Say we get Trumps 10% tarrifs.

What's the correlation here. If tariffs are inflationary does this increase the odds we end up raising rates, and we see yields go up and prices go down again?

And if so, I would assume it would take some years to run thru the system or would the bond market react prior to any impact on inflation and rate changes?

Tariffs may be inflationary but exports are hurt by higher rates. If exports and tariffs seek to accomplish the same thing (domestic production) then politically you would see a push for lower rates/higher bond prices.

If we raise rates because we've caused price inflation through tariffs then we're just doubling down on American consumers paying the price for domestic regulatory burden and bad tax policy.

Sims said:

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Tariffs may be inflationary but exports are hurt by higher rates. If exports and tariffs seek to accomplish the same thing (domestic production) then politically you would see a push for lower rates/higher bond prices.

If we raise rates because we've caused price inflation through tariffs then we're just doubling down on American consumers paying the price for domestic regulatory burden and bad tax policy.

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I don't see how it would increase exports. Other countries without the tarrifs can still get the less expensive Chinese goods.

Trump's goal is to incentivize manufacturing to come back so that we can become a net exporter again. Really, the only way out of our mess without a depressionary, deflationary, deleveraging, would be to have our economy completely shift back to a net producer and net exporter economy. Unfortunately, this process would need pretty across the board all hands on deck kind of buy in which we dont have. So it's relatively pointless to punish the country with the short term negative impacts of tariffs waiting for the next guy to come in and dismantle the long term goal it was attempting to achieve.

Even if we could promise to keep all the policies intact it's gonna take long time for companies to lay down the sorta investment and time it takes. Even with more friendly manufacturing policies the Chinese labor cost is basically free by comparison.

I have my doubts it would happen to any meaningful degree no matter what.

jamey said:

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Even if we could promise to keep all the policies intact it's gonna take long time for companies to lay down the sorta investment and time it takes. Even with more friendly manufacturing policies the Chinese labor cost is basically free by comparison.

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Agreed, which is why the buy in has to be almost unanimous from the electorate, to the politicians, to the business owners, to the FED. That kind of turnaround and buy in usually doesn't come until the electorate has already felt considerable pain, reality about dire circumstances has set in, and there are no other options. And even more unfortunate for us, our education system was dismantled so thoroughly for the last 6-7 decades that the electorate wouldn't be able to grasp common sense economics if it slapped them in the face.

Hence why I have no faith in anyone. We don't have the intelligence, backbone, or patience as a country to do what's necessary. In turn, we will most likely suffer.

Heineken-Ashi said:

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jamey said:

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Even if we could promise to keep all the policies intact it's gonna take long time for companies to lay down the sorta investment and time it takes. Even with more friendly manufacturing policies the Chinese labor cost is basically free by comparison.

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Agreed, which is why the buy in has to be almost unanimous from the electorate, to the politicians, to the business owners, to the FED. That kind of turnaround and buy in usually doesn't come until the electorate has already felt considerable pain, reality about dire circumstances has set in, and there are no other options. And even more unfortunate for us, our education system was dismantled so thoroughly for the last 6-7 decades that the electorate wouldn't be able to grasp common sense economics if it slapped them in the face.

Hence why I have no faith in anyone. We don't have the intelligence, backbone, or patience as a country to do what's necessary. In turn, we will most likely suffer.

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Another issue I see is we're basically talking low wage labor jobs and I assume Trump plans to deport a chunk of that base.

I was GM of low wage manufacturing plant almost 2 decades ago. At a low wage, there's so many problems with the legal employee base. I even had them bussed in from a half way house at one point. Only one of them made it and she married the manager of the half way house and was highly intelligent. Lots of very good people who went
astray but I don't think we have the base for it, especially if we kick out the illegals.

Unemployment is right at 4% as it stands. I don't know where these people are suppose to come from even if the manufacturing jobs existed

Yes, that's one of the main hurdles. And the problem is, we really don't have that free of an economy. Until the regulatory burdens can be dismantled, the higher education partnership with government broken up, the entitlement system reformed so that you can't live above true poverty unless you work, AND a bit of deleveraging to bring prices and the middle class closer together, you really don't have much hope of people ever appreciating manufacturing jobs and their wages again.

NEW: Vance open to devaluing US dollar to boost exports, he told me this spring.

Lighthizer and allies mulling dollar devaluation if he’s elevated to Treasury or other leading econ post pic.twitter.com/whcaDK1g6X

— Gavin Bade (@GavinBade) July 15, 2024