Instead of trying to make sense of the formula, it's much more likely the administration needed a global 30% and then they made up the formula (and the constants, etc) to get to that number.
Anyone who's trying to make arguments based on the formula itself is the dog being wagged.
Doesn't this formula also punish circular trade patterns in a strange way, like if the US imports $X of good from country B and country B imports $X of goods from country C and country C imports $X of goods from the US, and there are no flows in the opposite direction, then the US would impose an infinite tariff on country B since US imports from B are zero?
Yes. It also only looks at physical goods and not account for services.
It's utter incompetence and laziness. But when you vote in lazy incompetence, then that's what you get.
I wonder if he and his friends opened a bunch of options the morning of and are now collecting their winnings...
he does have a bunch of crypto pump and dumpers as advisors.
I would think that it would be put options wouldn't it? Aren't puts the ones where you want the stock to go down?
they have terrible names. I can never remember. A put option I think gives me the right to sell you a stock at a price.
So say, ACME is trading at 110. I can buy the right to sell you ACME at 100. You say ok because it's at 110.
But then ACME crashes to 50.
I buy it at 50 and you are on the hook to buy it from me at 100.
Reddit's r/QuiverQuantitative. follows trades and puts by members of congress. MJ Greene bought stock in Dollar General.
I’m not in the US, what could this mean?
Dollar stores are the stores that sell the absolute cheapest versions of products. Usually low to very low quality, but when you're tight on money, it's where you go. If we enter a recession or depression, those type of cheap stores are going to get a lot more shoppers as folks try to tighten their belts.
Those stores also predominantly sell imported products. They are going to be affected disproportionately by the tariffs.
The running joke is that American legislators make "surprisingly" good stock trades for "reasons." Regardless or not of whether these picks actually tend to be good long term investments, it really, really rankles to know that a legislator expects poverty to come, is banking on that, but is otherwise not telling diddly squat to her constituents.
https://www.morningstar.com/funds/2-etfs-that-track-congress...
It's a store chain that will soon be rebranded 'Ten Dollar General'.
You're thinking of Puts and Put-ins. However it would be funny if they did calls.
Not only that, but I assume they'll take more bites of the apple as they go down the list country by country and negotiate better rates for some kind of kickback and market manipulation opportunity.
it's kinda strange that the largest tariff is in a landlocked country a 5 hour drive from elon musk's hometown.
All the numbers on what a country is supposedly charging america appear to be a complete fabrication so we're forced to find other motivation for setting the numbers the way they did.
Not sure if I understand you correctly. I just watched a Youtube video explaining the formular. The Youtube user checked all 160+ countries. All have been calculated with the formular. So there seems to be no Motivation in this sense. All have received the same broken treatment.
Or short sell one day before the tarriff announcements.
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I believe the idea was "Very High Tarrifs" and the formula was some kid in MS Excel . They are definitely not reciprocal. They don't need to be, since the plan was to use the high tarrifs as negotiating tool to somehow reduce the US national debt
I'd put my chips on the formula being $(LLM_OF_CHOICE), given the lack of attention paid to details like, say, uninhabited islands near the Antarctic.
https://arstechnica.com/tech-policy/2025/04/critics-suspect-...
I don't think it's LLM, not everthing is AI, just because that's the hot topic of the day. This forumla is too simple, it's essentially 0.5 * (their_portion_of_trade_deficit / total_trade_deficit_with_country) % . It's not complex at all and that formula fits all the % calculated by Trump's board of "liberation" too closely to not be essetially what he and his cronies came up with. Likely one of the DOGGie boys
But how do you explain an uninhabited semi-independent (as i understand it) island with no trade with the US getting higher tariffs than Australia, the country it's broadly part of?
I think this is really interesting and would be fun to find out what really happened.
https://www.theguardian.com/australia-news/2025/apr/04/revea...
I have three theories, based this article.
1. The administration used an LLM on certain data and it incorrectly conflated the countries.
2. Certain companies listed regions of export to avoid customs, duties, or for other reasons and it now indirectly got exposed. The article alludes to this without saying so?
3. The administration listed what seemed like inconsequential regions for the purpose of preventing Australia, for this example, of just saying it was exported from Norfolk Islands to dodge tariffs. Although, this is giving the administration way too much credit and if they are reading this don’t steal this as reason. :-)
All the "weird" countries on the list have internet domain names .nf .tk .gi .io The "penguin island" has the domain .hm
So the conclusion is that the intern failed geography and did not realize that those aren't countries.
Lesotho, a small mountain within South Africa punished with a sudden 50% tariff, disproves #3 is evidence of an intelligent carve out.
Article links here which explains how they did it, with reasoning and references: https://ustr.gov/issue-areas/reciprocal-tariff-calculations
My favorite citation is curiously missing from the references (as of Sat April 5, 6:40 EST):
> The recent experience with U.S. tariffs on China has demonstrated that tariff passthrough to retail prices was low (Cavallo et al, 2021).
The line that says "sure, tariffs won't cost consumers _that_ much", and they don't even have a bibliographic entry for Cavallo et al. 2021.
Gotta love these two sentences in that article:
(when describing the model) Let ε<0 represent the elasticity of imports with respect to import prices...
(when implementing the model) The price elasticity of import demand, ε, was set at 4.
4 is less than 0, right? Right?!?
Yea that's even more ridiculous. Epsilon*phi equals to 1 because i guess that's the best mathiness they could do.
The only thing that fixes the Budget deficit is higher taxes (likely on the upper middle class and on up, especially the wealthy and corps) and lowered spending. Nothing else will fix it. It's not because of trade deficits. Any moron can see that but that says a lot about Trump and his toadie circle.
I think that is just sane washing. Original idea was that tariffs are good and America is being ripped off whenever it buy stuff. The rest are mutually exclusive rationalizations by Trump loyalists trying to make it sound reasonable.
There are multiple of these explanations and none od them is consistent with actual decisions.
I believe the forensic credit should go to James Surowecki:
https://xcancel.com/JamesSurowiecki/status/19075591892341969...
i don't think Trump cares about US national debt.
