Author Topic: S&P futures for tomorrow just fell off a cliff. Trumpy wants 100B in new tariff  (Read 16508 times)

Financial.Velociraptor

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I was just looking at the S&P futures for tomorrow's open and watched them go from neutral to 1.3% down on implied open.  Sure enough, breaking news bar on CNN notes Trumpy is tweeting about another 100B in Chinese tariffs.  How did he get an MBA if he failed economics?!?

Padonak

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BTFD (buy the fucking dip)

nereo

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BTFD (buy the fucking dip)
...or...
Top is in!!

:-D

appleshampooid

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1.3% is a cliff? News to me.

I was hoping for 13%, my wife's 401(k) contributions will settle tomorrow.

bacchi

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I was just looking at the S&P futures for tomorrow's open and watched them go from neutral to 1.3% down on implied open.  Sure enough, breaking news bar on CNN notes Trumpy is tweeting about another 100B in Chinese tariffs.  How did he get an MBA if he failed economics?!?

Trump doesn't have an MBA.

sisto

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I just bought some VTSAX, we'll see!

bacchi

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I wish he had a Wharton MBA instead of pretending to have one.

Quote from: trump
In light of China's unfair [sic] retaliation...

That's what a trade war is. You tariff this, they tariff that, repeat until the economy is in the shitter.

SPX at -1.44%; NQ at -1.67%.


bwall

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Sell covered calls, out of the money.

Write out of the money puts.

Rinse and repeat.

Guizmo

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Hahaha. 1.3% down is a cliff??? What's 20%??? Falling off the face of the earth??


bwall

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Hahaha. 1.3% down is a cliff??? What's 20%??? Falling off the face of the earth??

Yes, 1.3% in the futures market is a big deal, as it is a derivative of the real market opening. So, if the futures are down 1.3% (about 375 DOW points), then you can expect the opening to be down about 500 points, depending what happens overnight in Asia and Europe. 

The market won't drop 20% overnight, not even in 2008. But if it did, it would be a huge negative event.

Personally, I can sleep well knowing that my covered calls will expire tomorrow out of the money. Not nearly enough to make up for the beating I'm taking in the long position, but, well, every bit helps. 

Space Pickle

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what an idiot :(

Stachless

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I presume most of us are part owners of many large American companies. which is exactly who benefits most from many of these tariffs.

It may be a bumpy ride to get to better Trade Agreements, but this American believes it will be well worth it once its done!






aspiringnomad

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I presume most of us are part owners of many large American companies. which is exactly who benefits most from many of these tariffs.

It may be a bumpy ride to get to better Trade Agreements, but this American believes it will be well worth it once its done!

Lulz. Worked out well for Smoot and Hawley.

Travis

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I presume most of us are part owners of many large American companies. which is exactly who benefits most from many of these tariffs.

It may be a bumpy ride to get to better Trade Agreements, but this American believes it will be well worth it once its done!

Tariffs benefit a select group of industries, usually at the expense of consumers who would otherwise get their goods from somewhere less expensive.  If it's a raw materials industry, every other business that requires those materials has to pay more for whatever it is they produce.  Which ones do you think are benefiting here, and why should I pay more to support them?

Stachless

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I presume most of us are part owners of many large American companies. which is exactly who benefits most from many of these tariffs.

It may be a bumpy ride to get to better Trade Agreements, but this American believes it will be well worth it once its done!

Lulz. Worked out well for Smoot and Hawley.

We had a ginormous trade SURPLUS in the Smoot and Hawley days...quite the difference from today!

P.S. remember these are still much more 'threats' than actual 'tariffs' so far.  While I would not be surprised to see tariffs enforced, I bet they serve their purpose in a successful renegotiation of brutally unfair Trade Agreements.

P.S.S. Bueller?

Stachless

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I presume most of us are part owners of many large American companies. which is exactly who benefits most from many of these tariffs.

It may be a bumpy ride to get to better Trade Agreements, but this American believes it will be well worth it once its done!

Tariffs benefit a select group of industries, usually at the expense of consumers who would otherwise get their goods from somewhere less expensive.  If it's a raw materials industry, every other business that requires those materials has to pay more for whatever it is they produce.  Which ones do you think are benefiting here, and why should I pay more to support them?

You shouldn't pay more to support them.

