Chaos – Fat Tail Daily | Australian Markets

Tariffs, tariffs in all places…

What a rollicking good time for the press. And for Trump critics. The wires:

Stocks slide across the world as buyers recoil from Trump’s tariffs

We watched the tape yesterday. The Dow was down 1,000…then 1,200…then 1,500. Where wouldn’t it come to relaxation, we questioned. It ended the day down 1,679.

In his first time period, Trump dedicated one of the most important blunders in US financial historical past — shutting down the economic system and changing actual output with an additional $4 trillion in phony, printed-up stimmy checks .

The end result? The worst inflation in fifty years.

And now…right here comes Big Blunder No. 2. Doubters abroad and skeptics at home — all are having a discipline day. Raw Story:

“This might be the single stupidest thing any of us will ever see,” [Ian] Dunt argued. “It is stupid in every way: presentationally, intellectually, politically, methodologically, morally and of course economically. The word stupid doesn’t really suffice for the full level of idiocy we’ve now reached.”

Trump’s tariffs are so dumb they’re uniting Democrats and Republicans… free merchants and protectionists…comedians and historians. Alternet:

Shortly after President Donald Trump issued Wednesday’s announcement of new tariffs, 4 Senate Republicans joined Democrats to increase a lopsided bipartisan rebuke to his trade coverage. The Senate adopted a decision by a 51 to 48 vote to dam his proposed tariffs on imports from Canada, a longtime US ally. Now, former Vice President Mike Pence is additional infuriating Trump supporters by calling out his new tariffs as “a tax.”

The tariffs are even making economists look sensible. Finally, right here is one thing that Paul Krugman — famously unsuitable about most all the things — could be proper about. Raw Story:

“Based on what he said, he’s gone full-on crazy,” wrote Krugman, a frequent critic of the president. “It’s not just that he appears to be imposing much higher tariffs than almost anyone expected. He’s also making false claims about our trading partners — not sure in this case whether they’re lies, because he may be truly ignorant — that will both enrage them and make it very hard to back down. Basically, he’s claiming that the rest of the world is placing very high tariffs on U.S. products, and that he’s imposing ‘reciprocal’ tariffs that are only half what they impose on us.”

“The EU, like the United States, has generally low tariffs; the average tariff it charges on US goods is less than 3 percent,” wrote Krugman. “So where does this 39 percent number come from? I have no idea. Many people speculated that Trump would count value-added taxes as tariffs, even though they aren’t — European producers selling to the EU market pay the same VAT as US producers, so it doesn’t discriminate and therefore isn’t protectionist. But even if you get that wrong, EU VAT rates are in the vicinity of 20 percent, so you still can’t get anywhere close to 39 percent.”

Where do Trump’s numbers come from? Some are nonsense. Some are irrelevant. Some are pure WTF. The Donald, for instance, says Taiwan ought to get a 64% tariff.

On a complete of $134 billion of back-and-forth trade in 2023, tariffs on imports and exports averaged 2% — even steven, coming and going. So, why a penalty tariff on our supposed ally?

Trump:

“We are going to charge countries for doing business in our country and taking our jobs, taking our wealth, taking a lot of things that they have been taking over the years.”

Business Insider:

Commerce Secretary Howard Lutnick mentioned on Wednesday that President Donald Trump’s new reciprocal tariffs are simply a response to how the US has been handled on trade.

Laura Ingraham at Fox picks up the battle membership angle. “Only Trump has the guts” to stop the foreigners from ripping us off, she says.

Get it? They’re Honor Tariffs… like honor killings, designed to reclaim America’s sense of equity…justice…and honor. We’re going to show them a lesson by imposing taxes – on ourselves!

Because, the foreigners don’t pay the tariff penalties. US shoppers do.

Warren Buffett explains:

“The Tooth Fairy doesn’t pay ’em!”

And why are the feds’ getting concerned in any respect?

Donald Trump is the last word politician…all the time combating for energy, status, and money. That’s why he insists upon being a ‘winner.’ In politics, you’re both a winner or a sufferer. Now, he thinks he can win by bludgeoning different nations with tariffs.

But trade will not be meant to be half of the political world. It’s half of the win-win world of commerce — bargaining, negotiating, and making an attempt to fulfill a buyer.

When an sincere trade occurs, each side win. Each will get one thing he didn’t have earlier than and offers up one thing he considers much less worthwhile. Bringing in politics simply queers the deal.

And now that the politicians are on the case, you possibly can anticipate them to make the identical type of mess of it that they made of Amtrak, Iraq, and the Covid hysteria. Expect decrease growth, greater costs, and more chaos.

Regards,

Bill Bonner,
For Fat Tail Daily

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