywhere4• 1 year ago

I'm sure some people would claim this is 4D chess

There is some regular 2D chess going on here, but it's not being played by anyone in the US admin. Putin wants to weaken NATO so he can continue expanding. America is a linchpin holding together much of the European alliances and not coincidentally the candidate he helped get elected twice is destroying the US's global standing and weakening the US dollar.

The rebuilding going on in Europe, the increase in European military spending, and the talk about nuclear weapons in Europe is a direct consequence. I don't know if Putin just expected Europe to run around incompetently like the Keystone Cops, but it kind of feels like they're acting quickly and competently without the US.

At any rate, all of this is bringing us much closer to a WWI or WWII style global military conflict.

Paradigma112• 1 year ago

If that really was Putins intention and doing he makes Trump look like a stable genius. Crude is already down to 62USD/barrel. If this goes on for any amount of time Russia is dead.

lucasyvas• 1 year ago

Of course I'm sure some people would claim this is 4D chess

You mean idiots of course.

kentbrew• 1 year ago

"Mama always said ... stupid is as stupid does"

lunarlull11• 1 year ago

Of course I'm sure some people would claim this is 4D chess or what not

No one worth listening to.

budududuroiu2• 1 year ago

Trump is the actual anti-imperialist, and as he said, unifier. He’s so selfless that he’s putting the US on the line to ensure world peace and unity /s

refurb3• 1 year ago

The US represents a huge proportion of global demand.

These countries can establish as many new trade agreements as they want, but they aren’t going to replace the US market.

And to claim that the US has lost allies is ridiculous. Countries have done far worse and remained allies.

Let’s not overplay the impact here. Free trade is a relatively new thing. We’re just going back to the world the way it was a few decades ago.

mcv7• 1 year ago

There is most likely a deeper plan behind it. It's not 4D chess, or if it is, it's played by people who don't really understand it themselves, but there is a goal behind it: ending Reagan's neoliberal economic world order.

That in itself is not a bad goal, and it's one I agree with; neoliberalism has increased inequality, put excessive wealth in the hands of a tiny elite, and looted nations of their infrastructure and social structures. Neoliberalism should die.

The problem is that Trump's economic advisors seem to want a new world order where the rest of the world is even more subservient to the US, and they think they can enforce that by cutting everybody off from the US economy, and they'll only be let back if they accept America's new terms.

The problem is of course that the US actually cut itself off from the rest of the world, and as big and powerful as the US is, it's not more powerful than the rest of the world put together. It's not the rest of the world that will come crawling back; it's the US. After having squandered its 80 year dominant position in the global economy.

csense2• 1 year ago

So honest question: A bunch of people who currently own stock are deciding they'd rather have cash instead -- that much is obvious.

But what exactly are they doing with the cash?

Don't want to hold onto it, everyone says devaluation and inflation is coming.

Bitcoin and gold are kinda flat. I expected them to shoot up as uncertainty hedges. What gives?

some_furry5• 1 year ago

If I had $1000 in cash, and inflation hits 10%, the purchasing power is equivalent to (1000 / 1.1 = ~$909) in 2026.

If I had the same $1000 in stock, and it lost 11% of its value in 2 days, I might worry about it being worth close to $0 by the end of the month.

bawolff9• 1 year ago

If stocks hit $0, you probably have more immediate concerns - like where you are going to get your next meal and if someone is going to shoot you for the contents of your fridge.

Stocks could still continue to fall, but they aren't going to slide to zero.

kragen2• 1 year ago

Brazilian hyperinflation lasted from 1985 (the year when the military dictatorship ended) to 1994, with prices rising by 184,901,570,954.39% (or 1.849×1011 percent; equivalent to a tenfold increase on average a year)

https://en.wikipedia.org/wiki/Hyperinflation#Notable_hyperin...

ijustlovemath2• 1 year ago

Inflation only happens if the US starts paying down the debt -- locking up the tariff money in interest payments. Otherwise, there's fundamentally no increase in the supply of money. I'm guessing there still will be inflation for consumers, especially seeing as most don't have the funds to invest in bonds.

surfaceofthesun• 1 year ago

I’m pretty sure the conventional wisdom suggests inflation happens when countries don’t pay down their debt.

Increased money supply isn’t the only cause of inflation (e.g., stagflation). Uncertainty about how to price goods—especially for goods in the middle of supply chains—could cause supply disruptions. It’s a self-inflicted version of the Covid supply disruptions.

bawolff9• 1 year ago

I don't know, but us stocks aren't the only options, they could just be transferring to european stocks.

alaxhn5• 1 year ago

European stocks where down even more than US stocks today (although not down nearly as much yesterday)

senorrib2• 1 year ago

Real estate, bonds, foreign stocks, oil. There's a billion options out there. Or they can just sit and wait. Losing for a bit of inflation is better than losing 20-30% in a recession.

tasuki8• 1 year ago

Losing for a bit of inflation is better than losing 20-30% in a recession.

Except you can't time it like that. Inflation eats your savings all the time, while recessions are short.

I have a friend who's been saying "stocks are too risky" since about 2010. He prefers the predictable ~3% inflation...

heigh6• 1 year ago

Gold is going off the charts

kristopolous4• 1 year ago

Trump just said "fuck you" to 95% of the planet. These stocks have a long way to fall.

