Thoughts on the Trump presidency

[D6130]

What planet is he on?

Given his character....probably Mercury!

 

[Annetts key]

I don't get the goal/aim/target/end state of the tariff regime annouced by the Trump team.

Is there capacity within the American industrial landscape to pick up the slack? Do they have access to the resources, skills tools and techniques needed to replicate international supply chains and manufacturing? Do they have the time to do that?

I very much doubt that there is spare capacity that could be brought into use without substantial investment. And it’s the same with (a lack of suitable) skilled workers, tools and machinery.

The quickest that a company could manage would be to buy or build a suitable site and then literally move an existing factory from a nearby country. But that means shutting down for however long that move would take. And there would still be the problem of finding and employing suitable employees plus the time to train them up.

Given the uncertainty that appears to be a feature of this administration, how many companies are willing to go to that expense in the short term?

Aren't the tariffs kicking in at midnight tonight? I am surprised (read; not surprised) that Trump is saying there will be some (!) pain before the gain, to allow for companies to relocate their manufacturing in the USA etc.

What I don't get is that surely you'd see first if that was even possible/feasible, and if so you'd set a deadline to give businesses time to prepare. The idea that they can start punishing straight away, which will harm a lot of businesses and its customers, and the firms will all announce multi-billion investments in factories in the USA is pie-in-the-sky thinking.

Worse still, Trump thought he could bully companies by telling them not to pass on the costs or he'd impose higher tariffs, which goes to show he knows it will be devastating but thought his threats would hide the real impact by not impacting prices. What planet is he on?

The same planet as Liz Truss?

This is policy that ignores the practical realities of modern manufacturing.

Even if you think Trump has a point, automation and the sharing of parts between manufacturers means the U.S.A. is very unlikely to get anywhere close to their previous manufacturing employment levels.

Also, if the U.S.A. is only a part of your world wide market, a company may decide to put up with the tariffs and instead try to expand their sales into other countries.

Anyway you want to look at this, the American citizens are going to pay more. Through higher prices and through higher inflation.

And from Trumps comments it’s clear that he sees this as a substantial source of tax income. I fully expect income tax rates to decrease at some point as he looks after himself and his rich buddies.

As with any tax on sales of products, it’s a regressive tax with those who spend a high percentage of their money on groceries and products feeling the effect far more than those who are wealthy.

 

[YorkshireBear]

I don't get the goal/aim/target/end state of the tariff regime annouced by the Trump team.

Is there capacity within the American industrial landscape to pick up the slack? Do they have access to the resources, skills tools and techniques needed to replicate international supply chains and manufacturing? Do they have the time to do that?

Surely not quickly. And who is going to invest in significant domestic industry in the US when in four years time the tariffs might get removed?

Hard to get your money back in 4 years when you haven't even built the facilities yet.

 

[Garmoran]

One upside of Trump's tariffs seems to be that, for now, the Dollar has been devalued, so we have a stronger pound:

GBP/USD Currency Exchange Rate & News - Google Finance

Get the latest Pound sterling to United States Dollar (GBP / USD) real-time quote, historical performance, charts, and other financial information to help you make more informed trading and investment decisions.

www.google.com

View attachment 177727
(Image of the pound to dollar exchange rate for the last 5 days, with value just under 1.32)

Is that an upside? It means that the cost of importing goods from Britain to the US will effectively increase by more than the 10% tariff that Trump has imposed.

 

[najaB]

Is that an upside? It means that the cost of importing goods from Britain to the US will effectively increase by more than the 10% tariff that Trump has imposed.

It's a plus for us since we import (sightly) more from the USA than we export to them.

 

[brad465]

Is that an upside? It means that the cost of importing goods from Britain to the US will effectively increase by more than the 10% tariff that Trump has imposed.

It's a plus for us since we import (sightly) more from the USA than we export to them.

And a bunch of other commodities, especially oil, are traded in dollars, so even if they're not imported from the US, the dollar value matters.

 

[Cloud Strife]

Is there capacity within the American industrial landscape to pick up the slack? Do they have access to the resources, skills tools and techniques needed to replicate international supply chains and manufacturing? Do they have the time to do that?

No, no and no. While I maintain that Trump correctly understood the feelings of those in the Rust Belt with the collapse of American manufacturing, he has little to no understanding of what happens next. In the short to medium term, all this will do is increase prices dramatically. For instance, the EU doesn't need to export to the USA, there are plenty of other customers for European steel. How does the USA propose building all this manufacturing capacity when they don't have the capabilities themselves?

