I have questioned the merits of Adam Smith's four supposed principles of taxation in the past, but would agree with one of them. That one is the suggestion that tax should be predictable, or certain.
And then, inevitably, we get to Trump.
About a month ago, there were going to be tariffs on Mexico and Canada.
They were, however, delayed.
Then they were threatened again.
Then they were going to start this week.
And now that is not going to be the case, apparently.
For how long this will be the case, no one knows.
You literally can't manage anything like this, let alone an international tax system with massive impacts on trade.
The reality is that all Trump is proving himself to be is an absolutely appalling manager, let alone politician.
In the face of this turmoil, indecision, uncertainty and straightforward mess, the American economy - and its people - will suffer very badly.
As far as I can see, his goal is to achieve MASA - Making America Shit Again. It's not a word I usually use here, but it seems totally appropriate. Nothing else can be the outcome of this.
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An eminently sensible proposition.
The uncertainty is deliberate. Trump is just using the threat of tariffs to extract concessions. Trump is not “transactional”, seeking mutual advantage in an open and honest way. He is abusive. A bully. Like a gangland boss.
The governments of Canada and Mexico are presumably using the temporary suspensions to make preparations for when they expire. And calculating that the cost of short term uncertainty is less than the damage that the full tariffs would cause.
I expect businesses have been getting in stockpiles of tariffed goods now if they can, so the full impact of the tariffs will be reduced for several months.
I am amused to hear that boycotts of US goods in Canada are growing. There is, apaprently, a 100% tariff on Jack Daniels in the sense that it is disappearing from shelves, at the choice of the stores that stocked it.
There’s no point in wasting shelf space on products customers won’t buy.
Let them drink decent Scottish Single Malt!
So I am told not being a drinker!
Of course, where there are good substitutes. I don’t drink JD but I understand Canadian whisky is available.
Trump says the US does not need Mexican or Canadian goods – and perhaps in the long term that is more or less right. But those substitutes often don’t exist today and supply chains need to be rebuilt. US businesses know that is going to take time and cost more. Prices to US customers have to increase in the short term due to tariffs (and suppliers will have downward pressure on their prices until they find other buyers) and in the longer term prices will stay high due to their higher cost of the substitutes. Or profits of US businesses will decrease. So almost everyone loses. This is what happens when you ignore comparative advantage.
Trump can say what he likes
The US is dependent on Mexican food and Canadian oil. They have not got the substitutes.
I can recommend watching this:
https://www.youtube.com/watch?v=z3rIlAITjXk
This is Canada’s foriegn minister speaking & she does not mince her words – at all. Compare & contrast with the mealy mouthed shite that Starme spounts.
The Canadians are taking Mango’s threats very seriously.
On a slightly happier note – Musks penis-substitute – his rocket – exploded yesterday. Good. One can only hope a few more explode.
Well worth watching.
Thanks
In Ontario, you can only buy booze from dedicated stores run by LCBO, Liquor Control Board of Ontario. I believe it is this board which has removed stocks of US whiskey, beer, etc from the stores. I don’t know if this is true for the rest of Canadian provinces.
That explains it…
reply to Mike Parr @ 10.05am final para – it did not explode – it was a “rapid unscheduled disassembly” as per SpaceX –
Of course 🙂
100% ! Businesses can adapt to almost any regime, as long as it’s stable. Change and uncertainty are anathema to anyone except disaster capitalists.
Incidentally, that probably also applies to education, the NHS and other public services that politicians love to meddle with.
Our American relatives havé sold their Tesla car as a practical response to the callous behaviours of their current government.
One of those principles of Adam Smith is “The subjects of every state ought to contribute towards the support of the government . . in proportion to the revenue which they respectively enjoy under the protection of the state.”
In modern parlance we call that progressive taxation. It’s your opinion that that is wrong and I’d support your right to say it, but you do rather put yourself at risk of looking like a contrarian for the sake of it.
This principle is too vague – flat taxers claim it justifies what they say. So, the principle is not a principle at all if it is open to serious doubt as to meaning.
And next time, I suggest, stop trying to be a smart ass.
A tax system should be fair – asking people to contribute proportionately more as they earn more with a sensible set of allowances for things like disability, caring and parental responsibilities which increase necessary costs.
