The United States will impose a 10% import tax on New Zealand products as part of a sweeping tariff plan announced at the White House on Thursday morning, NZ time.
President Donald Trump said America had been “looted” by foreign countries who had stolen the country’s jobs and ransacked its factories.
“For decades, the United States slashed trade barriers on other countries, while those nations placed massive tariffs on our products and created outrageous non-monetary barriers to decimate our industries and in many cases, the non-monetary barriers were worse than the monetary ones”.
Trump displayed a chart showing his administration's assessment of the tariff and other trade barriers faced by American exporters, and a “discounted reciprocal” rate to be imposed in response.
These reciprocal rates are roughly half the Trump team estimates in most cases. For example, China was said to impose a 67% barrier and has been hit with a 34% retaliation rate.
'Not correct'
However, the administration has decided to charge a minimum tariff of 10% on all foreign imports including those from NZ, which the US incorrectly claims imposes a 20% tariff on US products.
Trade Minister Todd McClay said this number was not correct and officials were seeking to clarify how that number had been calculated. US products face an average tariff rate of 1.9% when entering New Zealand, which would only be 17% even if GST was included.
Despite the miscalculation, the Minister said this was still “the best possible result” as Kiwi exporters would not be any worse off than those from other countries.
“Every country in the world faces a minimum of 10%, some as high as 30% or 40% and a worse outcome from New Zealand would be that we have higher tariff rates than some of the countries we compete against”.
However, he said the tariffs would still have an impact on international trade, inflation, global demand, and many currency exchange rates which could be difficult for businesses.
The back-of-the-envelope estimate is that it would add $900 million of costs to the $9 billion in exports to the US, but there was “pretty clear evidence” much of this would be paid by American consumers and not Kiwi exporters.
NZ would not retaliate against these tariffs as that would only increase costs for consumers and put pressure on inflation, he said.
Economic logic ‘doesn’t stack up’
John Ballingall, a trade economist at Sense Partners, agreed it was a better than expected outcome for NZ, but also said it was worse than hoped for the global economy.
“The fact that we are facing a 10% tariff, when some of our competitors are facing a lot more, is not the worst outcome in the world. But some of the tariffs that he's imposing on other countries are absolutely enormous, and that points to a pretty significant impact on global growth,” he said.
Many competitors, such as Brazil, Australia, and the United Kingdom, have also received the 10% flat rate while others are facing higher rates. For example, the European Union at 20%.
The White House told CNBC the new 34% tariff on China would be added to previous measures, bringing the overall rate to 54%. McClay said he was seeking clarification about whether that would be the case for NZ tariffs as well.
Ballingall said GST would have to be included as a trade barrier to get anywhere near the 20% rate the Trump administration claims NZ imposes on imports.
“The math doesn’t really stack up and the economic logic absolutely doesn’t stack up. So yeah, it's hard to know exactly how they got to those numbers”.
While NZ won’t be disadvantaged relative to other exporting countries, it will be relative to domestic US producers.
The US has been NZ’s fastest growing export market. Kiwi businesses sold $14.6 billion into the States in the year ended March 2024, making it the second largest export market ahead of Australia and behind China.
Independent global economic researchers Capital Economics (CE) said the tariffs turned out to be "bigger than expected".
Chief economist Neil Shearing said CE's calculations pointed to an import-weighted average tariff of 19.1%.
"...That means the effective tariff rate on all imports will rise from 2.3% last year to around 26%, leaving it at a 131-year high. In very general terms, Canada and Mexico have got off lightly, while those in Asia, particularly China and Vietnam, have been hit hard," he said.
Trade war launched?
Tim Groser, a former NZ trade minister, said the reactions of other countries were at least as important as the tariffs themselves. “That reaction will start to shape itself over the coming days,” he said in a text message.
If other countries retaliate it could spark a trade war which would rock global markets.
Australian Prime Minister Anthony Albanese said the tariffs were unjustified but it was US consumers who would pay the biggest price.
“This is why our government will not be seeking to impose reciprocal tariffs. We will not join a race to the bottom that leads to higher prices and slower growth," Albanese said.
But Canadian Prime Minister Mark Carney said his country would respond: "it’s essential to act with purpose and with force, and that's what we will do”.
Some European leaders also hinted at possible retaliation, while China said last month it was ready for “any type of war” with the US.
Sabrina Delgado, an economist at Kiwibank, said she was also worried about the trade war between our two largest trading partners escalating.
“We’re now awaiting retaliation, if any … China has been hit with a 54% tariff rate. That’s steep,” she said in an email.
“An escalation of the tariff trade war could stall the Kiwi economy’s expected recovery, requiring the RBNZ to do more. It is a scenario that’s certainly not outside the realms of possibility, yet one the market has not priced”.
Sharon Zollner, chief economist at ANZ, said it was unlikely that people were taking today’s announcement as “the final word” on tariff policy.
“It appears that part of the Trump administration’s plan is to sow so much uncertainty that firms decide the only safe option is to manufacture in the US.”
Some firms will do that but others will decide to stop making new investments altogether, which would dampen global economic growth, she said
Financial markets hit
Already financial markets are reacting negatively to the news. S&P 500 futures dropped 3%, while Nasdaq futures fell almost 4%. Trump’s speech was timed to be after market close, to avoid an embarrassing crash mid-announcement.
In NZ, the benchmark NZX index dropped more than 1.5% at market, open but later recovered some of those losses.