Numerous times, he conflates debt and budget deficit. He has even confused the direction his budget goes in. These terms are just backdrops for the things he wants to talk about: immigration, lack of loyalty to whites from other races, etc.
By the time companies decide to open factories in the US, these factories will be run with Chinese robots by companies which wouldn't care about a 500% tariff on Chinese robots if they are still cheaper than the work of an American worker.
It makes plenty of sense if you consider that it wasn't designed to benefit the US, but rather to drive US trade to our competitors.
Considering how open they've been about their clear conflicts of interest (Trump launching a cryptocurrency on day 1 of his presidency, being in charge of a publicly traded company that he's made no effort to remove himself from, and the Diablo cheater being in charge of a department that gets to determine "efficiency" while also bidding on government contracts), I think we should really consider the possibility that Trump and Musk shorted or bought Puts on companies that would be hit especially hard by tariffs.
I debated doing that. I wish I had, I would have made a bit of money in the last few days.
Don't forget that bigballs was fired from one of his last jobs for... selling company secrets to a competitor.
Too bad oversight is "inefficient"
> I debated doing that. I wish I had, I would have made a bit of money in the last few days.
The details weren't public. You can stop feeling being bad about yourself.
Well, he announced when “liberation day” was going to happen. I debated buying one that expired on Friday.
this is “due for a big one” gambling logic
Yeah, which is why I talked myself out of it.
Plan for the tariffs to reverse course once enough political pressure mounts. Calls for say, three months out.
calls for 3 months out only make sense once the stock price is decimated, and there's no certainty that prices will recover given the bumbling antics of this administration.
If they give the Federal Reserve the DOGE treatment next week, negative interest rates could always save stock prices.
Under normal circumstances, the chair cannot be removed without cause. And appointments must pass the Senate.
But, fanatics can intimidate and stalk Fed employees, with the executive conveniently withholding law enforcement response.
Would the tariffs make more sense if this were true?
I mean, I don't doubt that it's true, but it seems more like an opportunity to make some money on the side than a reason to do it in the first place.
It's designed to destroy America's position in the world and is almost certainly a dictate from Russia. I mean they didn't even put tariffs on our most antagonistic supposed adversary, and why would they do that other than he has Trump by the short hairs? for god sakes they put tariffs on penguins on a virtually unknown island nation.
Funny he put like Martinique which is a territory governed by France
> Funny he put like Martinique which is a territory governed by France
More 'funny': Diego Garcia (officially British Indian Ocean Territory).
An island in the Indian Ocean whose only inhabitants are UK and US military personnel.
* https://en.wikipedia.org/wiki/Diego_Garcia
* https://www.cnbc.com/2025/04/03/5-bizarre-locations-hit-by-t...
It might actually be ha-ha funny if this wasn't creating havoc on international commerce and people's lives.
It is even worse than that as Martinique is a “territory governed by France” in much the same way that Hawai’i is a territory governed by the USA.
Martinique is a region and department of France—and administrative subdivision of the same type as those in the French mainland, differing only in that the the top two levels of subdivision (region and department) are coextensive rather than nested in Martinique and the other overseas region/departments.
Potentially France could have all imports from US pass by Martinique and they’d save a lot of money
And offer a loophole to any European company.
Like putting HQ in the Netherlands to avoid corporate tax of all other EU counties
> Potentially France could have all imports from US pass by Martinique and they’d save a lot of money
The EU shares a border with the UK (island of Ireland) and the UK also has lower rates: just drive a truck over the border.
First I thought it could make sense considering the territories have some differences in taxes on imports. But in that case, why is Åland missing then?
Because they couldn’t figure out how to type « Å » on the murrican keyboard.
I feel bad for Lesotho- 50% is tough.
Well you've got to get those diamond manufacturing jobs back to the US somehow
Unfortunately, now that some people appear to think that annexations are something to be considered, this joke has a very unexpected element of not funny.
Lesotho is a landlocked enclave. The US would have to chew through South Africa, first.
Also, would MAGA want a new US state from Africa?
Askshually… I thought it was possible nowadays to manufacture diamonds?!
That is a brilliant joke
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Good one
Does anyone here know what is the impact of this for Lesotho in practice?
I found an article[1] but perhaps someone here knows more or is there in person.
> Lesotho exported $237m of goods last year to the US and imported $2.8m. Agoa[2], which has allowed tariff-free access to the US market for thousands of product types since 2000, created a thriving garment industry, accounting for about 20% of GDP.
> There are about 30,000 garment workers in Lesotho, mostly women, with 12,000 making clothes for US brands including Levi’s, Calvin Klein and Walmart in Chinese- and Taiwanese-owned factories.
> “(…) If we lose our jobs here, I’m almost certain that many of us will end up sleeping on empty stomachs.”
[1]: https://www.theguardian.com/global-development/2025/apr/04/l...
[2]: https://en.wikipedia.org/wiki/African_Growth_and_Opportunity...
I want the people who work to make the things I use to earn more than $150 per month.
A sane tariff policy would be set up to penalize these very low wage exporters to give competitive advantage to exporters and local producers with higher wages but also to incentivize higher wages in a way that set rates make producers more profitable if they paid workers more (and likewise other human development and environmental etc issues)
What you're advocating for is these 30.000 people to lose their jobs, not earn anything and starve.
How does that help them? Oh, right. You don't care about them, actually. You just have this vague ideal that people should earn more money. Maybe not even that. You just want tariffs for some inexplicable reason. Because tariffs cannot give these people higher salaries. That's not how any of this works.
I don’t see how tariffs magically create wealth for foreign exporters that translates into higher wages. Let’s say I can buy a $10 shirt from Lesotho with zero tariff. Now a 50% tariff gets imposed. I can either eat the tariff and pay $15, in which case Lesotho still gets their $10, or Lesotho can eat the tariff to keep their exports competitive, in which case Lesotho now makes $5.
The part about giving a competitive advantage to local producers is true, though…
Maybe the $5 per garment could go to USAid, and fund care programmes in those countries.
