As a departure from my normal posts, but continuing in the vein of suck shit America, I have been reading the reports of the aftershocks of Trumps tariff war for the past day and would like to set the record straight.
1. With the worst few days in stock market history, billionaires are not losing hundreds of billions of dollars. Sophisticated investors understand markets, and make as much money short selling stock as we do buying and selling stock. In fact, it's much easier to make money shorting stock which falls due to a broader economic shock wave like this than to pick stock before a rise. The people who lose money in bloodbaths like this are pension funds, and mum and dad investors, and anyone using heavily leveraged margin lending. This is a simple reality of life.
2. Trumps calls for calm claiming the job market is strong is likewise a bs claim. Job market figures are nothing more than guesses, rarely correct, nearly always adjusted in the following months when real numbers are available. I repeat, job market numbers released by the govt are nothing more than guesses, not even educated ones. They are political in nature, not economic.
3. Global growth will be massively impacted by these tariffs. Again complete bullshit. The market will adjust, it will find work arounds and trade will be diversified. Markets are so much smarter than politicians, always bet on the market, never trust a politician.
4. As with everything Trump related, this is smoke and mirrors. Trump is collapsing the markets with an aim to lower interest rates, as the country has to refinance around 4 trillion in debt this year, and borrow a further 2-3 trillion. Current bond rates are high, and yields rising. Crashing markets will also lower inflation, IF, the job market remains strong. It won't, the flow on effect will be months, not weeks, but jobs growth will lower as just as in Ukraine, Trump has grossly overestimated usa influence, and resilience in today's global economy.
5. Tariffs will not onshore more industry. This is a completely one dimensional argument, and is fundamentally wrong. Today's manufacturing is unlike that of the 1930/40 when you bought steel, and built a car. Today's consumer products are highly technical, and supply chains far more complex. To build iPhone in the usa will cost 5-8 times more than to do so in China or Brazil where Foxconn manufacture now. Foxconn in fact do not build an iPhone, they assemble one. All of those components that go into the iPhone are built by other companies, many not even Chinese. Hence, let's say Foxconn decide to set up an assembly plant in the usa, all of the components will still need to be imported, attracting tariffs, greatly increasing the cost of goods going into that phone. With increased infrastructure, and labour costs in the usa, the iPhone built in the usa could well be 10-15 times more expensive than the ones built in either China or Brazil. So, any built in the usa will most definately not be exported to the world, and Apple would ultimately find it more profitable to import Chinese/ Brazilian built ones into the usa than to actually build them in the usa.
Although not building iPhones, my company builds telcom devices, and we bought our factory in China after the 2008 crash which nearly closed down the company that was building them for us. We faced this same situation in Brazil shortly after acquiring it, as the Brazilian government introduced 60 percent tariffs on imported electrical goods in an attempt to onshore production. Unlike the moronic Trump, the Brazilian government gave adequate notice, and invited companies to enter into an agreement to move onshore in Brazil as much of the manufacturing process as possible, and if a deal was agreed, they would wiave tariffs and excise on imports for manufacture. We reached an agreement to bring in populated pcbs, and purchase in Brazil harnesses, boxes and program and load firmware into our devices which would be assembled in Brazil, where we set up a small factory and to this day employ 19 people. This is what smart politics does.
Millions of jobs will be lost in the usa as a result of this, and no real manufacturers will relocate into the usa, as products made in the usa will still be more expensive than 50 percent tariffs, and demand in the usa will never sustain a market without the ability to export that production, which retaliatory tariffs will ensure cannot happen.
All of the above shows the Trump admin, just like in its dealings and prolongation of its war in Ukraine, is like a bull in a China shop. It is practicing incoherent, intellectually retarded protectionism in an age long since passed, and isolating itself further. Bullying the entire world won't work when the entire world has each other for support.
Same circus, different clown, same outcome. Until the usa learns to play properly, it will be increasingly isolated and irrelevent to the global conversation.
This was always the risk in electing Trump, those of us who thought he might have learned his lesson were wrong it seems. He has chosen poorly in his admin officials, and not listening to the few good picks he made. He needs to get Vance, Gabbard, RFK Jnr into a room, listen to all they have to say, and do what they tell him to do. Better still, give either Alexander a call every morning and get his instructions.
Trump is a fool, the usa is Argentina in 1930, and it's collapse will be faster, and far deeper unless it's parties come to an accord, and work to correct the fundamental economic issues in the usa. Those issues confronting the usa are centred in Kiev, and Telaviv, in its disgusting foreign policy. Until they are corrected, everything else is merely a distraction.
