Tag: foreign policy

Tariff Freak Out: Why So Many People Cling To The Cancer Of Globalism

This past week after Donald Trump’s “Liberation Day” announcements the Dow Jones Index plunged by around 4000 points and the global panic was palpable. Social media was rife with nervous naysayers on both sides of the aisle – The leftists are panicking but also cheering because they think crashing markets will turn into public support for the woke commie brigade.  A contingent of conservatives are panicking too, but I’ll get to that in a moment…

My response? Finally this farce of a market is facing a correction and smacking people in the face with five fingers of reality! I applaud the event because it’s something that needed to happen years ago. Most skeptics are wrong on the tariff issue, mainly because they think the stock market matters. It doesn’t.  People are also terrified of tariffs because they think globalism matters. It doesn’t.

This position might upset those who are heavily invested right now, but I would argue they are missing the macro picture and they need to look at the situation from a position of inevitability.  Tariffs and the end of globalism are a necessary outcome.  Here’s why we shouldn’t fear the Reaper…

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Why Comparing Trump’s Tariffs To The Smoot-Hawley Act Is Dishonest

Trump’s tariffs are not designed to encourage Americans to borrow money and maximize their consumption. Nor are they designed to encourage participation in speculative stock market or real estate bubbles. America’s free trade policies encouraged such excesses after the end of the Cold War, and we can’t stand a repeat of the folly. While his critics wrongly invoke the Smoot-Hawley tariff failures of 1930, Trump’s emerging tariff policies, particularly if combined with the appropriate monetary policy, will have much better results and Make America Great Again. 

As Trump’s tariffs are implemented, they will generate revenue for the federal government and encourage investment in atrophied as well as cutting-edge sectors of the American economy. In addition, they will increase the quantity and quality of jobs available for Americans as a whole, will persuade (and are already persuading) our trading partners to adopt fairer and less predatory trading regimes, will arrest a possible slide into recession, and will get our economy moving toward our long-term growth potential of 3 percent (or more) GDP growth per year.

President Trump says “tariff” is one of his favorite words, and historical evidence indicates tariffs work. They worked for the Chinese this century, they worked for the Japanese after World War II, and they worked for the U.S. and Germany in the late 19th century. Back then, American and German growth rates and economic vibrancy radically outstripped the growth rates and economic vibrancy of a free-trading Britain, which, after abandoning its early 19th-century tariffs, adopted the free trade nostrums of David Ricardo and slipped into decline. 

One of the few instances when tariffs failed was during the Smoot-Hawley tariff episode at the beginning of the Great Depression. But there are special circumstances surrounding the imposition of the Smoot-Hawley tariffs that the free-traders hesitate to mention. When the United States raised the Smoot-Hawley tariffs, the U.S. was the world’s greatest creditor, and by raising the tariffs, we prevented others from selling us things so they could make money and pay us back. When they didn’t pay us back, it collapsed the global financial system and helped usher in the Great Depression.

Obviously, today the circumstances are reversed. The United States is now the world’s largest debtor. If we can’t pay back our debts, the global financial system will collapse, which would be disastrous for the entire world. 

Trump’s tariff medicine will put us on a diet, help us produce more, diminish inflation, and position us to manage and decrease our debt. Thus, Trump’s tariffs are not only good for Americans, but they are also good for everybody else across the world. While the Smoot-Hawley tariffs were bad, Trump’s tariffs are good because the relative financial position of the U.S. vis-à-vis the rest of the world is now reversed. This fact must not be overlooked when assessing the wisdom of Trump’s tariffs versus the folly of Smoot-Hawley. 

Furthermore, as Ben Bernanke, the former chairman of the Federal Reserve, taught us, at root, it wasn’t the Smoot-Hawley tariffs that sparked the Great Depression. It was a monstrous policy misstep on the part of the Federal Reserve Open Market Committee. On the eve of the Great Depression, the Fed raised rates and pursued a contractionary monetary policy when it should have cut rates and pursued an expansionary monetary policy. 

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EU Must Buy US Energy to Get Tariff Relief: Trump

U.S. President Donald Trump said late on April 7 that the European Union would need to buy $350 billion worth of American energy to secure relief from tariffs.

