Stock Market and tariffs

[Vismund]

I only read pg 1 of this thread, so if some of the things have been covered in pgs 2-6, I apologize.

1. Tariffs on a large, aggressive scale like this. While, it "can" work.....and if it does, then Trump deserves massive credit for doing something impressive. But the risk is YUGE. You could be risking a global trade war and recession. It's not the route I would've used, but here we are.......we'll have to see how it plays out.

2. There absolutely is a plan......but it would be foolish to come out and say it to the public. However, there are indications out there if you know where to look.

For example, look at Javier Milei in Argentina. He is a very eccentric economist who was recently elected. He made some news with the following 1' minute video.




But to explain what kind of effect he's had on Argentina, I present the following 35' min video.



This longer video does get a little bogged down in the political past of Argentina, but the gist is that Milei took over......dismantled a bunch of departments......streamlined the gov't.......removed a METRIC TON of bureaucracy and red-tape.......and put in place tariffs. He ripped the band-aid off extremely fast when he was sworn in. Things worsened during the first 6 months, but during the subsequent 6 months saw an economic boon that Argentina hadn't seen in a super long time.

Oh, and by the way Milei attended Trump's inauguration and has met with him many, many times.

Is this Trump's plan? No, clue, but it seems to have a LOT of the same tells. Will this work in the US as it has thus far in Argentina? Well, we'll see.


3. Are the Tariffs a bargaining chip or are they here to stay? My first thought is that they are mostly bargaining chips. There are already >70 countries who have already contacted the US about trade negotiations. I would expect deals to get done quickly with these countries. The issue is going to be with the big boys like China. I doubt China will back down to just the US alone. However, if the US can get trade deals in place with entities like the EU and other major countries, they can gang up on China to help force trade deals. So, I think that the vast majority of these tariffs will likely be reduced very soon.

However, Milei in Argentina did retain some tariffs to help promote growth from within.....so, I would anticipate that a good number of the Trump tariffs to stick around (but my guess is at a significantly reduced amount)


4. The notion that it takes decades to bring back factories, jobs, infrastructure, etc and therefore won't help. I don't get this line of thinking. Sure, deals can fall through, but even just the announcing of such deals is big for the US economy in general. For example, as of Oct of Biden's time in office, he was able to boast about $900 million of new investments into the US with a total of about 700,000 jobs created. He deserves praise for getting this done. Sure, it might take a decade for this money and jobs to actually come to reality, but do you think it would be better served if that money/jobs went to another country?

For some contrast, as of right now Trump has secured >$2.2 trillion worth of investments as of March 21st.

https://www.newsweek.com/business-trump-biden-investments-manufacturing-recession-2048775

This is an awesome post and has some great information. I would argue, however, that scale matters here. Argentina increasing tariffs (and I'd need to double check the amounts) isn't the same as the US doing so.

It also begs the question of whether our scale could be beneficial in these negotiations (which I think it will). What I'm concerned about is how long Trump and his team are willing to endure pain to see results.

I heard an commentator say recently that Trump doesn't care about markets but does care about perception. If polls start to indicate that people are turning on him (specifically middle of the road voters as there is 30% of this country that will follow him through hell) then you may see a change in approach.

It will be interesting to see.

 

[megablue]

"This is why messaging matters. It sounds like Trump and most of his team is trying to calm the markets while Lutnick/Navarro are hell bent on ending all trade deficits."

I agree ... the messaging matters. I've never understood trade deficits to be inherently good or bad. Selectively used, it seems to me, tariffs can be a good thing for certain segments of a country's economy. Being "hell bent on ending all trade deficits" does not make sense to me. Nothing is ever that absolute ...

 

[DSmith21]

I wasn't following the notion that a country would pay the tariff either, I just don't think that happens with a smaller country like Vietnam. As you stated earlier, US companies can see if the foreign vendor will eat the increased cost but they tend to work on even smaller margins.

Lutnick stated the other day that he wants to end the trade deficit with Vietnam. In order to do that Vietnam would have to buy 50% of its Gdp from the US. You have to believe they are talking tough to get deals done but that doesn't even seem right because Vietnam was one of the first countries to offer 0 tariffs.

Surely something breaks with this soon.

The administration is not just looking to even up tariffs. They want to lower trade deficits caused by what they are calling cheating. Cheating can be both tariffs and non tariff measures like government regulation, currency manipulation, relabeling Chinese goods to avoid tarriffs, etc. Vietnam has one of the largest trade surpluses with the US of any country. Vietnam sells us $15 for every $1 we sell them. One third of those goods are just repackaged Chinese goods. Vietnam also targets US agricultural products with a much higher tariff than their average rate.

https://www.newsweek.com/vietnam-offer-remove-tariff-trump-trade-peter-navarro-2056149

 

[AustinTXCat]

"Where there's chaos, there's $$"

Short sellers mint $159 billion profit in 6 days as stocks sink.

