I think it's genius. Of course, Trump is taking a gamble, that's probably the way he does business, but he's going with his gut instinct and I think there's a very good chance it's going to pay off. He's certainly put the cat amongst the pigeons! Anyone who did 'O' level history, when I did 'O' level history will have learned how tariffs turned the Wall Street crash into a global depression - until recently, I believed it was case proven, tariffs are bad, free trade good. But look what's happened to the US and Britain over the past 40 years, we've deindustrialised, we're poorer and weaker, we've become subject to the whims of globalist powers that care nothing for our people, our history, our culture. We're up to our ears in debt and in despair about the future. That's what the smart ones, the 'adults in the room' have done to us. How is it bad to level the playing field in favour of American workers rather than Chinese slave drivers? This isn't 1929, the world has changed, old orthodoxies are no longer relevant - this is the time for Trump's tariffs (in my humble opinion).
Excellent summary. What would be useful Liam, is to gain a better understanding of just how much protectionism is out there in the form of tariffs and how much of this is directed at the USA. Listening to MSM you would think what Trump has done is all one way and Trump is the bad guy for being the only person using tariffs. As I understand it a lot of countries use tariffs and other means as a method of protectionism to limit imports from certain countries yet no one seems to complain. Why is this?
I think it's important to recognise that Trump probably has some very specific aims underneath the bluster of tariffs. First, I think he's aiming to supercharge the CHIPS act- the investment may seem substantial until one considers that South Korea is in the midst of a $450 billion fab push, the full effects of which won't be seen until 2042. More generally, its worth starting to look at robots per 10,000 manufacturing workers as a key metric to see who is still going to be around in some area of manufacturing, both at a national and individual company level. Everyone knows about the fab barrier, with its capital intensive wall, but I don't think enough economists outside of China, South Korea and Singapore have stopped to consider how robots are going impose a very similar barriers in other areas like automotive, machinery and industrial equipment, electronics and battery production.
Put simply, Trump wants 'to have his cake and eat it too'- he's aiming for the types of changes to the US economy which only South Korea and Singapore managed to achieve, by very specific policies, incentives and strategies. They were amongst the few who recognised the dangers of an over-reliance on the service sector for value creation, and re-geared their economies for manufacturing which was 20% to 30% of total GDP. Although it's only an opinion, I think Trump is kidding himself if he thinks tariffs alone are going to achieve this strategic aim. It's only going to work if he largely foregoes broader tax cuts for the 0.1% and instead focuses his tax cuts into very specific tax incentives for capital investments. We here a lot about inward investments, but there is a danger that without substantial carrots for machinery and robot investments the new 'manufacturing' in the US will be little more than flat-pack assembly plants for already finished goods, designed to evade tariff structures.
The second element is Germany. I don't know many people have been following developments in Germany, but in addition to German automotive manufacturers being killed by BYD in EV pricing and quality, over a third of German manufacturing are considering offshoring their manufacturing, because of Germany's Net Zero lunacy. Norway is already making noises about the higher prices being forced on their businesses and consumers by the ill-advised policies of Germany and others, and Sweden/France are sure to follow. This represents a strategic existential threat to German manufacturing, in addition to the medium-term cost burden they are facing due to current high energy costs and the negative comparative advantages this confers.
Germans are engineers. They understand probability and impact. And Trump (with his advisors), ever the opportunist, is likely looking to largely reshore major German manufacturing hubs- not just in automotive, but also the chemical industry, machinery and industrial equipment, electronics and battery, and small/intermediate aerospace. Germany will be forced to deindustrialise because of their strategic energy mistakes, and Trump is hoping to make Germany's loss, America's gain.
