Trump's Tariffs and Possible Trade War

[Tidewater]

A couple of points.
1. I learned at the Capstone that specialization and free trade benefit both parties to a transaction. I still believe that, to a point.
2. The country best postured for autarky is the US, better than Guatemala or Columbia. But autarky hurts everyone.
3. I think all of this is a bargaining technique. Some pundit (and I cannot remember who) said Trump sees himself as a wheeler-dealer and a lot of what he says is to strengthen his bargaining position when the US sits down at the table to negotiate.
4. Tariffs would not cause inflation, it would cause prices to rise for the tariffed commodity. Two different things. Inflation is a general increase in prices as too many dollars chase too few goods. Place a tariff on coffee and the price of coffee goes up. The price of substitutes (say, tea) would also go up a bit as some folks shift from drinking coffee in the morning to drinking tea. Place a tariff on coffee and the price of steel would be unchanged.
5. The incidence of a tariff depends on the price elasticity of demand for that commodity. Place a tariff on diabetic insulin and the consumer pays the entire tariff because nobody (or very few) would simply stop taking insulin. The demand of insulin is very inelastic. Place a tariff on imported cars and consumers would shift to buying American cars, so the incidence of the tariff would be born by foreign manufactures and by consumers (to a lesser extent) as the price of American-made cars goes up due to increased demand for American cars. Some would simply not buy a new car at all.

 

[AWRTR]

Dude, you've lost a ton of return since you sold everything a year ago. My advice to you is to never try to time the market. It's just too hard and rarely works out. These bumps are normal. As long as you aren't in your 70's and need the money to survive it is almost always better to stay invested. Just shift your holdings into blue chips rather than a money market.

Dollar cost averaging is the way to go for the average investor. I buy if it’s up or down. Trying to time the market is a losing game.

 

[Huckleberry]

https://www.cnn.com/2025/02/01/economy/trump-tariffs-mexico-canada-china-increased-costs

Here’s what will get more expensive from Trump’s tariffs on Mexico, Canada and China

On Saturday, President Donald Trump made good on his promise to impose steep tariffs on America’s three largest trading partners — Canada, China and Mexico — citing a national emergency on the flow of fentanyl and undocumented immigrants into the United States.

The action, which is expected to take effect on Tuesday, includes a 25% duty on all imports from Mexico and most goods from Canada (there’s a 10% carve-out for energy-related items such as crude oil), and an additional 10% tariff on Chinese goods imported into the United States.

Trump has used and promised to employ tariffs for three primary purposes: to raise revenue, to bring trade into balance and to bring rival countries to the negotiating table.

However, economists warn that these moves negatively impact American businesses and consumers, many of whom are still reeling from the sharp rise in inflation in recent years.

The US Chamber of Commerce warned Saturday that tariffs won’t solve the yearslong issues at the borders and instead threaten to “upend supply chains” and raise prices for American families.

“Consumers are going to be clearly worse off,” Sung Won Sohn, professor of finance and economics at Loyola Marymount University and chief economist at SS Economics, told CNN on Saturday.

“When you talk about a tariff, it’s an economic war; and in war, everybody loses,” he added. “But hopefully we will come to some better results and conclusions as a result of the pain and suffering that we will go through.”

About one-third of US imports come from the three countries Trump targeted Saturday. Their products are among some of the most commonplace and critical items used by Americans, including fruits and vegetables, meat, gas, automobiles, electronics, toys, clothing, lumber, and beer and spirits.

 

[Maudiemae]

https://twitter.com/i/web/status/1886102185152274689

“Cowboy Barbie” Kristi Noem says if Trump’s tariffs cause prices to rise in America “other people’s reactions” will be to blame.

I have some friends who are going to say that. And, because I will be seeing those people at someone else's function, I will have walk away in order to avoid slapping them baldheaded. What the...heck...did they think would happen when he pulled this stunt? They seriously didn't realize other countries would respond in kind?

 

[Tidewater]

https://www.cnn.com/2025/02/01/economy/trump-tariffs-mexico-canada-china-increased-costs

Here’s what will get more expensive from Trump’s tariffs on Mexico, Canada and China

On Saturday, President Donald Trump made good on his promise to impose steep tariffs on America’s three largest trading partners — Canada, China and Mexico — citing a national emergency on the flow of fentanyl and undocumented immigrants into the United States.

