More Tariff Threats
Trump is like a child with a new toy.
Via the AP: Trump threatens 100% tariff on the BRIC bloc of nations if they act to undermine US dollar.
President-elect Donald Trump on Saturday threatened 100% tariffs against a bloc of nine nations if they act to undermine the U.S. dollar.
His threat was directed at countries in the so-called BRIC alliance, which consists of Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran and the United Arab Emirates.
Turkey, Azerbaijan and Malaysia have applied to become members and several other countries have expressed interest in joining.
Of course, such a threat is nonsensical but will be hailed by MAGA sycophants as a brilliant opening move in arting the deal, or something.
While the U.S. dollar is by far the most-used currency in global business and has survived past challenges to its preeminence, members of the alliance and other developing nations say they are fed up with America’s dominance of the global financial system.
The dollar represents roughly 58% of the world’s foreign exchange reserves, according to the IMF and major commodities like oil are still primarily bought and sold using dollars. The dollar’s dominance is threatened, however, with BRICS’ growing share of GDP and the alliance’s intent to trade in non-dollar currencies — a process known as de-dollarization.
The sad, frustrating irony is that the biggest threat to the dollar’s dominance is Trump and his foreign policy. One of the main reasons the dollar retains its position is deep global trust in the stability of the US government and economy. Moreover, the general approach to the global liberal order in terms of trade has been a hallmark of the post-WWII era and has largely been consistent regardless of who is elected to the presidency. Trump’s first election was seen to be an anomaly that might be dismissed like a hundred-year flood. His re-election, however, has created a great deal of long-term anxiety across the globe in terms of whether the US will remain a stabilizing superpower rather than simply acting like one of several great powers.
Indeed, constantly threatening tariffs is a great example of this new unpredictable, unstable global environment that will help hasten some countries to accelerate their desire not to be so tied to the dollar.
I continue to think that one of the most remarkable self-owns of the MAGA movement is that their desired foreign and trade policies will make America less great and less powerful.
If the felon ever carries through his brilliant plan to default on the US sovereign debt, you know, in order to renegotiate it on better terms, he’ll need to impose tariffs globally at 1,000% just to keep the USD in existence.
How about if we don’t allow Trump to manipulate us by saying ridiculous things and all of us responding with gnashing of teeth? Remember the great wall on the Mexican border? It didn’t get built. When Trump says something outrageous, just chill and tell yourself Mexico will pay for it. He is playing everybody.
It makes sense once one remembers Trump is a Putin-puppet. Putin wants Trump to weaken the United States and our democratic allies. MAGA voters are just useful idiots in that enterprise.
If Trump is just bluffing, he’ll look like an unserious, impotent fool. If he is able to implement these demented, inflationary tarrifs, he’ll end up with a second failed presidency.
First Lady Musk is already on record saying Americans will need to get used to economic pain under Trump. So maybe these wackadoodles are serious?
Either way, I’m chuckling and chewing popcorn.
@DK:
I initially read your last sentence as “chuckling and spewing popcorn, which you may well do if you chuckle too much.
@Slugger: Serious question: do you think him harmless?
I don’t think he was harmless in his first term and will be worse in his second.
I would be pleased to be wrong (keeping in mind that I hate to be wrong).
@Steven L. Taylor:
Oh, he’ll be worse. He’ll do whatever he wants. He’s already vowed to take revenge. The Republicans are cowed by him, and they have the majority in the house and the senate. Who and what’s going to stop him? Anyone who would or could is long gone.
@Slugger:
What Steven said.
Take the wall, that’s a good example. He did not build it, no, and Mexico did not pay for it. But he kept trying. He appropriated military funds, he tried to declare an emergency, and ultimately he shut down the government over the holidays amidst an impasse over funding for the wall.
@Slugger: Trump Inc might be “playing “ to their audience. That’s what reality tv stars do. Not presumptive world leaders. Definitely not.
@Steven L. Taylor:
He’s not harmless, but he does have a habit of letting his mouth write checks his butt can’t cash.