It sure would be nice to have a competent, organized opposition that does more than finger wag and tsk tsk in a scornful tone

lazide6• 1 year ago

Trump has consistently avoided consequences from breaking the rules.

You can’t fight someone like that within the rules, and right now the left will throw anyone who starts breaking the rules in jail while consistently being unable to hold the opposition accountable.

It’s enforced self destruction.

outer_web10• 1 year ago

What can be done?

Aeolun4• 1 year ago

Maybe all the billionaire owners of these stocks can go storm the capital together?

Spooky233• 1 year ago

The dollar may devalue, but Apple just did.

mixmastamyk2• 1 year ago

Gold is up 14% this year, and up last year as well. A lot for something not inclined to move.

jdlshore• 1 year ago

Bonds and stocks tend to have an inverse correlation. And, yep, bonds are up while stocks and real estate are down.

That’s why financial advisors tell you to keep a mix of stocks and bonds, trending towards a greater percentage of bonds depending on your risk tolerance and as you get older. (Because bonds have lower returns than stocks, historically, but are also less volatile.)

LikeBeans2• 1 year ago

Often yes but sometimes they both go down. However bonds don't decline as fast. The actual strategy I follow is stock/bond/short-term. The short term is like a buffer currently invested in short term treasury fund. Think of it like a game. If stocks are low then sell bonds and when that is also low then use the short term investment to live on to wait out the market recovery. Also if you are retired like me you would tighten expenses when drawing from the short term during a downturn.

jjav• 1 year ago

Bonds and stocks tend to have an inverse correlation.

Careful with this, it's not always true and which kind and duration of bonds is important.

outer_web10• 1 year ago

Interest rates are high enough that holding cash isn't terrible, particularly if you expect the administration to reverse course on tariffs yet again.

Powell said the Fed isn't changing its plans to keep combating inflation from Trump's first term.

TLT is worth considering, though maybe we'll see Elon decide the treasury will default on bond payments.

breadwinner4• 1 year ago

But what exactly are they doing with the cash?

Buy Treasury Inflation Protected Securities (TIPS) and hold them to maturity. (Don't buy TIPS funds, their value fluctuates based on interest rates. Buy actual TIPS instead, at either Fidelity or Vanguard.)

rsweeney21• 1 year ago

A lot of money is moving into treasuries, which is causing the 10 yr yield to quickly drop below 4%.

https://www.barrons.com/articles/10-year-treasury-yield-junk...

IAmGraydon3• 1 year ago

Don't worry - it will move back out at breakneck speed when Trump threatens to default on the national debt in the not so distant future.

rglover• 1 year ago

AFAIK this is one of the first times that a significant downward move in the stock market wasn't also seen in the price of Bitcoin. Usually they're correlated.

iknowSFR• 1 year ago

What’s the sample size of significant downward moves in the market during the existence of BTC?

rtp4me3• 1 year ago

ROTH conversions.

LikeBeans2• 1 year ago

Lookup VUSXX. It is a vanguard short term treasury fund. That's where I put my cash. It is currently paying 4.24% that is state tax free (I live in Oregon).

Unfortunately it is hard to predict if that rate will stay high enough. Previously I had 'cash' in iBonds which for a while paid 8-9% early in the pandemic when inflation was high. If none of the above pays well enough I look into treasuries, or CDs.

Fade_Dance• 1 year ago

I'll give the consensus answers from the trading arena. Each of your questions has a fairly significant long-term backdrop, a medium-term one, a short term one, and an immediate day-to-day narrative. That's fairly obvious, but there is strong confluence now when it comes to some of the things you are asking. And please ignore the grammar - on a phone and banging it out:

International money is now flowing out of US assets. This is a shift from the past few years where the US has seen historic inflows that kicked into overdrive with the AI wave. The pairing of stronger dollar and rising US assets made us equities especially attractive for international investors. This peaked with the US exceptionalism trade during the beginning of the Trump presidency, and now as a response to tariffs you are seeing dollar down stocks down which is making the sell-off especially painful for international participants.

Before the recent tariff shock, those previous narratives were already coming to an end. European equities have been ripping. That's one place where money has been flowing from big players like hedge funds.

A lot of the money has gone into deleveraging. When you look at prime broker data you can see that hedge fund positioning, large asset manager positioning, vol control, CTA, and most of the big market participants have been heavily lowering exposure for a solid month now. Remember that cash can go to lowering leverage.

The bond question is very much in play. You are correct that bonds have not been catching a bid. The consensus outlook was moving to stagflationary, and bonds had other hair like the US still having a lot of debt to term out (and newly issue... deficits are running Huge despite the news of cuts in inconsequential places as far as overall budget), and some more recent theater releases about consumer inflation expectations were frankly shocking, and that feeds into the fed's response function when it comes to cutting rates and helping out a bond rally cycle. This is part of the reason you're seeing money go, well, a lot of other places! Like European banks, gold, etc over the past few months. Now we're in a full on recession trade, and this debate is in overdrive. Fed cuts were increasingly priced in, bonds caught a bid, but Powell spoke very recently and said there was too much uncertainty to even consider cuts which pulled back those rate cut expectations. Opinions that are in conflict are priced into various aspects of the market right now, and this will play out in the coming weeks.