The action, which is expected to take effect on Tuesday, includes a 25% duty on all imports from Mexico and most goods from Canada (there’s a 10% carve-out for energy-related items such as crude oil), and an additional 10% tariff on Chinese goods imported into the United States.

Trump has used and promised to employ tariffs for three primary purposes: to raise revenue, to bring trade into balance and to bring rival countries to the negotiating table.

However, economists warn that these moves negatively impact American businesses and consumers, many of whom are still reeling from the sharp rise in inflation in recent years.

The US Chamber of Commerce warned Saturday that tariffs won’t solve the yearslong issues at the borders and instead threaten to “upend supply chains” and raise prices for American families.

“Consumers are going to be clearly worse off,” Sung Won Sohn, professor of finance and economics at Loyola Marymount University and chief economist at SS Economics, told CNN on Saturday.

“When you talk about a tariff, it’s an economic war; and in war, everybody loses,” he added. “But hopefully we will come to some better results and conclusions as a result of the pain and suffering that we will go through.”

About one-third of US imports come from the three countries Trump targeted Saturday. Their products are among some of the most commonplace and critical items used by Americans, including fruits and vegetables, meat, gas, automobiles, electronics, toys, clothing, lumber, and beer and spirits.

We import relatively little from Guatemala or Columbia, but Mexico, Canada, and China, I'm frankly surprised that those three account for only 1/3 of US imports. I would have bet it was more.

Thinking strategically, I would placate Mexico and Canada and play hardball with China, not so economic reasons, but for geopolitical ones. While I generally believe in free trade, the theory from the 1990s that, if we treat China like a normal country in terms of trade, they will become a normal country in terms of their internal policy, has not panned out. Letting them into the WTO and treating them like a normal country has largely bankrolled bad Chinese policy, both domestically and internationally.
In hindsight, that was probably a mistake. The world should have demanded a lot more policy concessions from China in the 1990s (like verifiable compliance with WTO free trade measures, protection of intellectual properties, and easing restrictions on the Chinese public). Chinese backsliding on any of those should have immediately resulted in sharp punishment by the international community.

 

[Maudiemae]

A couple of points.
1. I learned at the Capstone that specialization and free trade benefit both parties to a transaction. I still believe that, to a point.
2. The country best postured for autarky is the US, better than Guatemala or Columbia. But autarky hurts everyone.
3. I think all of this is a bargaining technique. Some pundit (and I cannot remember who) said Trump sees himself as a wheeler-dealer and a lot of what he says is to strengthen his bargaining position when the US sits down at the table to negotiate.
4. Tariffs would not cause inflation, it would cause prices to rise for the tariffed commodity. Two different things. Inflation is a general increase in prices as too many dollars chase too few goods. Place a tariff on coffee and the price of coffee goes up. The price of substitutes (say, tea) would also go up a bit as some folks shift from drinking coffee in the morning to drinking tea. Place a tariff on coffee and the price of steel would be unchanged.
5. The incidence of a tariff depends on the price elasticity of demand for that commodity. Place a tariff on diabetic insulin and the consumer pays the entire tariff because nobody (or very few) would simply stop taking insulin. The price of insulin is very elastic. Place a tariff on imported cars and consumers would shift to buying American cars, so the incidence of the tariff would be born by foreign manufactures and by consumers (to a lesser extent) as the price of American-made cars goes up due to increased demand for American cars. Some would simply not buy a new car at all.

We should remember that he does indeed see himself as the ultimate wheeler dealer---and that has not always worked out well for him. Though any sort of politics is always about game playing, I truly feel this dude is only concerned about losing a game as pertains to how much the loss affects him and nobody else. And I don't believe that these recent moves have anything to do with illicit drugs. He just sees himself as being in his element, playing his kind of game and thinks he's the king of the game table. I have no faith in this administration as I'm sure many people don't.

 

[JDCrimson]

In a vacuum selectively applied should not contribute to inflation. But tariffs send a signal that prices can be raised in other sectors especially if they have inputs from the tariffed commodities. American cars have about 70% of the parts are foreign made a good bit coming from China.

Further if our domestic supply chain cannot replace the foreign supply then prices will raise on domestically produced goods.

The tariffs also provide cover for more price gouging by our food distributors because we will have retailiated tariffs on ag imports.

How anyone can see this as a good strategy, idk...

