alt Hacker NewsI think a lot of people assume the economic consequences like these have not been understood by the WH. Although I don't like this administration I beg to differ: they know what's going to happen, and they expect the coming storm because they seek what follows.
They want to repudiate foreign held debt, or devalue it, by revaluation of the USD and they will wear what they think of as a one time economic shock to get their reset in a belief they can make it less like the Smoot-Hawley great depression because so many other economic levers exist now, including floating currency, MMT, and massive fintech.
Personally I think it's a mistake but hot takes "they have no idea what's coming" are I believe naive. They know. They just don't care. Some amount of foreign trade will absorb the cost. Not all, not most. Not all prices in the US will rise and some substitution will happen although spinning up cheap labor factories again isn't going to happen in 2025. Maybe by 2027? Rust belt sewing shops and Walmart grade cheap goods production lines?
What amazes me is the timing: the midterms will hit while the bottom is still chugging along. I would think it unlikely they can secure an updraft from this to keep the house. What's the plan for that?
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I tend to agree with you that they know. However the signal leeks showed me that they are not just playing stupid in public - it seems that they are like that for real.
> "they have no idea what's coming" are I believe naive.
There could be someone who understands this. But this someone never shows their face in public, or provides any rationale for the policies beyond the nonsense like "reciprocal tariffs" or similar nonsense. I mean the literal board with tariff percentages that was held up had numbers that made NO sense, to anyone! Yet there are no critical questions?
It's beginning to feel like a conspiracy theory. That behind the obvious idiots who are the faces of the policies, are some other, less inept people who are pulling the strings. But who would this be?
> they expect the coming storm because they seek what follows.
If there are elections in 2026 and 2030 then what follows is a blue wave in the midterms and millions of disappointed voters who had their 401k's gutted, saw prices of most goods increase 10%+ in 2 years, saw little to no tax cuts, lost their jobs if they worked for the government, and lost their social security.
> What's the plan for that?
Trump ran on a campaign that voting is a pain and you won't have to do it again if he wins. Since then he's maintained that third term is the plan. Doesn't really matter how upset the voting population is if you're going to ignore their votes.
By the time the midterms come along I doubt there will be many people left who want the job of fixing up this mess. So they will likely get to keep it.
Even the best economists can't predict economy results from "small" actions.
With global ones like this - they are absolutely oblivious what will happen.
This is, as they say, “sanewashing”. Trump is doing this out of a mix of spite and a view of trade as a zero sum game. He may be advised into a path to try to pivot this into a “win” by large scale debt restructuring, but that is not the overarching motive.
bit of an 11 dimensional chess answer. Senator Chris Murphy has a much better explanation, which is simply this is Trump's way of holding private industry hostage [1]. The tariffs will be incrementally removed as various private industries give him loyalty pledges just as he is doing with large law firms and universities. that's it! so simple.
[1] https://bsky.app/profile/chrismurphyct.bsky.social/post/3llu...
> the midterms will hit while the bottom is still chugging along. I would think it unlikely they can secure an updraft from this to keep the house. What's the plan for that?
There won't be any elections. We will stick with Trumpism. We will be our own best friends, Morty. The outside world will be our enemy. We will do great things Morty, we will do the greatest things. A Trump administration for a 100 years. A Trump administration forever. Over and over. Running around, the Trump administration forever.
This is a good take, but I think I can answer your question about the midterms. This is timed specifically for them. The drop we're seeing in markets right now isn't a pricing in of the tariffs, per se (at least, not yet), it's a pricing in of policy uncertainty that is going to lead to a near-term drop in investment.
However, because they are doing it so early, they will have time to recalibrate and bake in exemptions until the market / inflation is happy. Up to and including backing off of the policy entirely, if that ends up being necessary. As a political strategy, it is perfectly timed to allow Trump to "save the economy" from his own policies. This is true imo independently of what you may think about the policy as policy.
When it comes to the policy as such, recipirocal tariffs, conceptually, are designed to incentivize the overall global reduction in tariffs. So, as a headline, implementing "reciprocal tariffs" is actually favorable to free trade. However, there are some important details that they have fucked up, such as identifying tariffs with trade deficits in general, and in particular identifying them with trade deficits in goods only. That is really the component of the policy that doesn't make sense, and it is important.
