I've been trading many years but I have to admit I am stumped, I have never traded a tariff market making day.
Will we have to 10:45 am fake out? Buy the rumor,sell the fact? I had a good gain yesterday,maybe stay on the sidelines?
Thanks much, Mike!
Plenty of unprecedented things going on right now and extreme uncertainty!
And I do not see what else we are supposed to do to end this fiasco of abuse. The tariff situation is so bad because America has allowed it to escalate for decades of abuse by others.
Same with our debt of 37 trillion. We have never been brave enough to take the pain to solve the debt issue.
In the end you take out the noise and only look at the charts. We have been in a wedge pattern for a long time and continue within the pattern. Sell the top and buy the bottom. Some day it will break through.
Most of the so called "abuse" is simply a trade imbalance caused by many to most of our trading partners not needing to pay their employees the huge labor wages that include wonderful benefits that us Americans demand.
In addition, the cost for many parts and raw materials may be cheaper. As a result, their production costs are MUCH lower and they can sell products MUCH cheaper than the same products that we sell.
Why isn't Trump telling the truth about that?
Instead, he uses fairy tale tariffs on us with deranged math and manufactured Trump explanations to justify actions that destroy free trade and punish everybody.
When I first saw his tariff numbers, I thought it was somebody that had doctored the image to make a joke.
This is no joke!
There is no fixing the trade imbalance. It exists because of the difference between poor countries and rich countries. Unless we want to become a poor country and work for a fraction of what our current high wages are........it's one of the fundamental differences that allows other countries to produce products cheaper than us.
It may seem like a penalty but its just a fundamental, authentic dynamic that defines the natural differences in the global economies. It's a consequence of us being a rich country(that can afford to pay more for the same reason that things we make COST MORE which will always cause the trade imbalances that Trump is trying to wipe out with dysfunctional tariffs.
We might as well call them "poor country taxes" that we impose on other countries, penalizing many of them for being more efficient and cost effective, while penalizing OUR consumers by that same amount and speculating that it will cause our production to go up even more than the penalty............while we still pay the same cost of labor and materials to manufacture products here.
It very likely to backfire badly by stifling free trade and REDUCING our exports when other countries respond with REAL tariffs, not the fake ones that Trump has manufactured. At the same time, it WILL cause Americans to pay more for everything that we import. That's a ton of stuff.
This could end up being pretty bad.
One legit way to make things better is to reduce the cost of our producing things in this country.
People will never accept lower wages but reducing energy costs can help a great deal.
Trump thinks that manufacturing companies around the world will come here now. One of the flaws in that thinking is that it takes years to plan, build and ramp up to production. Another one is that he didn't solve the fundamental problem...........it costs more to produce everything in the United States.
What's more likely is they will continue to use countries with lower production costs and not want to lose that most important benefit, while waiting for these tariffs to backfire after punishing Americans, who elect a sane president that reverses the tariffs.
Sadly, there will be permanent damage at that point.
This is just more evidence that President Trump is mentally ill with delusions of grandeur ism. He thinks he can take over Greenland, the Panama Canal. Kick out Palestinians from Gaza, then rebuild it and invited in people HE wants to live there.
At least he's doing one thing right in trying to end the war in Ukraine which was the only reason that I voted for anybody in the last presidential election.
Also withdrawing from the fraudulent fake Climate Accord and on a path to reverse the absurd ruling by the EPA, "the endangerment finding in 2009" that the beneficial gas, CO2 is pollution.
https://www.newsweek.com/donald-trump-reciprocal-tariff-math-explained-2054743
As I have posted previously. Trump may not believe in anything except expanding his power. But if he does believe in something, it is tariffs. The Trump bear market continues…
Trump equates trade deficits with America being cheated. It’s not. As Mike pointed out, it’s just more expensive to make things in America.
It is worth noting that on liberation day American stocks got hit more than foreign stocks. Retaliation is coming. it is a bizarre economic policy to start a trade war with….THE WORLD!
Thanks, joj!
Just to provide the other side. Wouldn't it be great if all we had to do was what Trump is doing to accomplish all these wonderful benefits:
https://makersrow.com/blog/top-10-benefits-of-keeping-your-manufacturing-local/
Now, back to the real world:
China and India are not even on this graph below. I believe they would be even less than Mexico at the bottom.
We are fortunate to be blessed with extremely high wages and massive benefits here in the USA.
Let's say you are a major manufacturing company that can locate in any country in the world and have a choice between the USA and Mexico. There are some benefits to staying with the USA or moving to the USA that are mentioned above. However, labor is a huge business cost and locating in the USA, means that you will pay near the MOST for labor. Maybe 5 times the amount as you would pay in Mexico! In addition, raw materials, parts and so on are also likely to be a huge lower factor for Mexico. Regulations are also likely to be tighter in the USA.
The advantages of Mexico, China, India and others compared to the USA for manufacturing and other industries are massive because of the differences in how much cheaper everything is there.
