Excellently written Mark. Still I am not 100% convinced there is as carefully a crafted plan as perhaps suggested. Game-show style tariff boards and levies on islands inhabited by Penguins might suggest otherwise. Hope you are well mate.
Thanks Richard. Trump is a media machine and that tariff board was a massive red herring on both sides - it’s really a scorecard of who the US market is important to. An enormous about of pixels were devoted to a ‘gotcha’ on the calculations and it fed the meme machine with suggestions on how the penguins could buy an F35.
The other note I wrote about using logical fallacy bingo cards to write your own Op-Ed was trying to make a similar point.
We need to look at the likely substance - and real target - of these tariffs. I think it is US multi nationals and that is where investors should be looking.
Brilliant analysis as always Mark, cutting through the noise and focusing on what is actually happening. Companies (and countries) need to recognise what Trump is doing and adjust their strategies and business models in order to survive. We in Ireland are front in the queue in this regard.
Great article. Am not sure the extent to which this is a fully thought out game plan by Team Trump but your take on the effect feels spot on. As you pointed out before, Trump cannot openly target US corporations so claiming it is all about “foreigners” and then pushing them to do deals that yield more tax for the US would be a smart way to do so.
One reflection is that manufacturing cost is often a tiny fraction of full retail price. Eg $5 to make a sports shoe that sells for $100. So even a 100% tariff will not lead to massive onshoring or hyper inflation, LOL. But by changing transfer price incentives (transfer prices right now being heavily inflated to avoid US tax) it may well lead to more profit being booked in the US and more tax being paid. Your explanation of what is going on makes the most sense of the ones I have seen.
Kind of you to say so! Your point on inflation is also well made. This was something I noted when talking about the tariffs on Canada. 10% on Canadian heavy crude will not affect the amount received by Canada in the slightest and will , at worst, add a few cents to the price of gasoline in the US. Same with lumber - maybe $2k to the cost of a $400k house.
The real target was Ford, GM etc making cars just over the border, mainly to avoid healthcare costs.
The outrage from Carney et al was performative globalism while the real target was US multinationals!
A brainstorming question : why would do that if on the other side he implemented a large tax cut in the First mandate and now it is again one of the main goals....
Thanks for the question. In my view, the cuts are both personal and corporate and he needs to make them permanent before the mid terms otherwise they reset. Something he and also his political enemies are very aware of.
Thisl is why he has to show congress he is cutting spending and ‘raising taxes on foreigners.
The last time, it did lead to some repatriation of the trillions of profits sat in tax havens - so kind of worked- but did nothing to change the underlying system.
Excellently written Mark. Still I am not 100% convinced there is as carefully a crafted plan as perhaps suggested. Game-show style tariff boards and levies on islands inhabited by Penguins might suggest otherwise. Hope you are well mate.
Thanks Richard. Trump is a media machine and that tariff board was a massive red herring on both sides - it’s really a scorecard of who the US market is important to. An enormous about of pixels were devoted to a ‘gotcha’ on the calculations and it fed the meme machine with suggestions on how the penguins could buy an F35.
The other note I wrote about using logical fallacy bingo cards to write your own Op-Ed was trying to make a similar point.
We need to look at the likely substance - and real target - of these tariffs. I think it is US multi nationals and that is where investors should be looking.
Let’s catch up when I am in U.K. perhaps?
A penguin walks into a bar and asks the bartender, “Have you seen my brother?”
The bartender replies, “What’s he look like?”
Brilliant analysis as always Mark, cutting through the noise and focusing on what is actually happening. Companies (and countries) need to recognise what Trump is doing and adjust their strategies and business models in order to survive. We in Ireland are front in the queue in this regard.
Thanks Mark. Indeed, I think Ireland is at risk that the EU throws them under the bus to secure a better deal with the US..
Great article. Am not sure the extent to which this is a fully thought out game plan by Team Trump but your take on the effect feels spot on. As you pointed out before, Trump cannot openly target US corporations so claiming it is all about “foreigners” and then pushing them to do deals that yield more tax for the US would be a smart way to do so.
One reflection is that manufacturing cost is often a tiny fraction of full retail price. Eg $5 to make a sports shoe that sells for $100. So even a 100% tariff will not lead to massive onshoring or hyper inflation, LOL. But by changing transfer price incentives (transfer prices right now being heavily inflated to avoid US tax) it may well lead to more profit being booked in the US and more tax being paid. Your explanation of what is going on makes the most sense of the ones I have seen.
Kind of you to say so! Your point on inflation is also well made. This was something I noted when talking about the tariffs on Canada. 10% on Canadian heavy crude will not affect the amount received by Canada in the slightest and will , at worst, add a few cents to the price of gasoline in the US. Same with lumber - maybe $2k to the cost of a $400k house.
The real target was Ford, GM etc making cars just over the border, mainly to avoid healthcare costs.
The outrage from Carney et al was performative globalism while the real target was US multinationals!
Great post Mark!
Power is changing hands between elites - this never goes smoothly...
Agree! Thanks for the comment :)
A brainstorming question : why would do that if on the other side he implemented a large tax cut in the First mandate and now it is again one of the main goals....
Thanks for the question. In my view, the cuts are both personal and corporate and he needs to make them permanent before the mid terms otherwise they reset. Something he and also his political enemies are very aware of.
Thisl is why he has to show congress he is cutting spending and ‘raising taxes on foreigners.
The last time, it did lead to some repatriation of the trillions of profits sat in tax havens - so kind of worked- but did nothing to change the underlying system.
’
Another great read, thanks Mark!
Thank you!