You should buy a similar product that was made in America or with our dozens of trade partners that practice fair trades.  I.e. their products aren't priced based on stolen IP, child slave labor, etc and putting companies that do Play Fair out of business.   If you have to pay $60 more for your next TV I'm cool with it.

aspiringnomad

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I presume most of us are part owners of many large American companies. which is exactly who benefits most from many of these tariffs.

It may be a bumpy ride to get to better Trade Agreements, but this American believes it will be well worth it once its done!

Lulz. Worked out well for Smoot and Hawley.

We had a ginormous trade SURPLUS in the Smoot and Hawley days...quite the difference from today!

P.S. remember these are still much more 'threats' than actual 'tariffs' so far.  While I would not be surprised to see tariffs enforced, I bet they serve their purpose in a successful renegotiation of brutally unfair Trade Agreements.

P.S.S. Bueller?

Should the 138 countries that we still have a trade SURPLUS with announce tariffs against our exports? Fair is fair, right? Let's do away with the entire global trade system. What's the worst that can happen?

Good on ya for the Bueller reference though.

Jsn

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Analyzing tariffs in the abstract isn’t all that relevant to what’s happening now, which is a trade showdown with China.

China. Which can easily out-tariff us, for the simple fact that their economy isn’t as acclimated to our imports as we are to theirs.

China. Which sells more stuff to us than we sell to them. They could literally match all our tariffs with comparable tariffs, and still run a trade surplus.

China. Which holds almost 1.25 trillion dollars in U.S. debt.

Yeah...all politics aside: getting into a trade war with China is a stupid, stupid idea.

Travis

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I presume most of us are part owners of many large American companies. which is exactly who benefits most from many of these tariffs.

It may be a bumpy ride to get to better Trade Agreements, but this American believes it will be well worth it once its done!

Tariffs benefit a select group of industries, usually at the expense of consumers who would otherwise get their goods from somewhere less expensive.  If it's a raw materials industry, every other business that requires those materials has to pay more for whatever it is they produce.  Which ones do you think are benefiting here, and why should I pay more to support them?

You shouldn't pay more to support them.

You should buy a similar product that was made in America or with our dozens of trade partners that practice fair trades.  I.e. their products aren't priced based on stolen IP, child slave labor, etc and putting companies that do Play Fair out of business.   If you have to pay $60 more for your next TV I'm cool with it.

Are there a lot of steel mills and aluminum mines operated by child labor in China?  You didn't answer the other question. Who in the US is benefiting? Name a US company that will profit from this, and I'll name ten US companies that will have increased costs.

maizeman

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China. Which sells more stuff to us than we sell to them. They could literally match all our tariffs with comparable tariffs, and still run a trade surplus.

Wait I don't think I follow you here.

The problem China has in a trade war with us is exactly that we don't sell nearly as much to them as they do to us. If they try to put tariffs on equal dollar values of our exports as Trump puts on their exports, they're going to run out of US exports to tax a long time before Trump runs out of chinese exports to tax.

nereo

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China. Which sells more stuff to us than we sell to them. They could literally match all our tariffs with comparable tariffs, and still run a trade surplus.

Wait I don't think I follow you here.

The problem China has in a trade war with us is exactly that we don't sell nearly as much to them as they do to us. If they try to put tariffs on equal dollar values of our exports as Trump puts on their exports, they're going to run out of US exports to tax a long time before Trump runs out of chinese exports to tax.
Good point.

There was a good (albeit hypothetical) synopsis of which country could better weather a trade war (link).
Summary:
US: has less to lose economically as Chinese exports total $130B (vs $506B from China to US)

China: Politically China's communist structure (and Xi's lack of term limits) means Xi can play the long game - Xi won't face political pressure from congress or constituents. They have more cash on hand ($3T) they can deploy to keep citizens from feeling any effects (something the WH can't do).

steveo

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I was just looking at the S&P futures for tomorrow's open and watched them go from neutral to 1.3% down on implied open.  Sure enough, breaking news bar on CNN notes Trumpy is tweeting about another 100B in Chinese tariffs.  How did he get an MBA if he failed economics?!?

Honestly I thought everyone realised that tariffs destroy your economy. Say you put a tariff on steel that increases the price of steel from $1 a pound to $2 a pound. The guy who buys steel now has to pass on his costs to the next person and round the circle we go. Eventually it permeates everywhere and every thing is more expensive. It's pretty stupid.