And in automotive, it's not just German automotive which is in play. Other than China, many of the world's top 20 in automotive have made a strategic blunder in terms of switching from ICE to EV. Here's the thing. An optimistic assessment of the total percentage of global vehicle manufacturing by 2040 is 40% to 50% of all vehicles, given cobalt and lithium potentials, and 50% to 60% by 2050. A more pragmatic analysis puts the figure at 16% to 21% by 2040, and 20% to 27% by 2050. This assessment is based upon 3% vehicle growth per annum. Trump's Team have realised that the 17% to 18% of automotive currently produced in Europe is effectively up for grabs. Trump has realised there is a strong chance of doubling American automotive production in the next ten years, as it becomes increasingly apparent that European electorates will belligerently refuse a shift to EVs or public transport (although they might well be forced by pricing and behaviour change policies to drive less).
There are other areas where few have been paying attention. In December 2024, a bipartisan push passed the SHIPS for America Act. Trump has already been making moves to build upon this initiative. The thing about Trump is that nothing appears rational of the surface. It looked as though he was genuinely aiming for peace in Ukraine and Gaza, but how much of the former was an attempt to get the Europeans to contribute more and realign sentiments within his own base, and how much of the latter was an attempt to realign perspectives in the West, the Middle East and the Gaza populations itself from being sympathetic to Palestinians, to antagonistic towards Hamas? It wasn't widely reported in the West, but the anti-Hamas protests in Gaza only fizzled out because of the brutal crackdown by masked thugs. One wonders whether the sentiment in Gaza is shifting on a more permanent basis.
Thank you Liam. A really helpful summary in understandable language, including for those of us interested, but lacking a background in economics. Much appreciated!
I’m at the pessimistic/we need a reset button end of things in relation to the British Economy. It seems NO political party understands that unless you rewire the British Economy away from welfare and public spending largesses including and public sector employment volumes/ rate (pensions) / mix ( too many non- front line bureaucrat) largesse + ageing population we are doomed.
I also keep hearing that voters want politicians to govern left on the economy / but govern right on other issues (immigration etc).
So it’s time for shock treatment and we are getting that from Trump. So if the Trump tariffs bring forward a full blown fiscal crisis where we are forced to change and sort our s**t out etc economically, then bring it on ….
TRUMP said today when a journalist asked if it was all about pushing other countries into negotiating, "it's not a negotiation until it becomes a negotiation" .
It says to me he is flexible. He runs the USA like a business. He does things. Countries react. But at the end of the day he will probably get to where he wants to be. Reindustrialusation of the United States, China brought into line and strategic industries back in the USA. All providing jobs for American workers.
Dr Joeri Schasfoort has made a very interesting video about this topic, explaining the methodology behind the Trump administration use of tariffs and explaining how and why they could work, though much depends on how other countries react to what is an eminently hostile move.
Definitely not madness. He has thought long and hard about this, and in fact spoken about it ever since he took an interest in public and political life. People saying this do so for two reasons: they have not had the imagination or deep political thought to think of it for themselves, and they have the fixated, brain-washed opinion of the Democrats, that Trump is stupid, irrational and everything evil.
If the exchange rate of the country affected by tariffs falls, then perhaps it’s not as inflationary for the American consumer ? And maybe affected countries will be able to ship their goods elsewhere and develop other markets. Maybe here in Australia we’ll be able to get cheaper imports as China , Japan etc seeks to offload inventory
Amid the universal pessimism, the headline that this is either madness or genius is spot on. Tariffs shouldn’t be taken in isolation; if the strategy of cutting public spending works, Bon yields will fall, growth will pick up and the rest of the world would follow. That would be genius
Thanks Liam. The de minimus decision is interesting (and it isn’t getting much coverage in mainstream media): I wonder if it will be this that is most immediately felt by American consumers.
As a Brexiteer my heart is saying Trump is doing the right thing but my head is saying it didn’t work out in the 1930s and we should protect ourselves asap from the evil empire (Russia, Iran, China and N. Korea).
Agreed great summary no doubt he will have a shopping list, and now the negotiations will commence, he has everyone’s attention each will be looking for the best deal and Trump knows what he wants and more importantly he is keeping his word to his electorate, so now we just have to see how it rolls out, this will sort the men from the boys.
Great summary, Liam. And welcome to Substack!