That will not change unless those countries develop more and follow a similar path as the United States. Its not conceivable for workers in the USA to take major pay cuts to be more competitive.
Donald Trump wants to level the playing field by imposing huge tariffs on those cheap labor countries(and others too)
But they will still be producing everything at the same lower cost. It's just that Americans will no longer be getting good deals from buying their cheaper stuff, because Trump's tariffs, ARTIFICIALLY mark up the price before we buy it and that means we may decide NOT to buy it or to buy the more expensive American version of it.
Trump's theory is that those manufacturers will be so upset at losing America's business, that they will close factories overseas and move them to the USA just to keep our business.
Also, we COLLECT tariffs and use it like the government uses our income tax as a source to fund it.
Will those businesses really move here? How long will it take? How many years of Americans paying higher prices for everything need to happen before the benefits of the tariffs start?
Why did Trump go so mega extreme with the tariffs? Why not something more reasonable and why penalize some countries that sell products, like coffee that the USA doesn't compete with?
Is this another negotiating position, where his starting point is almost impossible in an attempt to get the other side to move more in his direction, than if he started with a reasonable position?
If all the MAGA people know that this is what Trump is doing, are the ones in actual negotiations with Trump, huge companies and powerful people, just not as smart as MAGA and don't realize what Trump is doing..........because Trump is just too brilliant for those that don't understand him?
Or, is it something else that makes way more sense?
https://www.helgilibrary.com/charts/which-country-pays-the-highest-average-wage/
Export inflation / Import inflation
Getting workers in poorer countries to make our Tshirts, clocks etc has kept inflation low for decades. Now we are going to import inflation....
Trump thinks ALL business deals are a zero sum game. Economics is about growing the pie, not fighting over it.
China retaliated against the additional 34% tariff (1/2 of the pretend 67% tariff announced by Trump Wednesday) with a 34% tariff. That tanked stock index futures, which are currently way down from yesterday’s big drop. Oh boy!
Thank you, Mr. President, you’re brilliant!
If this 34% retaliatory Chinese tariff on US imports actually occurs, it would mean:
-China’s tariff on soybeans imported from the US would rise to 47% from 3% in 2024. They already had increased 10% to 13% last month in response to Trump’s new tariffs on them..
-China’s tariff on In-quota corn/wheat imported from the U.S. would rise to 50% from 1% in 2024. They already had increased 15% to 16% last month.
-Thus I can’t imagine many US midwestern farmers are happy right now.
-This was Trump’s response to China’s increase in tariffs of 34% to match Trump’s 34% on them:
CHINA PLAYED IT WRONG, THEY PANICKED - THE ONE THING THEY CANNOT AFFORD TO DO!
https://truthsocial.com/@realDonaldTrump/posts/114279915827492021
Now have sat here and read every negative word about these tariffs. Every word you guys have written...mostly every word negative and nearly identical to most every major media source in tone and bias.
But what word have I never seen in either your or the media's bias posts. I have yet to see this one word. Now I could of missed it and if so I am sorry but pretty sure I did not miss that word. That very key word to this entire discussion and never mentioned.
Reciprocal yes Reciprocal tariffs. wonder why the exact reason and goal which is reciprocal is never mentioned? So odd isn't it.
And the same could said for Musk. How many stand up politicians who owned the largest electric car company would come out and say the government has no business subsidizing electric charging stations like Mush did? Ohh that's right, zero politicians who stand around all day and who created the mess and now just stand around take pot shots at Musk.
Hey mc,
You do realize that the new Trump tariffs were way higher than the then current tariffs on the U.S., right? Do you realize that the numbers in the column on the Trump tariff tables showing tariffs on the US were way overstated as Mike and I posted about?
the higher numbers are put out for a reason. You help us and we help you. you screw us and we try for reciprocal but after 50 years it ain't easy
And furthermore you can throw most of that list of tariffs out and it would not matter. The US and China are what? 42% of world gnp. Canada is like 2% so this should inform everyone what this is all about
https://www.youtube.com/watch?v=RkcHP0zm2Z8 a great explanation to a totally unwise, biased the core, and even worse a so called journalist
mcfarm,
You are under the false illusion that Trump's brilliance allows him to see things that everybody else misses.
One thing that HE and his followers are missing is that the 180 or so countries that he put a tariff on are almost in total agreement AGAINST Trump's absurd tariffs.
One of his biggest problems for anybody that wants to take him serious is the way that he presented it earlier in the way. Completely making up other country tariffs on us that don't exist with dishonest Trump math.
That graph, by itself, if you didn't know anything else about this topic was causing everybody's BS meter to be sounding off loudly.
A person that would have the audacity to insult our intelligence with such a nonsense, fake tariff, manipulated spin has something wrong with them in believing that they can actually get many people, other than MAGA to believe it.