I'm not even a Trump hater. Prior to these stupid protectionist policies being implemented I thought he would be smart enough to talk nonsense but not actually do it. The guy has proven me wrong.

2Birds1Stone

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*yawn*

ender

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I'm surprised how many experts we have on global economics here.

nereo

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I'm surprised how many experts we have on global economics here.
It's the internet.  Everyone gets to be an expert.  Kind of like cable news.

Jsn

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China. Which sells more stuff to us than we sell to them. They could literally match all our tariffs with comparable tariffs, and still run a trade surplus.

Wait I don't think I follow you here.

The problem China has in a trade war with us is exactly that we don't sell nearly as much to them as they do to us. If they try to put tariffs on equal dollar values of our exports as Trump puts on their exports, they're going to run out of US exports to tax a long time before Trump runs out of chinese exports to tax.

What’s going on now is a game of equivalence. We impose X amount of tariffs, they impose X amount. If that escalated to the point that all U.S. trade to China was under tariff, three factors would be in place:

1.) Proportionally, the damage to their economy would be less than to ours.

2.) Since the penetration of U.S. products into China is far shallower than vice versa, the tariffs would serve as acceleration for replacement of those product sectors with Chinese manufacturing, a process already well underway.

3.) The internal pressure of foreign tariffs would be severely straining the U.S. economy. Tariffs on imported goods have the effect of raising prices on non-imported goods, since domestic manufacturers no longer have to be competitive against the pre-tariff price of imports, only the post-tariff price. If your Chinese competitor now has to charge 20% more than you do (to pay for the tariffs), you can get away with a 19% price increase. Not being a free-market capitalist country, China has powerful internal price controls to keep this from happening on their end.

If the trade war went beyond the skirmishes of tariff equivalence and into the territory of unequal sanction? Yes, the US would have more to throw on the fire, but the American economy would be profoundly damaged, if not sunk, long before then. Contrary to the president, this isn’t “easy to win.”

gredenko

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I'm surprised how many experts we have on global economics here.

Me too. Good reads though sometimes

aspiringnomad

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China. Which sells more stuff to us than we sell to them. They could literally match all our tariffs with comparable tariffs, and still run a trade surplus.

Wait I don't think I follow you here.

The problem China has in a trade war with us is exactly that we don't sell nearly as much to them as they do to us. If they try to put tariffs on equal dollar values of our exports as Trump puts on their exports, they're going to run out of US exports to tax a long time before Trump runs out of chinese exports to tax.

What’s going on now is a game of equivalence. We impose X amount of tariffs, they impose X amount. If that escalated to the point that all U.S. trade to China was under tariff, three factors would be in place:

1.) Proportionally, the damage to their economy would be less than to ours.

2.) Since the penetration of U.S. products into China is far shallower than vice versa, the tariffs would serve as acceleration for replacement of those product sectors with Chinese manufacturing, a process already well underway.

3.) The internal pressure of foreign tariffs would be severely straining the U.S. economy. Tariffs on imported goods have the effect of raising prices on non-imported goods, since domestic manufacturers no longer have to be competitive against the pre-tariff price of imports, only the post-tariff price. If your Chinese competitor now has to charge 20% more than you do (to pay for the tariffs), you can get away with a 19% price increase. Not being a free-market capitalist country, China has powerful internal price controls to keep this from happening on their end.

If the trade war went beyond the skirmishes of tariff equivalence and into the territory of unequal sanction? Yes, the US would have more to throw on the fire, but the American economy would be profoundly damaged, if not sunk, long before then. Contrary to the president, this isn’t “easy to win.”

Yes, and I'm sure there are one or two people who've warned Trump of these and other serious consequences, but it's far too much for his attention span. He sees a trade deficit like a dog sees a squirrel. He'll run himself and the entire global economy into oncoming traffic if he has to, but in fact, I'm fairly certain he won't even catch the squirrel. Any bets against our trade deficit with China actually being higher this time next year despite (or because of) the bluster and stupidity flowing from the moron in the White House?

