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Trade War 2.0
"Trade War 2.0" will dominate headlines in the week ahead, and not just on financial news portals.
Donald Trump's weekend tariff declarations may well destabilize markets, but they also risk a diplomatic crisis with Canada and Mexico.
Claudia Sheinbaum's not a pushover, but Mexico doesn't exactly come at this from a position of strength, certainly not economically. More than three-quarters of its shipments "abroad" go to the US, and that doesn't count the drugs. In theory, Trump's levies, if i
What is sadly ironic is that these tariffs violate the very agreement that Trump 1.0 negotiated, USMCA which replaced NAFTA in 2020. The US has a long and inglorious history of breaking treaties and agreements. But generally that is done by different administrations. This is a new low.
Trump believes his own BS when he says he has an overwhelming mandate. Its not even clear what he’s asking of Canada and Mexico, so I’m not sure what a resolution looks like (although if it’s anything like Trump’s typical victories, it’ll be slapping a new label on existing deals and declaring total capitulation of our adversaries).
I’m rooting for chaos at this point. I want all those business owners and tech/crypto bros to feel the pain. We need to break this MAGA fever, and short of Trump succumbing to Father Time, economic pain might be the only cure. It might kill the patient in the process (I.e. Trump might just declare martial law and get away with it), but I’d rather see the situation resolved.
Things that wouldn’t surprise me based on what we’ve seen so far:
1. The US economy will go into recession with a healthy dose of stagflation.
2. The government will be hacked in a major way that disrupts payments for major programs like Medicare and social security. All of our personal data will be even more compromised than it already is.
3. The military will participate in a mass casualty event.
4. The FBI will miss signs of a major attack because they are bing gutted.
5. Airports will see shut downs or capacity constraints because they won’t have staffing.
6. Crypto will tank when appetite for risk drops off a cliff.
7. Housing costs will go up dramatically because builders will now have higher costs in the face of a worsening economy and stop building despite supposed deregulation.
8. China will invade Taiwan during his term.
I think the average Joe will be surprised when their lives are impacted directly in a meaningful way by the likes of Elon Musk overseeing government tech and mass government layoffs and Kash Patel leading the FBI (and that’s just the start of the list of the incompetent lackeys in charge now). Trump believes he is the second coming and knows Republicans won’t lift a finger to check all his worst impulses this time around. We are in for a bumpy ride. Cthulhu help us if there is an even worse pandemic or a major war.
The other thing I’d add is even if we come to a new agreement with Canada, I’d be willing to bet Canadians won’t be so quick to forget this treatment. They were booing the national anthem at a hockey game last night. They will be rightfully pissed and may not be so quick to buy American going forward.
Stop spending, hurt economy before midterms. Less pain now than down the road. It’s coming either way. Old college days, we asked what was the best approach to get a win-lose player to cooperate. Tit-for-Tat won; sting defections then cooperate until they change. Problem today, the question is finding the best approach to changing the other person from playing “dictator-lose-lose” (forgot what I’m suppose to say about scare quotes). I have no computer support, but still think Tit-For-Tat best approach. Democrats are scared, soft as tRump would say, to play lose-lose. I say ignore everything he does, just focus all effort on what hurts him, first the economy, hurt it before stopping him is 10X the cost down the road.
Don’t forget the part where a “National Emergency” is declared (invented) and elections are suspended.
Biggest problem Mexico has….” the rule of law doesn’t really exist in some (most) locales “. I don’t think there is anyone down there that our law enforcement could work with. Sad fact. Up here sometimes it seems hopeless, but we are so lucky with what we have !
This is a wake up call for Canada, I’m hopeful that the government/country makes changes to become more productive (lagging for years) and less dependent on the US. Imo the longer this goes on the greater the long term benefit for Canada, short term of course will be difficult.
“All that’s going to do is stoke anti-US sentiment in Canada, chaos in Mexico and inflation in the US.” Does he care, or will be forced to care, about the first two though? And by the time he sees measurable inflation according to lagging measures there’s a fair amount of damage already done.
H-Man, when the kitchen gets hot, he will tell us the tariffs work –fentanyl and illegal immigration down. No more tariffs, problem solved.
He is the fairest reporter of his performance of all time. No sugar coating, only he can perform so well. He is simply amazing …
I got a bridge for you from NY if you want to buy it.
As I catch up on your articles this week, it has been impressive (at least to me) how you link to your prior articles, even some years back, to support or emphasize a point. It helps me go back and read what I may have missed or forgotten. It is in this spirit, while catching up on what you wrote this week on tariffs, I recalled a quote you either posted or article-referenced during the Trump 45 presidency when, I believe, he reneged on an Agreement with the Democrats on tariffs. I may not have the situation exact.
The quote was attributed to Chris Kruger, Strategist at Cowen Washington — “To paraphrase Lenin: there are decades where nothing happens and there are weeks when decades happen…and then there is a single week in the Trump Presidency. What a time to be alive.”
All I know is Trump was correct when he said we’re going to get tired of winning. It’s exhausting after a couple of weeks.