On to Gold. I think it's fine to simplify it and say that Gold sniffed the danger out. It's been on a face ripping rally for a while now, and what you see now is a great setup for the trading phenomenon of "sell the news." Once everybody is long there's no one left to buy and only sellers can come in from there. When markets get hot like that, you get fast money coming in that is prone to selling on small down moves (because they're only joining the bandwagon to make "easy" money, and they're not interested in losing even a little bit of money. They are also often tourists in that they do not have deep knowledge of the investment product so when something like gold selling off when it should be going up happens, there is a fear response.

That said, the gold selloff today is significant. Have heard two commentaries on this, and both agree it's a sign of margin calls and liquidation/sharp capitulation. In extreme sell-offs you see all correlations go to the one, and there is a "dash for cash" to meet collateral requirements and shore up risk metrics. You can also see signs of this in FX markets. Some other commentary from today confirmed stres in treasury liquidity, which is a "safe haven" but also gets liquidated in dash for cash situations.

And this does partially answer "where the money is going". T Bills. That's what everyone wants when battening down the hatches.

Gold is indeed best viewed as an uncertainty hedge rather than an inflation hedge. That's a good observation. It's really a hedge against systemic fragility though things like people being unsure of Central Bank policy... Tariffs.... Etc. It's not exactly a day-to-day extreme market volatility hedge. Some of the cash is going literally into hedges! Volatility itself is hugely being bid up right now. That stuff is even better than cash because it has negative correlation to risk assets.

Stitch everything together and you get a pretty good backdrop for the current sell-off. It even helps explain things like the 2-day back to back action, where day one was a huge selloff but it was somewhat orderly because everyone was coming in with fairly low exposure, so panic didn't really set in until day two (and he's selling feedback loops often continue until liquidation is forced, which marks a bottom for buyers to take a stab at. Nobody wants to step in during a steep grind down of price).

Relevant charts. Not all of them have the labels in-chart, but it's all significant data. Ex: here's a real data point that isn't in the charts below, but is a typical example of this sort of data. "High volatility is expected to generate 80 billion USD in equity supply from macro strategy funds over the next week if conditions continue": https://ibb.co/album/KNBSw2

watersb• 1 year ago

Not bad for just "banging it out on the phone". Thanks!

tossandthrow• 1 year ago

So, the value disappears when the stock market tanks. It is not a zero sum game where the 6 trillion is suddenly cash instead.

ein0p8• 1 year ago

WAI. Trump is crashing the T-note yield to refinance $9T (which is how much US debt is going to mature in 2025) at a lower rate. That, for those of us who know arithmetic, is approximately one quarter of all US debt. It seems to be working.

butterlettuce• 1 year ago

Is that really what he’s doing? If so, then that’s some 5d chess right there.

ein0p8• 1 year ago

It's 1D chess, really, and it isn't really Trump who came up with the idea. We're between a rock and a hard place. If we refinanced at 4.8%, the interest payment would go to $1.2T per year. If we refinance at a lower rate, it's lower. Note that we're not just refinancing either, we'll have to borrow about $1.8T, too, unless DOGE miraculously achieves its $1T/yr savings (doesn't look like it will, if the current trends are anything to go by). Tariff revenues would help to plug that hole somewhat. Then there's the issue of many countries having higher tariffs for our stuff than we have for theirs. That's not "free" trade. Then, finally, there's the issue of the near-irreversible erosion of the industrial base.

Warren Buffett warned about this back in 2003, and proposed an elegant solution, which, unfortunately, would require Congress to implement it through legislation: https://faculty.washington.edu/ss1110/IF/Buffett%20Fortune%2... But we do not have a functioning congress, so Buffett's solution is impossible.

lenerdenator14• 1 year ago

Trump's been talking about tariffs for far longer than the current t-note cycle. He was talking about it a decade ago during his first time in office. IIRC he ran for POTUS as a Reform Party candidate in the 90s or 00s, and that party was started by Ross Perot, who was against NAFTA on the grounds that it'd cause a giant sucking sound of American jobs to Mexico.

He doesn't care about the debt; you can see this in how he pays taxes.

What he needs is something that lets the rich have their cake and eat it too. He needs to appear to be doing something for working-class American manufacturing jobs, while making the people that would fill those jobs bear the brunt of the impact. Tariffs are an expedient way to do that. They don't have to be approved by Congress and are effectively an autocratic way of raising taxes. They apply to prices first, not revenues, and they're simple to implement. The surplus value that used to head to shareholders as a result of cheap foreign goods will go down, but that can be offset by layoffs and the like.

The refinancing, if it's even a viable plan, is a nice side-effect.

JackYoustra21• 1 year ago

The surplus value that used to head to shareholders as a result of cheap foreign goods will go down, but that can be offset by layoffs and the like.

could you just do the layoffs without the tariff if it were a conspiracy?

heurist• 1 year ago

That's the most charitable possible reading of this strategy. There are many others.