When happens when it's realized that we are not positioning for leverage but a desired outcome?

 

[Tidewater]

In a vacuum selectively applied should not contribute to inflation. But tariffs send a signal that prices can be raised in other sectors especially if they have inputs from the tariffed commodities. American cars have about 70% of the parts are foreign made a good bit coming from China.

Further if our domestic supply chain cannot replace the foreign supply then prices will raise on domestically produced goods.

The tariffs also provide cover for more price gouging by our food distributors because we will have retailiated tariffs on ag imports.

There is also a temporal aspect of tariffs. If the US were to place tariffs on all commodities from X country, then in the short term, prices for products to which Country X exports are a component would rise.
Over the long term (defined as "how long it take the US to build plant to replace the goods from Country X") price would return to the status quo ante, but they would never make it all the way back or we would never have imported the commodity from Country X in the first place.
And yes, Country X is likely to retaliate with tariffs of their own on products the US exports there.

 

[crimsonaudio]

Thinking strategically, I would placate Mexico and Canada and play hardball with China, not so economic reasons, but for geopolitical ones.

One of the main issues with Mexico is the fentanyl flowing over the southern border, as the Mexican government hasn't shown the willpower to stop the cartels from doing so. China is the principal source of precursor chemicals from which Mexican cartels synthetize fentanyl - Chinese brokers even provide recipes to the cartels how to make fentanyl out of them.

Unless / until the Mexicans clean up their mess at our southern border, I don't really care about 'fortifying' our relationship with them.

 

[dWarriors88]

Dude, you've lost a ton of return since you sold everything a year ago. My advice to you is to never try to time the market. It's just too hard and rarely works out. These bumps are normal. As long as you aren't in your 70's and need the money to survive it is almost always better to stay invested. Just shift your holdings into blue chips rather than a money market.

I've been in and out during the bull run throughout the year, I picked up about half last FY's gains, I'm not that conservative, but I am anticipating going all in after a COVID esque correction. I can acquire a larger position as opposed to depositing at average pricing over the entire duration of a bull run, I left 10% of gains on the table over this last year. However, if the market turns down, and it will. I will never in my life be in a position to put 26k into the market at fire sale prices like those were in March in 2020. I didn't have a 401k built up in 2020, so this next time around I will be ready to step in and capitalize appropriately.

As I get older I won't have the courage to catch the falling knife, but I like my chances going into this Trade War fiasco.

 

[Bamaro]

I'm not taking up for the tariffs, I think that they were not properly thought out by the mango moron. However, a 25% tariff doesn't mean a 25% increase to the consumer. Take, for example, an avocado from Mexico selling for $1.00 in the grocery store. If the importer normally pays $.50 at the border for each, the tariff will cost the importer 12 .5 cents extra. If he passes that amount on to the consumer, the $1 avocado will now cost $1.13 (rounded) to the consumer, not $1.25

 

[Tidewater]

Here are a couple of graphs to illustrate the incidence of a tariff.
If the demand is inelastic, a tariff falls mainly on the consumer.

If the demand is elastic, then the producer bears the bulk of the burden, through sales he can no longer make because the price of his product has been artificially elevated.

One of the main issues with Mexico is the fentanyl flowing over the southern border, as the Mexican government hasn't shown the willpower to stop the cartels from doing so. China is the principal source of precursor chemicals from which Mexican cartels synthetize fentanyl - Chinese brokers even provide recipes to the cartels how to make fentanyl out of them.

Unless / until the Mexicans clean up their mess at our southern border, I don't really care about 'fortifying' our relationship with them.

That is why the "tariffs on Canadian goods" side is hard to understand. I do not think much fentanyl comes across the northern border (it might, but I doubt it). I trust the Canadian authorities to interdict drug trafficking much more than I do Mexican authorities.

 

[Bamaro]

WASHINGTON/BRUSSELS (Reuters) - U.S. President Donald Trump will pause new tariffs on Mexico for one month after Mexico agreed to reinforce its northern border with 10,000 National Guard members to stem the flow of illegal drugs, particularly fentanyl, he said on Monday on social media.

 

[Huckleberry]

https://twitter.com/i/web/status/1886460420350701609

Did Trump cave to Mexico?

Biden successfully secured a 10,000-troop commitment from Mexico four years ago—without triggering market panic, alienating major trade partners, or driving up energy prices.