A truely laughable suggestion.
for countries that pay a worker $10 a day, put a tariff on the goods produced by that worker to total $10
for countries that pay a worker $15 dollars a day put a tariff on the goods produced by that work to total $4
therefore someone importing goods produced by one worker in one day from the lower wage country would spend $20 for the goods from the lower wage country but only $19 for the goods for the higher wage country giving a competitive advantage for higher wages
obviously that is a simplistic example but that's what i mean using tariffs to incentivize better behavior and level the playing field so the most exploitation doesn't make the most money
If the shirt costs $10 in labor, and the pre-tariff wholesale price is also $10, how does the manufacturer make a profit? Surely the wholesale price would at least include some markup for profit? So like $10 labor + $3 markup (per employee-day) + $10 tariff ($23) contrasted with $15 labor + $3 markup + $4 tariff ($22), in your scenario.
But now you see that the low wage manufacturer has a third option, $10 labor + $1 markup + 10 tariff ($21), which would maintain their competitive advantage and in this scenario only cut their daily per employee profit by $2, as opposed to the $5 hit they would suffer by raising their employee wages to $15 day from $10.
That's not really what I mean.
What I'm saying is set a minimum wage on imports. Set a global minimum wage. Anyone importing something from somewhere that doesn't meet that minimum wage would have to pay a tariff greater than the amount saved with low wages.
The goal is to increase competition and improve fairness between locations. You wouldn't want to do it all at once at first, rather a gradual increase. You wouldn't want to distort the local economy too much so don't insist somewhere pay 10x the median local wage. Lots of things you would do which are more complex with an eye for fairness and competitiveness and definitely not trying to raise everyone by force to American levels of wages, but always measured amounts of pressure.
That’s a nice idea, but I’m skeptical—where is the new wealth coming from that will allow Lesotho to pay its workers more? It’s not an issue of strong-arming some bad guys in Lesotho to pay their workers more using tariffs as a negotiation tool.
I feel that conflating tariffs with some sort of negotiation tool to bring about positive global change is disingenuous, because the real aim is clearly protectionism.
It's clearly not protectionism, because you wouldn't put tariffs on everything - including all the raw materials and parts you need to import, if you wanted your local industries to succeed. And you'd have a coherent industrial policy to go along with it.
Protectionism is France and England putting tariffs on each others cheese. America putting tariffs on Canadian lumber.
Putting tariffs on places that have a 20x factor difference in wages is something else.
And protectionism isn't necessarily a dirty word. It's often valuable to save your local industries from being wiped out and to not have a foreign country have complete control of a necessity.
It's coming from the people who buy the exported goods.
This would mean, of course, that the people who happen to work for an export-oriented factory become much more wealthy than most people in Lesotho. So you might reasonably wonder whether it's better to make twice as many workers half as wealthy. Labor advocates believe the answer is no: paying some people genuinely good wages both creates and encourages further development, while paying a larger number of people "good enough" wages encourages poor countries to race to the bottom competing for the lowest standard of "good enough".
These suggestions are... not based in reality. Lesotho has a GDP per capita of something like $1000 per year.
How do you expect them to magic higher salaries?
Such a tarrif on low wage countries would prevent the exploitation of low wage countries. Because any county could easily 'defeat' the tarrif by setting a minimum wage. It doesn't help raise the people being exploited out of poverty. But it does prevent countries from getting stuck in a cycle of depending on low wage labor.
Whether that works out better for the exploited is uncertain. But the alternative argument is effectively "these poor countries should be happy to let themselves be exploited" it is their only way out of poverty. And that really doesn't sit right with me.
This makes sense. I think even MAGA might agree if you pitch it as "we use tarrifs to prevent American labor from being undercut.
But it is clear that the reasoning here is "I want tarrifs, how do I easily get them". And then they found the easiest possible way to say something about 'countries putting a tarrif on the US'.
The stupid theory behind this is effectively: not having a minimum wage is equivalent to putting a tarrif on the US. Which would suggest that the low US minimum wage is actually already a tarrif on the EU.
Pressure to improve trade imbalances is a good idea! Particularly with China and some of these extremely low wage countries. Democrats being silent on the topic or not wanting to do anything about it is one of the bigger deciding issues for the kind of moderates who would actually change their vote between parties.
The current administration is like... if you're being charitable you can imagine at some point someone had a reasonable set of ideas that got filtered through a long string of fools in a game of telephone so now we have an angry toddler with a gun destroying the global economy on the basis of ideas which very well may have been interesting at the beginning of the chain but have long since descended into incoherence.
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"incentivize higher wages in a way that set rates make producers more profitable if they paid workers more"
That sounds amazing..how would that work?
You can just put in the trade agreement that the goods are subject to tariffs unless the workers who made them are paid enough. The USMCA, for example, has requirements along these lines for auto assembly (https://www.dol.gov/agencies/whd/usmca).
Well, this gets closer. There used to be a garment industry in the USA...
> There used to be a garment industry in the USA...
Yeah, but the last large piece of it (there are still some amall remnants) got wiped out with the most recent push for eliminating large scale non-penal slavery in the US.
And, no, I don’t mean abolishing formal chattel slavery with the 13th Amendment, I mean the push to eliminate the informal de facto slavery that persisted in the US territory of the Confederation of the Northern Mariana Islands around the turn of the millenium.
There still is, just small. I quite like my American Giant tshirts for example.
Yeah, it sucks and I bet these countries won't forget this for a very long time.
make lesotho great again!
Wonder why this has been flagged.
Bookmark https://news.ycombinator.com/active and you won't have to wonder if you're missing flagged posts with discussion.
nice, didn'tknow about that one :)
It is weird that HN isn't talking about tariffs at all - since this is probably the biggest economic mixup since COVID.
Why would HN be talking about tariffs? That's the sort of mundane concern you'd find covered on TV news, and good hackers shouldn't find such things interesting. Let's talk about... umm... set theory? Graphics cards? Python?
I don't quite understand the error this article is pointing out and how it could lead to a four fold inaccuracy. Can someone try explain with an example?