 

[Vismund]

The administration is not just looking to even up tariffs. They want to lower trade deficits caused by what they are calling cheating. Cheating can be both tariffs and non tariff measures like government regulation, currency manipulation, relabeling Chinese goods to avoid tarriffs, etc. Vietnam has one of the largest trade surpluses with the US of any country. Vietnam sells us $15 for every $1 we sell them. One third of those goods are just repackaged Chinese goods.

https://www.newsweek.com/vietnam-offer-remove-tariff-trump-trade-peter-navarro-2056149

Which is why China isn't blinking at 104% tariffs. It's known that China will avoid tariffs and I even mentioned that earlier in this thread as I was discussing Wilbur ross' assumption that China will just go through LATAM now.

You invest in customs and points of entry to catch these aversions. And if the goal is to prevent China from avoiding tariffs, say that instead of the goal of ending trade deficits because that doesn't make sense.

 

[vhcat70]

Thursday and Friday were one of the top 3 or 4 worst 2 day drops in history, it is actually quite rare to drop more than 5% two days in a row.

As I posted on another thread a few days ago, DJIA dropped 23% on Oct. 19, 1984 - within living memory for some of us, LOL. It had dropped 10% combined the three days previous. I remember this distinctly as I was on a business trip in Phoenix at that moment. It was merely 500 points, 2200 to 1700.

 

[DSmith21]

Which is why China isn't blinking at 104% tariffs. It's known that China will avoid tariffs and I even mentioned that earlier in this thread as I was discussing Wilbur ross' assumption that China will just go through LATAM now.

You invest in customs and points of entry to catch these aversions. And if the goal is to prevent China from avoiding tariffs, say that instead of the goal of ending trade deficits because that doesn't make sense.

It's not just about China although they are the worst. The EU engages in targeting US products. They have higher tarriffs than us and use government regulation to block some products (especially agricultural). The EU even Instituted a new special 2%-3% tax on tech companies whose revenue was above a certain level. The only companies that qualify are US companies like Microsoft, Meta and Google.

 

[Tskware]

As I posted on another thread a few days ago, DJIA dropped 23% on Oct. 19, 1984 - within living memory for some of us, LOL. It had dropped 10% combined the three days previous. I remember this distinctly as I was on a business trip in Phoenix at that moment. It was merely 500 points, 2200 to 1700.

Yes I remember as well (and my dad told me to do nothing, which was good advice then and now), think 1987 was one of the four times the WSJ article mentioned which is where I got my info.

 

[BlueRaider22]

This is an awesome post and has some great information. I would argue, however, that scale matters here. Argentina increasing tariffs (and I'd need to double check the amounts) isn't the same as the US doing so.

It also begs the question of whether our scale could be beneficial in these negotiations (which I think it will). What I'm concerned about is how long Trump and his team are willing to endure pain to see results.

I heard an commentator say recently that Trump doesn't care about markets but does care about perception. If polls start to indicate that people are turning on him (specifically middle of the road voters as there is 30% of this country that will follow him through hell) then you may see a change in approach.

It will be interesting to see.

Absolutely, the scale that the US is currently using is extremely risky......I hope it works. Argentina did not use nearly the scale of tariffs.......but they didn't have the leverage to do so either......so who knows?

As far as how long will Trump endure pain to see results? The easy answer is probably as long as it takes. I would wager that if you could get Trump to talk, he would gladly take the following even though it might mean a temporary dip in the market. Resetting local and global trade, an unprecedented US gov't balanced budget, reducing the US deficit, significantly reducing bureaucracy/red tape to enable super growth of the US economy, further solid position as a world leader, etc.


You are right about perception though. If Trump and the Argentina method is right things will be worse for a little while before they rapidly get better. But will things move quickly enough to improve the public's perception before the mid-term elections? I believe the chances of losing the senate/house majority with the mid-terms is generally high no matter who is in office, but if they don't see the benefit of what Trump has/is doing by then it'll be brutal.

 

[LineSkiCat14]

Lot of great replies and discourse. I'm mostly just on the sidelines and here for some comedic relief.

But I see this being talked about above: the question of if Trump's plan does or doesn't work.. and/or if he pulls back as his rating and popularity drop.. well, then what? Are we just going back to same old business as usual?

