Tariffs

Tariffs should not be used as a weapon.   They are properly used as a strategic tool to strengthen domestic industry and moderate dependence on foreign nations for critical items.

The threat of tariffs, or even a short course of them, is a brilliant bargaining tactic. 

It is irresponsible.   Apparently you do not see that this has already damaged worldwide relationships.   The world has now clear evidence that the USA is capable of electing a tyrant as PotUS who would abuse the power of the presidency to this level.

You continue to defend a tyrant who is threatening our economy and weakening our relationships in a global economy.

As shown this morning by the Mexico / USA deal around tariffs. 

What does it show?   Do you think that Mexico is even able to stop Fentanyl?    Do you think Trump is going to make good on his promise to not ship assault weapons to Mexico?   This is show ... it is not progress.

Do you think that it is worth harming international trade relationships (trust in the USA has taken a nose dive) when one can accomplish the same (or better) with smart negotiations?

You're making stuff up and really have no idea about what you are talking about.

What am I making up?  Be specific.

What does it show? 

It shows it was a good bargaining tactic. How hard is that to realize? It's right there in the print of the post I responded to. 

The rest of your post has absolutely nothing to do with my post that you responded to.

Yeah, maybe every country should do it to every other country.  Brilliant.  What a great world it will be.

It shows it was a good bargaining tactic.

Why is it good?   

My criticism is not that bullying a weaker nation cannot work.   It is that this kind of arrogant attitude by the USA is both unnecessary and counterproductive.

Do you think that public, arrogant bullying is better than private negotiation?

Do you think that putting the world on guard that the USA is less trustworthy than they thought is good?

Do you think that encouraging trade partners to diversify and seek suppliers in addition or (or other than) the USA is good?

Using a sledgehammer rather than a hammer to hang a picture will work but it is an unnecessary use of force and will likely damage the wall in the process. 

The rest of your post has absolutely nothing to do with my post that you responded to.

Sure, ignore the difficult question:

TiG@1.1.3 ☞ Do you think that it is worth harming international trade relationships (trust in the USA has taken a nose dive) when one can accomplish the same (or better) with smart negotiations?

Why is it good? Because it brought them to the negotiating table. The rest of your post is your attempt to put words in my mouth, I refuse to play that game. But I'm done with this discussion. You have your opinion, I have mine. Let it end there.

Just read a few moments ago that Trudeau and Canada have blinked as well with Trump giving Canada 30 day pause as well. I don't see China caving that quick if at all.

That's the opinion of a Trump supporter, Ed.  IMO Canada was not going to do much more that it was already starting to do, some of which was before the issue came up ion the first place.  It's Trump who "blinked" when he realized what retaliation Americans would face.  Canada doesn't have to sell its wood to America, China would love to have it, and Europe sure as hell isn't going to refuse Canadian oil, and Canada can buy its veggies and fruit in winter from what Mexico would not be selling to the USA, and Canada has lots of different alcoholic beverages of its own, from beer to wine to whisky, etc.  Let's see what happens during this 30 day reprieve.  I'll bet Canada, Mexico and China are not going to provide ANY further concessions to Trump and he will call the whole thing off, by giving his flock time to forget about the can of worms he opened. 

Why is it good? Because it brought them to the negotiating table.

You actually believe that Trump could not open negotiations with these trade partners in private?

Just read a few moments ago that Trudeau and Canada have blinked as well with Trump giving Canada 30 day pause as well.

First of all, Mexico negotiated and got a promise (as good as that is worth from Trump) to do what they wanted which is to curtail guns from the USA entering Mexico.   So why spin this as Mexico capitulating?   Second, Mexico is the weakest of the three.  They have a very weak bargaining position so it is easy for the USA to encourage them to act.   Thus, there was no need to publicly taunt them.   A private meeting could have been effective and the big stick of tariffs could just quietly stand in the corner during the negotiation.

Similarly with Canada.   While they have a stronger position, they are nothing compared to the power of China.   Thus there was no need for Trump to engage in the public outrageous threats.   Those threats are always there if private negotiations break down.

And even with China.   The upfront threat is entirely counterproductive.   China, especially, will not be seen as caving to Trump.   No way on the world stage.   And whatever the USA throws at them, China can reciprocate in kind.   If China cuts off our supply of rare Earth elements we are screwed.   They know this, Ed.   

So Trump's public threats were brain-dead stupid.   They were unnecessary and indeed damaged international relationships with our closest trading partners as well as others.   The rest of the planet has been watching Trump and they clearly know that their level of trust in the USA is now lower.   They know that dependence on the USA is not as wise as it might have been given we proved that we are irresponsible enough to put a buffoon like Trump in the presidency.   Thus it is a fair bet that they will take actions going forward that lessens their dependence on the USA.

Bottom line, even if Mexico and Canada had totally capitulated (which they did not do) that misses the point.   The point is the stupid methods Trump employed ... the overkill that introduces collateral damage and is net counterproductive.

The last time Trump slapped on a really big boy, China, who answered in kind. The subsidies that Tump had to give to farmers to date is $28 billion and still shoveling the money out the door to them.

As for Mexico capitulating did MAGA forget that Mexico in the last 7 years has put thousands of troops on the border..If I remember correctly three different times. Has the US ever stopped the flow of guns in Mexico….Welll Duh, NO.

