New world order USA? New opportunities everyone else.

[ele]

So, the tarriffs. Kind of point out how much more efficient production is in many other countries around the world don't they? And the higher the tarriff placed, the more efficient- well not necessarily of course, but in general. So thanks US for pointing out who to buy from....And there are still niches for other countries any way where they will do better because of their particular resources or skills. The closer a country has been to free trade, the closer it has been to identifying which industries are its niche industries. In Australia, I reckon tourism, education, medical research. energy alternatives and energy research may be ours.

If the US continues this they may find themselves excluded from a world trade network, basically, by themselves. Or is the intention just to manipulate share prices and make money for particular business men? I mean, the US has always had a lot of industrial- particularly military and agricultural industrial influence on government.

Also I wonder how much more essential the items US buys are then the items it sells?

 

[Sarkus]

So, the tarriffs. Kind of point out how much more efficient production is in many other countries around the world don't they?

No. The efficiency of a sweat-shop in Vietnam might be much lower than a similar set-up in the US, but - and here's the important thing - wages are that much cheaper over there, along with many other things, that the cost of the finished goods are that much less. If you mistake "low wage" for "efficiency" then you're going to fail.

And the higher the tarriff placed, the more efficient- well not necessarily of course, but in general. So thanks US for pointing out who to buy from....

You seem to have completely misunderstood the calculation behind the imposed tariffs. The calculation is based on the value of trade - i.e. the trade deficit that the US has with that country. Nothing to do with efficiency. Not even a proxy for efficiency. Just simple trade imbalance.

And there are still niches for other countries any way where they will do better because of their particular resources or skills. The closer a country has been to free trade, the closer it has been to identifying which industries are its niche industries. In Australia, I reckon tourism, education, medical research. energy alternatives and energy research may be ours.

You could choose to ignore that c.50 of your exports are from the mining/resources sector, of course. Or any of the other larger sectors in the country.

If the US continues this they may find themselves excluded from a world trade network, basically, by themselves.

They could, yes. At least until someone sensible is in the top job.

Or is the intention just to manipulate share prices and make money for particular business men?

There will undoubtedly be investigations into possible insider-trading as a result of Trump's sudden announcements, and who might have known, and who might have benefitted from such insider knowledge.

I mean, the US has always had a lot of industrial- particularly military and agricultural industrial influence on government.

You don't say! You mean that the gun-lobby might pay (sorry "donate") vast sums to numerous politicians to ensure that they can continue to sell their pistols, rifles, automatics etc to the population?
Or that Trump didn't tell "big oil" that if they donate $1bn to his campaign fund they could basically write their own Executive Orders?

Also I wonder how much more essential the items US buys are then the items it sells?

Maybe if the world stopped using Twitter, Facebook, Amazon, Google, Netflix, etc, we might find out.

 

[Seattle]

So, the tarriffs. Kind of point out how much more efficient production is in many other countries around the world don't they? And the higher the tarriff placed, the more efficient- well not necessarily of course, but in general. So thanks US for pointing out who to buy from....And there are still niches for other countries any way where they will do better because of their particular resources or skills. The closer a country has been to free trade, the closer it has been to identifying which industries are its niche industries. In Australia, I reckon tourism, education, medical research. energy alternatives and energy research may be ours.

They may or may not be efficient but you could equate competitive advantage to efficiency I suppose in some cases. What it really shows is just the trade deficit or surplus.

If the US continues this they may find themselves excluded from a world trade network, basically, by themselves. Or is the intention just to manipulate share prices and make money for particular business men? I mean, the US has always had a lot of industrial- particularly military and agricultural industrial influence on government.

Donors have input, yes. Theoretically, they should balance each other out but that's theoretically.

Also I wonder how much more essential the items US buys are then the items it sells?

That would be hard to answer since it's subjective, in part. We buy a lot of junk from China but we also buy a lot of electronic gear, chips and essential raw materials.

General tariffs (and not specific targeted tariffs) are generally bad for everyone. Free trade benefits everyone. Trump is off on cloud 9 on this subject.

Today was a good opportunity for many to get out of the market if they wanted to. I'm sure there is now a lot of cash on the sidelines. Uncertainty really hasn't been improved so I don't see the market or companies doing much until that uncertainty is resolved.

China is essentially out of the US market at this point. Companies like Apple will be affected and really it's going to trickle down to most people in one form or another. In reality though, many products will just be trans-shipped through Vietnam or something like that so the effect may be much less than one would think.

 

[exchemist]

So, the tarriffs. Kind of point out how much more efficient production is in many other countries around the world don't they? And the higher the tarriff placed, the more efficient- well not necessarily of course, but in general. So thanks US for pointing out who to buy from....And there are still niches for other countries any way where they will do better because of their particular resources or skills. The closer a country has been to free trade, the closer it has been to identifying which industries are its niche industries. In Australia, I reckon tourism, education, medical research. energy alternatives and energy research may be ours.

If the US continues this they may find themselves excluded from a world trade network, basically, by themselves. Or is the intention just to manipulate share prices and make money for particular business men? I mean, the US has always had a lot of industrial- particularly military and agricultural industrial influence on government.