A major reason was a sharp slide in the value of market heavyweight Fisher & Paykel Healthcare, a big provider of products to the US market. It was down at one point more than 7%, but after the company put out an announcement the losses were pared back. At the time of writing the share price was down about 1% on the day.
In a statement to NZX the company said it still expected to reach its gross margin target but US tariffs may add costs and delay the timeframe for that goal.
The NZ dollar dropped almost 1% against the American currency and only recovered half of those losses. It has fallen 5% against the US in the past year, but has been trending higher since the start of the year.
The price of precious metals immediately rallied after the announcement but then started to fall. Gold, went up, then down, and then strongly up again to a new record high of US$3,160 oz, in very choppy trading. But other metals fell.
Bitcoin fell about 4% in the hour after the announcement and at time of writing was below US$83,000, down around 3% in the past 24 hours.
94 Comments
FnP Healthcare down over 7% since the announcement.
Finally someone is standing up to those big bullies Laos (48% tariff) and Madagascar (47% tariff).
It's gonna be pretty significant for those countries. And also I think Sri Lanka was 80% plus?
Handy Brexit dividend.
? Can you explain your view ?
UK only gets a 10% tariff, EU gets 20%. Presumably if the UK had remained a member they would have seen 20% as well.
It's about time some kind of Brexit dividend showed up - I strongly suspect it's not enough to make up for the damage done to their much more important trading partners in the EU.
profile,
You might want to express that view to the Scotch whisky exporters.
Perhaps Trump is trying to boost Jack Daniels consumption. Wouldn't be surprised if the scottish parliament has an excise duty on whisky exports so if whiskey exports to the US drop there goes some Scottish govt revenue.
The Scots have already been shafted by the loss of the case by the Scottish Whisky Association against minimum pricing per standard drink which resulted in the excise tax being higher before export even occurs, thus diluting (had to say it) the appeal of scotch whisky compared to a growing number of competitor countries offerings.
The ruling here
Linklater - "Scotch Whisky is the UKs largest food and drink export, and the US is the largest export market by value. If the UK were still in the EU, that export market would have been obliterated today, with a 200% tariff due to the EU trade war with the US."
profile,
True. Finally, a benefit from Brexit. Hooray.
Or possibly the whole Scottish electorate.
It seems unlikely that DJT is investigating existing tariffs so one has to wonder how dumb his advisers are to confuse taxes applied to everything with tariffs applied to imports.
Alternatively, he's made the existing tariff percentages up purely to support his narrative.
I don't think they care about it being accurate/logical, he's just trying to sell the idea he's protecting the US people...my understanding it's that the same people he's 'protecting' will have to pay for these tariffs and generate revenue for the US govt
Trump has never been too worried about the accuracy of the data he displays.
https://edition.cnn.com/2019/09/06/politics/trump-sharpie-hurricane-dor…
https://www.smh.com.au/world/north-america/the-stuff-of-memes-hard-hitt…
and that 10% is to be payed by US consumers, right?
Depends, and that question has neither been considered nor answered nearly enough. For instance NZ exporters cannot find overnight another market for their manufacturing beef, that supplies the gigantic US burger market, in volume and likely even with a 10% tariff imposed, a better price. That means the tariff while actually paid by the US importer is more than likely to be compensated by a deduction from the invoice, the CIF price. That in turn means the USA collects the 10% and the US consumer pay no more, a win, win outcome for Trump’s policy.
Depends, and that question has neither been considered nor answered nearly enough. For instance NZ exporters cannot find overnight another market for their manufacturing beef, that supplies the gigantic US burger market, in volume and likely even with a 10% tariff imposed, a better price.
Trump singled out Aussie beef and kneecapped their industry. Remember, the barriers to the Aussie mkt for US beef exporters are high.
By members of a nation going further and further into debt. And more and more of whom are in the precariat category.
Yeah right. .
But yes, the apparatus of government has to be 'funded' from somewhere, and everyone votes for short-term tax-reduction (everyone who is a sheep, that is - which is the majority). So tariffs might go some way to displacing tax shortfalls - if people buy...
his logic is golden. So he'll help the american people by making them spend extra on a lot of stuff, and all the extra money will go to govt. I think some people argue that the tariffs will incentivize consumption of US made stuff, but they depend on a lot of imported goods for the stuff they make in the US. So if countries hit back with an US export tax (paid by the US company importing the good), costs of US made stuff will increase. It's a big loss-loss situation for the people haha
There is an additional flaw....the tax policy just tabled has the bulk of the cuts to the top end (no surprises there) ...and that isnt where the consumption is generated.
so potentially the U.S. consumer will be hit with increased costs (certainly in the short term), reduced Gov.provision and the offsetting tax cuts go to the investor class.
Perfect storm.
"the U.S. consumer will be hit with increased costs , reduced Gov.provision and the offsetting tax cuts go to the investor class."
Correct, you understand the situation very well, Frank.
Yes....but how that impacts trade/price/exchange rates is yet to be seen.
and there is a possibility of lower import prices for us as overseas manufacturers look for new markets to avoid the US tarrifs - especially asia
Think that is unlikely to be the case....unless our currency strengthens more in relation than the sellers.
I expect that in the main trade in toto will decline and that will increase costs and reduce output with all that implies....including an increase in global unemployment, some hit worse than others
and there is a possibility of lower import prices for us as overseas manufacturers look for new markets to avoid the US tarrifs - especially asia
Yessir. The mighty Chris Joye reckons to get ready for disinflation in Aussie / Aotearoa as China, Vietnam, Europe and everyone else blocked by US tariffs dump their goods at cheap prices on our markets. Rates will come down. Good for the Ponzi!
