The Guardian had an article yesterday headlined:
I am sure that a sub-editor who wrote the headline thought that it was logical. It was not. Of course they Trump's tariffs do not make sense. These aren't economic weapons, tools, policies or strategies. Instead, they are, at best, weapons of political economic warfare brought into action as Trump seeks to exercise global power via intimidation. At worst, they are just weapons of direct warfare, intended to impose US tyranny on other states without conventional weapons ever being used.
Let me explain, albeit briefly.
The assumption that there is anything economically rational about what Trump is doing is shattered by the fact that it is clear that what is happening is not a tariff war, but a battle being waged by the USA against the economic consequences of it being possessed of the richest and most powerful economy in the world, combined with it being the creator of the world's reserve currency, meaning it has been able, for decades, to fund its excess consumption, from which the people of the USA have benefited enormously, by running trade deficits with countries around the world for which the USA has not needed to make settlement because the world has been willing to take and hold dollars that they never redeem in exchange for massively subsidising the US lifestyle in this way.
The USA has not been ripped off, defrauded or abused by running trade deficits, as Trump has claimed. It has instead been freeriding on the back of the rest of the world.
Now, Trump wants to end all that. He wants to force Americans to work for the standard of living that they enjoy, when they have been wholly unaccustomed to doing so.
He wants to end the trade imbalances, the result of which will be a massive decline in US living standards, which have been unearned for a long time.
He will, along the way, destroy the hegemonic power of the dollar as the world's reserve currency, because people are very clearly no longer going to want to accept it as a currency of choice. Who knows how the US economy will react to that.
In summary, he is setting out to shatter every economic advantage that the USA has had, has exploited, and has massively benefited from. If anyone can see any sense in that, good luck in trying to do so.
If this were an act of charity to the rest of the world, it might be commendable.
If he was, as a consequence of doing this, trying to regularise the terms of trade, that might be an act to be applauded.
If he wanted the flow of wealth to reverse, so that countries in the global south might, in particular, gain from the reduction in US world economic power that he is intent on delivering, I might be pleased.
But that is not what he is trying to do. He is seeking to drag all states down with the USA, which has no chance of surviving what he is doing unscathed, and maybe intact, or even without civil war, so massive will the consequences be.
There is literally not a shred of rationality to what he is doing. There is no point looking for it. It is not there to be found.
This is precisely why I reiterate my point that the right reaction to what Trump is doing is for the leaders of the rest of the world to make clear that this is the case.
Then they have to say that if the US wishes to enter into an act of total self-destruction, so be it. They are not participating.
As a consequence, they should set up:
- New free trade zones, as soon as possible.
- A new world trade organisation to minimise tariffs.
- A new World Bank, and a new International Monetary Fund
- They might even think about establishing a new world reserve currency, as Keynes intended there should be.
There is no time to waste on any of this.
Trump has hit the self-destruct button to send the USA into a downward economic spiral. What the rest of the world needs to do is to prevent him from dragging them down with him. This now has to be the highest priority in international political economy.
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ratiknmality
12th Paragraph Richard
Rationality i think
Too much early morning writing
Now, I have mentioned this before Richard!!
If Trump was really worried about the living standards of US citizens (rather than abstract numbers such as GDP or trade balances) he would address inequality. US citizens are collectively among the richest per capita in the world already, yet many of them live in poverty without the basic safety net (housing, health, social security) that people in Europe, mostly living in counties with significantly lower GDP per capita, take for granted. Inequality in the US has reached extreme levels.
Agreed
Yes, it was clear that there is no external logic ref tariffs. The internal logic? i.e. the logic internal to the USA? Create crisis to fuel further power grabs/consolidate position? 1st 5 mins of the film V seem to be playing out in real-time. There is a related internal (& possibly external problem) – yesterday somebody was kind enough to post this link:
https://www.theatlantic.com/magazine/archive/2025/02/new-apostolic-reformation-christian-movement-trump/681092/
I strongly suggest those that visit this blog to read it. The USA needs to be isolated – economically, financially, physically etc. The imbeciles described in the article have a plan & there is no doubt they would like to contaminate e.g. Europe/UK. Note that adherents to the madness described are high profile. & for the avoidance of doubt (look at the pathetic prayer meeting picture featuring Mango) Nixons cabinet held a prayer meetings before they decided to illgeally bomb Cambodia (& kill circa 250,000 people – or more). Americans have always been religious imbeciles (bible suckers) – a reality which surfaces and becomes more evident with depressing regularity.
