Wrap Up for April 2025

Not surprisingly, tariff related issues are still dominating the news cycle, so I've grouped them together at the top of this post. 

The "scar tissue" of recent tariff threats and realities.

Tariffs can't and won't address trade deficits.

What if the foolhardy use of tariffs marks the peak of Trump's power?

Capital flight never ends well. "Suddenly, the world is treating America like a developing country". Some things are easy to ignore but the bond market is not one of them. U.S. Treasury bonds also aren't helped by assertions that national debt calculations could be fraudulent.

The U.S. borrowed a huge amount from foreigners. So, how does it get paid back?

This isn't the end of globalization, but it could be the end of America's participation in globalization. More here.

A collapse in ocean container bookings. "Blank sailings" may even dwarf the covid era.

This trade war is being waged without an understandable end goal. Hence the lack of clues how to actually get there. More than anything this war disrupts our own supply chains. 

How much do major economies rely on their exports?

A stagflationary shock impacts both sides of the Fed's mandate at the same time.

Even though Trump's approval ratings continue to diminish, Democrats have lost relevance in this populist era. 

This questioning of dollar dominance value, came from an unexpected source. And, a rebuttal.

Some legal considerations regarding Trump's efforts to fire Jerome Powell.

The Fed has a balancing act for managing demand in the face of tariff uncertainty.

The Trump tariff shock is likely not something that can be resolved easily or quickly.

Taking a closer look at the financial markets after the tariff announcement.

Will Trump retreat enough from his recent policy mistakes to avoid these worst case scenarios?

Some historical comparisons to Trump's pressure on Powell.

Trade resets especially hurt small businesses and make recession more likely.

A comparison of the U.S. weighted average tariff with Smoot-Hawley.

High tariffs over the years have caused plenty of economic problems for Brazil.

Powell has done a much better job than some realize.

The possibility of a sudden-stop crisis.

It's not so much about what foreigners own here, as the fact that U.S. capital produces more and profits more in foreign countries. And, it took someone who isn't an economist to make this enlightening argument.

The biggest paradox of all this is the tariff effect on potential deindustrialization.

Maybe once we finally get through all this, we won't be duped again anytime soon by protectionist and mercantilist nonsense.

Most trade wars don't look quite this silly.

How might international trade become realigned in the years to come?

Rebuilding the U.S. has been delayed for now.

Canada's provinces have had more trade with the U.S. than with one another.

There are much better ways than tariffs, to ensure the U.S. remains a prosperous country.

How will tariffs impact real incomes?

Some highlights from a tariff primer.

The choice of nations: either trade, or armies.

What makes Trump's tariffs historically unique?

This article seems an appropriate close for the month long spotlight on tariffs: Tariffs hurt long run economic growth more than anything else. And, "Monetary policy has almost no impact on how tariffs affect long run growth."

"How the war in Ukraine changed Russia's global standing."

With home building costs like these, it's no wonder new approaches are needed for housing.

What is the sex gap in global life expectancy?

Mothers in Europe are waiting longer to give birth.

Some contrasts in daily incomes for 25 countries.

When state and local policymakers mostly complain about what's happening at the federal level, are they actually focused on the needs of their own voters?

Which parts of Europe have experienced the biggest rise in living standards since 2014?

Where an ancient tradition is reviving bee populations.

Political secession is even more difficult than individual exit has been.

Power outages in the U.S. are most often the result of extreme events.

The Russian paradox in the use of human capital.

Total tax burdens by state.

Paul Krugman interviews Claudia Sahm.

Productivity has declined most in areas where construction is particularly concentrated in the urban core.

On dollar dominance and its challenges.

A visual for the $19 Trillion consumer economy in the U.S.

"50 Things I've Learned Writing Construction Physics"

How many scientists will end up leaving the U.S.?

If this turns out to be the Chinese century, what might that mean?

For Trump to fire Powell, the Supreme Court would have to intervene.

Experts become little more than mouthpieces when they attempt to dictate the terms of engagement.

What would it take for the euro to become a safe haven?

Sometimes what we think is a helper bot, is simply a teacher bot.

Where has AI proven most useful recently?

An update for the worldwide growth slowdown.

There's plenty of variance in daycare costs across the U.S.

In the nineties, rising debt and deficits contributed to a more pragmatic politics. But that didn't happen this time. And more unsettling matters may keep an unrealistic Republican budget out of view till its passage. 

What accounts for the lack of male participation in U.S. workplaces?

A closer look at what federal spending actually does for the average citizen.

Musk is hardly the first to say silly things about GDP.

Why didn't the authors of Abundance highlight the possibilities of localism?  I continue to believe that localism could be best defined by locally coordinated time use in knowledge centered services. And it is becoming especially obvious now, how private enterprises (in globalized settings) are better at coordinating physical goods management than national governments.