Trump supporters only care about capitulation.   And even when the results were a negotiation where both side got what they wanted (words, not deeds), Trump supporters spin this as some big win and claim Trump was right.   They are supporting Trump's uncalled for, outrageous, counterproductive aggression.

They continue to ignore the point that Trump's grandstanding threats were entirely unnecessary and were (and continue to be) counterproductive.   They continue to ignore that Trump could have and should have engaged Mexico, Canada, China, and the EU privately and individually with a well-planned negotiation that ultimately is fair for both sides.   Threats and other antagonistic methods should be a last resort because while they are often effective, they exact a cost.   The cost is fraying long term relationships worldwide.   The cost is causing trading partners to view the USA as less honorable, less trustworthy and encourage them to find ways to reduce their dependence on us.

This is net bad and unfortunately much of this damage has already been done.   The world now has absolute proof that they cannot trust the USA electorate to elect a responsible PotUS ... that we would actually put a vindictive, narcissistic buffoon in the most powerful office on the planet.   To think that other nations do not take this seriously is naive.   The notion of "do not trust the USA" is now an easily justifiable position.

So the best we can hope for is that these theatrics end with terms that should have been achieved with negotiation.

Don't you think they would have come if he just said, "Hey. Come here, let's talk. I have some ideas."????

What do you do when you first encounter somebody? Try to shake them down or say, "Hi. My name is Snuffy." 

Just think about it for a little bit, consider the ramifications, and get back to me.

Who blinked?
Canada Outsmarts Trump on Tariff "Deal"

Mexico, too.

They love bullying. Most likely they were all bullies when they were in school

They are properly used as a strategic tool to strengthen domestic industry

The reality is that no amount of tariffs will bring back manufacturing jobs to the US like we had after WWII. These Trump tariffs are all just a show and will in the long run hurt the American consumer and do nothing for the American worker. And what's really frustrating is that when that happens those who have been jumping up and down all excited over Trumps supposedly "brilliant tariff move" will forget all about how they pushed for them and then they'll downplay it. They'll just pretend it did far less damage than it actually did because Trump and all his crowning little white heads about to pop over tariffs never admit they were wrong, that goes against their dear Leaders nature.

You always get more with honey than vinegar. Vinegar leaves a bad taste and the recipient always remembers and when possible will apply the ‘’pay back’’.

And beyond that, the damage Trump has already done to international relationships was totally unnecessary.    This guy is an irresponsible buffoon playing with his new toy (the presidency) and apparently feeling as though he is king of the planet.

Hard to blame other nations for being pissed at our nation, Trump, and those who elected this tyrant.

Game of CHICKEN: Ben Shapiro's Post Explaining Just EXACTLY How Trump Broke Mexico Is Spot-Freaking-ON – Twitchy

You continue to miss the point.

The point I have made is that Trump's tactics are irresponsible.   The USA has a dominant relationships with Mexico and could easily negotiate getting more support at the border.   This could and should have been done privately.   Instead, Trump has threatened Mexico, China, Canada, and now the EU.   He has projected to the world that the USA cannot be trusted to put a rational, reasonable person in the presidency.   This will encourage every trade partner to put less faith in the USA and to diversify.

Mexico and Trump came to an initial agreement wherein Mexico will supply 10,000 troops to the border while Trump will curtail the movement of dangerous grade arms to Mexico.   This could have been accomplished in a manner that preserves relationships and does not project to the world that the USA is unreasonable and untrustworthy.

So what would your response be if China decides to deny the USA rare Earth elements?   There is a trade partner with plenty of clout.    Columbia and Mexico have almost no clout compared to China. 

This stupid bullying tactic looks real bad when not dealing with a weak trade partner.   Shapiro probably will not be gushing if China decides to play its cards.

Hey Kavika..

Vinegar leaves a bad taste and the recipient always remembers and when possible will apply the ‘’pay back’’.

I cannot argue that with you, BUT (there is always a but) Montana forests are SHUT down; Canada lumber is imported into Montana while our forests DIE.... thus, a slap up alongside the head (aka vinegar) is warranted at times.

Now granted this is my thought process ... but trees are the future, they are what combats 'climate change' .. but 'we' let our forests become diseased and eventually die... then blame climate change...  If we continue to rely on Canadian imports (as well as other countries) and allow our forests to die and blame climate change, rather than the lack of selective cutting (aka cleaning out of the dead and dieing) America will not survive... and the craziness that is a wildfire will escalate. 

'We' are close to be becoming the worst stewards of the land in the world ... running a close second to Brazil and their destruction of trees/rain forests..!

Just venting Kavika - I am a conservative conservationist, Montana born and raised tree hugger .. I can only speak to my state, but it is time to quit relying on other countries,

Peace...

Hi Colour,

Maybe I don't understand your post, but isn't the problems with Montana's trees our problem? We should be taking care of our trees. And I am aware of the problems and it's not just climate change, but also Mountain Pine beetles and white pine rust. 

We are terrible stewards of the land. It drives me nuts.

NY is having a similar issue, with the spotted lantern fly and the Asian longhorned beetle,, but we are being very proactive so that they don't take hold.  Thank goodness that we have Cornell leading the way. 