Majromax4• 1 year ago

Trump is crashing the T-note yield to refinance $9T (which is how much US debt is going to mature in 2025) at a lower rate

Even if this were intended (unlikely), destroying $6T of notional stock market value so far to save $270b/yr of interest (if 10-year yields drop by 3%, which hasn't happened yet) is a bad trade.

ein0p8• 1 year ago

Stock is easy to goose back up via QE and/or lower prime rate. Once you lock in those interest rates on debt, though, there's nothing you can do about them. You're also ignoring trade barriers that other countries have, and the fact that we've been offshoring manufacturing capacity for over three decades. What Trump is doing today is what Bernie was advocating in the 00's.

mathfailure14• 1 year ago

National stock market is owned by people, but the national debt is owned (and has to be payed) by the government. Basically, the government is just milking the reach now to lower gov's national debt. Poorer people rather win from this (even if no manufacturers come to U.S. to avoid tariff barriers, which some manufacturers will and which will be another small benefit for the poorer (more jobs)).

stubish• 1 year ago

Why would anyone purchase the T-notes with a poor return? Especially if other assets are in a dip?

ein0p8• 1 year ago

Because you don't know when the dip will end, and how much lower it could go. People could (and do) choose to exit the market if they expect further volatility, and when they do exit, they need something to park their cash.

walterbell16• 1 year ago

2024 paper (40 pages) by Stephen Miran, current chair of the Council of Economic Advisers, which has influenced tariff policy, https://www.hudsonbaycapital.com/documents/FG/hudsonbay/rese...

  The root of the economic imbalances lies in persistent dollar overvaluation that prevents the balancing of international trade, and this overvaluation is driven by inelastic demand for reserve assets. As global GDP grows, it becomes increasingly burdensome for the United States to finance the provision of reserve assets and the defense umbrella, as the manufacturing and tradeable sectors bear the brunt of the costs... Tariffs provide revenue, and if offset by currency adjustments, present minimal inflationary or otherwise adverse side effects.. Finally, I discuss a variety of financial market consequences of these policy tools, and possible sequencing.

blog review/opinion, https://simplicius76.substack.com/p/trumps-liberation-day-an...

One of the core tenets of the document is the deliberate devaluation of the US dollar in order to make US exports favorable again.. a country which holds the world’s reserve currency faces a significant dilemma.. to keep its currency as reserve status—and reap all the geopolitical benefits this creates—the country must hamstring its own economic output by running a huge trade deficit, which means the country imports far more than it exports, which hurts—or in the case of the US, kills—domestic manufacturing.
... if a French person buys a $50K Ford truck and imports it to France, that’s $50K USD that leaves France and goes back to the US, lowering France’s dollar holdings. If an American buys a $50K French Peugeot to import it to the US, he sends his $50K USD to France, which increases its dollar holdings.. to maintain the dollar’s reserve status.. US dollars are constantly flooding the world.. running a massive trade deficit where imports of foreign goods (outflow of USD) far outweigh exports of domestic goods (inflow of USD).

Centigonal5• 1 year ago

As global GDP grows, it becomes increasingly burdensome for the United States to finance the provision of reserve assets and the defense umbrella

I don't understand. US share of global GDP is around where it was in 1980, and in 1995[1]. Is Miran arguing that America's "exorbitant privilege" of being the source of the world's reserve currency, literally being able to buy goods from any country in the world with money printed out of thin air, is actually a liability?

[1] Page 8 of his paper

EDIT after reading through Chapter 2 of the paper: Thank you for sharing this. I don't agree with many of the arguments Miran is throwing out so far, but at least it's self consistent.

He is saying:

1. If the US's global share of GDP decreases, then a set of global economic factors will cause the US to keep having to take on deficits to fund the rest of the world's desire for USD (because that is the world's reserve currency). If the US becomes small enough relative to the world economy, then this pressure will cause the US to risk defaulting on its debt.

2. The US's status as the reserve currency issuer means US dollars are artificially expensive. This means that low margin, high-labor industries like manufacturing can't thrive in the US. This is a national security risk because China/Russia can make lots of tanks/drones/etc and we can't.

3. The US benefits from being the reserve currency issuer because it can use that power to project force worldwide and maintain national security.

4. (He doesn't say this, but implies it in that coy way that people who read The New Criterion like to do) #1 is an unacceptable risk for America, and the US should employ a range of unilateral or multilateral measures to reshape the global financial system in a way that devalues the US Dollar, strengthens US manufacturing, and forces US trading partners (esp. other liberal democracies) to subsidize the US's status as the reserve currency issuer, since the US provides a global hegemony that is beneficial to them.

Also, having read portions of the Project 2025 "Mandate for America," it's really interesting to me how all of these right wing thinktank writers (Russ Vought, Max Primorac, and now Miran) seem to share the same writing style.

AyyEye• 1 year ago

You and I don't get to print money. Other classes do.

sebmellen25• 1 year ago

Yes, it is a liability, because in exchange for your reserve currency status you are indebting your country. Gradually, as you outsource more and produce less, your country derives more and more of its returns from soft economic assets (financial markets, legal structures, software, pharma, IP, etc.), than hard economic assets (commodities, energy, manufacturing, transportation, logistics, etc.).