They used a 0.25 constant in a formula and the article is arguing they should have used 0.945 instead (difference of ~4x). The constant the Trump administration used seems to have been the one for estimated effect of tariffs on retail prices (ie, consumer facing) and it was more appropriate to use the one for the effect on prices at the border.
I assume that is similar to me being a computer company importing chips, a 25% tariff on microprocessors will make the imported cost of microprocessors go up by ~24% (because some really expensive ones don't get bought) but it would increase the price of the computers I build by ~5% because most of the computer isn't a microprocessor.
It is an exciting time to learn about the country of Lesotho.
My understanding is they are saying the elasticity of the price (what can be absorbed by tariff increase) comes from the transaction in the retail market it ultimately sells to, yet the "equation" was using elasticity of the import costs.
In other words, Trump's equation thinks that import price will absorb (elasticity) the tariff's impact, but that's not true. It's passed on almost entirely (the 0.945 number, so 0.055 may be absorbed).
So it's using wrong numbers to justify the effective tariffs. IMO, I don't think Trump cares. I think the equation was a "straw-man".
The funny part is that China yesterday imposed a 34% tariff on US imports.
The “reciprocal” formula does not even consider this. China can impose a 1000% tariff and the formula will not move :facepalm:
> if the US imports $100 million worth of goods and services while exporting $50 million to a country, then the Trump Administration alleges that country levies a 50 percent tariff on the United States
The Trump Administration ignores the services and only looks at goods. So the base is already wrong.
They’re also rolling up local taxes like VAT as Tariffs it seems
Could it be that Trump's main goal is to stay in power? I mean not only for the next 3 years. But beyond.
If we look at his actions from this angle, could they make sense?
Step 1: manufacture a crisis
Step 2: become an emergency dictator "for the duration of the crisis"
Step 3: make sure the crisis never goes away, but it's not so bad that people would revolt
It's basically dictatorship 101. In this case the US happens to be the center of global economy, so a crisis in the US also causes a crisis elsewhere, but that's an irrelevant side effect. The only question is whether Americans will realize what's going on before it's too late.
People forget that he already tried during Covid, when he tweeted that the election should be postponed.
No? The tariffs aren't popular with anyone, have already produced multiple defections from his own party in Congress, and severely undercut the rationale business and financial leaders had for supporting him in 2024. His co-consul Musk, who normally spares no effort to hype up Trump's decisions, has spent the past few days carefully avoiding even indirect acknowledgement of the tariffs. It's really hard to see how this policy could possibly lead to consolidating power.
A bad leader and a dictator are kind of the same. They want things to get so bad that their personal relationship with their tiny number of remaining allies and still profitable ventures look so essential in the short term that they don't have to suppress talk of jumping the J-curve with anything but rational fear of starving.
At this point he gives no fucks about what anyone thinks because the plan is to consolidate the oligarchic power to its maximum, russia style. Winning the hearts and minds is not and never was a part of his plan. And the sad thing is that they will probably succeed.
I have no idea why you Americans are so naive about someone who staged a putsch to give up power voluntarily now that he's got it. You will be a russia style full on kleptocracy by the time he's done with you. And then his heirs will lord over you for generations (unless one of them fucks something up). Godspeed.
I'm just not sure what people mean when they talk about "consolidating power" as something distinct from convincing people that you should have lots of power. "Russia style" consolidation of power under Putin involved quite a lot of winning hearts and minds. Rather than inducing a recession, for example, Putin doubled the Russian GDP over his first 4 years.
I'm not naive about the fact that Trump would like to stay in office after 2028 (he doesn't exactly keep it a secret), but the desire doesn't make him any good at it.
Making people rich and powerful wins their hearts and minds pretty fast.
Look up the military leaders of the USA. Secretary of Defense, Chairman of the Joint Chiefs of Staff, Service Chiefs (Army, Navy, Air Force, Marine Corps, Space Force) ... all appointed by Trump.
You've gotten inaccurate information. Only the Secretary of Defense and Navy chief were appointed by Trump, the rest were appointed by Biden. (The incoming chairman will also be a Trump appointee, of course.)
Who do you think the current Chairman of the Joint Chiefs of Staff is and who appointed them?
The seat is formally unfilled, so the vice chairman Christopher Grady (appointed by Biden) is the current acting chairman. You may be thinking of Dan Caine, who Trump nominated for the position but hasn't yet been confirmed.
> I'm just not sure what people mean when they talk about "consolidating power" as something distinct from convincing people that you should have lots of power.
When Trump threatens to destroy law companies that sued him and gets submission because he has actual power to do it, that is "consolidating power". It does not matter whether people think he should have that power or not, he has it. And he is using it so that everyone is afraid to oppose him in the future. Or sue him.
When Trump fires prosecutors that prosecute criminal acts by him and his friends, he is consolidating power. When he hires loyalist and uses prosecution against his political opponents, ignoring unfavorable laws and judges, he is consolidating power. Because all of that makes sure that it does not matter what people think, they will shut up and wont oppose.
When Trump changes election laws so that students have it harder to vote, he is consolidating power. People who are likely to vote against him will vote less for practical reasons and their opinions wont matter.
> I'm not naive about the fact that Trump would like to stay in office after 2028 (he doesn't exactly keep it a secret), but the desire doesn't make him any good at it.
All he has to do is to harm those who oppose him, so there are less people opposing him. And to ignore the laws he finds inconvenient, which is something he is already doing.
Putin wasn't who consolidated power in Russia, Yeltsin did, when he successfully carried out his coup. Russia stopped being a semi-functional democracy in ~1993, even if it wasn't yet clear to anyone living there at the time.
Putin just stepped into the nest of ~unlimited executive power that was already made for him.
If you put the end date of Russia's democracy 2 years after its start date, I'm not sure it's right to say it ever had one.
People certainly thought they were still living in one in 1996 and 2000, but there was no golden path out of it. The press was fully compromised, the security apparatus was in the hands of one man, and parliament was an irrelevant sideshow.