Maybe I don't understand your post, but isn't the problems with Montana's trees our problem? We should be taking care of our trees. And I am aware of the problems and it's not just climate change, but also Mountain Pine beetles and white pine rust. 

Hey Perrie -

Yes, it is an 'our' problem, it is a nationwide/worldwide problem - I can only speak for my state, because it is what I know best. 

Mountain pine beetles are being blamed on 'climate change' mainly I have heard it from WA state as individuals are saying it no longer gets cold enough to kill them during the winter - guess I do not know if that is truth or not .. because before the Northwest got shutout of the forests by environmentalists dead and dieing trees were being harvested, that is no longer the case, as the dead and dieing are now left as fuel for wildfires.  'We' are 'loving' our forests to death!

Western Montana's last remaining lumbermill that was capable of producing large amounts of lumber has shutdown .. I was raised on money from Montana's wood products .. the company my father worked 35+ years for has closed it doors.  It frustrates me to see lumber imported while our trees die, there is a plethora of jobs that could be created once again by managing the forest properly.

Sounds as if NY is doing the right thing .. my hat is off to any state that is taking care of their trees..  

I am not trying to preach to the already converted Perrie  : )  Trees are my main Soapbox issue - I will put Soapbox back in her stall..

Peace...

We trade with other nations if they have items we cannot supply ourselves (at the same or less cost).

The first part of that sentiment is a universal truism of trade (both domestic and foreign, individual and national).  The highlighted portion of that sentiment is a summation of Bill Clinton's new implementation of mercantile capitalism.  Clinton's economic advisors may try to flimflam people by calling it New Keynesian economics but an oligarchy by any other name is just as destructive.  Clinton may have been naively duped but the fact remains that Clinton's efforts to open international markets for American made goods was a smashing disaster that directly caused today's economic disparities and economic insecurities.  Clinton's trade policies did provide an abundance of foreign made goods and much lower prices but the only real benefit was buying votes.  Lifting restrictions and regulations on trade and finance doomed the United States to slow and possibly irreversible decline.  Those once cheap imports are now barely affordable.  

The era of free trade ushered in by Bill Clinton could only sustain itself with credit and borrowed money.  Clinton created a middle man economy that doesn't produce sufficient value to pay for what the country imports.  The reliance on credit has reduced the buying power of the dollar, driven the need for ever growing Federal budget deficits, and has made the United States less secure.

Even now those who have profited from Clinton's bad economic ideas are trying to hold American consumers hostage.  Keep the profits flowing or consumers will suffer.  These same non-producers will flee the country at the first sign of a downturn.  Why is the 'greatest country on Earth' so great if it can't supply itself with sufficient toilet paper?

Not sure what point you are trying to make.

Not sure what point you are trying to make.

Well, of course not.  The statement you provided in the article would be better stated as:

We trade with other nations if they have items we cannot supply ourselves (at the same or lower price).  <== Note the change in text to explain the point.

Consumers are concerned with price; not with cost.  The complaints made about abuse of tariffs have been about consumer prices and not costs.  As has been pointed out, the middle man merchants will pass the costs on to consumers in the price.

Bill Clinton's free trade economic agenda was about price for American consumers, too.  A one-sided free trade regime, where only the concerns of US consumers are considered, allows trade partners to sell at prices below their cost to capture the market.  There really have been complaints about China dumping in the US market to deliberately undermine and eliminate US manufacturing.  US businesses cannot afford to sell at prices below production costs for very long.

Trade is more about price than cost.  That's because consumers pay for everything in the economy.  There isn't any other source of revenue from a marketplace.

Consumers are concerned with price; not with cost. 

How utterly petty.   Think of "how much does it cost?".   The price of a good typically reflects what it costs you to buy it.   Resorting to petty gotchas (that do not even work) is not thoughtful commentary.

How utterly petty.   Think of "how much does it cost?".   The price of a good typically reflects what it costs you to buy it.   Resorting to petty gotchas (that do not even work) is not thoughtful commentary.

It's not petty to point out that the language used in the statement does not conform to the precise meanings used by economists.  The technical language would either be 'price' or 'cost to consumers'.  

Economists differentiate between the supply side and demand side of the economy by using 'cost' for the supply side and 'price' for the demand side.  The metrics used to report heath of the economy utilize price.  It is the Consumer Price Index; not a cost index.  It is the Producer Price Index; not a cost index.

It's not petty to point out that the language used in the statement does not conform to the precise meanings used by economists. 

It is entirely petty.   When you buy a good you pay a price AND it costs you money.  There is a cost.   This nitpicking accomplishes nothing.

It is entirely petty.   When you buy a good you pay a price AND it costs you money.  There is a cost.   This nitpicking accomplishes nothing.

The cost to the consumer (which you have updated in following statements as clarification) is the price.  So, the statement you made is imprecise, at best - 

We trade with other nations if they have items we cannot supply ourselves at the same or less cost.

Is cost, from your statement, the only determining factor in trade?  A manufacturer in a foreign country can chain 12 year old kids to the machines and produce items at dramatically lower cost than in the US.  And that lower cost may not translate to a significantly lower price in the US; the price only need be low enough to undercut production in the US.  Do we not have a higher responsibility in trade than just obtaining the lowest price?