In the long run, this hollows out your industrial base, drives income inequality (because labor is devalued when products/soft assets have zero marginal cost of replication), and defangs your country.

Said differently — vertical integration is the key to “innovation” in the abstract. You can see this with BYD.

With the above in mind, let’s say your goal as a country is to develop your industries so you can achieve vertical integration. Soft economic assets are easier to bootstrap once you have hard economic assets. If you lose your hard economic assets and only have soft ones, you are at a strategic disadvantage because your opponent (in this case China), can bootstrap their soft assets relatively quickly. By comparison, it will take you much longer to get your hard assets back (through the mythical process of “reshoring/reindustrialization”).

All that being said, this is not a commentary on the effectiveness of the tariff policy of the Trump administration.

walterbell16• 1 year ago

Is there any relationship between reserve currency, national security and power projection? https://apnews.com/article/shipbuilding-china-united-states-...

In only two decades, China has grown to be the dominant player in shipbuilding, claiming more than half of the world’s commercial shipbuilding market, while the U.S. share has fallen to just 0.1%, posing serious economic and national security challenges for the U.S. and its allies, according to a report released Tuesday by the Center for Strategic and International Studies. In 2024 alone, one Chinese shipbuilder constructed more commercial vessels by tonnage than the entire U.S. shipbuilding industry has built since the end of World War II.

hattmall2• 1 year ago

Yes, that's exactly what a liability is! US currency is an IOU. The more of it out in the world the less value there is in America's domestic assets.

Majromax4• 1 year ago

I know that a quotation is not necessarily an endorsement, but this is a fantastically short-sighted idea.

it becomes increasingly burdensome for the United States to finance the provision of reserve assets

How dare countries want pictures of dead Presidents so badly that... they're willing to send real goods to the United States for its consumption, with no expectation of reciprocation.

and the defense umbrella

... and agree to a de-facto policy of minimal militarization, such that they could not pose a threat to America's global security interests, no matter what it decides those are.

A few hundred years ago, this would look like a tribute system. It's unfathomable that a nation in such a privileged position would decide it's tired of such a systematic set of advantages.

as the manufacturing and tradeable sectors bear the brunt of the costs...

What's the saying, they've tried nothing and are all out of ideas? Industrial policy is a known and understood thing. The US has this in its defense sector even it doesn't want to admit it, and the CHIPS act was another attempt for the semiconductor industry.

This sort of policy is far more targeted and far less disruptive than blowing up international supply chains in hope of repatriating sweat-shop sneaker sewers and factories for five cent injection molded widgets.

sebmellen25• 1 year ago

You’re right about all you say. But the US has struggled to implement even the simplest forms of industrial policy because other countries are so extremely price-competitive, and our markets so unbridled, that our “elites” have eroded our industrial base to drive shareholder returns.

If not through tariffs, how else do you force reindustrialization? Industrial policy will always fail if it’s driven by a chimeric political system where both sides are incentivized to grow “The Economy” by eroding domestic capacity.

The CHIPS Act is too little, too late (when you’re competing with a fast-accelerating rival that is simultaneously your largest debt-holder and main industrial base).

telchior• 1 year ago

unfathomable that a nation in such a privileged position would decide it's tired of such a systematic set of advantages.

That's just the thing, you've got it exactly backward! The US has been "looted, pillaged, raped and plundered by nations near and far," and it's far less rich than it should be.

Icarus is taking flight, the rest of the universe better watch out. And for those stuck getting carried along toward the sun... tough shit, there's not going to be enough time to convince a population of born and bred narcissists that it's really hot up there before the meltdown.

sorcerer-mar4• 1 year ago

Why must a country run a trade deficit to retain its global reserve currency status? Because when your currency is the global reserve currency, the entire world constantly hungers for it in order to use it in all the various countries’ international trade between each other. The only way to keep those countries constantly supplied with dollars is for Americans to buy tons of foreign imports, which effectively sends dollars to those countries, since these purchases are made with dollars

So... the problem with the US being the reserve currency is that it makes other countries cater to our tastes because they want our money...?

bgnn2• 1 year ago

Yes, abd this appreciates USD, in turn makes production costs in US high, so the rest of the world doesn't buy what US produces.

It is by itself sustainable though as US doesn't only export produced goods but tech etc which the world wants. A valuable dollar funds this tech, in a sense whole world funds the US trch sector.

insane_dreamer5• 1 year ago

The counterpoint to this is that the US as the reserve country means that it’s very cheap for the US to service its debt since it’s holds the money supply. It basically controls its own destiny in that sense.

rtp4me3• 1 year ago

On the bright side, this may be a good opportunity to convert 401(K) or IRA funds into a ROTH account.

huevosabio3• 1 year ago

Why?

eclipticplane2• 1 year ago

You owe tax on the difference between contributed dollars and converted dollars. So if you contributed $100 and it historically had grown to $150, you would owe tax on $50 to convert.

If that $150 in value is suddenly $120 instead, your tax bill to convert is significantly cheaper.

joshuamcginnis• 1 year ago

ROTH contributions grow tax-free. Doing your conversions now allows you to buy equities are they're currently discounted prices, maximizing your potential long-term tax-free gains.

cortesoft• 1 year ago

Because you have to pay taxes on it when you convert, and you will have less to pay taxes on if you do it now.

dgunay• 1 year ago

Rebuy equities/reinvest dividends at reduced prices, pay taxes now, enjoy tax-free growth. If the current admin is serious about trying to get rid of income tax, then that would eliminate a major advantage of trad vs roth.