But you can't see any of this, when you're on the inside looking out - and you can't be certain of it when you're on the outside looking in.
You can't be certain of anything, I suppose. I'm not really sure what you're getting at here. Whether or not Trump has secretly ended American democracy, it's still the case that popular leaders have more power than unpopular leaders and criticizing unpopular decisions is a good way to try and stop them.
Even Ted Cruz criticized them. When I read that I had to check to make sure it wasn't April 1 and that I wasn't reading The Onion.
Are you saying Trump has to be popular to stay in power?
Can't wait for the sniffling Marc Andreessen to claim this is blue skies for small tech.
Trump is only confusing if you think his policies are meant to benefit America.
If you don't believe that, then his policies are terrifyingly not confusing. If you believe his policies are primarily meant to benefit American oligarchs or Russia, his policies are even less confusing.
Withdrawing support for Ukraine and not putting tariffs on Russia, despite putting tariffs on uninhabited "Heard Island and McDonald Islands" is probably the least confused I've been since his inauguration. https://www.theguardian.com/us-news/2025/apr/03/donald-trump...
I disagree on Russia. If that tariff madness goes on for more than a few months Russia is dead. Russia's economy is already completely unsustainable and on the brink. Brent is currently traded at 66USD and if oil prices fall a bit more and stay there that's it for Russia.
It will be fascinating to see what is going to happen with that purely mercenary army recruited from the poor when the money is worth nothing any more.
I’ve been thinking about your second point. Some speculation:
Assuming that Trump, Musk, and Putin each need something from one of each other. Assuming that the siloviki want to quietly rule Russia.
A mercenary uprising would be convenient cover for Putin to endure exile in, say, the Caribbean. Security by FSB, siloviki split up their rule across Russia, etc. Operating from Guyana, Putin could deprive ESA of access to the French Guiana spaceport, handing it over to Musk.
The entire Caribbean fell into 10% tariffs except for two: Guyana (38%) and Cuba (0%).
I mean, Occam’s Razor says he’s just incompetent, honestly. And he’s had a bit of an obsession with tariffs for a _very_ long time. He’s been going on about them since before the fall of the Soviet Union, so unless you’re speculating some sort of secret Putinist rebel cell within the former Soviet Union influencing him 40 years ago, it’s probably just that he’s quite stupid.
Also, this kind of ignores how dependent Russia is on _China_. If this were actually at Russia’s behest, China would hardly even be bothering with mirroring tariffs; it would just call Putin to heel.
No. His policies are all aimed at fighting China.
- He wants to choke them with tariffs (and now has leverage to get the rest of the world to join in).
- They want Greenland to defend the North
- He wants to onshore manufacturing as a strategic wartime capability
Once you understand this, his policies make sense.
And the whole business of putting tariffs on everywhere is so countries can't export from them to evade the tariffs.
So because of this he seems to think effects on markets will be a one time correction that's worth the cost (not to mention is probably shorting it to pieces)
So why the tariff on Taiwan, and why alienate Canada? Is European support not strategically useful?
Who buys American weaponry to fund American military industry when countries don't trust us?
Why would he create the grounds for civil unrest here, which would make decisive military action much harder?
How can we have leverage when other countries are dealing with an O(1) problem while we are dealing with O(N) harm to our economy?
Why abandon Ukraine, a country in a very similar position to Taiwan?
Why talk about ethnically cleansing Gaza, ceding the human rights high ground?
He wants to devalue the USD to make manufacturing more cost effective. For that he needs leverage. Plus tariffs raise money so can fund tax breaks. Read the essay I linked to in my other comment. It's all there.
You completely avoided interacting with the concerns I have in good faith. I understand that's the marketing pitch, I even understand there is some truth to it, but can you try to see the bigger picture and zoom out of an individual policy to see overall strategy? At the absolute best this is incompetence.
Even if we figured out manufacturing, wars are frequently won with technology, and those researches that fled Germany to get away from oppression are now fleeing America because colleges are robbing them of their dignity in expression and attempting to exploit them by taking the fruits of their labor, without the experiencing the "cost" of their own person-hood and individual beliefs.
None of that makes sense as fighting China. Especially not the Greenland thing. He makes China looks good which is quite a feat.
> He wants to choke them with tariffs (and now has leverage to get the rest of the world to join in).
Like, how? You expect the countries to put tariff on Chine, risk to have tariffs put on them by both China and unpredictable USA? He is loosing leverage here rather then gaining it.
> They want Greenland to defend the North
Right now, Greenland sees America as the biggest threat to protect against. They even refused to talk to Vance on his visit.
> He wants to onshore manufacturing as a strategic wartime capability
That is inconsistent with tariffs on everything. If this was the goal, he would had targeted tariffs to ease manufacturing. It would exclude materials for example. It was NOT be calculated as ratio of trade deficit.
And this is also inconsistent with using tariffs as a leverage in negotiations which was your other point. This would require stability and companies being confident the policy wont change in the next few years. In reality, they dont know what will happen tomorrow.
It's all here. This seems to be their playbook: https://www.hudsonbaycapital.com/documents/FG/hudsonbay/rese...
They'll tie the defence umbrella to tariffs and good behaviour.
I mean, if that were the case, then their previous behaviour on Ukraine seems baffling, as it has made the defence umbrella look, at a minimum, kinda tattered. Like, we are now in a world where Poland is talking to France about hosting French nuclear warheads. If you told someone in 2010 that that would be happening in 2025 they’d think you were completely insane.
Who will be dumb enough to believe American security promises anymore? America won't defend anyone no matter what they promiss.
If they wanted to sell defense, threatening annexation of countries they are supposed to have current defensive arrangement with is inconsistent with that. Allying yourself with Russia is inconsistent with that too.
And above all, an attempt to use past help as a reason to make the other country your colony for materials extractions while trying to sell their parts to Russia ... makes you untrustworthy.
Greenland is not threatened by China right now, they are threatened by America.
> The formula for the tariffs, originally credited to the Council of Economic Advisers and published by the Office of the United States Trade Representative, does not make economic sense.