If we wanted to thumb our nose at China and increase our exports at the same time, the TPP was an excellent way to do that. China was pretty upset about being excluded. But like a lot of smart policy, it suffered in the US from a populist uprising in a post-fact era, and not at all from poor negotiating on the part of the US representatives.

maizeman

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What’s going on now is a game of equivalence. We impose X amount of tariffs, they impose X amount. If that escalated to the point that all U.S. trade to China was under tariff, three factors would be in place:

1.) Proportionally, the damage to their economy would be less than to ours.

2.) Since the penetration of U.S. products into China is far shallower than vice versa, the tariffs would serve as acceleration for replacement of those product sectors with Chinese manufacturing, a process already well underway.

3.) The internal pressure of foreign tariffs would be severely straining the U.S. economy. Tariffs on imported goods have the effect of raising prices on non-imported goods, since domestic manufacturers no longer have to be competitive against the pre-tariff price of imports, only the post-tariff price. If your Chinese competitor now has to charge 20% more than you do (to pay for the tariffs), you can get away with a 19% price increase. Not being a free-market capitalist country, China has powerful internal price controls to keep this from happening on their end.

If the trade war went beyond the skirmishes of tariff equivalence and into the territory of unequal sanction? Yes, the US would have more to throw on the fire, but the American economy would be profoundly damaged, if not sunk, long before then. Contrary to the president, this isn’t “easy to win.”

What's the argument for #1? Assuming a tariff is equally damaging to the exporting and importing country (or actually even if the damage is unequal as long as China and the USA are imposing tariffs on the same number of goods), the damage to each economy would be equal in both countries, and since the US's economy is still larger than that of China, the damage would be proportionately smaller.

#2 seems reasonable although I'd predict we'd see similar effects in the USA with an acceleration of the current trend towards investments in domestic (largely robotic) manufacturing to replace imported goods.

For #3, that model only works if you assume there is only one domestic manufacturer. If you have multiple domestic manufacturers competition is going to prevent the price from rising rapidly. It also assumes the chinese manufacturer doesn't have any capacity to cut pre-tariff prices to remain cost competitive with domestic manufacturers while still paying the tariff.

Note that none of the above should be read as endorsing Trump's strategy (if it is a strategy) or trying to argue a trade war isn't going to really suck for everyone involved.

Jsn

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What's the argument for #1? Assuming a tariff is equally damaging to the exporting and importing country (or actually even if the damage is unequal as long as China and the USA are imposing tariffs on the same number of goods), the damage to each economy would be equal in both countries, and since the US's economy is still larger than that of China, the damage would be proportionately smaller.

Yes, I should have clarified that. What I meant can be illustrated by two statistics. Here are the top 10 categories of imports from China to the US:

  1.   Electronic equipment: $150 billion
  2.   Machinery: $112.4 billion
  3.   Furniture, lighting, signs: $34.8 billion
  4.   Toys, games: $26.7 billion
  5.   Plastics: $17.6 billion
  6.   Vehicles: $15.6 billion
  7.   Knit or crochet clothing: $14.9 billion
  8.   Footwear: $14.8 billion
  9.   Clothing (not knit or crochet): $13.5 billion
  10. Iron or steel products: $12.4 billion


Now, here are the top 10 categories of imports from the US to China:

1.    Soybeans: $15 billion
2.    Civilian aircraft: $8.4 billion
3.    Cotton: $3.4 billion
4.    Copper materials: $3 billion
5.    Passenger vehicles (small engines): $3 billion
6.    Aluminum materials: $2.4 billion
7.    Passenger vehicles (large engines): $2.2 billion
8.    Electronic integrated circuits: $1.7 billion
9.    Corn: $1.3 billion
10.  Coal: $1.2 billion

See the difference? Most of what we get from them are finished goods. Most of what they get from us are commodities.

It’s easier to switch to another supplier for commodities, especially if that commodity can be swapped out for another. Soybeans, for instance, which they already plan to tariff (yes, the Chinese went directly after our #1 export in retaliation for Trump’s tariff on their #10 export). Not only can they get soybeans elsewhere, they can replace it with other, cheaper food sources if need be. The populace might grumble, but they won’t starve.

On the other hand, their exports are woven into several points of our economy. If Trump decides to go after their #1 export to us, electronic equipment, he’s not only attacking them but the US companies that design the equipment (hardware companies), make it function (software companies), create demand (marketing, media) and physically sell it (retail). That’s a lot more disruptive and damaging than finding an alternative to soybeans.

