No. of Recommendations: 23
Some may remember the words of the "Hokey Pokey" song:
You put your right foot in
You put your right foot out
You put your right foot in
And you shake it all about
You do the Hokey Pokey and you turn yourself around
That's what it's all about!
This morning, we saw the positive result of social media posts that the US was engaged with the EU in talks to reduce tarrifs. This was quickly countered by the deflating of the market by a wise crack that another 50% could be levied against China. A cynic would believe that one could make a fortune by having about ten minutes of advanced notice of these posts (not quite the same as insiderr trading, is it?). In the mean time, this nonsense is cost a lot of people real money. Maybee Trump got an A+ on an essay he wrote in high school. Who knows what fixed the simplistic approach to our economy in his mind. The alternative view is that this is all a tactic to get beneficial trade agreements by holding the world heads under water until they agree with his US-serving proposals. While this unbelievably risky approach might work in the short term, his record of breaking deals - even the "wonderful" one he made with Canada (after breaking the original Nafta agreement) means that shaking hands with him means you have to not only count your fingers afterwards, but your relatives as well - and even then, the deal is only in effect until he deecides to change it.
The US, over the past week, has essentially sanctioned every nation on earth (except Russia). While Charles de Gaulle famously stated that "France has no friends, only interests," reflecting a realist approach to international relations where nations prioritize their own self-interest rather than forming strong alliances based on friendship, it is an interesting shift in the US's relationship to the redst of the world to discard the friendships which have served our interest for decades and replace them with a financial blackmail scheme.
Jeff
No. of Recommendations: 25
Well, like NYC weather this month, if you don't like the season, wait a day and you'll be in a different one.
Today saw the sudden demise of all but the paltry 10% steady-state tariff for wall but China (Trump’s top trade official wasn’t informed of tariff delay until after announcement). Yaeh, I know it will all come back in three months, but considering the frequency of change over the past couple of months, that's like a lifetime.
OTOH, China's tariff is now set at 125% and China has raise theirs (last I heard) to 84%.
So, other than the obvious inflationary issues, there are a couple of other considerations that come to mind.
China has become a successful manufacturer of all sorts of items by first having the lowest labor rate around and subsequently building highly automated factories requiring fewer employees. An example of the variety of "stuff" they make: www.temu.com, not to mention many of the components which make up a Tesla - the US built car with the highest percentage in domestic content. Even if the Chinese firms came to the US to build factories, they probably would be highly automated and require few employees. I'm guessing it would be too challenging for USians who had never built the custom manufacturing equipment required to build all this crap.
The unspoken risk is that the US has just placed an immense level of sanctions against a country where trade sanctions would otherwise be the most effective leverage to prevent them from taking the errant island of Taiwan. In a world where the US seems to condone the Russian attempt to consume Ukraine because Russia feels it is strategically important and the US craves Greenland for its "protection" and resources, and the US feels it is warranted to dump over a billion bucks of missiles/bombs on the Houthis in support of turning Gaza into a strip of hotels, it seems rational to assume that China has a comparable argument over the fate of Taiwan.
Neither the US or China are likely to lose face by kowtowing to the other over trade and I fea this may have moved the world into a more dangerous orbit.
Jeff