Disinflation...so inflation but reduced, but still inflation. Reduced import prices implies deflation, and that requires either loses or structural reform. Pay cuts anybody?
Disinflation...so inflation but reduced, but still inflation. Reduced import prices implies deflation, and that requires either loses or structural reform. Pay cuts anybody?
Whether your pay is cut and / or not rising is actually beside the point. If your currency's purchasing power improves and your market environment is more competitive, you don't necessarily need wage rises.
You appear to not realise that somewhere in that mix there has to be a pay cut somewhere.....unless you believe that everyone will suddenly increase productivity....which if that was likely would have occurred in any case.
Perhaps we will reduce compliance costs....effective in the immediate term but not sustainable and the epitome of the race to the bottom.
The worlds exporters have spent the past 4 decades trying to be as competitive as possible within the existing framework....and the worlds largest importer has just thrown out the rule book....how do you think they can suddenly change their cost structures?
No actual rhyme or reason - Australia assessed at 10%, and 10% applied. NZ assessed at 20% and 10% applied.
Finger-in-the-wind policy-making. But cannot expect anything else.
From RNZ's website: Confusion as Donald Trump says NZ has a 20% tariff against the US | RNZ News
(Economist John) Ballingall (of Sense Partners) said he had studied the figure used by the White House showing New Zealand had what appeared to be a 20% tariff on US goods. It was assumed by many to be made up of GST plus a number of smaller tariffs.
But Ballingall said in fact it was a function of New Zealand's trade surplus with the US.
President Donald Trump has often focused on surpluses and deficits as a shorthand of who is a friend of ... Read more
From RNZ's website: Confusion as Donald Trump says NZ has a 20% tariff against the US | RNZ News
(Economist John) Ballingall (of Sense Partners) said he had studied the figure used by the White House showing New Zealand had what appeared to be a 20% tariff on US goods. It was assumed by many to be made up of GST plus a number of smaller tariffs.
But Ballingall said in fact it was a function of New Zealand's trade surplus with the US.
President Donald Trump has often focused on surpluses and deficits as a shorthand of who is a friend of the US.
Ballingall said the figure was arrived at by dividing New Zealand's trade surplus - how much more we sell to the US than buy back - by the total amount of exports. New Zealand currently exports $14.6 billion in goods but imports around $11.6 billion, leaving a trade surplus to New Zealand of $3 billion. Put simply New Zealand makes more money by selling things to the US than the US does selling things to New Zealand by about 20 percent.
I'm not saying this is correct, but it could explain where the percentages come from (hey, they may have used a different calculation for each country!).
Read lessTrump is reacting to an impossible digression - the trend to requiring 'cheap' and the parallel trend to wanting to be 'rich'. So other countries being repressed, workers too. Invasions, coups - all to keep the narrative trucking.
But debt and real unproductivity - actually not making stuff - have compounded with entropy (infrastructure decay) to the point people are hurting. This is not measured by GDP - thus is ignored by the 'economic' media.
The US voted for that which it cannot have; it's jobs back AND wealth. This is because to build stuff cheaply, they'd have to accept 3rd-world wages ... Read more
Trump is reacting to an impossible digression - the trend to requiring 'cheap' and the parallel trend to wanting to be 'rich'. So other countries being repressed, workers too. Invasions, coups - all to keep the narrative trucking.
But debt and real unproductivity - actually not making stuff - have compounded with entropy (infrastructure decay) to the point people are hurting. This is not measured by GDP - thus is ignored by the 'economic' media.
The US voted for that which it cannot have; it's jobs back AND wealth. This is because to build stuff cheaply, they'd have to accept 3rd-world wages - which wouldn't buy their US-wage products. Whether this turns the US citizenry into slave labourers, or drives them to civil war, or causes them to rally and boot out all incumbents from now on, is an interesting conjecture..
but from a macro perspective, we are looking at 'peak globalism in the rear-view mirror. It had to happen; overpopulated species, being-depleted planet. Strap in for the ride.
Read lessYou've always got to pair whatever they are doing with the "turn" toward Christian nationalism.
Take for example, the intent to deport all foreigners of colour regardless of visa and/or permanent resident/citizen status. The answer so many in the ag sector are asking is: who will pick the crops - and the Christian nationalists will respond - it's time to get black people back into the fields.
This has nothing to do with anything other than wealth for a select few and slavery for the rest.
America was empty - hence the lines in the Statue of Liberty:
"Give me your tired, your poor, your huddled masses yearning to breathe free, the wretched refuse of your teeming shore. Send these, the homeless, tempest-tossed to me, I lift my lamp beside the golden door!”
Well, it's full now. Overshoot happens like that. And logically they're wanting 'others' to go away. Rather like NZ importing cheap Pacific factory labour in the 1950s and 60s, then dawn-raiding them to send them home as we de-factoried. Absolutely the same thing.
Population-wise it's not full by any means. A bit like China - there was mass internal migration to the cities as the small manufacturing businesses in small towns gradually closed down over decades as a result of neo-liberalism.
And, also like China, they face a serious demographic problems with the rate of births dropping continuously.
Really don't know the history of the dawn raids and their relationship with economic factors here at the time; as it was before my time :-). When I arrived, Rob was on his way out and neo-liberalism on its way in.
I imagine all farming in the US ... Read more
Population-wise it's not full by any means. A bit like China - there was mass internal migration to the cities as the small manufacturing businesses in small towns gradually closed down over decades as a result of neo-liberalism.
