Fools Rush In – Fat Tail Daily | Australian Markets

In the news yesterday, Cryptopolitan:

‘President Donald Trump is now backing off plans to announce new industry-specific tariffs on April 2, according to a Monday report from the Wall Street Journal, which said the White House is still moving forward with reciprocal tariffs, but is now leaving out the broader measures on automobiles, pharmaceuticals, and semiconductors that were expected.’

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Mr. Trump could also be delusional, however he’s not loopy. Faced with the truth of ‘reciprocal tariffs,’ he hesitates. Bloomberg:

‘President Donald Trump’s coming wave of tariffs is poised to be more focused than the barrage he has sometimes threatened, aides and allies say, a potential reduction for markets gripped by anxiousness about an all-out tariff struggle.’

But wait. The trade struggle simply acquired screwier. USA Today tells us that his second of sanity handed like a sneeze. Now, Captain Confusion is taking tariffs to a entire new degree:

‘President Donald Trump on Monday said the U.S. will impose a 25% tariff on imports from any country that purchases oil or gasoline from Venezuela, targeting the South American nation for what he called “purposefully and deceitfully” sending criminals into the United States.’

Like ‘second hand smoke’, secondary tariffs are actually a hazard to a nation’s financial health.

Every main authorities program since WWII — Korea, the Vietnam War, the wars towards poverty, medication, Iraq, Afghanistan, Covid, the Ukraine…Gaza…to not point out scores of campaigns towards different imagined foes — was a flop, typically a very costly, disgraceful and lethal flop.

And now, with this unhappy historical past so tight towards its rear bumper and realising that it would lose control of the House or the Senate in simply two years, you’d assume Team Trump would forswear foolish distractions and deal with issues that basically matter. It is just not actually any fret of ours whether or not or not Peru buys Venezuelan oil. But a fast-approaching debt disaster is. Bothering with the rest is just not solely a waste of time…however seemingly a death sentence to the empire.

But as an alternative of an iron self-discipline and relentless willpower to sort out the Number One menace dealing with the USA, the administration plunges additional into what the Wall Street Journal aptly known as ‘the dumbest trade war ever’.

We noticed yesterday that the precise trade-weighted average tariffs paid by the US and its main trading companions are small and related…typically under 2%. Making them ‘reciprocal’ will make little distinction to anybody. It is just whenever you dig into the delicate tissue of NTBs — non-tariff limitations — that you just strike the uncooked nerves. But that can also be the place the confusion multiplies.

Let’s say we make footwear in a single city and promote them in one other city for $100 a pair. The shoemaker within the different city has to pay his employees more…so he has to charge $110 a pair for his footwear. He says we’re unfair competitors; the decrease wages in our city are an NTB to trade.

But wait, then we discover that the opposite shoemaker’s workshop is in a building owned by the municipality, the place he acquired a lease at a preferential charge.

Unfair! Another NTB! He’s being subsidised by the feds.

‘Hold on’…says the opposite shoemaker. His city is critical concerning the battle towards international warming. It requires him to make use of solar energy…which is more costly than the coal we burn. Another NTB…this one in his favour.

What a mess!

The neighbouring city is now able to impose a ‘reciprocal’ tariff…meant to take into consideration all the numerous NTBs it believes it has found. And now the city’s mayor is upset as a result of some hooligans — allegedly from our city — sprayed obscene graffiti on his workplace wall. He says he’ll retaliate with a tariff towards anybody who does business with us.

Of course, that is politics. And it will get worse. We’ll rent an ex-mayor as a ‘consultant’. He’ll be costly. But he’ll speak to the members of the city council privately…possibly he can get them to see it our approach.

Poor Treasury Secretary Scott Bessent is heading up America’s attempt at reciprocal tariffs. He’s meant to be weighing this towards that…environmental protections towards labour prices…subsidies towards tax breaks. Spare a prayer for the person; he should know he’s on a idiot’s errand. The apples of decrease power prices actually can’t be balanced, in any significant approach, towards the peaches of a higher educated workforce (educated at authorities expense!).

And what about national security!? If our city permits one other city to make its footwear, what’s going to we put on our ft after we go to struggle with it?

At the top of the day…or each time future historians get round to it…odds are good that they are going to see one other comically dismal failure.

Regards,

Bill Bonner,
For Fat Tail Daily

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