Surprised there isn't mention that a big part of the tariff strategy is to throw the equity markets into chaos in an effort to drive down the price of the 10-year bond. There was a panic last night because the 10 year bond price started going up as stocks were trading down, which is not supposed to happen. It would be truly disruptive if the whole game gets blown up by a lack of buyers for US debt.

> using trade flows to measure the health of the economic relationship with these countries — any country, really, but particularly final assembly countries — is legitimately stupid

A simple way to see this is you have can a system of three countries, A, B, and C, where A only exports to B, B to C, and C to A. All have net neutral trade, but are in a deficit with someone.

This essay seems to be built on a flawed analogy.

Clayton Christensen’s model of disruption (or models, counting his low end version) involves innovation by both the incumbent and disruptor. The disruptor’s innovation is immediately appealing to the low end of the market while the incumbent is focused on the high end.

His example of Hong Kong factories manufacturing Fairchild chips doesn’t fit this template even though he claims it does. It’s just targeting the low end of the market with lower prices. That’s just basic business competition, it’s not disruption as he defined it in this piece.

Side note, I’ve never been a big fan of his giant block quotes, especially when he does not bother to summarize them much. It’s asking the reader to connect to the dots and arrive at the insights he is supposed to be providing.)

Talking about the merits of these tariffs kind of misses the point. The person who wrote this article is very smart. I am sure they are smarter than I am. He has produced a pretty solid analysis of trade policy. But in articles like this people ascribe their own motivations and goals to the tariffs that aren't actually there. Buried in this article is the assumption that the motivation of tariffs and trade policy is to maintain competitiveness with China in manufacturing for both economic and security reasons.

This may be important to the author but it isn't a top priority for the administration. Competitiveness with China and onshoring manufacturing are certainly talking points but they is not stated as the primary motivation for the tariffs. The administration characterizes trade imbalances as countries taking advantage of us. The tariffs are targeted based on trade imbalance. If manufacturing was the goal why apply tariffs to things like raw materials? If competition with China is the goal why apply tariffs to South Korea or Japan, pushing them closer into China's orbit? These are just not the goals of the tariffs and neither their rhetoric or actions suggest that they are.

People have a hard time dealing with values and motivations that are wildly different from their own so they construct all sorts of parallel explanations and defend those instead. But talking about these explanations is non sequitur. It is like the administration adopted a policy of jailing all Capricorns and only Capricorns and people started writing think pieces about how the criminal justice system would be more efficient if they focused on programs to reduce recidivism.

> There is one other very important takeaway from disruption: companies that go up-market find it impossible to go back down, and I think this too applies to countries.

There's a lot of talking past each other here. This observation, framed a bit differently, is precisely the argument for radical disruptive change. If there's a structural ratchet mechanism, where outsourcing a particular kind of manufacturing work means the US can never do it effectively again, doesn't every tick of the ratchet pose significant risks?

Can anyone give a manufacturing example for the phenomena for which he uses Uber? It seems off to use a gig economy company in this article with its tariffs/manufacturing focus.

Sure, but aren't we past rational debate on this point? Not only are the new trade policies irrational, it's quite possible that they're intentionally irrational as a bargaining or maneuvering tactic. We're not going to reason or argue our way out of this one.

As I commented yesterday, there's a playbook for reshoring that's being totally ignored:

First you invite industry to reshore via subsidies and preferential access to government contracts. If necessary, the government must directly invest in new firms. (They already do this in a very small way with In-Q-Tel and others, so it's not totally beyond the pale. For a time there was even a US Army VC firm.) If you talk to a Chinese factory owner or mine boss, many of them will tell you that they got their start with a >$2M direct investment from their government.

Second you gradually tighten the screws on foreign finished products, not industrial inputs like metals, plastics, ores, etc.

Third you streamline export paperwork requirements and relax things like ITAR.