The reason that Trump WILL LOSE on this issue is:
1. Almost the entire world is against him and they know it. They have a tremendous amount of power together and will be using it, as China just did. If this was just China and the US, it would be a different deal. But it's EVERYBODY vs the USA and Trump caused it to be that way. He will not win over EVERYBODY, although his delusions of grandeur-ism pathological thinking, continually tells him he will. Just like he will get Greenland.
2. Americans are strongly against this.
3. Real world consequences will continue to punish the USA and Americans for Trumps decision. People with money in the stock market have already started to suffer. Now, Farmers will suffer with China's INEVITABLE tariff on our ag products. It's China and the rest of the world that have all the control here. Trump made his big announcement that went gung ho overboard with everything but the kitchen sink and now he's out of ammo. The United States is now going to be sitting ducks for all those countries that he targeted. Announcement, after announcement after announcement by them of tariffs on the US and nothing we can do about it.
4. If you want to negotiate about anything, your initial position has to be reasonable and make sense for you to be take serious. I made this point to cutworm previously. If we are negotiating on the price of something and I bid $1 for it and you offer to sell it for $1 million.......at least 1 side will not take the other one serious. If it's worth $500,000, then the side trying to get it for $1 is a joke. Trumps EXTREME tariff position is a joke. His absurd, fake tariff #s presentation proved its a joke. What he expects in return is a joke. This is why he's not being treated seriously and will lose.
If Trump was not so delusional with his omnipotence, there would have been a much better way to negotiate this.
a. The most important, would be to be REASONABLE so that the other parties would consider it.
b. The other is to back it with authentic facts and explanations. His crazy presentation with fake tariffs earlier this week is something every single country in the world knows is hogwash. He didn't fool anybody.........except the ones that are always fooled and he can count on that 365 days a year about everything he does.
https://www.firstpost.com/world/vietnam-agrees-to-slash-tariffs-to-zero-after-being-hit-by-46-levies-claims-trump-13877345.html ohh look I must be still under an allusion. You guys just keep shoveling the hole and its get deeper. Wonder who will cave next.
Hey mc,
Have you ever criticized Trump in any significant way other than that he posts meanie stuff at times? Can Trump ever do wrong in your mind?
Thanks, mcfarm,
Everybody is on to what he is doing and what the impact it will have..........except for MAGA.
https://www.newsweek.com/trump-tariff-math-leaves-economists-baffled-2055505
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What's interesting is that, while I'm not economist, when I saw Trump holding the tariff board with all those numbers that he said represents tariffs by other counties on us, I immediately thought it was doctored by somebody as a joke(I didn't watch the live version).
It was that outlandish.
When I quickly realized that it wasn't somebody that changed Trumps numbers to make a joke, I knew that it was STILL A JOKE, only Trump actually thinks people other than MAGA will believe it.
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https://www.yahoo.com/news/why-economists-horrified-trumps-tariff-211158937.html?fr=yhssrp_catchall
They should be horrified. A president this delusional using tariffs, economics and math is basing our economic policies on an impossible to work tariff scheme. ....because of his pathological, delusions of grandeur thinking.
Mental illness is not good for making smart decisions, especially when the one that is suffering from it is the most powerful person on the planet.
Here's a map that shows the REAL tariffs from other countries.
It's probably changed a bit in many places since then but it gives one the appreciation of how fraudulent Trumps fake tariff numbers are:
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https://www.reuters.com/graphics/USA-TRUMP/TARIFFS/jnpwjmqklvw/
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Compare that to Trumps FAKE tariff numbers in blue:
mcfarm,
Your article shows that Vietnam might drop their tariffs on US products.
You and Trump claim that their current tariff is 90% but that is 18 times the REAL tariff rate of 5%.
Being off by a factor of 18 and doing it intentionally to support a delusion scheme means your math errors completely obliterate your credibility and honesty.
2. How did Vietnam end up with 46% Reciprocal Tariffs?
The suggestion by the US Administration that Vietnam had imposed tariffs equivalent to an average of 90% across US products being imported into Vietnam has left Vietnam officials and pundits bemused. However, the actual trade weighted average tariff rate for Vietnam is approximately 5.1%.
It appears that the US Administration has calculated its ‘tariff’ of 90%, by taking Vietnam’s trade surplus with the USA (approximately US$123.4 billion) and dividing it by the total amount of trade between Vietnam and USA (approximately US$136.5 billion).
This also appears to be how the US Administration has calculated “Tariffs” for each of the 60 jurisdictions which have been subjected to a country-specific tariff of more than the baseline tariff of 10%.
+++++++++++
mcfarm,
What Trump did is not even debatable.
The justification by MAGA that Trump is just too brilliant for everybody but MAGA to understand lacks any authentic data or facts to support it. This is just FAITH in him, similar to a religion. If MAGA wants to worship President Trump like he's a God, nobody can stop them but the rest of us require more than FAITH when it comes to his looniest agenda because he's an extremely flawed HUMAN BEING.