Correct me if I'm wrong, but the abnormal thing happening was that treasury yields were going up, which meant that prices were going down (due to lack of buyers, as you said), right?
https://www.theguardian.com/business/2025/apr/09/dramatic-se...
> The yield – or interest rate – on the benchmark 10-year US Treasury bond rose to 4.516% on Wednesday before slipping back to 4.451%, up 0.14 percentage points on the day.
You mean, a big part of one of the inconsistent explanations people are desperately theorizing, because they're too afraid of the simple answer... that there isn't any strategy at all?
[Edit: Or, to be more precise, no strategy which is both (A) sane and (B) designed for America rather than for specific individuals.]
> chaos in an effort to drive down the price of the 10-year bond
I assume this means "the US government will benefit by being able to borrow money more cheaply than before because so many people can't trust stocks". That explanation rests on a big fat false assumption that trust in the particular debtor issuing the bonds remains unchanged as more people want to lend them money.
Instead, economic trust in the US--built up over decades--is being actively firebombed into the dirt by the new Republican regime. This means the US government can easily end up in a far worse position than before, because creditors will demand higher interest-payments to offset the "holy shit your country might implode first" risk they're taking on.
Or, y'know, they'll take their money out of US stocks and then buy the bonds of some other government entirely...
I think that's an important thing to reiterate.
This isn't Trump. This isn't MAGA. This is the entire Republican Party apparatus that is allowing this to continue. The Republicans of the Nixon, Regan, Bush eras are long gone.
Likewise, why would the tariff strategy be to drive down bond prices? Lower prices means receiving less for their issuance/paying more interest...
Youve got it all backwards friend
A simple way to see this is you have can a system of three countries, A, B, and C, where A only exports to B, B to C, and C to A. All have net neutral trade, but are in a deficit with someone.
Clayton Christensen’s model of disruption (or models, counting his low end version) involves innovation by both the incumbent and disruptor. The disruptor’s innovation is immediately appealing to the low end of the market while the incumbent is focused on the high end.
His example of Hong Kong factories manufacturing Fairchild chips doesn’t fit this template even though he claims it does. It’s just targeting the low end of the market with lower prices. That’s just basic business competition, it’s not disruption as he defined it in this piece.
Side note, I’ve never been a big fan of his giant block quotes, especially when he does not bother to summarize them much. It’s asking the reader to connect to the dots and arrive at the insights he is supposed to be providing.)
The main flaw of the analysis I can see is that he is seeing patterns that aren't there - being used to analyzing complex international economics, and then being confronted with something as simple as this pump and dump scheme.
This may be important to the author but it isn't a top priority for the administration. Competitiveness with China and onshoring manufacturing are certainly talking points but they is not stated as the primary motivation for the tariffs. The administration characterizes trade imbalances as countries taking advantage of us. The tariffs are targeted based on trade imbalance. If manufacturing was the goal why apply tariffs to things like raw materials? If competition with China is the goal why apply tariffs to South Korea or Japan, pushing them closer into China's orbit? These are just not the goals of the tariffs and neither their rhetoric or actions suggest that they are.
People have a hard time dealing with values and motivations that are wildly different from their own so they construct all sorts of parallel explanations and defend those instead. But talking about these explanations is non sequitur. It is like the administration adopted a policy of jailing all Capricorns and only Capricorns and people started writing think pieces about how the criminal justice system would be more efficient if they focused on programs to reduce recidivism.
A few years later when that didn't happen to that extent I remember an interview with someone from a fishing port which lost a lot of business that previously went to Europe. They were complaining that Brexit wasn't hurting the right people and why are prices increasing all the time.
It seems no amount of logic is going to convince some people.
Unfortunately for them, they happened to be completely wrong about this (arguably not unpredictably: the UK MMO was more zealous than most European countries about enforcing catch restrictions) so they didn't lose the quota system but did lose an export market.
