There appears to be an emerging consensus amongst some on the left, at least, as to what Trump is trying to achieve with his tariff wars.
The suggestion is that he wants to:
- Force the value of the dollar down considerably, so US exports are more attractive and its imports are more expensive, supposedly creating support for US domestic production as a result.
- To maintain the dollar as the world's reserve currency despite this substantial change in its value and the change in the status of the USA.
- To force down the interest rate on the dollar domestically and internationally.
- Impose new trade deals on the world that will require other countries to:
- Dismantle environmental protections
- End employment protection and rights
- Absolish protection from other forms of discrimination
- Abandon health and safety requirements
- End human rights
The chosen mechanisms to achieve this are:
- Tariffs, which will put barriers in the way of US imports.
- Demands that no retaliatory tariffs be imposed, supposedly making US exports more attractive.
- To put pressure on the Fed to reduce interest rates, to which it is not at all clear that it will at present agree.
- An apparent plan to demand that countries holding significant numbers of dollars liquidate their holdings, although the mechanism for this is not clear.
- That others might have the demand made of them that they accept bond swaps, replacing full interest-bearing US bonds for very long-dated or perpetual bonds at very low rates, reducing the return on such funds considerably and removing any chance to effectively liquidate them.
- New trade deals.
The consequences of all this are going to be:
- Likely heavy inflation in the US because there is no domestic production that is going to substitute imports for a long time to come, meaning that product shortages are likely.
- Reduced interest rates might also fuel inflation by permitting house prices and rents to rise.
- This is going to create substantial domestic stress within the US: standards of living face the likelihood of falling significantly.
- The US does not have many products to export. Trump's demand that trade be rebalanced is not going to be fulfilled.
- The USA has had almost no control over the external use of dollars outside its domain (the eurodollar and petrodollar markets for that currency) for many decades, and it has caused problems for Presidents since the 1960s at least, when J K Galbraith tried to find solutions to the problem for J F Kennedy, and so far none has been found. The likelihood that Trump can simply now try to recall and replace them, as he seems to want to do, is remote in the extreme.
- Fights over interest rates are only going to accelerate trade wars into finance wars.
- New trade deals are not going to be agreed with the USA when confidence in its administration is at such a low ebb.
Is there, then, any chance that Trump will get the outcome he hopes for? I think not.
Already, it is clear that the demand for US bonds is falling because of the uncertainties that Trump is creating. As a result, the interest rate on US bonds has risen by 0.3% very recently, and the demand for bond issues in the US has declined. Trump is already delivering the exact opposite of what he wants.
If he, in that case, extends his activities from the trade sector into a war around the value, convertibility and return on US bonds, effectively meaning the US is planning to default on its debt, this could escalate into a massive economic crisis very quickly.
If anyone on the left thinks that total chaos of this sort is beneficial, they, too, have lost touch with reality.
Trump is mad. He has lost touch with reality. The rest of the world needs to show it can be grown up by talking to each other, and not the United States. The big risk is that it will not do that.
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TRUMP TRIBALISM
Trump insists he loves the uneducated, but education has nothing to do with it. Trump loves them because they believe what he tells them.
During the Korean war, captured US servicemen signed false “confessions” because they were isolated from contact with the outside world, and fed a stream of propaganda that eroded their grasp of reality.
Today, Faux News fulfills that role for Trump, isolating his followers from the world of fact. Those MAGAs who binge on Faux know less about the world, but more about what they have been told to believe.
So, it is not surprising Trump followers seem ignorant– a cult resistant to fact. A recent Gallup poll on major issues showed an average of 41 percent favoring Trump– the same people, with the same rote response, issue after issue.
That means Democrats must address the majority of voters who are open to facts– but especially facts on issues that matter to them.
A coalition of the ( economic ) willing? Though it would be harder to sustain.
I have seen people on the street being interviewed about Trump and several times heard ‘He’s putting his country first’ with an implication or a statement that we should do the same.
The world did that in the early 1930s with dire consequences.
A co-ordinated action by much of the rest of the world would strengthen the hand of those forces in the US opposing Trump. Those are the people best placed to stop this madness.