There is a 2024 paper (40 pages) by Stephen Miran, chair of the Council of Economic Advisers, https://news.ycombinator.com/item?id=43589350
The root of the economic imbalances lies in persistent dollar overvaluation that prevents the balancing of international trade, and this overvaluation is driven by inelastic demand for reserve assets. As global GDP grows, it becomes increasingly burdensome for the United States to finance the provision of reserve assets and the defense umbrella, as the manufacturing and tradeable sectors bear the brunt of the costs... Tariffs provide revenue, and if offset by currency adjustments, present minimal inflationary or otherwise adverse side effects.
> Miran.. points to Trump’s application of tariffs on China in 2018-2019, which he argues “passed with little discernible macroeconomic consequence.” He adds that during that time the U.S. dollar rose to offset the macroeconomic impact of the tariffs and resulted in significant revenue for the U.S. Treasury.. “The effective tariff rate on Chinese imports increased by 17.9 percentage points from the start of the trade war in 2018 to the maximum tariff rate in 2019,” the report said. “As the financial markets digested the news, the Chinese renminbi depreciated against the dollar over this period by 13.7 per cent, so that the after-tariff USD import price rose by 4.1 per cent.”
This is the most important doc to read. I'm surprised even the FT don't mention it (although commenters do).
Next step is currency devaluation. Think I'm going to sell all my US stocks despite the recent battering as they're likely to fall further.
Trump was the emotional vote, and he is governing emotionally.
Apparently he's been upset by the trade barrier imbalance since the 1980s.
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no, this is not emotional government
it's just incompetence
real estate allows a lot of bullshit from a leader like this because they're not going to go in and give orders to the structural engineers or the electricians that can actually cause huge problems, the only thing a bullshit artist is going to influence are the outward appearances which are easy and you can't do so wrong that the building falls over. the thin facade can really just be whatever and you can always screw over a new set of suppliers or go bankrupt again and keep going
now the lifelong real estate scammer is taking that facade bullshit attitude which basically couldn't go wrong and directing towards the very impactful machinery of the global economy expecting the same kind of bluster to be the same kind of effective
it's not emotional reactions it's just stupidity, people who didn't understand things voted for the guy that puts on a much better show
and didn't vote for the people who put on a terrible show, displayed zero hutzpah, and have the attitude of "i know better than you" and "i told you so" and make no effort to hide it
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This post reads like its an AI generated bot trying to stur something up.
I'm sorry but Americans including democrats were really harsh on biden on the last election.
Arrange a political debate right after a diplomatic tour, with huge jet-legs sleep loss?
free-trans-surgery with tax payer money?
no wonder that man went "fck this"
I just wonder if democrats simply gave up on the last election
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A pity about the tiny islands with their own TLDs.
Am I surprised they used a list of ccTLDs to get a list of countries? No.
Am I mildly amused to know someone somewhere had to manually remove Soviet Union (.su) from a list of countries to put a tarrif on? Absolutely.
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Why wouldn't they use ISO 3166 directly which doesn't contained outdated countries?
Americans and ISO? That sounds like an oxymoron.
I mean, any "definitive" list of countries is gonna be inaccurate in some way.
For example, according to ISO 3166, Kosovo is not a country, but Antarctica is, which isn't particularly useful in real-world scenarios. Kosovo does have its own ccTLD (.xk, although it's supposed to be a temporary one) and were tariffed.
The reason I've mentioned Soviet Union in particular is that its domain is still active. You can go and buy .su right now, unlike say .yu (Yugoslavia), .dd (East Germany) or .cs (Czechoslovakia), which were deprecated.
Trump said he is open to negotiation on these tariffs. The factor of four difference is likely intentional padding. This way, he can:
1.) Shock the market into dropping several hundred points on the S&P and Nasdaq indices, thereby making quite a bit of money on the way down and then back up again. and
2.) Lower tariffs in exchange for patronage from countries or specific businesses that want a port opened in this new trade firewall.
Issue is that Japanese Prime Minister Shigeru Ishiba visited Donny in February already to avoid tariffs and talk security. Ishiba gave him a one of a kind golden samurai helmet even. It was kind of a big deal.
Donny reneged on that.
Other countries know that Donny is not trustworthy when it comes to deals. He will go back on them at any time.
You can't negotiate with a pigeon.
https://english.kyodonews.net/news/2025/02/b4067f888d9e-japa...
this is a classic way that kings and other authoritarian leaders demand patronage.
A fair few kings also got their heads chopped off due to getting too unpopular with the masses.
I don’t think can attribute the actions of Trump to intelligence or cunning.
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Can anyone explain the reversal of positions on free trade between left and right since the 2000s? Back then, the biggest bogeyman of leftists was globalization and they would protest against free trade agreements and wanted to boycott imports from poor countries because it was exploiting workers there and taking jobs from poor people in rich countries. At the same time rightists loved free trade because it was good for economic growth everywhere. Since Trump 1 when he cancelled some trade agreements, that somehow turned upside-down and leftists since then love free trade while rightists (or at least Trump) oppose it. Trump seems to be like part of a 2000's leftist dressed up as a rightist.
I wonder if the change in leftists is just a reaction to Trump who they didn't like because of his personality. Now everybody's making economic arguments which is nothing like what the older type of leftist would do.
because the constituencies have been largely reversed.
Any time one party focuses their attention on one thing, the other will generally greatly oppose it.
Republicans weren't the antivaxxers - that was largely hippie type democrats - prior to 2020, and weren't really even until the government mandates, just to give one example. Hell, it isn't even an idea but look what happened to Elon Musk. Liberals loved him until he started publicly sharing some conservative ideas, which made them waffle a bit, and now they absolutely loathe him.
This is going to sound like peak HN head-up-own-assery, but I've come to realize that 90% of the population has basically no capacity for nuance, at least politically.
> Hell, it isn't even an idea but look what happened to Elon Musk. Liberals loved him until he started publicly sharing some conservative ideas, which made them waffle a bit, and now they absolutely loathe him.
