Retaliate - or negotiate?
Biggest US Self-Inflicted Wound <–Larry Summers, that economist who warned Biden he was spending too much (Biden went ahead anyway), and there would be inflation in consequence.
I can’t get their “share” thingy to copy the correct link, so I’ll just repeat their note on Summers here:
Quote
Former US Treasury secretary Larry Summers says higher inflation is “almost inevitable” under Donald Trump’s new trade order.
“This is the biggest self-inflicted wound we’ve put on our economy in history," he tells ABC News.
He projects that the loss to the US economy as a result of the tariffs would be comparable to oil prices doubling, adding: “We’ve never seen anything like this before.”
Summers says: “There’s no one, virtually, who doesn’t work for the president who thinks this is a good idea.”
“Trump may be wrong, but at least he’s trying.” <–remark of a random citizen this morning to a reporter. Reminds me of the great support in West Virginia 2016 for Mr. Trump who promised to turn back the clock and revive the coal mining there (where the words “sulfur” and “Wyoming” are seldom heard). Reminds me of the Depression/WWII generation, my folks’ generation, where there was so much support of FDR no matter the gap of dreamy promises and actuality.
So not the greatest, but they were happy with their King.
20 hours ago, Boydstun said:
The EU let go of controls last year in finally accepting free trade with a bloc of countries in South America.* The USA has been offered that free trade deal from Argentina et al. but is not willing to try freedom. The USA could champion a free trade deal with EU just as the President of Argentina did last year and earlier, but the US leadership is not willing to try freedom.
That’s an absurd statement to make. We clearly mean two different things by the phrase “free trade”.
My definition is “the ability of all individuals to trade on a voluntary basis with each other”. What’s yours?
Here’s just one example of a clear violation of what I mean by free trade: https://inplp.com/latest-news/article/the-european-commission-confirms-that-argentina-has-adequate-legislation-for-the-international-transfer-of-personal-data/
That outlines just a tiny fraction of the legislative over-reach Argentina had to engage in, in violation of its own citizens’ individual rights, to obtain what you call “free trade with the EU”. A very tiny fraction. The EU has blocks of regulation like that for every single industry, that it forces its trading partners to adopt ahead of any trade agreement.
The EU bureaucrats aren’t interested in free trade. They’re after imposing their regulatory framework on the world. They’re shaping the world in their own image. And, up to this point, the US has been standing by, just watching, as the European Commission writes laws which are then applied in Canada, South America, Japan, Britain, etc., as a condition of access to the EU market.
That’s entirely absurd. The US should, at the very least, start offering the same exact deal: access to the US market conditional on the immediate abolishment of every single EU regulation. Start with Canada. Make them choose between trade with the EU and trade with the US.
The alternative, of course, would be what Elon Musk suggested the other day: free trade between the US and the EU. Keyword on “free”. But that’s not a realistic proposal. That’s every bit as unrealistic as suggesting free trade with North Korea (requiring Kim Jong Un to step aside, have free elections, liberalize its economy, etc.).
The probability of EU bureaucrats stepping aside and allowing actual free trade to happen is exactly the same ZERO. The only thing that will work is a contentious negotiation process that attempts to limit the EU’s power, under the threat of tariffs.
Another thing: when I buy something from Canada, for example, it’s zero tariff, right? But, fun fact: every European government has a tax of 20% or so on that purchase. It’s automatically deducted at customs. It’s the seller that HAS TO pay it. It works exactly the same way as a tariff would. And some might argue that that’s fine, since it doesn’t disadvantage to Canadian producers … oh, but how naive you are. Because here comes the next con: VAT exemption. That’s a little favor many European governments hand out to their favorite categories of local producers. So yes, Canadian companies do have to compete with local producers who don’t pay VAT.
It gets worse: honest Canadian producers also have to compete with Chinese companies that CHEAT. They sell me let’s say a pair of $100 shoes. That’s $80 for them, $20 for my government, right? Wrong. That’s $100 for them, 0$ for my government… because when my package arrives, it says the shoes cost $7-8 on the invoice. Low cost items like that aren’t taxed, because the accounting would cost the government more than the revenue. Obviously, my government can’t do anything to a guy in China who’s evading European taxes. He has immunity. The Canadian guy does not.
