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Trade Reciprocity Would Be ‘Very Tough For People’
"I'll probably be more lenient than reciprocal," Donald Trump said, during an interview with Newsmax
Will the US keep buying oil from Venezuela while applying tariffs to other countries that also import from Venezuela? I know it’s impossible to make sense of this and I am not sure why i still try.
I think the main target of the tariff-on-Venezuelan-oil-customers is China, which buys something like 60-70% of Venezuela’s oil production. If effective, the tariff would effectively cut global oil production by around 0.8%, probably offset by increased availability of Russian oil – at the current rate, the US Navy will be helpfully escorting Russian tankers [sarcasm].
On tariffs generally – my base case is that Trump is i) incapable of backing down on his plans to tariff the world, and ii) unable to stop his erratic, ever-changing, without-notice announcements of new and changed tariffs and levies.
i) is because tariffs are the only economic idea he has, may be necessary to fund the only tax idea he has (tax cuts for the rich), and are central to the Mar-A-Lago Accord fantasy-turned-policy that Bessent et al seem to be pursuing.
Suppose ii) is wrong and that over the next few months the Trump crew actually manages to roll out a coherent global tariff scheme, convince companies/investors that the US tariff scheme is now fixed, predictable, and reliable, and get Trump to shut up about the subject even as other countries retaliate and companies lobby for exemptions.
What will be the impact of high global tariffs without the “uncertainty” part?
/quote
Suppose ii) is wrong and that over the next few months the Trump crew actually manages to roll out a coherent global tariff scheme, convince companies/investors that the US tariff scheme is now fixed, predictable, and reliable, and get Trump to shut up about the subject even as other countries retaliate and companies lobby for exemptions.
/unquote
coherent, fixed, predictable, reliable, get Trump to shut up
None of that is going to happen
I don’t know how I will keep track of all the sizes and shapes of tariffs we’ll encounter before this is all over. So far, we have the basic import and export tariffs (which work one way in the US, but differently in every other country). These tariffs can be “fair,” “large” and “rather large,” but we can all agree they are beautiful. We also have totally legal tariffs (ours) and totally illegal tariffs (theirs). And now, I’m being told if you don’t go reciprocal, the recently-discovered NextGen tariff, you can do “lenient.” (It’s an interesting word you don’t hear much anymore unless someone mentions it just before you head out for a friendly interview).
Maybe I’m overreacting, and all I need is an old school thesaurus and a tariff bingo card. And maybe someone should explain to him how long-term supply contracts and shipping lags work.
I think once you start with the premise that Trump is truly insane then everything starts to make sense.
Its a good baseline. Better than the baseline of 4d chess genius.
His chaos is beginning to feel a little predictable. Wild swings of good news / bad news headlines.
But also with a net negative impact in the medium term (at least).