Trump was responding to European Commission President Ursula von der Leyen, who said earlier on Monday during a news conference in Brussels that the EU was ready to negotiate a “zero-for-zero” tariff pact on industrial goods.

Asked by a reporter at the White House whether the offer was enough for him to back down on 20 percent duties on imports, Trump said: “No, it’s not.”

“The European Union’s been really tough over the years. We have a [trade] deficit with the European Union of $350 billion and it’s going to disappear fast,” Trump said. “And one of the ways that that can disappear easily and quickly is they’re going to have to buy our energy from us … They can buy it, we can knock off $350 billion in one week.”

On April 2, Trump announced a minimum 10 percent tariff on all trading partners, as well as higher levies on about 60 nations identified by the administration as “worst offenders” in trade imbalances with the United States. China topped the list.

The 27-nation EU bloc is currently facing 25 percent import tariffs on steel, aluminum, and cars, with tariffs of 20 percent due to kick in from April 9 for almost all other goods under Trump’s new policy of responding in kind to countries that he says impose high barriers to U.S. imports.

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Old Video Of Pelosi Echoing Trump On China Tariffs Resurfaces

An old video of Rep. Nancy Pelosi (D-Calif.) urging Congress to retaliate against China’s tariffs on the United States is going viral for its uncanny resemblance to President Donald Trump’s current tariff policies.

Recorded on the House floor in June 1996, the video features Pelosi calling on her colleagues to challenge the “status quo” trade policies that had contributed to America’s growing trade deficit with China. She specifically urged lawmakers to address the disparity between American tariffs on Chinese goods and the higher tariffs imposed by China on U.S. products.

“In terms of tariffs, it’s interesting to note that the average U.S. MFN [Most Favored Nation] tariff on Chinese goods coming into the United States is two percent, whereas the average MFN tariff on U.S. goods going into China is 35 percent,” Pelosi said then.

She then asked, “Is that reciprocal?” before calling the U.S.-China trade relationship a “job loser” for America.

“In terms of jobs, this is the biggest and cruelest hoax of all. Not only do we not have market access, not only do they have prohibitive tariffs, not only are our exports not let in very specifically, but China benefits with at least, at least, 10 million jobs from U.S.-China trade,” she said.

Pelosi went on to point out how the U.S. was only getting 170,000 American jobs out of the relationship at the time.

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Here’s Schumer In 2005 Saying Big Tariffs On China Needed…

In 2005, Chuck Schumer passionately advocated for a 27.5 percent tariff on China, calling their trade policies unfair and saying it had to end.

He was saying the exact same thing Trump is saying now, but ultimately the Democrats under Obama and Biden did nothing about it.

Schumer urged that such a large tariff on Chinese goods “says to the Chinese that their unfair trade policies have got to end. The Chinese have enjoyed a huge trade surplus with the U.S. Every year it gets larger and larger.”

Schumer had joined forces with Republican Senator Lindsey Graham to introduce a ‘China Free Trade Bill’

The rest of what Schumer said:

“Much of that trade surplus is because the Chinese don’t play fair. They don’t let our goods into their country. I can tell you company after company in New York who cannot sell goods in China or can only sell them under impossible conditions.”

“The Chinese make no effort to prevent the ripping off of our intellectual property. These are our crown jewels. The thinking. The great creativity. The great entrepreneurialness of the American business community is just taken, and they shrug their shoulders.”

“And worse of all, the Chinese pile on and add unfair rules that violate free trade. And at the top of that list is the fact that the Chinese peg their currency abnormally low, so their exports get a 27 precent advantage here in the U.S. and our imports get a 27 percent disadvantage when sold in China. Every tenet of free trade, if you believe in it, says they should not peg their currency.”

“What does this mean for America? It means a huge job loss. We have suffered dramatically in manufacturing jobs, service jobs, and other jobs. It means we have a huge trade deficit. It means the dollar sinks to abysmally low levels, threatening our wealth, and it creates chaos in the whole world trading system.”

