Post

1/ If you target me with tariffs, that's bad for your consumers who have to pay more to buy my products, and it's bad for my producers who will probably sell you fewer things. For my government, the negative impact on your consumers is irrelevant unless it changes your behaviour.

2/ If I retaliate with tariffs, that's bad for my consumers who will have to pay more for your goods and bad for your producers who will sell me fewer things. It is good for my producers who compete in my market with yours, but that is likely a different group than those hit with your tariffs.

3/ In other words, if you hurt both of us by hitting me with tariffs then my only retaliation option basically also consists of hurting us both - which only helps if it brings us to a truce or prevents you escalating further.

4/ This means that those confronted with a US willing to hurt itself with tariffs have no good options. I think you can make a credible case both for aggressive resistance and for appeasement. Anyone pretending the choice is easy is, in my view, kidding themselves.

5/ The case for aggressive resistance is that if you can cause the US real economic pain, their public may be less willing to endure it than yours - because you have the more compelling story to tell about being the aggreived party... ... and that such pain will make them back off.

6/ The counterargument is that the US may escalate considerably and that pain is... well, painful. Additionally, when faced with your resistance the US could simply offer others better deals and leave you locked out of while your competitors devour your market share.

7/ There's also the non-trade counterargument, which is that the US is important in a bunch of ways like in the context of Ukraine, or Pacific security, and alienating them too badly may endanger that engagement.

8/ The argument for appeasement is that a rate of 10-15% with a lot of carveouts is unpleasant but manegable and isn't likely to lead to a flood of recalibrated supply chains. Moreover, a deal offers predictability at a time when that's what investors and business is craving.

9/ The counterargument is that it encourages negative behaviour and hostage taking, and demonstrates your ultimate reluctance to retaliate or escalate - a lesson that may cost you in time. Now granted, should Trump reneg you could always retaliate - but the temptation will be to keep caving.

8 reposts94 likes

We all KNOW that the producers now KNOW we will gladly pay the fucking tariffs in many instances & in a system that ONLY ratchets up, TRUMP & his fucking shitty deal-making is only making EVERY AMERICAN poorer. WE'LL NEVER SEE THE PRICES RELENT bc Americans are so uneducated they chose HIM. We suck.

sadly it seems so though I can't help but feel that the 'elites' (shit word, struggling for a better one) in many countries are happy with that, and they are happy to narrow voting pool by making politics seem pointless and gerrymandering

10/ I just want to be clear here: I'm not cheerleading for the EU-US deal. I think many of the criticisms are entirely valid, and I understand the frustration of those who feel the EU caved or failed to utilize its strength. My only goal is to explain the options and why shit's hard, yo.

I’ve really started to view the Trump tariffs as a US consumption tax. Near as I can tell the only goal is the generation of tax revenue. As an aside there is a decent chance they are fully invalidated by the court system. So negotiating a lower level expecting them to be overturned is a fine plan.

Agree I doubt for example they will build footwear factory in US to replace Vietnam exports (now with 20% extra tariff). So the economic question is this: where will the US consumers get the extra money? Spending less? Buying lower quality? Saving less? Borrowing more?

I'm reminded of the game theory video veritasium did a while back. Lessons included something like "stand up for yourself firmly (i.e. retaliate hard), but be forgiving" Feels like the EU is either playing a foolishly short game - or depending on administration change in the US - for a long game

Don't get suckered into believing the headline figures. It's all in the detail, and Trump doesn't do details - no one man can. It takes an army to create a trade deal, not some megalomaniac who doesn't even understand how tariffs work.

Sigh. It's all so predictable ... “It’s a nice number but it’s just not realistic,” said Warren Patterson, head of commodities strategy at ING Bank. “You’d essentially have to divert all energy trade. That’s just not possible.” www.wsj.com/business/ene...

wsj.comTrump’s $750 Billion Deal for U.S. Energy Collides With Market RealityEurope has pledged to increase purchases of American oil, natural gas and nuclear fuels , but exporters might struggle to meet demand.

Does anyone know if this is a good or bad deal? I mean, if BMW Germany has a 15% tariff on a finished car, and BMW USA has a 50% on steel and aluminium and maybe rare earths or finished semiconductors, then who can build the cheaper car?

And why get promises on EU investment into the US if that's going to keep the exchange rate up and so hurt US exports? How can you even make a deal with the EU commission on investments when they're not a nation state?

I think when Magas start getting a real taste of how tariffs makes so much stuff cost more, they will be less thrilled with Trump - and the off-ramp of the Epstein Papers is just ahead. I don't sense that anyone BUT Trump wants tariffs - it's strictly his own insanity - but Maga Congress fears him.