Also I wonder how much more essential the items US buys are then the items it sells?

Well the whole strategy seems already to have blown up in Trump's face, with BOTH stock and bond prices falling, when they normally move inversely to one another. The UK suffered this when we had the famous "Trussterfuck" a couple of years ago. Basically the markets started to add a "moron premium" to UK government bonds, due to a lack of faith in competent economic management. The same may now be happening to US Treasury bonds!

And guess who holds the most of these bonds: the Chinese, arf, arf. Trump may not realise, yet, that if Xi joins in the bond sell-off and starts dumping US Treasury bonds, bond yields go up and China could thereby indirectly jack US interest rates and crater the US economy totally. So I think this pissing contest has a few more rounds to go.

But what is for sure is Trump is trying to declare victory while he retreats. It was always stupid. Trump's rationale was like saying when I buy a bag of apples from the greengrocer's stall the trader is "ripping me off" because he just takes my money and doesn't buy anything from me in exchange. But of course I don't grow apples, and what I have to sell is expertise on the lubrication of marine and power engines, which is no use to him! So that's why I run a trade deficit with the greengrocer.

 

[TheVat]

But of course I don't grow apples, and what I have to sell is expertise on the lubrication of marine and power engines, which is no use to him! So that's why I run a trade deficit with the greengrocer

And TP doesn't understand circularity in economies, e.g. that said greengrocer might go and purchase a boat and a riding lawnmower, whose proper operation and value is partly owing to your lube expertise. TP's view of transactions is very binary and childish.

And declaring victory while he retreats was his MO in his first term, so no real change there.

Will be interesting to see how the shelves look at Walmart as this all plays out. Walmart stores are mostly a vast hangar full of mediocre quality fungible junk from the Chinese factory floor. (even their once highly touted "Made in USA" items were mostly items made from Chinese parts/materials)

 

[TheVat]

In reality though, many products will just be trans-shipped through Vietnam or something like that so the effect may be much less than one would think.

Just curious if you have more information on how that would work, some kind of link? Given the volume of China's exporting, I'm having trouble visualizing how Vietnamese trans-shipping would operate.

 

[TheVat]

Was also gloomily ruminating on how the shortage of affordable housing should be nicely exacerbated by all this, along with all the other economic mayhem.

If we face higher borrowing costs from a bond selloff, then those increases filter across to mortgages. Normally, young families can go out and buy houses from old couples like me and the missus, as we downsize to a smaller townhouse, but the market is so insane a lot of us are putting that on hold, so the pool of houses for sale shrinks, bidding wars erupt...throw in higher mortgage rates and plummeting rate of new construction (pricier lumber from Canada and our major drywall supplier is, gulp, China), and the whole machine freezes up.

 

[Sarkus]

Just curious if you have more information on how that would work, some kind of link? Given the volume of China's exporting, I'm having trouble visualizing how Vietnamese trans-shipping would operate.

The idea would be that China sells to a 3rd country with much lower US tariffs.

So if China have 100% tariff, and they try to sell $100 direct into the US, the US importer would have to spend $200 ($100 to the exporter and $100 to the US government).

But if they go via a 3rd country, e.g. Vietnam - let's assume a minimal fee (e.g. 10%) payable to Vietnam that is then included in the price to the end-user (maybe they've tweaked the product, some value add that justifies the delivery to Vietnam beyond just trying to bypass the tariff). This would put the base cost up to $110. Vietnam have, say, 10% tariffs with the US, so the $100 goods will cost the US importer only $121 ($110 to the exporter, and $11 to the US government).

$121 is cheaper than $200, which means that demand may not be as badly impacted.

 

[exchemist]

Was also gloomily ruminating on how the shortage of affordable housing should be nicely exacerbated by all this, along with all the other economic mayhem.

If we face higher borrowing costs from a bond selloff, then those increases filter across to mortgages. Normally, young families can go out and buy houses from old couples like me and the missus, as we downsize to a smaller townhouse, but the market is so insane a lot of us are putting that on hold, so the pool of houses for sale shrinks, bidding wars erupt...throw in higher mortgage rates and plummeting rate of new construction (pricier lumber from Canada and our major drywall supplier is, gulp, China), and the whole machine freezes up.

In the UK we found it took quite a while for the “moron premium* ” to dissipate. And that was after Truss had been forced to resign. With senile Cap’n Chump at the helm, a wildly yawing economic policy can be expected to continue indefinitely, so expect bond yields - and all the other interest rates that cascade from that - to be elevated.

* This is actually a thing, in the bond markets: https://www.investopedia.com/the-moron-risk-premium-11711745

P.S. I gather it was James Carville , the veteran Democrat strategist and commentator, who once quipped that if reincarnated, he would like to come back as the bond markets, on the basis that they are the most powerful thing in existence.

 

[exchemist]

And TP doesn't understand circularity in economies, e.g. that said greengrocer might go and purchase a boat and a riding lawnmower, whose proper operation and value is partly owing to your lube expertise. TP's view of transactions is very binary and childish.

And declaring victory while he retreats was his MO in his first term, so no real change there.