The adherents of the rabble described need to be classified as enemies of the state (UK and EU) – & regarded in exactly the same way as the USSR in the 1970/1980s, which means that they are supressed and excluded from the UK/EU. Populating what became the USA with religious lunatics was always a mistake – becoming more evident over time.
Mike (and anyone else interested in learning more of the ‘religious lunacy’ of the US), two books well worth reading are ‘ American Messiahs: False Prophets of a Damned Nation’ (2019) by Adam Morris. And ‘Fantasyland: How America went Haywire (a 500 year history)’ (2017) by Kurt Andersen.
The introduction to former is titled: ‘The Messianic Impulse in America’ and just about says it all about what this book covers, starting with someone called Jemima Wilkinson in 1776, and concluding with Jim Jones of ‘Peoples Temple’ and ‘Jonestown’ infamy.
The latter starts its exploration of ‘Fantasyland’ in 1517 and ends with a chapter looking at developments from 1980 to 2017, that begins with a section titled: ‘The inmates running the asylum decide monsters are everywhere’, which just about sums up what has become even more apparent with the arrival of Trump Mark 2.
To those of us brought up in the UK or Europe – even with all the corruption (of various kinds) of our establishment religious denomination – what you’ll read in these two books is almost unbelievable, but by golly it explains a lot when you see contemporary versions of religion in the US (and its use of abuse, which is on display almost daily from the likes of Vance and Hegseth)..
I think it also illustrates how on the nail Karl Marx was when he wrote: ‘The criticism of religion is a prerequisite of all criticism’, though I appreciate many religious people wouldn’t agree. Then again, perhaps we could update that in light of all of the religious developments and scandals that have occurred since Marx’s time.
Thanks
All I see is this: if the State begins to fail to rule for all, those who are ignored will seek their salvation in something else.
And as history tells us, there is a lot on offer for desperate people to be exploited.
I think that all this in the States started with Reagan.
At the heart of this though is a typical fault with mass organised religion. The view that God must speak through mortals when really he/she/it has already instructed us through a book and a prophet whom we decided to kill because some preferred to provide ‘home grown’ ones ‘on message’ with temporal power structures, through a controllable institution called a church.
Christianity rejected God/Jesus a long time ago. It was a failure of faith, because man has to have tangible evidence of authority – that is how humans work, and much better if fellow humans are telling you what to do under some sort of structure. It was inconvenient you see, to be concerned with the poor and the sick. That is why the world is as it is now and why many dream of death to go some place that does not even exist, believing it to be better.
Nothing is not better. It is nothing. The here and now is what counts for it is brief and all we have, which is why the Bible was written to guide us in life. It is not just Christianity that suffers from this.
I honestly believe you know that religion is a deeply personal matter. It is a sort rule book to have dominion over ourselves to inform our relationship with the world and others. It is about deep personal sovereign responsibility over one’s own behaviour internally and externally. It was never meant to me to be a mass movement of any kind and subject to the abuses thereof.
Thanks for the book references.
This also parallels with some of the aspects of the tech billionaires Techno-Authoritarianism vision :
https://www.reddit.com/r/samharris/comments/1hhuuyq/thiel_musk_the_leviathan_and/?rdt=52681
and
How Nazi Race Science Conquered the White House, and is Coming for Your Democracy
https://bylinetimes.com/2025/04/04/how-nazi-race-science-conquered-the-white-house-and-is-coming-for-your-democracy/
Meanwhile, at No. 10, Starmer is reportedly trying to organise suitable dates for Trump’s visit to Balmoral this summer. According to the Telegraph, Trump also plans to visit Turnberry.
Bizarrely someone based in White Hall briefed the Telegraph that the reason for his visit to the golf course is so he can increase the playing fees. Well, he is the world’s biggest grifter after all.
This looks more like Starmer grovelling at the feet of King Don than standing shoulder to shoulder with other world leaders.
I have been wondering if this was the time to start talking about Keynes’ Bancor. It would demand a lot of international co-operation, perhaps more than the world is prepared to do. OTOH a crisis -such as we are experiencing- is a time where people will make giant steps. Like the mid 1940s which saw all sorts of international bodies set up.
Can you post more about it?
Oh you have.
I didn’t scroll down first. Embarrassing.
🙂
There’s nothing wrong with great minds thinking alike.
My thanks to you both for BANCOR.
Trying to find any ‘logic’ in this, I can only conclude that it is American hubris at work. It may very well be that they expect the rest of the world to conform and comply because they do not thing that the RoTW has the minerals to go it alone, or that Russia (for sure) and China (what is going on there?) will not play ball.
