I wrote in earlier posts about the genius of Trump’s tariffs in turning globalism on its head reestablishing American hegemony, the swimming pool analogy of increasing private spending while decreasing public spending, and even the potential risks with tariffs if not correctly approached in posts on the counterfactuals and the potential “carpenter problem.”
Here I just want yto clarify that at this point the game, so to speak, is effectively over and its outcome definate–Trump wins. There are still risks in the US economy and perhaps volatility but overall Trump has won. If this were a game of four dimensional chess you’d have to–and I say this from the vantage point of this blog which stays politically neutral–ackowledge that the game was polayed masterfully and Trump won.
The reason I say this is quite simple. The new normal for foreign goods coming into the US is 15 per cent–a huge number now seen as the rule–at the same time free trade has actually, and this is incredible, expanded as country after country is now opening its markets to American goods. Huge flows of private capital has been pledged that will juice the economy in the US for years to come. But that’s not the deeper reason. THe deeper reason is that with the Japanese and European trade deals having been reached we are past the tipping point.
By tipping point which is a crucial concept I mean the following. The deeper weakness with tariffs was all along that if not enough countries made a deal than the whole effort could collapse and the only 2 outcomes would be either global chaos and recession or they would have to be removed. Taiffs then would have failed. But once enough huge economic partners signed on board all other countries would face an impossible dilemma. Either reluctantly make a deal or give to the competitive trading blocks a huge advantage. We have now crossed that threshold which is a huge event only partially understood by the public and media.
Take e.g. Asian countries and that region. With Japan, Vietnam, Indonesia, and the Phillipines having reached a deal can Korea really afford not to. How will Korean electronic and auto companies stay competitive with their European and Japanese rivals if they are the odd country out? Can India really afford to not makev a feal? Can VChuna risk all the outsourcing business going to other places in Asia?
More importantly with the two huge economic powerhouses of Japan and the European Union and United Kingdom with trade deals can China afford to be the one huge economic powerhouse that has no deal?
I could go on and on about the position of other countries now and why they more or less have to make a deal. Even if they don’t, however, the result is the same: Trump has made a deal with a large enough amount of the global trade system that the U.S. effectively wins. Game over. Checkmate. Or more importantly it’s like a great chess player now being up a queen. Enough said.
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