Im not really rooting for Trump to succeed because I voted for him. I want to see this work regardless if it's a dem or repub, because what we were doing the last 20 years seemingly wasn't working, as we've seen a slow decline of middle class wealth, wages, job loss, etc. So if not this, then what? Trying not to make this political, but to me, it seems we either attempt to make this work, or we're just on a slow death march to our own despise (eventually, maybe several decades and beyond).. whether its "my" guy or "your" guy behind the wheel.

 

[LineSkiCat14]

I just feel like something has to change. This isn't the 70s or the 80s. It's the 2020s and things have changed drastically. So too, should our policies. The tech sector is a big player, manufacturing has been out, our citizens skills have drastically changed over the decades.

Doing the same thing over and over again without much nuance, just doesn't seem to be cutting it.. whether its Biden or Bush or Obama.

 

[ukcatz12]

what we were doing the last 20 years seemingly wasn't working, as we've seen a slow decline of middle class wealth, wages, job loss, etc.

Was it really not working though? No economy is going to be great for every single type of worker and this isn't to say that some areas of the country weren't left behind. But real median incomes are as high as they've ever been. Our post-Covid economy was better than any other westernized country and our inflation was the lowest. We've been at basically full employment.

And this isn't saying that things are perfect. They're far from it. But doesn't it make more sense to use a scalpel to fix than a hammer?

Just as an example, housing costs are out of control and that's a huge problem for the middle class. But that's fixed by building more housing, something that is more expensive with tariffs on materials needed to build housing, reevaluating zoning laws (single family housing spread far and wide is not a sustainable way to build our cities), looking at corporate home ownership, etc.

 

[Bill Cosby]

So did any of you panicans realize those unrealized losses you were bitching about? Or did you just leave things alone like rational people?

 

[jtrue28]

 

[ukcatz12]

further solid position as a world leader, etc.

I think the people who support this administration in this thread are severely underestimating just how much we are throwing away our position as a world leader right now. This could all be reversed tomorrow and it will have negative impacts on the US economy for years. We are increasingly being viewed as a country you can't be counted on, that doesn't honor its word, and doesn't value its allies.

The world will just build trade deals around us. They won't buy our products. They won't give us their tourism dollars. And it's already starting to happen.

 

[BankerCat12]

So did any of you panicans realize those unrealized losses you were bitching about? Or did you just leave things alone like rational people?

And did they buy with the dip? Lots of money could have been made.

 

[JumperJack]

It's grown about 23% if you took out all Federal Government spending. Again, not sure why you think you need to remove government spending. Not all of government spending is with borrowed money. This past year alone there was about 5 trillion worth of spending that was not borrowed.

A few points- where are you getting the 23%; we are near a breaking point caused by debt, so at some point the government deficit spending has to stop; government spending in and of itself creates a host of problems; and the biggest is that the government becomes too big to properly manage, as is now being revealed by DOGE, and that it consumes the people’s wealth at an ever increasing rate.

 

[LineSkiCat14]

Was it really not working though? No economy is going to be great for every single type of worker and this isn't to say that some areas of the country weren't left behind. But real median incomes are as high as they've ever been. Our post-Covid economy was better than any other westernized country and our inflation was the lowest. We've been at basically full employment.

And this isn't saying that things are perfect. They're far from it. But doesn't it make more sense to use a scalpel to fix than a hammer?

Just as an example, housing costs are out of control and that's a huge problem for the middle class. But that's fixed by building more housing, something that is more expensive with tariffs on materials needed to build housing, reevaluating zoning laws (single family housing spread far and wide is not a sustainable way to build our cities), looking at corporate home ownership, etc.

It might be a little hyperbolic, but I believe we are, and have been, on a slow death march. For the first time ever, we are seeing signs that future generations are NOT better off financially than their parents.

These homes didn't seem to be getting built before these tariffs. Which isn't to say they weren't going to eventually happen IF the market dictated demanded.. but no one is building starter homes. Everything going up by me starts at $600k. And not just because of inflation and housing costs: these are 3-4 bedroom 2.5 bath homes. And sure, maybe SF homes aren't sustainable.. but whose going to take that hit? Who is going to downsize? Who is going to turn in their large SUVs for something more ecological?

IDK, I'm watching more and more people getting pinched beyond repair it seems. Delinquencies rising for CC, car payments, mortgages. Multi-generational home % on the rise. Layoffs and long unemployment periods. Seems more and more families are dipping into the red.