And, also like China, they face a serious demographic problems with the rate of births dropping continuously.
Really don't know the history of the dawn raids and their relationship with economic factors here at the time; as it was before my time :-). When I arrived, Rob was on his way out and neo-liberalism on its way in.
I imagine all farming in the US will be corporatised within the next 10 years and the corporates will build worker-housing - much like the slavery days. And the expectation will be that those workers will produce the children for each next generation in the fields.
Read less
I'm sorry Kate, but it is. Full.
We used underground-stored solar acres, to exponentially increase our population. Back on real-time acres (and without drawing down aquifers or soil quality) the US is overpopulated. As is NZ. You decide the level of consumption you want; I'll tell you your upper population-limit (spoken by a Professor from the US, a long time ago). At good=peasant level, 2 billion globally. At ours? South of 1 billion; perhaps 600 million.
The North American Indians had the place pretty much full, in long-term sustainability terms. And they knew it.
I'll agree to disagree! :-).
You need o prove a replacement energy source, and how to parry dissipation/entropy.
Otherwise you have no case.
:)
Kate,
Sadly, you simply cannot disagree with pdk. Now he has clarified his stance on maximum sustainable population to under 1 bn, possibly 600 million. As we are now over 8bn and still rising, that means that the global population Must-and therefore will-fall to less than 10% of the current figure. You might want to ask how that might occur. Perhaps WW3?, another Black Death episode? Take your pick, but what is the evidence for such a cataclysmic event?
Tump's MAGA: "Make America Go Away", as in become much less relevant, as other countries bypass America to trade with each other.
So by restricting/removing the worlds largest importer we are going to somehow increase trade amongst the remaining?....how much more do you you think NZ could import/export?
Remember it is impossible for all economies to be net exporters....and the largest importer is in the process of removing itself, all while 'encouraging' the on-shoring of production....production from where? not Mars.
"So by restricting/removing the worlds largest importer we are going to somehow increase trade amongst the remaining? Yes of course, see below. how much more do you think NZ could import/export?" Nothing more at all, we trade less with the USA and more with other countires a net zero difference.
Companies in countries who have been hit by a tariff of 20% or more are going to struggle to remain profitable, i.e. they will struggle to absorb 20% + higher cost. So they are going to look at other market to sell their goods or services (agreed, this will take time). ... Read more
"So by restricting/removing the worlds largest importer we are going to somehow increase trade amongst the remaining? Yes of course, see below. how much more do you think NZ could import/export?" Nothing more at all, we trade less with the USA and more with other countires a net zero difference.
Companies in countries who have been hit by a tariff of 20% or more are going to struggle to remain profitable, i.e. they will struggle to absorb 20% + higher cost. So they are going to look at other market to sell their goods or services (agreed, this will take time). We can already see this with Korea and Japan looking at exporting more to China, and Europe looking at reducing their exports to the USA and starting to negotiate lower trade agreements with Asian countries.
THE USA's TARIFFS WILL ENCOURAGE COUNTRIES TO MOVE AWAY FROM THE USA AND TOWARDS OTHER COUNTRIES, EXACLTY THE OPPOSITE OF WHAT THE USA IS HOPING FOR.
Read less"Companies in countries who have been hit by a tariff of 20% or more are going to struggle to remain profitable, i.e. they will struggle to absorb 20% + higher cost. "
You have just outlined why lower prices in the rest of the world are not a realistic option (except in the case of fire sales)....the current cost structures are embedded and will require structural reform to reduce....how is that to be achieved?...lower wages perhaps?
Smaug has roared - all bow to the dragon sitting on his pile of shiny gold and gems. It will be interesting to see how many hobbits will get burned trying to access the pile with their greenback IOU's.
Do we know when these tariffs come into effect ?
Midnight tonight.
While NZ officials say our average tariff on US goods is only 1.9%, anyone who’s actually tried to import something from the US knows it feels much higher.
I recently bought a $200 item from the US using NZ Post’s own mail-forwarding service, and was hit with a 15% GST on top of already steep shipping and customs charges (despite being below the $1000 minimum). So from the US exporter’s perspective, it’s not crazy to include GST in the trade barrier calculation. The Trump campaign's table explicitly states the 20% figure for NZ includes “tariffs charged to the US, including currency ... Read more
While NZ officials say our average tariff on US goods is only 1.9%, anyone who’s actually tried to import something from the US knows it feels much higher.
I recently bought a $200 item from the US using NZ Post’s own mail-forwarding service, and was hit with a 15% GST on top of already steep shipping and customs charges (despite being below the $1000 minimum). So from the US exporter’s perspective, it’s not crazy to include GST in the trade barrier calculation. The Trump campaign's table explicitly states the 20% figure for NZ includes “tariffs charged to the US, including currency manipulation and trade barriers.”
Rounding up to 20% might reflect the real friction US exporters face: high compliance costs, import restrictions on certain goods, and yes — currency dynamics.
Because it’s not just tariffs. NZ may not peg the Kiwi or intervene daily, but the RBNZ has clearly taken actions that impact the NZD’s value.
For example, the RBNZ has massively increased its foreign reserves — from around $20b in 2021 to over $50b now.
That’s not just “preparing” for intervention — it is intervention. To build foreign reserves, the RBNZ has to sell NZD and buy foreign currencies, which increases NZD supply and weakens the currency. Interest.co.nz even covered this, though they framed it as forward-looking rather than acknowledging the current effect.
And then there’s the $50b LSAP (Large Scale Asset Purchase) — basically money printing to buy government bonds, which directly funded government spending during COVID. That expanded the money supply and further devalued the NZD.