One purpose of his braying threat is to terrify us into submission and forget that we aren’t powerless.
Yes he has a lot of power but much of his threats have the weak spot of requiring full and prompt compliance and cooperation of the 50% of Americans who hate him, and couple dozen governors who oppose him and the hundreds of agencies that have no desire to carry out his orders.
I wouldn’t say “Let’s chill” so much as I would emulate Gavin Newsom who just opened a new session of California state legislature specifically for the purpose of leaping into the fray.
Threats have a role in international relations. This seems unquestionable to me. Usually, though the threats are spoken softly or merely implied, as Teddy Roosevelt (a conservative favorite) said, “Speak softly and carry a big stick.”
Trump is going a different way though. Most of the people I know who are good negotiators don’t do it that way. Steven Covey describes it as “Think Win-Win”. I don’t really know, but I can imagine a Trump supporter saying, “win-win is for losers. I believe in I win, you lose”.
Here we are. About to test these ideas on a grand stage.
@Chip Daniels: I would caution to try to avoid the trap of resisting anything and everything that Trump tries. It is super important at times like this to try and keep one’s focus on the things one loves and cherishes.
@Jay L Gischer:
“It is not enough to win. Others must fail.” — Gore Vidal
@Jay L Gischer:
Oh I agree. We should not be afraid to agree with him.
Like, one time I was out and hungry and stopped at a McDonalds even though Trump likes it too.
And, um there’s that time…Nope. That’s about it.
In some respects, the obvious immediate challenger to the role of the dollar would be the euro rather than yuan/renminbi, or any BRICS trading marker equivalent to IMF/World Bank SDR.
Such as: relatively open economies, deep financial markets, clear legal regulatory frameworks, global trading and financial operations on a massive scale, lack of currency manipulation for trade aims, relatively transparent governance.
There are also various problems, and reasons why the EU does not want to supplant the dollar: higher currency valuation, lack of a central federalised state treasury, German distaste for a pan-EU bond market, desire not to piss off Washington.
But that might all get brushed aside if the US goes nuts.
After all, the dollar reserve currency in many ways only emerged accidentally post-WW2, as gold reserves became locked up in the US, and key trades and loans came to be dollar denominated, and trading profits got recycled as US Treasury bonds.
If Trump drives tariffs to the point where other countries cannot EARN dollars, as per Smoot-Hawley, then they eil have to, perforce, switch to other exchange currencies.
As I’ve said before: Trumpist policies seem to assume that the US economic/financial/strategic/military dominance is somehow ordained of God.
Rather than due to combination of post-WW2 circumstances that some very intelligent operators in Washington and New York leveraged to the advantage of the US.
The MAGA look at the system through their perennial sense of grumpy grievance, and see only the downsides, while seeming to consider the upsides as matters of indifference.
“After all, what could possibly go wrong?”
Message in a bottle from Edwardian England c 1910:
“Lotsa things, schmuck!”
@JohnSF:
Don’t it always seem to go, that you don’t know what you got til’ its gone?
— Joni Mitchell
@Chip Daniels:
Sure. I don’t believe for a second that he will levy 100% tariffs on the BRIC countries. I realize I didn’t say so in the OP, but didn’t think I had to.
This kind of posturing is still a problem. If you threaten your wife with divorce constantly, even if you don’t really mean it doesn’t mean your threats don’t damage the relationship.
Yeah, but I’m a writer, not a governor, so I write about these things.
@JohnSF:
This is my point. They seem not to understand what they are risking and once it is gone, it is gone.
@JohnSF:
I’m sure Manifest Destiny is in the Bible. I think in the book of St. Ronald of Reagan or something like that.
@Steven L. Taylor:
Maybe not forever. In its last days, the Western Roman Empire, along with the Eastern (Byzantine) Roman Empire (which had about a millennium left to run, in a way), minted the Solidus, which became kind of like the international trade currency of the Mediterranean, Europe, and the Middle East, for several centuries.
