While the markets are panicking, the geopolitical situation is ramping up. It is going to be interesting to see what the responses are going to be to the tariffs and how far Trump is willing to go. Will he really push another 50 points onto China? Will China match it again? For those counting though, The US imports about twice as much from China, than China does from the US, and China accounts for over 30% of all production on earth.
What happens if they just stop shipping to the US?
Or what happens if instead of an import tariff, the RoW imposes export tariffs on the US, "saying sure, you can buy from us, but we are going to up the price of everything going to the US". What if they take that difference and use it to subsidise the cost for other countries instead, creating additional buying power and a situation where demand in the RoW can increase. While the US market is the world largest and is mammoth, I wonder how much it would take to increase the consumer markets of the RoW to soak up the loss of trade?
How much are Americans willing to pay for an iPhone?
What about those oh so popular Ford F-150s that are as American as Apple pie and the top seller in the States? Well - 45% American... Well, if you count Canada as part of America.... That's right, only 45% of an F-150 is American sourced, and that doesn't differentiate for what is coming from Canada, even though it is assembled locally. And that is about the highest percentage for all the cars out there.
What about all the other stuff besides cars?
The US is a massive country with a lot of resources, and it would be able to be self-sufficient without international trade... but is that the America that people really want?
My ex's family live in a small town but when their daughters both moved to the city (where I live), they started visiting. One day, I picked up some Chinese takeaway for dinner and from then on, every time they visited, they wanted more. I introduced my ex to sushi, and curry, and tacos and a whole range of things and her world of flavour changed - would she want to go back to eating only traditional Finnish foods?
Nobody would.....
But what about all the other aspects of global culture that Americans have come to expect, are they willing to do without? For instance, Americans like a cup of coffee - but other than a bit in Hawaii, don't grow any of it. Maybe it would be a good thing to ween people off the coffee - after all, they can get their caffeine hit from those energy drinks. Except, the caffeine in those drinks is synthetically produced in factories.... In China.
All of the imported products might be able to be produced eventually in the US, but if the RoW were to just stop selling to the US, what would happen in the meantime? How long does it take to get the US functioning smoothly, if nothing is coming in from abroad?
While I don't think the other countries have the balls, if they really wanted to break this flex by the US by using tariffs, and if they really wanted to create turmoil in the US like they haven't seen before, then the RoW would just stop trading and ostracise the US from the global economy. And maybe as the RoW increases their consumer behaviours, and the US is forced to reduce theirs, the land of opportunity might not be so opportune, and people might start leaving, rather than trying to get in - setting up a brain drain.
Currently, there are relatively large groups of people protesting the current government actions, and one thing that I have found interesting just by looking at the pictures, is that it isn't the young hippies who are doing it because it is cool - there seems to be a lot of older people in the crowds as well. Does this indicate anything for the future of the protests? Is the stomach there for consumer hardship?
What the RoW has to remember is all of this is an attempt to "Make America Great Again", not the world a better place. Of course, it is unclear exactly what period Great America it will be - perhaps when it was a British colony? My point is, that the RoW has an opportunity to rebalance the power structures and maybe improve wealth distribution, if it doesn't bow down and play the short game of keeping the US market alive. The problem is, the power structures in the other countries are supported by the status quo too, and they don't want to give up their control over the people either.
In a couple days the EU will announce the countermeasures from the bloc, and I suspect they are going to be pretty lame. All people seem to see is the current situation, rather than a situation where things are better than today. And the normal people who are supporting the US oligarchy, I feel are in for a nasty surprise if this economic plan succeeds, because the average person doesn't factor in. They talk about bringing jobs back to America, but those same people are the ones who are automating jobs away from humans, and finding as many ways to maximise profit, without increasing headcount. The corporations will be wealthy, the GDP might be brilliant - and still the average person will be in a worse position.
Practicality doesn't matter.
People are supporting their position based on their emotional state, driven by what is often far from accurate belief models about how the world works. Right and left are fighting about the irrelevant, while the things that actually matter fly under the radar. Real people are suffering and more will suffer, while those with private planes and yachts manipulate the conditions to get a little more for themselves. And that mentality will always want more, and more, and more - and it will take your job too, if it makes them more.