Then, when that's all humming along and the factories are working, you can launch blanket tariffs to protect your nascent industries, if need be. But you must exempt necessary industrial inputs from tariffs.

It's possible that personnel problems can, to some extent, be solved with automation.

But, anyway, the playbook's being torn up and read backwards, so it's all moot. We're just going to have to ride the tiger and see what the world looks like in a few months.

To me (European), there is no strategy behind these tariffs other than Trump's thirst for a dominant display. Just to show that he can, that he has the cards.

He introduces a shocking measure and then wants to humiliate the affected by letting them beg for relief. Submission. In a speech yesterday he literally said that "countries are coming to kiss his ass" and he clearly took great joy in this validation of power.

What he forgets, and so does this article, is that due to the above tactics this isn't a USA vs China situation. It has become a USA vs everybody else situation.

And surely "everybody else" is working on alternatives.

I find amusing that people still want to rationally discuss this thing.

What the U.S. is doing is just Brexit 2.0. If reason didn't work with Brexit, why would it work with this?

The best each one of us can do is to isolate ourselves from the disaster.

A jumble. Really one of his least coherent pieces.

My 2 cents in wake of recent news:

It's all a scam, Trump is literally stirring the pot to manipulate the stock market and to enrich his fellow billionaires. This is the same man that started his presidency with a crypto rugpull less than 6 months ago. No wonder DOGE went so hard after every stock market regulatory agency so hard.

I think this misses the point. The president and his closes aides are fascists. They aren't economics professors and diplomats trying to play some game, they're people who look towards the future and see that this world is going to end for a number of reasons. Productive capacity in China, climate change, the decline of patriarchal white supremacy, the facade of a 'rules based order', international payments and finance systems, &c.

Defending a world that is inevitably on the way out is for suckers and weaklings. And boy howdy do they despise the weak. How do you clean out the weak from finance and start preparing a command based war economy?

Volatility, the violence of markets. Move fast and break things. Then there's chaos under the heavens and the situation is excellent, or however the maoist saying goes.

At least to me this looks like trying to get advantages in an expected world war. Sensitive businesses need to die and release labour that can be transfered to a war industrial economy, and the plainly weak people need to die so the people that cares for them no longer have to and can labour with something else like pregnancy or trauma medicine.

Elon Musk is surprisingly not fully on board with this, either he doesn't understand the team he joined or he's started having second thoughts when his stocks crashed. I'm guessing the former, and that he to some extent joined the fash to look cool and manly, and liked it when he got to be on the world stage throwing about their taboo, highly recognisable signals. But now he doesn't find it exciting and refreshing to watch the world burn, he likely doesn't have his own vision for it.

None of the others are into deep sophisticated reasoning. It's not how they think. Mainly they lust, and the thinking they do is to dress up their lust in a way that doesn't turn public speeches and statements into moments of intimacy and vulnerability, because that would be effeminate and look weak.

The war they expect is north versus south, and not east against west. When the climate refugees come and the equator is unlivable, the far north will be the attacked home of the supreme humans, the masters of the future.

Ben Thompson was a leading industry commentator in the 2010s. He was well suited for those times. Less so for these, perhaps.

It reminds me a lot of Brexit. Politicians in the south of the country were warning that the financial sector (predominantly in London) would loose 100,000 jobs and people in the north were saying "oh, that sounds pretty good".

A few years later when that didn't happen to that extent I remember an interview with someone from a fishing port which lost a lot of business that previously went to Europe. They were complaining that Brexit wasn't hurting the right people and why are prices increasing all the time.

It seems no amount of logic is going to convince some people.

The primary architect of trumps tariff strategy in his first and second term is Peter Navarro. If you want to understand the tariffs today, just go read one of his many books. His goals are pretty simple:

reindustriaize America

No more free trade

China is evil and the worlds enemy

It should be no surprise to anyone observing trump since he took office that the end goal was always to decouple from China.

