As the FT notes in a newsletter this morning:
The US has slapped tariffs on imports of gold bars, in sharp contrast to industry expectations of an exemption to US President Donald Trump's countrywide levies. The Customs Border Protection agency's ruling threatens to upend the global bullion market and deal a fresh blow to Switzerland, the world's largest refining hub.
Trump has done many strange things in the past six months, and this is another such thing.
It is hard to see what Trump is trying to do in this particular case, unless it is based on a desire to escalate his fight with Switzerland.
As Trump must know, many countries hold part of their financial reserves in gold, and many of them hold part of those reserves in the USA, for supposed safekeeping. How this new policy will interact with this reality is hard to say.
Trump must also be aware that in times of financial crisis, people buy gold, which is described as a safe-haven asset, although that is an almost meaningless description. So what is he trying to do in that case? Is he trying to restrict the supply of such assets? Is he trying to force people into crypto instead? Is he, well, just is he whatever else, because to be candid, I have no real comprehension of his logic at this point.
For the second time this morning, I have to talk about economic incoherence on the part of those who are supposedly in charge of our economies. It is becoming widespread. You could almost call it an epidemic. The fear is it might be contagious. The reality is that the economic common sense that is the vaccine against its spread is in very limited supply . The consequence is that we need to be worried. There is no other position to take.
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King Donald believes that he is a genius, who does not have to explain his actions and uses deflection language to bat away the the consequences of his actions.
Ultimately the King will be found out to be a man of straw with the inevitable downfall.
Perhaps it is starting in Texas where flood victims are complaining about the lack of federal and state funding in the aftermath of the flooding?
It is like fighting fires by taxing fire insurance. Fire insurance doesn’t fight fires. But the geniuses we have in charge of everything seem to think that means the opposite must be true!
The incoherence is an externality created by the cold logic of the rich which the rest of it seems must bear.
Pardon me, but isn’t this a bit like putting a tariff on the buying and selling of currency itself? I am absolutely no economist of any kind but slapping a tariff on what props up the strength of a (some?) currencies seems to be completely illogical? I am at a loss here.
You are right.
It is akin to taxing money itself.
And I am confused as well.
I think the key to understanding Trump is that he has the mindset of a criminal or gangster. Logic, truth, justice, evidence, facts, expertise, rules, standards are of no use to him and he seeks to undermine them because they are the tools of his enemies. What is important to him is not to be a competent ruler with a coherent set of policies but the unbridled exercise of power and the enrichment of the Trump dynasty. Inexplicable, unpredictable, apparently irrational actions are a useful tool in maintaining his power because they keep the world on edge and fearful of what he might do next, as your post rightly suggests we should be. The US has put Al Capone in charge of the world economy and its biggest nuclear arsenal. What could possibly go wrong?
He was a spoiled, neglected child who has never grown up as a result. Te tantrums persists as a consequence. Musk is of the same type.