As we discussed on the site formerly known as Twitter yesterday, I do not consider this a pause at all: the 10% across-the-board tariffs is still a new tariffs that did not previously exist, and is at what was considered a high level when tariffs were being discussed last year.
This is still going to hurt us pretty badly, and the harm to the US's reputation is gonna take a lot of time to repair - if it even can be before serious knock-on effects occur (like everyone else pivoting away from the US to China).
First, the market is in bubble territory; any air that is taken out now can prevent a future bust, perhaps while we are in a recession. Second, the expectation was that money that came out of the market would go into treasuries, lowering the cost for the US to cover its borrowing, which is the biggest threat on the horizon. Third, when China dumped bonds to cover its currency plunge, the bond market went into the opposite direction. SO, the strategy changed immediately. The pressure was kept on China, and everybody else got a reprieve. Everybody else will expect at least SOME tarrifs to resume in 90 days, so they will carefully sell stocks and buy bonds, countering the continuing Chinese dump. The possible Chinese dump of bonds had represented a serious risk to the US if it occurred during really difficult US times. Being forced now, while we are relatively OK, removes some ( how much?) potential for a Chinese dump when we are more vulnerable. The tarrifs cost the investor class tons of money but the less wealthy in the US spend money on food, rent, and clothes, and the continuing demand for clothes is mostly in the children's sizes. Apart from clothes, these are US provided products. Trump is trying to keep the US out of bankrupcy, ie he is protecting the government's interests over that of the investor class, (which includes him!)
In summary, China is hurting badly, and its potential for doing damage to the US economy is being significantly decreased. And it is expected that the trade imbalance will decrease at least temporarily and give us time to get spending under control and the economy moving, before collapse occurs. The stock market only measures the economy of people who are spending so much money overseas, not the health of the US as a whole. We are in considerably worse shape than the people whose investments were soaring understand.
There is just so much wrong here I don't know where to start.
The majority of Americans own stock and/or bonds, and those who don't are still exposed via either pension funds or of course just rh general economy.
Which sector is in a bubble? Tech/AI, maybe. But the whole market? No. This wasn't a correction brought on by the market changing its mind on a particular sector.
The market is a leading indicator of expected performance/value. This drop in valuations is showing that the expectation is the companies on the exchanges - and by extension the overall economic environment - will not be as productive in the future.
To my knowledge it was the Japanese that took the hit in the bond markets. You are also incorrect about bond yields, because when they go up it means there's more expected risk. Not long ago there was a consideration for setting negative interest rates - basically requiring people pay us to take our debt - because we were the safest places to store it. Now Greece is a less risky option.
The tariffs make everything more expensive, because inputs often have a mix of sources and because there's now a protected profit difference between the foreign option and the domestic one.
And no, food is not all domestic: there are little/no domestic options for bananas/mangoes/avocados and more. Consider also out-of-season fruits and veggies: those are all imported.
Rent is where we should be focusing our efforts, but tariffs won't help that. If anything it'll make it go higher (and more difficult to pay as jobs are lost and wages drop) due to the increased costs for taking on debt to purchase the inputs, which are also more expensive with tariffs, making the cost of building new housing higher. Zoning regulations are the big impedance there, and tariffs won't change that.
If China is the actual target, then Trump has made a mess of it since his first term. The Trans-Pacific Partnership was designed to get more allies on our side in preparation to decouple from China: Trump removed the US from it, and now that group is looking at partnering with China. Rather than focusing on friendshoring and setting up trade agreements with those closest to us, which would enable supply chains to orient in our favor - Trump is antagonizing them pushing them away from the US and towards China.
Trump has no idea what he's doing because he's a real estate heir, not an international trade expert. And we're all going to suffer for it, get nothing out of it, and may not be able to recover our reputation. Our status as the world's reserve currency - driven by our wealth and consumption - is in jeopardy, and expecting things to work out in our favor is not a given.
In conclusion, diversify your investments into developed international markets. Expect pain. Expect a new world order to arise.
I never said that tarrifs will not cause pain. I claim that the people who are worst hurt are China and the investor class, those who have been greatly helped by previous policy. I have a great fear of the debt loop quicksand we are just over the boundary of. Unless SOMETHING is done soon, the US will go the way of the Soviet Union. I am not even sure that Trump's medicine is the best available. Canceling all welfare for a year might work a lot better, but I do not and I do not know anybody who would support THAT idea. So tell me what you would do if you were President, and forgive me if I reject out of hand, continue in the same direction we have been going and/or tax all businesses out business.
You are wrong, tariffs harm the bottom more than the top and realistically it will cost the US more in terms of dollars than it will China - because while the US is ~$400b of business for them, they do much more business with the rest of the world. They'll be fine: we won't.
This will not fix our debt problems, only make them worse. Debt will cost us more as yields rise, and rather than stop spending we're on course to spend even more under Trump than prior (just like his first term).
Got an update for you: the tariffs rate on China is actually 145%, with 125% being "reciprocal".
https://www.cnbc.com/2025/04/10/china-trump-tariffs-live-updates.html
As we discussed on the site formerly known as Twitter yesterday, I do not consider this a pause at all: the 10% across-the-board tariffs is still a new tariffs that did not previously exist, and is at what was considered a high level when tariffs were being discussed last year.