Will be interesting to see how the shelves look at Walmart as this all plays out. Walmart stores are mostly a vast hangar full of mediocre quality fungible junk from the Chinese factory floor. (even their once highly touted "Made in USA" items were mostly items made from Chinese parts/materials)

Yes when I was in Houston I was struck by how crap almost everything was in Walmart. Stuff that fell to bits as soon as you got it home, or else was too tasteless to buy in the first place. But China also makes seriously good hi tech products as well, not that you would find any of those in Walmart.

Anyway, today I feel less pessimistic than I have for weeks. It really seems now to be possible that Trump and his Trumpies are fucking up so badly that opinion may turn against them before they have a chance to complete their soft coup. And there seems to be real dissension in the team, e.g. between “Ron Vara” and Vance, vs. Bessent and Musk.

P.S. the head of the UK armed services, Adm. Tony Radakin, has just made a visit to China, to talk to his counterparts there. No big deal, but possibly one straw in the wind concerning the reshaping of military alignments that Trump is causing. These days, one has to hedge…

 

[ele]

Thought this article was interesting and relevant to my questions:

Trump assumed the US could dictate a new world order. China said no

Of all Trump's miscalculations this week, his biggest miscalculation of all may be assuming that China would not hit back, using the economic power that the Chinese Communist Party has been amassing for decades, but until recently, has not fully deployed.

www.abc.net.au

 

[ele]

The idea would be that China sells to a 3rd country with much lower US tariffs.

So if China have 100% tariff, and they try to sell $100 direct into the US, the US importer would have to spend $200 ($100 to the exporter and $100 to the US government).

But if they go via a 3rd country, e.g. Vietnam - let's assume a minimal fee (e.g. 10%) payable to Vietnam that is then included in the price to the end-user (maybe they've tweaked the product, some value add that justifies the delivery to Vietnam beyond just trying to bypass the tariff). This would put the base cost up to $110. Vietnam have, say, 10% tariffs with the US, so the $100 goods will cost the US importer only $121 ($110 to the exporter, and $11 to the US government).

$121 is cheaper than $200, which means that demand may not be as badly impacted.

Good point you make here. I wonder though how much China (and Vietnam) would want to do this... and what response it would bring if they did.

 

[exchemist]

Thought this article was interesting and relevant to my questions:

Trump assumed the US could dictate a new world order. China said no

Of all Trump's miscalculations this week, his biggest miscalculation of all may be assuming that China would not hit back, using the economic power that the Chinese Communist Party has been amassing for decades, but until recently, has not fully deployed.

www.abc.net.au

Yes, good article.

One thing that strikes me about all this is it seems to betray the same naïve and hubristic exceptionalist thinking that US Republicans showed towards the world at the time of the Iraq Invasion. At that time I read Graham Green's "The Quiet American" and was struck by how he captured this trait in US attitudes towards the world so accurately. Now we seem to be seeing the US Republicans being taught the same lesson in economics as they were taught militarily then: that there actually are limits to the power the USA has to act unilaterally.

Of course the old guard in the Republican party knew all this, just as the old guard in Britain's Conservative party would never have made the blunders of Truss. What has happened to both parties is that the centre-right Sensibles have all been purged, in favour of a new class of Batshitters: fawning idiots and madmen, happy to parrot facile and extreme internet ideology in exchange for political advancement. So a whole generation of political wisdom has been thrown out - and they will have to learn it all again, the hard way.

 

[exchemist]

And TP doesn't understand circularity in economies, e.g. that said greengrocer might go and purchase a boat and a riding lawnmower, whose proper operation and value is partly owing to your lube expertise. TP's view of transactions is very binary and childish.

In fact, it is almost as if Trump doesn't understand the purpose of money. He seems to think anything other than bartering of goods is a rip-off.

 

[TheVat]

At that time I read Graham Green's "The Quiet American" and was struck by how he captured this trait in US attitudes towards the world so accurately. Now we seem to be seeing the US Republicans being taught the same lesson in economics as they were taught militarily then: that there actually are limits to the power the USA has to act unilaterally.

Great book, decent movie (the 2002 version; the 1958 version was crap and grossly subverted Greene's whole point about American recklessness and absence of self-doubt and remorse over damage and death). "Not a lot of people know that" there even was a fifties movie version. In the later version Brendan Fraser captured American hubris perfectly.

Of course the old guard in the Republican party knew all this, just as the old guard in Britain's Conservative party would never have made the blunders of Truss. What has happened to both parties is that the centre-right Sensibles have all been purged, in favour of a new class of Batshitters: fawning idiots and madmen, happy to parrot facile and extreme internet ideology in exchange for political advancement

Mostly, though Joseph McCarthy notably spearheaded some Republican paranoid batshittery around 1950, seeing commies and Russian spies under every bed in academia and Hollywood. It took the more moderate and genteel Eisenhower (with old guards in congress) to put him down. I don't know how close the GOP came to the edge back then - maybe as you say the old guard had the guardrails firmly in place. There is so much of McCarthy in the TP playbook that I find myself wanting to go back and read up on that whole Red Menace era.