I mean, this one is just being reasonable. Liberals were for a person X as long as that person pretended to favor the same policies and ideologies. When that person turn out to be conservative, well actually far right political player, they changed opinion on the person. Both Trump and Musk dabbling in the democratic politics and then being rejected by them is a sign of more consistent politics of that side.
When liberals were antivaxxers, issue was not much political. And democrats and other liberals largely criticized these. Politically, liberal antivaxers were minority that lost the political fight in their own party. They were not putting in anti-vaccers into power.
I don't think the positions have reversed as much as you're thinking. Trump began this round of trade wars with a series of indefensible attacks on free trade with Canada, which is clearly good for American workers and has never been unpopular in the US. If Trump had done everything else he's doing here, but used a sensible formula and avoided pointlessly antagonizing Canada, you would see significant crossover support from the left.
The tariffs aren't a "right-wing" position.
They're a Trump position.
They have no basis in principle, ideology, or logic.
They are purely something he wants because he misunderstands what they are and do, and thinks that they will punish other countries more than they will punish the US.
The global economy is a complex system. Far more complex than software. All of the nerds will adjust their pocket protectors and spew their dubious word-salad (for or against), but the fact of the matter is that nobody truly knows what the nth-order effects will be until they happen.
AEI is just another church of Austrian economics--still burning incense for the ghost of Milton Friedman. If you told any of them, "Tariffs, or your mother dies in her sleep tonight.", they would reply in chorus, "Oh well, that's why I keep a picture to remember her by." If any of these people actually knew what they were talking about, they would be fabulously wealthy hedgies like Dalio or Simons, rather than "think-tank" shills.
> All of the nerds will adjust their pocket protectors and spew their dubious word-salad (for or against), but the fact of the matter is that nobody truly knows what the nth-order effects will be until they happen
It doesn't really matter if they analyze the nth-order effects correctly because there is enough wrong with these tariffs that the 1st order effects will be bad enough that the higher order effects won't matter.
Even if Trump is right that the US should not have a trade deficit it only makes sense to apply that to US trade a whole, not to trade with each individual country.
If you apply it to each country independently then you cannot trade with a country that has something you need but doesn't need anything from you. That would exclude circular trade (US buys from A, A buys from B, B buys from the US) for example.
That is a very long way to say, "That's why I keep a picture to remember her by."
There are two silver linings to all this:
1. The evisceration of American soft power will really diminish the direct and indirect harm the US intentionally and unintentionally causes. Just look at China, South Korea and Japan deciding to respond to tariffs together [1]. That is an absolutely astonishing event given fairly recent history. Future retellings of history will correct portray the US as the actual Evil Empire; and
2. All of these actions are doing a ton to break the myth of meritocracy. The people involved in this, at the highest levels, are clearly demonstrating just what complete and utter morons they are. This is why fascism flames out: valuing loyalty above all else results in an administration of sycophantic morons.
This is going to do untold economic harm in the interim but ironically it's accelerating the rise of China as a global power, despite the fact that this administration are China hawks and see these tariffs as a means reducing China's power, which it won't.
[1]: https://www.reuters.com/world/china-japan-south-korea-will-j...
From the first paragraph of your linked article:
> BEIJING, March 31 (Reuters) - China, Japan and South Korea agreed to jointly respond to U.S. tariffs, a social media account affiliated with Chinese state media said on Monday, an assertion Seoul called "somewhat exaggerated", while Tokyo said there was no such discussion.
Given the amount of military and economic power wielded by the US compared to our nearest competitor, we are one of the most benign great powers in history, which is saying a lot about considering the harm that we have caused. Calling the US "the real evil empire" is puzzling when we have still have the regimes in Russia, China and North Korea still at large.
Benign? Native American genocide, the transatlantic slave trade, chattel slavery, segregation, Japanese interment, suplying drug cartels with weapons and money, the havoc that's caused in virtually every Central and South American country, the only nation to ever use nuclear weapons against a foe (twice, and against civilian population centers no less), Korea, Vietnam, the Middle East, all the CIA-backed coups and regime changes, becoming the world's arms dealer, economic imperialism and almost starting World War Three (the Cuban Missile Crisis should really be called the Turkey Missile Crisis).
We also end up consistently on the wrong side: apartheid South Africa, Pinochet's Chile, Saudi Arabia, Israel, the list goes on.
Russia? We enabled the looting of Russia after the collapse of the USSR that directly created Vladimir Putin.
North Korea? This continues a long trend of simply starving countries for the hell of it, just like Iraq [1], Venezuela and Cuba.
China? What's China done exactly? I'll tell you what: it singlehandedly lifted hundreds of millions of people out of extreme poverty in the 20th century. Remove China from the stats and poverty grew in the 20th century. China became an economic powerhouse while having a much fairer distribution of wealth than the US has had or currently has. And they continue to build infrastructure rather than minting a few more billionaires.
[1]: https://www.aljazeera.com/opinions/2022/3/25/lets-remember-m...
Native American genocide - the same thing happened everywhere, for all of history, except we at least gave them reservations instead of killing literally everyone. The transatlantic slave trade - one country among many involved. Chattel slavery - also the country that fought itself to end it.
I could easily go on.
You're looking at the world with very..uh, anti red white and blue glasses.
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This is what i was thinking of yesterday after folks on HN pointed me to the "official formula" from the govt. I could not understand why the "elasticity" parameters were chosen in such a manner as to cancel out. Now it seems it was chosen deliberately to give "room for maneuvering" when the concerned countries inevitably come to the negotiating table; never mind that the formula itself is not economically sound. It also explains why Trump and his Team keep saying the "economic hardships" will be short-term and will get better soon.
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>The trade deficit with a given country is not determined only by tariffs and non-tariff trade barriers, but also by international capital flows, supply chains, comparative advantage, geography, etc.
All of those other things, minus geography are influenced by the terrifs. Terrifs make economic incentives to invest in America, for America to gain comparative advantages, etc.
I mean yeah those are influenced by tariffs a bit (I think it's a safe assumption that the writers of the article know that). It doesn't change the fact that those are mostly driven by things besides US tariffs.
