From Bloomberg, “Trump Presses China to Make Tariff Offer to Calm Trade War”:
“The ball is in China’s court. China needs to make a deal with us. We don’t have to make a deal with them,” White House Press Secretary Karoline Leavitt said Tuesday, reading what she said was a statement Trump dictated.
So, I am reminded of this (apologies to Christopher Walken and imitators), at 1 min 7 seconds in.
Interesting how silent the right has become during this period of maximum chaos by trump. Rick stryker and bruce hall? Crickets. But your boy trump has okayed retribution in politics. And my recommendation is be prepared. Because i am okay with the next democratic president dismantling the conservative world, since you all okayed their dismantling now. Fox news? Shut down. Bannon podcast? Treason and jail time. And if you protest in the streets, bring in the army. Shut down the republic convention, its enemy propaganda. Rick stryker, glad you are in favor of such political tools. Cause reality bites.
This is power dynamics on full display. The fact that the felon-in-chief is saying “China needs totally us” out loud means that China has the advantage. If China were desperate, it would be unnecessary to say anything.
I have to think that the felon stomping his tiny feet and demanding g a call means he has miscalculated and he knows it. He isn’t great with knowing how things work, but he must know how badly the U.S. economy will suffer without Chinese inputs. He done messed up.
I think you’re giving our Orange Messiah too much credit for understanding what’s going on and caring about the impact it is having. He operates on instinct and he has a short attention span—case in point: annexing Greenland and Canada haven’t come up recently in the news. His aides, and the Tech Bros who have rolled the dice on him, are waiting for him to get bored with the tariff excursion and refocus on something else like bombing Harvard or Iran. What might happen is that his attention will shift and he’ll forget that the tariffs are still in place and we’ll be in deeper and deeper poop as the months roll on.
Hartley and Ribucci have looked at the dollar’s slide on Liberation Day (sic) using detailed market flow data:
https://cepr.org/voxeu/columns/tariffs-dollar-and-equities-high-frequency-evidence-liberation-day-announcement
They find that equity market flows – selling U.S. stocks to buy other G20 stocks – is evident in the data. They don’t find a loss of safe-haven status in the data on that day. Weakness in developing market currencies vs the dollar doesn’t suggest the dollar is not a safe-haven currency.
Of course, safe-haven status should probably not be thought of as a simple dichotomy, but rather as a continuum. The dollar was treated as a safe haven relative to DM currencies, but not against majors – on that day. Since that day, BRL has recouped about half of its Orange Crisis ™ slide. So had TRY until its relentless slide recommensed. THB is at its strongest level vs the dollar since last October. All in a period in which risk metrics remain elevated and policy uncertainty is high.
Hartley and Ribucci have attempted to explain the events of a particular day and find equity market adjustment a better explanation that loss of safe-haven status. Look beyond that day, and you may still find reason to worry about the dollar’s future.
One more point about the dollar. Some analysts objected to the notion that something bad has happened to the dollar as a result of the Orange Crisis ™, because the dollar index (DXY) had not fallen out of the range it has been in since 2022 – the Fed rate hike range. Well, if that’s how we decide whether the dollar is damaged, then the dollar is damaged:
https://www.tradingview.com/symbols/TVC-DXY/?timeframe=60M
It just keeps falling.
Correct me if I’m wrong, but isn’t the felon-in-chief’s tariff program, all else equal, likely to produce a big increase in monopoly rents? If the market for some good is competitive largely because of imports, then it becomes less competitive when imports are priced out of the market.
Maybe I’m late to the party – maybe the rest of the world assumes this goes without saying. But by limiting consumer choice (we are no longer “Free to Choose”), aren’t we shifting the balance of market power to domestic producers? And isn’t part of the felon’s argument for tariffs that we have very few goods producers in the U.S. – almost by definition, not bunch of price takers, once a tariff wall goes up?
If so, isn’t this at least a partial answer to Powell’s “is the tariff price shock transitory?” question? Don’t monopoly rents tend to raise not just the price level, but the rate of inflation? (Not a rhetorical question.)
I’m not suggesting this is the felon’s sole motivation, but I doubt the monopolistic implications of tariffs are lost on a guy like him.