I say this as someone who's stomach sank when I'd heard that Brexit had passed and that there was a real chance that Donald Trump could be elected.
reindustriaize America
No more free trade
China is evil and the worlds enemy
It should be no surprise to anyone observing trump since he took office that the end goal was always to decouple from China.
He's also a complete and utter liar. I happened to come across him speaking on Fox News when he stated that "Canada has been taken over by Mexican cartels". [1] As a Canadian and as someone who isn't living in some bizarre alternate reality, I can assure you that Canada has not been taken over by cartels. The claim is insane. The fact that his interviewer did not challenge him on this insanity is unsurprising yet also insane.
I bring this up first because it made me angry, but secondly because I think it's relevant to this discussion: of course things are going to turn out badly when the architects of policy are either liars, are living in an alternate reality, or both.
1: https://www.mediaite.com/tv/trump-adviser-insists-canada-has...
[0] In case you didn't know Run Vara is a fake economist that Navarro made up in his books and memos to justify his own deeply flawed policies.
> It should be no surprise to anyone observing trump since he took office that the end goal was always to decouple from China
As far as any mention of jobs? Those are long gone and never coming back.
Trade still makes sense for raw inputs and any outputs though.
Trump's first term tariffs happened under Lighthizer, who was much more rational than both Trump & Navarro.
And what is the US under the Trump administration? China didn't start a trade war, accuse every other country of ripping it off, hasn't talked of acquiring Greenland and making Canada it's 51st state, or discuss bombing cartels in Mexico.
I was born on January 19. Should I be concerned?
> The second order effects are a much more fertile territory for narrative creation. That’s because, as with any other policy, the second order effects of tariffs don’t lend themselves to the same kind of certainty as first order effects. They involve people and how they will respond and act. Any argument in favor of tariffs can only live in the world of second order effects.
https://www.epsilontheory.com/narrative-shopping/
There is no logic here, seeing depth in a shallow pond, is the same as staring at the emperor’s new clothes.
PS> I have seen young voters happy to see Wall Street, elites and older generations feel pain.
It is more interesting to me that actual targeting is based on trade imbalance. They could easily have used the same rhetoric and targeted the tariffs based on something else. I think the way they are targeted is sufficient to rule out a lot of explanations I have seen proposed like I mentioned above. What you are mentioning seems super plausible to me I just can't be sure yet.
Tariffs are a tax levied on American consumers, not on foreign governments. Using them to decrease income taxes on the rich is something only an out-of-touch millionaire could dream up. Qu'ils mangent de la brioche!
https://www.nytimes.com/2025/04/09/opinion/trump-tariffs-rat...
In some cases, Occam's Razor says, "this person is not acting rationally" and you have to weigh that possibility even if it is uncomfortable. Desire for dominance is common, and is not rational. Why should it surprise us to see it in Trump?
From that perspective, he's at least acting consistently, and has been rewarded over his lifetime for it.
Punch people/organisations/nations in the mouth repeatedly until they beg for mercy, then keep pounding them until they forfeit their dignity and pledge allegiance.
Everyone, everywhere, all the time. The weaker the better. Until stopped.
>The tariffs are targeted based on trade imbalance
Ok, I buy that based on the stupid formula they showed. Is "not ruin everything else" not also part of his goals? Can you explain what I'm missing?
I think people just keep underestimating exactly how stupid and ignorant Trump is. That's why nothing makes sense. He does not understand the law of comparative advantage and thus doesn't understand that trade is the engine of growth. He only sees fixed size pies and win-lose deals, so he's not capable of finding real solutions.
That goal 1 is to make Trump feel important and to prop up his ego. Goal 2 is probably to dismantle the rule of law and democracy in the US.
Now I'm imagining new posters in the style of Obama's Hope but with Trump and Cope underneath
Punishing other countries is just a bonus.
it seems likely to me that they know their voting base is too dumb to understand, so they make up stuff that sounds good to get the support.
The Trump administration's power is based in the Russian propaganda machine and xenophobia. Blanket tariffs (except towards Russia and Belarus, not mentioned in Ben Thompson's article of course) are in service of those two power bases.