Our system somewhat aims to do that – more so than the US at least. We should aim to reduce those cliff edges where someone gains salary and loses a benefit (like childcare) immediately, resulting in being worse off for a pay rise. We should aim to reduce those points where benefit withdrawal or personal allowance withdrawal give a much higher effective tax rate than higher levels of income.
The US is provide a good illustration at present of how not to create a productive environment – it’s not just the tariffs, it’s the attempts to increase tax breaks to the wealthiest, creating uncertainty about any welfare safety net, discussions about capped contributions which mean for some things the wealthy pay proportionately less tax, the uncertainty about government contract invoices being paid and future domestic demand…
Unfortunately it’s also an illustration of how little attention the majority of a population pays to the facts given that a significant proportion are still actively cheering on the assault on their own futures.
Our tax system is regressive at first, then flat for a wide band before becoming regressive again at very high incomes.
It is almost nenver progressive, even if income tax might be.
But income tax is only one tax. You need to think more widely when it comes ot tax.
Uncertainty is killing the economy. Earlier this week you noted “Nowcast” data which (with some caveats) shows an economy in trouble… and this can’t be easily reversed – cancelling what you just did doesn’t do it… and we see this in the real economy and financial markets, too. Of course, markets dumped when tariffs were first announced but bounced sharply when they were delayed… then fell again when the delay expired but bounced modestly and only briefly when some exceptions were made. His words are having ever diminishing impact…… and the markets keep sliding.
Mr Parry I am pleased to announce that in an increasingly uncertain world – one thing seems to becoming more certain: Mango as a Russian asset. Of course, as the late great Mandy-Rice-Davies would respond “well he would say that wouldn’t he” however, I bring forward an important witness – none other than Grok – Mr Muskrat’s own version of ChatGPT: here is the question and the response:
https://x.com/i/grok/share/WQepvCpIJl2EJ0F7tHNbLAhm6
In summary probably 85% certain that Mango is a Russian asset. I hope this helps bring some certainty in an uncertain world – I wonder what the Muskrat thinks? (or perhaps he will disupute ownership of Mango with Putin – who knows).
And are all the US federal workers sacked or not? Should they be paid severance and then immediately rehired, as Cameron did with the Health Service workers? Reality has bitten and Trump & Musk have lost their “big boy trousers”.
https://www.theguardian.com/us-news/2025/mar/06/elon-musk-republicans-federal-workers-firings
The GOP envisage sacking 800,000 Federal employees, including cutting the number of IRS staff by 50%, pay offs will not be great, cutting $880bn from the Medicaid budget, to fund multi trillion $ tax cuts for the super rich.
Even the Murdoch owned Wall Street Journal is warning the King Donald tariff war is risking a mega recession.
The US relies on Canada for the oil needed to run their oil refineries, aluminium, potash for their farmers, electricity. King Donald renegotiated the trade deal between the US, Canada and Mexico in his first term, saying it was the greatest trade deal ever.
Watch how Trump and Muck are promoting their crypto currencies through US Federal channels plus Musk pushing his electronic payment wallet to take over the Federal payment system. Who cares if Tesla tanks if you have such financial products being used by the US state etc?
Every time I see Trump wearing that Make America Great Again hat, I’m left wondering how long it will take him to get a Make Me King Of The World hat.
Not shy about self-promotion, Trump always boasts about being a great businessman. In reality, his hotels and casino businesses have declared bankruptcy six times between 1991 and 2009. To rub salt into the wounds of his creditors, he brags about using Chapter 11 bankruptcy to avoid paying his debts, saying “they’re very good for me.” It says a lot about the man. ‘Trump: The Art of the Deal’ (1987), a part memoir and part business-advice book, credited to Trump and journalist Tony Schwartz, helped make Trump a household name. Except Schwartz and the book’s publisher, Howard Kaminsky, alleged that Trump had played no role in the actual writing of the book. Schwartz called writing the book his “greatest regret in life, without question”, adding “if it were to be written today it would be very different and titled The Sociopath.” Schwartz also said he had “put lipstick on a pig”! Trump set up the Donald J. Trump Foundation in 1988 to give away the book’s royalties, they largely failed to materialize. Trump is as fake as his orange tan, with about as much substance, and is as thick as mince.