This is still going to hurt us pretty badly, and the harm to the US's reputation is gonna take a lot of time to repair - if it even can be before serious knock-on effects occur (like everyone else pivoting away from the US to China).
First, the market is in bubble territory; any air that is taken out now can prevent a future bust, perhaps while we are in a recession. Second, the expectation was that money that came out of the market would go into treasuries, lowering the cost for the US to cover its borrowing, which is the biggest threat on the horizon. Third, when China dumped bonds to cover its currency plunge, the bond market went into the opposite direction. SO, the strategy changed immediately. The pressure was kept on China, and everybody else got a reprieve. Everybody else will expect at least SOME tarrifs to resume in 90 days, so they will carefully sell stocks and buy bonds, countering the continuing Chinese dump. The possible Chinese dump of bonds had represented a serious risk to the US if it occurred during really difficult US times. Being forced now, while we are relatively OK, removes some ( how much?) potential for a Chinese dump when we are more vulnerable. The tarrifs cost the investor class tons of money but the less wealthy in the US spend money on food, rent, and clothes, and the continuing demand for clothes is mostly in the children's sizes. Apart from clothes, these are US provided products. Trump is trying to keep the US out of bankrupcy, ie he is protecting the government's interests over that of the investor class, (which includes him!)
In summary, China is hurting badly, and its potential for doing damage to the US economy is being significantly decreased. And it is expected that the trade imbalance will decrease at least temporarily and give us time to get spending under control and the economy moving, before collapse occurs. The stock market only measures the economy of people who are spending so much money overseas, not the health of the US as a whole. We are in considerably worse shape than the people whose investments were soaring understand.
There is just so much wrong here I don't know where to start.
The majority of Americans own stock and/or bonds, and those who don't are still exposed via either pension funds or of course just rh general economy.
Which sector is in a bubble? Tech/AI, maybe. But the whole market? No. This wasn't a correction brought on by the market changing its mind on a particular sector.
The market is a leading indicator of expected performance/value. This drop in valuations is showing that the expectation is the companies on the exchanges - and by extension the overall economic environment - will not be as productive in the future.
To my knowledge it was the Japanese that took the hit in the bond markets. You are also incorrect about bond yields, because when they go up it means there's more expected risk. Not long ago there was a consideration for setting negative interest rates - basically requiring people pay us to take our debt - because we were the safest places to store it. Now Greece is a less risky option.
The tariffs make everything more expensive, because inputs often have a mix of sources and because there's now a protected profit difference between the foreign option and the domestic one.
And no, food is not all domestic: there are little/no domestic options for bananas/mangoes/avocados and more. Consider also out-of-season fruits and veggies: those are all imported.
Rent is where we should be focusing our efforts, but tariffs won't help that. If anything it'll make it go higher (and more difficult to pay as jobs are lost and wages drop) due to the increased costs for taking on debt to purchase the inputs, which are also more expensive with tariffs, making the cost of building new housing higher. Zoning regulations are the big impedance there, and tariffs won't change that.
If China is the actual target, then Trump has made a mess of it since his first term. The Trans-Pacific Partnership was designed to get more allies on our side in preparation to decouple from China: Trump removed the US from it, and now that group is looking at partnering with China. Rather than focusing on friendshoring and setting up trade agreements with those closest to us, which would enable supply chains to orient in our favor - Trump is antagonizing them pushing them away from the US and towards China.
Trump has no idea what he's doing because he's a real estate heir, not an international trade expert. And we're all going to suffer for it, get nothing out of it, and may not be able to recover our reputation. Our status as the world's reserve currency - driven by our wealth and consumption - is in jeopardy, and expecting things to work out in our favor is not a given.
In conclusion, diversify your investments into developed international markets. Expect pain. Expect a new world order to arise.
I never said that tarrifs will not cause pain. I claim that the people who are worst hurt are China and the investor class, those who have been greatly helped by previous policy. I have a great fear of the debt loop quicksand we are just over the boundary of. Unless SOMETHING is done soon, the US will go the way of the Soviet Union. I am not even sure that Trump's medicine is the best available. Canceling all welfare for a year might work a lot better, but I do not and I do not know anybody who would support THAT idea. So tell me what you would do if you were President, and forgive me if I reject out of hand, continue in the same direction we have been going and/or tax all businesses out business.
You are wrong, tariffs harm the bottom more than the top and realistically it will cost the US more in terms of dollars than it will China - because while the US is ~$400b of business for them, they do much more business with the rest of the world. They'll be fine: we won't.
This will not fix our debt problems, only make them worse. Debt will cost us more as yields rise, and rather than stop spending we're on course to spend even more under Trump than prior (just like his first term).
For a more sane conservative option, read this plan: https://manhattan.institute/article/how-to-truly-fix-the-federal-debt
And re decoupling, read this:
https://www.foreignaffairs.com/china/underestimating-china
Tarrifs are like chemo against cancer. It will kill you, cure you, or give you enough time to find another cure.
I think tariffs are more like snake oil against cancer. Not only do they not help, they probably make the situation worse.
Or perhaps better yet: it's more like we're trying to treat diabetes with chemo.