Yesterday, I asked if there was a plan undergirding Trump's declaration of economic warfare. Maybe it's Trump being a dumb donkey, surrounded by dumb donkeys who cannot stray one millimeter from Trump Thought. Trump wants tariffs, so we get tariffs. The stupidity and economic illiteracy of the whole project including tariffs on penguins is simply a byproduct of Trump's war on elites (people who can think good). Meanwhile, I also quoted Chris Murphy who thinks this is part of his authoritarian power grab. Companies and countries will have to kiss his ass to get tariff relief.
Richardson today quotes Eric Trump (Jeebus, that's nuts) who suggests that countries better quickly lineup to give Trump what he wants. This is a variation of Trump's war on states, law firms and universities. This, perhaps, mistakes how sovereign countries operate, though. We have Canadian Prime Minister Mark Carney accurately saying that "American leadership is over." This is Trump acting, as Richardson notes, as a mob boss extorting concessions from neighborhood businesses.
Paul Campos argues, on the other hand, that there is no plan. Again, this is completely plausible. Trump seems to REALLY REALLY like tariffs for reasons that people can't quite understand. In his post, he relates someone from the financial world making the case that crashing the economy has to do with resetting the bond markets or some shit. Meanwhile, I got an email from my financial advisors. Let me quote:
Today’s equity market selloff and the accompanying rally in bonds is clearly a reaction to President Trump’s reciprocal tariff policy announced last night from the White House Rose Garden. The tariff program is wide and far reaching, which has caused much uncertainty with investors. Prior to the announcement, investors hoped for a more nuanced and tactical approach with more exceptions possibly.
However, we expect the tariff rate structure announced yesterday is merely a baseline for further negotiation, and that ultimately a more strategic and beneficial policy will evolve.
As it stands, there is a gap between higher costs and consumer prices, which will be incurred immediately, and any future benefits from the onshoring of factory production. And in the interim, without tariff relief, there will be pressure on both sales and input factor costs, which will shrink corporate profit margins and lower earnings per share.
...
With mid-term elections seemingly always around the corner, it will be incumbent on the Trump administration to demonstrate economic progress in the not-too-distant future. This makes us optimistic that tariff policy will necessarily evolve in a way that is pro-growth and supportive of US based companies in the longer-run, and that will become more obvious with refinements to policy.
They also make a point that the market was overvalued and some sort of correction was inevitable and why not have tariffs be the reason the market corrects. Ok...
The bolded parts are just another version of Campos' finance guy saying this is about resetting bond rates. It's all trying to sanewash Trump's insistent demand for tariffs. They treat Trump's actions as that of a "normal" politician operating under normal political impulses. Any normal politician would, in fact, want to make policy that is good for as many voters as possible.
Here's the crux of the matter: We really don't know which it is. It could be that Trump simply loves loves loves tariffs. He's fixated on it as a way to return America to the McKinley administration. If and when he does negotiate tariff reductions, it will be because the markets are kicking the shit out of America, and he will declare victory. The manic instability of his actions are unlikely to placate nervous markets.
Or maybe he will try and leverage tariff reductions for certain policy demands, like he's doing with law firms. If the EU pressures Denmark to give us Greenland, we will drop tariffs on the EU. That's...insane, but it's not implausible that he thinks it will work. So he could have a plan, but's a really, really dumb one.
Or maybe he will have various companies come to him, pay him actual bribes and he will relent on tariffs that impact those companies. Again, completely plausible.
Krugman seems to fall on the Mad King side of the debate, and his arguments are persuasive. There is no deeper meaning to these tariffs, as the method underlying them is just incoherent nonsense. If you proceed from that starting point - the ridiculous formula they used to create other countries "tariffs", the last minute formulation of the whole thing - then ascribing to Trump some sort of 6 dimensional chess seems ridiculous.
This, though, seems undeniable. The market has lost trillions of dollars of wealth in the past two days. What's more, Musk is out there firing Federal workers by the thousands and cutting off grants and funding that prop up all sorts of economic activities. The Atlanta Fed is predicting that we are effectively already in a recession, but since conservative ideology says that government jobs aren't real jobs, everything's cool?
What's more, the dollar is falling in value. That's the opposite of what tariffs should do to the strength of the dollar. The reason it's falling is that Trump is a chaos monkey, flinging poo around the global financial system.
My financial advisors suggest that Trump will respond to negative feedback and correct course. My gut says that Trump feels he's a very stable genius who knows that a few months of pain will be worth it in the long run and fuck the little people anyways.