 

[Bill Cosby]

I think the people who support this administration in this thread are severely underestimating just how much we are throwing away our position as a world leader right now. This could all be reversed tomorrow and it will have negative impacts on the US economy for years. We are increasingly being viewed as a country you can't be counted on, that doesn't honor its word, and doesn't value its allies.

The world will just build trade deals around us. They won't buy our products. They won't give us their tourism dollars. And it's already starting to happen.

Yes, we were much more respected when we were the rich cuck sitting in the corner jerking off while paying everyone to bang our wife while we drone bombed a few Muslim weddings.

 

[ukcatz12]

So did any of you panicans realize those unrealized losses you were bitching about? Or did you just leave things alone like rational people?

I will never not be amazed by how much you guys parrot things he says like this. It's a little weird.

But congrats a 90 day pause in tariffs that leaves the markets below where they were when this all started, I guess? I think very few people in here were legitimately concerned about a 10% drop in their investment accounts. It's the longer term consequences that people are worried about it.

But a 90 day pause is still exactly what people are complaining about. When things are so unpredictable like this it harms the economy. Companies can't make informed decisions when their supply chains are just one big question mark. The constant back and forth and back and forth with all this is ridiculous.

 

[Bill Cosby]

I will never not be amazed by how much you guys parrot things he says like this. It's a little weird.

But congrats a 90 day pause in tariffs that leaves the markets below where they were when this all started, I guess? I think very few people in here were legitimately concerned about a 10% drop in their investment accounts. It's the longer term consequences that people are worried about it.

But a 90 day pause is still exactly what people are complaining about. When things are so unpredictable like this it harms the economy. Companies can't make informed decisions when their supply chains are just one big question mark. The constant back and forth and back and forth with all this is ridiculous.

lol

When someone nails a nickname, it sticks. Will especially stick when it gets under the oppositions skin. You will now forever be Panicans.

 

[Tskware]

And right on cue Trump bows to overwhelming negative response and economic pressure and pauses all tariffs except for China.

Anybody can see the brilliant well thought out strategy there.

 

[catlanta33]

Putting China in a box while you're having a favorable market response here kind of seems like a good thing, no?

 

[Tskware]

Putting China in a box while you're having a favorable market response here kind of seems like a good thing, no?

Okay is that the new strategy?

 

[Bill Cosby]

Putting China in a box while you're having a favorable market response here kind of seems like a good thing, no?

It depends what Trump did? Did Trump do it? Then it’s bad.

 

[Ron Mehico]

Was it really not working though? No economy is going to be great for every single type of worker and this isn't to say that some areas of the country weren't left behind. But real median incomes are as high as they've ever been. Our post-Covid economy was better than any other westernized country and our inflation was the lowest. We've been at basically full employment.

And this isn't saying that things are perfect. They're far from it. But doesn't it make more sense to use a scalpel to fix than a hammer?

Just as an example, housing costs are out of control and that's a huge problem for the middle class. But that's fixed by building more housing, something that is more expensive with tariffs on materials needed to build housing, reevaluating zoning laws (single family housing spread far and wide is not a sustainable way to build our cities), looking at corporate home ownership, etc.

As a small business owner and dealing with the general public I personally felt the economy as is didn’t seem sustainable. I read an article that said in 2024 we both had the most US citizens taking a European Vacation and also the most US citizens in history going to a food bank. Credit Card debt is at a record high (with an insane interest rate) and increased significantly the last 3 years - all while there was a pause on student loan debt. I feel like people forgot about that little thing since it was paused for years and instead of paying down the principal most people ended up with more debt. Those aren’t bankruptable so something will need to give there. Income inequality is reaching French Revolution levels. Buying a house or car is almost impossible for most. Groceries for a family of 5 are like 500 a month. 3 weeks ago people could barely afford eggs. I mean I just don’t see many opportunities for the younger generations.

I’m not educated or paid enough attention to comment on tariffs so no clue of those would help. I think the thought behind DOGE is really good but I haven’t followed how it’s been executed so far. I’m not really advocating for or against any specific policy, I just disagree the economy was going well. Just felt the lower and middle class are getting really squeezed and the rich are getting richer.

 

[ukcatz12]

Putting China in a box while you're having a favorable market response here kind of seems like a good thing, no?

If you wanted to put China in a box surely this last week wasn't the best way to do it. It really seems like nobody in this administration actually has any real negotiating or diplomacy skills. Gather your allies and work on putting China in a box together. Work collaboratively. Don't just threaten everyone with a hammer and then act like it's a real deal making strategy when you backtrack on 95% of it.

 

[catlanta33]

Okay is that the new strategy?