Eventually it got debased, but any day now it should make a comeback. Who doesn’t love a solid, debased gold coin with some bad engraving of an Orthodox Emperor on it?
So, the US Dollar may go away for a centuries as well, but, well, something.
@Jay L Gischer:
The felon is a classic great ape alpha male: he makes a lot of noise and throws his feces around.
But alpha males also swing their di*ks to intimidate others in their group. So there’s that: Yell loudly and swing a limp di*k.
I dare a lot of people are intimidated. But a great many, a majority even, are figuring out how to get around the coming wave of repression, not how best to knuckle under.
Trump looks like the consummate asshole in the photo heading this post, doesn’t he? Not that he always doesn’t, but there’s something unusually asinine about the flung-out arms here.
“Trumpist policies seem to assume that the US economic/financial/strategic/military dominance is somehow ordained of God. Rather than due to combination of post-WW2 circumstances that some very intelligent operators in Washington and New York leveraged to the advantage of the US.”
Wow. Just wow.
We give each other haircuts, and vital shows like Dancing With the Stars, or The Housewives of………….while giving up the mining and refining of strategic materials, the manufacture of vital components like chips, the production capability, know how and economic benefits of making widgets, real energy independence………………… We fight nonsense wars advocated by globalists; we build military assets to fight the last war; we totally disproportionately fund NATO because Europeans think we are suckers……………….all advocated by “very intelligent operators” in DC. Well, I guess we’ve got Facebook. So there’s that.
And of course, its good to know we’ve got Ukraine’s back, with Burisma and all. $$$ + a pardon. Good work if you can get it.
I would say its the progressive movement that risks it all. And yes, once its gone…….
@Jack: First, as always, no positive defense of anything, just weird derision.
Second, I am honestly and seriously in doubt of your claims about being in the investment business.
Third, you also keep confirming you don’t know a lot about history—like your assertion a few weeks ago that Cubans were in Florida because of the Mariel boat lift.
You makes claims about your expertise, but rarely if ever deploy said expertise and you love to ridicule. And that is about all you contribute.
@Kathy:
Reagan, or at least those around him, were never as dumb as to assume Power falls from the hands of the Lord upon his Servants.
At least, not unless unless said servants are willing to work the hard yards.
Reagan, and Bush I, and Clinton, administrations were always looking to cement US ascendancy, largely via allied consensus.
The US centered alliances, the military ascendancy related to that, the trading and financial networks, the investment opportunities, and so on.
But without yielding to the temptation to become a global tyrant.
Campist mythology notwithstanding.
@Jack:
US GDP per capita: 81,695. (That’s more than doubled since 2000.)
China GDP per capita: 12,614.
I’m struggling to figure out how we manage to have the world’s largest economy, strongest currency, outpace just about every other economy aside from tax havens and Switzerland on GDP per capita, produce the most oil, are 4th place in chip production, with spots 1,2 and 3 being allies, all while remaining the most powerful nation on earth what with being so terribly bad at. . . what is it? Coal production?
You’re out of date, grandpa. Remember when China was going to eat our lunch? Yeah, not so much. Before that it was Japan. And the EU. And yet despite doing nothing but giving each other haircuts, we bestride the narrow world like a colossus.
Is it Russian Bot day? This seems to be Putin’s line of the week. Prepping the know-nothings to betray Ukraine and bow to Vlad.
@Jack: Hey. You’re always claiming to be a mover and shaker with your own money and that of others on the line. Why did you just stand by and watch? Or in the alternative, what have you been doing that tried t0 alter that state of affairs and why hasn’t it been enough?
[Note to the commentariat: No, I’m not holding my breath waiting for him to answer. His record on answering serious questions from me is too weak.]
@Michael Reynolds: Yeah, the Burisma ref was quite the tell about his media diet.
@Just nutha ignint cracker: The truly funny thing he claims to have made a lot of money during the last several decades…
@Jack:
Let me make a bulleted list of some of your complaints, because I think they are important:
* We make and watch idiotic TV shows. (I’m not sure about the complaint about haircuts. Haircuts are inevitable regardless. Or maybe I don’t understand?)