Including cost (or price) factors in the motivation for trade opens the door for abusing trade.  We do, indeed, trade with other nations if they have items we cannot supply ourselves.  Or we find alternatives.  But we can't allow that economic truism to justify profiteering and abusive trade.

So, the statement you made is imprecise, at best - 

Your nitpicking is pointless and petty.   (take the hint)

Is cost, from your statement, the only determining factor in trade? 

No.  This topic is about tariffs and the key factors are dependence and growth.    Stop with the pointless petty tangents.

This is the focus of this article:

The key problems with buying from a foreign nation are:

• Dependence on the foreign nation for these items (or some volume of these items)
• Growth:  helping foreign industries grow stronger rather than our own

The cost to the consumer (which you have updated in following statements as clarification) is the price.  So, the statement you made is imprecise, at best -

Is the "price" the consumer pays effected by the "cost" of the product? Yes or no?

If yes, then you can't separate the two in any debate about either cost or price and adjustments effect both in real time to consumers.

While I admit that you are essentially correct when you said "Consumers are concerned with price; not with cost", the fact that price is tied to cost makes your comment sound petty and lose any point if it had one.

In context, what you seem to be saying is that consumers don't care about what it costs (production, materials, labor, shipping, tariffs, sales, etc.) they only care about the price (production, materials, labor, shipping, tariffs, sales, etc. + profit).

Can you see why some might be seeing your desire to separate the two as petty?

Is the "price" the consumer pays effected by the "cost" of the product? Yes or no?

Cost is typically not factored into the trade price of raw materials, ores, agricultural commodities, and labor.  For this class of trade goods the price is determined by competitive bids between buyers.  For example, the price of oil does not factor in the cost of producing the oil.  The price of oil, gold, corn, and tulips are determined by competitive bidding that does not factor in cost of production and delivery. 

The price of the manufactured goods traded internationally typically are determined by contract bids.  The bidders factor in their production costs, associated costs, profit expectations, and a gamble on what the market is willing to pay.

The price the consumer pays also includes transportation costs, marketing costs, the cost of retail display and access, financial costs, and profits by everyone in the chain to deliver products to the consumer.

In addition to all that, suppliers have been known to sell goods at prices below the cost of production for the purpose of eliminating competition.  The US has laws to regulate domestic producers dumping products on the market.  But international trade is much more difficult to regulate.

So, the short answer to your question "Is the price the consumer pays by the cost of the product" is NO.  Cost may determine whether or not something is available for trade.  But the trade price is determined by other mechanisms and factors.  

BTW, the argument for free trade has been that US producers cannot compete because the prices consumers pay won't cover production costs.  But those prices have been determined by competition between consumers and competitive bidding on contracts.  

Can you see why some might be seeing your desire to separate the two as petty?

No, I don't see the separation of cost and price as petty.  Attempting to conflate cost and price does not reflect the real world of trade.  Basing the motivation for trade on supply-side factors would be misinformation.  (Note: the influence of profit on trade has been a justifying argument for Socialist-style regulation of the marketplace.)

No, I don't see the separation of cost and price as petty. 

It is petty and downright stupid.  And clearly I should have shut this deflection from the topic down right off the bat. 

The cost to the buyer is represented by the price.   Nowhere have I even suggested that underlying supply-chain cost is the same as price.   That is utterly ridiculous on its face because that eliminates the concept of profit.   I was referring to the cost to the buyer.   And you damn well know that by now.

You continue to ignore this and continue to try to make something out of absolute nothing. 

The topic is tariffs (what they are) and their effect on the USA.   The topic is not about the perspective-based meaning of cost vs. price.

This is off topic.  This is your last warning.

[✘] The [✘] topic is tariffs (what they are) and their effect on the USA. The topic is not about the perspective-based meaning of cost vs. price.

Tariffs are a geopolitical economic tool to address imbalances in international relations that threaten national security and impose costs on the country. Tariffs are less destructive to trade and consumers than sanctions and embargos. Sanctions and embargos deny consumers a legal choice to acquire goods. Tariffs allow the goods to be available for consumers but may raise prices or lower profits.

Trump has chosen the less destructive tool available to achieve an international agreement. Those who are willing to accept the imbalances threatening national security and imposing costs on the country are obviously motivated by price of goods (and political ability to buy votes with lower prices). That attitude devalues our sovereignty, security, and economic stability to support social and political ideologies that have failed every time they've been tried throughout history.

Why would abuse of tariffs be any worse than abuse of free trade?  In the past China has used threats of embargo to deny goods to the US as a diplomatic tool.  That was China's response to US concerns over the human rights of the Uyghur People.  And it was an effective coercive tool used by the Chinese government.

It can be pointed out that manufactures could move to Vietnam, the Philippines, or Indonesia to avoid China's threat of embargo impacting their profits.  But not to the United States where they are wanted for jobs, economic security, and national security.  So, how is it possible to coerce manufacturers to return to the United States?  That's the only way to avoid the ability of adversarial trading partners coercing our government and our consumers.

Why would abuse of tariffs be any worse than abuse of free trade?

How about not abusing tariffs in the first place?   The US has plenty of threats.   Part of negotiation is to ensure your negotiation partner understands what you could do (and you understand what they could do) and to work out an agreement that is good for both sides.