If the RoW coordinates and cooperates, it will win a trade war with the US easily.
The cost will be World War III.
Taraz
[ Gen1: Hive ]
The US could produce everything its citizenry consumes, but how is this beneficial? The US could raise tariffs further, but who benefits? I know the nationalist arguments about anticompetitive and abusive foreign practices, but this does not justify raising costs for consumers here. Government wants revenue, and the politically-connected want to eliminate competition with threatens their profit margins. It's packaged to sell to a gullible public by preying on their prejudices, but it is short-sighted and destructive.
Absolutely. And this is why humanity can't have nice things - because we are too gullible, following leaders who are only looking to fill their short-term desires. It is a tale as old as time remembered.
I have just published an article that also looks at the fall, the collapse of the economy, if it is opportune, ‘keep an eye on it’. Your analysis is profound and raises scenarios that invite us to reflect on global interdependence and the possible consequences of economic and political decisions. Well, it makes me think about how fragile the balance between national interests and collective well-being can be. No doubt the key is how people and governments react to these challenges. Fear of change can lead to hasty responses, but it can also be an opportunity to seek fairer and more sustainable solutions. Nevertheless, I am confident that international cooperation will prevail over conflict, because we all lose out in a divided world. I do not believe that World War III is yet latent.
I think the only thing stopping world war III at this point, is the RoW lack of stomach for it. No one wants it of course, but the US government is relying on that lack of desire to force countries to bow. I am not sure it is a good gamble at this point of human history.
What is certain, the current economy doesn't work for 99% of the global population, so it has to change, otherwise there will be revolution anyway. That might be better, but it will mean a lot of violence at all levels.
A WW3 where the US is the bad guy. That'll be fuuuuun.
Maybe they always were - like Anakin turning to the darkside.
All about perspective. But I mean, yeah, you look at some of the shit the US has involved itself in and done...
You raise some good questions.
This would harm China more than the US. They are already in economic trouble. They need to export. Whereas the US can substitute goods from other countries. There is evidence that such changes are possible. For example, after China imposed a 25% tariff on US soybeans, they shifted to purchasing them from Brazil. The US was able to redirect most of the soybean exports to other regions, notably the EU, Mexico, Argentina, and other Asian countries. In addition, US internal consumption increased and farmers also started shifting to other crops.
Similarly, if China stops shipping to the US, they'll have to ship somewhere else. In the meantime, the US would have to source from other places until internal production catches up to demand.
Fortunately, iPhones are a bit of a luxury item, which means there is plenty of margin. However, Apple has shifted some production to India and Vietnam. Furthermore, Apple is investing in building production within the US. Both India and Vietnam have reacted to the tariffs by dropping their own tariffs. However, China is still dominant in iPhone production. But that can be changed, which hurts China more. The US will still get iPhones, but decreasingly from China.
As for vehicles and their components, they are largely exempted from tariffs by USMCA (US-Mexico-Canada Agreement). Even then, Mexico has already agreed to drop tariffs.
In a recent interview on Triggernometry, Jim Rickards expressed some degree of support for the actions and stated that whatever China does, "that's China's problem". I think the sentiment is similar to the approach the Trump administration is taking.
You are right in thinking that the tariffs would cause some level of inflation. However, whenever there is inflation, the Federal Reserve tends to drop interest rates. And the US Government needs interest rates to drop as they have a significant amount of debt that needs to be refinanced at a lower interest rate. The inflation is expected to be mitigated by higher domestic production, which would also result in more wages. Inflation will be temporary as Trump has already secured trillions of dollars of foreign investments to build up manufacturing in the US.
With regard to discontent, the numbers don't support it. Trump's approval ratings continue to rise. And he has even gained support by worker unions, which have never supported Republicans.
All this is not to say that there won't be economic pain. President Trump, along with Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick have a plan that they have discussed quite often leading up to the election. The plan necessarily requires killing globalism, which has been the source of economic problems for the US, Great Britain, the EU, and other developed countries that have gutted their production capacities and economically strangled their middle classes. If they follow the same plan, they will also benefit.
