More Articles | Free Reports | Premium Services By Bill Bonner, Bonner Private Research The big story in the financial world is still the trade war. Wars are serious business. Nations tend to get edgy when they think their material welfare… or military power… is in danger. Japan bombed Pearl Harbor after the U.S. cut off its oil supplies. Napoleon invaded Russia because he thought it was undermining his trade sanctions (against England). Hitler made his disastrous decision to send the 6th Army into Stalingrad in order to get access to oil. Tariffs were the centerpiece of the Trump administration’s economic plan. And they are the biggest challenge to the world economy since the Covid hysteria. Yet, nobody seems to know what the plan is. What is the idea? Even the “why” of it is still not settled. What problem is the Trump Team trying to solve? Springfield News-Leader: Trump, in a Truth Social post April 13, wrote that the U.S. needs to make products in the U.S. and won't "be held hostage by other countries, especially hostile trading nations" such as China. He said the U.S. is reviewing tariffs involving the entire technology supply chain. "NOBODY is getting 'off the hook' for the unfair Trade Balances, and Non Monetary Tariff Barriers, that other Countries have used against us, especially not China which, by far, treats us the worst!" Trump wrote in a Truth Social post later on April 13. "There was no Tariff 'exception' announced on Friday. These products are subject to the existing 20% Fentanyl Tariffs, and they are just moving to a different Tariff 'bucket.'” Fentanyl? Deindustrialization? Child labor? Currency manipulations? Buckets? Trade imbalances? There seems no end to the possible breaches of Trump’s Fair Trade ideal, whatever it is. So, we ask ourselves: What kind of show is this – a comedy? A tragedy? A farce? “A farce!” say many commentators. In a much-watched press conference (on April 2), the President unveiled his new tariffs, a different one for each country, depending on how successfully it met U.S. consumer demands. The more it offered to U.S. households, the greater the punishment. And then, to underline the lack of intellectual rigor, the tariffs were only assessed at half the level of the supposed injustice. If America’s deficit with Iceland were 50%… the new “reciprocal” tariff was only 25%. Then, the stock market sold off. The Great Helmsman must have panicked. It was as if Eisenhower had called off the D-Day Landings because of clouds over the English Channel. Liberation Day would have to wait. But instead of giving China the same break as everyone else, the world’s largest exporter was subjected to even higher tariffs. This was seen by some as an act of “genius,” since it “isolated China” from the rest of the world. Instead, like choosing a prisoner for an especially brutal beating, it merely made the other prisoners realize how vulnerable they were. They appear to be joining forces to get away and leave the U.S. on the sidelines. The Daily Express: Europe appears to be shifting its gaze from west to east, as leaders lean towards China for trade agreements rather than aligning with President Donald Trump of the United States, with the news coming just days after China's huge economic decision that was described as an “act of hybrid warfare” and designed to “punish Trump.” Euronews has reported that following President Trump's infamous "reciprocal tariffs" – which China responded to with huge tariff hikes on certain goods – speech at the White House earlier this month, the first call made by European Commission President Ursula von der Leyen was to China. The European Commission, which had previously provided President Trump a stern warning over his tariffs, issued an official statement saying: "In response to the widespread disruption caused by the U.S. tariffs, President von der Leyen stressed the responsibility of Europe and China, as two of the world's largest markets, to support a strong reformed trading system, free, fair, and founded on a level playing field. Then, this past weekend, after promising “no exemptions,” Team Trump provided exemptions for some electronics, whose vendors must represent an important source of financing for Republican candidates. And just when the buyers and sellers got comfortable with that, yet another pronunciamiento declared that the reprieve would be temporary, not permanent. AP: Tariff exemptions announced [last] Friday on electronics like smartphones and laptops are only a temporary reprieve until the Trump administration develops a new tariff approach specific to the semiconductor industry, U.S. Commerce Secretary Howard Lutnick said Sunday. But the result of this improv trade policy could turn it into a tragedy, says Oxford Economics. City AM: [If Trump follows through with his tariffs] the fall in trade would nearly match those seen during the Covid-19 pandemic in 2020 and the U.S. recession of 1975. Oxford Economics claimed their estimates were “conservative” given the unpredictability of retaliation and uncertainty regarding how consumers and firms respond to tariffs. The IMF (International Monetary Fund) estimated that the Covid epidemic cost the world economy $12.5 trillion. Fortune magazine put the cost to the U.S. economy alone at $14 trillion. So, who knows? But maybe the U.S. won’t roll out the tariffs as threatened. More pauses? Delays? Exceptions? Maybe Trump was looking to score political points at home as a tough hombre… getting even with foreigners who have been “ripping us off” for years? Or maybe the idea is to trigger “negotiations” that might lead to… well… we don’t know. Or maybe the whole point is just to lower the value of the dollar… in order to make U.S. exports more competitive? If so, it’s a dangerous game for a country that has $2 trillion deficits… and $37 trillion in debt. Investors are likely to lose their appetite for more U.S. bonds. But trade wars, like other wars, don’t always go as planned. Regards, Bill Bonner Bonner Private Research | 