So while NZ may not fit the textbook definition of a currency manipulator, the RBNZ’s tools have real and systemic impacts on our trade competitiveness — something it’s fair for trading partners to notice.
Also let's not forget that while the US is effectively adding a 10% sales tax on imported goods, they're also in the process of dismantling their Income Tax and allowing workers to keep the proceeds of their labour (Something New Zealand seriously needs to get a move on with!). American workers will have more money to spend and New Zealand products will remain attractive.
Read lessIf you think those income tax cuts are going to the working class I have a bridge to sell you
Like any neo-liberal project - there are crumbs thrown at the working class - and Americans seem so used to being oppressed by terrible employment law and so denied of decent public services that even if their tax cut works out to 10 bucks more in hand per paycheck, they'll be happy. The way the Trump administration is going, they'll start saying soon that workers should be thankful they have work. A bit like the Secretary (Ludnick, I think) who said most Americans won't panic if one social security check is late - using his mother as an example.
Corrupt to ... Read more
Like any neo-liberal project - there are crumbs thrown at the working class - and Americans seem so used to being oppressed by terrible employment law and so denied of decent public services that even if their tax cut works out to 10 bucks more in hand per paycheck, they'll be happy. The way the Trump administration is going, they'll start saying soon that workers should be thankful they have work. A bit like the Secretary (Ludnick, I think) who said most Americans won't panic if one social security check is late - using his mother as an example.
Corrupt to the core - everyone of them.
Read lessToo true, Kate!
This appointment of Lutnick of Cantor Fitzgerald fame, to provide the Wall Street connection for the dancing billionaire technocracy, was a coup for King Donald.
Cantor Fitzgerald is one of the 24 primary dealers of the New York Federal Reserve - you can't get any closer to the #1 global counterfeit money spigot than that.
Cheers
Col
Yep, love your contribution!
I'm surprised at just how closely many NZers are following this. And that's impressive.
We're addicted to youtube posts to get our news. Lots of good media podcasters (we like MeidasTouch network and David Feldman) and we track all the various news programs - both the public networks and cable).
The U.S. administration has repeatedly signaled its intention to create an External Revenue Service (ERS) to eventually replace the IRS, with the goal of eliminating income tax altogether. It’s a bold idea — but if they pull it off, it would represent a major leap forward for workers.
After all, income tax is paid by those who work for a living. Removing it would ease the financial burden on the working class while dismantling the labyrinth of deductions that enable tax dodging at the top.
It would also reduce the grip of the accounting industry — a sector that profits from complexity ... Read more
The U.S. administration has repeatedly signaled its intention to create an External Revenue Service (ERS) to eventually replace the IRS, with the goal of eliminating income tax altogether. It’s a bold idea — but if they pull it off, it would represent a major leap forward for workers.
After all, income tax is paid by those who work for a living. Removing it would ease the financial burden on the working class while dismantling the labyrinth of deductions that enable tax dodging at the top.
It would also reduce the grip of the accounting industry — a sector that profits from complexity and actively lobbies to keep the tax code convoluted and exclusionary.
If successful, this shift wouldn’t just be a win for efficiency — it would be a human rights victory for workers, reclaiming more of their earnings and time from a system that was never designed with them in mind.
Read lessIf they pull it off.... nothing they have tried to date has succeeded. And it's no wonder given the idiots in charge. They can't even manage to get a person they admit was wrongly deported (due to an administrative error) to El Salvador back, for goodness sake.
That said, I should have mentioned that they have successfully extorted any number of businesses - but thankfully others are fighting back. They will lose those cases and even their extortion will be knee-capped.
They won't pull anything off aside from a worsening gap between the rich and the poor - and more destruction of the ... Read more
If they pull it off.... nothing they have tried to date has succeeded. And it's no wonder given the idiots in charge. They can't even manage to get a person they admit was wrongly deported (due to an administrative error) to El Salvador back, for goodness sake.
That said, I should have mentioned that they have successfully extorted any number of businesses - but thankfully others are fighting back. They will lose those cases and even their extortion will be knee-capped.
They won't pull anything off aside from a worsening gap between the rich and the poor - and more destruction of the middle class.
5th April will be interesting.
Read lessIRS income/corporate tax annual revenue was close to $3 trillion. Total imports into the USA were valued at just under $3 trillion so they would need to put 100% tariffs against all countries to abolish income/corporate tax
And that's ignoring the contradictory stated goal of onshoring to significantly reduce the goods imported into the US. Fewer imports, lower revenues.
I suspect a major benefit for Trump is he directly controls the tariffs, so switching over to them gives him more leverage without having to involve Congress or the Senate. All the better for grifting.
"Mercantilism is a nationalist economic policy that is designed to maximize the exports and minimize the imports of an economy. In other words, it seeks to maximize the accumulation of resources within the country and use those resources for one-sided trade."
Michael Every is a clear voice on this.
https://youtu.be/s7EwfjK0FP0?si=c3VgYr9FFwT0MNsL
Yes, mercantilism was global commerce before capitalism and Adam Smith. Only back then, it was practiced as one-sided plunder of the other guys wealth.
And now to think about it - that's not far from Trump's plan. He'll plunder his own people whilst teaming up with other dictators doing the same.
And I don't see the CCP as plunderous of their own people. So, I'm glad we have a good, longer term trade relationship with China. They are clever - and sure, they cheated on IP and do a lot of hacking of the Western World, plus any number of other horrible ... Read more
Yes, mercantilism was global commerce before capitalism and Adam Smith. Only back then, it was practiced as one-sided plunder of the other guys wealth.