What worries me is that should the other zones initiate a viable plan that hurries the U.S down the plug hole on its own, not only might there be a civil war in America but a world war as the U.S flexes its military might along typically fascist grounds (my guess is that they would go for China first) – all bought and paid for by the RoTW propping up U.S. deficit defence spending no less.
It’s no longer about economics — it’s about theatre – andnot even good theatre at that. Trump’s tariffs, as this article rightly points out, aren’t designed to make fiscal sense; they’re props in a nationalist performance, staged to stoke grievance and craft an illusion of control in a world shaped by forces far beyond any one leader’s grasp.
What’s most chilling is not the economic incoherence, but the strategic intentionality behind it. These tariffs are weapons in a culture war disguised as economic policy. They don’t aim to protect industries — they aim to tell voters who to blame: China, Mexico, Europe — anyone but the system that allowed domestic inequality to metastasize in the first place. By bypassing reason and embracing retaliation, Trump isn’t miscalculating — he’s recalibrating the purpose of trade itself, converting it from a tool of cooperation into a tool of populist propaganda.
The deeper tragedy is that tariffs like these won’t hurt the political elites who peddle them. They’ll hurt ordinary Americans — through rising prices, retaliatory measures, and lost jobs in export sectors. But in a post-truth economy, the pain can be spun as proof of loyalty. Suffering becomes a badge of patriotic sacrifice, even when it was cynically engineered.
We should be asking ourselves: if economic policy no longer requires economic justification, what guardrails are left? When logic is optional, accountability dissolves. The challenge now is not to debate whether these tariffs “work” — but to expose the political sleight of hand that pretends they ever needed to.
In the US there are no guardrails left
The paragraph beginning “ The assumption that there is anything economically rational…” is not so easy to understand without more detail or background. Would love to know more! Cheers!
It is dense, I admit.
I also was very pleased with it.
But I will do another post to unpack it.
“I also was very pleased with it.”
As you should be! Amazingly, it’s a single sentence of 135 words, but it still manages to flow logically and make perfect sense.
Admittedly, I did have to read it a couple of times.
Thanks
Sir Kid Starver obviously feels quite relaxed about rich people. He’s just upholding Nu Labour’s core values.
The Balmoral visit is just a convention for unaccountable power and wealth, imposed on Scotland.
The thing is a new world trade organisation, etc – and especially a ‘bancor’, really need China – so a very profound political change of mindset is required.
It can’t be worse than Trump.
*Whitehall*
Hello. I was just told about your December 2024 post saying that “Trump’s planning to crash the global economy”, in which you said that Trump would deliberately crash the world economy so that the cohort of the ultra-rich would get even richer thanks to bailout money.
I decided to check your most recent blog posts, and now the theme seems to be more that Trump’s policies are aimed at an impossible goal, and that this is due to an error in neoliberal economic philosophy.
Could you explain more about your views and whether they have changed? Are you still saying that Trump had a cold-blooded plot to enrich the billionaires by creating a new depression, or are you saying that he’s just deluded by a mistaken ideology?
If Trump and his friends shorted the market how much do you think they might have made?
This is how disaster capitalism works.
Could it be that Trump and his cohorts expected a stock market crash after announcing their plans?
A crashed stock market opens up opportunities for the very richest to do what Rothschild did and buy up all the stocks while they’re cheap. Of course that plan relies on the stocks growing again in the long term, which is far from certain given our species’ proclivity for ecocide.
Are you suggesting they traded with this possibility in mind?
I, of course, have no idea.
Good morning.
To be fair to the Guardian and the sub-editor who wrote the headline I don’t think it was meant to be “logical”. The headline is in quote marks to show the sub has picked a line from the article and used it as a summary of what the writer was trying to say.
It is possible to criticise a headline if it does not sum up the gist of a piece but I think in this case it does.
Accepted
To add to your blog, Rachel Maddow has a great segment on where Trumps infatuation with tariffs comes from: revisiting his first term obsession with these. A certain Jared Kushner and then Peter Navaro has a lead role, but the expert he cited often is Ron Vara. We’ve all heard of him haven’t we? No! Rachel explains why.
The segment is ‘The ridiculous real story behind the tariff plan…’ Also worth watching the two segments above if time allows.
https://www.msnbc.com/rachel-maddow-show
As usual, thank you
The new trade zones are already taking shape.Japan,S.Korea and Japan in talks.