This is an economic reset. It is definitely having an effect like knocking over an ant hill. But the expected end result is that the US will be able to grow its economy faster than the growth of the national debt by rebuilding the middle class through domestic manufacturing and killing trade imbalances.
I recommend watching interviews with Scott Bessent, who has detailed the plan for months before and after the election. He wasn't keen on tariffs, but he has come around to understand their place and incorporated them into the overall plan. It's a massive undertaking the involves tariffs, tax cuts, refinancing national debt, attracting investment, austerity measures (DOGE), deregulation, and lots of negotiation.
I am heading to bed, so will get back to this later, but you have missed the point perhaps - I am not saying if China stops shipping to the US, I m saying if the entire rest of the world stops shipping.
Where would they get dollars? Part of what makes selling to the US beneficial, besides the massive market, is getting paid in dollars. If the US didn't have the world's reserve currency, the tariffs would just be a fart in the wind. Reserve status insulates the US from the consequences and compounds them on other countries that try to "punish" the US.
And you'll always have holdouts who decide to play ball with the US, getting maximum economic benefit at the expense of the boycotting nations. There is more upside for defectors than for boycotters. And there are already a few nations that have dropped their tariffs.
A reserve currency is only useful when there is some level of trust and stability. That is not the case now. Currencies are just tokens, and they can be replaced.
There is more upside in the US, but not with other trading partners. Very few countries are self-sufficient, or can thrive with only one trading partner.
This is a money grab, and while in the short term it might look promising for the average American with all of the "investment" coming into the country, they shouldn't believe the hype. That investment isn't in them, or for them.
I don't claim that you don't have legitimate concerns or thoughts. I just want to get across that although the media portrays Trump as capricious and haphazard, what is happening is planned and deliberate. The more I have researched the actions and the people involved, because it's not just Trump doing it on a whim, the more clear it is that the "chaos" is planned. Unfortunately, it requires breaking the status quo to bring in a new economic reality that primarily benefits the USA, but can also result in prosperity for other nations.
Much of the current international trade is based on post WWII decisions that no longer serve the US or the EU. The abrupt change is understandably worrying. But it is not happening based on the caprice of one man. There's a plan.
There is no chance of RoW cooperation to counter USA. I think it will be a mess.
Greed continually overpowers the common good.
I think it's important to point out that half of us never wanted any of this in the first place. My mother in law is going to march in a protest somewhere. I am not sure where. I think it's a lot of older people because they are worried about their pensions and social security.
Well over half didn't want it... but here we are. It sucks for everyone who isn't already a billionaire, or has more than a few tens of millions in wealth invested.
Yes :) over half. It's sad and scary all at the same time.
Honestly, I would rather believe trhe conspiracy theory that Trump and family got in the White House to run Government-backed pump-and-dump scheme, scaring people to buy cheap and publishing hopeful messages to sell high, them and their insider group. I laughed, but now it is happening for real. The irony!
Also, the normal citizens of the US are the one paying for the tarrifs, bot the companies, they will just up the price to include the taxes.
How many Trump "friends and family" shorted the markets?
Judging by the results, all of them. Greedy bXXXXXX!
😱 Wow, only 45% of a Ford F-150 is actually American. That’s way lower than I thought. America relies so much on other countries and the tariffs just exposes the truth
I don't know what percentage of the 45 is from Canada either, as they don't distinguish it.
Oh ok 🤔 but still pretty serious haha
The United States wants to get rich at all costs.
¿By chance, have you ever heard about the Comrade Krasnov?
China could actually decide to stop shipping to US even though it has a good market there m… it would be affected ofcourse but it could channel that energy into other markets. There are a lot to discover..trump is just pushing these thing too far and what of every other nations begin to tariff retaliate..its would be a game of back and forth
Our brand of ground coffee has doubled in price in a few months. I bought 10 packs at the old prices, but I should have bought several times more. I missed out on a small profit.
Whatever happens, it is going to suck for normal people, no matter which country they live in.