The end result here can only be severe economic problems for the majority of ordinary Americans. Of course, the whole point is that the tariffs are there to fund his tax cuts for the wealthy.

 

[DustyBin]

No, no and no. While I maintain that Trump correctly understood the feelings of those in the Rust Belt with the collapse of American manufacturing, he has little to no understanding of what happens next. In the short to medium term, all this will do is increase prices dramatically. For instance, the EU doesn't need to export to the USA, there are plenty of other customers for European steel. How does the USA propose building all this manufacturing capacity when they don't have the capabilities themselves?

The end result here can only be severe economic problems for the majority of ordinary Americans. Of course, the whole point is that the tariffs are there to fund his tax cuts for the wealthy.

I think it may well be a case of Trump expecting others to blink first. If other countries remove/reduce tariffs on US goods he'll reciprocate and he'll have scored a great victory, corrected years of injustice, made America great again yada yada... It's classic Trump really!

 

[edwin_m]

I think it may well be a case of Trump expecting others to blink first. If other countries remove/reduce tariffs on US goods he'll reciprocate and he'll have scored a great victory, corrected years of injustice, made America great again yada yada... It's classic Trump really!

It looks like the percentages imposed by Trump are based on trade deficits, not on the amount of tariff the other country imposes: https://www.bbc.co.uk/news/articles/c93gq72n7y1o

it boils down to simple maths: take the trade deficit for the US in goods with a particular country, divide that by the total goods imports from that country and then divide that number by two.

(subject to a 10% minimum applicable to all countries where this would work out to a lower or negative figure).

So whatever other countries do with their tariffs won't affect the calculation directly, just indirectly by changing the deficit. Similarly if Trump's tariffs reduce the deficit then the tariffs themselves ought to reduce as well. There are probably all sorts of ways for other countries to game this. For example, with the UK being on the 10% minimum and a negative trade deficit (from the USA point of view), there's quite a lot of headroom to impose reciprocal tariffs if we choose to, without triggering an increase. This does of course depend on the USA sticking to the same formula and re-working the numbers periodically.

 

[Annetts key]

I think it may well be a case of Trump expecting others to blink first. If other countries remove/reduce tariffs on US goods he'll reciprocate and he'll have scored a great victory, corrected years of injustice, made America great again yada yada... It's classic Trump really!

The trouble is, Trump’s tariffs are not just about other countries tariffs. It’s about a combination of things including the trade deficit plus other so called “restrictions”. No government can change the trade deficit overnight even if they wanted to.

And it’s got nothing to do with fairness or injustice. No one forces Americans to buy products imported from other countries. And most Americans believe in a free market, as that is supposed to keep consumer goods prices low.

And trade deficits are a worldwide issue that will exist as long as there are countries or regions where there is a significant difference in living standards and other factors in the cost of production.

Putting large tariffs on the imports from poorer countries will not help the people in those countries to increase their own living standards. Meanwhile, as a country that imposes tariffs on imports, you are driving up the cost of living and hence driving down the standard of living for your own population.

 

[Nicholas Lewis]

The trouble is, Trump’s tariffs are not just about other countries tariffs. It’s about a combination of things including the trade deficit plus other so called “restrictions”. No government can change the trade deficit overnight even if they wanted to.

And it’s got nothing to do with fairness or injustice. No one forces Americans to buy products imported from other countries. And most Americans believe in a free market, as that is supposed to keep consumer goods prices low.

And trade deficits are a worldwide issue that will exist as long as there are countries or regions where there is a significant difference in living standards and other factors in the cost of production.

Putting large tariffs on the imports from poorer countries will not help the people in those countries to increase their own living standards. Meanwhile, as a country that imposes tariffs on imports, you are driving up the cost of living and hence driving down the standard of living for your own population.

Basically China has enriched itself at the expense of the US oh and the UK, EU etc as we have all allowed that country to levy very high tariffs against our products whilst we offshored our production at the expense of our own populations for some short term gain. All but impossible to reverse now but what a greater centrepieces for Trumps MAGA then to tell his flock we are getting your jobs back. Reality of course will be substantially different but businesses' are generally very adept at dealing with these issues but it takes time to see a difference and Trump has only four years and more like three to materially show a benefit.