Meanwhile, Trump is now pledging US resources to stop the flow of American firearms into Mexico.

An estimated 200,000 to 500,000 weapons are smuggled across the U.S. border into Mexico each year, and 70% of firearms recovered from crime scenes there were originally purchased in the U.S.

 

[AWRTR]

https://twitter.com/i/web/status/1886460420350701609

Did Trump cave to Mexico?

Biden successfully secured a 10,000-troop commitment from Mexico four years ago—without triggering market panic, alienating major trade partners, or driving up energy prices.

Meanwhile, Trump is now pledging US resources to stop the flow of American firearms into Mexico.

An estimated 200,000 to 500,000 weapons are smuggled across the U.S. border into Mexico each year, and 70% of firearms recovered from crime scenes there were originally purchased in the U.S.

View attachment 48928

I don't think the 10,000 under Biden did much good.

 

[Tidewater]

This, I think supports the assertion that the threat of tariffs was a bargaining technique, designed to put pressure on the Mexicans. The pause is one month, to see if the Mexxicand actually do anything about it.

 

[Tidewater]

I don't think the 10,000 under Biden did much good.

CDC: US. Overdose Deaths Decrease in 2023, First Time Since 2018
The new data show overdose deaths involving opioids decreased from an estimated 84,181 in 2022 to 81,083 in 2023.
So, only 81,000 dead Americans in 2023.

 

[DzynKingRTR]

CDC: US. Overdose Deaths Decrease in 2023, First Time Since 2018
The new data show overdose deaths involving opioids decreased from an estimated 84,181 in 2022 to 81,083 in 2023.
So, only 81,000 dead Americans in 2023.

the other 3000 bought all the eggs

 

[Bazza]

This, I think supports the assertion that the threat of tariffs was a bargaining technique, designed to put pressure on the Mexicans. The pause is one month, to see if the Mexxicand actually do anything about it.

Was at Publix just now and wondered if I should stock up on Corona's and avocados!

Why does Chuck Schumer look like he discovered beer and chips for the first time ever?

https://twitter.com/i/web/status/1886209173743919468

 

[Bazza]

I think this issue is important enough to have its own thread. I'll start with a statement from the National Association of Manufacturers:

National Association of Manufacturers President and CEO Jay Timmons released the following statement on the executive orders imposing significant tariffs on imports from Canada, Mexico and China.

“Manufacturers understand the need to deal with any sort of crisis that involves illicit drugs crossing our border, and we hope the three countries can come together quickly to confront this challenge.

“At the same time, protecting manufacturing gains that have come from our strong North American partnership is vital. The success of President Trump’s landmark trade agreement, the United States-Mexico-Canada Agreement, has strengthened North American supply chains and bolstered economic power across the region, boosting jobs, wages and investments here in the United States.

“Thanks to this agreement, one-third of critical U.S. manufacturing inputs now come from Canada or Mexico, rather than from competitors like China that often engage in unfair trade practices.

“However, with essential tax reforms left on the cutting room floor by the last Congress and the Biden administration, manufacturers are already facing mounting cost pressures. A 25% tariff on Canada and Mexico threatens to upend the very supply chains that have made U.S. manufacturing more competitive globally. The ripple effects will be severe, particularly for small and medium-sized manufacturers that lack the flexibility and capital to rapidly find alternative suppliers or absorb skyrocketing energy costs. These businesses—employing millions of American workers—will face significant disruptions. Ultimately, manufacturers will bear the brunt of these tariffs, undermining our ability to sell our products at a competitive price and putting American jobs at risk.

“We stand ready to work with President Trump to ensure a trade strategy that reinforces American strength—holding bad actors accountable while preserving the gains of the successful USMCA and advancing policies that sustain manufacturing growth here at home.”

Manufacturers on Executive Orders to Impose Tariffs

Washington, D.C. – National Association of Manufacturers President and CEO Jay Timmons released the following statement on the executive orders imposing significant tariffs on imports from Canada, Mexico and China. “Manufacturers understand the need to deal with any sort of crisis that...

nam.org

Breaking news:

Prime Minister Trudeau says U.S. tariffs on Canada will be paused at least 30 days

https://www.cnbc.com/video/2025/02/03/prime-minister-trudeau-says-u-s-tariffs-on-canada-will-be-paused-at-least-30-days.html