Liberty Street Economics takes a look at China's economy.

Tiny home villages can also be beautiful.

How did inflation get so out of control in the sixties and seventies?

The Fed needs to strengthen the political foundations of its independence.

Market Monetarists recall when central banker Mark Carney spoke well of NGDP targeting.

There may be some economic sacrifices for more manufacturing jobs. But who is really on board with this?

The CBO has been undershooting its forecasts for long-term interest rates. But the lack of accuracy in forecasting budget deficits is also quite concerning.

Some still dream of villages where people of like minds can live and work together.

Alas, "Liberation Day" was Historic: Reactions and Responses

This month's news cycle began on a fast and furious note, so I set out to post tariff and tariff related news as timely as possible. Indeed, some events from two weeks ago feel as though they happened months earlier. While things are starting to settle down, there will doubtless be further tariff information for the April Wrap Up post, which I'll group together for easier reading. Like so many in the U.S., I am overwhelmed by what our government has set into motion. I can only hope other nations are faring better, so much is at stake. With a little luck we may eventually emerge from these trying times stronger and wiser. In other words, you go, world!

Some advance warning from Promarket at the end of March, "Breaking Trust in the Government Will Not Be Efficient in the Long Run".

To what extent are trade deficits responsible for the decline of U.S. manufacturing?

Decades earlier tariffs have left a lasting mark on the structure of some U.S. markets.

Consumers are trying to preempt rising costs due to tariffs, wherever possible. 

International trade is much more important now, than it was during the unfortunate Smoot-Hawley tariff.

"This is perhaps the worst economic own goal I have seen in my lifetime."

Anti-neoliberalism grew for decades before the MAGA movement got the chance to actually put it into practice.

There is little incentive for local generic drug production with pharmaceutical tariffs.

It's the end of the world (order) as we know it.

Government trade policy by Chatbot.

Not everyone is confident these tariffs will be scaled back. Oh well, it's only 2.5 trillion stock market wealth lost.

This approach to restoring in U.S. production capacity is strictly wishful thinking.  There has been no strategic preparation or planning.

What, specifically, makes this set of tariffs so bad? 

More manufacturing is needed in the U.S. but Trump's tariffs are the wrong approach.

Might seventies style stagflation be the ultimate result of "liberation day"?

The Trump administration made a major mistake in its tariff calculations. But are they willing to fix it?

The historical Smoot-Hawley example for our times.

In this instance, Donald Trump could be compared with Liz Truss.

Tariffs lead to increased domestic costs: a textbook example.

I regret not visiting Canada when I could have, and now people there no longer welcome U.S. citizens. Understandably so. They are quite fortunate to have Mark Carney as their new prime minister.

Will the withdrawal of the U.S. from globalization "set the tone for the rest of the world"? While I certainly hope not, it remains to be seen. At the very least, the U.S. "has not been the key driver of global trade growth for two decades".

The model for the "reciprocal" tariff plan is completely incoherent. Its entire premise doesn't take the basic foundations of monetary economic exchange into account.

What radical uncertainty looks like.

Tariffs are the wrong approach for much needed improvements in manufacturing capacity.

Rules make things predictable, which makes planning possible. And when rules are broken, uncertainty also means less growth.

Multinational companies have few good options for tariff arbitrage this time around.

There is plenty of ego involved in this tariff episode.

Wait a minute, how do you have this great surge of manufacturing jobs in the U.S. if you're automating all the manufacturing this time around?

The bond vigilantes are not easy to ignore. Monetarily the U.S. could ultimately pay, especially if the rule of law continues to be set aside.

If it were to happen, a Treasury market unwind would be more serious than what happened in 2008.

A visual of China's growing global trade dominance since the year 2000.

By no means are we out of the big tariff era yet. Parts of the threat may be delayed but this is far from over.

Inflation is no longer the main concern.

As of April 9, which tariffs are still in effect?

Tariffs are also still coming for pharmaceuticals. Which of course is on top of other recent cuts on medical innovation. Nevertheless, many have run out of patience with drug companies despite what happens.

However people may feel about it now, debt has been the greatest U.S. export for some time. Indeed, our "capital account surplus" is the mirror image of the trade deficit. So, "If our trade deficit falls, our ability to get the rest of the world to finance our growth will also fall". 

The world has changed in the last nine days.

In this moment of relative calm, how far are we from the potential storm of politicized financial markets?

Tariffs are also on top of what was already declining consumer activity.

Some charts and a timeline for tariff changes.

When it comes to trade wars, China is playing a longer game this time.

This could be a trade diversion like no other. Until now the U.S. was the world's biggest consumer market. How much protectionism might this diversion ultimately cause?

There has already been a rising shift away from long-dated U.S. debt in recent years, which is likely to continue.