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Futures Soar On Optimism For Tariff Deals

After three days of big losses and record-breaking volatility, equity futures are rebounding sharply following somewhat soothing comments from Treasury Secretary Bessent (although how long the relative calm lasts is anyone’s guess, given there’s little clarity about what Trump wants in exchange for cutting tariffs). As of 8:10am, S&P futures are 2.9% higher, a bounce which started around the time we informed readers that Goldman’s head of risk of risk had turned bullish yesterday afternoon; Nasdaq futures are up 2.7%, with all Mag7 names higher with Semis and Cyclicals also outperforming. European and Asian markets are also broadly higher. The VIX is down 10 vols below 40, while Chinese ADRs are mixed. Bond yields have reversed earlier losses and are up 1bp to 4.22% with the USD dropping. Todays’ macro data focus is the Small Business Optimism report which saw sentiment tumble to 97.4 from 100.7 the lowest since the Trump election (Hiring Plans also slumped; these tend to have a lagged but positive correlation to NFP).

In premarket trading, Nvidia is leading the Magnificent Seven higher (Nvidia +4%, Amazon +3.3%, Meta +3%, Tesla +3.0%, Alphabet +2.5%, Apple +1.6%, Microsoft little changed). Health insurance stocks are rallying after the Centers for Medicare & Medicaid Services finalized a 5.06% average increase in payments to Medicare Advantage plans from 2025 to 2026, an increase from its earlier projection (Humana +14%, Alignment Healthcare +10%, CVS +8.8%, UnitedHealth +7.2%, Centene +4.9%). Here are some other notable premarket movers:

  • Agco Corp. (AGCO) rises 2% after Citi upgraded the agricultural equipment company to buy, saying that the company is “favorably positioned given its ~65% exposure to Europe and South America, which we anticipate recovering ahead” of North America.
  • Blackstone (BX) rises 3% after the private equity firm is upgraded to market outperform from market perform at Citizens.
  • Chegg (CHGG) falls 2% as JPMorgan downgrades its rating to underweight, saying the education technology company is facing secular headwinds.
  • CME (CME) rises 2.5% and Charles Schwab (SCHW) gains 3.4% after Morgan Stanley upgrades its ratings across exchange operators and brokers in a hunt for more defensive exposure.
  • El Pollo Loco (LOCO) rises 10% after receiving an unsolicited, non-binding indication of interest from Biglari Capital Corp.
  • Eli Lilly & Co (LLY) climbs 2% after Goldman Sachs upgraded the obesity drugmaker to buy, citing a “compelling entry point into the sector’s premier topline grower” at current levels.
  • Levi Strauss (LEVI) jumps 11% after the apparel retailer maintained its full-year outlook in the face of sweeping new US tariffs that are poised to significantly raise costs for multinational apparel companies.
  • Marvell Technology (MRVL) climbs 4% after Infineon agreed to buy the chip designer’s automotive networking business for $2.5 billion. The deal makes sense given the firm’s strategic focus on artificial intelligence, analysts say.
  • Nu Holdings (NU) rises 4% after JPMorgan upgraded the bank to overweight, saying “even in our more conservative estimates we see Nu growing earnings more than 30% in next 3 years, something hard to find.”
  • Teradata Corp. (TDC) rises 4% after Morgan Stanley upgraded the database management company to overweight, saying “we acknowledge the company remains a model in transition with risk of extending sales cycles,” but at the current valuation, “we believe this is more than priced in.”

Traders are dipping back into risk assets after one of the most brutal selloffs in years, with some taking hints that President Donald Trump might be willing to ease his position on trade terms after Japan pushed ahead with talks. That sent the Nikkei 225 index to a 6% surge. Goldman traders are turning outright bullish anticipating a big bounce in stocks here, with many citing expectations that Trump will cut trade deals.

“The Trump administration is signaling his openness to trade deals,” said Elias Haddad, a strategist at Brown Brothers Harriman. “Regardless, the pervasive uncertainty created by continuously changing US tariff threats and the scope of potential retaliatory measures remain a major blow to the global economy. Bottom line: relief rallies in risk assets will likely be short-lived.”

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Trump’s Reciprocal Tariffs Prompt Japan Trade Negotiations with U.S.

President Donald Trump’s reciprocal tariffs have helped open trade negotiations between the United States and one of its key economic partners — Japan.

Last week, Trump announced reciprocal tariffs, a policy that has the United States set tariffs based on the rate that each country in the world imposes on the U.S. For Japan, the tariff rate with the U.S. is now 24 percent.

As a result, Japanese Prime Minister Shigeru Ishiba is looking to negotiate trade with the Trump administration.