I think it's genius. Of course, Trump is taking a gamble, that's probably the way he does business, but he's going with his gut instinct and I think there's a very good chance it's going to pay off. He's certainly put the cat amongst the pigeons! Anyone who did 'O' level history, when I did 'O' level history will have learned how tariffs turned the Wall Street crash into a global depression - until recently, I believed it was case proven, tariffs are bad, free trade good. But look what's happened to the US and Britain over the past 40 years, we've deindustrialised, we're poorer and weaker, we've become subject to the whims of globalist powers that care nothing for our people, our history, our culture. We're up to our ears in debt and in despair about the future. That's what the smart ones, the 'adults in the room' have done to us. How is it bad to level the playing field in favour of American workers rather than Chinese slave drivers? This isn't 1929, the world has changed, old orthodoxies are no longer relevant - this is the time for Trump's tariffs (in my humble opinion).
Excellent summary. What would be useful Liam, is to gain a better understanding of just how much protectionism is out there in the form of tariffs and how much of this is directed at the USA. Listening to MSM you would think what Trump has done is all one way and Trump is the bad guy for being the only person using tariffs. As I understand it a lot of countries use tariffs and other means as a method of protectionism to limit imports from certain countries yet no one seems to complain. Why is this?
I think it's important to recognise that Trump probably has some very specific aims underneath the bluster of tariffs. First, I think he's aiming to supercharge the CHIPS act- the investment may seem substantial until one considers that South Korea is in the midst of a $450 billion fab push, the full effects of which won't be seen until 2042. More generally, its worth starting to look at robots per 10,000 manufacturing workers as a key metric to see who is still going to be around in some area of manufacturing, both at a national and individual company level. Everyone knows about the fab barrier, with its capital intensive wall, but I don't think enough economists outside of China, South Korea and Singapore have stopped to consider how robots are going impose a very similar barriers in other areas like automotive, machinery and industrial equipment, electronics and battery production.
Put simply, Trump wants 'to have his cake and eat it too'- he's aiming for the types of changes to the US economy which only South Korea and Singapore managed to achieve, by very specific policies, incentives and strategies. They were amongst the few who recognised the dangers of an over-reliance on the service sector for value creation, and re-geared their economies for manufacturing which was 20% to 30% of total GDP. Although it's only an opinion, I think Trump is kidding himself if he thinks tariffs alone are going to achieve this strategic aim. It's only going to work if he largely foregoes broader tax cuts for the 0.1% and instead focuses his tax cuts into very specific tax incentives for capital investments. We here a lot about inward investments, but there is a danger that without substantial carrots for machinery and robot investments the new 'manufacturing' in the US will be little more than flat-pack assembly plants for already finished goods, designed to evade tariff structures.
The second element is Germany. I don't know many people have been following developments in Germany, but in addition to German automotive manufacturers being killed by BYD in EV pricing and quality, over a third of German manufacturing are considering offshoring their manufacturing, because of Germany's Net Zero lunacy. Norway is already making noises about the higher prices being forced on their businesses and consumers by the ill-advised policies of Germany and others, and Sweden/France are sure to follow. This represents a strategic existential threat to German manufacturing, in addition to the medium-term cost burden they are facing due to current high energy costs and the negative comparative advantages this confers.
Germans are engineers. They understand probability and impact. And Trump (with his advisors), ever the opportunist, is likely looking to largely reshore major German manufacturing hubs- not just in automotive, but also the chemical industry, machinery and industrial equipment, electronics and battery, and small/intermediate aerospace. Germany will be forced to deindustrialise because of their strategic energy mistakes, and Trump is hoping to make Germany's loss, America's gain.
And in automotive, it's not just German automotive which is in play. Other than China, many of the world's top 20 in automotive have made a strategic blunder in terms of switching from ICE to EV. Here's the thing. An optimistic assessment of the total percentage of global vehicle manufacturing by 2040 is 40% to 50% of all vehicles, given cobalt and lithium potentials, and 50% to 60% by 2050. A more pragmatic analysis puts the figure at 16% to 21% by 2040, and 20% to 27% by 2050. This assessment is based upon 3% vehicle growth per annum. Trump's Team have realised that the 17% to 18% of automotive currently produced in Europe is effectively up for grabs. Trump has realised there is a strong chance of doubling American automotive production in the next ten years, as it becomes increasingly apparent that European electorates will belligerently refuse a shift to EVs or public transport (although they might well be forced by pricing and behaviour change policies to drive less).