That’s your “free trade”. And I’m only mentioning a tiny fraction of the incredibly massive volume of things that make this “free trade” very, very unfree. I’m not talking about a mere tariff, where you hand over the 10% Trump just imposed, and beyond that you get to trade as you wish. This goes to the essence of the issue. This changes the fundamental nature of the trade. Countries which sign deals with the EU, and companies which produce for the EU, aren’t just paying a percentage. They’re selling their souls. The essence of what they do (how they regulate their economy, in the case of countries, and how they produce their products, in the case of companies) changes fundamentally.
[edit] If economic regulations aren’t scary enough, another condition of free trade with the EU is adherence to the ICC. That’s the so-called “International Criminal Court”. The one that wants to arrest Netanyahu, while refusing to indict any living Hamas leader. The one leftist EU bureaucrats set up and are trying to turn into a Court that rules over the whole world.
Feel free to look on any EU website for how that Court is described: they’re talking about it like it is a global judicial body representative of the population of Earth, legitimately making judgements anywhere on Earth it wishes to.
And it’s not. It’s something that’s been imposed on most of the countries that signed up for it. Certainly Argentina. You think Milei wants to be part of the ICC? But he can’t leave. The EU will punish him economically for it.
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15 hours ago, Boydstun said:
Reminds me of the Depression/WWII generation, my folks’ generation, where there was so much support of FDR no matter the gap of dreamy promises and actuality.
Hmm. “actuality”, you say. You’re citing reality as your argument. Really?
What is this actuality, that actually exists in the world today, that reminds you of the Great Depression?
Don’t give me promises about what will happen in the future, from “experts” who oppose Trump ideologically. Give me actuality. Are there hobos running around, with dainty little sacks made of handkerchiefs attached to a stick, looking for a job because of Trump’s policies? In actuality?
Because the only gap I see is between reality and the doom and gloom of the critics. Trump’s been in office for four years before, you know. And he was doing roughly the same things: playing with tariffs to force people to re-negotiate deals. And everyone who hates him promised the same exact doom and gloom back then too.
Meanwhile, the only economic gloom came from a childish over-reaction to a mild cough. Not from anything Trump did.
So am I looking at a different reality here? Where’s this reality that’s supposed to convince me that Trump is the second coming of FDR? How am I ignoring my hunger? Clearly, I’m hungry, in this reality of yours. And yet, my belly feels perfectly full. What kind of delusion is this? Were people in the Great Depression also able to magically feel perfectly satiated, while they were starving? Or is it just me?
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6 hours ago, stansfield123 said:
. . .
What is this actuality, that actually exists in the world today, that reminds you of the Great Depression?
. . .
I said that the attitude of West Virginians towards Trump who failed to deliver the return of coal mining in West Virginia reminded me of the attitude of FDR fans during the Depression who failed to deliver what was promised. That is elementary, and does not translate to your representation of what I said. You are being dishonest, I conclude, because it is plain you are not an idiot. My statement being so elementary, and you rewriting it to something else you’d rather it were, I’ll not bother with you further.
On 4/7/2025 at 6:26 PM, Boydstun said:
I said that the attitude of West Virginians towards Trump who failed to deliver the return of coal mining in West Virginia reminded me of the attitude of FDR fans during the Depression who failed to deliver what was promised. That is elementary, and does not translate to your representation of what I said. You are being dishonest, I conclude, because it is plain you are not an idiot. My statement being so elementary, and you rewriting it to something else you’d rather it were, I’ll not bother with you further.
I’m sorry, I didn’t mean to misinterpret what you said. I wasn’t being dishonest, I just misunderstood. I thought you were making a wider comparison between Trump and FDR. I guess you’re not.
Unfortunately, this new comment confused me more, not less. So please, clarify something for me: Are you saying that the only similarity you see between Trump and FDR is that they both have unfulfilled campaign promises?
That’s it? Nothing else whatsoever?
I don’t think there are many Moldbug readers around.
Rockefeller’s Ruchir Sharma’s opinion on the Trump tariffs:
https://www.youtube.com/watch?v=SVgXLac9XDg
The new baseline tariff rate is 10%, which would reduce the US GDP growth rate by 1 percentage point (from an average of 2.4%). The growth rates of many other countries are also being cut but by a smaller factor compared to the US. And for obvious reasons, countries are starting to trade with each other more, bypassing the US.
According to him, the only check on the US government now is the bond market and government debt. There are multiple ways that this situation can get worse for the US: tax cuts that increase debt, low GDP growth that would reduce the tax revenue even at the same tax rate, high interest rates (due to less demand for US bonds from declining value of USD or other factors affecting investor confidence) making it more difficult to refinance debt, etc.