That's why there are no tariffs on Russia: there's no trade, there's nothing to tariff.
I don't see how you concluded that US is currently "in service of Russia".
In reality, he's doing exactly what is on the tin: reducing tariffs, and doing what he wants to do, because he feels like it.
There's a lot of talking past each other here. This observation, framed a bit differently, is precisely the argument for radical disruptive change. If there's a structural ratchet mechanism, where outsourcing a particular kind of manufacturing work means the US can never do it effectively again, doesn't every tick of the ratchet pose significant risks?
Yes, and in an earlier post Ben made that argument and said that the broader conversation on tariffs has been straw manning and wasn't trying to understand where they were coming from. He did more or less agree that the post-ww2 and post-nixon economic setup created this and articulated why it's problematic.
His thesis is just that this approach is wrong, and that it's hard to unpack the reasons because you don't know what to trust: is what the admin says a PR problem, a bad argument, directional or literal, etc.
Here's the older post (the one I shared in this thread was a continuation): https://stratechery.com/2025/trade-tariffs-and-tech/
No, there is still a lot of work to do before we get close to making this make any sense.
Ironically, this was the plan laid out for Tesla early on. Very expensive Roadster, pretty expensive Model S. Make some cash and build a reputation for how good a luxury electric car can be. Then use that cash to go down market.
Of course zero marginal cost does not apply with the Model 3, but they did dramatically lower their own cost-of-materials by the time they released the Model 3, making it profitable at scale.
> The takeaway from that Article isn’t that Uber is a model for the rebirth of American manufacturing; rather it’s that you can leverage demand to fundamentally reshape supply
Anecdotally, I know that Tesla became an aspirational brand, a dream car for many. A status brand. So the demand was there, and if you could get a "dream car" for $35K USD then why wouldn't you?
They acquired those customers by burning billions of dollars to deliver rides below the cost of providing them.
Then they raised prices beyond their competition to account for their ridiculous overheads.
In reality I'd guess building an Uber scale tech company is not particularly difficult - after a quick ChatGPT query, it seems a city like New York, has about 90kish drivers at any moment - if we assume they make a query to the API every 5 seconds (and add once as many for users) - the scale doesn't look particularly daunting, something manageable with optimized tech on a small server cluster.
Sharding is trivial since New Yorkers are not really interested in taxies from Brussels etc.
And the proof of the pudding is there are tons of competitors, and most of them work just as well as Uber does (on the technology level, driver availability or market penetration might be a different issue).
Uber is a brand like McDonalds - you could say people go to McDonalds because they have the best burgers enabled by their superior logistics and equipment - and that's certainly probably a factor, you can't really ignore that they are where they are due to brand strength, availability, and early mover advantage - while also recognizing they are far from the only players in the business.
American tech companies have immensely benefited from being the 'default' providers of services - Google, Gmail, AWS, etc. People didn't give much thought on what they chose - and assumed everyone chooses them because they are the best, not because people lacked sufficient incentive to give proper consideration to what service they use.
Thanks to Trump, that has certainly changed in Europe at least, literally overnight.
As I commented yesterday, there's a playbook for reshoring that's being totally ignored:
First you invite industry to reshore via subsidies and preferential access to government contracts. If necessary, the government must directly invest in new firms. (They already do this in a very small way with In-Q-Tel and others, so it's not totally beyond the pale. For a time there was even a US Army VC firm.) If you talk to a Chinese factory owner or mine boss, many of them will tell you that they got their start with a >$2M direct investment from their government.
Second you gradually tighten the screws on foreign finished products, not industrial inputs like metals, plastics, ores, etc.
Third you streamline export paperwork requirements and relax things like ITAR.
Then, when that's all humming along and the factories are working, you can launch blanket tariffs to protect your nascent industries, if need be. But you must exempt necessary industrial inputs from tariffs.
It's possible that personnel problems can, to some extent, be solved with automation.
But, anyway, the playbook's being torn up and read backwards, so it's all moot. We're just going to have to ride the tiger and see what the world looks like in a few months.
