More On Tariffs And Big Pictures

Yesterday I spent a lot of time puzzling over the geopolitical scene—Trump’s threats of war on Iran and the likely Sino-Russian responses—as well as institution of Trump’s tariff plan. These reflections were spiced by the afternoon news that Laura Loomer has taken over American NatSec policy—well, they say personnel is policy, right? So if Loomer now tells Trump who to hire and fire it follows that this disturbed woman now is in charge of NatSec policy. As I explained in a comment, it doesn’t matter whether Loomer is right about some or even all of the NSC staffers she had fired. This is not the way a presidential administration ought to run. I assume that I would want many of the same people at the NSC replaced—including, or starting with, Mike Waltz. That’s all on Trump for having hired Waltz in the first place, presumably at the bidding of his financial backers. But replacing Waltz’s people with Loomer’s choices is simply out of the frying pan into the fire. All this works against Trump’s true big picture plan.

Moving on, I’ll add a few words on geopolitics before getting to the matter of Trump’s tariff plan—because, again, the geopolitical nonsense directed by Zionists is a massive hinderance for Trump. Russia and China are weighing in on Trump’s planned attack on Iran—we have to assume an attack is planned, based on his rhetoric—and they’re doing so in strong terms. Yesterday I reiterated speculation that the Chinese blockade and attack exercises around Taiwan might well represent a message to Trump on what might happen if he attacks Iran. That is in the context of my contention that Trump’s attack would likely be illegal under international law because the NPT (non-proliferation treaty) doesn’t provide for US attacks on countries it selectively accuses of violations. That’s an important consideration, since Putin places great emphasis on legality, and nowhere more than in his decisions on war and peace. So, Trump will need to take this seriously:

Russia Warns Against US Strikes On Iran Nuclear Sites: 'Catastrophic & Illegal'

My guess is that the to-this-point somewhat muted reaction of Russia and China has been because they don’t want to back Trump into an escalatory corner from which he would find it politically difficult to escape. However, Trump’s reckless rhetoric has forced a strong reaction:

The Russian Foreign Ministry warned on Thursday that US threats of attack against Iran are "unacceptable" and could result in a "catastrophe".

"The use of military force by Iran's opponents in the context of the settlement is illegal and unacceptable. Threats from outside to bomb Iran's nuclear infrastructure facilities will inevitably lead to an irreversible global catastrophe. These threats are simply unacceptable," Foreign Ministry spokeswoman Maria Zakharova said.

Russian Deputy Foreign Minister Sergei Ryabkov also told Life magazine that the "consequences of this, especially if there are strikes on the nuclear infrastructure, could be catastrophic for the entire region."

…

Regarding tension between Tehran and Washington, Ryabkov said Russia "condemns US threats." The Russian Foreign Ministry comes after US President Donald Trump renewed his threat to attack Iranian nuclear facilities.

‘Nuff said. On to tariffs. I repeat, I’m not an economist, so all I can do is present alternative views that may not get a lot of play in the MSM.

Yesterday I quoted Gilbert Doctorow at some length regarding the possible Sino-Russian responses to a Trump attack on Iran. However, at a certain point in his interview with Judge Nap, Doctorow brought up the subject of the Trump tariff plan. Judge Nap abruptly cut Doctorow—preferring to get a mainstream take, later, from Jeffrey Sachs—but not before Doctorow could blurt out that the Trump tariffs are part of an overall plan that includes near-zero income taxes. IOW, we finance the government through tariffs—I kind of fiscal originalism—while offsetting the like price rises with massive tax cuts. Of course there are all sorts of moving parts in international trade and it could prove difficult to foresee all the consequences of the changes in tariff policy, but adjustments can be made. For now, it appears the Trump tax cuts will remain in place and further cuts may come. At the same time, there is a certain flexibility apparent in the tariff regime which Trump isn’t emphasizing—preferring the blustering rhetoric:

Philip Pilkington @philippilk

The US is legit sucking in as much gold as possible as it decouples from its former vassals.

5:08 PM · Apr 3, 2025

Interestingly, back during the election season, PP was on the side of the Conventional Economic Wisdom (perhaps an oxymoronic concept), although his reference to “tariffs alone” was a sort of escape clause:

Tariffs Alone Won't Counter China and Rebuild U.S. Industry | Opinion

Basically, in this article, PP argues that Trump overestimates what “protectionism” alone—tariffs—can accomplish, while risking high inflation through income tax cuts. The obvious reply—strictly off the top of my head—is that the income tax cuts would be designed to balance out with the tariffs. Of course, PP would still have the argument that “tariffs alone” aren’t the answer because they’re limited to “protectionism.” His policy preference was, and still is, to balance trade.

Between 1980 and the mid-1990s, trade imbalances in the world economy hovered around 1 percent of world GDP. By the mid-2000s, due to an aggressive round of globalization, they had roughly doubled and have remained at at elevated level since.

These trade imbalances explain everything from the rapid rise of China to the hollowing out of American manufacturing. They are real problems, and the Trump campaign is right to highlight them. The question, however, is whether increased tariffs and protectionism are the best way to deal with these imbalances.

…

Rather than return to the tariff policies that met with minimal success in the 1930s, we advocate dusting off an innovative policy idea that was floated at the 1944 Bretton Woods Conference that created the post-war monetary and economic system. This proposal is known as the "bancor."