Your 30s analogy is horribly appropriate
[…] as I note this morning, he might utterly overturn those markets, and in effect default on large parts of US debt by […]
I agree although I would add a fifth item, which is the desire to create corporate countries. I think this is from the “Tech Gurus” who are behind Trump. They consider themselves very clever, and believe they can use Trump to create chaos, whilst they buy up countries, as it were. This might sound rather far fetched, but I don’t think anything is too far beyond reality for them. This link is an idea of how they might expect governments to be run. Of course it would be simple to link up all governments in a world wide corporation!
https://www.nakedcapitalism.com/2025/03/the-dark-enlightenment-the-tech-oligarch-ideology-driving-doges-destruction.html
Very dystopian.
The plan seems to be chaos, to divert whilst the robber barons plunder some more.
The World should just boycott American goods rather than bow down to bullying and exploitation.
I read yesterday evening that Leonard Leo and one of the Koch brothers have both launched legal challenges to Trumps tariff bonanza as they are constitutionally illegal (as only Congress has the power to approve tariffs. Trump is doing it under cover of a claimed ‘national emergency’ – which there is not, but Congress fails to act to stop this, petrified as they are of Trump). For those who don’t know, Leo is a very powerful figure behind the scenes on the right of the Republican party – largely seen as responsible for the selection of the right wing Justices Trump chose during his first term, for example. And the Koch brothers have long funded all sorts of right wings causes. Interesting they’re no longer willing to go along with the Trump madness – perhaps because they no longer control him, as they were largely able to do in his first term. Now he’s happier listening to EXTREME right wing nut jobs.
For once, the Koch brothers are right
But all of this is part of the descent into hell
Watch this segment from Chris Hayes, last evening. You don’t need all of the reasons set out above just listen to what Hayes’s has to say and the clips from Trump repeating, over and over, where this is going.
Fox News/Propaganda in the US and others on the right are presenting all this as an attempt to return to the ‘Golden Age’ for the the middle class (by which to us they mean working class) in the US (unionised jobs, housing, health care, etc). But that’s not Trumps inspiration – OH NO! But you won’t be surprised what is once you have this little slice of US history.
Anyway, watch and marvel. The clip is the second one down: ‘Idiotic….’
https://www.msnbc.com/all
That feels right
But it does ignore the international consequences
Probably we all heard that in the spat between Musk and Trump’s leading tariff adviser, Peter Navarro, yesterday Musk called Navarro ‘Dumber than a sack of bricks.’ We might pause for a second to wonder on how that then reflects on Trump.
But what you may have missed was that later in the day, Musk apologised to bricks for comparing them to Navarro. And shortly thereafter Musk brother – who happens to be on Tesla’s board – then called for a moments silence for bricks that had been maligned so badly, by being compared to Navarro.
Again, we might pause for a moment to consider how that reflects on Trump, given he’s following the advice of someone who, it’s being suggested, is even dumber than a bricks. Who knows? But by golly this doesn’t bode well for Musk’s continued support of Trump, of the withdrawal of the millions of $ he provides in support of the ‘Orange One’ – not to mention X.
Anyway, if you want to watch 14 minutes of some of the most amusing, but also cutting, current affairs coverage anywhere watch this segment from Lawrence O’Donnell.
https://www.msnbc.com/the-last-word/watch/lawrence-musk-called-navarro-a-moron-what-does-musk-think-of-trump-who-follows-navarro-s-advice-236886597710
The fallout is going to be big
Trump appears to think everything is going just as he planned. He boasted last night: “I’m telling you, these countries are calling us up, kissing my ass. They are. They are dying to make a deal.”
Mocking the pleas of foreign leaders, he parodied: “Please, please, sir, make a deal. I’ll do anything. I’ll do anything, sir!”
(Hm – strange sort of diplomacy, that.)
I daresay the MAGA voters are hearing just what they want to hear. America as a swaggering bully.
Agreed
The performance was repulsive but revealed the real man
[…] is to be some rationality to this, then that might be found in the US bond market. If Trump is, as I noted yesterday, planning to tell the international owners of US treasury bonds to surrender their existing […]