    > It should be no surprise to anyone observing trump since he took office that the end goal was always to decouple from China

> It is like the administration adopted a policy of jailing all Capricorns and only Capricorns and people started writing think pieces about how the criminal justice system would be more efficient if they focused on programs to reduce recidivism.

I was born on January 19. Should I be concerned?

Worse than projecting one's values onto a rationalization of the new tariffs is to simply take the administration's rhetoric at face value. That other countries are "taking advantage of us" is just a talking point. We have to look at how the tariffs fit historical conservative programs. Republicans have long wished to replace our progressive income taxation with a flat tax system, but that's simply not achievable, even for Trump. Further decreasing tax rates from high earners and replacing revenue with tariffs to avoid the ballooning of the government debt, for which Trump was heavily criticized during the first term, may be the closest he can get to approximating flat taxation.

It is considered socially unacceptable to armchair psychoanalyze other people, but I think we can waive that when it comes to the most powerful politician on the planet.

https://www.nytimes.com/2025/04/09/opinion/trump-tariffs-rat...

In some cases, Occam's Razor says, "this person is not acting rationally" and you have to weigh that possibility even if it is uncomfortable. Desire for dominance is common, and is not rational. Why should it surprise us to see it in Trump?

The confusing part is that the actions don't seem logically consistent with any of the possible goals.

>The tariffs are targeted based on trade imbalance

Ok, I buy that based on the stupid formula they showed. Is "not ruin everything else" not also part of his goals? Can you explain what I'm missing?

I think people just keep underestimating exactly how stupid and ignorant Trump is. That's why nothing makes sense. He does not understand the law of comparative advantage and thus doesn't understand that trade is the engine of growth. He only sees fixed size pies and win-lose deals, so he's not capable of finding real solutions.

Thank you. I see these coping strategies everywhere, from sources I would never imagine would try to find reason within the damage these will do. People want to feel like these are rational well thought out choices with experts behind the reasoning and that they must be missing something. Because how could the POTUS willingly cause so much harm to the country? So there is cope instead of coming to terms that this man is single handedly destroying the economy and their future.

Indeed, Paul Krugman has been doing the rounds on podcasts recently and he seems to think that Trump is doing tariffs and trying to eliminate trade imbalances because he has always had that idea of doing tariffs and thought that trade deficits were being taken advantage of, and the talk about a greater strategy are post-hoc rationalizations. Sometimes a simple person has a simple reason divorced from complicated reality.

> The administration characterizes trade imbalances as countries taking advantage of us.

it seems likely to me that they know their voting base is too dumb to understand, so they make up stuff that sounds good to get the support.

Broadly that is true of the administration's motives, but as concerns trade with China, they are obviously aware of both the national security and competitiveness angle. Not only did Biden take the lead on that already with the exact above rationale, China is currently more steeply targeted.

Agree, and I find this totally bizarre.

The Trump administration's power is based in the Russian propaganda machine and xenophobia. Blanket tariffs (except towards Russia and Belarus, not mentioned in Ben Thompson's article of course) are in service of those two power bases.

Bingo -- analysts of Trump are way too overeager to attribute "4D Chess" super analytics driven goals to Trump.

In reality, he's doing exactly what is on the tin: reducing tariffs, and doing what he wants to do, because he feels like it.

> the company spent its early years building its core technology and delivering a high-end experience with significantly higher prices than incumbent taxi companies. Eventually, though, the exact same technology was deployed to deliver a lower-priced experience to a significantly broader customer base; said customer base was brought on board at zero marginal cost

Ironically, this was the plan laid out for Tesla early on. Very expensive Roadster, pretty expensive Model S. Make some cash and build a reputation for how good a luxury electric car can be. Then use that cash to go down market.

Of course zero marginal cost does not apply with the Model 3, but they did dramatically lower their own cost-of-materials by the time they released the Model 3, making it profitable at scale.