Quote

For #3, that model only works if you assume there is only one domestic manufacturer. If you have multiple domestic manufacturers competition is going to prevent the price from rising rapidly.


I wish! Unfortunately, since there’s now a set point, a clear price threshold that cuts off the Chinese competitors, everyone tends to migrate to the vicinity of that set point. “Competition” becomes a matter of shaving off a point or two from that, rather than being a direct response to the marketplace.

Quote
It also assumes the chinese manufacturer doesn't have any capacity to cut pre-tariff prices to remain cost competitive with domestic manufacturers while still paying the tariff.

Of course. But that defeats the supposed purpose of the tariff, which is to make it no longer worthwhile to pursue US markets, thereby helping US companies by scaring off their competition. If the US government isn’t willing to ratchet up the tariff until that’s achieved, you’ve simply created a leaner, hungrier competitor. Which will be an even more unpleasant prospect if and when those tariffs go away.

ChpBstrd

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I'm surprised how many experts we have on global economics here.

For 10 mustache hairs, name this person.
For 20 hairs, name his plan... the ___ Plan.
For 50 mustache hairs, post his infamous quote.


aspiringnomad

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I'm surprised how many experts we have on global economics here.

For 10 mustache hairs, name this person.
For 20 hairs, name his plan... the ___ Plan.
For 50 mustache hairs, post his infamous quote.

First is pretty easy.
Second is too easy if you know the first.
Third I'm guessing is "everything will work out alright" which I just learned from Wikipedia; talk about being wrong on an epic scale. According to his Wiki page there's another fun quote attributed to him later on, so maybe you mean that instead.

Stachless

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Was the infamous quote 'Remember son you're a Melon'?

Jsn

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I'm surprised how many experts we have on global economics here.

For 10 mustache hairs, name this person.
For 20 hairs, name his plan... the ___ Plan.
For 50 mustache hairs, post his infamous quote.

Yeah, I’m wondering if you mean “liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate... it will purge the rottenness out of the system.“

steveo

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I'm surprised how many experts we have on global economics here.

If you studied economics in any way shape or form you'd realise that protectionist policies don't work. It's not complex at all.

HBFIRE

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No new tariffs have been implemented.

They've been brought up as he's trying to negotiate a better deal.   That's a good thing.  We should try to get a better deal.  Our last president didn't do anything other than his disastrous Trade agreement. First step is to squeeze the toothpaste and see what comes out.  Worst case is he backs down back to where we were, best case is we get a better situation on trade.  I think China will be willing to negotiate to an extent.  We'll see.  Short term will hurt as the market isn't sure what will come of it.   Trump says a lot of things which never materialize, all that matters is what actually gets done, like the tax cuts which we all benefited from.  For now, let's see how this plays out.
« Last Edit: April 07, 2018, 08:47:57 PM by dustinst22 »

nereo

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No new tariffs have been implemented.

They've been brought up as he's trying to negotiate a better deal.   That's a good thing.  We should try to get a better deal.  Our last president didn't do anything other than his disastrous Trade agreement. First step is to squeeze the toothpaste and see what comes out.  Worst case is he backs down back to where we were, best case is we get a better situation on trade.  I think China will be willing to negotiate to an extent.  We'll see.  Short term will hurt as the market isn't sure what will come of it.   Trump says a lot of things which never materialize, all that matters is what actually gets done, like the tax cuts which we all benefited from.  For now, let's see how this plays out.
I don't buy this 'ends justify the means' crap.  Problem here is that the markets aren't just some abstract thing - it's real value that could seriously screw with people's lives. If there's a sustained drop companies stop hiring, panic and protection sets in and we go into recession mode.
That's why past presidents (Ds & Rs alike) haven't gone down this route. Nobody wins in a trade war, or even trade postering... your best hope is that you come out of it with fewer scrapes than the other guy. It's not a zero-sum game.

HBFIRE

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Short term market fluctuations matter very little.  All we're seeing is some jitters short term.

We've been in a trade war with China for a long time, not even mentioning the IP issues - now we're finally trying to do something about it.

I really dislike a lot of what Trump does.  But I think he's actually right on China. 