And now to think about it - that's not far from Trump's plan. He'll plunder his own people whilst teaming up with other dictators doing the same.
And I don't see the CCP as plunderous of their own people. So, I'm glad we have a good, longer term trade relationship with China. They are clever - and sure, they cheated on IP and do a lot of hacking of the Western World, plus any number of other horrible human rights violations; but I do believe those there at the top have more manners and more respect for the environment. Sure, it is a new respect but they are not afraid to go at their problems (particularly with fresh water and garbage pollution) hard.
Read lessIt's all going Game of Thrones based around the Nuclear powers aka Dragons. France have already flexed their wings. I assume India will be opening an eye too. Australia/NZ should look at stealing an egg from somewhere or like sleepy hobbits - we will get burn't for our shiny stuff
"Removing it would ease the financial burden on the working class while dismantling the labyrinth of deductions that enable tax dodging at the top."
tax dodging or tax evasion .... or both? (I suspect)
tax dodging or tax evasion .... or both?
"Here at the country club sir, we call it living"
Trump ran on policies to increase the labyrinth of deductions and loopholes. No tax on tips, overtime or social security.
Yeah, he ran on it but no Executive Orders yet and no budget either.
Keynes foresaw this ...and was ironically defeated by the U.S.
"He argued that a national currency was unsuitable as a global reserve currency because of the Triffin dilemma—the difficulty faced by reserve currency issuers in trying to simultaneously achieve their domestic monetary policy goals and meet other countries' demand for reserve currency.[7][8] A similar analysis can be found in the Report of the United Nation's "Experts on reforms of the international monetary and financial system"[9] as well as in the IMF's study published on 13 April 2010.[10]"
Exactly — and this is why the U.S. has validated Bitcoin as the successor to the global reserve currency model Keynes envisioned. The recent creation of a Bitcoin-only strategic reserve signals a recognition that no single nation's fiat currency can sustainably serve global needs without running into the Triffin dilemma.
Bitcoin isn’t controlled by any state, has a fixed supply, and operates on neutral global infrastructure — all qualities Keynes sought in the Bancor, but which were politically out of reach at the time.
We may finally be watching that idea come to life — not through Bretton Woods 2.0, but through ... Read more
Exactly — and this is why the U.S. has validated Bitcoin as the successor to the global reserve currency model Keynes envisioned. The recent creation of a Bitcoin-only strategic reserve signals a recognition that no single nation's fiat currency can sustainably serve global needs without running into the Triffin dilemma.
Bitcoin isn’t controlled by any state, has a fixed supply, and operates on neutral global infrastructure — all qualities Keynes sought in the Bancor, but which were politically out of reach at the time.
We may finally be watching that idea come to life — not through Bretton Woods 2.0, but through open-source consensus.
Read lessBitcoin is NOT and can never be Bancor....Bancor was a proposed agreed trade accounting system with penalties and capital controls.....the antithesis of Bitcoin.
Yeah, exactly — and that’s why Bitcoin actually works as the global reserve currency. Bitcoin achieves neutrality and balance through code, not committees.
It can achieve neither as it anarchic.....there is no enforcement, nothing to stop the accumulation of bitcoin to a single entity...as said the antithesis of Bancor.
"nothing to stop the accumulation of bitcoin to a single entity" at which point it becomes completely valueless!
And creates havoc in the process....something most sensible people would seek to avoid.
Actually, Bitcoin’s design directly addresses the issues you’re raising.
Unlike fiat or centralized digital systems, Bitcoin has a provably fair distribution — every satoshi has been mined and earned through proof of work, which requires real-world energy and cost. Anyone — including nation-states — can compete to acquire it on open, global markets. There are no backdoors, special privileges, or hidden allocations.
And importantly, concentrating bitcoin doesn’t give anyone control over the system. Bitcoin isn’t proof-of-stake — it’s not like owning more gives you more voting power or influence over the rules. It just means you’re holding more of a scarce asset, ... Read more
Actually, Bitcoin’s design directly addresses the issues you’re raising.
Unlike fiat or centralized digital systems, Bitcoin has a provably fair distribution — every satoshi has been mined and earned through proof of work, which requires real-world energy and cost. Anyone — including nation-states — can compete to acquire it on open, global markets. There are no backdoors, special privileges, or hidden allocations.
And importantly, concentrating bitcoin doesn’t give anyone control over the system. Bitcoin isn’t proof-of-stake — it’s not like owning more gives you more voting power or influence over the rules. It just means you’re holding more of a scarce asset, like gold. You can’t censor transactions, inflate the supply, or rewrite the chain.
So while Bancor envisioned fairness through top-down enforcement and penalties, Bitcoin achieves neutrality through rules without rulers — by design. That’s precisely why it’s working — and why no one can rig the system in their favor.
Read lessIt does not and cannot link distribution to nation states however....even if you believe that its distribution can remain fair and unhoarded which evidence to date suggests not.
Now you may wish the demise of nation states, but until people determine they dont wish to be part of such communities then they remain the form we need to administer.
Oh my, and bolded to help "our" understanding.
As I said the other day: LOL.
There's also childrens books and kids cartoon shows about Bitcoin if you need something more your speed.
I don't think Bitcoin would work as a reserve currency. that currency would need to have a managed exchange rate, not a demand based one. It would need to be controlled by a neutral organisation - The World Bank?
LOL.