Most likely, they will recalibrate and/or provide a lot of exemptions, particularly as the midterms approach. As a political tactic, I think it will work out fairly well, if they respond to the feedback appropriately - that's the big question though, and that uncertainty is the most significant reason for the market drop.
This explanation doesn’t make sense because dollar denominated debt doesn’t change with devaluation.
What is the more likely explanation is all the countries with trade surpluses will feel the pain long before the US and agree to much better terms than before.
The PM of Canada had already indicated progress is being made on their trade deal.
Always keep in mind that Blackrock manages the retirement/social insurance funds of a lot of countries. If the USD crashes, they will, too.
The aftermath will probably be complete isolation of the US, because no country will want to trade with them. And the administration is fine with that, because they're not interested in keeping the status quo of democracy alive.
More influence for them, less influence from outside. That's how oligarchs think and act.
That all sounds fine except that the admin have no intention of keeping these tariffs, rendering your point kind of moot. Trump will enact/retract these tariffs multiple times over just the next month, and few to none of them will still be this high in three months. Since we are just speculating here - what is probably going on is that Trump has some very bad ideas and no one is allowed to contradict him. I'm sure there are people around him that know better, but he really is this simple minded. To your point about midterms, I'm sure his Project 2025 handlers are beside themselves that he's doing this, but there is little they can do to stop him.
> What amazes me is the timing: the midterms will hit while the bottom is still chugging along.
I think Trump is getting unpopular actions out of the way quickly, perhaps planning to announce an income tax reduction later to save the midterm elections.
I have followed writings of the many in this administration, seen their interviews etc. Anyone who thinks there is a "5D chess", "the plan" etc. is purely drinking cope here.
> cheap labor factories again isn't going to happen in 2025
It is not going to happen ever unless we plan to move people from better paying jobs in McDonalds and WellsFargo to China styled factories or we allow much higher immigration levels from South America.
Trump admin and his advisors genuinely believe that tariffs are good, that they will create factories and jobs within USA and enable white families to raise families on a single income. They think rest of the world's existence is a mistake, they hate Europe, China, India and South America. They don't know much about Africa and admire Russia.
The 2nd paragraph is 100% accurate.
I hold a more pessimistic view of the cause and I do agree with your argument that they do know the consequences. But they don't care for another reason.
The plutocracy has fully captured the government and now seeks its ultimate goal: complete transfer of all tax burden to the 99%. For this end they cut the government spending, wrecking the democracy and they impose tariffs to generate fake temporary revenues, so they can argue that the huge tax cut (dwarfing all that came before) is economically sound and fully justified.
This will wreck the global economy and with the coming bad times (wars, famine, extreme migration) nobody will have the presence or the governmental weight to rein in these few rich man.
Probably the plan for that is to do massive gaslighting on social media and find someone to blame for the hardship. Leveraging emotions (especially the aggressive ones) may be an effective way to keep support of the base.
I really wish I was more optimistic and share your position that voters are driven by self-interest. I hope you're right though.
Rich people are typically insulated from economic downturns, especially ones they cause, by their ability to shift investments and asset allocations to mitigate and/or profit from changing tides.
Furthermore, Trump has never bought his own groceries, pumped his own gas, or interviewed for a job so retail prices and layoffs are abstractions "for plebs". Plus, he's reaching the end of his life so he doesn't have very much proverbial skin in the game since his motivations revolve almost exclusively around himself.
"The king is walking around naked; surely he's got a great reason for that. And his advisors wouldn't let him do it if there wasn't a deeper purpose!"
It looks too complex, IMO. As someone living in Trump's beloved country (Russia), I'd say you should ask, "Cui prodest?" If some oligarchs (currently called billionaires, but we'll see) surrounding Trump benefit financially from these tariffs, then the plan isn't about state debt—it's about their personal wealth.
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They might be smart about it like you said, but they might also just be stupid. And the theory that they are smart about it is based on a whole bunch more assumptions...