Comments On "The Mar-A-Lago Accord"

In an attempt to find an explanation for the erratic policy of the Trump administration, people are pointing to the so-called “Mar-a-Lago Accord.” (This short explainer by Torsten Sløk offers one summary.) Although one could imagine that this policy mix is what some members of the White House want, we run into the classic “you can’t get there from here” problem. To the extent the plan would work, it relies upon the world being one of simplified economic models, and the goodwill of other countries.

Sigh, Chaos Continues (8)

Meme "recycled" from Reddit

As I expected, Trump has turned his gaze towards the European Union, and a cycle of tariff/counter-tariff/counter-counter-tariff appears to be starting. (At the time of writing, Trump threatened to put a massive tariffs on booze from the EU in response to EU counter-tariffs.)

Revenge Of The Expectations Fairies

I used to mock the idea of the “expectations fairies” — at least in the context of neoclassical theory. However, Keynes’ “animal spirits” is back, we are running into a situation that does not have a lot of precedents in the post-World War II era. The brain trust in the White House has done a lot of things, but very few of them so far would have macroeconomic impact (outside of countries where US aid was significant). Instead, the issue is the effect of future actions.

Sigh, Chaos Continues (7)

Since my last article, President Deals partially caved in Canadian/Mexican tariffs, but has just announced new tariffs on Canadian products (dairy and lumber, from what I could tell). We also have had reports that Trump had earlier threatened to revise the Canada/U.S. border (i.e., annexation of Canada).

This constant chaos (and existential threats) means that the required re-negotiation of the Canada/U.S. free trade treaty is a non-starter, and the best that can be hoped for are some kinds of “trade cease fire” while Canada desperately re-orients its economy away from North-South trade. At the same time, Europe is dealing with the effective demise of NATO, and the call for nuclear weaponry is growing. Trump also appears increasingly frustrated that nobody cares about his Ukraine “peacemaking” efforts (since he gave the Russians everything he could give, he is no longer of use to them).

Sigh, Chaos Continues (6)

The tariff hammer finally fell on Canada/Mexico, and it is unclear how long the new policy will remain in place (and whether new tariffs will be stacked on top of them). Although the tariffs will have major negative economic effects, the Trump White House is detached from objective reality, and so the negative effects will not force anything.

Sigh, Chaos Continues (5)

The Tariff Week speculation continues, and at the time of writing, it is unclear whether the Tariff Hammer falls on Canada/Mexico (deadline tomorrow). I just want to comment on the Ukraine blow up, which was far stupider than I expected.

There are a few broad scenarios I see going forward, one of which will have hard to predict side effects.

Sigh, Chaos Continues (4)

The crisis continues, following existing trends. Musk is destroying state capacity (and looting) while simultaneously reducing spending very little, and Trump is doing his best to undermine previously allied international relationships while actually accomplishing very little.

On the domestic front, the administration is doing its utmost to destroy confidence and force a recession. Perhaps the plan is that the economy will emerge from the wreckage by around the midterms, so the business press can gush about growth prospects. Although the House managed to get a budget plan passed, it is still not clear that they will agree on anything once the scale of economic damage is clear.