Bullying can work in the short term but it has consequences.   Watch Canada start changing its infrastructure to build more interprovincial pipelines as a strategic move to lessen their dependence upon the USA.   What was once a trusted trading partner (the USA) is now no longer trustworthy.   This same principle will manifest (differently but for the same reason) with all US worldwide trading partners of significance.

Junkyard bullying is irresponsible.

Not if it works. You keep missing the point.

Junkyard bullying is not necessary and is counterproductive.   It causes every trading partner to rethink its relationship with the USA and to take measures to diversify.   This is bad for the USA and unfortunately some of this damage is already done.

That is the point.   Gratuitous counterproductive tactics by Trump.

The point never was that Mexico (on its own) had the economic power to damage the USA.   We can live without guacamole.

How about not abusing tariffs in the first place?   The US has plenty of threats.   Part of negotiation is to ensure your negotiation partner understands what you could do (and you understand what they could do) and to work out an agreement that is good for both sides.

Trade is a two way street.  How should we respond to countries who abuse trade?  As I pointed out, sellers can abuse trade, too.

The previous administration used economic sanctions and trade threats to coerce other governments, such as India, for continuing to trade with Russia.  No one raised concerns because we import little from India and consumers would hardly notice.  What that example illustrates is the ability of larger trading partners coercing the US government by abusing trade and threating consumers.  

How should we respond to countries who abuse trade?

It depends on the specifics.   What we should not do is make outrageous public threats of across-the-board tariffs before even opening private negotiations.   Brains rather than bully showmanship.

It depends on the specifics.   What we should not do is make outrageous public threats of across-the-board tariffs before even opening private negotiations.   Brains rather than bully showmanship.

The specifics are that this is Trump's 2nd term.  Trump has the experience of his 1st term and Biden's intervening term to guide his approach to demanding Mexico, Canada, and China take a more active role in addressing illegal immigration and illicit drugs.  

Trump made overtures during his 1st term.  Mexico and Canada abandoned anything they had agreed to when Biden was elected.  And Biden let Mexico and Canada off the hook.

Trump is not a new, untested President.  The move on tariffs is a natural progression from Trump's 1st term.  

The specifics are that this is Trump's 2nd term.

No, the specifics are the problem, the actual goods in question, and the circumstances at play.

The move on tariffs is a natural progression from Trump's 1st term.  

Gratuitous, outrageous across-the-board tariffs without even first negotiating with our top three trade partners is counterproductive and overkill.   It is a stupid move.

It is you that keeps missing the point, Greg. Let’s take an analogy, when you were 12th grade you keep bulling a kid in the 9th grade, some years later he meets you again only this time he is big, tough and seeks the opportunity to kick you ass up to your ears. Do you think that he will pass on the chance, or settle old grievances. I give you about a 1% chance or not getting your ass kicked. In the diplomatic world the same applies, only in stead of a physical beating they will pay you back in many different ways. 

Meaner than a junk yard dog applies to revenge seekers who can take you down in more than one way, Greg.

Trump is assembling a coalition. Against the US.

MSNBC saying Trump backed down not Canada and Mexico

Trump already harmed international relationships with his unreasonable threats.   

What he accomplished could have been done privately and maintain good relationships.   And, importantly, the world's nations would not be on guard and concerned that the USA is less trustworthy than before and that they need to act to protect themselves (more than they have in the past).

Trump agreed to mitigate the flow of weapons to Mexico.   That is what they wanted in return (and they got it in words).   I do not expect Trump to actually follow through on his part and I do not expect that Mexico's efforts will make much of a difference in the flow of Fentanyl in a month.   So this saga will continue in a month unless Trump is somehow convinced by rational minds that pulling out the biggest possible gun upfront is unwise and that negotiations can be effective if the partners are aware of the big gun (which they are).   That is what negotiation is all about.   Bullying will prevail with weaker nations but it damages relationships with all trading partners.

Meanwhile, Trump is going after the EU and will cause further damage.    One can only hope that this time he will first try to negotiate.   Is that possible?

I have not verified the accuracy of this yet, but:

"Mexico has made similar agreements without the threat of tariffs,"   posted   Sam Stein, of The Bulwark and   MSNBC . " Here   in 2021 they agreed to surge the same number of troops to help with migration.   Here   in 2022 they agreed to invest an additional $1.5b.   Here   in 2023 were 15 administrative actions."

"Surging 10,000 troops to the border is something Biden got them to do in the past w/o tanking the stock market,"   added   attorney Marcy Wheeler. "Given that   @Claudiashein   got concessions by giving Trump what Mexico has already given the US, I gotta   wonder   whether Trump's tantrum was just about shorting the stock market."

"It seems like the trick to negotiating with Trump is to realize he doesn’t have any idea what the current facts are,"   said Washington Post   columnist Catherine Rampell. "'Oh you want 10,000 troops?' says world leader who already deployed 15K. 'Great 10k it is.'"

rawstory

Looks like Mexico deployed about 10,000 troops in 2021 to help deal with migration.

In all, we have ridiculous overkill theatrics by Trump when it is very likely that normal private negotiation would have worked and spared all the angst and damage.

You should read your own link. It states Mexico deployed the troops to the southern border.

Mexico announced in March that it was deploying National Guard members and immigration agents to its southern border, and it has maintained more personnel at its southern border since Trump threatened tariffs on Mexican imports in 2019.