Canada is wooing the EU and is open to building Swedish fighter jets.EU officials are in Central Asia and next stop is India.
At least,Starmer’s and Reeves’ heads are grounded ,sadly grovelling to the Orange One.
Can’t they see the trend to exclude the US and not embrace it ?
It is bizarre, isn’t
Should be Japan,S.Korea and China in talks. Japan can talk to itself as well.
Everyone must make their own decision about what they buy and who they buy it from, but here, for information, are some of the UK Brands owned (completely or substantially) by US entities, and also some of the prominent US companies operating in the UK:
UK BRANDS
Cadbury
Founded in Birmingham in 1824, this iconic chocolate brand was acquired by the American company Kraft Foods in 2010.
HP Sauce
Known for its distinctive brown sauce, HP was purchased by Heinz, an American company, in 2005.
Walkers Crisps
Although a staple in British snack culture, Walkers is owned by PepsiCo, an American multinational food and beverage corporation.
Ted Baker
This British clothing brand was acquired by Authentic Brands Group, an American company, in 2022.
The Body Shop
Originally a British company, The Body Shop has changed ownership multiple times and is currently owned by Natura & Co, a Brazilian company.
Costa Coffee – While Costa was originally owned by the British company Whitbread, it was acquired by The Coca-Cola Company in 2019.
Boots – The iconic pharmacy chain is part of Walgreens Boots Alliance, an American holding company.
Superdry – While not fully American-owned, there has been increasing American investment in the company, and it has been in talks with various U.S. investors.
Häagen-Dazs (UK operations) – Although an American brand, it operates extensively in the UK through franchise agreements and partnerships.
SlimFast (UK operations) – Owned by Glanbia, an Irish company, but was previously held by U.S.-based Unilever and then Kainos Capital.
US Consumer Goods Companies:
Procter & Gamble (P&G): A leading global consumer goods company, P&G offers a wide range of products in the UK, including household names like Pampers, Gillette, and Ariel.
PepsiCo: Known for beverages and snack foods, PepsiCo owns brands such as Pepsi, Walkers Crisps, and Tropicana, all of which are popular in the UK.
The Coca-Cola Company: Beyond its flagship Coca-Cola beverages, the company offers a variety of drinks in the UK market, including Fanta, Sprite, and Schweppes.
US Consumer Services Companies:
Amazon: A dominant force in e-commerce, Amazon provides a vast array of products and services to UK consumers, including retail goods, streaming services, and cloud computing solutions.
Uber: Operating extensively across UK cities, Uber offers ride-hailing services and food delivery through Uber Eats, becoming an integral part of urban transportation and dining.
American Express: Providing financial services such as credit cards and travel-related offerings, American Express serves a substantial UK customer base.
Thank you Cliff. That is a really helpful list.
AN INTERVENTION IS NEEDED
The “Special Relationship” with the USA is in reality an Abusive Relationship; where the fiction of ‘normality’ is maintained to mask the nasty, brutal behaviour of the abuser. The UK needs to recognise this, face up to the reality, and get out of it now
Agreed
Trump hasn’t the manpower nor weaponry to attack China. He’s out my and and the Chinese have superior weaponry eg a rocket that can carry a ballistic or nuclear payload at hit New York in 20 minutes. The US military complex has nothing fast enough to shoot it down.
Financially BRICS has their own international currency exchange system indepedent of the US $.
If Starmer had an ounce of pluck he’d tell the Americans to keep their clorine washed chicken and rubbish cars.
I’m not sure those are compelling arguments in themselves.
The news talking about Great Depression forgets two things:
– They didn’t have automatic stabiliser welfare systems back then
– They didn’t have a floating exchange rate
If MMT is anything it is the study of a monetary system in a floating exchange rate environment with operational spend-side automatic stabilisers.
The effect of tariffs in 2025 needs to take those two things into account – primarily by realising that they are just a differential tax raising measure within a currency area, and therefore will result in the same outcome as any other differential tax raising measure within a currency area – more unemployment within that currency area.
Agreed, but only in part.
Benefits can be cut.
And floating exchange rates work within parameters of experience. Remember real people operate systems. When they get signals they do not understand they get confused. This is reality. Never confuse a theory with reality. MMT can’t overcome normal human confusion. That will destabilise for a while, come what may.
Goods trade relative to each other. A Rolls Royce engine is always worth a certain number of tomatoes based upon relative productivity. That’s one of the reasons currency devaluations never worked.