This is the rationalization being projected onto the situation, but it doesn’t make logical sense.
The administration launched a trade war with 100+ fronts and left no time to negotiate with all of them, let alone the biggest players.
The biggest players are already calling the administration’s bluff with counter-tariffs. If there was an expectation to use the threat of irrational tariffs as a bargaining chip, they didn’t leave enough time to do it.
Seen from abroad, trust in the rule of law and property rights has been eroded. Today Trump sends randos to El Salvador, maybe tomorrow he will nationalize enterprises or other assets, with no meaningful opposition from the Congress and the judiciary? Germany is already pulling gold from the US, that had been stored there for decades. Better safe than sorry.
There is a reason that the power to tax resides in congress, and it's specifically to prevent that. They've just abdicated their role and here we are with a king instead of a president.
No.
> Not only are the new trade policies irrational, it's quite possible that they're intentionally irrational as a bargaining or maneuvering tactic.
Not really, at least not a well-considered bargaining or maneuvering tactic. There is no incentive to comply if there isn't a clear compliance goal and a clear willingness to reward progress toward it as well as punish noncompliance. Irrationality is poor bargaining.
More to the point, though, the space for rational debate is NOT with the architects of the policy, who, yes, seem beyond reason. The space for debate is among everyone else, including the people who have the Constitutional power to arrest the executive policy in this area (whether that debate centers on the merits of policy in the broad sense or their own narrow future political fortunes or some combination of those.)
> As I commented yesterday, there's a playbook for reshoring that's being totally ignored
Broad reshoring of industries or broad sectors that have left the US because its comparative advantage in the present world trade regime has shifted elsewhere is an objectively economically harmful idea, and expending resources on it consumes resources that could be productively employed in pursuit of relative economic inefficiency. There may be select industries that can be identified where there is a rational argument that that would be only a short-term hit and that there would be long-term benefits, or where security or stability issues given real expected international threats make that a cost worth bearing (though in the latter case it is still generally probably better to work to maintain existing alliances and work jointly to "reshore" critical industries broadly within our international political alignment rather than making it an isolated national policy, both because there are often going to be other places in the alliance where it is less out of line with present comparative advantage and because it is a broadly shared benefit where it makes sense to share the costs.)
We don't need a better playbook to achieve autarky, we need to reject it as a goal.
There is no point debating the administration or supporters. Peter Navarro hatched this idea, and he is nearly alone in his logic.
However, a broader debate is useful. A professor in Europe recently pointed out that Nixon did the same thing in the 1971. The intent was to destabilize and reset the dollar value compared to other currencies. He basically set off a grenade in the office. He proposed "New Federalism", and "Nixon's decision to end the gold standard in the United States led to the collapse of the Bretton Woods system. According to Thomas Oatley, "the Bretton Woods system collapsed so that Nixon might win the 1972 presidential election.""
https://en.wikipedia.org/wiki/Richard_Nixon#Economy
By the way. Bretton Woods and Treasury monetary policy after WW2 was crafted by Lauchlan Currie. Currie was a renowned economist and worked at US Treasury from 1934. In WW2, Currie was Franklin Roosevelt's chief economic adviser. Currie was also a Russian agent. His US passport and US citizenship was revoked in ~1954 and he lived the remainder of his life in Colombia.
If a guy with a finite lifespan has a preference for autarky, expansionist military invasions, racial hierarchies and a secret police regardless of the consequences and then rationally pursues those preferences in ways that are likely to bring them about before his death of old age, the guy doesn't qualify for the category "delusional" and instead fits into one of the moral categories.
However, it's worked out well for him personally (less so for those he does business with, or near, or for the US...) so despite being on-paper delusional, I admit the waters are rather muddied.
https://en.wikipedia.org/wiki/Norman_Vincent_Peale#Influence
You're giving them too much credit. This is more of a "some men just want to watch the world burn" situation than a "4-D chess" situation.
