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.)

So long as his focus was solely on Canada, China, and Mexico, it was possible that the trade war would be somewhat contained. This is now a global trade war, with the United States taking on pretty much everyone.

Although the United States has a relatively closed economy, there is still going to be a multiplier effect from the traded goods sector. I do not claim to be an expert on the Great Depression, but my understanding is that the trade war was multilateral — pretty much everyone wanted to protect their domestic trade versus all international competitors. The current situation is different — the United States is deliberately turning itself into a pariah among democratic nations. This is mainly dangerous to countries that made the mistake of sharing a border with the United States, but other countries can more easily redirect trade flows. Meanwhile, the entire traded goods sector in the United States is facing a wall of lost developed markets.

Since the White House is currently completely cut off from critical feedback, there does not appear to be any mechanism to stop Trump from posting his way to over 100% tariffs on pretty much everyone in a matter of weeks. April 2nd was supposed to be Tariff Judgment Day, but the speed of posting may mean that tariffs may have already peaked by then.

At the time of writing, I do not know what happened between the Canadian team and U.S. Commerce Secretary Lutnick. Lutnick was publicly demanding that Canada kowtow to the Americans, which is an insane reading of the mood of Canadians at present. The meeting could be a disaster, but it is possible that the ongoing collapse of equity markets might moderate the Americans’ imperialist ambitions.

Also at the time of writing, Russia has signalled that it would reject a 30-day ceasefire. The Russians maximalist ambitions was always the stumbling block for any ceasefire. The extent to which Trump will rotate to support Putin after he makes a mockery of Trump’s peace plan remains to be determined.

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(c) Brian Romanchuk 2024