Donald Trump’s fantasy explanation of how tariffs work might rouse the base to yet another cheer, which is what it was designed for, but now that pipe dream is going up in smoke as the reality of world economics hits home hard. Friday morning China announced it’s own imposition of tariffs of between 5% and 10% on $75Billion in U.S. goods. That announcement sent ripples through Wall Street, where the Dow Futures was glowing green, and then immediately flipped to red. Apparently, that threw Trump over the edge, because he immediately went for Jerome Powell’s jugular.

Then the Toddler in Chief really threw a tantrum. We don’t need China at all, so there. Yeah, great idea. Let’s stop dealing altogether with the world’s second largest economy. Shrewd thinking.

Now American companies are ordered to find an “alternative to China.” Great. Is anybody in contact with economic powers on other worlds, Mars maybe? Because Donald Trump seems to have exhausted all the possibilities on this globe and so now he’s ordering companies to find markets elsewhere. And then there’s this tag along notion to the post office.

We are “MUCH larger” than China. Not if we keep taking this pounding. And China timed this announcement perfectly. Jerome Powell was due to speak from Jackson Hole today and the announcement preempted his speech. Trump is also set to fly to the G7 summit later today and this was done to rattle him — which clearly worked. The man has the brains and instincts of a fruit fly. He reacts impulsively and immediately, without talking to anybody or getting a grasp on the issues. And this is his mind set flying off to an international summit?

And things are a lot worse than you think. Mike Pompeo was making a lot of noise a few weeks ago and intimating possible military action against China. For some reason that didn’t get the press coverage it should have. Axios:

When Secretary of State Mike Pompeo and Defense Secretary Mark Esper visited Australia earlier this month, they delivered an unequivocal message to senior Australian officials: The U.S. plans to forcefully push back against China’s destabilizing behavior in the Asia-Pacific.

  • Some left those meetings with the impression that the U.S. was serious about confronting China militarily.
  • Between the lines: This visit was important for the signals Pompeo and Esper sent, but didn’t get as much U.S. press attention as it deserved. (See Bloomberg’s Aug. 4 story here.)

The bottom line: So if not a China trade deal, what then is left to juice Trump’s economy and stave off recession?

  • Tax cuts? Not going to happen.
  • Infrastructure? Not going to happen.
  • Federal Reserve rate cuts? Probably. But how much will these expected cuts actually achieve?

Trump’s house of cards is collapsing. He’s going to have to get a tutorial in how economics actually works and then he’s going to have to dial down the rhetoric and stop lying — and what are the chances of that? The reality TV actor isn’t going to be able to improvise his way out of this one. But the good news is, that he might finally have enough rope to hang himself, and that is so devoutly to be wished.

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    • I’m wondering how Trump’s war with China is going to affect Ivanka’s factories, and all the trademarks that the Chinese gave her. That might be interesting to know.

      • Which sort of makes one wonder if all this is for show. Keep in mind, Trump alone doesn’t run our foreign policy, that is Trump and Vlad, with a serious imbalance of power in that relationship. Just as Russia is strengthened by our weaknesses, it is also strengthened when China is weakened. Hence, what could be better than a trade war, from Russia’s perspective?
        I honestly thinks this hurts Trump and Ivanka business-wise. Which means that I suspect he has been “encouraged” to start this trade war and start bad-mouthing China. Recall, he tried to sluff off all the election inference on China, too. I think this is coming from Vlad. When historians look back, this trade war, plunging us into recession, might well be the biggest single thing that Russia “got” out of controlling US policy. They might well point to the country being “sold out” by a madman in hock to the Russians. Sad.

        • If you’re on point, Jason, then Vlad is far dumber than I thought he was. One of the advantages of having the second largest world market is EVERYONE wants to do business with you. So China is swimming in alternatives for getting what they want. Yes, they have a slowing economy and civil unrest in Hong Kong at present. But unlike the US government at the moment, their trade policy isn’t run by idiots either. They’re likely better prepared for hard times than we are.

          And none of this is actually strengthening Russia, not with vast Siberian wildfires that rival Brazil’s, their own civil unrest in Moscow that refuses to leave, an oil-dependent economy undergoing a slow motion trainwreck and quagmires in Ukraine and Syria. Oh, did I forget the exploding nuclear missile in Arkangel?

      • Pretty sure those trademarks are one of the next phases of escalation. It’s a bit like slowly choking someone, gradually increasing the pressure to cut off the oxygen.

  1. I think you do a great disservice to fruit flies by comparing them to “The Orange One”!! Maybe Troglidyte or Gargoyle would be a better analogy. Other then that your analysis is spot on…

  2. I think it’s safe to say, people, that the moment I’ve been waiting for has arrived. Trump is looking to wreck the world economy that may give us the Second Great Depression at long last. And all this because he wants to avoid a little jail time…

    Still, I gotta ask…what the hell was Pompeo thinking threatening military action? Japan and South Korea are rehashing old grievances right now, Trump has practically installed a backdoor for the Chinese with his witless North Korean lovefest and nobody with enough power to fight back–like, say, the Chinese military–takes Trump’s threats seriously. We’ve been set up to fail.

  3. As much as I don’t want us to be in a recession I’m wondering what it would do for Trump’s chances at getting re-elected if he totally wrecked the economy. Isn’t his college degree in economics? I wish the 25th amendment could be invoked…

    • The degree, even though from an Ivy League school (Wharton is part of Penn) doesn’t mean he learned anything. In fact, one of his professors who’s name I can’t recall but was widely known in Economics called Trump “the dumbest goddamn student I ever had” and this was thirty years ago when Trump was only famous nationally because of his (ghost written) book The Art of the Deal. “W” got his undergrad degree from Yale if you recall, and he also more or less bragged about getting “Gentleman’s Cs” as he wasn’t much into actual school. Money and power can get youth of privilege through to an Ivy League degree especially back when Trump & Bush Jr. were in school and there were no personal computers, much less an internet. Trump only got into Penn because his daddy made a big donation – unlike W he wasn’t admitted even as a “legacy.” It’s not a stretch to think that like W, Trump didn’t bother too much with schoolwork & studying. If he did actually learn anything back then (btw for years he got away with implying and people assuming he was a graduate of the Wharton School of Business & therefor had an MBA but he only has a Bachelor’s degree from Penn that included undergrad courses at Wharton) he’s long since forgotten it.


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