I mean, the people making decisions might be well past rational, but hopefully there's always a contingent of people putting deep, rational thought into what might be the best plan to utilize going forward. And hopefully good ideas keep spreading and somehow find their way back to the top. Before it's too late.
Sure, foreign chip manufacturers might gain a leg up, but it might not be totally ruinous. There's a way to do it that's smooth, gradual, and mostly painless.
Summarized: the government gives money to companies, or more charitable "invests".
I would totally agree with you on this path forward BUT FOR the fact that thos nation is dead broke. Completely dead broke. There's no responsible money to do this with. None.
The explicit architecture of the petrodollar system is that the US will protect international shipping, and in return all petroleum contracts will be priced and executed in dollars. This makes the USD the international reserve currency, and every country participating in international trade needs to hold USD.
How can they put those USD to work? By buying up safe US government debt and other financial instruments.
The US has been rewarded with near unlimited borrowing ability assuming it remained the most stable, powerful, and trusted partner. We could use that to fund practically any investment we want.
And because of the dollars currency hegemony, the world helps you do it. Just let the tax cuts expire and increase the federal tax rates on higher incomes.
Even if you didn't want to do this, the world will literally fund whatever nonsense you want and you could deficit spend to restore manufacturing.
You as a country have a bunch of options (more than most) and it's sad to watch ye flail around ineffectually.
He introduces a shocking measure and then wants to humiliate the affected by letting them beg for relief. Submission. In a speech yesterday he literally said that "countries are coming to kiss his ass" and he clearly took great joy in this validation of power.
What he forgets, and so does this article, is that due to the above tactics this isn't a USA vs China situation. It has become a USA vs everybody else situation.
And surely "everybody else" is working on alternatives.
Well, it really depends on the competence of "everybody else"...
What the U.S. is doing is just Brexit 2.0. If reason didn't work with Brexit, why would it work with this?
The best each one of us can do is to isolate ourselves from the disaster.
You certainly seem to practice what you preach, lol
> Brexit 2.0
Apples to oranges
> isolate ourselves from the disaster
The one that will never come? Go ahead, more for us "rational" folks.
They are (were? will be?) exiting the world, not just the EU...
It's all a scam, Trump is literally stirring the pot to manipulate the stock market and to enrich his fellow billionaires. This is the same man that started his presidency with a crypto rugpull less than 6 months ago. No wonder DOGE went so hard after every stock market regulatory agency so hard.
Defending a world that is inevitably on the way out is for suckers and weaklings. And boy howdy do they despise the weak. How do you clean out the weak from finance and start preparing a command based war economy?
Volatility, the violence of markets. Move fast and break things. Then there's chaos under the heavens and the situation is excellent, or however the maoist saying goes.
At least to me this looks like trying to get advantages in an expected world war. Sensitive businesses need to die and release labour that can be transfered to a war industrial economy, and the plainly weak people need to die so the people that cares for them no longer have to and can labour with something else like pregnancy or trauma medicine.
Elon Musk is surprisingly not fully on board with this, either he doesn't understand the team he joined or he's started having second thoughts when his stocks crashed. I'm guessing the former, and that he to some extent joined the fash to look cool and manly, and liked it when he got to be on the world stage throwing about their taboo, highly recognisable signals. But now he doesn't find it exciting and refreshing to watch the world burn, he likely doesn't have his own vision for it.
None of the others are into deep sophisticated reasoning. It's not how they think. Mainly they lust, and the thinking they do is to dress up their lust in a way that doesn't turn public speeches and statements into moments of intimacy and vulnerability, because that would be effeminate and look weak.
The war they expect is north versus south, and not east against west. When the climate refugees come and the equator is unlivable, the far north will be the attacked home of the supreme humans, the masters of the future.
Who has the stronger incentive to steelman? And if that's the best he can do right now, I grant that's not the same as saying he will certainly fail to adapt to the post-globalized, much more broadly and deeply impoverished world now taking shape. It is, though, about the same as saying he has not yet obviously begun succeeding.