The Amazon thing, on the other hand, is a circus.
« Last Edit: April 07, 2018, 09:09:52 PM by dustinst22 »

Radagast

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Suppose that as a result of future tariffs buyers select their second favorite suppliers, resulting in 15-20% price increases on certain items.

Apart from the China specificness, can someone explain the difference between the proposed tarrifs and the EU's value added tax of the same magnitude? Isn't this nothing more than a pretty insignificant sales tax?

privatefarmer

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No new tariffs have been implemented.

They've been brought up as he's trying to negotiate a better deal.   That's a good thing.  We should try to get a better deal.  Our last president didn't do anything other than his disastrous Trade agreement. First step is to squeeze the toothpaste and see what comes out.  Worst case is he backs down back to where we were, best case is we get a better situation on trade.  I think China will be willing to negotiate to an extent.  We'll see.  Short term will hurt as the market isn't sure what will come of it.   Trump says a lot of things which never materialize, all that matters is what actually gets done, like the tax cuts which we all benefited from.  For now, let's see how this plays out.

bro, you either didn't read the tax plan or have just had your head in the sand. LOTS of people did NOT benefit from the tax plan. my taxes stayed exactly where they were, I didn't get a cut or an increase, however if the personal tax cuts expire then mine will go up from where they used to be. almost all the benefits go to those making >500k/year. The standard deduction doubled, that's great, however they took away personal exemptions. Giving most people a quarter while the top 1% takes home hundred dollar bills does not mean "everyone benefits". wealth inequality in this country is at a historic level and this bill did nothing but worsen it. You can only concentrate so much of the wealth into so few hands, at some point the system fails. When 50% of the country has zero savings and nearly all retirees are completely dependent on their meager SS checks, you have a problem. I am a high earner closer to FI in my early 30s however I can see that even if you take care of yourself/adequately save if the rest of society is broke your life is not going to be that great.

Anyhow, the tax cuts did a huge disservice to our future. This will be evident by the increased inflation/national debt coupled w/ stagnant wage growth and an ever increasing wealth inequality.

nereo

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No new tariffs have been implemented.

They've been brought up as he's trying to negotiate a better deal.   That's a good thing.  We should try to get a better deal.  Our last president didn't do anything other than his disastrous Trade agreement. First step is to squeeze the toothpaste and see what comes out.  Worst case is he backs down back to where we were, best case is we get a better situation on trade.  I think China will be willing to negotiate to an extent.  We'll see.  Short term will hurt as the market isn't sure what will come of it.   Trump says a lot of things which never materialize, all that matters is what actually gets done, like the tax cuts which we all benefited from.  For now, let's see how this plays out.

bro, you either didn't read the tax plan or have just had your head in the sand. LOTS of people did NOT benefit from the tax plan. my taxes stayed exactly where they were, I didn't get a cut or an increase, however if the personal tax cuts expire then mine will go up from where they used to be. almost all the benefits go to those making >500k/year. The standard deduction doubled, that's great, however they took away personal exemptions. Giving most people a quarter while the top 1% takes home hundred dollar bills does not mean "everyone benefits". wealth inequality in this country is at a historic level and this bill did nothing but worsen it. You can only concentrate so much of the wealth into so few hands, at some point the system fails. When 50% of the country has zero savings and nearly all retirees are completely dependent on their meager SS checks, you have a problem. I am a high earner closer to FI in my early 30s however I can see that even if you take care of yourself/adequately save if the rest of society is broke your life is not going to be that great.

Anyhow, the tax cuts did a huge disservice to our future. This will be evident by the increased inflation/national debt coupled w/ stagnant wage growth and an ever increasing wealth inequality.

I'm among those who's tax burden will not go down this year, and I'm young enough that the loss of federal revenue (and the resulting increase in the deficit) is seriously starting to worry me. I suppose one could argue that I benefited as stock prices took off, but that's the counter argument to not being concerned about gyrations to the market due to this tariff talk.  Most of my peers - younger people who are in or have just finished graduate school - have no savings and low incomes, so they are pretty much in the same spot. Despite all the increases in corporate profits wage increases haven't gone up as some predicted - instead most companies have used their savings to issue dividends and stock buy-backs.  Such is the incentive structure for publicly traded companies - I really can't blame them.