Pretty heavy stuff for the likes of ZURU to deal with considering their production is centered in China and the US is by far their primary market. The Monday shampoo's secret sauce was price.
Allbirds, if they're still kicking, produce all their shoes in Vietnam.
From google: "Nike manufactures products in many countries, primarily in Asia, including China, Vietnam, and Indonesia"
Unlikely they'll let a large american company like Nike take the hit...same goes for Apple, there must be some sort of small print where tariffs do not apply for US based companies manufacturing elsewhere. I wonder if the same applies for non-american companies manufacturing elsewhere...
Vietnam is central station for the likes of Nike.
They will either have to re-shore to the US or pay a stipend and pledge fealty to the King
Looking forward to the new Trump Golf range of Nike trainers.
Brand royalties to be paid in $TRUMP coins please.
The U.S. Senate has passed a resolution to terminate the 25% tariffs on Canadian imports, marking a bipartisan but largely symbolic rebuke of Trumpy's trade policies.
The resolution passed narrowly with a 51-48 vote, supported by all Senate Democrats and four Republican senators—Susan Collins, Lisa Murkowski, Mitch McConnell, and Rand Paul. These Republicans criticized the tariffs for harming economic sectors like manufacturing and agriculture.
https://www.npr.org/2025/04/02/nx-s1-5347699/senate-trump-tariffs-canada
Such a shame the vote is merely symbolic, JC.
Yes, and if I heard it right, Mike's just sent the House home - so no chance.
Yet, symbolic or not, I'll take a flicker of a crack, as opposed to a solid wall. I wonder how many of those GOP Senators are thinking now about what a bunch of idiots they passed through those Cabinet senate confirmation hearings.
Re... "about what a bunch of idiots they passed through those Cabinet senate confirmation hearings."
Have you seen Samantha Costello's expose' of these appointments, Kate?
https://globalsouth.co/2025/03/28/the-united-states-of-israel/
Not yet - will have a look!
Shein, Temu, and Aliexpress are dead in the US. You can say that's a win for their domestic vendors.
And fewer counterfeit products on Amazon.
It feels like the administration is out to actively break as much of the furniture as possible.
I'd be fascinated to know what the actual rationale is.
But that'll probably only surface in 50(?) years or so when the records get declassified.
Hopefully there's enough journalists quietly sitting in private chats that we can reconstruct their rationale (if that's not too presumptive a word) a little earlier.
Christian nationalism. It's not a rationale, it's an ideology. Just like MAGA is not a political party, it's a zeitgeist. A cult.
I think brute self-interest plays a larger role than any kind of ideology.
Like: I wonder if Elon Musk is buying back Tesla stock at its now discounted rate.
Beyond ego-gratification I just wonder what's in it personally for the others.
MAR-A-LAGO ACCORD - TARIFFS AND TRADEWARS declared against the entire planet.
There are so many moving parts here. Meanwhile, Captain Chao$ appears clueless that he is in grave danger of creating a huge boomerang effect that could return and clobber him right behind the ear.
The messaging has been as chaotic as the narrative to date, as well as contradictory. Trump and his various spokespersons have stated that they want a "weaker dollar", and yet 5 minutes later they want a "strong dollar" - surely it is quite a challenge to achieve both of these goals at the same time.
As it turns ... Read more
MAR-A-LAGO ACCORD - TARIFFS AND TRADEWARS declared against the entire planet.
There are so many moving parts here. Meanwhile, Captain Chao$ appears clueless that he is in grave danger of creating a huge boomerang effect that could return and clobber him right behind the ear.
The messaging has been as chaotic as the narrative to date, as well as contradictory. Trump and his various spokespersons have stated that they want a "weaker dollar", and yet 5 minutes later they want a "strong dollar" - surely it is quite a challenge to achieve both of these goals at the same time.
As it turns out when they announced that they wanted a "strong dollar", what they meant was they were demanding strong global use of the US dollar as the reserve currency in trade - hence the threatening of 100% tariffs, and god knows what other punishments if countries dared to not use King Dollar in their international trade.
These people were using the wrong terminology - what is not clear is whether this was done out of ignorance, or simply to obfuscate the situation and cause extra confusion - if it was the latter, then they certainly achieved that goal.
It turns out "wanting a weaker dollar" was the agenda, as it seems that it had finally dawned on some that the Triffin Paradox is indeed real. This means, to enable a competitive manufacturing and export economy, and to keep trade deficits down to manageable levels, the incumbent country needs to limit the strength of their currency to some degree.
The Triffin Paradox was identified some 60 years ago - perhaps this challenge should have been tackled long before now - like before the Rust Belt extended from the Great Lakes all the way down through New York State, Washington and into Virginia - also well before the average US tax payer's total liabilities (including unfunded liabilities) reached a completely mind-numbing $1.2 million.
MAR-A-LAGO - What is becoming known as the 'Mar-a-Lago Accord', is a real doozy - with the #47 Admin appearing to believe that they can re-enact James Baker's 1985 Plaza Accord.
...from Wiki...
"The Plaza Accord was a joint agreement signed on September 22, 1985, at the Plaza Hotel in New York City, between France, West Germany, Japan, the United Kingdom, and the United States, to depreciate the U.S. dollar in relation to the French franc, the German Deutsche Mark, the Japanese yen and the British pound sterling, by intervening in currency markets.
The U.S. dollar depreciated significantly from the time of the agreement until it was replaced by the Louvre Accord in 1987. Some commentators believe the Plaza Accord contributed to the Japanese asset price bubble of the late 1980s."