The bancor is a plan for an international clearing system that imposes rules on world trade. These rules are aimed at preventing countries from running trade imbalances while at the same time avoiding curtailing free trade. They would prevent imbalances in two broad ways. First, countries that run persistent trade surpluses—as China is currently doing—are charged interest on their earnings. This interest is transferred to countries that are running trade deficits to help them develop their infrastructure and industry. Secondly, countries that run trade imbalances past a certain magnitude are forced to revalue their currency to eliminate the trade imbalance.

In 1944, the United States rejected the bancor plan because it ran large trade surpluses—today the benefit for America is obvious: managed free trade is the best shot the country has at rebalancing its economy and recovering its domestic industry. But what about China, which, like the United States in 1944, is benefiting from an unmanaged system? We argue in the report that it is strongly in China's interest to avoid an ongoing trade war with the United States. Signing onto the bancor proposal would impose short-term penalties on China, but in the long run the balanced world system it would create would allow both China and the United States to prosper.

Currently, PP appears to have come around to the idea that the Trump tariffs may be designed to do exactly that—correct trade imbalances. It isn’t the full “bancor”, but maybe it’s a start. I’ll quote from his tweets of the last two days:

Looks like the Trump admin’s tariffs are based on price elasticities of demand and are geared to reducing the American trade deficit to zero. Say what you will about the policy itself. This IS the way to calculate YOLO tariffs.

The tariffs are designed to close the US trade deficit. Judging them any other way misses the point. Are they good policy? Maybe, maybe not. Are they calculated properly to aggressively close the US trade deficit? Yes, they are.

The goal is to rebalance trade. For this goal the tariffs are designed correctly, no matter how you assess the viability of the overall policy.

Replying to @philippilk:

And if their goal is to balance trade, that the trade deficits are more important than the specifics of the other countries’ tariffs.

Liberation day might precipitate the death of USD hegemony. But it will likely be slow. If countries flood the market with USTs their currencies rise in value, exponentially increasing the impact of tariffs and creating a potential depression.

Bloomberg whining this morning that global trade should be roughly balanced. The idea that global trade should be roughly balanced was true throughout human history until 1971 when the USD funny money machine was switched on. The eXpERt class are beclowning themselves.

In the short-term there is no doubt that the main victim of the YOLO tariffs are the ex-vassal europoors. These clowns just can't stop losing. They have no strategy except coping and seething. Weakness breeds contempt. I hope we can get rid of the contemptuous rotten oligarchy.

Oil continues to crater. Has the Trump administration engineered lower oil prices to offset the inflation caused by the tariffs? It’s possible.

Me: If so, Russia—which has some of the lowest oil production costs in the world—is unlikely to be greatly affected. Is this part of the reason why Trump has been talking trade cooperation with Russia? PP has that angle covered:

Kirill A. Dmitriev @kadmitriev

Holding key  meetings in Washington, D.C. on April 2–3.

Open, productive dialogue between Russia and the U.S. isn’t optional — it’s essential.

Global stability and peace depend on it.

Russia-US economic cooperation is about to begin. There’s a saying popular in DC: “If you’re not at the table, you’re on the menu.” The EU are not at the table.

Oh look, OPEC+ is pumping out oil as Russia meets the US on future economic cooperation. TDS, which is spreading fast, is going to wreck peoples’ ability to see multipolar developments moving forward.

Again, whether you think the tariffs were a good way to do this is largely irrelevant now that they're in place. But the Trump team has competent economic advisers. Are they a bit crazy? Maybe. Do they understand what they're doing and the consequences? Yes.

Boomers raging.

“The Trump administration has signalled that it is deadly serious about rebalancing trade, which means that the excess dollars will stop flooding world markets. If this happens, much of the stock market’s current business model will no longer be viable.”

“The US is taking an enormous gamble. This new strategy, then, can be understood as a high-risk gambit to get the country on a stronger economic footing in an increasingly multipolar world.”

I’ve saved the best for last but, unfortunately—because I can’t embed tweets and couldn’t find the video on Youtube—you’ll need to click the link to go to an excellent 14 minute video that explains why all this econ chatter is really about real human beings. The video explains why the American Conservative Movement—a marriage of Social Conservatism with Libertarianism (Economic Liberalism) is no longer viable but has screwed over normal people. Do yourself a big favor and listen to PP’s speed reading carefully:

Gerard Holland @gerardgholland

This is excellent from @philippilk - unchecked economic liberalism is an inherent market failure for family life.

The market wants us to work as much as possible and consume as much as possible - that pesky spouse and kids just get in the way. Better to just import strangers from around the world to broaden the tax base and consume digital slop with transient partners in your down time instead.

Quote

Philip Pilkington @philippilk

My short talk on why family policy and demographic issues will destroy the “fusionist” compromise in the Western conservative movement at the @InstituteDanube family policy conference. Social conservatism + economic liberalism = no longer viable. Fundamental changes coming!

4:22 / 14:07

6:13 AM · Apr 4, 2025

Trump’s big plan is to replace the American Conservative Movement—which has, in any case, betrayed normal people, the base for real conservatism. Some call it Populism. What stands in Trump’s way? The Anglo-Zionist empire. If Trump can break out of the Zionist cage he appears to be stuck in, he has a chance to MAGA and go down in history as one of the greats. If. Pray that Trump can break free.