Serious question as I am unsure of the implications to global market operations and the reserve currency status afforded the USD , but could or would expending petroleum production and exporting offset GDP ‘losses’?
51 minutes ago, tadmjones said:
Serious question as I am unsure of the implications to global market operations and the reserve currency status afforded the USD , but could or would expending petroleum production and exporting offset GDP ‘losses’?
Petroleum production and export would strengthen US dollar and make it easier for the US to import, but won’t necessarily prevent the slowdown of GDP growth. Ramping up petroleum production or government spending without increases in production efficiency just leads to inflation. It’s not real growth. Letting countries specialize in producing certain things and then trading them leads to better efficiency and lower inflation and higher real growth. Petroleum production doesn’t necessarily make things more efficient. Government spending can contribute to efficiency and real GDP growth if the spending is on logistics, education, etc (like what China did) which leads to more efficient capital formation.
Also, Trump doesn’t like a strong USD. A strong currency is good for knowledge economies, but not for manufacturing economies. USD has been a strong currency since the 70s but is starting to weaken and exporting petroleum probably won’t reverse that.
On 4/19/2025 at 6:47 PM, human_murda said:
And for obvious reasons, countries are starting to trade with each other more, bypassing the US.
Did he actually say that? “countries are trading with each other”? That’s a very sloppy way to phrase it, since most of the trade isn’t happening between countries, it’s happening between a wide variety of economic actors, mostly private.
And, of course, once you phrase it correctly, you should realize that, if the tariffs increase trade among non-American economic actors … they also increase trade among American economic actors. And that’s something you should account for, before predicting how the tariffs will affect economic growth. The only reason not to is because you’re driven by ideology rather than a desire to tell the truth.
It’s of course even more complicated than that, because the tariffs serve to bring countries to the negotiating table. Some countries will agree to trade deals with the US. Trade deals which are better than the current status quo. So, as American economic actors lose some foreign trading partners, they gain new ones.
19 hours ago, stansfield123 said:
they also increase trade among American economic actors. And that’s something you should account for, before predicting how the tariffs will affect economic growth.
That’s already part of the calculations used to predict economic growth. Economists use hundreds of variables to predict economic growth. The combined effect of the decrease due to tariffs and the increase due to internal trade is still a net decline. However, there’s a limit to the increase in internal trade in the US because tariffs put a new minimum on the the price of goods, making it more inefficient than importing.
Other countries will also face a net decline but not as much as the US because they have the option to sign trade deals with each other. Other countries are decreasing international barriers as well as internal barriers for trade (such as in the case of Germany). The US cannot do the former (internally) and isn’t really doing the latter, so the offset is much smaller, resulting in a larger decline.
19 hours ago, stansfield123 said:
The only reason not to is because you’re driven by ideology rather than a desire to tell the truth.
Peak comedy. You’re spouting nonsense based on Capitalism, Objectivism and other ideologies and don’t understand free market economics. You’re disagreeing with me on the basis of capitalism. That’s an ideology. I was purely talking economics in the last two comments. I did not mention a single thing that was ideological in the last two comments. I laid out exactly what was happening economically. You perceived that as ideological. Stop projecting.
On 4/21/2025 at 3:47 PM, human_murda said:
That’s already part of the calculations used to predict economic growth.
You buying a bike made in Taiwan, Germany or the US, because the cheap copy made in China now costs 140% more, was already part of the calculations? Quite the clairvoyants these “economic experts” who predict the future for the legacy media, aren’t they.
Please, point out what part of the “calculations” that is in.
2 hours ago, stansfield123 said:
You buying a bike made in Taiwan, Germany or the US, because the cheap copy made in China now costs 140% more, was already part of the calculations? Quite the clairvoyants these “economic experts” who predict the future for the legacy media, aren’t they.
Please, point out what part of the “calculations” that is in.
Out of morbid curiosity, what methodology do you think economists use?
Even morbidlier , do you mean ‘economists’ like scientists, lawyers , doctors? Like experts ? So any study done by any one member will be based on the same principles, cuz expertise?
9 minutes ago, tadmjones said:
Even morbidlier , do you mean ‘economists’ like scientists, lawyers , doctors? Like experts ? So any study done by any one member will be based on the same principles, cuz expertise?
I read this several times and I think you need to see a specialist.
Specialist , good one 
But seriously, why not look at the situation as Trump trying to duplicate or mirror a rhyming historic era, protectionism to foister domestic dominance in burgeoning technologies?
Von Mises to me was more art than math, modern economists are algebraically arethmatic.