Ancalagon• 1 year ago

Lower absolute taxes

biglyburrito• 1 year ago

https://archive.md/XMnlS

duxup• 1 year ago

“The Stock Market(s) are literally crashing. There was no reason for this, all self inflicted!”

- Trump….https://truthsocial.com/@realDonaldTrump/posts/1084698607876...

Cerium• 1 year ago

What's that supposed to mean? He is saying the quiet part out loud?

adt• 1 year ago

Jun/2022

xnx2• 1 year ago

The tweet is from June 13, 2022.

Aeolun4• 1 year ago

Don’t worry. President Trump knows what he’s doing. If anything, this is a perfect time to invest before the markets inevitably recover.

Aeolun4• 1 year ago

Should have /s’ed that.

To be fair, I do think the markets will eventually recover. If not soon, then in 4 years time. Assuming democracy hasn’t eroded to the point that timeline is meaningless.

rsynnott10• 1 year ago

So your theory is that there’s an amazing master plan, but only insane people on Twitter (and notably, not, say, _Wall Street_, or any economists) are smart enough to see its ineffable wisdom?

Aeolun4• 1 year ago

Wall Street and economists have a vested interest in keeping their precious theories alive.

asdev• 1 year ago

Tech really needs to fall another 50% at least. I think when the big AI bust happens(unless it's happening now), we will see that

markus_zhang5• 1 year ago

With this kind of free fall it's going to trigger a lot of busts.

colechristensen3• 1 year ago

The last market crash was caused by the very economically unnatural COVID and the global response to it. This one is caused by insane foreign policy. Both of these are weird recessions because they don't have anything to do with real market conditions or even stupid pathological market conditions (housing crash).

colechristensen3• 1 year ago

The covid response of printing trillions of dollars and other currencies around the world meant that there was way more money and it had to end up somewhere.

There's just way more money to invest than there are productive companies to invest in. So you get crazy P/E ratios in the best bets available.

The "fix" is to inflate that money away (or maybe to tax it and pay down deficits?) but it's not an easy monetary policy or a familiar one.

jckrichabdkejdb• 1 year ago

And no tariffs on Russia, oh I wonder why...

breadwinner4• 1 year ago

There is away out of this mess: A U.S. Senate bill that would require congressional approval for new tariffs gained more Republican support on Friday [1].

Trump is not going to back down since that will make him look like a loser. Neither is China. But GOP can help Trump out by creating a new law that automatically expires all new tariffs after 60 days unless approved by congress. This will let Trump extricate his head from this mess without losing face.

[1] https://www.reuters.com/world/us/more-us-senate-republicans-...

Trasmatta• 1 year ago

Trump would surely veto, and I currently have doubts there will ever be enough Republican votes to override

Tadpole91814• 1 year ago

To be clear, this is going to have to pass the house. Then, Trump will veto it. Then, the senate will need 16 Republican senators (30% of the party) to vote against it. And it's still a toss-up if Trump will even obey it or if he'll executively order customs to continue the Tariffs.

So unless Republicans suddenly grow a spine, which is unlikely given their current strategy is "hide the stock ticket on Fox news" and pretend glorious leader is a genius, this is a token effort that will do nothing.

And even if the tariffs are revoked, we've destroyed our reputation. You think countries will want to continue on like nothing happened after this? The only thing that might stop the impending collapse of the US economy as 180 nations divest from the empire we built is if we were to impeach and convict Trump immediately and set an example that this economic chaos will not be tolerated; that allies are not fair game to bully.

But, honestly, I think that ship has already sailed. It needed to happen immediately, not after a week of testing the waters.

almog• 1 year ago

I absolutely agree that impeachment and conviction is the only way to restore the world's trust in the US.

If this bill passes and Trump vetos it, don't you think that could raise the odds for a 3rd impeachment process?

breadwinner4• 1 year ago

My assumption is that Trump understands what a mess he has gotten himself into and wants to extricate his head, without losing face. Congressional action will allow him to do that because he can blame congress for undoing his tariffs which was a good idea all along. This is the only way out.

hackly4• 1 year ago

I’m tired of winning boss.

bigyabai2• 1 year ago

- Xi Jinping, 2027

xyst• 1 year ago

Don’t check your 401K accounts, Americans.

This idiocracy administration is single handedly ruining both _public_ and _private_ safety nets.

To my fellow Americans that helped vote this dipshit into office, please fuck off.

inatreecrown23• 1 year ago

Isn't it obvious that Trump's goal are not these tariffs, but renegotiated trading agreements? But everybody just seems to love to proclaim this the end of US.

kstrauser2• 1 year ago

No. It's not obvious that there's any lucid end goal whatsoever.

JackYoustra21• 1 year ago

How is that obvious? Why would your 'negotiating stance' be 'give no demands and tariff the entire world, including islands with just penguins, a nonsensical rate?'