Mexico, Honduras, Guatemala deploy troops to lower migration | AP News

What difference does that make to the point?   The point is that Mexico has a history of deploying substantial troops to help deal with migration.    History shows that there is no need for Trump to make public outrageous tariff threats ... just sit down and negotiate in private.   Mexico is clearly smart enough to realize that Trump could use the might of the USA (including tariffs) if negotiations stalled.

Mexico has and would continue to deploy troops to deal with migration.   Trump used a sledgehammer when the normal hammer would almost certainly do the trick.    Trump broadcast to the planet that the USA is now going to make unreasonable demands and try to bully everyone into compliance.   Unnecessarily damaging relationship is a bonehead stupid move, but no doubt this is a result of Trump grandstanding to satisfy his newly-energized ego as opposed to a thoughtful, responsible execution of policy.

The stock markets don't appear to care nearly as about tariffs as they do cheap Chinese AI.

The market dipped in the morning and recovered after the Mexico delay went into effect.   But, good grief, are we really going to try to analyze one day in the market?

Collectively, the market has a much better understanding of global economics than they do AI (by far).   If tariffs are imposed then real consequences can be predicted and the market will reflect negatives.

DeepSeek, in contrast, is still a mystery to most people.  And the market absolutely hates uncertainty.   Most people (it seems) look at DeepSeek as a breakthrough in AI that makes much of the US AI obsolete (that is entirely wrong).   Further, they translate a massive improvement in efficiency in specific circumstances as a reduction in need for hardware.   The thought process apparently is that if AI (as a whole) can now run using a fraction of the processing power then we will not need as much hardware.   Thus NVidia, et. al. will have less demand for their products.

So much confusion.   First of all, every improvement in software efficiency translates into more applications, not less need for hardware.   The market grows, not shrink (Jevon's paradox).   We will continue to need hardware advancements and NVidia is very much needed for the long haul.   Second, DeepSeek did not improve AI (as a whole).   It improved a narrow albeit important segment of what we call AI.   It cut corners that improves efficiency at the expense of precision (and that will work 80% of the time).   It has a revolutionary test time (query time) optimization algorithm that is impressively good at eliminating fruitless searches (an application of a tried and true method of Computer Science).   And it stood on the shoulders of LLMs like that of ChatGPT and essentially learned from the distilled learning of OpenAI.   This is analogous to what human beings do each generation.   We need not do all the original work (e.g. reinvent Calculus, rediscover Fourier’s Theorem, ...) but can benefit from the truths that resulted.   This saves enormous time.   But note that someone still must provide that original work in the AI world and DeepSeek did not solve that problem.   Expensive AI work is still quite heavily in demand and new applications enabled by efficiency will consume the hardware we have (as always).

So much to say, but the bottom line is that DeepSeek was a complete enigma to the market.   AI professionals were properly praising its accomplishments and too many people interpreted this as if China had changed the playing field for AI itself.   Not true, but that kind of uncertainty is going to affect the market.

If you invest, I suggest that NVDA is a buying opportunity (assuming we do not go into a Bear market due to Trump).

The market dipped in the morning and recovered after the Mexico delay went into effect.  

Yes.  It dipped less than half as much as on the Deepseek announcement.

But, good grief, are we really going to try to analyze one day in the market?

Marcy Wheeler seems to be.  Interesting how that's totally OK if it agrees with our politics.

That said, markets tend to overreact in the near term.  Look at Deepseek day as evidence. 

Monday, we had the POTUS announce massive tariffs on our 3 largest trading partners, and the market moved a trivial amount.  What that says very loudly is that the people who manage money for a living don't expect these tariffs to have much meaningful impact on the US economy. 

I promise you if Jerome Powell had announced a 1/4% interest rate hike, we'd have seen at least twice as much movement.

If you invest, 

I do.  

I suggest that NVDA is a buying opportunity

Thank you.  Probably good advice for people who invest that way.

I tend toward ETF investing, and then use options to boost returns.  Individual issues like NVDA or TSLA can behave extremely erratically for almost no reason, as we saw last week.

Volatility reverts to the mean, and is much more predictable over a basket of 100 stocks (QQQ) or 500 (SPY).  I made a very nice profit selling puts and buying calls on the 27th.  Just too easy.

It dipped less than half as much as on the Deepseek announcement.

And that is likely because the market is far more aware of (and thus comfortable with) global economic factors than AI factors.   The market is far more likely to respond to specifics of the tariffs since it is the specific details of tariffs that make the difference.   We do not have the specifics ... this is still in flux.

That said, markets tend to overreact in the near term.  Look at Deepseek day as evidence. 

Again, Jack, there is a major league difference between events that the market understands and those it does not.   The market does not yet understand AI.

Anecdotally, my financial planner called me to discuss DeepSeek when it was released.   His initial understanding was that this was some new Chinese chip that was a disruptive technology against Nvidia.   Even after he understood what DeepSeek was, I am not sure he appreciated how and why this is actually good for Nvidia and other hardware manufacturers.   And that it is also good for AI developers!

Lack of knowledge translates into discomfort which translates into panic.

What that says very loudly is that the people who manage money for a living don't expect these tariffs to have much meaningful impact on the US economy. 