* We give up mining of strategic materials. This is a substantive concern. It’s important. Let’s flesh this out. The mines I know about in the US are either mined out or still operating. I’m not sure we’ve given up on anything, as opposed to discovering that the stuff we want now (and didn’t want in the past) is only to be found overseas, and we will have to pay for it, one way or another. How do you imagine Trump fixing this?
*We are giving up the refining of strategic materials. Stuff is usually refined right where it is mined. Maybe not. Tell me if I’m wrong. Again, how is Trump going to fix this?
*Chip manufacture has fled overseas. This is accurate. I’m not a fan of this. Corporate oligarchs chasing profits were the most responsible for this, not Democratic politicians, who can be portrayed as going along with it, for sure. What’s the plan to fix it? Would tariffs fix it? It probably takes at least 10 years to build a fab line. And it takes a highly skilled workforce to run it. How is Trump going to make this better?
*The benefit and expertise of making widgets I paraphrased you a bit there, I hope I captured you correctly. This is important. Manufacturing of physical things has fled the US. This happened, again, because of corporate oligarchs, and because of Ronald Reagan. It was so popular and powerful that Bill Clinton embraced it too. Free trade meant economic growth, but the benefits of that growth went only to a select few, not to everyone. I don’t think this is good. Tariffs seem to address it, I’m not certain though, that they will stick or make things better. I’ve said before that tariffs are not at the top of my list of objections to Trump, though I doubt he will do much of substance here.
* real energy independence Which to me would mean further embrace of solar, wind, and geothermal power generation and improvements in battery technology. I don’t see Trump doing that. But I’m not certain what you mean by “real”.
We disagree on Ukraine and the importance of stopping Putin in his tracks. However, we are in broad agreement about all the other things above. I would guess that many of the commenters here agree with you on those things, though I don’t want to put words in their mouths.
@Jack:
Well, here’s a shotgun-pattern of stuff to handle.
Some responses:
Defining me as a progressive would be a rather large category error. 😉
The decay of US industry is massively overstated.
Of course, the US is not going to still make nails by the bushel, or cheap plastic toys.
That is impossible unless you ruin your comparative advantage in more advanced production by trying to go autarkic.
Would you care for a run-through of US manufacturing statistics?
Because I can can provide such, if you wish.
The US is NOT de-industrializing; it’s moving away from labour intensive, low value-added, low-tech products, because it can’t produce such and pay the workforce involved market-competitive wages.
So, it goes to high-value products, and automates, releasing labour for service jobs that people are willing to pay for.
The US could, incidentally, likely do more mining, if the Bureau of Mines was re-instituted.
Which wars, in particular, might those be?
Afghanistan?
Iraq?
Advocated by “globalists” like Rumsfeld and Bolton?
Seriously?
No, you do not, because apart from the HQ/staff budget, which comes to about $3 bn, of which the US pays 16%, iirc, THERE IS NO NATO FUNDING.
It’s all separate national defence budgets.
In which the the US spending is $750 billion, and the European $450 billion.
But as the US has other allies and interests, perhaps we should add the spending of Japan, South Korea, Australia etc to the European total?
European NATO armed forces manpower (excluding Turkey) is 1,648,000; US 1,328,000.
These are not negligible numbers.
Perhaps you would prefer it if those numbers were on the Beijing side of the scales?
In which case you really are a fool.
And Burisma?
ftlog, be serious, man.
@Chip Daniels: I actually agree with you here. In fact, I would flip the script if I were one of the public players and alternate between ‘Really?!? I fkn dare you…’ and ‘Go ahead dummy…’
So much of his hypnotic effect of his own crowd is that he terrifies his opponents. You can’t listen to a liberal commentator on cable news for 20minutes without one one of them saying they are terrified of what Trump will do to the Country. Bullies enjoy the fear of their victims. You might be scared but you can never say it or show it–it makes them more brazen
@Jay L Gischer:
We know what the felon is going to do. We’ve seen him do it before: nothing, or nothing of substance, and claim things were never better.