Some in the UK feel we have been let off compared to others countries but it will still hurt the precious growth the UK needs. Starmer and his entourage must surely now realise that if we don't come to an accommodation with EU very quickly over trade Reeves growth goal will fade away and we all know how that will play out both economically and politically. I thought Starmer had grasped this over the way US had gone at Europe over Ukraine and realised that really our own security can only be assured by close collaboration with EU now. EU have surprisingly woken up to this very quickly and many EU members want the UK inside the EU security and defence pact but French are being obstructive over fishing rights allegedly and Starmer seems to want to sacrifice the whole country what is now a miniscule industry anyhow. We dont have to go into a customs union just being in the EEA (European Economic Area ) would be beneficial.

 

[brad465]

Basically China has enriched itself at the expense of the US oh and the UK, EU etc as we have all allowed that country to levy very high tariffs against our products whilst we offshored our production at the expense of our own populations for some short term gain. All but impossible to reverse now but what a greater centrepieces for Trumps MAGA then to tell his flock we are getting your jobs back. Reality of course will be substantially different but businesses' are generally very adept at dealing with these issues but it takes time to see a difference and Trump has only four years and more like three to materially show a benefit.

Some in the UK feel we have been let off compared to others countries but it will still hurt the precious growth the UK needs. Starmer and his entourage must surely now realise that if we don't come to an accommodation with EU very quickly over trade Reeves growth goal will fade away and we all know how that will play out both economically and politically. I thought Starmer had grasped this over the way US had gone at Europe over Ukraine and realised that really our own security can only be assured by close collaboration with EU now. EU have surprisingly woken up to this very quickly and many EU members want the UK inside the EU security and defence pact but French are being obstructive over fishing rights allegedly and Starmer seems to want to sacrifice the whole country what is now a miniscule industry anyhow. We dont have to go into a customs union just being in the EEA (European Economic Area ) would be beneficial.

The Trade & Cooperation agreement is up for renegotiation next year (as it has a clause requiring this every 5 years). This will be when some serious moves take place with the EU relationship that will hopefully lead to a much closer alignment. By then we'll probably have seen more of the damage from Trump's trade war, which should enhance the case for closer alignment.

 

[DustyBin]

It looks like the percentages imposed by Trump are based on trade deficits, not on the amount of tariff the other country imposes: https://www.bbc.co.uk/news/articles/c93gq72n7y1o


(subject to a 10% minimum applicable to all countries where this would work out to a lower or negative figure).

So whatever other countries do with their tariffs won't affect the calculation directly, just indirectly by changing the deficit. Similarly if Trump's tariffs reduce the deficit then the tariffs themselves ought to reduce as well. There are probably all sorts of ways for other countries to game this. For example, with the UK being on the 10% minimum and a negative trade deficit (from the USA point of view), there's quite a lot of headroom to impose reciprocal tariffs if we choose to, without triggering an increase. This does of course depend on the USA sticking to the same formula and re-working the numbers periodically.

The trouble is, Trump’s tariffs are not just about other countries tariffs. It’s about a combination of things including the trade deficit plus other so called “restrictions”. No government can change the trade deficit overnight even if they wanted to.

And it’s got nothing to do with fairness or injustice. No one forces Americans to buy products imported from other countries. And most Americans believe in a free market, as that is supposed to keep consumer goods prices low.

And trade deficits are a worldwide issue that will exist as long as there are countries or regions where there is a significant difference in living standards and other factors in the cost of production.

Putting large tariffs on the imports from poorer countries will not help the people in those countries to increase their own living standards. Meanwhile, as a country that imposes tariffs on imports, you are driving up the cost of living and hence driving down the standard of living for your own population.

I don't disagree, you're both correct in what you're saying. This is Trump though; he makes it up as he goes and will claim "victory" regardless (unless things become so bad even he can't bluster his way through).

