We all witness an amazing act of malfeasance by the Tariff-in-Chief. Like a monkey playing with the most complex machine on the planet, the US Economy, we have witnessed Felon-47 flip switches and turn dials seemingly at random. The administration did publish the formula, devised by Ron Varo, the imaginary friend of Peter Navarro. But the numbers on the chart displayed by the our deranged leader bear little resemblance to what the formula published by the Office of the United States Trade Representative should have generated. See my previous blog post on that.
As of 4/11/2025, what is the current status of the tariffs? The original 10% across the board tariffs are still in effect. There are exceptions. Books, pharmaceuticals, items currently in transit, Canada and Mexico. And of course Chinese tariffs are now at 125%.
Then suddenly, they were gone. On a ninety day "pause." Except pharmaceuticals, which he threatened increased tariffs on the day after. To hear him boast, 50 countries came to him begging to negotiate. Then because that number wasn't good enough, it was 75 countries. None of which he would name. Because, they would call him on the lie.
But they are not gone. The baseline is still there. And as much as he has promised a pause, his word has zero worth. The maga-hats may say that is just Trump-Derangement-Syndrome. But you don't have to believe me. The whole world now has TDS. Why is that?
But the topic here is the question, is the damage to the US economy caused by the orange ape flipping switches, with the full consent of the Congress, permanent? Effectively yes. Long term damage has been done. Damage that will be with us for at least the decade past this presidency's demise.
A major indicator is the stock market. Since the economic buffoon's inauguration, the stock market has lost over $9 trillion. Those that do not understand this can think, well, it is just a correction, and it will go back up. Thinking this is just game being played by stock portfolio managers and rich people. How does it affect you and me? Ask your self this, "where did the money go?" Using round numbers. Say the stock market was worth $1,000. And you sold your share at $50, and the over all market dropped to say, $950. You now have $50. What do you do with it. If you are just playing a game, you could wait till the market dropped lower and buy back in. Sell high, buy low.
And to some extent, that is happening. That part we don't need to worry about, except for the insider traders that the entire administration and republican members of congress seemed to be engaged in. The real problem is the world is looking at the idiots in charge of the US and start looking elsewhere to place their dollars. Trillions of dollars just flowed out of the US and will be flowing into the European stocks and bonds. That is money that would be furthering investment in the US, and will now be investing into our chief competitors.
Want proof? Look at the dollar. Before tariffs, the Euro bough 1.08 dollars On April 11, it was 1.126 dollars. About a 4% decline in the dollar, in 10 days. Why is that. Supply and demand. Dollars are bought and sold in a world wide auction system. We have more dollars chasing fewer euros. So the value of the dollar goes down.
Effectively, this is an additional 4% tariff on all foreign goods. Without the exceptions for books and pharmaceuticals.
Then there is interest on the bonds. Every so often, the US Treasury holds a bond auction. Since our credit is the best in the world, the world buys our bonds paying low interest rates. But not any more. We haven't defaulted on the bonds, but every investor in the world is not going to trust to hold our debt. Right now, we are paying $1 trillion in debt interest. About 2.8%. Lets raise that to 3.8%. Now the debt service goes up to $1.36 trillion.
Elon Musk is making claims that DOGE will save us $150 billion a year. Assuming that is correct, and based on DOGE's gross errors so far, it is not. We will still be needing another 200 billion for next year.
Also, these interest rates will bubble through the economy, making homes and cars harder to buy.
The Treasury secretary declared that the tariff policies would improve the business climate, and they were also pursuing a policy of a strong dollar.
A lack of stability is anathema to businesses. They will be running away as fast as they can. And the mishandling of the dollar will lead to its weakness.
So is this damage permanent. Maybe not. But it is going to be with us for a very long time.
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