Most people's thinking here seems to be clouded by political ideologies and anger over their stocks being down. Game theoretically Trump has a long history of basically playing the perfect strategy of extreme unpredictability, willingness to take a loss for the purpose of making a point, but sufficient reliability if a deal is agreed upon that he benefits from the most. He's the one who'll brake the last in a game of racing to the edge of a cliff - always. That's why he will succeed and the US will keep the upper hand geopolitically and economically. But the world will change also - that's actually why he's playing so tough. The cake is being divided anew and China _will_ get a much larger portion. His goal is not to prevent this - because he can't - his goal is to secure an as large as possible piece for himself and the US.
The tariffs are for forcing the entire world to renegotiate anything that he is interested in. And that plan will work. They will ALL negotiate, with him holding the upper hand.
PS: Many of the replies suggest that countries can achieve independence of US companies and the US Dollar. While that is possible they forget a key weakness of democracies. Politicians are elected based on short-term benefits and avoidance of suffering. All those required actions to reach independence require serious long-term efforts that detrimentally impact the comfort of the respective voting population at least short-term. That's why those adjustments probably won't happen. Trump knows that and takes advantage of it. Countries not governed by a democratic system are usually led by an elite who'll be indifferent of pretty much anything we are debating here - they just want to obtain more power and wealth. And they'll be achieving this easier when they cooperate with who is factually the most powerful man on the planet.
Look up what happened when he tried to strongarm China in 2018. China simply switched their supplier to Brazil, and never fully returned as a buyer of the American product.
Trump’s ship of fools is tossing the US to the sidelines of the global trade, in particular due to his inability to work with anyone else. EU is rearming, they won’t need “america’s protection”. Latin America (with the only exception being Argentina) is stronger than ever as a trade block, and getting courted by EU and China. Africa is aligning with China for a decade. India is going up the ladder, from US’s cheap labor center to a country producing goods for their own consumption. Even Israel seems completely uninterested in joining the “green list”.
Everyone will find more reliable trade partners, and the American people will be left hanging with this supposed “upper hand” trump supporters dream he has
> Look up what happened when he tried to strongarm China in 2018. China simply switched their supplier to Brazil, and never fully returned as a buyer of the American product.
Okay, let's have a look ... well, this statistic doesn't back up your claim:
https://tradingeconomics.com/united-states/exports/china
> Trump’s ship of fools
Which is actually part of his strategy. You need fools that commit outrageous claims, threats and actions. Then he can play the good cop when it makes sense and just fire the fool. That is basically applied game theory on a meta- and psychological level.
> Everyone will find more reliable trade partners
No, they won't and everybody knows that.
Here u go: https://farmdocdaily.illinois.edu/2024/02/the-united-states-... Plenty of data on the damage he’s done to the US exports. Plenty of data on how Brazil replaced it.
For someone who wants to sound smart citing “game theory”, you surely don’t sound very capable of seeing reality
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> Which is actually part of his strategy. You need fools that commit outrageous claims, threats and actions. Then he can play the good cop when it makes sense and just fire the fool. That is basically applied game theory on a meta- and psychological level.
Firings that support this: Flynn, McCabe, Esper, Bolton
Firings that support Trump’s Razor: Comey, Sessions, Tillerson, Nielsen, Krebs
“The dumbest explanation is often the correct one.” tells us that the increase in information from those moves is uselessly low for both him and us. Nevertheless, if Trump is able to influence the rules, the accumulation of side effects of high strategic value gives his advisers something to work with.
Spouting "game theory" to everything does not mean he will win these bets, tho.
> No, they won't and everybody knows that.
That's delusional. 70% of the world has China as their main trading partner. The world definitely can thrive without Coke, Facebook, Nike and McDonalds.
Since you were so kind to change "shouting" to "spouting" I'll compliment you a reply.
> That's delusional. 70% of the world has China as their main trading partner. The world definitely can thrive without Coke, Facebook, Nike and McDonalds.
How about Amazon, AWS, Microsoft, Azure, Google, Nvidia, 3M, Pfizer etc.?
> How about Amazon, AWS, Microsoft, Azure, Google, Nvidia, 3M, Pfizer etc.?
If all of them leave to be replaced by the alternatives, local or european/chinese, that would definitely be net positive.
Most of these companies can simply move their business to a different country too. The only reason they stay in the US is due to the dollar dominance, which created stability to run a business for decades. If that goes away, what’s the point?
Or people won’t want to deal with him, route around the US, and let us drive off the cliff alone.
Who is people and why wouldn't they want to deal with him when they'll at least short term benefit from it?
All those supposed "people" are like your celebrities who promised to leave the country if Trump gets elected. Nobody left.
This is also a good example of a bad strategy from a game theoretic perspective.
They want X and threaten: if I don't get X then I'll do Y which is going to be bad for you and me. They don't get X and think: well, what's the point of sticking to my threat if I lost anyway. And that's a bluff. Trump would do X nonetheless and by that prove he's willing to suffer himself just to make you suffer as well. This is going to be remembered next time he makes a threat.
Plenty of celebrities & other rich people left. Just because you didn’t read it on Fox News, doesn’t mean it didn’t happen. You can easily google and see.
Trump already backpedaled on his tariffs a handful of times. I agree his strategy is bad, from a game theoretical perspective. He’s eroding trust with partners for nothing at all. Just like he ran all his businesses.
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This is thoroughly studied. He’s grim trigger but fairly good at choosing close to optimal moves when we believe Trump’s Razor.
The trick is that he'll bring his competitors and even partners in a position where they are threatened with suffering at a level of X. Then he'll offer you a deal that makes you suffer Y with Y < X but also Y > 0.
Yet playing a mixed strategy means that—-to maintain unpredictability—-these deals to avoid venal retribution are not always offered. I predict less than 30% of the time; almost all his Pareto-optimal deals are very obscure. The biggest example is USMCA, which he wrote and negotiated. Yet, today he says it was signed by a fool. “The dumbest explanation is usually the correct one.”