It seems that the only common ground in these so-called accords is the fact that they were concocted in plush hotels - that's it - all the other circumstances are entirely different, including the influence of the US Empire, and the state of their economy, including their appalling balance sheet, and hollowed out manufacturing capabilities.
Japan sits alongside Germany as the two largest net creditor nations at $3.3 trillion, China at $2.9, Hong Kong at $1.8, and Norway at $1.5. The US languishes at the bottom of this list on negative $19.9 trillion. These are the net international investment positions from 2023 according to the World Population Review.
PLAZA ACCORD - this was an agreement to depreciate the US dollar against the French franc, Deutsche Mark, Japanese yen, and £ Sterling, by intervening in the currency markets - it was based on cooperation and was signed by 10 friendly Western-centric economies.
MAR-A-LAGO - based on "we are the indispensable nation" that has this divine right to call all of the global shots, and continue as the world's unchallenged financial hegemon. This approach is based on coercion and threats that would not be out of place in a Cosa Nostra handbook.
See the link to Steven Miran, Senior Strategist for the Trump admin...
https://www.hudsonbaycapital.com/documents/FG/hudsonbay/research/638199_A_Users_Guide_to_Restructuring_the_Global_Trading_System.pdf
The Trump admin's theory appears to be that the weakening of the US dollar will give US consumers an advantage in affording imported goods which will then cancel out the extra tax effect of the import tariffs - this is how they spin the story that it is the other countries that are paying for these tariffs and not the US consumer.
Trump loves the word 'tariff', partly because he knows that it is the one tax that goes directly into the Treasury coffers and is therefore not subject to the same restrictions through congressional oversight that all other tax revenues are subject to.
Trump as the head of the executive and its agencies will have a much more free hand in blowing this booty - whoop, whoop, happy days, as they head towards another all-time record in deficit spending.
CREATIVE ACCOUNTING - Their latest move is to rejig their balance sheet, and the debt clock by loading in some $167 trillion of "Hidden Assets". With some serious jiggery-pokery, they rearranged it so that the average US citizen went from being $434K in debt to over $500K of wealth.
CENTURY BONDS WITH NO COUPON - brilliant - who on earth would buy these, other than the US govt? Besides, the US dollar has already lost 97.5% of its purchasing power against gold since 1973 and the BIS effectively threw all fiat currencies under the bus in January 2023, when they designated physical gold as a Tier 1 balance sheet asset.
This one takes the cake - they want to move holders of short-term treasuries into ultra-long-term bonds with no coupon value and a "guarantee" that in 100 years time, the holder will be paid the equivalent of the gold price of the day - IOW if you bought $3,150 (the equivalent of 1 oz of gold) today, when the bonds are finally redeemed in the year 2125 (if man is still alive), the holder will receive the value of gold at that time. IOW if the price is say $3 million/oz you can take the money or the gold.
This desperate move sounds like some tragic joke to me - how on earth would they find any buyers for them? They also want to try to persuade holders of more liquid short-term bills to swap into these century bonds!
Quite apart from that, these short-term treasury bills are one of the main liquidity sources for the global financial markets. This brings in the question of collateral for the multi-quadrillion dollar off-balance sheet derivative markets and the fact that these bills offer this massively leveraged casino working liquidity - in effect, they keep the house of cards alive, much like a float or chips in a gambling house in Las Vegas.
The markets need liquid collateral, not mortgages and long-dated treasury bonds. Problem - if everyone redeemed their bonds (fat chance), for century bonds where is all this collateral going to come from - this alone could trigger the greatest financial meltdown in history, by killing liquidity and collapsing the extremely precariously balanced global derivative market.
TREASURY SECRETARY SCOTT BESSENT and his cunning plan, sometimes referred to as '3-3-3', which is essentially seeking to reduce budget deficits down to 3%, boost growth by 3%, and energy production by 3 million barrels per day.
The word is that his plan is inspired by the late Japanese Prime Minister Shinzo Abe, who adopted a "three arrows" plan that featured aggressive monetary policy along with fiscal stimulus and structural reforms aimed at lifting Japan's economy from stagnation and persistent deflation.
Oh dear - IMO, that is not a good start. A cornerstone of that plan was maintaining interest rates at near ZERO, along with massive central bank purchases of government bonds to inject liquidity into the market.
Early this year Japan's public debt (U$8.84 trillion) - 263% of GDP, and 43.3% of this debt was held by the central bank, while the remainder is owned by various domestic investors, including banks, insurance companies, and individual households.
The alarming part of this is that based on CEIC data, Japan's total debt (including unfunded liabilities) is ~1200% of GDP. Bessent's desire to model his plan this way is to load the working classes up with this long-term debt just as Japan did. To me Japan is maintaining its standard of living by loading debt onto future generations - precisely what the US is already doing, but now is attempting to supercharge this trend.
Given that the US House has passed a budget resolution to increase the debt ceiling by $4 trillion, and the talk of monetizing $167 trillion of Hidden Assets including the revaluation of the US gold reserves, which because of multiple leasing and rehypothecation, may not even exist, I think we can see where King Donald is heading.
The question remains - is the Orange Emperor wearing any clothes?
Cheers
Col
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The debt is unrepayable - there isn't enough remaining planet (something you don't buy into, for all the applied thought).
So something had to give.
And yes, it will be chaotic: https://www.resilience.org/stories/2019-05-29/review-collapse-now-and-a…
And I'd add - he just did this;
https://theintercept.com/2025/04/02/trump-pardons-corporation-bitmex-cr…
Whoa boy.
Great post, Col
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