It at least says that they do not think the current threats will manifest into something that harms us.   One key hypothesis in the financial markets is that Trump is simply bluffing and that trade partners will eventually cave.   That they should wait to see what actually happens.   Again, specifics.  If China were to impose restrictions making it more difficult for us to get rare Earth elements, do you think the market would shrug and move along?   Details matter.  

Plus we do not know how long these tariffs would apply.   That matters too.   If Trump backs down then this goes away.  

I think it is foolish to think that Trump can play his tariff games and that this will have no significant impact on prices, consumption, earnings, production, and the market.

I promise you if Jerome Powell had announced a 1/4% interest rate hike, we'd have seen at least twice as much movement.

Because the cause and effect is known when dealing with interest rates.

Individual issues like NVDA or TSLA can behave extremely erratically for almost no reason, as we saw last week.

Correct.  So apply this across the board.   The market is currently unsure about AI.   You can exploit that.   Buying NVDA is of course not the only way to do this.

And that is likely because the market is far more aware of (and thus comfortable with) global economic factors than AI factors.

I think most people think any tariff arrangement is going to be very temporary.  

Again, Jack, there is a major league difference between events that the market understands and those it does not.

There is some difference, yes, but markets tend to overreact on both.

Plus we do not know how long these tariffs would apply.   That matters too.   If Trump backs down then this goes away.  

The consensus appears to be that he's going to use the tariffs to grandstand, and as soon as he can reasonably declare a personal victory they'll stop.

I think it is foolish to think that Trump can play his tariff games and that this will have no significant impact on prices, consumption, earnings, production, and the market.

Well, as you say, details matter.  I'm not sure a tariff lasting 8 hours moves the needle very much.  

Because the cause and effect is known when dealing with interest rates.

Or because interest rates matter vastly more than tariffs.

Correct.  So apply this across the board.   The market is currently unsure about AI.   You can exploit that.   Buying NVDA is of course not the only way to do this.

The options trading has proven pretty profitable.  It's all about managing probability.  You just have to understand the math.

I think most people think any tariff arrangement is going to be very temporary.  

It should be expected that a tariff is temporary; that is the intent.   What is not known is the duration.

The consensus appears to be that he's going to use the tariffs to grandstand, and as soon as he can reasonably declare a personal victory they'll stop.

That is my read of the market hypotheses too.   And if the hypotheses turn out to not be true (e.g. Trump does not back down from his Chinese tariffs) then the market will likely respond.

I'm not sure a tariff lasting 8 hours moves the needle very much.  

Me neither.   Duration matters.   Part of the issue is that it is hard to determine duration at this point.    A tariff that lasts a week is of no consequence.

Or because interest rates matter vastly more than tariffs.

Depends on the tariffs.

You just have to understand the math.

Much more than that.   One must be able to accurately interpret current events, metrics (e.g. P/E ratios), and consideration of history to produce an accurate model.   Probability is a function of the underlying model.

I am sure you did not mean to imply this, but options trading is not merely about understanding mathematics.

What is not known is the duration.

Fair point.  If they drag on for too long, they start to impact earnings, so the market would respond along the way.

Me neither.   Duration matters.   Part of the issue is that it is hard to determine duration at this point. 

I think there is probably an interesting discussion about how that looks based on which country we're talking about.  Canada is in a far less defensible position than China, and they tend to be far more agreeable anyway.  It's not hard to envision a scenario where the Canadian tariffs last a few minutes and the Chinese tariffs last few years.

And, of course, the market will anticipate poor earnings and respond.

It's not hard to envision a scenario where the Canadian tariffs last a few minutes and the Chinese tariffs last few years.

In addition, China is potent.  Far more potent than Canada and Mexico combined.   While Canada could do damage with their oil, it would inflict so much damage on themselves that it is impractical.   China, in contrast, has plenty of weapons in its arsenal and rare earth metals bother me the most.

 The tariffs have been paused owing to Canada and Mexico ledging to approach border crossing security and fentanyl trafficking with more vigor.

Perhaps that was the desired outcome from the beginning

Or perhaps not and it was just a lucky hapenstance

A good result could have been obtained without bullying and retaliatory threats, but then, after all, it was Trump who compromised America's reputation around the world.  The unfortunate thing is that he will put his "success" to be due to his bullying which will encourage him to use it again. 

A good result could have been obtained without bullying and retaliatory threats, but then, after all, it was Trump who compromised America's reputation around the world.  The unfortunate thing is that he will put his "success" to be due to his bullying which will encourage him to use it again. 

You mean Trump should have bribed Mexico and Canada?  That hasn't really been effective in the past.  Throwing money at the problems of illegal immigration and illicit drug trafficking hasn't achieved meaningful results.  The typical response has been to blame the US for not throwing more money at the problem.

Keep in mind this is Trump's 2nd term.  Trump is not a new, untested President.  Seems like Trump's tariffs are a natural progression to reestablish his 1st term policies to address these problems.  Remember that the preceding President overturned almost all of Trump's 1st term policies to address illegal immigration and illicit drug traffic.  

"You mean Trump should have bribed Mexico and Canada?"

No, he should have privately negotiated like a decent respectful and respected diplomat, but maybe that's beyond his capability.  That way he would not have forced his neighbours to retaliate in order to maintain their dignity.  

No, he should have privately negotiated like a decent respectful and respected diplomat, but maybe that's beyond his capability.  That way he would not have forced his neighbours to retaliate in order to maintain their dignity.  