“Countries from all over the world are talking to us. Tough but fair parameters are being set. Spoke to the Japanese Prime Minister this morning. He is sending a top team to negotiate!” Trump wrote on Truth Social. “They have treated the U.S. very poorly on trade. They don’t take our cars, but we take MILLIONS of theirs. Likewise, agriculture, and many other ‘things.’ It all has to change, but especially with CHINA!!!”

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Taiwan Offers Zero Tariffs and More Investment in U.S.

Taiwanese President William Lai Ching-te on Sunday proposed zero tariffs, lower trade barriers, and more investment in the United States instead of retaliating against President Donald Trump’s tariff increases.

President Trump’s tariff announcement on Wednesday included 32 percent on all Taiwanese exports except semiconductors, which are Taiwan’s most celebrated and economically significant product.

Trump had threatened in March to include Taiwanese semiconductors on his tariff list, because he said Taiwan “stole” the industry from America with unfair trade practices.

“They stole it from us. They took it from us, and I don’t blame them. I give them credit. I blame the people that were sitting in this seat because they allowed it to happen,” Trump said in March.

The president’s position on Taiwanese semiconductors softened a little after the island’s biggest chipmaker, TSMC, pledged to spend $100 billion on five new semiconductor factories in Arizona over the next four years.

Officials in Taipei were stunned when Trump slapped 32-percent tariffs on everything except semiconductors last week. Taiwanese cabinet spokeswoman Michelle Lee called the tariffs “deeply unreasonable” and “highly regrettable.”

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We Didn’t Start the Trade War—We’ve Just Finally Joined It

When President Donald Trump slapped a fresh round of tariffs on European and Asian imports, the professional hand-wringers and legacy press clodpolls sprang into choreographed action.

Headlines and television anchors blared warnings of trade wars, economic isolation, and diplomatic fallout. The bureaucratic priesthood that worships at the altar of “free trade” without reciprocity—from Brussels to Brookings—launched into familiar homilies: tariffs are regressive, Trump is reckless, and globalism is gospel.

But let’s pause the hysteria momentarily and apply something vanishingly rare in today’s media-industrial complex: perspective.

The prevailing orthodoxy treats tariffs as anathema to prosperity—an outdated relic of 19th-century mercantilism. But this overlooks a simple truth: for trade to be free, it must also be fair. For decades, American policymakers—both Democrats and Republicans—have tolerated a grotesquely asymmetrical global trade regime that has hollowed out the American industrial base and made us dangerously dependent on foreign powers, friend and foe alike.

Trump’s critics are wrong. These tariffs aren’t a calamity. They’re a much-needed course correction

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Art of the Deal: EU Offers Trump ‘Zero-for-Zero Tariffs’ on Industrial Goods with United States

EU Commission President Ursula von der Leyen said on Monday that the bloc has offered a “zero-for-zero tariff” trade arrangement on industrial goods with the United States in a bid to avoid a full-on trade war.

While the EU chief continued to condemn the reciprocal tariff measures enacted by U.S. President Donald Trump to rectify the long-standing transatlantic trade imbalance, as pressure from the markets began to take shape, Von der Leyen and other top eurocrats expressed willingness to negotiate with the White House.

“We stand ready to negotiate with the US,” the EU president said. “We have offered zero-for-zero tariffs for industrial goods as we have successfully done with many other trading partners. Because Europe is always ready for a good deal. So we keep it on the table.”

However, the German politician did not address other significant areas of concern expressed by the Trump administration, such as restrictions on American food imports or, perhaps more significantly, on EU tariffs against U.S. made automobiles, which currently stand at around four times the rate European cars are taxed when sent to the United States.

Von der Leyen warned that Brussels is “prepared to respond through countermeasures and defend our interests if the trade dispute continues.” The EU chief said that Brussels will take a two-pronged approach towards the Trump tariffs, firstly by reducing internal barriers within the bloc — as opposed to reducing further barriers with the U.S. — and of “diversifying” Europe’s trading partners.

“This is why we are deepening our relations with our trading partners: You know the deals we have done with Mercosur, Mexico, Switzerland, and we are working with India, Thailand, Malaysia, Indonesia and many others. With that, we want to be very clear: Europe stands together for our businesses and with our businesses for all Europeans in the European Union and beyond,” she said.

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