Bulletins and News Discussion from April 14th to April 20th, 2025 - The Lamentations of a Levy-Loving Leader

Image is of Trump's initial set of reciprocal tariffs. Source is CNN and Reuters.

It's difficult to keep up with the news around the tariffs; they get instated, then dropped, then reinstated... for example, on Friday, Trump said that certain electronics like smartphones would be exempt, causing markets to rally a great deal, but now the Commerce Secretary has said that they might not be exempt? The state of play right now, if you haven't been keeping up this week, is that the US recently announced a 90-day global pause on implementing the tariffs he had planned (that is, 25% on certain Canadian and Mexican goods, and at least 10% on every other nation) but nonetheless increased tariffs on China to 145%.

Meanwhile, China has been - quite remarkably - standing their ground, increasing tariffs on the US to 125%, and putting restrictions on rare earths. Xi Jinping has been in Vietnam and has made statements against a tariff war there, saying that it would have no winners. Meanwhile, a Chinese spokesperson has essentially said that China can endure the tariff war due to the increasing demand from its domestic market in combination with its growing economic ties with other countries.

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1K comments

It's funny how Dollar appreciated like crazy before Trump got elected in part due to anticipation of his policies pumping up US markets.
Now, his policies turned out to be much sillier than expected, the dollar is depreciating.
For third world countries, the fall in oil prices and the depreciating Dollar will make some of the pain from tariffs and global economic slowdown a bit better.
China should really accept local currencies of third world countries upto a certain limit, only for trade transactions. I think the "selfish" aspect of trade remains, with China preferring local currency arrangements with countries it has a trade deficit with.
- I'm curious, why haven't they done so already? Do they trade in Yuan or dollars? Why is it "selfish" for China to prefer local currency with certain countries?
  
  If you import more than you export (mostly) then you'll not accumulate large amounts of local currency of the other country. For example, if China has a Yuan-Ruble agreement with Russia, it won't accumulate too many Russian rubles since it will be using it for imports of crude oil. in this case, Russia accumulates Yuan.
  But if China is the one which has a trade surplus, it'll accumulate local currency assets of the trade deficit country. China then has to try investing these local currencies in the deficit country (investments in real assets, not financial). Also, high inflation in many especially smaller third world countries erodes real purchasing power of the local currencies.
  There is definitely double standard when it comes to accumulating financial assets of first world countries which have trade deficit with China (US, UK) compared to third world countries which have a trade deficit with China. The main reason third world countries have a trade deficit with China current arrangements is because they accept western 'investments' or have trade surplus with the West, through which they accumulate Dollars which can be used for trade with China.

1005 comments