I mean sure I guess you can say he's negotiating, in which case I'd like you to admit he's a terrible negotiator.

inatreecrown23• 1 year ago

because that's the way he likes to do things?

acidmath• 1 year ago

This is what all of the smart people have been saying. So pretty much yeah.

kstrauser2• 1 year ago

Literally not one person I would consider to be smart, or at least educated, has said any such thing.

anigbrowl6• 1 year ago

Isn't it obvious that you can't negotiate effectively if nobody trusts you?

hackly4• 1 year ago

Trust doesn’t matter if you have the most powerful military force in the world. You think the middle eastern countries surrounding Israel trust Netanyahu? Nope, but they sure fall in line and keep the negotiated peace because let’s face it, all of them combined will crumble before a single Israeli battalion. Might does indeed work in negotiations regardless of trust.

ants_everywhere4• 1 year ago

No I think the goal is to isolate the US and make it no longer a global power. That's explicitly the goal of several powerful people who were instrumental in Trump's rise to power.

This includes not only foreign adversaries (and those who work for them) who helped Trump, but also ideological crypto currency fans who fantasize about ending the idea of nation states in general.

markus_zhang5• 1 year ago

Whatever, I'm in Canada and decided to cut down all costs. Fully expecting a recession as well as a depression.

We thought about getting a new car, but not going to do that until in a few years when car sellers are begging me to take one. Right now they are so arrogant that they charge high rates and popular cars takes months to deliver. I'm gonna sit for another 3-4 years.

Also decided to remove all travel plans from the near future. Purchases higher than $100 are going to require a stamp from the financial department ($wifie). All purchases re-directed to local second hand market as mu as possible. Thought about buying a MacBook for RE but to hell with it. No new phones, no nothing until something breaks and evaluated by the financial department to be "essential".

Fuck it. I just got a small raise and bonus but feel so insecure. I expect to lose job at any moment.

owebmaster2• 1 year ago

Fuck it. I just got a small raise and bonus but feel so insecure. I expect to lose job at any moment.

just today 3 people from my network messaged me about losing their job and asking about some opportunity. They worked remotely for American companies (from Brazil).

markus_zhang5• 1 year ago

Yeah, that's the uncertainty we all have to face. I hope they find some local jobs at least.

I don't even know what I can do if I can't find an IT job. I don't have any other skills.

jmward01• 1 year ago

This is the payout difference between perato optimal and minmax solutions. Trust is gone so the sum value to all players is lower overall than it was before. The only thing is the rest of the world still has trust with each other so the ultimate looser is just the US. I just wish that the devastation this is causing could only impact those that caused it but the reality is that those responsible, those that voted for this, won't admit or learn from this, or the hundreds of other devastating acts going on, and will keep inflicting this type of pain. We really did have it all.

insane_dreamer5• 1 year ago

I don’t expect Trump to make sane or rational decisions. But can anyone explain why the GOP senate is just standing by? Surely they are getting hit on the effects of the tariffs like everyone else. Doesn’t compute.

Vegenoid4• 1 year ago

Because opposing Trump risks becoming an outcast, which is the thing that humans want least, and losing their job. There is not yet the sign that their voting base actually wants them to do anything to oppose Trump.

insane_dreamer5• 1 year ago

But what about those who are not up for re-election soon (unlike Representatives). If they're in for another 3-5 years regardless, by then things will have changed anyway.

blatantly2• 1 year ago

Cheap stocks people. Got my eye on some that below a certain price it would be a no brainer to buy. Global trade is rerouting around the bottleneck.

Didn't think there would be an opportunity so soon after March 2020.

Got my eye on a tech stock that has dropped about 40% already but was undervalued before IMO.

roflyear3• 1 year ago

This is a fine idea, but having the cash during a recession to buy stocks is not always easy.

kaycebasques• 1 year ago

A simple but profound idea that has stuck with me from the days when I religiously listened to The Macro Tourist's podcast: who's on the other side of the trade? In order for AAPL to drop 7% today, someone of course had to agree to sell their shares at a price that is 7% lower than yesterday's. But perhaps more interesting, someone else agreed to buy the shares at that price. Who's buying here and who's selling? Who's more composed? What is the investment timeframe of the seller versus the buyer?

It takes two to make a market.

neogodless2• 1 year ago

Presumably most 401(k) contributions and dividend reinvestments happening automatically create a large volume of buying power.

While some people freak out, call an agent, sell stocks, I'd imagine this is mostly actively managed (by humans and software) investments doing the selling.

Beyond that, when you sell something, maybe it felt like it was worth $10. But you offer it for $9.95. Maybe someone buys it, maybe not. Maybe you drop it to $9.80? Then someone buys it. Rinse and repeat until the price is now $8.

When you sell a "$10" stock, if you say you won't sell it for less than $10, you might not be able to do so. It's all more complicated than that, and there are limit and market orders, etc. that affect how much the price will vary from when you initiate it.

But if you're like "hmm, this is horrible news for the economy" you probably press the "sell as fast as possible" order, and your $10 stock might actually sell instantly for $9.50 because for someone with a "smart" algorithm, $9.50 looks pretty good when the stock still seems valued at $9.75+. But then a few million shares sell at prices lower than $9.75 and now the same system that thought it was a good idea to buy at $9.50 thinks it's a good idea to turn around and sell it... for even less.

darkwizard42• 1 year ago

Some people have an obligation to sell (option contracts must be honored, ETFs must be rebalanced, etc.) and this creates liquidity.

