Trump reacted for the first time on Thursday to the fallout from his tariff announcement, which included markets nosediving and foreign leaders threatening retaliation.
I trust that the US will lose it’s competitive edge that some be recoverable and will fall into a recession.
The real irony of course is that this will have literally the exact opposite effect from what he wants. For some unknown reason Trump is thoroughly obsessed with trade deficits, specifically the eliminating of them. He actually used a formula based on each country’s trade deficit when deciding what each tariff would be.
Ultimately though these tariffs are going to massively increase the trade deficits though as the counter tariffs hurt US exports of goods that are either luxuries or else readily available from other countries. Meanwhile while the tariffs will somewhat reduce US demand for imports the fact that there’s no real domestic alternatives for the overwhelming majority of goods means they’ll still be imported. The net result will be little if any reduction of imports combined with a significant reduction of exports leading to record trade deficits.
The real irony of course is that this will have literally the exact opposite effect from what he wants. For some unknown reason Trump is thoroughly obsessed with trade deficits, specifically the eliminating of them. He actually used a formula based on each country’s trade deficit when deciding what each tariff would be.
Ultimately though these tariffs are going to massively increase the trade deficits though as the counter tariffs hurt US exports of goods that are either luxuries or else readily available from other countries. Meanwhile while the tariffs will somewhat reduce US demand for imports the fact that there’s no real domestic alternatives for the overwhelming majority of goods means they’ll still be imported. The net result will be little if any reduction of imports combined with a significant reduction of exports leading to record trade deficits.