IDK but I'm asking, is that a good thing or a bad thing? I don't really care how the sausage is made as much as others so not interested in a strategy debate. I think China is a giant ******* and if they have to take it in the pants to make their largest consumer happy, I'm perfectly fine with it.

 

[ukcatz12]

I don't really care how the sausage is made as much as others so not interested in a strategy debate.

How the sausage gets made when it comes to issues like this is kind of just as important as the outcome though. The sausage needs to be made in a way that makes people still want to make more sausage with you in the future. Being an unpredictable actor whose demands change on the whims of one man's social media posts is not reassuring to people you're making sausage with.

 

[Vismund]

Sorry to be a broken record here but messaging matters. Republican senators are asking who's neck gets choked if this is a massive mistake and we were only two days in.

If Trump announces new tariffs why would any other country respond if they know he will eventually cave, which is the 3rd time this year by the way.

Also, I haven't heard any updates on new trade deals, so why did we just carve 8 trillion out of the stock market?

 

[catlanta33]

How the sausage gets made when it comes to issues like this is kind of just as important as the outcome though. The sausage needs to be made in a way that makes people still want to make more sausage with you in the future. Being an unpredictable actor whose demands change on the whims of one man's social media posts is not reassuring to people you're making sausage with.

Yeah I couldn't care less. All the countries will still be our friends because we're dumb Americans that love buying **** we don't need on credit cards.

 

[cole854]

I will never not be amazed by how much you guys parrot things he says like this. It's a little weird.

But congrats a 90 day pause in tariffs that leaves the markets below where they were when this all started, I guess? I think very few people in here were legitimately concerned about a 10% drop in their investment accounts. It's the longer term consequences that people are worried about it.

But a 90 day pause is still exactly what people are complaining about. When things are so unpredictable like this it harms the economy. Companies can't make informed decisions when their supply chains are just one big question mark. The constant back and forth and back and forth with all this is ridiculous.

What part of the US being upside down in trade do you not understand, and the business as usual policy was a slow death? The market is not the economy, and it was always going to rebound at some point....patience, grasshopper. America first seems to be a bad taste for some....it's a little weird.

 

[Vismund]

A few points- where are you getting the 23%; we are near a breaking point caused by debt, so at some point the government deficit spending has to stop; government spending in and of itself creates a host of problems; and the biggest is that the government becomes too big to properly manage, as is now being revealed by DOGE, and that it consumes the people’s wealth at an ever increasing rate.

Can you point me to the data showing no GDP growth outside of government spending since 2008? Or limited growth?

I'm not saying you're wrong but that doesn't sound right at all.

 

[ukcatz12]

Also, I haven't heard any updates on new trade deals, so why did we just carve 8 trillion out of the stock market?

Because there is absolutely no plan here. People can keep assuring themselves there is one, but nothing about how this administration has handled any of this tariff stuff over the last three months indicates there's a plan.

 

[cole854]

If Trump announces new tariffs why would any other country respond if they know he will eventually cave, which is the 3rd time this year by the way.

He didn't cave on anything...read the whole story. Negotiations.

 

[Vismund]

What part of the US being upside down in trade do you not understand, and the business as usual policy was a slow death? The market is not the economy, and it was always going to rebound at some point....patience, grasshopper. America first seems to be a bad taste for some....it's a little weird.

What exactly did adding then promptly pausing tariffs after just 24 hours do to fix trade deficits?

Countries now have 90 days to plan how to navigate this stuff where at least trump had some form of leverage with the tariffs in place.

I suppose Elon won Trumps ear over Navarro.

 

[ukcatz12]

What part of the US being upside down in trade do you not understand,

There's zero issue with being upside down on trade. Why would we not have a trade deficit with Vietnam? This obsession with trade deficits is nonsensical and just isn't supported by any iota of economic sense.

 

[Vismund]

He didn't cave on anything...read the whole story. Negotiations.

If countries were begging to do deals like he claimed, why pause all of the tariffs? Why not start announcing some deals to ease the pressure on wall st and generate positive buzz for trade in general?

This was sold to us as very real and long term. We were holding out for the best deals the world has ever seen. Countries were tonguing Trumps *** to get a deal done!

 

[Bill Derington]

And right on cue Trump bows to overwhelming negative response and economic pressure and pauses all tariffs except for China.

Anybody can see the brilliant well thought out strategy there.

Overwhelming?

 

[Bill Derington]

lol, some of you guys were mad about tariffs, and now that they’ve been paused 90 days except on the Country we’re focused on, you’re mad about that.

China is, and always has been the target.