Some people also have a lower risk tolerance (or want the money to put into something with more predictable returns like say treasuries) and want out now.

verteu2• 1 year ago

There was widespread institutional selling, and typically dip buyers are non-professional traders who underperform the market [1] [2]

At the end of the day, does it really matter who's the marginal buyer and who's the marginal seller?

Do we learn anything about the value of Apple Inc by learning that the marginal buyer was an HFT hoping to offload inventory in 500ns, a mid-frequency shop who will hedge delta at end-of-day, or a value investor who will hold for a lifetime?

I claim any such information would be rapidly priced in by flow-analysis algos, and thus reflected in the closing price.

[1] https://www.reuters.com/markets/retail-bought-stocks-largest...

[2] https://www.businessinsider.com/retail-investors-buy-dip-tru...

gls2ro• 1 year ago

Asking just for me to learn:

Does it really need someone on the other side to buy or can it be like other markets (consumer goods lets say) where you can set the price lower and not necessary have a buyer. You just announce it that you are willing to sell 10k of this type of share at 200 or lower up to 190. Then someone else seeing this says we are also willing to sell 20k at 190 or 180 ? And so even if no one bought these shares now their “average” price is not 200 but 190ish?

Sorry if the scenario sounds stupid and it is far away how the shares market works.

verteu2• 1 year ago

You are correct -- the (bid,ask) price can change with no trades taking place.

GP is hinting at a common fallacy -- I call it the "strong hands fallacy." It's common in crypto: "Every time the price of $fartcoin goes down, it's moving from weak hands to strong hands. Price drops are just more reason to be bullish!"

tetrisgm2• 1 year ago

Response from friends who voted for this because of Elon: “let them cook“.

This doesn’t seem to shock them

arcastroe• 1 year ago

do these friends participate in the market?

tetrisgm2• 1 year ago

They do. I think it’s one of these beliefs vs logic things

linotype2• 1 year ago

Aren’t the tariffs that the US is imposing half of what other countries have? Or was that fake news from the admin?

vitaflo2• 1 year ago

They aren’t the tariffs other countries are imposing, they are basically the trade deficit ratio instead. A country could have a 0% tariff on American goods but if Americans had a trade deficit with that country they would have been slapped with a tariff.

linotype2• 1 year ago

Ah thanks for the explanation. Definitely a ridiculous metric to go off of to determine tariffs.

rsynnott10• 1 year ago

Fakest of fake news; no developed country (except a few weird microstates) has effective tariffs higher than about 3%. Bizarrely, he based it on _trade deficits_. Today, only two countries have effective tariffs rates >20% (Bermuda and the Cayman Islands), though it will be three next week.

(Based on the World Bank metric; WTO uses a slightly different metric and says there are three; Bahamas, Sudan and Iran.)

t0lo2• 1 year ago

Does anyone have any idea where all of this tarrif(tax) revenue is going? I think it's a little more creative than just increasing wealth. Are there any bold visions or grand plans/futures in the works that this could be going towards?

gitremote2• 1 year ago

Tax cuts for the rich. Defunding the IRS, cutting social services, and pushing tariffs to tax the working class are all consistent with needing to keep the government running without taxing the billionaires.

Tadpole91814• 1 year ago

They just signed the budget, it's not a secret. They're giving $2.5 trillion in tax cuts to the wealthiest Americans.

mertleee• 1 year ago

Assuming we don't give all of the jobs generated to h1b's and O1's I think this could do very good things for the country. Dollars staying within the US and not going to other countries is good.

windex• 1 year ago

Iam amazed at the epic levels of ruin one man can bring upon a country and how a whole country of people can elect someone so utterly out of depth. This level of idiocy wouldnt be tolerated in companies if done by an intern.

disqard• 1 year ago

But what if a significant fraction of the employees believed in some message being spread that intern?

Whether the intern is an inveterate grifter, and/or happens to be personally sponsored by a powerful mob boss, does not matter for the employees latching onto that message.

In that context too, I have a feeling these flaws would be tolerated/overlooked.

parski• 1 year ago

Must feel good to be great again.

heigh6• 1 year ago

Has anyone checked out Fox News recently? There is zero, and I mean zero coverage of the implications of the tariffs. W.T.F. At what point do you go “okay, we’re actually on par with North Korea”?

scoofy• 1 year ago

Freedom of the press means you have dishonest press. Fox News is just ESPN for news consumption. Out of sight, out of mind. If they reported the bad news, these people would change the channel anyway.

mvdtnz• 1 year ago

jfc do some reading about North Korea before making idiotic comparisons like that.

IAmGraydon3• 1 year ago

Fox News is irrelevant when Americans see their retirement account lose 65% between now and late 2026.

lippihom• 1 year ago

They removed their stock ticker that runs at the bottom of the screen for the first time in 30 years. They're a Trump propaganda machine.

Trump's Tariffs Wipe Out over $6T on Wall Street in Epic Two-Day Rout

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