 

[zero]

It looks like the percentages imposed by Trump are based on trade deficits, not on the amount of tariff the other country imposes: https://www.bbc.co.uk/news/articles/c93gq72n7y1o

This is Trump though; he makes it up as he goes

It is possible that the tariff calculation method was suggested by ChatGPT with a prompt of something like "come up with a simple formula for tariffs to even out trade deficits" or some of Trump's other talking points

Trump’s new tariff math looks a lot like ChatGPT’s

ChatGPT may be the White House’s latest economic advisor.

www.theverge.com

When President Donald Trump began yesterday’s announcement of the White House’s latest trade policy brandishing a novelty-sized cardboard sign labeled “Reciprocal Tariffs,” the immediate and nearly unanimous response was bafflement.
Where did these numbers come from? Apparently, an oversimplified calculation that several major AI chatbots happen to recommend.
Economist James Surowiecki quickly reverse-engineered a possible explanation for the tariff pricing. He found you could recreate each of the White House’s numbers by simply taking a given country’s trade deficit with the US and dividing it by their total exports to the US.
In case you weren’t sure, Surowiecki calls this approach “extraordinary nonsense.” So why did Trump’s team use it? Well, like plenty of people who’ve realized their homework is due in three hours’ time, it seems like they may have been tempted by AI.

A number of X users have realized that if you ask ChatGPT, Gemini, Claude, or Grok for an “easy” way to solve trade deficits and put the US on “an even playing field”, they’ll give you a version of this “deficit divided by exports” formula with remarkable consistency. All four platforms gave us the same fundamental suggestion.

 

[brad465]

It is possible that the tariff calculation method was suggested by ChatGPT with a prompt of something like "come up with a simple formula for tariffs to even out trade deficits" or some of Trump's other talking points

Trump’s new tariff math looks a lot like ChatGPT’s

ChatGPT may be the White House’s latest economic advisor.

www.theverge.com

For all the folk who talk about AI potentially ending the human race, I bet none of them imagined this was how it would happen.

 

[Russel]

How long do we think it'll take the markets to recover from the mess Trump has created?

 

[najaB]

How long do we think it'll take the markets to recover from the mess Trump has created?

If he (and his ilk) were to leave office now and a more normal administration to replace them then it would be a matter of a few months.

But as long as they're in power the uncertainty, confusion, and constant changes will chill business sentiment and dampen the markets.

 

[Harpo]

But as long as they're in power the uncertainty, confusion, and constant changes will chill business sentiment and dampen the markets.

Putin is arguably more predictable. (Unless you’re Trump.)

 

[Nicholas Lewis]

How long do we think it'll take the markets to recover from the mess Trump has created?

It depends what the impact is as the markets are anticipating a fallout (seems reasonably probable) in the profitability and growth opportunities. However, if the step back in commodity prices hold that will in part neutralise some of the pain and ultimately good companies are generally adept at managing these situations. So far though basically only the Trump premium that has built since he won in Nov 24 has been lost and there were plenty that were saying markets had got ahead of themselves anyhow.

In terms of market recovery I suspect we will see a snap back next week as that generally happens after a big sell off then a slower downtrend sets in.

 

[Magdalia]

Some in the UK feel we have been let off compared to others countries but it will still hurt the precious growth the UK needs.

UK goods exports to the USA are not a big proportion of UK GDP. Furthermore, lots of them are luxury goods that are not price sensitive or substitutable. There are some UK businesses directly affected that are making a lot of noise, and there may be some impact where those businesses are located, but most parts of the UK won't notice the difference. There are opportunities for UK businesses too, though it is wise not to shout about them.

For the UK the bigger concern is a trade war that leads to a global recession.

It depends what the impact is as the markets are anticipating a fallout (seems reasonably probable) in the profitability and growth opportunities.

A key objective is to break the business model of US consumer businesses that manufacture outside the US. There is a fundamental market reappraisal of the income stream for those businesses.

The line that the markets hate uncertainty is also in play here in a big way. Nobody really knows whether or when the tariff rates might be changed.

It is possible that the tariff calculation method was suggested by ChatGPT with a prompt of something like "come up with a simple formula for tariffs to even out trade deficits" or some of Trump's other talking points

I don't know much about artificial intelligence but, coincidentally, I was having a discussion yesterday about spreadsheets. I was told that the Microsoft Office AI tool will devise an excel spreadsheet on request. The tariff table, that Trump had on a board as a visual aid, does look suspiciously like a spreadsheet that no human being could have devised, but might have been an AI answer to a request to calculate reciprocal tariffs.

 

[najaB]

A key objective is to break the business model of US consumer businesses that manufacture outside the US. There is a fundamental market reappraisal of the income stream for those businesses.