Remember this, reported on 27 Nov 2024?  Mexicos president and Trump had an upbeat call despite dust-up over tariffs   

How about this one, reported 30 Nov 2024?  Canadian Prime Minister Trudeau flies to Florida to meet with Trump after tariffs threat

Trump was quietly negotiating 2 months before the inauguraItion.  Sheinbaum and Trudeau weren't blindsided by Trump's tariffs.  Both Sheinbaum and Trudeau tried to hold American consumers hostage by pushing the narrative that imports would cost more.  Trump called Sheinbaum's and Trudeau's bluff.

So, you see, the diplomacy unfolded just as you suggested.

"Both Sheinbaum and Trudeau tried to hold American consumers hostage by pushing the narrative that imports would cost more."

Holding American consumers hostage?  They were absolutely right that imports would cost more if Trump pulled that tariff threat.  If that's holding American consumers hostage what the fuck are they?  5-year olds?  That was a bluff?  That was reality!!!!

So, you see, the diplomacy unfolded just as you suggested.

Are you not able to see that these meetings were AFTER Trump spoke of ridiculous tariffs?

Trump should have negotiated with them in private rather than make a big public show and sour international relationships.   It was entirely unnecessary and is net bad for this nation.

Trump is using tariffs as a weapon rather than as a temporary tool to help address domestics weaknesses.

Perhaps

Perhaps not

But like you I think that should have been the initial approach by Trump

We think alike about that, and as for what Trump did instead of what he should have done - Wither hast thou gone, common sense?

The tariffs have been paused owing to Canada and Mexico ledging to approach border crossing security and fentanyl trafficking with more vigor.

I think Fentanyl is the excuse to allow Trump to legally execute the tariffs.   National security is one of the easiest ways to justify a tariff and mitigate congressional oversight.   Once he has a justified tariff, he can always include other terms.    Threaten and negotiate is how Trump operated in business so it is not shocking that he continues with the same style as PotUS.   

It would be surprising indeed if Trump would have instead conceived a thoughtful plan for privately negotiating separately with each key trade partner.   A well planned, private negotiation would likely achieve the desired end without triggering chaos.   And Trump always has his junkyard dog big stick if negotiations fail.   Trump apparently thinks that Teddy Roosevelt had things backwards.

On a somewhat related note, watch how Trump is operating with his initiative to reduce the size of government.   I stated a while back that this is one of the initiatives that I wholeheartedly support in principle.   The idea is good because government, like any enterprise, will naturally accumulate waste.   It takes real effort to detect and clean things up and that is not what government tends to do given it does not have the profit / cost-reduction motive typically seen in the private sector.

I predicted that Trump and Musk would NOT engage in detailed analysis to untangle the interconnections, identify waste, design a process for eliminating waste, design new processes to improve effectiveness, develop / purchase new systems to implement these changes, and do this incrementally with checkpoints and methods to make corrections in place.   That is how things are done, when done right, in the private sector.    My prediction was that Musk, given he is a serial entrepreneur and seeks fast, exciting results, would never engage in such a laborious, lengthy process which delivers steady, sound improvements over time.   Instead, Musk would pull out his hatchet and go to town.

The idea of providing payoffs to people who voluntarily resign is a perfect example of what not to do.   That simplistic and crude approach often results in the more valuable (and thus more marketable) employees leaving while those who have been hiding in a safe government job and doing the minimum to stay employed will tend to stay.   Not good.    Similarly, making macro changes by looking at an organization chart totally misses the integration of processes in a complex enterprise such as the federal government.   It is quick, dirty, and will absolutely be chaotic.   And in the end, the untouched departments will still be part of governmental processes that are ineffective (wasteful).

As time goes on, I expect Trump and team to continue to use sledgehammers and axes as they seek quick results that they can spin to a gullible electorate rather than seriously try to do the job right.

The electorate is not gullible, as you would have us believe, but we do expect results. Your opinion as to how this is accomplished is irrelevant. Trump is getting all this left-wing flak because he is on target and doing the right things.

What is your point, Greg?   All you ever offer is that Trump is always right.   Getting pretty old since you never back it up.

Do you think Trump and Musk are reducing government in a responsible manner ... one that will end with good results?

For example, do you think it is smart to offer buyouts rather than selectively prune poor performers?

Do you think it wise to chop at an organizational chart level rather than understand the cross departmental processes and do the hard work of untangling them, modernizing them, etc.?

T.G.

good points appreciate the perspective

Too tired for a repeat of the "deliberative thinking" controversay

Have a good day

In all this Commentary, I haven't seen much about Trump's new clothes.

In the fable of the Emperor's new clothes, a narcissistic ruler parades about... naked. He declares that he is wearing the finest of finery, and that anyone who doesn't appreciate his fine finery is incompetent. 

Trump caved on tariffs, before they ever took effect. He is naked. His sycophants are required to praise his brilliance... but the rest of us are not. Trump caved. He is naked.

No Bob, Trump didn't cave. His threats and bullying worked.

He obtained nothing whatsoever, and "postponed" his tariffs.

That's caving.

No, they didn't.  What he got was a repeat of what was already in place or being put in place by Canada and Mexico.  Essentially, they put out statements that just shuts up Trump.