> The takeaway from that Article isn’t that Uber is a model for the rebirth of American manufacturing; rather it’s that you can leverage demand to fundamentally reshape supply

Anecdotally, I know that Tesla became an aspirational brand, a dream car for many. A status brand. So the demand was there, and if you could get a "dream car" for $35K USD then why wouldn't you?

I think this is the typical modern American bias of idolizing 'tech' companies - it makes a lot of money so it must be because it's very technologically sophisticated.

In reality I'd guess building an Uber scale tech company is not particularly difficult - after a quick ChatGPT query, it seems a city like New York, has about 90kish drivers at any moment - if we assume they make a query to the API every 5 seconds (and add once as many for users) - the scale doesn't look particularly daunting, something manageable with optimized tech on a small server cluster.

Sharding is trivial since New Yorkers are not really interested in taxies from Brussels etc.

And the proof of the pudding is there are tons of competitors, and most of them work just as well as Uber does (on the technology level, driver availability or market penetration might be a different issue).

Uber is a brand like McDonalds - you could say people go to McDonalds because they have the best burgers enabled by their superior logistics and equipment - and that's certainly probably a factor, you can't really ignore that they are where they are due to brand strength, availability, and early mover advantage - while also recognizing they are far from the only players in the business.

American tech companies have immensely benefited from being the 'default' providers of services - Google, Gmail, AWS, etc. People didn't give much thought on what they chose - and assumed everyone chooses them because they are the best, not because people lacked sufficient incentive to give proper consideration to what service they use.

Thanks to Trump, that has certainly changed in Europe at least, literally overnight.

> it's quite possible that they're intentionally irrational as a bargaining or maneuvering tactic

This is the rationalization being projected onto the situation, but it doesn’t make logical sense.

The administration launched a trade war with 100+ fronts and left no time to negotiate with all of them, let alone the biggest players.

The biggest players are already calling the administration’s bluff with counter-tariffs. If there was an expectation to use the threat of irrational tariffs as a bargaining chip, they didn’t leave enough time to do it.

Behaving irrationally, intentionally or not, is scaring investors away rather than attracting them.

Seen from abroad, trust in the rule of law and property rights has been eroded. Today Trump sends randos to El Salvador, maybe tomorrow he will nationalize enterprises or other assets, with no meaningful opposition from the Congress and the judiciary? Germany is already pulling gold from the US, that had been stored there for decades. Better safe than sorry.

I think you actually _should_ assume that he's acting rationally, just that his motivations aren't aligned with what you think they should be. Trump has a mafia mentality, and the purpose of the tariffs has absolutely nothing to do with policy and everything to do with control. He wants to have a guillotine hanging over the head of every country and corporation that he can use at will, so that every CEO has to come to him and bend the knee, so he can grant them an exemption on a case by case basis in return for personal loyalty to _him_.

There is a reason that the power to tax resides in congress, and it's specifically to prevent that. They've just abdicated their role and here we are with a king instead of a president.

> Sure, but aren't we past rational debate on this point?

No.

> Not only are the new trade policies irrational, it's quite possible that they're intentionally irrational as a bargaining or maneuvering tactic.

Not really, at least not a well-considered bargaining or maneuvering tactic. There is no incentive to comply if there isn't a clear compliance goal and a clear willingness to reward progress toward it as well as punish noncompliance. Irrationality is poor bargaining.

More to the point, though, the space for rational debate is NOT with the architects of the policy, who, yes, seem beyond reason. The space for debate is among everyone else, including the people who have the Constitutional power to arrest the executive policy in this area (whether that debate centers on the merits of policy in the broad sense or their own narrow future political fortunes or some combination of those.)