There are other areas where few have been paying attention. In December 2024, a bipartisan push passed the SHIPS for America Act. Trump has already been making moves to build upon this initiative. The thing about Trump is that nothing appears rational of the surface. It looked as though he was genuinely aiming for peace in Ukraine and Gaza, but how much of the former was an attempt to get the Europeans to contribute more and realign sentiments within his own base, and how much of the latter was an attempt to realign perspectives in the West, the Middle East and the Gaza populations itself from being sympathetic to Palestinians, to antagonistic towards Hamas? It wasn't widely reported in the West, but the anti-Hamas protests in Gaza only fizzled out because of the brutal crackdown by masked thugs. One wonders whether the sentiment in Gaza is shifting on a more permanent basis.
Thank you Liam. A really helpful summary in understandable language, including for those of us interested, but lacking a background in economics. Much appreciated!
I’m at the pessimistic/we need a reset button end of things in relation to the British Economy. It seems NO political party understands that unless you rewire the British Economy away from welfare and public spending largesses including and public sector employment volumes/ rate (pensions) / mix ( too many non- front line bureaucrat) largesse + ageing population we are doomed.
I also keep hearing that voters want politicians to govern left on the economy / but govern right on other issues (immigration etc).
So it’s time for shock treatment and we are getting that from Trump. So if the Trump tariffs bring forward a full blown fiscal crisis where we are forced to change and sort our s**t out etc economically, then bring it on ….
For now, if congress allows the tariffs, it’s looking pretty good. They seem to be working as advertised with little repercussions🤔🤔🙃🙃🙏🙏
TRUMP said today when a journalist asked if it was all about pushing other countries into negotiating, "it's not a negotiation until it becomes a negotiation" .
It says to me he is flexible. He runs the USA like a business. He does things. Countries react. But at the end of the day he will probably get to where he wants to be. Reindustrialusation of the United States, China brought into line and strategic industries back in the USA. All providing jobs for American workers.
And a path forward where US debt is reduced.
Liam great piece, but the AI voice isn't cutting it. Please would you read it yourself a la JRM.
Dr Joeri Schasfoort has made a very interesting video about this topic, explaining the methodology behind the Trump administration use of tariffs and explaining how and why they could work, though much depends on how other countries react to what is an eminently hostile move.
https://youtu.be/1ts5wJ6OfzA
Definitely not madness. He has thought long and hard about this, and in fact spoken about it ever since he took an interest in public and political life. People saying this do so for two reasons: they have not had the imagination or deep political thought to think of it for themselves, and they have the fixated, brain-washed opinion of the Democrats, that Trump is stupid, irrational and everything evil.
If the exchange rate of the country affected by tariffs falls, then perhaps it’s not as inflationary for the American consumer ? And maybe affected countries will be able to ship their goods elsewhere and develop other markets. Maybe here in Australia we’ll be able to get cheaper imports as China , Japan etc seeks to offload inventory
Amid the universal pessimism, the headline that this is either madness or genius is spot on. Tariffs shouldn’t be taken in isolation; if the strategy of cutting public spending works, Bon yields will fall, growth will pick up and the rest of the world would follow. That would be genius
Thanks Liam. The de minimus decision is interesting (and it isn’t getting much coverage in mainstream media): I wonder if it will be this that is most immediately felt by American consumers.
As a Brexiteer my heart is saying Trump is doing the right thing but my head is saying it didn’t work out in the 1930s and we should protect ourselves asap from the evil empire (Russia, Iran, China and N. Korea).
Agreed great summary no doubt he will have a shopping list, and now the negotiations will commence, he has everyone’s attention each will be looking for the best deal and Trump knows what he wants and more importantly he is keeping his word to his electorate, so now we just have to see how it rolls out, this will sort the men from the boys.