Still, I strongly disagree that 'worst case we back down and are back where we started' - though it is possible a deal could be worked out prior and few will remember this two years from now (best possible outcome IMO). Another potential outcome is that these and other tariffs go into effect, the EU, Brazil & India are forced to slap on their own and we wind up with curtailed global trade. A moderate recession hits and unemployment goes up to 8%. That's 6.5 million people who lose their income.
Problem is, that's not even a 'worst case' scenario, but something about in the middle of what's predicted should this escalate.

2Birds1Stone

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Still, I strongly disagree that 'worst case we back down and are back where we started' - though it is possible a deal could be worked out prior and few will remember this two years from now (best possible outcome IMO). Another potential outcome is that these and other tariffs go into effect, the EU, Brazil & India are forced to slap on their own and we wind up with curtailed global trade. A moderate recession hits and unemployment goes up to 8%. That's 6.5 million people who lose their income.
Problem is, that's not even a 'worst case' scenario, but something about in the middle of what's predicted should this escalate.

Do you see a subsequent deflationary pressure on housing, consumer goods, etc?

DreamFIRE

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all that matters is what actually gets done, like the tax cuts which we all benefited from.  For now, let's see how this plays out.
Yes, the tax cuts benefited most people in multiple ways.

As a upper middle class worker, not only did my paycheck go up significantly from the tax cut, but the stock market has done better, including the time period in which the tax cuts were largely anticipated.  Many people got pay raises and bonuses, and it's effectively a stimulus to the economy.

I'm concerned about the possible trade war, but I'm not panicking.
« Last Edit: April 08, 2018, 10:18:52 AM by DreamFIRE »

HBFIRE

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Exactly.  The corporate tax cuts in particular were needed, and yes we've all benefited from it either directly or indirectly. 

aspiringnomad

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Our last president didn't do anything other than his disastrous Trade agreement.

Care to elaborate on this or is it just a Sean Hannity talking point? Genuinely curious. @dustinst22
« Last Edit: April 08, 2018, 11:08:19 AM by aspiringnomad »

nereo

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Exactly.  The corporate tax cuts in particular were needed, and yes we've all benefited from it either directly or indirectly.
I have a big concern that this indirect 'benefit' will wind up costing me far more in the long term.  We punched a much bigger hole in the deficit, and as the saying goes, there's no free lunch. I'm deeply skeptical that this will be a net positive for the majority of Americans.  Trickle-down economics didn't work in the 1980s, I don't see why it will now.

HBFIRE

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Exactly.  The corporate tax cuts in particular were needed, and yes we've all benefited from it either directly or indirectly.
I have a big concern that this indirect 'benefit' will wind up costing me far more in the long term.  We punched a much bigger hole in the deficit, and as the saying goes, there's no free lunch. I'm deeply skeptical that this will be a net positive for the majority of Americans.  Trickle-down economics didn't work in the 1980s, I don't see why it will now.

Exact opposite.  Has nothing to do with trickle down, everything to do with the US being more competitive internationally.  We were near the top in terms of corporate tax rate.  China, on the other hand, has an effective corporate tax rate of 15% in tech, we need to be able to compete with that particularly as the AI revolution is on the horizon, where being first will be critical.  Cutting corporate taxes was a good long term move.
« Last Edit: April 08, 2018, 11:23:07 AM by dustinst22 »

HBFIRE

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Our last president didn't do anything other than his disastrous Trade agreement.

Care to elaborate on this or is it just a Sean Hannity talking point? Genuinely curious. @dustinst22

Don't want to derail this thread, happy to PM about it if you'd like.  In short, NAFTA cost the US a lot of jobs, drove illegal immigration to astronomical numbers, drove our trade deficit through the roof w/Mexico and Canada, and the deal has worked poorly for Mexico as well.

aspiringnomad

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Our last president didn't do anything other than his disastrous Trade agreement.

Care to elaborate on this or is it just a Sean Hannity talking point? Genuinely curious. @dustinst22

Don't want to derail this thread, happy to PM about it if you'd like.  In short, NAFTA cost the US a lot of jobs, drove illegal immigration to astronomical numbers, drove our trade deficit through the roof w/Mexico and Canada, and the deal has worked poorly for Mexico as well.

NAFTA was signed into law by Bill Clinton in 1994. Obama wasn't even an Illinois state senator yet.