> As I commented yesterday, there's a playbook for reshoring that's being totally ignored

Broad reshoring of industries or broad sectors that have left the US because its comparative advantage in the present world trade regime has shifted elsewhere is an objectively economically harmful idea, and expending resources on it consumes resources that could be productively employed in pursuit of relative economic inefficiency. There may be select industries that can be identified where there is a rational argument that that would be only a short-term hit and that there would be long-term benefits, or where security or stability issues given real expected international threats make that a cost worth bearing (though in the latter case it is still generally probably better to work to maintain existing alliances and work jointly to "reshore" critical industries broadly within our international political alignment rather than making it an isolated national policy, both because there are often going to be other places in the alliance where it is less out of line with present comparative advantage and because it is a broadly shared benefit where it makes sense to share the costs.)

We don't need a better playbook to achieve autarky, we need to reject it as a goal.

That's what smart experienced people would do. But if you run the power game as an ego polishing reality show with whole world stuck in it, all logic is off the table. Sad to be part of it and absolutely powerless

> Sure, but aren't we past rational debate on this point?

There is no point debating the administration or supporters. Peter Navarro hatched this idea, and he is nearly alone in his logic.

However, a broader debate is useful. A professor in Europe recently pointed out that Nixon did the same thing in the 1971. The intent was to destabilize and reset the dollar value compared to other currencies. He basically set off a grenade in the office. He proposed "New Federalism", and "Nixon's decision to end the gold standard in the United States led to the collapse of the Bretton Woods system. According to Thomas Oatley, "the Bretton Woods system collapsed so that Nixon might win the 1972 presidential election.""

https://en.wikipedia.org/wiki/Richard_Nixon#Economy

By the way. Bretton Woods and Treasury monetary policy after WW2 was crafted by Lauchlan Currie. Currie was a renowned economist and worked at US Treasury from 1934. In WW2, Currie was Franklin Roosevelt's chief economic adviser. Currie was also a Russian agent. His US passport and US citizenship was revoked in ~1954 and he lived the remainder of his life in Colombia.

https://en.wikipedia.org/wiki/Lauchlin_Currie

Preferences are independent of rationality, surely?

If a guy with a finite lifespan has a preference for autarky, expansionist military invasions, racial hierarchies and a secret police regardless of the consequences and then rationally pursues those preferences in ways that are likely to bring them about before his death of old age, the guy doesn't qualify for the category "delusional" and instead fits into one of the moral categories.

> it's quite possible that they're intentionally irrational as a bargaining or maneuvering tactic.

You're giving them too much credit. This is more of a "some men just want to watch the world burn" situation than a "4-D chess" situation.

Hopefully we're never past rational debate.

I mean, the people making decisions might be well past rational, but hopefully there's always a contingent of people putting deep, rational thought into what might be the best plan to utilize going forward. And hopefully good ideas keep spreading and somehow find their way back to the top. Before it's too late.

If the goal was to really reshore there are a lot of ways to encourage companies to move in that direction. The CHIPS act is one but Trump wants to cancel it. And I'm sure there are others than can work, but broad based tariffs are not a solution.

I don’t think this playbook works for complex products. Before every component needed for an iPhone is locally manufactured, the overseas competitor manufacturers of those components would be many generations further. You’d be competing with the whole world.

> First you invite industry to reshore via subsidies and preferential access to government contracts. If necessary, the government must directly invest in new firms.

Summarized: the government gives money to companies, or more charitable "invests".

I would totally agree with you on this path forward BUT FOR the fact that thos nation is dead broke. Completely dead broke. There's no responsible money to do this with. None.

Where I live, Uber is recognized as the high prices option. Once VCs stopped subsidizing rides prices went up and availability went down - it was a running joke for years that at DCA you’d see people waiting in line for 20 minutes to spend $20 more than hopping in a waiting cab.

At least in Seattle, it's actually about 50% cheaper to get a taxi from SeaTac to the city than to take a Lyft or Uber.

Where I live taxis are on par with Uber, sometimes cheaper when Uber has surge prices. We also have Bolt, an European competitor, which is usually 10-40% cheaper than Uber or taxis.

Every Uber or Bolt can also operate as a taxi since the regulations stipulate that any private passenger transport service is the same as a taxi, and has to follow the same regulations.