The problem for DJT and the MAGA movement is that the move of manufacturing to foreign shores didn't happen in a few years, it was a slow process that took decades. Bringing that capacity back to the USA will take at least as long, if not longer. It's definitely not going to happen by 2028.

 

[brad465]

The problem for DJT and the MAGA movement is that the move of manufacturing to foreign shores didn't happen in a few years, it was a slow process that took decades. Bringing that capacity back to the USA will take at least as long, if not longer. It's definitely not going to happen by 2028.

Wait till they also find out that any manufacturing that does return will be largely automated, so they won't even get the jobs.

The solution to loss of past industry is to invest in more modern industry and train the population to be able to work in it, not try and bring back the outdated past through suicidal economic acts.

 

[Gloster]

One of the things that I read somewhere is that the highest of all the tariffs, 99%, has been imposed on St Pierre et Miquelon. Normally trade between the USA and the islands is roughly balanced and negligible, but in July 2024 there was one large order, almost certainly shellfish, which skewed the figures for one month of one year. There are also the cases of Heard Island and the McDonald Islands, and of Norfolk Island, which both appear to have had items imported from other countries wrongly marked against them. It all strikes me as being a thoroughly amateurishly and unseriously produced list, but I am afraid that is what we now expect are likely to see more of.

 

[The Ham]

There's been an interview where Obama asks the question "imagine if I had done any of this" and goes on to ask if parties who are quiet about Trump's actions would have also been quiet if he had tried to do those things:

(Edit):
Video of Obama giving a talk on how if had done some of the things which are currently being done (for example if he'd recommend Fox News' White House press pass) how many people would have relocated such behaviour.

Original link:

 

[Ant1966]

There's been an interview where Obama asks the question "imagine if I had done any of this" and goes on to say that parties who are quiet about Trump's actions would have also been quiet if he had tried to do those things:

I think he says exactly the opposite?

 

[Nicholas Lewis]

UK goods exports to the USA are not a big proportion of UK GDP. Furthermore, lots of them are luxury goods that are not price sensitive or substitutable. There are some UK businesses directly affected that are making a lot of noise, and there may be some impact where those businesses are located, but most parts of the UK won't notice the difference. There are opportunities for UK businesses too, though it is wise not to shout about them.

In the case of high end cars etc thats probably fair enough but we are also indirectly involved with sub assembly of various parts for Airbus, amongst others, for example which could well be impacted albeit this is likely measured in years due to the long lead ordering. Our biggest export to the US is services though and given the way DOGE is ripping through local programmes that could free up a lot of human capability in the US that could easily move into some of the lower value end of services quite quickly.

For the UK the bigger concern is a trade war that leads to a global recession.

This is a clear and present danger now and with Europe being forced to reconsider its role the window for the UK to get back onto better trading terms with them is rapidly closing yet i fear Starmer is consumed with fear that any creep towards Europe will gift Reform and undermine Labours chance for a second term. I see it as the opposite and a thriving Reform is actually worse for the Tories and keeps them at bay thus leaving the centre ground to Labour. Yes the LibDems may collect the odd seat along the way but the worst they could ever be is a junior partner in coalition so now is the time for Starmer to be bold and nail our colours firmly in the European camp.

The line that the markets hate uncertainty is also in play here in a big way. Nobody really knows whether or when the tariff rates might be changed.

US mkts had got well ahead of themselves so had been looking for an excuse for a correction anyhow. Im sure we will see many adjustments to his Liberation day scoreboard over the days/weeks ahead but what is certain now is that the US under this administration is that this sort of knee jerk adjustment could come out the blue at anytime and business will reflect that it how they move forward.

 

[najaB]

but what is certain now is that the US under this administration is that this sort of knee jerk adjustment could come out the blue at anytime and business will reflect that it how they move forward.

Which is why any meaningful return to normality is unlikely this side of the next US elections.

 

[AlterEgo]

There's been an interview where Obama asks the question "imagine if I had done any of this" and goes on to say that parties who are quiet about Trump's actions would have also been quiet if he had tried to do those things:

That is precisely the opposite of what he says in that clip.

 

[The Ham]

That is precisely the opposite of what he says in that clip.

Sorry miss typed.

 

[Nicholas Lewis]

Which is why any meaningful return to normality is unlikely this side of the next US elections.

precisely which why we have to take the opportunity to move closer to Europe not get back into Europe just ensure we can trade on more straightforward terms under an EEA arrangement