@JohnSF:
Re, NATO, how’s this for an explanation: NATO is not Starfleet.
@Jay L Gischer: I’m sure Jack loooves the CHIPS Act given his concern about manufacturing!
@Jim Brown 32: Instead of “Terrified” I prefer “Alarmed” as in “To Arms!”
@Steven L. Taylor: “Second, I am honestly and seriously in doubt of your claims about being in the investment business.”
It has long been a source of astonishment to me that any of the people around here for whom I have so much respect have ever believed a single one of his claims.
@Steven L. Taylor: Yes. That’s what prompted my question.
@Jay L Gischer: “Haircut” is a term that describes spreading loss across group of investors sometimes.
ETA: Additionally, I’d note the offshoring production evolved out of a profound misunderstanding of how comparative advantage really works. The movers and shakers treated it as “I’ll make more money”–a microeconomic notion when it should be “the overall economy will improve”–a macroeconomic notion.
AETA: Morons from the conservative economic brain
farttrust like Rush Limbaugh and Zero Hedge promoted the idea.@Steven L. Taylor: I don’t think that he’s harmless. I think that allowing him to control the agenda and jumping for every feint makes him more dangerous.
@JohnSF:
(FTFY) While I am happy to concede this point, I will note that on the production side, the “releasing labor” factor usually resulted in releasing people into precipitous drops in income. We can drag out “the buggy whips” story yet again to explain that the choices were simply “creative destruction” and breaking eggs to make omelets, or we can discuss the possibility that a failure of understanding competitive advantage. Your choice.
@wr: While I take all such claims with a grain of salt, especially from anonymous commenters, I try and give the benefit of the doubt. And even when I am not, I am not prone to call people out.
Investments…
Reminds me of the Dispatcher when I drove the Yellow Cab:
“When I retire I’m going to invest in houses and lots.
Whorehouses and lots of whiskey!”
Asking for a Chinese friend: are the tariffs on China cumulative? If so, I think they’re over 300% by now.
@just nutha:
This is often true; people former employed in on business often have difficulty moving into a new one. And modern automated plants don’t need as much labour.
Average real wages in the industrial sector are more or less where they were in the 1970’s
But it’s not true in the larger picture: median household incomes are up (even when inflation adjusted), and goods prices generally down.
(With the big exception of housing).
There are some more extreme solutions: autarky, 1000% tariffs, and forbidding automation might work, and then trying to reconstitute the manufacturing economy of the 1970’s
Or possibly the 1870’s.
With a commensurate drop in real incomes and rising prices likely to trigger a massive political catfight over the shares of smaller cake.
Perhaps better would be to focus education and re-training on people and places affected by change. And regional re-development schemes for particularly heavily hit locations.
It might also be worth subsidising some strategic key sectors.
But that hits limits pretty quickly as well, due to upper bounds on the amount of tax available for subsidy, and the impact of that on the rest of the economy.
Another other sensible policy might be a German-style compulsory collective bargaining system, and industrial councils, given industrial real wages in Germany are higher than they were in the 1960’s.
@Slugger:
The primary driving motivation of Trumpism is resentment and grievance, and an overriding desire to inflict humiliation and suffering on those they hate.
In the online space, this manifests as trolling and attention-getting and outright bullying.
The way that Trump makes every days news cycle about himself, even if it is only by making outrageous and terrifying statements.
This is why I’ve stopped engaging with Trumpists. There is nothing valuable in their statements, no insight or thought.
@Jay L Gischer:
RE: Chip manufacturing
New York State is investing heavily in a chip corridor, and the Biden Administration has bolstered this by passing the CHIPS Act. Speaker Johnson promised to repeal this, walking that back only when a vulnerable Republican member of the House, from NYS, said that this was decidedly unhelpful to his reelection efforts.