“with floating exchange rate policy, the price level ceases to be the relative value between the now non-existent monetized reserves and all other prices.” https://warrenmosler.com/wp-content/uploads/2025/01/1_11_25-Draft_-A-US-Centered-Analysis-of-the-Price-Level-Inflation-and-the-Neutral-Rate-of-Interest.pdf
The net result is that importers pay the exporters domestic cost of sale (in the currency) plus foreign-held net savings (in the currency) and exporters pay the foreign cost of imports (in the countercurrency), with anything left held as foreign denominated assets (in the countercurrency). The domestic cost of sale includes any domestic savings the exporters wish to hold or are forced to hold by regulation (as we see in Russia for example)
Warren Mosler is far from reliable on this. Sorry, but it has to be said. He is profoundly guilty of ignoring human behaviours, as so many economists do. I am not saying there is nothing in these theories, but like all theory, they are the map and not the territory. Confusing the two is a massive error.
Morning Richard. Couldn’t sleep, so I’ve been checking on the legal position on boycotting US companies and UK Brands owned by US companies, noting that you didn’t put up my contribution last night. I can understand that you might well have reasons not connected with the law. However, for what it’s worth, here’s what ChatGPT has to say:
Would boycotting US companies and UK Brands owned by US companies as a way of protesting against President Trump’s recent imposition of punitive tariffs be lawful?
ChatGPT said:
Reasoned for a few seconds
Based on the legal framework and principles of free expression in the UK, a boycott of US companies and UK brands owned by US companies—as a form of political and economic protest against punitive tariffs—would generally be considered lawful, provided it is conducted in a manner that does not incite hatred or target individuals solely on the basis of their nationality.
Key Considerations:
Political Expression and Consumer Activism:
Boycotts are a recognized form of political expression and consumer activism. When framed as a protest against policies (such as tariffs that are seen as unfair or harmful), such actions are typically protected under UK law.
Avoiding Discriminatory Rhetoric:
The legal risk increases if the boycott is articulated in a way that singles out companies solely because they are US-owned or associated with a particular nationality. As long as the campaign focuses on the objectionable economic or policy implications of the tariffs rather than making generalized attacks on a nationality, it should remain within legal boundaries.
Precedents and Free Speech Protections:
UK law generally protects the right to protest and to use boycotts as a means of expressing dissent. However, organizers must ensure that the messaging is carefully crafted to avoid any implication of inciting racial or national hatred.
Conclusion:
If the boycott is clearly presented as a protest against President Trump’s tariff policies and their economic consequences—without resorting to language that discriminates against US-owned companies solely on the basis of their ownership—it is likely to be lawful. The focus should be on the economic and political rationale for the protest rather than on nationality, ensuring that the boycott falls within the protected realm of political expression.
This interpretation aligns with current understandings of UK free speech and protest law. Would you like more detailed legal analysis or additional examples of how similar boycotts have been treated under UK law?
Thanks
And apologies fir the delay
It was Saturday, and the birthday of one of my sons. We had a great day out. I moderated when I could. By the time I got home I was very tired. Long posts sometimes have to wait in that situation. I am human.
And a jolly good one you are too! More great posts today.
Thanks
Let me just quote that famously radical left wing lunatic politician Ronald Reagan speaking in 1987 (there are also videos)
https://www.reaganlibrary.gov/archives/speech/radio-address-nation-free-and-fair-trade-4
“You see, at first, when someone says, “Let’s impose tariffs on foreign imports,” it looks like they’re doing the patriotic thing by protecting American products and jobs. And sometimes for a short while it works — but only for a short time. What eventually occurs is: First, homegrown industries start relying on government protection in the form of high tariffs. They stop competing and stop making the innovative management and technological changes they need to succeed in world markets. And then, while all this is going on, something even worse occurs. High tariffs inevitably lead to retaliation by foreign countries and the triggering of fierce trade wars. The result is more and more tariffs, higher and higher trade barriers, and less and less competition. So, soon, because of the prices made artificially high by tariffs that subsidize inefficiency and poor management, people stop buying. Then the worst happens: Markets shrink and collapse; businesses and industries shut down; and millions of people lose their jobs.
… There are those in this Congress, just as there were back in the thirties, who want to go for the quick political advantage, who will risk America’s prosperity for the sake of a short-term appeal to some special interest group, who forget that more than 5 million American jobs are directly tied to the foreign export business and additional millions are tied to imports. Well, I’ve never forgotten those jobs.”
It’s worrying when we have to agree with Reagan.