Posted on 03/31/2025 6:12:57 AM PDT by RandFan
@PeterSchiff
During the months leading up to the 2008 GFC, the government and mainstream financial media remained clueless about what was obviously coming. They are making the same mistake again.
Tariffs mean fewer goods will come into the country, and fewer dollars will go out. More money chasing fewer goods means higher domestic prices. This is an economic certainty. As import prices rise sharply, demand will increase for domestically produced goods, sending those prices higher too. Meanwhile, lower trade deficits will result in fewer dollars being recycled into U.S. bonds, sending long-term interest rates higher.
Higher consumer prices and long-term interest rates will combine to weaken the U.S. economy, increasing the size of federal budget deficits. Middle-class tax cuts will worsen the problem by not only adding to deficit spending but by directly fueling demand for a diminishing supply of goods.
The Fed will respond to this "unexpected" economic weakness with rate cuts, ignoring the surge in consumer prices as a transitory effect of tariffs. They will also incorrectly assume that lower inflation will be the silver lining to the recession cloud.
All of this will weaken the dollar, compounding the effects of tariffs by making import prices rise even higher. Meanwhile, a weaker dollar and larger budget deficits will put even more upward pressure on long-term interest rates, which the Fed will try to offset with a return to QE, throwing gasoline on an already burning inflation fire. This will not be 1970s-style stagflation. It will be something much worse.
There is a reason Sen. Rand Paul is against the tariffs because it could be a disaster.
If it’s such a disaster, how come all those other countries have tariffs much higher than ours?
“There is a reason Sen. Rand Paul is against the tariffs because it could be a disaster.”
I’m on the fence here - we need to protect capabilities for national defense (something we haven’t bothered doing), and of course I like American jobs.
But if Trump winds up empowering Labor Unions to hold America hostage as they do in other countries, and have done in the US in the past, and also to fund DEMOCRATS, then not so good.
Did they comment on the effect of over $3 Trillion in new investment in this country announced just since Trump took office? Much of it to avoid tariffs that have not even been imposed and never may be?
People overlook what Trump is accomplishing just talking about tariffs, not imposing them, and companies making investment decisions based on what Trump says he could do….not what he has actually done..yet.
Seems like a gross over-simplification.
I tend to think Trump promised them and won hands down so we have to let this play out.
Someone WILL be vindicated in a year or two’s time
Making more things in the US means lower prices and more people employed earning taxable income and bringing people out of poverty or off Welfare, making the government cheaper to run and taxes go further down, making it even cheaper to produce and buy things across the US. Stopping illegals from coming over while kicking out the others will help reduce crime and reduce more Welfare use.
Two can play this game.
I’m willing to risk it. If other countries can charge tariffs and we can’t, how does that help prices?
More jobs will come in and fewer jobs will go out. The US is not as dependent on exports as is China and the EU. In contrast, the US is running a trillion dollar trade deficit with the rest of the world. Other countries will eat the tariffs to stay in the US market. They will lower their prices.
Yeah it is risky. Trump is taking a risk. The markets hate it
In one way you could say incredible fortitude
I hope it works out
Making more quality things in the US.
The quality has to be there. I hope it is and am optimistic that it will be.
Schiff ... always Dooms Dayer.
Time for these countries to stop subsidizing their tariffs.
So what are their suggestions for our exported industries and incredibly vulnerable supply chains?
We need to produce or own goods like we did not so long ago, and all of the other countries can kiss our ass. I’m tired of America last. We need to be more independent.
Trump has done some things to help keep the union thugs from DESTROYING his presidency, so we’ll see how it plays out...but I really hate the idea of letting unions FORCE their workers to fund Democrats (regardless of what the one clown here thinks), even when most union boys voted for TRUMP.
And yet foreign tariffs are designed to undercut American Manufacturing and make it unable to compete. Does that sound like a level playing field? There is nothing free about Free Trade.
Exactly. These people saying tariffs are bad have no clue what they’re even talking about. There’s an intermittent shaking happening but ultimately this is all going to be great for America. And the level of business and Manufacturing coming into this country is going to be epic. So his talk of too few products is BS
Does raising taxes on corporations raise prices too or just raising taxes on foreign countries?
It’s just the short term pain. You need a large scalpel as they say.
Long term it might be fine
But tell that to a politician. Trump is term limited. People like Rand are running soon
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